The Argus Group has announced that net income for 2004 rose 15 percent as a jump in investment income offset claims from Hurricane Fabian and losses in the company's motor insurance division.

Argus chief executive officer Gerald Simons said in a statement that the company's net income for the year ended March 31, 2004 rose by $2.2 million $16.6 million.

But Mr. Simons said investment income was boosted by the sale of the Bank of Bermuda to HSBC Plc, which resulted in a one-time gain of $3.1 million and helped boost investment income by $7.5 million or 42 percent.

He added: "Hurricane Fabian had a material impact on the financial results of the Group.

"However, thanks in part to our conservative underwriting practices and the adequacy of our reinsurance coverage, the $60 million of gross claims experienced by our two property and casualty businesses resulted in an earnings effect of a manageable $3 million."

Mr. Simons said stricter underwriting criteria and further premium increases would be applied to vehicle insurance as the company's motor account "continued to produce unsustainable losses".

He said that increases in health insurance premiums at the beginning of the year had produced "satisfactory" results, but warned: "Our concerns over the continuing escalation of health care costs and increases utilisation persist."

The Bank of Bermuda sale added $3.1 million to the company's investment income of $25.1 million as a one-time gain this year. A further $3 million in realised gains will be realised over the next even years under Canadian accounting rules, Mr. Simons said.

"Our remaining holdings in Bermuda equities continue to be a prodigious store of value and, at the year end, unrealised gains of $35 million have been deferred for recognition in that same seven-year time frame."

Commissions, fees and other income fell by 11.2 percent to $8.85 million as a result of Hurricane Fabian, Mr. Simons said.

The company saw claims, benefits and claim expenses jump from $66.7 million to $75.5 million while operating expenses and commissions edged up from $19.6 million to $20.1 million.