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Argus Group Announces Half-Year Results To September 2003
Argus earnings remained at essentially the same level as the corresponding period last year despite the effect of Hurricane Fabian on September 5, 2003. Our reinsurance protection limited the impact of Fabian on earnings to approximately $2.5 million whilst better performing equity investments, both in Bermuda and overseas, contributed to earnings.
Total net premium income improved by 6.36% and income from commissions and management fees declined slightly because of lost profit commission resulting from Fabian claims. Investment income increased by some $2.6 million benefiting from the improvement in equity markets but it should be noted that, in 2002, income was reduced by a $1 million provision for investments determined to be permanently impaired.
Health insurance underwriting results continued at an acceptable level. On the property and casualty side, in addition to the impact of Fabian losses and, despite recent premium increases, our Motor portfolio continued to perform poorly. The earnings of our pension business improved this year as our asset-based fees increased due to growth in equity markets and as the high costs of administering this business were reduced through efficiencies made in our operating processes. The increase in benefits paid clearly reflects the losses attributable to Fabian and, to some extent, the rising cost of health claims.
Operating expenses reduced this year following a change in Generally Accepted Accounting Principles, which eliminated the need to write down the value of Goodwill, and as the promised efficiencies of our new computer systems begin to take hold.
For many years now we have had the good fortune to avoid severe windstorm losses but 2003 broke this pattern. In light of the severity of Hurricane Fabian the results for the six month period ended on September 30, 2003 are pleasingly robust. Given a continuing positive performance by equity markets and in the absence of further catastrophic events, we would expect profits for the year ending March 31, 2004 to at least match those of the prior year.