Q3 2021 Argo Group International Holdings Ltd Earnings Call
Hello, and welcome to the <unk> group's third quarter 2021 earnings call. My name is Alex and I will be coordinating the call today. If you would like to ask a question at the end of the <unk>.
Presentation, you can press star one on your telephone keypad, if you wish to withdraw your question you compress at all too.
I will now hand over to your highest Greg chomping tier a V P of Investor Relations and corporate finance, Greg over to you.
Thank you and good morning, welcome to Argo Group's conference call for the third quarter of 2021.
After market closed last night, we issued a press release on our earnings which is available on the investors section of our website at Www Dot Argo group Dotcom and was filed with the SEC.
Presenting on today's call, Kevin Ruttenberg, Chief Executive Officer, and Scott Kirk Chief Financial Officer.
As the operator mentioned this call is being recorded.
As a result of this conference call Argo management may make comments that reflect their intentions beliefs and expectations for the future.
Such forward looking statements are qualified by the inherent risks and uncertainties surrounding future expectations generally and may.
Materially differ from actual future results involving any one or more of such statements.
Argo group undertakes no obligation to publicly update forward looking statements as a result of events or developments subsequent to this call.
For a more detailed discussion of such risks and uncertainties. Please see Argo group's filings with the SEC.
Also note that we will be referencing certain non-GAAP financial information.
More information regarding these non-GAAP measures are provided in our earnings release.
I will now turn the call over to Kevin run Bird Chief Executive Officer of Argo Group.
Good morning, and thank you for the introduction Greg welcome to everyone on the call I'm happy to speak today about the strong results. We reported our operating earnings per share was 91 cents for the third quarter. Despite elevated catastrophe losses, the industry experienced Argos annualized operating return on cost.
<unk> equity was seven 3%.
Our loss ratio improved nine eight points to 64.0 for the third quarter and reflects lower catastrophe losses.
And an improved underlying loss ratio, which is directly attributable to the strategic direction, we have implemented at Argo.
We continue to make progress on reducing expenses implementing our growth plan.
And the actions we are implementing are starting to come through in our financial performance as we remain focused on pursuing profitable growth improved underwriting margins reduced volatility and disciplined expense management I'm, particularly proud of the results achieved given the elevated catastrophe losses facing the insurance industry this quarter.
Over the past year, we have highlighted our strategy to reduce the volatility of our underwriting results and allocate capital to businesses with more stable returns. This was evidenced in the most recent quarter as our efforts to reduce property catastrophe exposure led to a significant improvement in our results.
We made the decision to exit our reinsurance operations in 2020, as we actively adjusted our insurance business to significantly reduce volatility given.
Given the tougher conditions the reinsurance market has experienced recently, we were very happy with the direction we have taken.
We continue to increase attachment points and reduce limits across multiple areas of our portfolio.
And our U S excess casualty portfolio during the first nine months of 'twenty 'twenty. One the average attachment point is up 26%, while the limits are down 11% compared to the same period in 2020.
Our D&O portfolio average limits have continued to decrease as well and over the past two years commercial primary and excess limits have decreased by 45% and 11% respectively Importantly.
This leads to increased underwriting profitability, while at the same time limiting volatility.
We continue to execute on our priority of becoming a leading U S focus specialty insurer.
This quarter, we executed on several transactions to exit underperforming or non strategic businesses, including the recent announcement to sell our Brazil operations Argos gross and we closed on the sale of our contract P&C business in October.
Now our business is comprised of three main platforms.
Our U S operations, which represent two thirds of our business.
On a go forward basis, followed by seem to get 200, and Bermuda insurance U.
U S. Specialty risks are regularly placed in the Lloyd's market and Bermuda and these platforms. We are focused on U S. Specialty risks and we are targeting business in which we have demonstrated our expertise.
Our Bermuda insurance business is an impressive long term track record generating underwriting profits and nine of the last 10 years and we've taken numerous actions in syndicate 200 on the business to optimize the portfolio and are starting to see them come through our financial results.
On the investment side, we reported very strong results driven by a significant contribution from our alternative investments portfolio, we adjusted our portfolio to target targeted asset allocations based on a study conducted at the end of last year, our bond portfolio is more heavily weighted to short durations.
