The Argus Group saw its earnings fall marginally by three percent for its year ended March 31, 2001 but declared it is the best ever for the Bermuda insurance company after its investment in Bermuda bank shares brought in millions of dollars.

In a release from the business yesterday, Gerald Simons, president and chief executive officer of the group announced earnings for the year of $14.22 million, slightly down on the previous year's record earnings of $14.69 million.

In a press release the company said that from a shareholder's point of view the year could well be considered "the best ever", as the value of the group's investment in local equities rose to record levels led by an impressive increase in the value of bank shares following the relaxation of Bermuda's 60/40 ownership rules.

The company said that under applicable Canadian accounting rules such unrealised gains may only be recognised in earnings at the rate of 15 percent per annum and the unrecognised portion of such gains are excluded from the balance sheet.

The company announced that as of March 31, 2001 these unrecognised gains totalled $20.06 million.

At the time of issuing the release yesterday a further $10.53 million of unrealised gains had accrued, the company said.

And it added that while these gains will be reflected in the earnings of future years at the rate of 15 percent per annum they currently represent just over $5.00 per share of shareholder value which is not reflected in shareholders' equity.

Overall, Argus' underwriting results were in line with last year with both net premiums and claims and benefits rising by 8.7 percent.

The increase in investment income of 3.5 percent, in a year in which overseas markets lost value and interest rates on fixed income securities remained low, was mainly attributable to the recognition, at the permitted 15 percent level, of unrealised gains on Bermuda equities.

Commissions, fees and other income rose by 4.4 percent to $8.18 million reflecting, through increased commissions earned by Argus' CGU agency, the increased property and casualty rates of the hardening market.

Operating expenses, as forecast last year by Argus, increased considerably as new computer systems came on line and a new health insurance product was implemented.

The company also retained all the staff hired to administer the new business generated by last year's pension legislation in order to cope with the reporting requirements it has imposed.

The release said: "We continue to believe that our new products and administration systems will result in improved earnings in the years ahead."

At 21.0 percent of total income, operating expenses and commissions are higher than historical levels and steps are now being taken to reduce them.

General account assets of Argus are $232 million and separate account assets under the group's control are $300 million.

The Argus Group, a multi-line insurance organisation and the leading provider of employee benefits in Bermuda, reported shareholders' equity at March 31, 2001 of $96 million.

Argus is the first and only Bermudian owned insurance company to be rated "A" (Excellent) by A.M. Best the international insurance rating agency.