One of Bermuda's two main insurance companies, BF&M, made profits of $8.9 million - despite the devastating effects of Hurricane Fabian in what the company called a “strong” performance.

Net income was down nine percent or $900,000 year-on-year after its bottom line lost $3.7 million due to the storm, the company said yesterday in its year-end results to December 31, 2003.

“BF&M had a very strong year,” said Glenn Titterton, president and chief executive officer of BF&M. “As Bermuda's leading insurer it is to be expected that BF&M would carry by far the largest share of insured losses.”

But he said that the company's conservative reinsurance programme with a very strong panel of reinsurers meant that the company's bottom line was not hit as hard.

“Our gross Fabian losses are estimated at over $60 million but our net loss, made up of our retained losses, the loss of our reinsurance profit commission and other expenses directly related to Fabian is about $3.7 million,” added Mr. Titterton.

Mr. Titterton added that the company would have posted record earnings if the storm had not struck.

The Category 3 hurricane hit Bermuda on September 5, and ripped through the Island, destroying boats, homes and businesses.

The estimated cost of the damage to Bermuda from the storm that hit with winds up to 140 mph was between $200 and $225 million, according to local insurance industry sources.

Of this figure, between $120 to $125 million was for buildings and goods insured with local insurance companies and between $80 and $10 million insured overseas.

Local insurance companies, BF&M, Argus, Colonial and Freisenbruch-Meyer, all weathered the storm and got away with little impact to their bottom line as they were heavily reinsured.

Rivals at the Argus Group last month posted earnings of approximately $4.9 million for the six-month period ended September 30, showing the insurer weathered Hurricane Fabian with only a 4.4 percent drop in profits.

Although the company said it suffered its greatest ever gross windstorm losses following the storm, reinsurance protection reduced the impact on its earnings meaning it only posted a net Fabian loss of $2.5 million.

Mr. Titterton said yesterday that gross premium written had increased by 16 percent to $95 million while net premiums earned increased by 17 percent and Investment Income increased by 48 percent. Total expenses increased by 20 percent due to a 30 percent increase in claims and benefits, but Mr. Titterton said that operating expenses were held to less than a 1 percent increase.

Assets totalled $276.6 million and shareholders equity was $66.3 million and $3.2 million was paid as dividends to shareholders during the year.

Mr. Titterton said: “We continue to expand our real-time on-line facilities at www.bfm.bm and we believe that our substantial lead in e-business positions us well as more sophisticated customers demand easier access to insurance services and to their insurance information.”

He added that the the Group Life and Long term disability business acquired from Sun Life in 2002 has been successfully integrated and said their networking agreement with Sun Life has brought real benefit to both parties.

He said that the development of PXRE House by BF&M 60 percent owned subsidiary, Barr's Bay Properties Ltd., is complete and the complete renovation of the Insurance Building is underway.

And he said that after year-end they reached agreement with Canada Life to acquire their group business in Bermuda and to act for them in other lines.

He said: “We also formed North Atlantic Asset Management Ltd. and acquired Osprey Investments.”

Mr. Titterton said that there was considerable momentum at BF&M that, combined with the enthusiasm and commitment of its team, they believed would “lead to the further growth and success”.