Argus takes $2m healthcare reform hit
Argus Group Holdings Ltd’s made net earnings of $3.9 million for the first six months of its fiscal year and said government healthcare reform cost its business about $2 million.
The insurer’s net income fell from $10 million in the corresponding period a year ago, while operating earnings fell to $8.5 million from $13.2 million.
Alison Hill, Argus’s chief executive officer, said she was pleased with the result for the six months ended September 30 “against the backdrop of a challenging business environment”.
The combined operating ratio, the proportion of premium income spent on claims and operating expenses, was of 84.4 per cent.
Argus’s board announced a dividend of nine cents per share, payable on January 28, 2020 for shareholders of record on December 31, 2019.
The company said net claims in its health division fell by $1 million because of enhanced claims management, helped by One Team Health, an overseas care administrator it acquired in May this year.
The health division’s premiums fell $6.2 million, primarily due to hospital financing reform, partially offset by targeted rate increases for existing insureds, Argus said.
“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,” Argus stated
“The Bermuda Government has announced another phase of its national health plan, which introduces 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.”
Ms Hill said Argus aimed to become 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,” Ms Hill said.
“We’re investing in our strategy today to ensure sustainable value for all in the future.”
Argus added despite the impact from Hurricane Humberto in Bermuda, net earnings for the property and casualty division rose 45 per cent increase over the corresponding period in 2018.
The company added: “We forecast that Hurricane Humberto will have a material negative economic impact on our Bermuda property and casualty business for the full year.”
Argus said its European businesses contributed positively to group results through “disciplined underwriting”.
Fee income generated by employee benefits, wealth management and insurance brokerage businesses remained stable at $11.9 million.
The group’s investment portfolio generated positive returns of $13.6 million, an increase of $5.9 million over the corresponding prior year period.
Argus’s said 87 per cent of the group’s investments were in fixed-income bonds, of which 97 per cent were classified as investment grade.
Equity attributable to shareholders of the company stands at $130.6 million, well in excess of the capital required by regulators, Argus said.
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