Due to the profile of our liabilities a portfolio with shorter duration for us of three years and a plus credit quality.
Positions <unk> well in an inflationary environment. We also continued to hold allocations in equities and alternatives and.
In terms of underlying growth our top line in the quarter continued to reflect our focus on growth areas.
Overall gross premium was down one 6% in the quarter. The decrease in gross written premiums is attributable.
To the businesses, we are exiting plan to exit or have sold including sales of Ariel re in November 2020 contract binding in October 2021, and businesses in Italy, Malta, and the U S grocery business and the ongoing businesses premiums grew approximately 17% during the third quarter of 2021.
When compared to the third quarter of 2020.
U S growth was 3.7% in the third quarter of 2021 premium growth continues to be driven by businesses. We highlighted in March as grow and invest businesses and those include Argo Pro casualty construction environmental inland Marine and surety.
These businesses, which represent nearly two thirds of our U S operations gross written premiums were up approximately 20% in total during the quarter and more importantly, these businesses remain highly profitable with a combined ratios in the eighties and minimal catastrophe losses.
It was meaningful top line impact from our decisions to reduce exposure in property and underperforming business units on a year to date basis. These actions have limited top line growth by over $60 million, but have improved overall profitability.
In the U S. We continue to see solid rate increases in the mid single digits on average this is a bit less than the increase we experienced over the last couple of quarters, but we feel very good about the rates, we're getting and direction of our margins are growing invest businesses outpaced the U S average increasing in the high single digits range.
Turning to international.
Reported gross premiums were down about 10%.
In the third quarter due to the impact of businesses. We are exiting plan to exit or have sold including the sale of Ariel REIT in November 2020, and the planned exits of businesses in Italy in Malta.
And the ongoing businesses, excluding the increased share of syndicate 1200 capacity grow.
<unk> written premiums were up approximately 19% primarily due to the higher rates of this growth rate increases and exposure from lines with attractive market conditions. Each contributed approximately one half of that growth.
Pricing continued to be strong in the quarter with rate increases, averaging 11% and international and continue to remain broad based over the past three years cumulative rate change for syndicate 1200 has been 32% and approximately 110% for Bermuda insurance. We believe these businesses are well positioned to continue.
To generate favorable underlying margins and market conditions remain attractive across most of our platform.
We will continue to deemphasize or take strategic actions in lines, where we believe market conditions are not attractive or where we do not have a competitive advantage.
Now turning to expenses, we continue to make progress towards driving efficiency in our operations on a year to date basis. Our non acquisition expense ratio continues to decrease and we are making meaningful progress in several areas.
We have reduced our real estate footprint as we've embraced a hybrid and flexible work environment, including.
Including the divested businesses, our head count has decreased by 16% or 248 employees since July 2020.
Additionally, we have consolidated renegotiated or eliminated a number of contracts with outside vendors with additional significant savings to be realized going forward.
We continue to target a 2036 expense ratio for the full year 2022 overall.
Overall, I'm very pleased with our results for the quarter and the progress we've been able to make on our strategic objectives I'll now turn the call over to Scott to discuss our results in more detail.
Yes, Thank you Kevin and good morning, everybody.
We reported strong earnings during the third quarter of 2021, driven by reduced catastrophe losses, and improved combined ratio and a strong contribution from alternative investments.
The combination of these factors, resulting in operating earnings per diluted share of 91.
And an annualized operating return on common equity of 7.3%.
I'll turn first to our consolidated operating results.
Gross written premiums decreased by one 6% in the third quarter of 2021. However.
However, allowing for the impact of previously announced files and exits premiums are up approximately 17% during the third quarter of 2021.
Now while reported gross written premiums decreased net written and net earned premium both grew approximately 9% a quarter.
As we discussed previously the key drivers of the net premium growth are related to the solid area right.
Increased out of ships that agent Syndicate 12 powders capacity.
We expect net premium growth to continue to outpace the change in gross written premium for the balance of this year.
The second quarter and year to date basis, our retention ratio calculated as net written premiums divided by gross written premiums increased seven points to 67% and 61% respectively.
