earnings increased 7.5 percent to $7.7 million.

Earnings per share rose from $1.72 in 1992 to $1.90 for the year ending December 31, 1993 .

The company hailed the financial year as a success, as it successfully maintained its business in the wake of the controversial wind-up of Bermuda Fire and Marine insurance company.

Total assets for BF&M, excluding managed funds, grew by 10 percent to $143,313,307 and shareholders' equity increased by 13 percent to $39,776,891.

Chairman the Hon. Charles Collis said: "The market price of our common shares was depressed as a result of confusion caused by negative publicity surrounding an unrelated company.'' That negative publicity refers to the Bermuda, Fire and Marine controversy, in which the "unrelated company'' which was controversially put into provisional liquidation last November.

The company, which suffered extensive losses in the London market, was spun off into a separate company several years ago. Some creditors of Bermuda Fire & Marine have questioned the move and warned they may challenge it in the courts.

Provisional liquidator Mr. Anthony Joaquim said yesterday an investigation into the company was still on-going and that it would be several months more before any recommendation is made.

The market price of the common shares of BF&M started the financial year at $8 a share, finished at $7.50 and last traded at the beginning of the week (May 2) at $6.50.

The company's preference shares also dropped from $12.50 to $9.50 to the end of the year, with some recovery earlier this year.

"These market prices do not reflect either the rate of return or our company's earning potential,'' reported Mr. Collis, "and your directors expect prices to return to realistic levels.

"The board decided to maintain the existing level of dividend on common shares and is confident that the company's shares represent a secure and highly competitive investment.'' The company paid out $3,409,159 in dividends for the year, with $1,159,159 paid on common shares ($0.40 per share per annum) and $2,250,000 paid on preference shares ($0.90 per share).

The company recognised its list of difficulties for the year as having included lingering effects of the recession, rising health care costs, a rapidly contracting and difficult property reinsurance market and the " public perceptions caused by adverse publicity surrounding an unrelated company.'' BF&M's business is almost exclusively domestic. And quite surprisingly, as president and chief executive officer, Mr. Glenn Titterton pointed out in his management report, there was no resulting loss of market share in light of the adverse publicity.

Mr. Titterton, like his chairman, went to great lengths in his report not to mention Bermuda, Fire and Marine by name, only saying, "Developments involving a separate and unrelated company were not anticipated. We were advised that the link to BF&M Limited was a matter of perception rather than of fact.

"However, the misunderstandings created by the publicity surrounding these developments presented our companies with an unusual public relations challenge.

"Management and staff responded successfully to this challenge and we are pleased to report that there was no resulting loss of business.'' BF&M reported a profit of $7,743,370 on gross premiums earned of $45.4 million, 12 percent ahead of 1992.

Overall reinsurance costs increased almost 18 percent due to increases in catastrophe reinsurance premiums.

Net premiums earned were $31 million. Investment income was down by less than two percent to $8.3 million.

Claims and benefits rose by nine percent to $28.6 million, attributable to life, health and motor insurance, while property and casualty claims were considerably less than budgeted.

Mr. Titterton said: "We were obliged to increase windstorm premiums in response to a significant increase in the cost of windstorm reinsurance. Rates in Bermuda had been falling for years and it was understandable world wide catastrophes would affect this trend.

"Rates vary from risk to risk but in 1994 rates in Bermuda will generally approximate those charged here in 1980.'' He added that compared to other similar countries, full cover, if available, would cost several times greater than that charged in Bermuda.

The motor division faced a further deterioration of liability claims from past years, with one claim finally settled last year with payments totalling over $1.5 million, representing part of total awarded damages and costs in excess of $2 million.

Mr. Glen Titterton.