Argo Group International Holdings Ltd posted record underwriting income for 2014, but fell short of Wall Street expectations for the fourth quarter.

The Bermuda-based insurer and reinsurer reported net income of $183.2 million, or $6.90 per share, for the year, compared to $143.2 million, or $5.14 per share, in 2013.

The combined ratio — the proportion of premium dollars spent on claims and expenses — improved last year to 96.2 per cent from 97.5 per cent in 2013.

Argo chief executive officer Mark Watson said: “Argo Group posted improved underwriting margins for the year, despite ever-increasing competitive pressures. We reported record underwriting income in 2014 and a return on average shareholders’ equity of 11.4 per cent.”

Argo’s results were helped by lower catastrophe losses totalling $17.7 million, down from $22.7 million in the prior year. gross premiums were flat at $1.91 billion.

For the fourth quarter, net income rose by more than 25 per cent to $59.7 million, while operating income was $21.8 million, or 83 cents per share, missing the 96 cents per share consensus estimate of analysts tracked by Yahoo Finance.

During the year, book value per share increased to $64.04, up 1.7 per cent from $62.99 at September 30, 2014, and up 8.6 per cent from $58.96 at December 31, 2013.

In 2014, Argo repurchased $50.8 million, or 1.1 million shares of its common stock at an average share price of $48.48, which represents 4 per cent of net shares outstanding at December 31, 2013.

During regular trading hours on the Nasdaq Stock Exchange yesterday, before the results were released, Argo fell $1.01, or 1.8 per cent, to close on $54.71.

Argo, which has a market capitalisation of approximately $1.4 billion, is one of the smaller insurers often mentioned as a likely acquisition target during the ongoing wave of consolidation sweeping the industry.