This was primarily a result of the increased retention in our international segment, resulting mainly from the sale of Ariel rate wherever you retained it very little of the risk on a net basis and our increased participation in 12 hundreds results.
The U S segment also contributed to the retention increased due to shifts in business mix towards focus largest business, where we retain more of the risk net.
In the third quarter of 2021, we reported a loss ratio of 64% down 10 points from 73.8% during the prior year period.
The improvement reflected lower cat loss ratios losses, and an improved ex cat current accident loss ratio.
Our cat losses totaled $27 million or just under six points of the combined ratio in the third quarter of 2021 of which 24 million related to natural catastrophes, and 3 million related to the impact from Covid.
This result compares favorably to catastrophe losses of $71 million or 16 points on the combined ratio in the prior year quarter, which.
Which included $54 million related to natural catastrophes and $17 million related to the COVID-19 pandemic.
As Kevin mentioned, the successful implementation of our strategy.
To reduce property cat related exposures has resulted in a significant reduction in our catastrophe losses, despite elevated industry cat losses during the quarter.
Yeah.
Unfavorable reserve development totaled $6 million in the third quarter of 2021. This was driven by a $7 million one time accounting adjustment in our international segment.
The prior year quarter included $1 $6 million of adverse reserve development.
The ex cat current accident year loss ratio came in at 57, 1% in the third quarter, which represents a 30 basis point improvement from the prior year quarter.
<unk> reflects the impact of continued rate increases as well as the benefits from our re underwriting actions.
Turning now to expenses our expense ratio was 36, 3% in the third quarter 2021, and was flat compared to the prior year quarter.
Acquisition expense and general and administrative expense ratio or in line with Q3 'twenty 'twenty.
Importantly, however, this marks the third consecutive quarter of improvement in our expense ratio.
On a year to date expense ratio now stands at 37, 3%.
As we said previously the improvement in the expense ratio is not going to be linear and we remain committed to the 36% expense ratio target from 'twenty to 'twenty two.
Yeah.
In the quarter, we also incurred $8 million in nonoperating expenses, mainly related to the reduction in our real estate footprint.
Expect the benefits to begin to materialize in the expense ratio in 2022.
Turning now to our segment results in the U S. Gross written premiums were up 3.7% comparable to third quarter 2020.
In the period was driven by our growth and invest businesses that include all got.
Casualty construction environmental inland marine and surety.
Now while gross written premiums increased just under that 4% net written premiums and net earned premiums in the U S increased by 7% 8% respectively.
<unk> quarter.
It's worth noting that after adjusting for the fronting business that we brought in the U S. Our retention ratio was 72% in the quarter and 68% on a year to date basis.
The U S segment reported underwriting income of $15 million, a combined ratio of 95, 4% in the third quarter of 2021.
The loss ratio decreased six points to 63%, mainly driven by a reduction in catastrophe losses.
The expense ratio of 32, 4% decreased 50 basis points from the prior year quarter, unless driven by improvement in both the acquisition ratio and the general and administrative expense ratio.
The improvement in the acquisition ratio was primary related to changes in business mix and the improvement in the G&A ratio was due to increased net earned premiums and the execution of expense reduction initiatives.
Turning now to our international segment gross written premiums declined 10% in the third quarter of 2020 one due to the previously announced exits with the largest decrease in property loans.
This was partially offset by higher white to increase participation in 1200 capacity.
International net written premium and net earned premium increased by 13% and 12% respectively versus the prior year quarter.
The increase was primarily driven by growth in syndicate 1200, due to changes in ceded reinsurance rate increases achieved over the last several quarters.
<unk> share of the Syndicate's result.
Partially offset by the impact of business exits.
And $5 million of reinstatement premiums in the current quarter.
The reinstatement premiums are mainly related to the cat events that occurred in the third quarter 2021.
Ah reinstatement premiums were $700000 in the third quarter of 2020.
International segment reported an underwriting loss of just under $5 million in the third quarter 2021.
To an underwriting loss of $23 million in the prior year quarter.
The combined ratio decreased 13 percentage points to 102, 8% in the third quarter of 2021.
Columbus, primarily driven by the reduced catastrophe losses, and continued remediation efforts and rate increases earning through the results.
