BF&M Half-Year Profits increase 6% to $4.65 million

Glenn Titterton, President & Chief Executive Officer of BF&M Limited today released the Group's unaudited accounts for the half year to 30th June 2002, which will shortly be mailed to shareholders. "The first half of 2002 was a very difficult period dominated by huge upsets in investments and a strained business climate. Against this background, we are very pleased that BF&M has been successful over a broad range of initiatives and in increasing Net Earnings by 6% to $4,655,404."

On the income side, Gross Premiums Earned increased by 13% to $39.9 million but as expected Investment Income came under severe pressure and decreased by 40%. Despite this, Total Income increased by 2% to $35.3 million.

Total Expenses increased by 1% with Operating Expenses increasing by 9% reflecting the Company's continuing strengthening and development of its people and further substantial investment in technology and systems.

John Wight, Executive Vice President, Finance commented that, "in keeping with the difficulties encountered by most financial institutions and investors generally, the management of our investment portfolio was particularly difficult during this period. Only 3% of our investment portfolio is in international equities but we experienced losses in this area. We also wrote a bond holding down to market value and booked a substantial loss. Elsewhere, lower interest rates affected income from both our local mortgage book and our cash position. This was a most difficult period for investors and we appear to have fared reasonably well despite several unfortunate knocks."

Mr. Titterton commented that this was also a difficult period from an underwriting perspective. "In BF&M General, premium or rate increases imposed across a wide range of policy types, but particularly the property account, were not sufficient to offset increased reinsurance costs. Motor experience continued to be bad in both the own damage and third party liability segments and this business lost us a substantial sum of money. In BF&M Life we were able to see an improvement in health claims experience and we will watch this welcome development closely to see if the improvement continues through the rest of the year."

Mr. Titterton added that "BF&M continues to make substantial progress on a number of fronts. Our principal lines of business remain sound and we continue to roll out new web based real time products and services to meet the needs of a growing number of our customers. Our networking agreement with Sun Life Financial has proven to be a win win situation for both parties. Work has started on the new PXRE House and the extension to the Insurance Building. Importantly, we continue to invest in the development of our people and in systems and process development, thus building strength for the future.