TUESDAY, JULY 24: BF&M Limited reported a first quarter net income of $4.5 million, down 22 per cent compared to the first quarter of 2011 due to a decrease in investment income.
The insurer had a three-month profit of $5.7 million for 2011.
The $4.5 million profit for this year’s first quarter resulted in an annualized return of shareholders’ equity of 9 per cent.
John Wight, president and CEO of BF&M, said: “Financial results were down from the comparative period in 2011 due to a decrease in investment income.
As BF&M has the majority of its investments in high-grade corporate bonds and US treasury securities, the increase in interest rates in Q1 resulted in the fair value of the securities decreasing in value. International financial reporting standards require these unrealized losses to be recorded in the statement of income.
“The earnings from the company’s underwriting operations were good, in the context of the challenging economy in Bermuda.”
Mr. Wight added the company’s balance sheet continues to be “very strong”. Shareholders equity as of March 31, 2012 was $196.0 million.
Assets totaled $918.0 million of which $94.0 million was held in cash and short term deposits.
The company will be paying a 20 cents dividend for shareholders of record as of June 30, 2012.
Gross premiums written for the period decreased 4 per cent over 2011. Investment income was down due to a $5.7 million decrease in the fair value of assets, resulting from the drop in the value of US$ denominated bonds in the quarter.
Commissions and other income increased 16 per cent to $6.3 million. Short-term claims and adjustment expenses increased by 10% to $7.0 million and life and health policy benefits decreased to $19.1 million. Operating expenses increased 9 per cent to $11.8 million.