Alison Hill, CEO of Argus Group. *Photo supplied
Alison Hill, CEO of Argus Group. *Photo supplied

The Great Recession may be over, but Bermuda will still have a long, slow climb to regain its losses.

Alison Hill, CEO of Argus Group, said it appears “The board and management believe that there are signs that the economic downturn in Bermuda and elsewhere may have bottomed out, but economic recovery will be slow. 

“The Group continues to make progress with its strategic goal of focusing on markets where Argus can grow and earn higher returns within acceptable risk tolerances. 

“Accordingly, we remain confident that the Argus Group is well positioned for the future.”

Along those lines, Argus posted earnings of $13.2 million for its financial year, which ended on March 31, 2014. This compared to $12.8 million the previous year.

A press release said: “These positive earnings have been achieved against a backdrop of global economic challenges that have lingered for several years and continued volatility in investment markets. In addition, the board has declared an interim dividend of seven cents per share.

Ms Hill added: “These positive results are underpinned by strong business fundamentals including continued strong performance by our core business operations, high client retention levels despite fiercely competitive markets and efficient management of operating expenses. 

“In addition, we continue to follow strong governance and risk management processes and to optimize the Balance Sheet and capital structure in a considered and orderly fashion.”

Shareholders’ Equity now stands at $106.9 million, representing an increase from $94.4 million one year ago, which is substantially in excess of the statutory capital required to conduct the Group’s various insurance and investment related businesses. 

The result for the year represents a return on average Shareholders’ Equity of 13.2 per cent compared to 14.5 percent for the previous year. The earnings per share for the year were $0.63 compared to $0.61 last year. 

As at March 31, 2014, Total Assets including Segregated Fund Assets stood at $2.1 billion.

Net premiums written increased by $3.0 million or two per cent, arising from a combination of new business and very high client retention levels. 

Net Benefits and Claims decreased by seven percent as the Group experienced a benign claims year in relation to the health and property and casualty portfolios.

Investment income and share of earnings of associates decreased significantly when compared to the prior year. The accounting policy under International Financial Reporting Standards requires the valuation of the majority of investments to be made at fair value, which can and often does lead to significant volatility of financial results, especially in life and annuity businesses. As a result, the Group reported an unrealised loss on its fixed income portfolios of $5.3 million compared to a $2.7 million gain in the prior year. This arose as the increase in interest rates in the year served to decrease the fair value of the Group’s extensive fixed income portfolios.

Commissions, management fees and other revenue fell two percent compared to the prior year due to decreased profit commissions offset by an increase in management fees in line with the rise in assets under management.

Operating expenses have decreased by three per cent over the prior year, reflecting the tight budgetary control and monitoring processes exercised by management.

Based upon the financial results, the board has declared an interim dividend of seven cents per share payable on September 15, 2014 for shareholders of record on August 11, 2014.