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Argus Group Announces Financial Results for the Year Ended 31 March 2004
Hurricane Fabian had a material impact on the financial results of the Group. However, thanks in part to our conservative underwriting practices and the adequacy of our reinsurance coverage, the $60 million of gross claims experienced by our two property and casualty businesses resulted in an earnings effect of a manageable $3 million.
Elsewhere in the property and casualty operations, the motor account continued to produce unacceptable losses and stringent measures are now being taken to put the account onto a sustainable footing using stricter underwriting criteria and further premium increases.
Health insurance results were satisfactory as a result of setting adequate premium increases at the beginning of the year but our concerns over the continuing escalation of healthcare costs and increased utilisation persist.
Reserves for the life and annuity blocks of business were strengthened significantly in the year to reflect the most current mortality rates. The results from international life insurance operations were encouraging and we remain confident that these operations will generate worthwhile earnings in the future.
Investment income increased by 42% to $25.5 million - the majority of which is attributable to our portfolio of Bermuda equities which contributed almost two thirds of the total. Investment income was noticeably impacted by the sale of our holdings in The Bank of Bermuda to HSBC. This sale produced an uplift of $3.1 million to the year's earnings and deferred realised gains of a further $3 million will be recognised over the next seven years under Canadian accounting rules. Our remaining holdings in Bermuda equities continue to be a prodigious store of value and, at the year end, unrealised gains of $35 million have been deferred for recognition in that same seven year time frame.
Commissions, fees and other income fell by 11.2% reflecting the loss of profit commission from our property and casualty portfolios as a result of Hurricane Fabian.
Operating expenses and commissions increased by 3.0% this year compared to 6.0% in the previous year and represent 17.9% of total income, down from 19.4% last year.
General account assets of the Argus Group at March 31, 2004 totaled $349 million and separate account assets under the group's control were $602 million. Shareholders' equity at year-end had risen to $121 million.
The Argus Group is Bermuda's largest domestic insurance company and the island's leading provider of employee benefits in Bermuda. Argus continues to be rated "A" (Excellent) by A.M. Best, the international rating agency.
Contacts : Gerald Simons, President & Chief Executive Officer 298-0810
David Carruthers, Chief Financial Officer 298-0818