The cost of car and bike insurance will have to rise, according to local insurance company BF&M, which yesterday reported profits were up by 37 percent to $6.4 million for the first six months of the year.

"We achieved a substantial improvement over the same period last year due to a great many factors including growth and improved investment," said Glenn Titterton, president and chief executive officer.

Mr. Titterton, in a letter to shareholders, said that net earnings were $6,373,265 to June 30 compared to $4,655,404 for the same six months a year earlier, which was ten percent better than budgeted.

But he added: "Rate increases were applied to our motor business due to continued poor results and further increases became necessary subsequent to the end of the period. Claims for own damage and third party damage show no signs of reducing particularly in autocycle and in commercial vehicle.

"This reflects not only the higher cost of repairs but also an increasing trend in the number of accidents. Premiums for motor insurance in Bermuda are far too low and must increase if the business is to become viable. Comparison with costs in other countries show just how under-priced cover is in Bermuda even taking into account the differing circumstances."

The company also announced that its total assets stood at $222 million with shareholders equity at $64 million.

The company's gross premiums written increased by 12 percent to $45.8 million, compared to $40.8 million for the same six months in 2002 and net premiums earned increased by 11 percent.

The largest change was in investment income, which increased 59 percent. Mr. Titterton said that it marked a "sharp turnaround from the unfortunate experience of 2002."

Total income, net after reinsurance, increased by 15 percent compared with an increase of 11 percent in total expenses, which was modestly less than budgeted.

"While expenses were less than budgeted they still reflect substantial investment in training and development of human resources, and substantial investment in technology advances and systems," added Mr. Titterton.

He said that gross premiums written increased by 13 percent over the same period last year due to a combination of rate increases and new business acquisition.

Mr. Titterton added that the programme of re-underwriting BF&M's marine account was well underway and their premium income has increased.

"This account is particularly exposed to storm damage and this issue is receiving close scrutiny," he added.