Argo Group International (ARGO-PA) 8-K Pxre Reports Fourth Quarter Results Net Loss of $19.7 Million

PXRE Group Ltd.
Unaudited Financial Highlights
(Dollars in thousands except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
Gross premiums written	$	6,952		$	114,617		$	138,776		$	542,325
Net premiums written	$	(18,169	)	$	130,665		$	53,509		$	407,005
Revenues	$	1,776		$	157,097		$	137,802		$	419,821
Losses and expenses		(20,889	)		(564,052	)		(108,703	)		(1,111,472	)
(Loss) income before income taxes and convertible preferred share dividends		(19,113	)		(406,955	)		29,099			(691,651	)
Income tax expense		(597	)		(39,510	)		(597	)		(5,907	)
Net (loss) income before convertible preferred share dividends	$	(19,710	)	$	(446,465	)	$	28,502		$	(697,558	)
Net (loss) income per diluted common share	$	(0.29	)	$	(8.45	)	$	0.37		$	(21.65	)
Average diluted shares outstanding (000’s)		77,156			73,555			77,072			43,517
Average diluted shares outstanding when antidilutive (000’s)		72,006			52,987			—			32,541

Financial Position:	Dec. 31, 2006			Dec. 31, 2005
Cash and investments	$	1,216,392		$	1,660,996
Total assets		1,401,343			2,116,047
Reserve for losses and loss expenses		603,241			1,320,126
Shareholders’ equity		496,767			465,318
Book value per common share(1)		6.41			6.01
Statutory surplus:
PXRE Reinsurance Ltd.		564,209	(2)		530,775	(3)
PXRE Reinsurance Company		137,974	(4)		126,991

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
GAAP Ratios:
Loss ratio		1.8	%		340.2	%		14.7	%		260.5	%
Expense ratio		(78.2	%)		17.1	%		73.7	%		21.9	%
Combined ratio		(76.4	%)		357.3	%		88.4	%		282.4	%
Losses Incurred by Segment:
Cat & Risk Excess	$	(3,847	)	$	532,815		$	6,490		$	1,004,771
Exited		3,606			187			5,953			6,752
	$	(241	)	$	533,002		$	12,443		$	1,011,523
Commission and Brokerage, Net of Fee Income by Segment:
Cat & Risk Excess	$	806		$	17,831		$	18,697		$	49,256
Exited		—			(114	)		186			(297	)
	$	806		$	17,717		$	18,883		$	48,959
Underwriting (Loss) Income by Segment:(5)
Cat & Risk Excess	$	(10,428	)	$	(393,453	)	$	59,761		$	(664,445	)
Exited		(3,620	)		(613	)		(6,558	)		(7,713	)
	$	(14,048	)	$	(394,066	)	$	53,203		$	(672,158	)

6

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
Underwriting (Loss) Income Reconciled to (Loss) Income Before Income Taxes and Convertible Preferred Share Dividends:
Underwriting (loss) income(5)	$	(14,048	)	$	(394,066	)	$	53,203		$	(672,158	)
Net investment income		14,893			14,643			60,654			45,292
Net realized investment gains (losses)		172			(14,370	)		(7,809	)		(14,736	)
Other fee income		185			—			185			—
Other reinsurance related expense		(7,124	)		(936	)		(17,862	)		(936	)
Operating expenses		(9,732	)		(9,105	)		(43,373	)		(36,208	)
Foreign exchange gains (losses)		168			494			(1,444	)		1,547
Interest expense		(3,627	)		(3,615	)		(14,455	)		(14,452	)
(Loss) income before income taxes and convertible preferred share dividends	$	(19,113	)	$	(406,955	)	$	29,099		$	(691,651	)

(1)	After considering convertible preferred shares.
(2)	Estimated and before inter-company eliminations.
(3)	Before inter-company eliminations.
(4)	Estimated.
(5)	Underwriting Income (Loss) by Segment (a GAAP financial measure): The Company’s reported underwriting results are its best measure of profitability for its individual underwriting segments and accordingly are disclosed in the footnotes to the Company’s financial statements required by SFAS 131,Disclosures about Segments of an Enterprise and Related Information. Underwriting Income (Loss) by Segment is calculated by subtracting losses and loss expenses incurred and commission and brokerage, net of fee income from net earned premiums. PXRE does not allocate net investment income, net realized investment gains (losses), other fee income, other reinsurance related expense, operating expenses, foreign exchange gains or losses, or interest expense to its respective underwriting segments.
	These preliminary financial statements are unaudited and do not include footnotes that customarily accompany a complete set of financial statements; these footnotes will be furnished when the Company makes its filing on Form 10-K for the year ended December 31, 2006.

