BF&M hurricane claims at $10m and counting
Insurance firm BF&M forked out more than $10 million on damage claims from a double whammy from hurricanes in October, the firm revealed yesterday.
BF&M CEO John Wight said that the financial impact of Hurricanes Fay and Gonzalo will be mostly recorded in the figures for the last quarter of the year.
He added: “The amount of claims incurred by BF&M resulting from the storms since the end of the third quarter is not inconsequential.”
But he said: “The company does however have a conservative reinsurance programme which limits the effects on earnings to a manageable level.”
Mr Wight was speaking as the firm revealed its results for the nine months ending on September 30.
Shareholders' net income for the period was $21.6 million, with an annualised return on shareholders' equity of 12.1 per cent, well up on the net income of $15.8 million recorded at the same point last year.
Mr Wight said: “There were, however, certain anomalies such as the change in interest rates, which moved in the company's favour for the first nine months of 2014 which were outside of the company's core operations that benefited our overall financial results.”
The board of directors has announced a 22 cent per share dividend for shareholders of record on December 31. The dividend continues the increased quarterly dividend that the board approved earlier this year.
Equity attributable to shareholders at the end of the nine-month period was $244.6 million, while general fund assets totalled $1.1 billion with $80.2 million was held in cash or cash equivalents.
Gross premiums written to September 30 totalled nearly $266 million, a drop of three per cent on the same period in 2013.
But the earnings report said: “Investment income for quarter three reflected a $13 million increase in the value of investments for the period as interest rates and credit spreads fell during the year, increasing the fair value of the company's extensive fixed-income portfolio.”
The report added: “Offsetting this was a $9.8 million increase in the value of policyholder benefits as a result of the company's asset liability matching programme which limits volatility of reported earnings as a result of interest rate swings.”
Commission and other income for the period decreased four per cent to $28.7 million and short term claims and adjustment expenses decreased by 13 per cent to $15.8 million and life and health policy benefits increased by 47 per cent to $88.8 million — a reflection of the increase in the value of policyholder benefits.
The report also said that operating expenses increased to $48.5 million (four per cent).
In the last quarter, ratings agency AM Best affirmed BF&M's financial strength ratings at A (excellent) for its two major Bermuda-based insurance subsidiaries — the highest among comparable firms on the Island.