BF&M turns $14m profit for first three quarters

Domestic Bermuda insurer BF&M, which is embroiled in a takeover fight with local rival Argus Group, turned a nine-month profit of $14.2 million compared to a $17 million loss in the same period in 2022. 

BF&M noted that the 2022 figures were restated as the company now adheres to accounting standard IFRS 17.

Abigail Clifford, the group's president and CEO, said: "This quarter, our financial standing has remained robust. As anticipated, the introduction of IFRS 17 has led to some variability in our financial outcomes, including alterations in earnout timings. 

"Despite these changes, the strong results we've achieved are a direct reflection of our team's dedication to appropriately adjusting rates and continuously improving our risk underwriting methods."

Clifford added: "The recent affirmation of our A (Excellent) rating from AM Best confirms our dedication to our policyholders, shareholders, employees, and business partners. Our goal is to foster trust, deliver exceptional service, and maintain the highest level of financial integrity."

Equity attributable to shareholders at 30 September 2023, was $293.4 million. General fund assets totaled $952 million, of which $123.3 million was held in cash and cash equivalents. 

The company’s combined insurance service, net investment, and finance result under IFRS 17 was $34.4 million versus a Q3 2022 IFRS 17 restated amount of $1.9 million, driven by higher core investment income, increases in bond and equity assets and higher than expected profit commissions due to favourable loss experience in P&C.

BF&M's three main insurance operations - BF&M General Insurance, BF&M Life Insurance  and Island Heritage Insurance all had their A financial strength ratings affirmed in October. 

The ratings agency said: "BF&M has a history of profitable operating results, though unfavourable net results in 2022 and consistent dividends have limited equity growth. In years when underwriting results were down, investment income was typically able to provide an offset. However, results in 2022 were adversely affected by pressure on core underwriting, and more materially, unrealized losses on its investment portfolio." 

It added: "In addition, AM Best does not consider the investment by BF&M into a fund holding a 16.3% share in Argus Group Holdings Limited (Argus) to be of sufficient materiality to warrant rating action. However, the recent announcement by BF&M regarding its strategic partnership with Equilibria Capital Management to engage in a merger defense strategy, in addition to the board’s adoption of a shareholder rights plan in response to Argus’s pending acquisition of a large minority stake in BF&M, continues to imply less-than-full alignment between the board and other key stakeholders. 

"AM Best will continue to monitor the status of this transaction and may take rating action if the exercise of BF&M’s exclusive option to purchase an additional 13.7% of Argus is determined to be material to its business strategy, corporate governance or balance sheet strength."

AM Best also said: "AM Best also continues to monitor the status of the pending purchase of a minority stake in BF&M by a subsidiary of Argus Group Holdings Limited, announced in early June 2023."