7

Exhibit 99.2

PXRE	Consolidated Balance Sheets
Group Ltd.	(Dollars in thousands, except par value per share)

	December 31,
	2006			2005
Assets
Investments:
Fixed maturities, at fair value:
Available-for-sale (amortized cost $502,307 and $1,212,299, respectively)	$	502,254		$	1,208,248
Trading (cost $14,794 and $28,225, respectively)		15,497			25,796
Short-term investments, at fair value		671,197			261,076
Hedge funds, at fair value (cost $11,583 and $132,690, respectively)		12,766			148,230
Other invested assets, at fair value (cost $1,717 and $2,806, respectively)		2,427			3,142
Total investments		1,204,141			1,646,492
Cash		12,251			14,504
Accrued investment income		3,830			10,809
Premiums receivable, net		93,325			217,446
Other receivables		7,321			17,000
Reinsurance recoverable on paid losses		3,324			4,223
Reinsurance recoverable on unpaid losses		35,327			107,655
Ceded unearned premiums		—			1,379
Deferred acquisition costs		8			5,487
Income tax recoverable		—			6,295
Other assets		41,816			84,757
Total assets	$	1,401,343		$	2,116,047
Liabilities
Losses and loss expenses	$	603,241		$	1,320,126
Unearned premiums		113			32,512
Subordinated debt		167,089			167,081
Reinsurance balances payable		34,649			30,244
Deposit liabilities		54,425			68,270
Income tax payable		597			—
Other liabilities		44,462			32,496
Total liabilities		904,576			1,650,729
Shareholders’ Equity
Serial convertible preferred shares, $1.00 par value, $10,000 stated value — 30 million shares authorized, 0.01 million and 0.01 million shares issued and outstanding, respectively		58,132			58,132
Common shares, $1.00 par value — 350 million shares authorized, 72.4 million and 72.3 million shares issued and outstanding, respectively		72,351			72,281
Additional paid-in capital		873,142			875,224
Accumulated other comprehensive loss		(100	)		(5,468	)
Accumulated deficit		(503,711	)		(527,349	)
Restricted shares at cost (0.4 million and 0.5 million shares, respectively)		(3,047	)		(7,502	)
Total shareholders’ equity		496,767			465,318
Total liabilities and shareholders’ equity	$	1,401,343		$	2,116,047

PXRE	Consolidated Statements of Operations and Comprehensive Operations
Group Ltd.	(Dollars in thousands, except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
Revenues
Net premiums earned	$	(13,483	)	$	156,653		$	84,529		$	388,324
Net investment income		14,893			14,643			60,654			45,292
Net realized investment gains (losses)		172			(14,370	)		(7,809	)		(14,736	)
Fee income		194			171			428			941
		1,776			157,097			137,802			419,821
Losses and Expenses
Losses and loss expenses incurred		(241	)		533,002			12,443			1,011,523
Commission and brokerage		815			17,888			19,126			49,900
Other reinsurance related expense		7,124			936			17,862			936
Operating expenses		9,732			9,105			43,373			36,208
Foreign exchange (gains) losses		(168	)		(494	)		1,444			(1,547	)
Interest expense		3,627			3,615			14,455			14,452
		20,889			564,052			108,703			1,111,472
(Loss) income before income taxes and convertible preferred share dividends		(19,113	)		(406,955	)		29,099			(691,651	)
Income tax provision		597			39,510			597			5,907
Net (loss) income before convertible preferred share dividends	$	(19,710	)	$	(446,465	)	$	28,502		$	(697,558	)
Convertible preferred share dividends		1,163			1,162			4,864			7,040
Net (loss) income to common shareholders	$	(20,873	)	$	(447,627	)	$	23,638		$	(704,598	)
Comprehensive Operations, Net of Tax
Net (loss) income before convertible preferred share dividends	$	(19,710	)	$	(446,465	)	$	28,502		$	(697,558	)
Net change in unrealized appreciation (depreciation) on investments		84			(4,435	)		(3,929	)		(12,061	)
Reclassification adjustments for losses included in net (loss) income		20			11,952			7,996			12,164
Minimum additional pension liability		1,847			(716	)		1,970			(716	)
Comprehensive (loss) income	$	(17,759	)	$	(439,664	)	$	34,539		$	(698,171	)
Per Share
Basic:
(Loss) income before convertible preferred share dividends	$	(0.27	)	$	(8.43	)	$	0.40		$	(21.43	)
Convertible preferred share dividends		(0.02	)		(0.02	)		(0.07	)		(0.22	)
Net (loss) income to common shareholders	$	(0.29	)	$	(8.45	)	$	0.33		$	(21.65	)
Average shares outstanding (000’s)		72,006			52,987			71,954			32,541
Diluted:
Net (loss) income before cumulative effect of accounting change	$	(0.29	)	$	(8.45	)	$	0.37		$	(21.65	)
Cumulative effect of accounting change		—			—			—			—
Net (loss) income	$	(0.29	)	$	(8.45	)	$	0.37		$	(21.65	)
Average shares outstanding (000’s)		72,006			52,987			77,072			32,541

