Glenn Titterton, President & Chief Executive Officer declares that " despite a most difficult year we are celebrating three significant developments which explain why 1999 was a very good year for BF&M Limited;
1. Our operating results were excellent
2. The long-running legal dispute* was settled
3. The enormous drain of legal and litigation expenses finally ended"
Mr. Titterton explained that "while 1999 was a most difficult year because of the trial, it represented a turning point in the history of the company and in the company's fortunes. Previously our operating successes tended to be overshadowed by the continuing threat of litigation. In 1999 alone we incurred over $6.7 million in litigation related expenses both before and during the seven month trial. In addition and happily, we were successful in negotiating a commercial out of court settlement between all parties, towards which we contributed $35 million. By yearend we had brought all litigation to a final and happy conclusion while at the same time concluding a very successful trading year."
"As one would expect, recording 100% of these very substantial expenses in 1999 produces a large net loss. However, the matter has been concluded once and for all and we have a lot to celebrate as we look forward to 2000 and beyond."
SUMMARY
Gross Premiums Earned increased by 11% from $62.1 million to $68.9 million
Total Income increased by 8% from $ 62.6 million to $67.85 million
Investment income fell by 15% for reasons explained below
Total Expenses increased by 11 % with Claims and Claim Expenses increasing by 11% to $40.4 million
Net Earnings (before Unusual Items) were $12.1 million comparing favourably with 1998 ($12.46 million) despite other substantial non-recurring expenses directly and indirectly resulting from the litigation and settlement, not quantified under Unusual Items
Unusual Items comprised a contribution of $35 million to the Settlement and Litigation Expenses of $6.7 million.
As anticipated these Unusual Expenses produced a Net Loss for the Year of $29.6 million, compared to Net Earnings of $11.1 million in 1998.
Total Assets, excluding segregated policyholders funds and managed funds, were $156.8 million
Shareholders Equity was $37.7 million
The Chairman, Lt. Col. Michael Darling said that "we are very pleased to record Net Earnings for the year before unusual items of $12.1 million, which represents a strong performance in a highly competitive market. Unusual items have been identified separately so that shareholders can compare operating results against the preceding year. While this will be useful, it will not produce a fair comparison because 1999 included the very costly diversion of senior management's time and energies to the trial and settlement, as well as a substantial loss which was realized on the sale of surplus under-performing investments to fund part of the settlement payment. Operating results would have been substantially better were it not for these developments."
Lt. Col. Darling said that "It is most satisfying to be able to report on the solid performance of BF&M Life and BF&M General, which produced very acceptable profits in a most difficult year. We are particularly pleased that our Risk Management Services Division produced a most satisfactory profit in 1999."
Mr. Titterton concluded that " 1999 will always be remembered as the year of "the court case" and of the "settlement". Most importantly, it will be remembered as the year that BF&M put this matter behind it once and for all. This simple summary does not do justice to the tremendous efforts of Management and Staff during this most unusual and trying period. We are so much stronger for the experience."
"Unfortunately these high profile issues detract attention from an otherwise strong operating performance. 1999 was a very good and profitable year for BF&M, in which we grew our primary lines of business and maintained our position as a strong market leader."
"Our business is in excellent shape and provides a solid foundation on which to build. We made dramatic changes within our organization in recent years and BF&M is now lean, well organized and customer focused. We have an excellent management and staff. We now have a level playing field. We are prepared to face the challenges of 2000 and beyond and we move forward with confidence and enthusiasm."
For further information, contact:-
Glenn M. Titterton, President & Chief Executive Officer Phone 295 5566, Fax 292 8831 , E-mail gmtitterton@bfm.bm
* In 1995 an action was brought against BF&M Limited, certain of its subsidiary companies, some of its shareholders and against certain other unconnected parties by the Liquidators and some of the Creditors of The Bermuda Fire & Marine Insurance Company Limited (In Liquidation). The case before the Supreme Court started in May 1999 and the action was dismissed by the Supreme Court on 16th December 1999, following the agreement by all parties to an out of court commercial settlement. At the time of dismissal, the schedule suggested that the case would not have concluded before the end of 2000 and would, almost certainly, have been followed by an appeal process lasting several more years.