Argo Group International (ARGO-PA) 8-K Regulation FD Disclosure

Safe Harbor Statement

Cautionary Statement under “Safe Harbor,” Provision of the Private Securities Litigation Act of 1995: This presentation contains various forward-looking statements and includes assumptions concerning our operations, future results and prospects. Statements included herein, as well as statements made by or on our behalf in press releases, written statements or other documents filed with the Securities and Exchange Commission (the “SEC”), or in our communications and discussions with investors and analysts at this conference or in the normal course of business through meetings, phone calls and conference calls, which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements, identified by words such as “intend,” “believe,” “anticipate,” or “expects” or variations of such words or similar expressions are based on current expectations and are subject to risk and uncertainties. In light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this presentation should not be considered as a representation by us or any other person that our objectives or plans will be achieved. We caution investors and analysts that actual results or events could differ materially from those set forth or implied by the forward-looking statements. For further information regarding cautionary statements and factors affecting future operating results, please refer to PXRE Group’s public filings with the SEC.

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Non-GAAP Financial Measures

In certain instances when presenting PXRE’s results, management has included and discussed certain “non-GAAP” financial measures. For example, operating income excludes after-tax realized investment gains and losses and foreign exchange gains and losses, as well as other non-recurring items. These excluded items may be material in a period. Management believes that providing non-GAAP financial measures such as operating income provides useful information regarding PXRE’s results of operations consistent with industry practices which enables investors, security analysts and rating agencies to make performance comparisons with PXRE’s competitors. The reconciliation of such non-GAAP financial measures to the applicable GAAP financial measures is included in PXRE’s press releases.

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The PXRE Franchise

	Highly-focused provider of property catastrophe and risk excess reinsurance to the worldwide marketplace
	•	Established in 1986; the longest tenured short-tail specialist reinsurer
	•	One of the leading property retrocessional writers in the world
	Strong underwriting team with proven long-term track record
	Operations in Bermuda, Europe and the United States
	Sound balance sheet, over $882 million of capital and more than $1.5 billion in total assets
	“A” rated by both A.M. Best and S&P

Well positioned to benefit from attractive fundamentals in the property catastrophe reinsurance and retrocessional business

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Proven Strategy

	Focus on core, profitable short-tail segments
	Maintain strict risk controls
	Apply extensive technical analysis to underwriting
	Continue disciplined management of capital across underwriting cycles

A proven strategy, generating superior underwriting results
and attractive returns on capital over the long-term

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Experienced and Talented Team

	Underwriters have an average of 23 years of underwriting experience
	Management and Directors own 7%(1); their interests are aligned with shareholders

Officer	Title / Responsibility	Years of Experience
Jeffrey Radke	CEO and President	16
Gerald Radke	Chairman	37
Guy Hengesbaugh	Chief Operating Officer	20
John Modin	EVP, CFO	18
John Daly	EVP, International Operations	28
Peter Kiernan	SVP, North America Operations	16
Andrew Stapleton	SVP, Marine and Aerospace	17
Bruce Byrnes	General Counsel	12

(1) On a fully diluted basis, including all unvested options.

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Attractive Market Fundamentals

	2004 Hurricane Season				Expect 10% growth in cat & risk earned premiums
	•	4 of top 6 U.S. hurricane losses in history			Expect 15% growth, excluding reinstatement premiums
	•	Large Caribbean losses			Rate increases – overall increase of 5% to 8%
	Japanese Typhoons				•	Retrocession – increase of 10% to 13%
	•	Additional property losses for international reinsurers			•	North America – increase of 2% to 4%
	•	Industry exposure approximates $2-4 billion			•	International – decrease of 5% to 8%
	Asian Tsunami (December 2004)				Additional demand from retro and catastrophe customers
	Windstorm Erwin (January 2005)				Utilizing all of the primary proceeds raised during late 2004

Recent events resulted in more attractive pricing environment for the 2005 renewal season

Sources: Benfield, Sigma and PCS.

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Retro Market Leader

	PXRE is among the top 4 retrocessional market participants worldwide
	Retro business is a unique niche with fewer competitors than traditional reinsurance
	Underwriting retrocessional business requires specialized skills
	PXRE’s proprietary models and market tenure allow it to successfully underwrite despite the lack of transparency
	Client relationships are critical

Retro business has higher returns than traditional
catastrophe reinsurance

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Proven Performance
Through the Cycle

($ in millions)

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Focus on Catastrophe & Retrocessional Markets

($ in millions)		Property Catastrophe		Property Retrocession		Specialty Risk		Property Risk Excess
NPW 1Q 2005(1)		$65		$44		$9		$6
Exposures	Wind/Earthquake U.S., Europe, Japan, Caribbean		Wind/Earthquake U.S., Europe, Japan, Caribbean		Aviation, Satellite, Marine		Industrial Risk Energy Generation
Commentary		Large International book		Relationships and experience are critical		Aviation market strong		Heterogeneous market
		North American book growing		Proprietary models required		Capacity shortage in satellite business		Information quality is an issue
				Data quality improving		Marine terms unattractive		Highly variable expected returns
Pricing	North America up low single digits; International down 5% to 8%			Rates up 10% - 13%		Rates up in satellites and down (but attractive) in aviation		Rates flat; improving in areas affected by losses

(1) Before ceded excess premiums.

