premiums for the year to December 31, driving profit up 41.7 percent to $64.9 million or $2.70 a share.

The company's fourth quarter net income jumped 46.9 percent to $15.3 million, with after tax operating earnings for the three months, excluding realised investment gains and losses, soaring 127.9 percent to $15.1 million.

Chairman William O. Bailey described the year as "very good'', with net income and operating earnings significantly above the year before. He said it reflected the company's expanding businesses and the added capital resources which were developed over the year.

Mr. Bailey said, "Each of Terra Nova's operating entities produced both premium and earnings results consistent with our expectations.

"Our strategy to achieve differential premium growth primarily through expansion of our participation in Lloyd's syndicates managed by Octavian helped achieve a 26 percent growth in net written premiums in 1996. An increase of 40 percent is expected in 1997.

"At a time of growing competition and price pressures in certain lines of business, expansion through a greater involvement in the largely renewal business of these syndicates continues to be the preferred course to optimise earnings going forward.'' Gross premiums written for the fourth quarter dipped 1.4 percent to $37.3 million, while for the full year they rose 19.3 percent to $361 million. Net premiums written for the fourth quarter rose 52.1 percent to $35.3 million, and rose 26 percent for the full year to $311.2 million.

An underwriting profit of $7.9 million compared favourably to the underwriting loss a year ago of $9.6 million.

On a pro forma basis, after tax operating earnings for the full year were $59.2 million or $2.26 per share. The pro forma earnings assume that the initial public offering, redemption of preferred shares and conversion of the minority interests which the company completed last April, took place January 1, 1996.

Net realised investment gains after tax for the year were $7.7 million, compared to $6.5 million a year ago.

The combined ratio improved year-over-year from 103.8 percent to 97.2 percent, due to a reduction in the loss ratio of 7.1 points.

Net investment income for the year was up 4.9 percent to $78.1 million, as a result of an increase in invested assets, partially offset by lower portfolio yields.

Total assets at December 31 were $1.867 billion, up $82 million from a year before. Shareholders' equity was $398.8 million, up 14.2 percent from a pro forma shareholders' equity of $349.1 million.

The increase is a consequence of retained earnings of $61.5 million and additional capital of $1.9 million, primarily relating to shares issued in connection with the Octavian acquisition being offset by a reduction of $13.7 million in the amount of unrealised investment gains after tax, primarily due to weaker bonds.