BF&M profit falls in year of record claims
BF&M Ltd dealt with record high claims last year after ferocious hurricanes wreaked a trail of destruction in many of the territories in which the insurer operates.
However, despite the impact of hurricanes Irma and Maria, the Bermudian-based firm managed to make shareholders’ net income of $3.7 million, down from $14.4 million in 2016.
John Wight, BF&M’s chief executive officer, said: “Despite the most destructive hurricane activity ever seen in the Caribbean region and record claims for BF&M, the company demonstrated its financial strength and finished 2017 modestly profitable.
“While Bermuda was fortunate to have avoided a major storm in 2017, many of our customers across the 15 jurisdictions in which we operate were impacted by the two Category 5 hurricanes, Irma and Maria.
“We prepare for events of this magnitude and we proved our ability to meet our obligations to our policyholders when they needed us. Excluding the impact from the storms, BF&M recorded a strong operating year from its core insurance and investment advisory services.”
Three of BF&M’s operating subsidiaries, BF&M General Insurance Company Ltd, BF&M Life Insurance Company Ltd and Caymanian-based Island Heritage Insurance Company Ltd, are rated A for financial strength by credit rating agency AM Best, while its Insurance Corporation of Barbados Ltd unit is rated A-.
Mr Wight said: “Shortly after reviewing the impact of Hurricanes Irma and Maria, AM Best reaffirmed the financial strength ratings for all four of BF&M’s principal operating companies, based on the BF&M Group’s balance sheet strength, operating performance and business profile. BF&M continues to hold the strongest ratings of any domestic insurance group in Bermuda and the Caribbean.”
Equity attributable to shareholders at December 31, 2017 was $261.1 million.
General fund assets totalled $1.8 billion of which $205.1 million was held in cash and cash equivalents.
Gross premiums written for the period were $329.7 million, reflecting a decrease of 5 per cent from 2016 as a result of a reduction in premiums on certain commercial properties. The reduction had little to no impact on the company’s bottom line.
Investment income for the year reflected a $10.6 million increase, up from a $0.7 million decrease in 2016 in the fair value of investments for the period.
Under the company’s asset-liability matching policy, which looks to limit volatility of reported earnings as a result of interest rate swings, BF&M reported a $0.9 million net loss on the difference between the fair value of investments which support certain liabilities and reported reserves.
The company incurred losses and set up impairments as a result of revaluing or disposing of commercial and residential properties that reduced in value in 2017.
Commission and other income increased from the prior year by 15 per cent to $47.1 million. The 2016 hurricanes continued to negatively impact commission income in the current year, but the impact was offset by additional reinsurance coverage and higher levels of proportional reinsurance ceded due to changes in BF&M’s reinsurance programme and profit share reported on non property business.
Short-term claims and adjustment expenses increased 11 per cent to $34.5 million due to the 2017 catastrophe losses.
Life and health policy benefits decreased by 4 per cent to $113.5 million. “Life and health policy benefits” includes changes in life insurance reserves which increased significantly in 2016 compared with a much smaller increase in 2017 in the same period.
These reserve movements were primarily driven by differences in market interest rates over the respective periods.
Operating expenses increased 3 per cent to $66 million for the year.
Windrush-style warning for Bermuda
Confronting the issue
Choice of Hargun as Chief Justice defended
Duffy calls for triathlon ‘wall of noise’
Triathlon trial run to close roads tomorrow
Wells vows to make improvements
Take Our Poll