The 2013 performance of Island Heritage has helped parent company BF&M to a shareholders’ net income of $25.2 million for the year. This corresponds to an annualized return on shareholders’ equity of 11.7 percent for the Bermuda-based insurance holding company. Shareholders’ net income for 2012 was $21.9 million.
President and CEO John Wight said last year was the 13th straight year that BF&M has achieved a return on equity of 10 percent or greater. Affiliates outside Bermuda contributed significantly to the 2013 results.
“For the first time, over half of BF&M’s profits came from businesses outside of Bermuda. Island Heritage Insurance Company, headquartered in Cayman and operating in 13 Caribbean countries, had record profits,” Mr. Wight said.
BF&M is the holding company of the BF&M Insurance Group, which includes BF&M’s life and general insurance companies, Island Heritage in the Cayman Islands and Insurance Company of Barbados, as well as financial firms in Bermuda. Island Heritage was acquired by BF&M in 2012.
Financial results from Bermuda-based businesses were good, but reflect the challenges that still impact BF&M’s individual, commercial and group customers. However, there were signs of recovery in the Bermuda economy, Mr. Wight added.
He said BF&M’s balance sheet continues to be very strong, in terms of capitalization and liquidity.
Equity attributable to shareholders at Dec. 31, 2013, was $227.8 million. General fund assets totaled $1.1 billion, of which $74 million was held in cash and cash equivalents.
Based on the company’s strong balance sheet, Mr. Wight said, the board of directors maintained the dividend of 20 cents per share for shareholders of record at March 31, 2014.
Gross premiums written for the year were $345.6 million, an increase of 8.6 percent over 2012.
Investment income for the year reflected a $22.5 million decrease in the value of investments for the period as the increase in interest rates reduced the fair value of the company’s extensive fixed income portfolio.
Offsetting this was a $20.5 million decrease in the reserve held in respect of future policy-holder benefits as a result of the company’s asset liability matching policy, which limits volatility of reported earnings as a result of interest rate swings in either direction.
Commission and other income decreased 16 percent to $40 million. Short-term claims and adjustment expenses increased by 21.3 percent to $22.2 million, and life and health policy benefits decreased by 21.7 percent to $83.8 million. Operating expenses increased 10 percent to $63.1 million.
A.M. Best’s financial strength ratings for BF&M’s two principal Bermuda-based operating subsidiaries, BF&M General Insurance Company Ltd. and BF&M Life Insurance Company Ltd., are A (Excellent). BF&M’s other two principal operating businesses, the Insurance Corporation of Barbados Ltd. and Island Heritage Insurance Company Ltd., have ratings of A- (Excellent).