Current accident year ex cat loss ratio was 51, 6%, which increased 130 basis points from the prior year quarter.
Relative increase compared to last year was primarily driven by the impact of reinstatement premiums on a month a moment Ida net earned premiums in the third quarter of 2021.
Cat losses during the third quarter of 2020, one of 17 million or 11% 11 points to the combined ratio compared to cat loss with a $45 million or 31 points of the combined ratio in the prior year.
Losses in the current quarter included natural catastrophe losses generated mainly by hurricane Ida as well as a reduced level of losses related to COVID-19.
The expense ratio of 39.4% increased 80 basis points from the prior year quarter, driven by the reinstatement premiums associated with the cat losses in the quarter.
Moving on to investments, we reported net investment income of $46 million in the quarter.
The result included $24 million of income from alternative investments principally mark to market gains on our private equity and hedge fund investments.
Although we are certainly pleased with this result were recognized with the outperformance of alternative investments from the last quarter last five quarters might not continue for an extended period and could revert back to long term historical norms.
Net investment income for the remainder of our portfolio was $22 million in the quarter, which was down three 5% from the prior year quarter.
This decline reflects the de risking actions over the last two years as well.
The lower yields available in the market.
Our book value per share was $50, 1% as all of a September 30, and this was flat, including dividends compared to the second quarter of 2021.
Finally, let me talk about capital.
Call. It a coal we mentioned that are required funds at Lloyd's position was in the range of 300 350 million pounds at the end of 2020.
Figure has decreased to around $290 million.
19 million pounds, we saw it again.
This figure has decreased to around 219 million pounds at the end of the third quarter due to a combination of improved results and I went international segment and reduced funding requirement will seem to get to the 1910.
A little under half of this is provided by AGA right.
And we continually monitor our capital levels determining whether to put it to work in the attractive opportunities, we see in the marketplace and against what we need from a regulatory and rating agency perspective.
As we've said in the past and holds true now if we have excess capital. After meeting these were calling it we will look to return this to shareholders.
Operator that concludes our prepared remarks, and we're now ready to take questions.
Thank you we will now proceed the Q&A session.
If you'd like to ask a question you can press star one on your telephone keypad.
If you would like to withdraw your question you can press star two.
Our first question comes from Matt <unk> from J M. P Group, Matt Your line is now open.
Hey, Thanks, good morning.
Good morning, Kevin I just had.
I just had a high level question for you you know back in March I guess at the Investor day. It sounded like you're largely had the team on the field. If you will in terms of the business going forward.
There was yes, there could be some nips and tucks around the edges, but the big pieces were in place.
Since then obviously, Brazil it sold.
While you guys haven't said anything it's been widely reported in the press that syndicate 1200 is going through a sale has been put up for sale.
It is my interpretation from the Investor Day right now do you have the big pieces on the field that you want or are there potentially still big moves to be made.
Just trying to get a picture of.
Kind of what Argo is going to look like going forward.
At this point.
Yeah.
Thanks, Thanks, Matt the.
Investor Day, our business is a good time to update it and it's part of the reason we put the supplement out.
For some updates on what is remaining because theres been so many pieces that that moved around so as I mentioned in my remarks, we are in three places now effectively where in the U S. We are in Bermuda and were in Syndicate 1200.
I'm not going to comment on the market rumors because we don't do that but the point of having the supplement information was to give everybody a sense of what the underlying remaining ongoing businesses look like getting there and what.
What the performance has been on those because we've spent a lot of time working through things and we believe that the potential for continued good results out of what we are down to is in line with our returns and I would suggest that we are in a position where ed.
Every business, where we remain and is in no different position than the others have been or you know since I was running the U S. All the U S businesses have been if theres an opportunity to make a profit and have some good opportunities for growth given environmental.
Outlook, and how we're performing and what our resources or we will do so and you know the business leaders understand that so I think it was time to help clear out the noise now theres going to still be some noise in the results of these things. We've recently gotten out of but this gives you a sense of what it looks like so hopefully that.
Helps.
Yeah, and I think I appreciate you can't comment on rumors but would it be safe that I'm hearing you right that at least as it stands today.
Lloyd Syndicate 1200 is yeah, if you consider an ongoing business.
