Argo Group International (ARGO-PA) 8-K Pxre Reports Fourth Quarter Results Net Income of $32.8 Million

Exhibit 99.2

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

		December 31,
		2004			2003
		(Unaudited)
Assets	Investments:
	Fixed maturities:
	Available-for-sale (amortized cost $705,204 and $613,833, respectively)	$	701,798		$	617,658
	Trading (cost $13,725 and $20,370, respectively)		15,483			21,451
	Short-term investments		296,318			175,771
	Hedge funds (cost $86,549 and $87,691, respectively)		129,118			121,466
	Other invested assets (cost $5,663 and $9,365, respectively)		6,823			10,173
	Total investments		1,149,540			946,519
	Cash		15,668			65,808
	Accrued investment income		8,054			5,490
	Premiums receivable, net		93,116			79,501
	Other receivables		35,315			30,695
	Reinsurance recoverable on paid losses		8,003			15,494
	Reinsurance recoverable on unpaid losses		61,215			146,924
	Ceded unearned premiums		3,500			10,454
	Deferred acquisition costs		1,745			2,495
	Income tax recoverable		31,594			14,133
	Other assets		46,666			42,134
	Total assets	$	1,454,416		$	1,359,647
Liabilities	Reserve for losses and loss expenses	$	460,084		$	450,635
	Reserve for unearned premiums		15,952			21,566
	Subordinated debt		167,075			—
	Reinsurance balances payable		10,937			53,373
	Deposit liabilities		72,143			80,583
	Other liabilities		31,670			32,133
	Total liabilities		757,861			638,290
	Minority interest in consolidated subsidiaries:
	Company-obligated mandatorily redeemable capital trust pass-through securities of subsidiary trusts holding solely a company-guaranteed related subordinated debt		—			156,841
Shareholders’ Equity	Serial convertible preferred shares, $1.00 par value, $10,000 stated value – 10 million shares authorized, 0.02 million shares issued and outstanding		163,871			172,190
	Common shares, $1.00 par value – 50 million shares authorized, 20.5 million and 13.3 million shares issued and outstanding, respectively		20,469			13,277
	Additional paid-in capital		329,730			192,078
	Accumulated other comprehensive income net of deferred income tax (benefit) expense of $(1,615) and $1,242, respectively		(4,855	)		1,692
	Retained earnings		194,081			188,670
	Restricted shares at cost (0.4 million and 0.3 million shares, respectively)		(6,741	)		(3,391	)
	Total shareholders’ equity		696,555			564,516
	Total liabilities and shareholders’ equity	$	1,454,416		$	1,359,647

The accompanying notes are an integral part of these statements.

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

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2004			2003			2004			2003
		(Unaudited)			(Unaudited)				(Unaudited)
Revenues	Net premiums earned	$	79,756		$	83,063		$	308,072		$	320,933
	Net investment income		9,237			6,906			26,178			26,931
	Net realized investment (losses) gains		(161	)		1,836			(150	)		2,447
	Fee income		229			1,481			1,785			5,014
			89,061			93,286			335,885			355,325
Losses and Expenses	Losses and loss expenses incurred		33,796			45,098			226,347			157,598
	Commissions and brokerage		7,825			9,497			36,111			47,360
	Operating expenses		10,533			10,252			41,293			39,701
	Foreign exchange losses (gains)		102			(534	)		80			143
	Interest expense		3,442			—			14,389			2,506
	Minority interest in consolidated subsidiaries		—			3,179			—			10,528
			55,698			67,492			318,220			257,836
	Income before income taxes, cumulative effect of accounting change and convertible preferred share dividends		33,363			25,794			17,665			97,489
	Income tax provision (benefit)		610			(2,046	)		(6,234	)		841
	Income before cumulative effect of accounting change and convertible preferred share dividends		32,753			27,840			23,899			96,648
	Cumulative effect of accounting change, net of $0.2 million tax benefit		—			—			(1,053	)		—
	Net income before convertible preferred share dividends	$	32,753		$	27,840		$	22,846		$	96,648
	Convertible preferred share dividends		3,478			3,376			14,018			13,113
	Net income available to common shareholders	$	29,275		$	24,464		$	8,828		$	83,535
Comprehensive Income, Net of Tax	Net income before convertible preferred share dividends	$	32,753		$	27,840		$	22,846		$	96,648
	Net unrealized depreciation on investments		(2,409	)		(4,134	)		(5,218	)		(6,396	)
	Minimum additional pension liability		(1,329	)		—			(1,329	)		—
	Net unrealized appreciation on cash flow hedge		—			—			—			946
	Comprehensive income	$	29,015		$	23,706		$	16,299		$	91,198
Per Share	Basic:
	Income before cumulative effect of accounting change and convertible preferred share dividends	$	1.99		$	2.30		$	1.65		$	8.06
	Cumulative effect of accounting change		—			—			(0.07	)		—
	Convertible preferred share dividends		(0.21	)		(0.28	)		(0.97	)		(1.09	)
	Net income available to common shareholders	$	1.78		$	2.02		$	0.61		$	6.97
	Average shares outstanding (000’s)		16,444			12,123			14,433			11,992
	Diluted:
	Income before cumulative effect of accounting change	$	1.09		$	1.14		$	0.86		$	4.10
	Cumulative effect of accounting change		—			—			(0.04	)		—
	Net income	$	1.09		$	1.14		$	0.82		$	4.10
	Average shares outstanding (000’s)		29,938			24,462			27,745			23,575

