BF&M Ltd.'s profits fell by $2.6 million or 11. 7 percent during last year, as the recession cut down insurance demand.

The insurer yesterday announced net earnings of $19.6 million for the year ended December 31, 2009, resulting in a 12 percent return on shareholders' equity, compared to net earnings of $22.2 million in 2008.

John Wight, CEO of BF&M, said the results represented a good return for the multi-line insurance company in a tough economic environment.

"2009 was a challenging year for Bermuda as the global economic downturn affected the Island's businesses in every sector," he said.

"Businesses employed fewer people, and individuals purchased fewer new cars, boats, and postponed building renovations.

"All of this contributed to less business volume for companies servicing Bermuda's insurance needs, and BF&M was not immune to the issues facing these businesses and individuals."

Mr. Wight said he was pleased that rating agency AM Best Co. had maintained its Financial Strength Rating "A" (excellent) for BF&M's two principal operating companies – BF&M Life Insurance Company Ltd. and BF&M General Insurance Company Ltd. – making it the strongest local insurer in Bermuda.

BF&M's balance sheet was also stronger than before, with shareholders equity at the end of 2009 standing at $169.4 million, while assets totalled $731.5 million, of which $58.3 million was held in cash and short-term deposits.

And based on the company's continued strong financial performance, the board of directors maintained the dividend of 20 cents per share for shareholders of record at March 31, 2010.

Gross premiums written for the year increased by six percent over 2008 to $225.5 million. Investment income dropped four percent to $16.8 million. The fair value of assets classified as held for trading decreased earnings by $3.4 million, mainly due to the drop in the value of local Bermuda equities held by the company.

Commissions and other income fell by one percent to $24.1 million. Claims and adjustment expenses decreased by seven percent to $18.7 million and policy benefits rose by nine percent to $98 million. Operating expenses was up eight percent to $43.4 million.