Absolutely Yeah, I mean, that's why look if you if you go to the supplement and look at.
Page five on the pro forma as.
You know there what's left in there is actually good and we still have some things that we're moving out of and we're still getting rate. So.
You know like I said, it's all about capital and opportunities and the U S businesses that haven't made it and theres been a lot of them right. We've we've pushed out almost $1 billion over the last 10 years are in businesses that didn't work out for one reason or another and still continue to grow it. So those things are going to apply.
All lines of business and you know, we very recently announced in the syndicate that we're getting out of the North American binders business in the property business. So those will have a significant impact.
Impact on volatility as we go forward.
Okay, great. Thank you for the color I appreciate it.
Yes. Thank you.
Yeah.
Thank you Matt.
Our next question is from Greg Peters from Raymond James Greg. Your line is now open.
Good morning, This is Alex Bolton, calling in for Greg Peters Oh, Good morning, Alex Yeah. Good morning.
Maybe just first if you could provide a little more color around a the reserve development, maybe the $7 million accounting adjustment.
Yeah. So.
I'm going to let Scott take this one because it's an accounting issue. So Scott why don't you jump in here. Please.
Yeah. Thanks, Alex It's a it's Scott Hey look a that was a result of remediation efforts that have been taking them through the.
Through the first nine months of the year.
There's really nothing nothing more to say other than that.
Okay, and then you know maybe going back to.
The Investor presentation, you set out.
Ceded reinsurance ratio targets I think what 63% in the U S 57 and international.
I guess are you still seeking those targets and the targets moved at all.
Yeah, so they're not actually target so those are actual numbers.
And that's why we put them out there and the what what we're intending to show is that we're trying to trend upwards and will continue that way based on some reduction in exposures, but more importantly, the reduction in the volatility lines, which are heavily property weighted and had a sort of an outsized share of reinsurer.
Since relative to what's remaining.
Yeah.
Okay, Great and then lastly.
Maybe just.
On maybe your confidence of the rate environment, you know, maybe you know 2022.
Sure.
We are seeing a rate that is consistent with what we're hearing from our competitors and brokers are.
It's in the wines, we participate it right we're sort of solidly there are right in the middle of the pack.
Some instances, we may be a little above or a little below but.
There there are areas, where it's it's certainly not as strong as it was in the previous year, but it's still good and it's still above what we've what we've experienced for loss cost increases and what we are hearing others talk about in terms of the increases for loss cost so the.
Fact that inflation is on the horizon the competitive environment is still pretty strong I think we're going to continue to see rates.
Rates moving up and in certain lines are going to drive it heavily.
Got it.
It'll it'll you know, there's we're not looking at or expecting an abatement right now.
Okay, Great I appreciate the answers.
Great. Thank you.
Thank you as a final reminder, if you'd like to ask a question you can press star one on your telephone keypad.
We have they now have a question from Casey Alexander from Compass Point Research Casey. Your line is now open.
Hi, good morning, and thank you for taking my questions. Good morning Casey.
Yeah My first question.
You know kind of relates to <unk>.
Clearly successfully you took down the property and or wind exposure in it and it resulted in a much better outcome. This quarter are you kind of satisfied where you are or is it the sort of underwriting strategy and.
Structural strategy to take that wind exposure down even more when we get to the catastrophe season in 2022.
Yeah really good question are we we are hum.
I'm, both satisfied and continuing to move forward right to answer it very specifically, so we had anticipated.
Dissipated that we would reduce the exposures you know over the course of the year or over the course of a year and a half and we managed to get there faster than we hoped partly just through driving ourselves out of some of these lines.
And so we're not surprised where we ended up based on what we talked about in June.
But the actions I've, just talked about earlier today, including things like.
Not going forward in the North American binders business, not writing DNF book for U S lines out of.
Then it gets 100 the sale of the contract finding book and then a continued reduction in our property exposure across the board.
What's happening is we're focusing on what we're good at and we're really good at casualty lines and so we're putting all our resources there and so the expectation is that there'll be a continuation of exposure reduction what that means to the net really depends on what reinsurance program, we can buy going forward, but it's.
We are happy with the direction, we're going in and we're continuing to work on it.