PXRE	Consolidated Statements of Shareholders’ Equity
Group Ltd.	(Dollars in thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
Convertible Preferred Shares
Balance at beginning of period	$	58,132		$	58,132		$	58,132		$	163,871
Conversion of convertible preferred shares		—			—			—			(109,108	)
Dividends to convertible preferred shareholders		—			—			—			3,369
Balance at end of period	$	58,132		$	58,132		$	58,132		$	58,132
Common Shares
Balance at beginning of period	$	72,346		$	29,395		$	72,281		$	20,469
Issuance of common shares, net		5			42,886			70			51,812
Balance at end of period	$	72,351		$	72,281		$	72,351		$	72,281
Additional Paid-in Capital
Balance at beginning of period	$	873,009		$	445,425		$	875,224		$	329,730
Issuance (cancellation) of common shares, net		133			429,799			(2,082	)		544,430
Tax effect of stock options exercised		—			—			—			1,064
Balance at end of period	$	873,142		$	875,224		$	873,142		$	875,224
Accumulated Other Comprehensive Operations
Balance at beginning of period	$	(1,382	)	$	(12,269	)	$	(5,468	)	$	(4,855	)
Change in unrealized gains on investments		104			7,517			4,067			103
Change in minimum additional pension liability		1,847			(716	)		1,970			(716	)
Incremental effect of applying FAS 158		(669	)		—			(669	)		—
Balance at end of period	$	(100	)	$	(5,468	)	$	(100	)	$	(5,468	)
(Accumulated Deficit)/Retained Earnings
Balance at beginning of period	$	(482,838	)	$	(71,041	)	$	(527,349	)	$	194,081
Net (loss) income before convertible preferred share dividends		(19,710	)		(446,465	)		28,502			(697,558	)
Dividends to convertible preferred shareholders		(1,163	)		(1,162	)		(4,864	)		(7,040	)
Dividends to common shareholders		—			(8,681	)		—			(16,832	)
Balance at end of period	$	(503,711	)	$	(527,349	)	$	(503,711	)	$	(527,349	)
Restricted Shares
Balance at beginning of period	$	(3,598	)	$	(9,683	)	$	(7,502	)	$	(6,741	)
Cancellation (issuance) of restricted shares, net		—			1,503			2,376			(4,566	)
Amortization of restricted shares		551			678			2,079			3,805
Balance at end of period	$	(3,047	)	$	(7,502	)	$	(3,047	)	$	(7,502	)
Total Shareholders’ Equity
Balance at beginning of period	$	515,669		$	439,959		$	465,318		$	696,555
Conversion of convertible preferred shares		—			—			—			(109,108	)
Issuance (cancellation) of common shares, net		138			472,685			(2,012	)		596,242
Restricted shares, net		551			2,181			4,455			(761	)
Unrealized appreciation on investments		104			7,517			4,067			103
Minimum additional pension liability and effect of applying FAS 158		1,178			(716	)		1,301			(716	)
Net (loss) income before convertible preferred share dividends		(19,710	)		(446,465	)		28,502			(697,558	)
Dividends to convertible preferred shareholders		(1,163	)		(1,162	)		(4,864	)		(3,671	)
Dividends to common shareholders		—			(8,681	)		—			(16,832	)
Tax effect of stock options exercised		—			—			—			1,064
Balance at end of period	$	496,767		$	465,318		$	496,767		$	465,318

