- AM Best Financial Strength Rating upgrade to A- Excellent
- Net loss of $2.3 million for the six months ended September 30, 2017
- Investment portfolio generated a positive total return of $14.3 million
- Increase in claims of $6.7 million
- Dividend declared of nine cents per share
Hamilton, Bermuda (December 11, 2017) – Argus Group Holdings Limited (the “Group” or ”Argus” or “Argus Group”) today announces their Financial Strength Rating upgrade to A- (Excellent) with a stable outlook and a loss of $2.3 million for the six months ended September 30, 2017, compared with net earnings of $8.2 million for the corresponding period in 2016.
Alison Hill, Chief Executive Officer of the Argus Group, comments: “We are delighted to report that AM Best has upgraded the Financial Strength Rating of Argus Group Holdings to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a-” from “bbb+.” Despite the short-term decline in earnings for the period to September 30, 2017, this rating reflects the strength of our balance sheet, our enterprise risk management program and our consistent favorable operating performance. Argus always seeks to generate attractive long-term returns while managing short-term volatility.”
“We will continue to deliver on our objective of long-term sustainable value in a dynamic and rapidly evolving global market place with the continued focus on our three strategic pillars of Growth, Advocacy and Innovation. We continue to apply prudent underwriting principles and maintain high client retention levels in increasingly competitive markets.”
The Group has successfully managed short term volatility within its investment portfolio and has generated investment income of $7.7 million for the six months to September 30, 2017. Argus’ investment portfolio reported a positive total return, including capital appreciation, of $14.3 million in an environment where credit spreads tightened, and global equities rallied.
The Group’s combined operating ratio has increased from 85.4 per cent last year to 93.6 per cent for the current period. Net benefits and claims increased by $6.7 million. The health division of the Group has been the primary driver of this increase. The utilisation of medical services increased due to both the high incidence of chronic disease, and an ageing population who require a greater number of medical services.
Alison Hill comments: “Argus continues to be deeply concerned about the unsustainable cost of the healthcare system in Bermuda. We continue to invest in our population health management initiatives such as partnering with the Premier Health and Wellness Center for the Diabetes Reversal Programme, which is free to eligible Argus members.”
“While the Group was spared from one of the most devastating hurricane seasons of recent times, it was hit with non-storm related large claims within its Property and Casualty Division. However, our risk mitigation programme and comprehensive reinsurance arrangements have significantly reduced the financial impact of these losses.”
Combined fee income, which represents fees generated by Argus’ Employee Benefits, Wealth Management and Insurance Brokerage businesses of $10.5 million, have increased 17 per cent over the prior year. Client retention, new business and investment growth have resulted in an increase in Assets Under Management which is a key driver for the increase in the combined fee income.
Alison Hill continues: “Our investment portfolio is designed to ensure funds are readily available to satisfy our promises to policyholders and to enhance shareholder value by generating appropriate long-term risk-adjusted yields. In the prior year, we did the right thing for our Pension members by reducing fees to enhance their savings and are now seeing this translate into real long-term value.”
On the consolidated balance sheet, total assets including segregated fund assets stand at $2.3 billion. Shareholders’ equity attributable to shareholders of the company has increased to $134 million, substantially in excess of the statutory capital required to conduct the Group’s insurance and financial services business by the regulatory bodies to whom the Argus Group reports.
The Board has declared a dividend of nine cents per share payable on January 12, 2018 for shareholders of record on December 27, 2017. This represents a total dividend of 18 cents per share based upon the audited financial statements of the Group for the year ended March 31, 2017 and an annualized dividend yield of 4.3%.