The accompanying notes are an integral part of these statements.

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

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2004			2003			2004			2003
		(Unaudited)			(Unaudited)			(Unaudited)
Convertible Preferred Shares	Balance at beginning of period	$	182,730		$	168,814		$	172,190		$	159,077
	Conversion of convertible preferred shares		(22,337	)		—			(22,337	)		—
	Dividends to convertible preferred shareholders		3,478			3,376			14,018			13,113
	Balance at end of period	$	163,871		$	172,190		$	163,871		$	172,190
Common Shares	Balance at beginning of period	$	14,426		$	12,177		$	13,277		$	12,030
	Issuance of common shares, net		6,043			1,100			7,192			1,247
	Balance at end of period	$	20,469		$	13,277		$	20,469		$	13,277
Additional Paid-in Capital	Balance at beginning of period	$	215,334		$	172,214		$	192,078		$	168,866
	Issuance of common shares, net		114,396			19,767			136,077			23,026
	Tax effect of stock options exercised		—			97			1,575			186
	Balance at end of period	$	329,730		$	192,078		$	329,730		$	192,078
Accumulated Other Comprehensive Income	Balance at beginning of period	$	(1,117	)	$	5,826		$	1,692		$	7,142
	Change in unrealized gains		(2,409	)		(4,134	)		(5,218	)		(6,396	)
	Change in minimum additional pension liability		(1,329	)		—			(1,329	)		—
	Change in cash flow hedge		—			—			—			946
	Balance at end of period	$	(4,855	)	$	1,692		$	(4,855	)	$	1,692
Retained Earnings	Balance at beginning of period	$	165,673		$	164,938		$	188,670		$	108,062
	Net income before convertible preferred share dividends		32,753			27,840			22,846			96,648
	Dividends to convertible preferred shareholders		(3,478	)		(3,376	)		(14,018	)		(13,113	)
	Dividends to common shareholders		(867	)		(732	)		(3,417	)		(2,927	)
	Balance at end of period	$	194,081		$	188,670		$	194,081		$	188,670
Restricted Shares	Balance at beginning of period	$	(7,800	)	$	(3,838	)	$	(3,391	)	$	(1,713	)
	Issuance of restricted shares		45			—			(7,291	)		(4,582	)
	Amortization of restricted shares		1,014			447			3,941			2,904
	Balance at end of period	$	(6,741	)	$	(3,391	)	$	(6,741	)	$	(3,391	)
Total Shareholders’ Equity	Balance at beginning of period	$	569,246		$	520,132		$	564,516		$	453,464
	Conversion of convertible preferred shares		(22,337	)		—			(22,337	)		—
	Issuance of common shares, net		120,439			20,867			143,269			24,273
	Restricted shares, net		1,059			446			(3,350	)		(1,678	)
	Unrealized depreciation on investments, net of deferred income tax		(2,409	)		(4,134	)		(5,218	)		(6,396	)
	Minimum additional pension liability, net of deferred income tax		(1,329	)		—			(1,329	)		—
	Unrealized appreciation on cash flow hedge, net of deferred income tax		—			—			—			946
	Net income before convertible preferred share dividends		32,753			27,840			22,846			96,648
	Dividends to common shareholders		(867	)		(732	)		(3,417	)		(2,927	)
	Tax effect of stock options exercised		—			97			1,575			186
	Balance at end of period	$	696,555		$	564,516		$	696,555		$	564,516

The accompanying notes are an integral part of these statements.

