Argus Group Holdings Ltd. is about to appoint a chief operating officer — a new role designed to strengthen senior management in running a company that has grown in size and complexity in recent years.

Chief executive officer Gerald Simons said Argus had grown from a company that operated solely in Bermuda to one with units in different jurisdictions and an international clientele.

"Business is becoming more challenging the world over," Mr. Simons said. "The company will be much stronger for creating this new position. It adds strength at the top and it will mean there will be a better flow of information to the board."

Advertisements for the post had attracted sufficient applicants of the right calibre for Argus to have a good choice of candidates to become the COO. The person chosen will be named within the next two to three months, Mr. Simons said.

"What we are seeing when hiring at all levels is a higher calibre of candidate, because of the situation right now," Mr. Simons said. "People are available from quite reputable businesses. Either they don't have a job, or they are fearful for their future."

The new COO will be a third top-level executive with group-wide responsibilities to assist Mr. Simons and chief financial Officer David Pugh.

"Eleven years ago, Argus operated only in Bermuda," Mr. Simons said. "It was a pretty straightforward operation doing group health insurance, pensions, property and casualty insurance and it had a small international life unit.

"Over the years, we have made acquisitions and expanded into places like Gibraltar, from where we write business in Malta and Spain. All of our units have grown and our pensions business has exploded in the last decade because of compulsory pensions. The group has become more complex and sophisticated."

Requirements of regulatory bodies had also grown in recent years and corporate governance expectations would rise higher still with the response to the economic turmoil of recent months, Mr. Simons said.

Argus has to report to such bodies as the Bermuda Monetary Authority, the Pensions Commission, the Bermuda Health Council and the Bermuda Stock Exchange, and it was felt that the company needed an extra executive to bolster internal oversight.

Argus's share price has fallen by 55 percent in the past 12 months and by 18 percent over the first two months of this year. It posted a net loss of $42.5 million for the six months through September 30, which was essentially due to a decline in the value of investment holdings.

Mr. Simons said the group had a large pool of surplus capital and is well equipped to deal with the current difficult economic conditions.

He added that the company's share price had suffered largely because of the Argus's substantial investments in other companies listed on the Bermuda Stock Exchange (BSX), which has hit a sustained downward trend for the first time in six years.

And although the company's Argus International Life Bermuda Ltd. (AILBL) unit has been impacted by indirect exposure to the Bernard Madoff scandal — the extent has not been publicly quantified — Mr. Simons said the situation did not pose a major threat to the future of the group. Two of the Rye funds that AILBL invested in had substantial exposure to Madoff and trading in them has been frozen. Argus is taking legal action to try to force the liquidation of those funds, so monies released can go to policyholders.

Argus, along with a number of funds and money managers, is itself being sued in a US court by a policyholder, who blames them for not seeing the danger signs around Madoff's alleged $50 billion Ponzi scheme.

Mr. Simons said the litigation was likely to be lengthy and added: "We are confident in our position."

The problem was not a threat to the group's future, he said. "It (AILBL) is a small part of our operation and it is well capitalised," Mr. Simons said.

Argus achieved its best ever operating results in the six months through September 30 last year and Mr. Simons said the company had many times the minimum required amount of capital needed by law.

As at September 30, Argus had $203 million in shareholders' equity — more than ten times the $20 million of minimum statutory capital than the insurer is required to have by law.

"Argus is probably the largest investor in companies trading on the BSX," Mr. Simons said. "We have seen large declines in the value of some of those companies and that has hit Argus directly."

For example, Argus owns an eight percent stake in Butterfield Bank, whose share price has fallen 29 percent so far this year, as well as a five percent stake in Belco Holdings Ltd., which has declined 11 percent in 2009.

Argus has accounted for changes in the value of investments held - unrealised gains or losses - in its net income statement since a change in accounting rules in 2007.

It has warned shareholders to expect more volatility in its results as a consequence of the change.