Argus profit drops by 53%
Bermuda domestic insurer Argus's annual profit was cut in half in 2024, but the company said the reduction in profit was largely driven by one-off expenses.
The company was also hit by rises in health claims.
The insurer, which also operates in Malta and Gibraltar, said it had net income for the year ended March 31 of $7.3 million, compared to $15.6 million in the previous year as restated for IFRS 17. It said the IFRS reported net income was impacted by one-off adjustments from the transition to IFRS 9 and 17, and exceptional project costs.
Net operating earnings for the year, reflecting the performance of the business excluding non-recurring expenses, were $18.5 million compared to $19.3 million in the prior year, management said.
It noted that while insurance revenues rose by 12.9% or $22.1 million to $193.2 million, insurance service expenses increased by $20.8 million or 17.6%.
Argus chief executive officer Alison Hill said: “The transformations to our business in recent years, from operating model changes to revenue source diversification, have provided significant benefits this year. Our multifaceted sources of revenues largely mitigated the continued increase in health claim costs, allowing us to continue reporting strong operating earnings.”
She added: “We are proud to have built a robust and diversified business platform delivering health, wealth and protection products into connected communities. We have focused on expanding our addressable market and managing costs through vertical integration, Of particular note is our Better Health Partnership, an unrivalled health eco-system that is making a meaningful difference to our clients’ and patients’ lives. A system that embeds cost management structures to better address rising healthcare claims costs and help to counteract health cost inflation.”
Insurance revenue for the year was $193.2 million, rising 12.9 per cent compared to the prior year ($171.1 million), driven by increased health insurance revenues. Fee revenue was $52.4 million, an increase of $8.3 million or approximately 18.8 per cent over the prior year, driven by the continued growth in the company's medical practices.
The company had a net operating cash inflow for the year of $22.4 million, compared to $15.6 million last year.
Insurance service expenses increased by $20.8 million or 17.6% compared to the prior year, mainly from increasing health claims costs, higher utilisation of stop loss claims for self-funded clients, prescription drugs and diagnostic claims.
Argus has not yet released a detailed statement of revenues and expenses or a balance sheet.
"We had a successful annual renewal of our health business and have won a number of attractive new clients, which will support our insurance performance looking forward," management said.
Shareholders’ equity at March 31, 2024 was $156.2 million, an increase of 17.2 per cent over 31 March 2023 of $133.3 million, restated for IFRS 17.
The main driver of the increase was a redesignation of the company's Interest Accumulator investment portfolio to amortised cost, to better match the accounting treatment of the associated liabilities, resulting in a one-time reversal of unrealised losses held.
The Company’s share price on March 31, 2024 was $6.30 compared with $5.55 on March 31, 2023. Book value per share was $7.16 at 31 March 2024 compared with $6.19 at 31 March 2023 restated for IFRS 17.
Argus declared a dividend of 12 cents per share for shareholders of record as of July 26, 2024, payable on August 30, 2024.
Argus's drop in profit compares to domestic rival BF&M, which reported a $27.2 million profit for 2023 compared to a $11 million loss in 2022. BF&M's year end was December 31, 2023.
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