Rising interest rates battered Bermuda-based White Mountains Insurance Group Ltd.?s comprehensive net income for the second quarter by 76 percent, the company has reported.

Comprehensive net income for the quarter was $38 million compared to $163 million in the second quarter of 2003.

The company said: ?The decline was mainly due to $139 million of after-tax unrealised losses on the fixed income portfolio caused by a rise in interest rates, compared to after-tax unrealised gains of $76 million in the second quarter of 2003.

?In addition, pre-tax realised losses were $6 million in the second quarter of 2004 compared to $90 million of pre-tax realised gains in the second quarter of last year.?

But the company reported strong operating income before realised and unrealised gains or losses of $169 million, as the company had strong underwriting results and recorded a $111 million after-tax gain on the Sirius acquisition.

Chief executive officer Ray Barrette said: ?I am pleased we were able to grow our book value in the quarter despite a strong headwind from the bond market. Our short duration and good equity performance minimised the damage. ?Underwriting profits at both OneBeacon and White Mountains Re remain strong. The Sirius acquisition resulted in a gain of $111 million. Sirius is also generating significant underwriting profits on annualised premiums in excess of $500 million.?

White Mountains closed the purchase of Swedish-based Sirius Insurance Group in April. For the year-to-date, comprehensive net income was $233 million compared to $254 million in the comparable period last year, the company said.

Operating net income for the first six months of 2004 was $264 million, up 42 percent compared to $187 million for the first six months of last year.