Argus Group Announces Financial Results for the Year Ended 31 March 2005

Hamilton, Bermuda: 2 June 2005 - The Argus Group today announced earnings for the year ended March 31, 2005 of $ 17.7 million up 6.8% from the previous year. 

Gerald Simons, President and Chief Executive Officer of the Argus Group, commented "These increased earnings are particularly pleasing given that investment income had declined compared to the previous year and despite continuing poor results in the motor portfolio. Fortunately, insurance operations in most other areas made a strong contribution to consolidated earnings.  

The year just ended has been an eventful one for the Argus Group's property and casualty operations with the acquisition of the Bermuda portfolio of Aviva plc, thereby increasing considerably the Group's local portfolio. In addition Argus acquired a Gibraltar property and casualty company. Both of these acquisitions were effective on January 1, 2005 and have made satisfactory contributions to Group earnings. Fortunately, we were spared any catastrophic claims." 

Mr. Simons continued: "Health insurance results improved over last year as a result of lower than anticipated claims especially for overseas neo-natal care and refinements to our claims handling processes. Our concerns over the continuing escalation of healthcare costs and increased utilisation persist." 

The Argus Group reported that results from life and annuity blocks of business were satisfactory, with improved earnings from all areas including our pensions and international life insurance operations. 

Investment income decreased by 23% to $19.68 million during the period. This was considered by the Group to reflect the lackluster nature of world investment markets during the year, while the portfolio of Bermuda equities, which contributes almost two thirds of the total, continued to be an excellent store of value for the Argus Group. At the year end, realised and unrealised gains in this portfolio of $29.5 million were deferred for recognition in future years under Canadian accounting rules. 

Commissions, fees and other income rose by 45% reflecting the increase in ceding commissions from the enlarged property and casualty portfolios, higher management fees arising from the growth in assets under management in the pension business and fees for administration services provided for new business acquired in the year. 

The Group reported that operating expenses and commissions increased by 15% this year reflecting the incorporation of three months of expenses from our Gibraltar subsidiary, the expansion of local operations and the ever increasing cost of operating in Bermuda

General account assets of the Argus Group at March 31, 2005 totaled $427 million and separate account assets under the group's control were $789 million. Shareholders' equity at year-end had risen to $132 million.