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BF&M reports $13.2m half-year earnings

Earnings up: John Wight, CEO of BF&M

BF&M has reported net earnings of $13.2 million for the first half of this year.

That is a $1.8 million improvement on shareholders’ net income, year-on-year. It also represents an annualised return on shareholders’ equity of 9.9 per cent.

However, the company acknowledged that a large fire claim will be recorded in its third-quarter financial statements. BF&M insured the Ann Cartwright DeCouto Building on Front Street, which was gutted by fire on July 21.

Regarding the financial results for the year up to June 30, John Wight, chief executive officer said the performance was “strong”.

He added: “The core operating earnings were largely in line in the first six months of 2016, exclusive of fair value accounting for movements in the company’s investments and reserves, with the corresponding period in 2015.”

About half of the company’s earnings were generated in Bermuda, while the rest came from its operations in 15 islands in the Caribbean.

The split is also 50-50 between property and casualty business, and health, life, annuities, pensions and investment advisory services.

BF&M has four main insurance operating companies. BF&M General Insurance Company, BF&M Life Insurance Company, and Island Heritage Insurance Company are all rated A (excellent) by AM Best, while the Insurance Corporation of Barbados is rated A- (Excellent).

Mr Wight said “there is no domestic insurance group in Bermuda or the Caribbean with stronger ratings”.

Gross premiums written for the period were $183.5 million, an increase of 1 per cent from the corresponding period in 2015.

Equity attributable to shareholders at the end of June was $266.9 million. General fund assets totalled $1.1 billion, of which $113.2 million was held in cash and cash equivalents.

Investment income for the six months reflected an $18.9 million increase in the value of investments for the period on falling US interest rates.

The company said this interest rate decrease positively impacted the fair value of extensive fixed income portfolio. Offsetting this was a $21.6 million increase in the value of life and health policyholder benefits as a result of an asset liability matching policy which looks to limit volatility of reported earnings as a result of interest rate swings.

BF&M said commission and other income was in line with the prior year at $20.4 million.

Short term claims and adjustment expenses increased 14 per cent to $12 million due to increases in reported motor and miscellaneous accident claims as well as more unfavourable development on that group of claims compared to the prior year.

Life and health policy benefits, which are recorded at fair value, increased by 64 per cent to $75.7 million, primarily as a result of the previously mentioned interest rate decreases and the BF&M’s asset liability matching policy. The increase can also be attributed to higher local health claims reported in Bermuda.

Operating expenses increased by 4 per cent to $33.3 million.