BF&M Limited, an insurer providing services to the domestic market, said its 2005 profit grew by 70 percent as its previously poor performing health insurance division turned a profit.

BF&M?s earnings grew to $16.9 million compared to $9.9 million in 2004, the company said in a statement. And gross policy sales grew $12.9 millon, or 12 percent to $118.8 million. The company expanded its operations last year by buying up a majority stake in a Barbadian insurer from that Island?s government, as well as growing in the Bermuda market. Chief executive John Wight said the company was already reaping benefits from the diversification.

He said BF&M?s diversification ?will serve not only to increase earnings but also reduce volatility?. And said this was already apparent in the 2005 results.

At the same time, Mr. Wight remained concerned at the escalating costs for healthcare in Bermuda, as well as increasing use of medical services here and abroad.

This part of the business dragged on BF&M in 2004, but returned to a profit last year.

Beyond insurance sales, BF&M?s results were bolstered to record profit by greater investment income, up three percent to $9.7 million, and a 20 percent jump to $14.1 million for other income and fees.

Expenses related to claims and benefits were also higher, up seven percent to $67.7 million.

During the period assets grew to $490.2 million, a nearly 68 percent increase from the end of 2004 when assets stood at $292.4 million. BF&M?s acquired stake in the Insurance Corporation of Barbados Limited helped fuel asset growth, the company said.

The company?s Bermuda acquisitions last year included buying the Bermuda block of the individual life insurance business of the Canada Life Assurance Company, and incorporating Bermuda International Insurance Services Limited, which specialises in providing life insurance products to high-net worth individuals.

Shareholders? equity at the end of last year was 6.7 percent higher, or $84.6 million.

Over the course of the year, the Bermuda Stock Exchange listed insurer paid out more than $3,500 to shareholders in dividends.