The year-end results for BF&M Ltd released yesterday show that the company spent some $41.7 million on the lengthy legal battle which ended in an out-of-court settlement last year.

Despite the company reporting a net loss of $29.6 million, management has vowed to put the past behind it and concentrate on increasing profit margins and pushing up the share price.

This came from the company's president and chief executive officer Glenn Titterton, who spoke to The Royal Gazette yesterday after the release of figures for the year ended December 31, 1999.

The report revealed that most of the loss was incurred by a lump settlement payment of $35 million -- an out-of-court settlement as part of an agreement between BF&M and the liquidators and creditors of the Bermuda Fire and Marine Insurance Company Ltd. A further $6.7 million was spent on legal costs.

But the figure for gross premiums earned was up from $62.1 million last year to $68.9 million this year.

Mr. Titterton said: "1999 will always be remembered as the year of `the court case' and of the `settlement'. Most importantly, it will be remembered as the year that BF&M put this matter behind it once and for all.'' Net premiums earned also rose from $44.6 million to $51.2 million and reinsurance ceded payouts went from $17.6 million to $17.7.

Mr. Titterton said: "I am very pleased because 1999 was a year we were very distracted by the court case and the business performed very well for the year. If it were not for other charges directly from the court case we would have exceeded earnings (of) 1998.'' He added that the company could now draw a line under the whole issue and concentrate on the core business of BF&M. Mr. Titterton said that all costs had been paid in full and up front and that there would be no carry over into the next financial year. The only impact would be seen on investment income because there would be less money in the coffers. He added that he believed that the company would now go from strength to strength.

"I believe the company will now be able to grow and we will be looking at the price of our stock to try and improve it.'' In a statement released to the press, Mr. Titterton said: "While 1999 was a most difficult year because of the trial, it represented a turning point in the history of the company and in the company's fortunes. Previously our operating successes tended to be overshadowed by the continuing threat of litigation.

"In 1999 alone we incurred over $6.7 million in litigation related expenses both before and during the seven month trial. In addition and happily, we were successful in negotiating a commercial out of court settlement between all parties, towards which we contributed $35 million. By year end we had brought all litigation to a final and happy conclusion while at the same time concluding a very successful trading year.

"As one would expect, recording 100 percent of these very substantial expenses in 1999 produces a large net loss. However, the matter has been concluded once and for all and we have a lot to celebrate as we look forward to 2000 and beyond.'' Chairman Lt. Col. Michael Darling said in a letter to shareholders: "We are very pleased to record Net Earnings for the year before unusual items of $12.1 million, which represents a strong performance in a highly competitive market.

"Unusual items have been identified separately so that shareholders can compare operating results against the preceding year. While this will be useful, it will not produce a fair comparison because 1999 included the very costly diversion of senior management's time and energies to the trial and settlement, as well as a substantial loss which was realised on the sale of surplus under-performing investments to fund part of the settlement payment.

"Operating results would have been substantially better were it not for these developments. It is most satisfying to be able to report on the solid performance of BF&M Life and BF&M General, which produced very acceptable profits in a most difficult year.

BF&M says it's ready to move on "We are particularly pleased that our Risk Management Services Division produced a most satisfactory profit in 1999.'' Mr. Titterton noted: "This simple summary does not do justice to the tremendous efforts of Management and Staff during this most unusual and trying period. We are so much stronger for the experience.

"Unfortunately these high profile issues detract attention from an otherwise strong operating performance. 1999 was a very good and profitable year for BF&M, in which we grew our primary lines of business and maintained our position as a strong market leader.

"Our business is in excellent shape and provides a solid foundation on which to build. We made dramatic changes within our organisation in recent years and BF&M is now lean, well organised and customer-focused. We have an excellent management and staff. We now have a level playing field. We are prepared to face the challenges of 2000 and beyond and we move forward with confidence and enthusiasm.'' The Bermuda Fire case had rocked the insurance world. The good and the great of the Island were put on the stand and the total legal bill is estimated to have reached $35 million.

In 1995 an action was brought against BF&M Limited, certain of its subsidiary companies and some of its shareholders by the liquidators Ernst and Young. The accountants were also suing Bermuda Fire's five former directors who sat on the finance committee, accountants Cooper & Lines and legal advisors Conyers Dill & Pearman for damages over the company's collapse.

The case before the Supreme Court started in May 1999 and the action was dismissed by the Supreme Court on 16th December 1999, following the agreement by all parties to an out-of-court commercial settlement.

At the time of dismissal, the schedule suggested that the case would not have concluded before the end of 2000 and would, almost certainly, have been followed by an appeal process lasting several more years.

The court case was based on Bermuda Fire being split into two separate businesses in 1991. BF&M got the profitable domestic business, while the less attractive international business was given to Bermuda Fire.

By the time Bermuda Fire collapsed in 1993, it owed an estimated $450 million.

BF&M president & CEO Glenn Titterton: `We now have a level playing field'