Argus Reports $3.9 Million Loss

Argus Group Holdings Limited reported a loss of $3.9 million for the six months ended September 30, 2011 — a sharp decline from the $9.9 million profit recorded for the corresponding period in 2010.

Alison Hill, Chief Executive Officer of the Argus Group, comments: “This result, while disappointing, is viewed as a turning point marking the end of challenging legacy issues in the investment arena. The Balance Sheet now faces substantially less exposure to risks arising from non-core investments.

“We remain confident that the Argus Group is well positioned for the future with core business units producing continued strong performance of $7.1 million for the half year despite the lingering recession.”

A statement issued by Argus said, “The investment related provision of $11 million stems from the uncertainty surrounding the ultimate collectability of the Group‟s investment in Northstar Group Holdings Limited.

“Net premiums earned in the period increased by 9.6 percent, reflecting new business acquisition and the Group’s continuing efforts to achieve acceptable underwriting ratios through the appropriate adjustments to rates.

“Meanwhile Net policy benefits, claims and adjustment expenses and Net change in contract liabilities have increased by 6.4 percent reflecting the trend of increasing health care costs both locally and overseas.

“In the six months under review, Investment income including Change in fair value of investments decreased by 51.5 percent due to the reduction of interest income as a result of lower interest rates on the Group’s bond portfolio combined with the reduction of markets values on its equity portfolios.

“The Argus Group continues to de-risk the Balance Sheet in a measured and orderly fashion to mitigate the effect of the volatility in worldwide investment markets, as experienced in recent years.

“Commissions, management fees and other income increased modestly due to increased ceding commissions earned by the Group’s Property & Casualty operations. Operating expenses decreased by 11 percent primarily as a result of the reduction in postemployment medical plan liability, following the decision in the prior year to amend the plan whereby eligibility, benefits and cost sharing were modified for current employees.

“In the six months to September 30, 2011 Argus recorded net unrealised losses of $598,000 under Other Comprehensive Income compared to gains of $616,000 in the corresponding period for the prior year.

“These unrealised losses arose from market movements on financial assets classified as “available for sale‟ and the negative foreign currency translation adjustment of the Group‟s selfsustaining foreign operations of $415,000.

“On the Balance Sheet, Total General Fund Assets now stand at $510 million, while Segregated Funds Assets have decreased to $1.1 billion. The Argus Group now has assets of $1.6 billion under its administration.

“Shareholders’ equity at September 30, 2011, is recorded at $79 million, which remains substantially in excess of the statutory capital required to conduct the Group‟s various insurance businesses.

Alison Hill added: “These financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) and represent the initial presentation of results and financial position under IFRS. It should be noted that in order to comply with IFRS, it was required that certain comparative figures were restated.”

“In order to maintain a capital base well in excess of minimum statutory requirements, the Board has decided that the payment of a dividend is not prudent at this time while the Group continues to report a net loss.”

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