PXRE	Consolidated Statements of Cash Flows
Group Ltd.	(Dollars in thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
Cash Flows from Operating Activities
Premiums collected, net of reinsurance	$	17,302		$	10,147		$	182,035		$	301,982
Losses and loss adjustment expenses paid, net of reinsurance		(123,585	)		(67,112	)		(620,947	)		(229,295	)
Commission and brokerage received (paid), net of fee income		412			(14,617	)		(7,154	)		(28,727	)
Operating expenses paid		(11,213	)		(6,971	)		(45,967	)		(31,666	)
Net investment income received		14,191			13,825			57,180			37,788
Interest paid		(1,385	)		(1,374	)		(14,338	)		(14,338	)
Income taxes (paid) recovered		(31	)		(144	)		6,295			18,328
Trading portfolio purchased		(8,499	)		—			(38,392	)		(17,685	)
Trading portfolio disposed		7,222			—			50,139			3,369
Deposit paid		(1,736	)		(2,060	)		(13,845	)		(3,873	)
Other		473			(11,464	)		10,747			(8,608	)
Net cash (used) provided by operating activities		(106,849	)		(79,770	)		(434,247	)		27,275
Cash Flows from Investing Activities
Fixed maturities available for sale purchased		(23,068	)		(360,140	)		(90,510	)		(733,076	)
Fixed maturities available for sale disposed or matured		50,178			58,747			794,485			209,763
Hedge funds purchased		—			(9,500	)		(4,000	)		(129,388	)
Hedge funds disposed		6,017			8,170			145,097			123,219
Other invested assets purchased		—			—			(35	)		—
Other invested assets disposed		186			1,494			1,577			3,738
Net change in short-term investments		65,998			(86,850	)		(410,121	)		35,242
Net cash provided (used) by investing activities		99,311			(388,079	)		436,493			(490,502	)
Cash Flows from Financing Activities
Proceeds from issuance of common shares		138			474,222			628			483,169
Cash dividends paid to common shareholders		—			(8,681	)		—			(16,832	)
Cash dividends paid to preferred shareholders		(1,163	)		(1,162	)		(4,864	)		(3,671	)
Cost of shares repurchased		—			(36	)		(263	)		(603	)
Net cash (used) provided by financing activities		(1,025	)		464,343			(4,499	)		462,063
Net change in cash		(8,563	)		(3,506	)		(2,253	)		(1,164	)
Cash, beginning of period		20,814			18,010			14,504			15,668
Cash, end of period	$	12,251		$	14,504		$	12,251		$	14,504
Reconciliation of net (loss) income to net cash (used) provided by operating activities:
Net (loss) income before convertible preferred share dividends	$	(19,710	)	$	(446,465	)	$	28,502		$	(697,558	)
Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities:
Losses and loss expenses		(124,525	)		334,684			(716,885	)		860,041
Unearned premiums		(4,709	)		(25,989	)		(31,020	)		18,681
Deferred acquisition costs		1,316			2,249			5,479			(3,742	)
Receivables		17,229			(35,115	)		133,800			(106,015	)
Reinsurance balances payable		18,504			(91,242	)		4,405			19,307
Reinsurance recoverable		698			166,359			73,228			(42,661	)
Income taxes		566			39,365			6,892			24,507
Equity in earnings of limited partnerships		(264	)		(2,432	)		(6,460	)		(13,000	)
Trading portfolio purchased		(8,499	)		—			(38,392	)		(17,685	)
Trading portfolio disposed		7,222			—			50,139			3,369
Deposit liability		(1,736	)		(2,060	)		(13,845	)		(3,873	)
Receivable on commutation		—			(35,154	)		35,154			(35,154	)
Other		7,059			16,030			34,756			21,058
Net cash (used) provided by operating activities	$	(106,849	)	$	(79,770	)	$	(434,247	)	$	27,275