The Argus Group has had a “pleasingly robust” six-month period with profits dipping marginally to under $5 million despite the pay-outs caused by the destruction of Hurricane Fabian.

In a report released yesterday, Gerald Simons, president and chief executive officer of The Argus Group,announced earnings of $4,873,000 for the six months ended September 30, 2003, down three percent from $5,024,000 for the same period in 2002.

“For many years now we have had the good fortune to avoid severe windstorm losses but 2003 broke this pattern,” said the company in its half yearly report.

“In light of the severity of Hurricane Fabian the results for the six-month period ended on September 30, 2003 are pleasingly robust.”

And the company said that given a continuing positive performance by equity markets and in the absence of further catastrophic events, Argus would expect profits for the year ending March 31, 2004 to at least match those of the year before.

“Argus earnings remained at essentially the same level as the corresponding period last year despite the effect of Hurricane Fabian on September 5, 2003,” said a release from Argus issued yesterday. “Our reinsurance protection limited the impact of Fabian on earnings to approximately $2.5 million whilst better performing equity investments, both in Bermuda and overseas, contributed to earnings.”

In total Argus paid out $37.8 million in claims and benefits - up nearly $5 million on the same period last year when it was $32.6 million.

Total net premium income improved by 6.36 percent and income from commissions and management fees declined slightly because of lost profit commission resulting from Fabian claims.

Investment income increased by some $2.6 million benefiting from the improvement in equity markets but the company pointed out that in 2002, income was reduced by a $1 million provision for investments determined to be permanently impaired.

“Health insurance underwriting results continued at an acceptable level,” said the release. “On the property and casualty side, in addition to the impact of Fabian losses and, despite recent premium increases, our motor portfolio continued to perform poorly.”

Th company said that the earnings of the pension business improved this year as the asset-based fees increased due to growth in equity markets and as the high costs of administering this business were reduced through efficiencies made in their operating processes, said the company.

“The increase in benefits paid clearly reflects the losses attributable to Fabian and, to some extent, the rising cost of health claims,” said the release.

Operating expenses were reduced this year from $9.76 million last year to $9.41 this year, following a change in generally accepted accounting principles or GAAP, which eliminated the need to write down the value of goodwill, and as the promised efficiencies of the company's new computer systems began to take hold, said the company.