Argus Announces Year End Financial Results

Hamilton, Bermuda: 4 June 2002 - Today Gerald Simons, President and Chief Executive Officer of the Argus Group, announced earnings for the year ended March 31, 2002 of $12.47 million. This represents a 12.31% drop in earnings from the $14.22 million earned in the previous year. The highlight of this financial year was the Group's strong investment result which is mostly attributable to the Group's investment in local equities. For the second year in succession, the Bermuda Stock Exchange, led by the share price increases of the two major banks following the relaxation of Bermuda's 60/40 ownership rules, has seen its index rise substantially. Under applicable Canadian accounting rules unrealised gains may only be recognised in earnings at the rate of 15% per annum and the unrecognised portion of such gains are excluded from the balance sheet. At March 31, 2002 the Group's unrecognised gains totalled $26.5 million.. Whilst these gains will be reflected in the earnings of future years at the rate of 15% per annum they currently represent $4.00 per share of shareholder value which is not reflected in shareholders' equity.

The Group's underwriting results deteriorated significantly from last year with both our health insurance and motor portfolios performing poorly. Health insurance claims increased alarmingly in the year far outstripping premium increases imposed at renewal. In addition to being faced with several large neo-natal claims this year, prescribed drug claims increased dramatically and utilisation increased noticeably across all health claim categories. The end result was a significant underwriting loss in the health portfolio. Our motor portfolio also experienced an underwriting loss. However, premium increases have now been effected in both the health and motor portfolios which, supported by careful underwriting, should improve this situation in the current financial year. Local life operations were very successful this year and Bermuda Life Worldwide Limited also made a significant contribution to earnings. The Group's pension and annuity business also performed creditably and of note is that $34 million of the $41 million premium increase, disclosed

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Press Release

June 4, 2002

in the preliminary announcement of results, relates to the acquisition of a sizeable portfolio of immediate annuities. During the year we continued our efforts to build our international life insurance operations and expenditures of almost $1million were incurred in creating product and a viable business process. We have chosen to write off this expense against earnings this year and we are confident that this expenditure will generate significant earnings in the years ahead.

The 34% increase in investment income from $14.26 million to $19.11 million was a remarkable result. Recognition, at the permitted 15% level, of unrealised gains on Bermuda equities together with dividends received from these equities contributed $8.9 million to earnings. This portfolio also accounted for over $2 million of the almost $5 million increase in investment income with most of the remaining increase coming from capital gains on other equity holdings. Commissions, fees and other income remained at essentially the same levels as the previous year.

Operating expenses and commissions increased by 12.41% but we now consider expenses to have peaked following a period of substantial change to the Group's products, computer hardware and operating systems. We are committed to reducing operating costs to their historic and more acceptable levels.

General account assets of the Group at March 31, 2002 totalled $283 million and separate account assets under the Group's control were $442 million. Shareholders' equity at March 31, 2002 stood at $103 million.