BF&M Ltd. boosted its net earnings by more than $2 million during the first half of 2010 driven by improved investment performance.

This was despite the insurer's underwriting activities being hit by higher health claims, resulting in a rare loss from that line of business.

The company reported net earnings of $10.7 million for the six-month period to June 30, 2010, resulting in a 12 percent return on shareholders' equity, compared to $7.9 million for the same period in 2009.

BF&M president and CEO John Wight said: "We were overall satisfied with the company's financial results, which benefited from the company's improved investment performance.

"The company's earnings from underwriting activities were negatively impacted by higher health claims which resulted in a rare loss for this major line of business. All other lines of insurance and investment advisory services performed in line with expectations in light of the current economic challenges faced by businesses and individuals."

Shareholders' equity at June 30, 2010 was $176.9 million. Assets totalled $774.2 million, of which $54.9 million was held in cash and short-term deposits. Based on the company's strong balance sheet and financial performance, the board of directors maintained the dividend of 20 cents per share for shareholders of record at September 30, 2010.

"We were very pleased that AM Best reaffirmed the financial strength ratings of A (excellent) to BF&M's two principal operating subsidiaries, BF&M General Insurance Company Ltd. and BF&M Life Insurance Company Ltd.," continued Mr. Wight. "There is no insurance company in Bermuda writing domestic insurance business with ratings this strong. AM Best cited BF&M's 'consistent positive net income, steady premium growth, high level of capital, and strong market share'."

Gross premiums written for the period also rose four percent over 2009 to $122.7 million.

Investment income decreased two percent to $8.9 million. The fair value of assets classified as held for trading increased earnings by $5.7 million due to a strong bond market in the second quarter. This compared favourably to a drop in value of $7.3 million for the corresponding period last year, when the investment portfolio was adversely affected by an overweighting of US Treasury securities. Commissions and other income climbed nine percent to $10.7 million.

Claims and adjustment expenses increased by 39 percent to $12.9 million and policy benefits advanced 31 percent to $59.3 million. Operating expenses were also up five percent to $21.1 million.