Bermuda's Argus Group has boosted its six months earnings by 6.8 percent to $18.5 million.

Gerald Simons, president & CEO, put the success down to building on the strong foundations of its core businesses - life, pensions, health and property and casualty insurance.

This, together with enhanced commission income and acceptable investment returns, particularly in light of recent market conditions, has combined to produce record earnings for the six months ended September, said Mr. Simons.

"The increase in premiums earned, net of reinsurance, reflects new business acquired and the results of our continuing efforts to achieve acceptable underwriting ratios by appropriate adjustments to premiums," he said.

"These efforts, combined with stricter selection of risks, have now begun to produce results as all insurance lines have improved performance. The situation has been assisted by the lack of catastrophic events, especially major windstorms, and a lower than anticipated level of overseas medical claims."

Meanwhile, on the flipside, investment income for the six months fell by 22 percent, primarily due to the diminution in market value of the group's equity investments at the end of September.

As a result of recent changes in accounting rules, the group now records the majority of its investments at market value as opposed to a moving market average. The net effect is substantially increased volatility of earnings from investment market movements.

In addition, the group is now required to report as 'other comprehensive income' any unrealised gains and losses on financial assets classified as "available for sale" together with any foreign currency translation adjustment of our self-sustaining foreign operations.

In the six months to September 30, the net unrealised losses recorded as 'other comprehensive loss' amounted to $2 million and arose from the reduction in value of trade investments. Shareholders' equity includes 'accumulated other comprehensive income' which, at the period end, totalled $4.5 million.

Commissions, management fees and other income rose by 56.9 percent reflecting the fees earned on additional assets under management in our international life and annuity, investment administration and pension divisions and also ceding commission on increased reinsurance placed by our property and casualty operations.

Mr. Simons added: "International life and annuity operations were significantly enhanced by the acquisition in December 2006 of Tremont International Insurance, now renamed Argus International Life Bermuda.

"The increase in operating expenses and commissions reflects the continued investment in information systems and the additional costs arising from the acquisition and assimilation of Tremont International Insurance.

"General account assets of the Argus Group at the end of September totalled $645 million and segregated funds assets under its control increased to $1.3 billion."