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Geographically Diversified
Business Mix

By Line of Business By Geography

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Superior Underwriting Technology
and Risk Management

	Crucible
	•	Risk management system
	•	Combines proprietary retro and other models with 3rd party models
	•	Capital allocated to each deal based on profitability and correlation
	•	Allows 3rd party model optimization
	Cap on zonal aggregates
	•	Based on contractual limits
	•	Monitored dynamically by Crucible
	Risk limits
	•	Set to ensure ability to capitalize after the event
	•	Percent of capital varies with market conditions

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Financial Strategy

	Superior financial strength ratings
	•	Rated “A” by S&P and A.M. Best
	Conservative investment philosophy
	Disciplined capital management
	•	Subordinated debt (trust preferred) to capital ratio of 19%
	•	Current dividend yield of 2.1%
	Only underwriting risk varies with the cycle

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Financial Performance

($ in millions, except per share data)
Selected Income Statement Items:
Gross Premiums Written	$125		$346		$339		$367
Net Premiums Earned	79		308		321		269
Net Premiums Earned – Cat & Risk Excess	80		302		262		176
Net Investment Income	10		26		27		25
Underwriting Income – Cat & Risk Excess	26		70		160		108
Net Income	23		$23		$97		$65
Earnings per Share 1	$0.69		$0.82		$4.10		$3.28
Selected Ratios:
Loss Ratio	56	%	74	%	49	%	47	%
Expense Ratio	23	%	24	%	26	%	31	%
Actual Combined Ratio	79	%	98	%	75	%	78	%
Loss Ratio on Cat & Risk Excess	56	%	66	%	27	%	28	%

(1) Fully diluted earnings per share

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Strong Balance Sheet

( $ in millions, except per share data )	March 31, 2005				December 31, 2004
Assets
Investments		$	1,184	$	1,150
Reinsurance Receivables			72		69
Other Assets			272		235
Total Assets		$	1,528	$	1,454
Liabilities:
Loss Reserves		$	461	$	460
Debt			167		167
Other Liabilities			185		130
Total Liabilities		$	813	$	757
Shareholders’ Equity:
Convertible Preferred			63		164
Common Equity			652		533
Total Shareholders’ Equity			715	697
Total Liabilities and Shareholders’ Equity		$	1,528	$	1,454

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March 2005 Post-Conversion
Capital Structure

($ in millions, except per share data)	03/31/05		12/31/04
Shareholders’ Equity:
Convertible Preferred	63		164	(1	)
Common Equity	652		533
Total Shareholders’ Equity	715	$	697	(2	)

Notes
(1)	8% Cash pay coupon, equivalent to 4.8 million fully diluted shares ($13.27 conversion price)
(2)	Total fully diluted shares outstanding of 33.4 million

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Recent Initiatives Significantly
Improve Financial Position

Assets

	Reinsurance receivables (RR) reduced by 57% from 2003 to 2004
	Only $2.4 million of reinsurance receivables due from reinsurers rated less than A-, without collateral, or non-current
	$200 million transfer of capital from PXRE US to PXRE Bermuda during 2004
Liabilities
	Year-end loss reserves vetted by third-party actuarial firm
	During 2004, reduced GL reserves by 65% and finite reserves by 43% through commutations and loss payments
Shareholders’ Equity
	Raised $98 million of primary capital in late 2004
	$101 million of convertible preferred converted in March 2005 – only $63 million of converts remain
	Cash dividends instead of PIK on the remaining convertible preferred

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Key Operating Metrics Show
Strength of Business

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Prudent Investment Philosophy

	Capital preservation is key goal
	High quality, low duration fixed income portfolio supplemented by a small fund-of-funds hedge fund portfolio
	Very low correlation between underwriting and financial risks
	Detailed portfolio guidelines and controls –diligent monitoring
	Third party investment managers:
	•	Gen Re New England Asset Management (GRNEAM) – match liabilities with high quality fixed income securities
	•	Mariner Investments – manages alternative investments focusing on strategies with better risk adjusted returns than straight equity or fixed income portfolios
	Fixed Income Portfolio – risk averse to interest rate and credit risks

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Strong Financial Position &
Excellent Outlook

	2005 operating income guidance of $4.50 to $5.00 per share
	Mid-Point of Guidance results in 2005 Projected ROE of 21%
	Loss ratio similar to cat and risk excess loss ratios of 2002 and 2003 results in 23% ROE and $5.40 EPS
	On target to meet 2005 net earned premium growth guidance
	•	15% growth excluding reinstatements
	•	10% growth overall
	Financial strength rating of “A” recently affirmed by both S&P and AM Best
	Doubled the dividend from $.24 per year to $.48 per year; resultant yield of approximately 2%
	Improved, less dilutive, capital structure
	Financial strength as strong as its ever been

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