Okay. Thank you.
Secondly.
You know I hate to get too far afield, but we're getting near the end of 2021. So from a modeling perspective perspective, we unfortunately have to start thinking about 2023. So we do expect the downward trend in the expense ratio too.
<unk> in 2023 and would that come primarily from <unk>.
Expected earned premium growth or from continued expense actions.
So we tried to give some color on the expenses for so far right and I think that the key one is that we've reduced the overall.
Head count of the organization by 16%.
And what we've said before was that look this is going to as we get out of different things in places we need less.
All of the infrastructure to support it right or we have lines that are not performing well so.
That will continue as we continue to.
Take actions that move us out of some of the things that are still underway, where they get finalized.
So theres an element of that but at the same time, we're putting a lot of resource into growing the businesses that make a lot of sense. So on.
On the head count side I think we've we've really done a lot and we'll continue to manage that well relative.
Relative to outside services, we because of the consolidation of the organization, we were able to get rid of multiple contracts or things that were duplicative.
And that had a significant savings.
And then we.
We will have some continued effort on the real estate side as we move forward and continue to work in the post pandemic environment. So you know.
We'll continue to do that we're not just going to sit back and hope it all happens through our earned premium growth there will be an impact from that but the targets of eliminating things that are unprofitable redundant or unnecessary will absolutely continue to be a cultural hallmark and I think it bodes well.
For us as we translate that into some of the real life experiences that we're everyone's dealing with with the great resignation and with some of the employment inflation thats going on so.
I think all of those things factor into it and we with the mix of business, we're going to see an uptick most likely in our acquisition cost because of the lines, we got out of.
And that'll have an impact too, but again, it's something we'll watch very closely and stay after.
Okay I have I have two more questions for you and I think these are these are questions that are confronting a lot of organizations.
These days.
My first question is.
How do you have to manage differently in order to create a culture in an environment, where a lot of your employees are not on site.
I'll bring that first question I mean, it's it's difficult issue I'm curious what your thoughts are.
Yeah, it's a difficult and great issue to talk about so there's two pieces to this for the for the folks who've been around a while and have worked together, it's really not that hard. It's people go through personal issues at times, but it's for those of US who've worked closely together for awhile.
Not that difficult.
But we have a lot of new employees and somewhat we've got people, who have joined and never met anybody or we've got people who've joined and had limited interactions. So we're taking an approach based on businesses or regions of.
Trying to find a way to connect people, whether it's through <unk>.
Zoom meetings, whether it's through some kind of fun event that people can do or whether it's actually getting together if that's possible.
All three of those things have happened, it's imperfect, but were looking to what others are doing what outside resources are there and theres a lot of communication going on so you know.
The business is going in the right direction, but it's something that we watch and work on every day.
The reemergence of the Offsite Potluck I think.
Yeah.
Where are we going to end my.
Great creative stuff people are doing.
Well Here's my last question I I I I think investors really appreciate the strategic streamlining in the in the in the much tighter focus of the business effort.
And whatever you can do to continue that and even tighten. It further I think investors really like it but is there a piece. That's missing is there something that you would add here that you don't have that you think could be highly accretive.
Our strategically important.
And I think it would be helpful to communicate that just so that it didn't catch investors by surprise and feel like a strategic change.
Okay. No. That's a good point is well taken let me just start to answer that question by saying that.
The feel of the business and the leaders that are left running what we have is better than I've ever seen right and on the international side. We've got people that are clear on what the direction is and they're excited about it and they know what lanes, they're in and they're the ones who have been doing the business that's been the underlying piece it's Ben.
Successful or they've remediated so.
They they feel good on the U.
U S side, our last operating review I have never been to one that was as good focused.
Solid with opportunities optimism happy about where we are in the marketplace and.
How it's working with our technology, so I walked away from that meeting feeling great and that translates into where a U S. Specialty carrier. So there are some a number of specialty lines. We are not in and I have a group of executives dedicated to research.
On some lines that some of us have hands on experience at multiple companies and know the market and it's getting to the point in some of these areas where we are.
You can find people with the right fit culturally who understand what we're about from an underwriting standpoint and exposure standpoint.
