Argus swings to $1.7m full-year profit

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Local insurer Argus Group Holdings announced a yearly net profit of $1.7 million — bouncing back from a $6.1 million loss in 2011.

Citing the end of “challenging legacy issues in the investment arena”, Argus CEO Alison Hill said the company’s “modest” result represents a significant milestone.

“Despite less than favourable investment market conditions, the lingering recession and an increasingly competitive marketplace, we have attained our overall business targets and delivered a strong operating performance for the year ended March 31, 2012,” she said.

Ms Hill added that without investment-related losses during this period, the earnings would have produced net income “in the region of $18 million for the year”.

“In addition, we have made good strategic progress, focusing on markets where we can grow and earn higher returns,” she said. “The balance sheet now faces substantially less exposure to risks arising from non-core investments as we continue to optimise the balance sheet and capital structure in a considered and orderly fashion.”

According to the company, at year-end, shareholders’ equity stood at $83.8 million.

Net premiums written increased by eight percent and claims, policy and contract liability benefits increased by seven percent over the prior year, which the company attributes to higher claims in local and overseas healthcare services and our property and casualty businesses.

Ms Hill stated that investment income, change in fair value of investments and share of (loss)/earnings of investments in associates continued to present challenges during the year.

“The main contributory factors that suppressed investment earnings in the year were the provision of $11 million against the Group’s investment in Northstar Group Holdings Limited, which was recognised at the half year, reductions of $2 million in the equity pick up from investments in associates in Bermuda due to the depressed local economy and net realised losses of $3 million on the sale of certain equities,” she said.

Revenues from commissions, management fees and other income rose by seven percent compared to 2011.

The Argus Group now has assets of $1.7 billion under its administration.

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