Domestic insurer BF & M has reported a sizeable increase in first quarter earnings and raised its dividend to shareholders.

But the company downplayed the earnings jump as derived from one-off revenues, as they outlined how income was increasingly relying on the performance of their Caribbean subsidiaries.

In reporting the earnings to March 31, the company said the net income of $11.4 million (up from $4.4 million in the same period in 2013) resulted in an annualised return on shareholders’ equity of 18.5 percent.

President and chief executive officer John Wight stated: “Financial results for the first three months of 2014 were good. The core operating earnings in the first three months of 2014 were slightly improved over the corresponding period in 2013, however there were certain anomalies such as one-time gains and the timing of certain revenues that occurred in the first quarter that will not repeat in the remaining quarters of 2014.

“We are however pleased with the results thus far for the year.

“BF & M has built, through profitable operations, a strong equity base which is important to policyholders, whether to provide for claims to policyholders in advance of the upcoming hurricane season in Bermuda and the Caribbean or to pay life insurance claims decades into the future.”

“The board of directors announced that it would be increasing the dividend from 20 cents per share to 22 cents per share for shareholders of record at 30th June 2014.

“This will be welcome news for the 1,300 Bermudian shareholders of BF & M, many of whom depend upon dividends to supplement their incomes or provide for their pensions.

“This announcement by the board of directors reflects the strong balance sheet of the company and the company’s track record and future plans to deliver sustainable strong financial results.”

Mr. Wight added further that the strategy of being a strong regional direct insurer in the Caribbean continues to benefit the company through greater diversification and reduced overall risk.

Approximately half of the company’s profits now are derived from businesses operating outside of Bermuda. In addition, approximately half of profits came from general insurances and half come from other businesses such as life and health insurance, retirement income and investment advisory services, and real estate.

The company statement added, “A.M. Best’s financial strength ratings for BF & M’s two principal operating subsidiaries, BF & M General Insurance Company Limited and BF & M Life Insurance Company Limited are A (Excellent).

“There is no insurance company in Bermuda writing domestic insurance business with ratings this strong. A.M. Best cited BF & M’s “consistent positive net income, steady premium growth, high level of capital, and strong market share.”

“BF & M’s other two principal operating businesses, the Insurance Corporation of Barbados Limited, and Island Heritage Insurance Company Ltd, have financial strength ratings of A- (Excellent). There are no other direct insurers in Barbados and Cayman with stronger ratings than those two companies.

“Equity attributable to shareholders at 31st March 2014 was $237.6 million. General fund assets totalled $1.1 billion of which $118.3 million was held in cash and cash equivalents.

“Gross premiums written for the period were $79.9 million, an increase of two percent over 2013. Investment income for Q1 reflected a $7.7 million increase in the value of investments for the period as interest rates and credit spreads fell in Q1, increasing the fair value of the company’s extensive fixed income portfolio.

Offsetting this was a $6.5 million increase in the value of policyholder benefits as a result of the company’s disciplined asset liability matching policy which limits volatility of reported earnings as a result of interest rate swings in either direction. Commission and other income decreased six percent to $10 million.

Short term claims and adjustment expenses decreased by 18 percent to $5.7 million and life and health policy benefits decreased by 62 percent to $32.4 million, reflecting the increase in the value of policyholder benefits mentioned above. Operating expenses increased one percent to $15.3 million.