Argus Group Holdings Ltd made a net loss of $3.9 million for the six months ended September 30, 2011, driven by a soured investment in a Bermuda-based reinsurance company, the company announced yesterday.The insurer said results were impacted by an investment-related provision of $11 million, which “stems from the uncertainty surrounding the ultimate collectability of the Group’s investment in Northstar Group Holdings Ltd”.Northstar operates in the life and annuity reinsurance industry and was formed in 2004.Argus’s loss compares to a profit of $9.9 million for the corresponding period in 2010. The Argus board decided not to pay a dividend.Chief executive officer Alison Hill said operating earnings remained strong.“This result, while disappointing, is viewed as a turning point marking the end of challenging legacy issues in the investment arena,” Ms Hill said. “The balance sheet now faces substantially less exposure to risks arising from non-core investments. We remain confident that the Argus Group is well positioned for the future with core business units producing continued strong performance of $7.1 million for the half year despite the lingering recession.”Ms Hill added: “In order to maintain a capital base well in excess of minimum statutory requirements, the Board has decided that the payment of a dividend is not prudent at this time while the Group continues to report a net loss.”Net premiums earned in the period increased by 9.6 percent, reflecting new business acquisition and some rate increases. Meanwhile net policy benefits, claims and adjustment expenses and net change in contract liabilities have increased by 6.4 percent reflecting the trend of increasing healthcare costs both locally and overseas.Investment income, including fair value changes, fell 51.5 percent as lower interest rates impacted the group’s bond portfolio and falling market values hit the company’s equity investments.Operating expenses decreased by 11 percent primarily as a result of the reduction in post-employment medical plan liability, following the decision in the prior year to amend the plan whereby eligibility, benefits and cost sharing were modified for current employees.Argus said it was continuing to “de-risk the balance sheet in a measured and orderly fashion to mitigate the effect of the volatility in worldwide investment markets, as experienced in recent years”.Commissions, management fees and other income increased modestly due to increased ceding commissions earned by the group’s property and casualty operations.The Argus Group now has assets of $1.6 billion under its administration, while shareholders’ equity at September 30 is recorded at $79 million, which the company assured remains substantially in excess of the statutory capital required to conduct the group’s various insurance businesses.