BF&M Ltd reported net income of $13.9 million for the first half of 2017 — up from $13.2 million in the first half of 2016.
The profit represented a 10 per cent return on shareholders’ equity.
John Wight, BF&M’s chief executive officer, said: “Operating results were strong, driven by favourable claims experience and positive net fair value gains on investments and reserves, despite the impact of lost 2017 reinsurance profit commission due to 2016 hurricanes Matthew in the Bahamas and Nicole in Bermuda.”
BF&M operates in 15 jurisdictions, including Bermuda and many Caribbean jurisdictions.
Equity attributable to shareholders at June 30, 2017 was $275.2 million. General fund assets totalled $1.2 billion of which $120.7 million was held in cash and cash equivalents.
Gross premiums written for the period were $175.8 million, reflecting a decrease of 4 per cent from the corresponding 2016 period as a result of a reduction in premiums on certain commercial properties. The reduction had “little to no impact on the company’s bottom line”, BF&M said.
The fair value of investments for the period rose $8.3 million, compared to $18.9 million in 2016.
“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, the company reported a $0.1 million net gain on the difference between the fair value of investments which support certain liabilities and reported reserves,” BF&M added.
A $2 million gain, compared to a $1.2 million gain in 2016, was reported on the company’s other investments.
Commission and other income increased from the prior year by 10 per cent to $22.4 million. The insurer said 2016 hurricanes continue to negatively impact commission income this year. But higher levels of proportional reinsurance ceded and profit share reported on non-property business offset the impact.
Short-term claims and adjustment expenses increased 2 per cent to $12.3 million. Life and health policy benefits decreased by 26 per cent to $55.9 million.
“Life and health policy benefits” includes changes in life insurance reserves which increased significantly in the first half of 2016 compared with a much smaller increase in 2017. These reserve movements were primarily driven by differences in market interest rates over the respective periods.
Operating expenses were in line with the prior year at $33.2 million.