Argus Records $18.4 Million Loss
Insurance and pension plan provider Argus Group Holdings Limited announced a net loss of $18.4 million for the year ended March 31, 2010.
Gerald Simons, President & Chief Executive Officer of the Argus Group said:
The Argus Group has experienced another challenging year and, while some of our business units have recorded excellent results, a further deterioration in the value of certain of our investments resulted in a net loss of $18.4 million for the year ended March 31, 2010.
At September 30, 2009, the half year, we reported net earnings of $12.2 million and we were optimistic of meeting our annual earnings target. However, in the second half of the year the further diminution in value of $29 million to our holding in Butterfield Bank and an additional provision of $10 million against potentially uncollectible commercial loans produced negative investment earnings. Clearly, without these two investment-related losses the earnings from our core businesses would have produced net income in the region of $20 million for the year.
Shareholders will need no reminding that the Company incurred a net loss of $115.7 million in the prior year reflecting the impact of the most difficult of financial climates, the after-effects of which have lingered into the current year.
As we celebrate our 60th year of operations, we are confident that the Argus Group is well positioned for the future with core business units that are strong and producing steady cash flow.
During the year Shareholders’ Equity was reduced by the net loss of $18.4 million and cash dividends of $12.2 million and increased by Other Comprehensive Income of $12.7 million. At March 31, 2010 Shareholders’ Equity stood at $97.5 million, substantially in excess of the statutory capital required to conduct the Group’s various insurance businesses.
Gross premiums written increased by 5.6 percent arising from new business and our continuing efforts to achieve acceptable underwriting ratios through appropriate adjustments to premiums. Overall, Claims, Policy and Actuarial benefits rose by 7.7 percent over the prior year reflecting the trend of increasing healthcare costs offset by better than anticipated claims experience in our property and casualty businesses.
Commissions, management fees and other income fell by 8.3 percent as fees from our various investment-related operations declined with the value of assets under management especially in the international life and annuity portfolios. This was partially offset by enhanced ceding and profit commissions earned by our property and casualty operations.
The containment of Operating expenses is a key strategic objective for management and the increase for the year was held below inflation at 1.0 percent.
The reduction in Amortisation, depreciation and impairment of $5.7 million is due to depreciation expense incurred on the new corporate headquarters for the first time and the absence of the one-off impairment charge to Intangible assets taken in the prior year as the fraud involving Bernard L. Madoff Investment Securities LLC came to light. In this regard, we continue to pursue all aspects of potential recovery available in the best interests of our policyholders and shareholders.
Total General Fund Assets of the Argus Group have reduced by $10 million to $519 million. The Group now has $1.7 billion under its administration.
Argus Group Holdings Limited and its subsidiaries, commonly known as the Argus Group, is a multi-line insurance and financial services organisation offering a full range of insurance, pensions and investment products targeted at local and international organisations and individuals. It is the leader in group health insurance and pension plans in Bermuda.
