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Argus Announces Preliminary Results For The Year 31 March, 2003

23 23 2003

Hamilton, Bermuda: 23 June, 2003 - Today Gerald Simons, President and Chief Executive Officer of the Argus Group, announced earning for the year ended March 31, 2003 of $14.4 million. He noted that, following a 12.3% drop in earnings in 2002, Group earnings have returned to the level achieved in 2001. The Group's investment earnings continue to be the strongest contributor to earnings with the $4.1 million gain resulting from the sale of an investment in an insurance company more than offsetting losses realized on the sale of other, poorly performing equity holdings. We have now sold all equity investments which have performed at less than acceptable levels and, where appropriate, full provision has been made against all equity investments which have suffered a permanent decline in value.

The underwriting losses incurred in the year ended March 31, 2002 in the Group's health insurance portfolio were not repeated in the year under review as a result of a significant increase in premiums effective May 1, 2002. Our motor portfolio, however, continued to perform poorly and again suffered an underwriting loss. Health insurance premiums have again been significantly increased at the May 1, 2003 renewal date to reflect the ever upward spiraling claims' costs. Motor premiums will also be significantly increased in the near future.

Bermuda Life, with its reliance on fixed income investments to support its long-term liabilities, had disappointing results partly due to the current low interest rate environment. Income from the administration of pension plans has also suffered as such income is largely asset-based and the value of the assets, mainly mutual fund investments, which support our pension plans have declined over the last two and a half years of turmoil in the world's investment markets.

On a more positive note, Bermuda Life Worldwide Limited again made its expected strong contribution to earnings and Centurion Insurance Services also had an excellent year.

In summation, our insurance operations overall did make a profit, but they accounted for only 11.5% of the Group's total earnings.

As in the previous year we have continued our efforts to build our international life insurance operations and further net expenditures of approximately $500,000 were incurred. Again, we have chosen to write off this expense against earnings this year and we remain confident that these international operations will generate significant earnings in the future.

Investment income declined from $19.1 million to $17.9 million reflecting the poor performance of equity markets worldwide. With the exception of one of the local bank's shares, Bermuda equities retained their value during the year but, overall, the value of our portfolio of local stocks declined by $3.4 million. Despite this decline the recognition, as the permitted 15% level, of previous unrealized gains on Bermuda equities, together with dividends received in the year, provided approximately 50% of the Group's total investment income. Commissions, fees and other income increased by $1.6 million to $10.0 million an increase of 19.0%.

We have been effective in stemming the growth of the Group's administration costs; "Operating expenses and commissions" increased by only 6.0% compared to a 12.4% increase in the previous year. Expressed as a percentage of total income this is 19.4%; within range of our historical levels.

General account assets of the Group at March 31, 2003 totalled $304 million and separate account assets under the Group's control were $463 million. Shareholders' equity at March 31, 2003 had risen to $110 million.

The Argus Group is a multi-line insurance organization and the leading provider of employee benefits in Bermuda. Argus in the first and only Bermudian owned insurance