BF&M Reports First Quarter Earnings Of $7.1M

June 13, 2016

BF&M Limited today reported shareholders’ net income for the three month period ended 31st March 2016 of $7.1 million, resulting in an annualized return on shareholders’ equity of 10.7%. Shareholders’ net income for the comparative three month period of 2015 was $8.2 million.

President & CEO John Wight stated that “2016 has started off for BF&M with strong financial results. The core operating earnings in the first three months of 2016 were ahead of the corresponding period in 2015. The results for the first quarter of 2015 had certain one-time gains which did not re-occur throughout the remainder of the year.

BF&M operates in Bermuda and 15 islands in the Caribbean. In the first quarter, approximately 50% of the Company’s earnings were generated in Bermuda, and 50% throughout the Caribbean.

Approximately 50% was generated from property and casualty business, and 50% from health, life, annuities, pensions, and investment advisory services. This model of diversification has served the Company extremely well in the past and will continue to in the future.”

The BF&M Group has four main insurance operating companies, with the following A.M. Best financial strength ratings;

  • BF&M General Insurance Company Limited A [Excellent] Bermuda
  • BF&M Life Insurance Company Limited A [Excellent] Bermuda
  • Island Heritage Insurance Company Ltd. A [Excellent] Cayman
  • Insurance Corporation of Barbados Limited A- [Excellent] Barbados

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

Equity attributable to shareholders at 31st March 2016 was $263.0 million. General fund assets totaled $1.1 billion of which $121.9 million was held in cash and cash equivalents.

Gross premiums written for the period were $86.5 million, an increase of 7% from the corresponding 2015 period.

Investment income for the three months reflected a $10.3 million increase [2015 - $7.2 million increase] in the value of investments for the period on falling US interest rates. This interest rate decrease positively impacted the fair value of the company’s extensive fixed income portfolio.

Offsetting this was a $11.2 million increase [2015 - $6.1 million increase] in the value of life and health policyholder benefits as a result of the company’s disciplined asset liability matching policy which looks to limit volatility of reported earnings as a result of interest rate swings.

Commission and other income increased 5% to $9.7 million from improved reinsurance commission income.

Short term claims and adjustment expenses decreased by 6% to $5.6 million due to limited storm and fire claim related activity in 2016 as well as favourable development on motor losses.

Life and health policy benefits, which are recorded at fair value, increased by 19% to $36.0 million, primarily as a result of the previously mentioned interest rate decreases and the Group’s asset liability matching policy. The increase can also be attributed to higher local health claims reported in Bermuda.

Operating expenses increased by 4% to $15.6 million.

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