Argus Group Holdings Ltd. yesterday announced its full-year earnings plummeted 58 percent to $15.5 million.

The insurance, pensions and investment company attributed the plunge in profits for the year ended March 31, 2008, to a change in accounting rules, as well as the effects of widespread economic turmoil on the world stock markets.

In a statement, the company added that it had achieved record operating results for all of its units.

Argus' earnings of $15.5 million compared to $36.9 million in the prior year and $26.9 million in 2005/06, but president and chief executive officer Gerald Simons said the dramatic decline was largely down to the new accounting rules.

"After years of putting systems and procedures in place, each of our operating units has achieved better results than ever before," Mr. Simons said.

"This has been offset by a sharp reduction in investment income precipitated by the adoption of new accounting rules, turbulence in world equity markets and provisions against mortgage loans."

Shareholders' equity by year-end soared by 47 percent to $260.7 million, an increase of $83 million over the prior year.

Argus said a large part of this substantial gain was due to the recognition of significant unrealised gains required to be booked under the new accounting rules in recognition of the investment fair values at the beginning of the year.

"Fair value" accounting rules require companies to put a current market value on its assets and has been a source of controversy, particularly in the US.

Most financial reporting had previously been based on historical cost — the original price paid for an asset. But US accounting rule makers have come to view fair value, or the price the asset could fetch in the current market, as more transparent.

But critics say fair value accounting has exacerbated the global credit crisis by forcing hundreds of companies to write down the value of even long-term investments that are far from their maturity date.

The write-downs are not realised losses, but a reflection of the assets' current saleable value.

Argus said its net premiums earned increased by 5.7 percent, while claims experience benefitted from increased deductibles.

"Almost all lines of business have demonstrated improved results," the company added. "This situation has been assisted by the lack of catastrophic events, especially major windstorms, and a lower than anticipated level of overseas medical claims."

The Argus pension division experienced growth in the year with assets under management increasing by almost eight percent due to new and continued business.

International life and annuity operations were significantly enhanced by the acquisition in the year of MassMutual Bermuda Ltd.

Commissions, management fees and other income increased by 27.1 percent.

Total General Fund Assets of the Argus Group have increased by $108 million in the year to $644 million. The Group now has assets of over $2 billion under its administration.