Mr. Titterton explained that "the substantial sum paid in 1999 to settle outstanding litigation has two principle effects on our business. First, the payment reduced the surplus funds that we have available for investment, with the obvious result that there is a reduction in investment income. Secondly, because part of the settlement was financed through a bank loan, the cost of servicing that loan increases our expenses." He also cautioned that "when comparing the financial results for the first half of 2000 with the same period in 1999, one needs to consider not only this reduction in income and increase in costs, but also the very substantial legal fees incurred in 1999, which have not been incurred in 2000. These changes in income and expenses impact the financial results of each of the profit centres and are mirrored in the consolidated results for the parent company".
BF&M announced that Net Earnings for the period were $5,001,142, a 41% increase over the $3,548,287 recorded in the same period in 1999. Mr. Titterton said that "this result demonstrates the underlying strength of our business even after the enormous expenses of 1999".
John Wight, Executive Vice President, Finance explained that "Gross premiums increased to $35.3 million but increased reinsurance costs and reduced investment income, resulted in Total Income reducing by 1% to $34.1 million. Total Expenses increased by 4% principally because of the loan costs mentioned above. At 30th June 2000 Total Assets stood at $155 million with Shareholders Equity at $41 million".
Mr. Titterton emphasized the exciting development of BF&M's new e-commerce capabilities. "The re-engineering of various systems and processes in recent years enabled us to move promptly to establish an outstanding e-commerce capability. We were excited and very pleased to be able to introduce to Bermuda the first insurance online quote and buy facility, "e-surance @ bfm" at www.bfm.bm , which has been very well received. Presently this facility enables applicants to apply, bind the cover and pay the premium, for a range of personal lines insurance products 24/7 (twenty-four hours a day seven days a week). Additional products and services will be added from time to time and business to business (B2B) facilities will also be available to strengthen the service we can provide. This is an important strategic step for your company. We are firmly at the leading edge of e-business change and we invite shareholders to view our site and compare it to any insurance site globally".
Mr. Wight pointed out that at the present time BF&M's common shares are trading on the BSX at prices fluctuating around $6.75 to $7.00. He said that "even allowing for the relatively low volume on the BSX and the peculiarities of local share trading, we feel that this is surprisingly low in view of the Company's current earnings and future earning potential".
Mr. Titterton summarized the feeling within the Company. "Leaving our legal difficulties behind us in 1999, we entered 2000 with enthusiasm and with a plan of action. This plan is now being implemented at a rapid pace and our success in introducing Bermuda's first insurance on-line quote and buy web facility, "e-surance @ bfm" at www.bfm.bm is a tangible sign of our forward planning and our aggressive new image".
"We have an excellent team that is evolving continuously to meet the dramatic changes in the business environment. I extend special thanks to them because the first half of 2000 has not been easy and our team has responded admirably to the new challenges. We are very pleased with our success in the first half of the year and have every reason to expect that this success will continue".
"It is our intention that BF&M will further strengthen its position as one of Bermuda's leading financial institutions while at the same time becoming a successful e-business embracing the opportunities offered by new technology".