Argus Group Holding Limited - Mar 2018 Financial Statements

114 Pages·2017·14.18 MB·English

Annual Report A Change, for Good.
2018
We are making a change, for good.
Change that will make a short-term loss for
long-term benefi t. Change that supports
our strategy of placing Argus on the global
stage. Able to provide sustainable, quality
solutions for the community and a strong
return for partners, for all our futures.
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Contents
Performance Measurements Welcome 2
Chairman’s Statement 4
$18.6m 90.6%
Our Mission 6
Net Loss Combined Operating Ratio
The Markets We Serve 8
$0.5m $17.9m
The Territories We Cover 10
Operating Profi t Operating Cash Flow Our Strategy 12
Chief Executive Offi cer’s Strategic Review 14
$24.6m 4.5%
Chief Financial Offi cer’s Report 18
Combined Fee Income Dividend Yield
Our Strategy: Our Action 24
(15.8%) A— (Excellent)
The Value We Create For Our Stakeholders 30
Return on Average Equity Financial Strength Rating Long-Term Goals 32
Governance and Leadership 34
Five-Year Summary 36
Financial Section 38
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Welcome
Welcome to Argus. Argus Group
1950
We support our customers in providing fi nancial
Date of Foundation
security, physical well-being and peace of mind. 234
Number of Employees
We do this through products and services in 87%
employee benefi ts, global property and casualty Employee Engagement
insurance and wealth management.
We are a business born in Bermuda, but we
continue to grow internationally to ensure we
are in the strongest position for sustainable
value and growth.
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Bermuda Gibraltar Malta
#1 #1 #2
Market Leader for Property & Casualty Insurer Insurance Broker
International Clients
40% 12%
#1
Non-life Market Share Non-life Market Share
Provider for Employee
22 16%
Benefi ts Solutions
Number of Employees Broker Market Share
Top 3
60
Employer in Bermuda
Number of Employees
152
Number of Employees
33
Argus Group Holdings Limited
Chairman’s Statement
We have experienced yet another year of unprecedented change around the globe. President
Trump has continued to implement impactful policies ranging from withdrawing from
agreements with Paris and Iran to tax reform and proposing protectionist tariffs. Brexit
continues to drive confusion and uncertainty, as do the broad range of coalition governments
being formed as populations lose their confidence in established government.
In addition to the market uncertainty caused by global change, the low-growth Bermuda
economy added to economic pressures. Against this backdrop, we are reporting a $18.6
million net loss attributable to shareholders. This was caused by losses in healthcare, which
is inherently volatile, and actions taken to restructure our balance sheet.
We have decided it is time to sell underperforming assets to better utilise the capital elsewhere.
Whilst this has a negative impact in this financial year, I am confident its redeployment will lead
to greater growth in the future. In addition, over the last two years we tracked what we believed
was a trend of slowing health claims inflation, which we hoped was the beginning of a long-term
trend. In response to this and in line with our strategy to ‘do the right thing, the right way,
“I am extremely
for all, always’, we decided to maintain healthcare premiums, passing on the benefit to our
confident that
customers, rather than increase premiums as our competitors did. Regrettably, volatility in the
we have taken the Bermuda healthcare industry continues to be challenging, due to the small Bermuda population
and the unusually high instances of severe claims, resulting in significant losses during the
right actions in
fiscal year. As you would expect from our team, they have reacted swiftly and decisively. We
the short term to are increasing premiums immediately to bring our healthcare business back into profit, while
ensuring that our premium increases continue to trend below the rate of medical inflation.
ensure sustainable
profitability and
I am extremely confident that we have taken the right actions in the short term to ensure
growth in the sustainable profitability and growth in the long term.
long term.”
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Annual Report 2018
My confidence in the health of Argus relates directly to my confidence in the Argus Board.
Difficult decisions had to be made this year in relation to the future success of the business
and the Argus Board has acted decisively, defining a strategy that I believe will give us a
strong presence on the global stage and manage risk whilst providing growth and greater
return to our shareholders.
The Argus Board continues to go from strength to strength and we remain focused on having
the right skills and experience to support the Board strategy. Over the last year we have
welcomed three new members, Barbara Merry, Keith Abercromby and Kim Wilkerson, whilst
saying our goodbyes and thank you to Wendall Brown and Jamie Jardine, who both retired
from the Board this year.
Our confidence in the future means that, despite the losses recorded this year, the Group
remains in a healthy Capital Position, and we are pleased to declare a dividend of nine cents
per share for shareholders of record as of July 31, 2018, payable on August 15, 2018. This
matches the dividend last year and equates to annualised yield of 4.5% based on the current
average share price.
I would like to take this opportunity to thank the Argus management team and staff for
their hard work under challenging circumstances, my fellow Board members for their
professionalism and strategic capability, and, most of all, my sincere appreciation to each
Argus shareholder for your continued loyalty, support and confidence.
Sheila E. Nicoll
Chairman
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Our Mission
Our Mission is to give more and more people the
freedom to do what matters most to them.
We will accomplish this by providing fi nancial services that
predict and protect for the future. Leading the way with
innovative forecasting tools to help our stakeholders avoid
storms that may threaten their life, health or wealth. Striving
to always deliver best-in-class products and processes to
protect our stakeholders in those instances when storms
are inevitable.
We aim to build strong, long-term, one-on-one relationships
with our clients, customers and community, based on loyalty,
service and trust. We’ll do this through what we believe makes
us truly different; our commitment to doing the right thing,
for all, always, behaving with honesty, openness and fairness
in everything we do.
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“Our Interest is You.”
This reinforces the fact that Argus puts people fi rst. It
communicates that we care deeply about our staff, our
clients, our shareholders and our community. It affi rms that
we will always aim to do what is in everyone’s best interests,
and not just our own. It is this innate desire to take care of
people that makes Argus the unique company that it is.
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The Markets We Serve
We serve a wide variety of needs, helping businesses and individuals predict and protect
for the future. Argus is unique in its position as a provider of expertise rather than mere
products.
Keeping You Healthy and Productive Keeping Your Business Running Keeping Your Possessions Safe
Going beyond traditional healthcare by Simple combined commercial policies, Expertise and active advice on how to
supporting you through initiatives such which effectively manage the risks protect your assets. Delivering policies
as Annual Health Checks, Population in your business with swift and that don’t nickel and dime.
Health, Diabetes Management, Thrive. comprehensive claims resolution.
and Case Management.
$132m $30m $10bn
Paid in Health Benefi ts Commercial Premium Property insured
$21m 5,824 40,000
Paid for Preventative Programmes Commercial Clients covered Vehicles covered
23%
Reduction in claims for members in
our Case Management Programme
88