the previous year, according to the groups's latest annual report.

Profits dropped to $5.3 million from $7.2 million. Total income, however, rose to $33.7 million from $31.4 million during the year to December 31.

The Argus Group includes the Argus Insurance Company, which primarily provides property insurance, the Bermuda Life Insurance Co., the Somers Isle Insurance Co., which sells health insurance, Argus International Management Ltd., plus Argus International Management (Dublin) Ltd. and St. Martin's Reinsurance Company Ltd.

It also owns Argus Management Service, which provides non-insurance management services, and Data Communications Ltd., which develops and maintains computer systems for other Argus companies and their clients.

Argus Group president Mr. Thaddeus Trott said he was pleased with the 6.7 percent increase in premium income over the previous year and especially with the group's ability to contain operating expenses to an increase of less than 4 percent.

He said the cost and frequency of major medical claims in Somers Isles was of "particular concern'' and indeed was a factor in the group's dip in earnings.

Somers Isle without question had its most difficult year in its 40 year history, he said.

"The pressure of rising claims levels in Bermuda was apparent in all principal areas of health care provided,'' Mr. Trott said. "Indeed, at a time when the Government-mandated hospital insurance premium was restricted to a 2.4 percent increase, the claims for treatment at the expanded out-patient department at the King Edward Hospital increase by 14 percent.

"In addition, there was explosive growth of overseas claims in both number and amount... This contributed to a major medical claims ratio in excess of 120 percent. Ironically, in the face of this seriously deteriorating experience, the Company faced severe competitive pressures.'' ARGUS GROUP 1991 SUMMARY Premium Income $24.6m Investment Income $5m Earnings $5.3m Earnings per share $1.22 Total Income $33.7 Total Assets $178.2m.