having paid out $41 million in settlement and legal fees during 1999.

Its bottom line has been hit by loan repayments which have knocked off more than ten percent of the BSX-listed company's operating earnings from 1999 to 2000.

BF&M, which is one of the Island's largest local insurance companies, was part of a marathon legal battle which finally settled out of court last year.

Last year the company made a net loss of nearly $30 million, but president and chief executive officer Glenn Titterton said the company now had a strong start to the new millennium with the 2000 results.

He said: "The year 2000 represents the happy beginning of a new chapter in the development of BF&M. The progress continues in 2001.'' But the operating earnings -- earnings before any extraordinary items -- were down more than ten percent from $12.1 million in 1999 to $10.8 million in 2000.

The difference of $1.25 million in earnings is attributable partly to an increase in the company's expenses for 2000 due to loans taken out to cover the cost of the court case and settlement.

There is an increase of $1.18 million on the payment of interests on loans, which is up from $181,341 in 1999 to $1.36 million in 2000.

BF&M chairman Michael Darling described this year's earnings as "excellent''.

He said: "It is difficult to compare 2000 to 1999 in any meaningful way.

There are many reasons for this. For example, one time settlement and legal expenses in 1999 totaled $41 million.

"Also, decreased investment income on fewer investment assets combined with the interest expense on the loan taken out to help fund the settlement reduced earnings in 2000.'' At December 31, net assets stood at $157.7 million, excluding segregated account assets of $117.3 million. Shareholder's equity increased to $45.6 million.

Gross premiums for the year increased by less than one percent from $68.9 million to $69.5 million "despite continuing downward pressure on some rates'', a company press release stated.

Reinsurance expenses continued to increase, going up from $17.7 million in 1999 to $18.2 million in 2000.

But net premiums earned increased marginally from $51.22 million in 1999 to $51.24 million in 2000.

Investment income went up by 12 percent from $7.7 million in 1999 to $8.6 million in 2000.

Operating expenses also rose from $11.8 million in 1999 to $12.6 million in 2000.

And earnings per share (basic) rose from minus $9.90 to $2.63. Fully diluted earnings per share went from minus $9.90 in 1999 to $1.47 in 2000.

Mr. Titterton said 2000 saw many positive changes in the company and cited the launch of e-insurance at www.bfm.bm, Bermuda's first full quote and buy personal insurance site.

The site allows residents to get personal insurance cover 24/7 on-line at the touch of a button.

And Mr. Titterton said the company would now be rolling out additional insurance products and services which would make the web site a full service insurance site.

He said: "There will be immense benefits for our customers as we move forward. This is a very tangible demonstration of the high level of innovation taking place at BF&M.'' He added: "However, there were many less visible developments which solidify our position as a market leader and shape our plans for growth in the new century. Our companies are financially strong, secure and well prepared. We believe that our excellent results in 2000 represent a very strong start to the new millennium.'' Mr. Titterton said the group's two largest companies, BF&M Life Insurance Co and BF&M General Insurance Co Ltd, had both produced good results in 2000 in a highly competitive market. He said he was also pleased with the results for BF&M Management Ltd and that all other subsidiaries had also produced profits.