And have the right market contacts and so you may see in the future us entering a few areas that we.
I haven't been in or haven't been in for a while.
Alright, well I'm way over my quota for asking questions. So I'll stop there, but thank you for taking my questions I. Appreciate it yeah. We appreciate your interest thanks.
Thank you Casey. Our next question comes from run Volkmann from capital returns run your line is now open.
Hi, Thanks, a lot and good morning.
Hey, good morning about Hi, you gave us.
Again sort of specificity on the expense ratio.
Estimate for next year, 'twenty, two and I recognize an estimate or guidance for a loss ratio is <unk>.
Far more complicated, particularly with the mix changes.
Hum.
Of course sort of the changing loss environment, which you know no one ever knows.
But how long.
I'm trying to maybe you plan on giving us greater specificity at some point between now and the start of next year. So maybe you could sort of let US know maybe is there any intention to provide some loss ratio guidance for next year, but but maybe separate and apart how long will these.
Mix changes and the exit of certain geographies and newer markets where lines of business or books of business.
Be sort of a friction were a drag on the loss ratio and thus the combined ratio and I know you've laid out sort of what the underlying combines our on the go forward mix, but that's really what I'm getting out can you help there. Please yeah.
Yes, so we we have traditionally not giving guidance. However, the last two years in the fourth quarter call. We have given some sort of direction about where we thought the business would go on a combined basis. So while we haven't given the.
<unk> expense I'm, sorry, the loss ratio, specifically, we're probably going to do the same thing and since we've been pretty candid about what the expense ratio is the loss ratio is pretty easy to define.
So it's premature right now to talk about what that will be but I think your point about before the end of the years, we'll try to find a way if we can if we can do it that early we will if not we'll do it.
When we did the <unk>.
We do the fourth quarter call.
But secondarily and more importantly to your point about what I'll refer to as noise that is going to continue to come we will do our best to quantify that and it was really hard.
Last year, just given the magnitude of different moving parts and you got to see what happens based on.
Our our nets being.
Almost between 50 and $60 million for cat at the early part of the year and then dropping down to where they are now so.
Got it.
In between I know some people were frustrated because we couldn't tell them exactly what it was because it's moving but I think the.
The numbers that we have are a bit more discreet and we'll try to do our best about timelines on certain things.
It's a good request and we'll work on that for you.
That noise has complicated things.
Understood.
Understood.
Moving a field the the.
<unk> in the quarter, the underwriting contribution from a profit profit or loss.
How.
Did syndicate 1200, and how did Argo Bermuda.
Contribute to either operating income, we're underwriting profits in the third quarter or year to date.
Separately not not lumped together is international.
Yeah, we haven't broken that out.
And you know I don't I.
I don't think we're going to set a precedent here, but on the international lines from an operating income you can see in the release it was $7 4 million.
So.
In the past you've commented on 12 hundreds underwriting profitability.
How did that do in the quarter.
Scott do you have the final number there.
Run can you did you run the question by me again, exactly what we'll be looking for exactly.
Was 1200 from an underwriting perspective profitable in the quarter.
Look you can see that the contribution overall was.
No not huge.
So we are in and around.
Breakeven or thereabouts.
Okay. Okay. Thanks, Tom Yeah, that's more specific than that because I don't want to I don't want to.
But as a reminder, as a reminder, we didn't announce we're getting out of North American binders in the D&S business, which was impacted by either.
So.
You know those are.
I'm, just pointing out facts I'm not trying to make excuses for it right. We're focused on what's the underlying business going forward.
Okay I'm not sure.
Okay, I can ask offline I'm not sure I fully understand the last comment but thank.
Thank you.
Okay. Thanks.
Olivia.
Thank you wrong, we have no further questions. So I'll hand back over to Kevin for any closing remarks.
Yes, thank you to everyone for joining us today I want to thank the employees for the great work, they've been doing to get us, where we're going the shareholders for supporting us.
Regulators and rating agencies for your interest in us and anyone else, who is part of the family here I. Appreciate your interest and look forward to seeing you soon.
Thanks.
Thank you all for joining today's call you may now disconnect.
Yeah.
Sure.
Uh huh.
Okay.
Yeah.
Yeah.