Argo Group International Holdings Ltd, which has agreed to be sold to Brookfield Re later this a year, reported its 2023 first quarter loss widened to $36.4 million.

Argo, a Bermuda-based specialty insurer, said the loss compared to a net loss attributable to common shareholders of $3.6 million in the prior year quarter.

Annualised return on average common shareholders' equity was minus 13.3 per cent, compared to minus 0.9 per cent in the prior year first quarter.

The net loss in the quarter included pre-tax net realised investment and other losses of $17.9 million, compared to $34.5 million of pre-tax net realised investment and other losses in the prior year first quarter.

The pre-tax net realised investment and other losses were mainly attributable to the realisation of unrealised investment losses associated with the sale of Argo Underwriting Agency Limited and its Lloyd's Syndicate.

In addition, the net loss included $11.6 million of non-operating expenses, which were mainly attributable to non-operating legal fees. In comparison, the prior year first quarter reported $7.4 million in non-operating expenses.

Operating loss for the quarter was $10.8 million compared to operating income of $43.4 million in the prior year quarter.

During the first quarter, Argo announced that it had entered into a definitive merger agreement with Brookfield Reinsurance that will see the company acquire Argo in an all-cash transaction valued at approximately $1.1 billion.

Argo shareholders have approved the merger, which is expected to close in the second half of 2023.

Argo executive chairman and chief executive officer Thomas A. Bradley said: “As we have started working closely with Brookfield Reinsurance on integration planning, we have developed an even greater appreciation for how this partnership will enhance our strong franchise and future growth prospects.”

In the first quarter, gross written premiums of $596.7 million decreased $123.9 million, or 17.2 per cent, primarily due to businesses the company has exited and sold.

Earned premiums of $389.9 million decreased $90.7 million, or 18.9 per cent.

Earned premiums increased approximately 6.7 per cent within the company’s ongoing business reflecting business mix shift towards lines of business where the company retains more risk, Argo said.

The combined ratio of 108.1 per cent increased 13.1 percentage points, driven by a higher loss ratio.

Net investment income of $29.7 million decreased by $8 million.

Book value per common share was $31.31 as of March 31, an increase of approximately one per cent from $31.06 at year-end 2022.