Argus first half profit rises 18%

Bermuda domestic insurer Argus Group’s net profit increased 18% to $5.9 million from $5 million in the first half of the year as fee-based income increases offset rises in healthcare claims. 

The insurer, which has agreed to merge with local rival BF&M, said its net operating earnings, which excludes non-recurring costs, rose from $9 million to $11 million. It said IFRS net income was reduced by  “exceptional project costs arising from our proposed amalgamation with BF&M”. 

Revenue for the period rose 15.2% to $135.1 million, driven by growth in both insurance and fee revenues. Insurance revenue grew by $14.4 million, or 15.6%, while fee revenue reached $28.2 million, a 13.8% increase, supported by continued growth in Argus’ medical practices. 

The company said expenses increased as a result of rising healthcare claims, which drove insurance service expenses to $13.7 million, or 21.5%, compared to the previous year.

The company said increased health insurance claims which rose in the previous financial year continued into the first quarter before stabilising but higher utilisation levels continue to drive local health claims. 

However, operating cash flows were strong, with a net inflow of $19.0 million for the six-month period.

“We are pleased with these resilient financial results, achieved in the face of challenging macroeconomic conditions,” said chief executive officer Alison Hill. “Inflation added pressure to our margins and operating expenses, yet these solid financial results highlight the strength of our growth strategy to diversify our income sources, with our fee-based businesses helping to offset elevated health insurance claims. 

“I would also like to thank our team for continuing to focus on ways to address claims cost inflation, whilst being strategic with pricing and underwriting.”

The company said hurricane losses incurred during the period from Ernesto were mitigated by Argus’ reinsurance programme. 

Shareholders’ equity as of September 30, 2024 was $160.4 million, reflecting a 2.6% increase from $156.2 million on 31 March 2024. This growth was driven by $5.9 million in net income and $0.7 million in other comprehensive income, partially offset by dividends declared during the period.

Book value per share increased to $7.31 as of 30 September 2024, up from $7.16 on March 31,  2024.

Hill, who does not have a role in the merged company, added: “We are incredibly proud of the progress that we have made over the last 15 years to transform the Argus Group. Our strategy has always been to grow our business to enable better leverage of scale and buying power for the benefit of our customers and community. We have diversified our business lines, grown our markets and delivered impressive shareholder value. 

“The proposed amalgamation with BF&M Limited is an exciting next step in our evolution. With greater geographic reach and enhanced resources, we are confident that our talented team will continue to drive further sustainable growth in the coming years.”

The report did not disclose when the merger would be completed. The companies have previously said they hoped it would close by the end of the year. 

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