BF&M Reports Nine Month Earnings Of $19.2M

December 5, 2016

John Wight `16 small sizeBF&M Limited today reported shareholders’ net income for the nine month period ended 30th September 2016 of $19.2 million, resulting in an annualized return on shareholders’ equity of 9.6%. Shareholders’ net income for the comparative nine month period of 2015 was $17.3 million.

President and CEO John Wight [pictured] stated: “Financial results for the first nine months of 2016 continue to be strong.

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

He added: “While our third quarter results do reflect the impact of a large commercial fire claim which occurred in Bermuda, they do not reflect losses associated with Hurricanes Matthew in the Bahamas and Nicole in Bermuda, which will be accounted for in the fourth quarter.”

BF&M operates in Bermuda and 15 islands in the Caribbean. As at the end of the third quarter, approximately 70% of the company’s earnings were generated in Bermuda, and 30% throughout the Caribbean.

Approximately 54% was generated from property and casualty business, 40% from health, life, annuities, pensions, and investment advisory services, and 6% from Bermuda real estate. 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, “Our strategy of diversification by geography and by line of business continues to serve us well. Our financial strength ratings are the strongest in Bermuda and the Caribbean for a domestic insurance group.

“These factors, together with long-established relationships with our partners and customers, are the cornerstones of our success. We are well-positioned for the rest of 2016 and for the years to come.”

Equity attributable to shareholders at 30th September 2016 was $271.0 million. General fund assets totaled $1.1 billion of which $118.9 million was held in cash and cash equivalents.

Gross premiums written for the period were $274.4 million, an increase of 5% from the corresponding 2015 period.

Investment income for the nine months reflected a $19.1 million increase [2015 - $2.3 million decrease] in the value of investments for the period on an overall year-to-date decline of US interest rates.

This interest rate decrease positively impacted the fair value of the company’s extensive fixed income portfolio. Offsetting this was a $19.6 million increase [2015 - $0.9 million decrease] 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 were in line with the prior year at $30.4 million.

Short term claims and adjustment expenses increased 6% to $18.0 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. Further impacting the increase were the claims associated with the Front Street fire in Bermuda that occurred in July 2016.

Life and health policy benefits, which are recorded at fair value, increased by 43% to $111.1 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 3% to $48.8 million.

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  1. Lualaba says:

    So no need for premium increase then? (Sorry only joking)