Hamilton, Bermuda (December 10, 2019) – Argus Group Holdings Limited (the “Group” or the “Argus Group”) announced net earnings of $3.9 million for the six months ended September 30, 2019, compared with net earnings of $10.0 million in the corresponding period in 2018.
•Strong underlying earnings from operations
•Investment earnings of $13.6 million
•Dividend declared of 9 cents per share
•Continued investment in strategy
Alison Hill, Chief Executive Officer of the Argus Group, says:“Against the backdrop of a challenging business environment, we are pleased with this result.”
“We continue to lay strong foundations from which to execute our strategy of becoming a Digital Integrated Specialist. We are delighted with our two newest acquisitions – One Team Health and FirstUnited Insurance Brokers – which further strengthen our services and market share internationally. We’re investing in our strategy today to ensure sustainable value for all in the future.”
The Argus Group has reportednet earnings for the six months to September 30, 2019 of $3.9 million (2018: $10.0 million) with operating profit of $8.5 million (2018: $13.2 million). The strength in our operations is reflected in the excellent combined operating ratio of 84.4% (2018: 80.5%), which is a metric to track the overall performance of our underwriting operations by comparing premium income to the cost of claims and operating expenses. All of our divisions have contributed to the underwriting result.
Net claims in our health division have decreased by a further $1.0 million due to enhanced claims management. Our acquisition of One Team Health is also helping to decrease our claims costs by improving the efficiency of case management and delivering overseas network enhancements.Premiums for our health division have decreased by $6.2 million, primarily due to hospital financing reform, partially offset by targeted rate increases for existing insureds. The 2019 Bermuda hospital financing reform has had a $2 million adverse impact on the financial results for the first six months of our fiscal year and we anticipate that this adverse impact on the profitability of our health division will continue.
The Bermuda Government has announced another phase of its national health plan, whichintroduces a unified payer model of health financing with the aim of ‘improving efficiency, reducing duplication and controlling health costs’. As strong client advocates, we will continue to work with all healthcare stakeholders to support a financially sustainable, robust healthcare delivery system for our community.
Interest rate volatility has caused a short–term impact on our six month financial results particularly in our Annuity business. During the period, the decline in interest rates resulted in an increase in our annuity liabilities. The Group’s long–term fixed income portfolio exists to match our longer–term insurance and investment liabilities.
DespitetheimpactfromHurricaneHumbertoinBermuda, net earnings for the Property and Casualty Divisionhaveseena45percentincreaseoverthecorresponding period in 2018.We forecast that Hurricane Humbertowillhaveamaterialnegativeeconomicimpact on our Bermuda Property and Casualty business for thefullyear.Disciplinedunderwriting,supplemented by a strong reinsurance program, serves as the foundationfor our PropertyandCasualtybusiness. Our European businesses support global diversification having contributed positively to Group results through disciplined underwriting.
Feeincomegenerated by ouremployeebenefits,wealth management and insurance brokerage businesses of$11.9 million remains stable.
TheGroup’sinvestmentportfoliohasgeneratedpositive returns of $13.6 million, an increase of $5.9 million overthe corresponding prior year period.Theportfolio has benefited from its best–in-class investment managersnavigatingwellthroughanotherroller–coaster year in investment markets, which have seen a broad–based drop in investmentyields and a decline in credit spreads.
TheGroup continues to hold a high quality,diversified, global investment portfolio with 87 percent of the Group’sinvestmentsinfixedincomebondsofwhich 97 percent are classified as investment grade.
EquityattributabletoshareholdersoftheCompany stands at $130.6 million and remains well in excess of thecapitalrequiredbyregulators.
TheBoardhasdeclaredadividendofninecents per share payable on January 28, 2020 for shareholders ofrecord on December31,2019.