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

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2004			2003			2004			2003
			(Unaudited)			(Unaudited)			(Unaudited)
Cash Flow from Operating Activities	Premiums collected, net of reinsurance	$	37,324		$	39,082		$	253,361		$	248,857
	Loss and loss adjustment expenses paid, net of reinsurance		(58,595	)		(20,941	)		(123,698	)		(80,113	)
	Commission and brokerage paid, net of fee income		(7,000	)		(2,335	)		(34,543	)		(21,738	)
	Operating expenses paid		(7,470	)		(9,507	)		(38,189	)		(34,346	)
	Net investment income received		3,097			3,778			15,894			13,719
	Interest paid		(1,792	)		(1,054	)		(15,138	)		(11,229	)
	Income taxes paid		(253	)		(2,887	)		(6,271	)		(15,680	)
	Trading portfolio purchased		—			(15,919	)		—			(21,607	)
	Trading portfolio disposed		—			16,687			6,965			25,183
	Deposit (paid) received		(2,995	)		4,766			(8,440	)		45,434
	Other		10,678			23,511			(4,590	)		5,777
	Net cash (used) provided by operating activities		(27,006	)		35,181			45,351			154,257
Cash Flow from Investing Activities	Fixed maturities available for sale purchased		(146,040	)		(196,387	)		(496,986	)		(527,249	)
	Fixed maturities available for sale disposed or matured		108,540			165,415			405,393			378,996
	Hedge funds purchased		—			(23,000	)		(13,123	)		(35,000	)
	Hedge funds disposed		4,989			20,073			15,149			40,009
	Other invested assets purchased		—			(181	)		—			(314	)
	Other invested assets disposed		334			105			4,417			1,673
	Net change in short-term investments		(43,425	)		56,875			(120,547	)		(42,453	)
	Payable for securities		(47	)		(82,923	)		(18	)		(4	)
	Net cash used by investing activities		(75,649	)		(60,023	)		(205,715	)		(184,342	)
Cash Flow from Financing Activities	Proceeds from issuance of common shares		98,269			20,867			114,701			21,538
	Cash dividends paid to common shareholders		(867	)		(732	)		(3,417	)		(2,927	)
	Proceeds from issuance of minority interest in consolidated subsidiaries		—			30,000			—			62,500
	Repayment of debt		—			—			—			(30,000	)
	Cost of shares repurchased		(123	)		—			(1,060	)		(1,848	)
	Net cash provided by financing activities		97,279			50,135			110,224			49,263
	Net change in cash		(5,376	)		25,293			(50,140	)		19,178
	Cash, beginning of period		21,044			40,515			65,808			46,630
	Cash, end of period	$	15,668		$	65,808		$	15,668		$	65,808
	Reconciliation of net income to net cash (used) provided by operating activities:
	Net income before convertible preferred share dividends	$	32,753		$	27,840		$	22,846		$	96,648
	Adjustments to reconcile net income to net cash (used) provided by operating activities:
	Reserve for losses and loss expenses		(57,417	)		13,325			9,449			2,807
	Reserve for unearned premiums		(23,540	)		(25,709	)		1,340			(42,148	)
	Deferred acquisition costs		2,617			5,286			750			20,226
	Receivables		7,593			3,781			(18,234	)		(5,855	)
	Reinsurance balances payable		(15,863	)		(6,629	)		(42,436	)		(27,717	)
	Reinsurance recoverable		9,563			10,831			93,201			74,678
	Income taxes		146			(4,807	)		(12,787	)		(14,808	)
	Equity in earnings of limited partnerships		(4,731	)		(3,632	)		(10,744	)		(13,373	)
	Trading portfolio purchased		—			(15,919	)		—			(21,607	)
	Trading portfolio disposed		—			16,687			6,965			25,183
	Deposit liability		(2,995	)		4,766			(8,440	)		45,434
	Receivable on commutation		23,054			—			—			—
	Other		1,814			9,361			3,441			14,789
	Net cash (used) provided by operating activities	$	(27,006	)	$	35,181		$	45,351		$	154,257

The accompanying notes are an integral part of these statements.