The Company has previously reported on the legal claims being made against it and certain of its shareholders. This action is now being heard in the Supreme Court and Mr. Titterton said "The Company remains confident of its legal position. Any comment on the case would be inappropriate".
Mr. Titterton pointed out that "The Statement of Earnings shows BF&M's Net Earnings both before and after very substantial legal expenses." He said "Rather than including these legal expenses under Operating Expenses, the Company had identified them in the accounts as a specific exceptional item. This accounting method will allow shareholders to measure the extent of legal expenses, but more importantly, to clearly see the Group's underlying strength and strong operating performance."
The overall results, before legal expenses, for the first half of 1999 were well ahead of the same period of 1998. Gross Premiums Earned increased by 13% to $35 million, with increased premium volume in all major lines of business. Investment Income increased by 15%. Overall Income, net of Reinsurance premiums paid, increased by 15% to $34.5 million. On the other side Claims and Benefits increased by 15% to $20.5 million, producing a 15% increase in Overall Expenses, excluding legal expenses, to $28 million. The result before legal expenses was a strong 16% increase in Earnings for the half year, to $6.5 million.
Legal Expenses included non-recurring Brief Fees to secure the services of leading London counsel, the heavy cost of preparation for the start of the court case and the costs of the first two months before the Supreme Court. The effect was that Net Earnings after Legal Expenses reduced by 28% to $3.5 million. Legal expenses are projected to be considerably less in the second half of the year.
Earnings per share after exceptional legal expenses decreased to $0.75. Total Assets, excluding Segregated and Managed Funds, increased to $177 million while Shareholders' Equity increased to $72 million.
Mr. Titterton said, "The Group's success in the first half of the year exceeded budgeted expectations." He attributed these superior results to outstanding teamwork throughout
the organization. "Our organization has been successfully reengineered over the past several years", he said. "The organization, business plan and systems are now appropriate to deliver success in the future. A future which we face with enthusiasm and confidence".