Argus Group suffers losses but secures upgrade
Bermuda insurer Argus Group suffered a loss in the six months ending September 30, 2017, but the firm has secured an upgrade to its financial strength rating by AM Best.
The insurer made a loss of $2.3 million for the period, compared with a profit of $8.2 million for the corresponding period in 2016. It has been upgraded to A- (Excellent) from B++ (Good).
The group generated investment income of $7.7 million for the six months to September 30, 2017. The company stressed that its 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 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, chief executive of Argus Group, said: “We are delighted to report that AM Best has upgraded the financial strength rating of Argus Group Holdings. 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.”
But the company’s CEO also expressed concerns about some aspects of the business.
Hill said: “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.”