Argo Group International Holdings Ltd.'s first-quarter net income fell by almost 27 percent on investment losses.

The Bermuda-based insurer and reinsurer posted a profit of $27 million, or $0.88 per diluted share, for the first three months of the year, compared to $36.9 million, or $1.20 per diluted share, in the same period last year.

Argo said its results were impacted by $11.8 million of net pre-tax realised investment losses and other temporary impairment write-downs in the investment portfolio.

Pre-tax operating income rose to $43.2 million, up from $40 million in the first quarter of 2008. Gross premiums written rocketed 43.1 percent, to $496.1 million from $346.6 million last year, boosted by Argo's acquisition of its Lloyd's platform Heritage Underwriting Agency in May 2008.

Argo Group president and chief executive officer Mark Watson III said: "Our business segments produced solid underwriting results in the first quarter as we focused on profitable business in a challenging marketplace.

"The continued development of Argo Group's business strategy of building an international specialty platform puts us in a good position to react to a changing environment."

Argo said the investment loss was primarily a result of an other-than-temporary impairment charge related to equity investments and, to a lesser extent, certain fixed-income investments totalling $14.1 million, reduced by net realised investment gains of approximately $2.3 million.

Total revenue for the 2009 first quarter was $371.1 million versus $258.1 million for the same period in 2008, aided by the establishment of Argo Re in the first quarter of last year, as well as the purchase of Heritage.

The Group's combined ratio - the percentage of premium dollars spent on claims and expenses - was 96.3 percent versus 95.9 percent in the first quarter of 2008. The reinsurance segment achieved a combined ratio of 57.4 percent.