THE ARGUS GROUP RETURNS TO PROFITABILITY

Hamilton, Bermuda: December 3, 2009 - Argus Group Holdings Limited today announces earnings of $12.16 million for the six months ended September 30, 2009, a turnaround of $54 million compared with the corresponding period last year when the company reported a loss of $42 million.  The board of directors has maintained a dividend of 16 cents a share.

Gerald Simons, President & Chief Executive Officer of the Argus Group, comments:  "The strength and diversity of the business operations of the Argus Group during very difficult times give us confidence for the future

Net premiums increased by 6 percent. However, claims and policy benefits grew by 13.4 percent.  While the property and casualty division benefited from an absence of hurricanes during the first six months of the financial year, there has been a significant increase in the level of claims in the company's health insurance business.  This increase is well above the recent levels of medical inflation and has been caused by a combination of increased utilization and a change in referral patterns resulting in more patients being treated in more expensive facilities abroad.  Management is working to create a cost-effective solution.

The change in fair value of investments for the six months under review was an increase of $10 million versus a decrease of $56 million recorded in the corresponding period in the prior year, a turnaround of $66 million. Investment income decreased by 47 percent to $5.98 million because of reduced dividends and fixed interest yields. Mr. Simons comments further: "While we have been disappointed with the performance of Bermuda equities in the recent past we are pleased to see a recovery in global investment markets which have benefited the company greatly." 

Commissions, management fees and other income fell by 7.8 percent during the period in line with the reduced value of assets under management in various investment-related businesses. Operating expenses increased during the period by 9.6 percent due to continuing investment in information systems and one-off costs associated with the relocation of staff to the new corporate headquarters.  The containment of operating expenses remains a high priority of management. 

In the six months to September 30, 2009, Argus recorded net unrealized gains of $13.8 million under other comprehensive income compared to a loss of $8.9 million for the corresponding period in the prior year.  These unrealized gains arose from gains and losses on financial assets classified as "available for sale" together with the foreign currency translation adjustment of the company's self-sustaining foreign operations. 

On the Balance Sheet, total assets have increased since March 31, 2009, by $36.2 million to $565.2 million, whilst segregated funds assets stand at $1.1 billion. The Group now has assets of $1.67 billion under its administration.  Shareholders' equity at September 30, 2009 rose to $134.3 million, up from $114.8 million at March 31, 2009.  Shareholders' equity is now five times the minimum capital requirements set by the company's regulators. 

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Notes to Editors