second quarter earnings as a result of a change in its underwriting strategy and improved investment returns.

EXEL earned net income of $211.6 million for the second quarter of 1997 ended May 31, a gain of 138 percent over the $89 million earned in the same period 1996.

The profits translated into net earnings per share of $2.46, compared with 95 cents per share in the same period last year.

In the six months to May 31 the company earned a profit of $319.7 million, or $3.68 per share, compared with $296.1 million, or $3.13 per share, in the same period last year.

EXEL President and Chief Executive Officer Brian O'Hara attributed the profit gains to a strategic change from longer tailed lines to shorter tailed lines of insurance and reinsurance contracts, and to the improved performance of the company's investments.

"However, increased competition in our core lines of business driven by readily available reinsurance capacity and a temporary decline in underwriting losses has encouraged us to reduce our exposure to certain classes of business and to the lower layers where there is a higher exposure to frequency of loss,'' Mr. O'Hara said.

Through its subsidiaries the exempted company provides general liability, directors and officers liability, employment practices and professional liability, political risk, and excess property insurance and reinsurance coverage. The company sees future growth through acquisitions and by expanding its services.

"We have recently undertaken a strategic review of all of our existing businesses and those where we see long-term opportunities,'' Mr. O'Hara said.

"As demonstrated by our recent purchase of Global Capital Holdings Ltd., we have identified several opportunities for selective expansion of our insurance and financial services businesses.'' EXEL's shares rose $3.50 to close at $52.50 after the earnings report exceeded analysts' expectations.

"Their core business has grown very competitive, so they have taken steps to couner that and the market is rewarding them,'' Cathy Seifert, an analyst at Stand & Poor's Corp., told Bloomberg News.

"On their core lines of business, claims trends improved,'' she added.

Net operating income for the second fiscal quarter, excluding realised investment results, was $85.3 million compared with $72.8 million for the same period in 1996.

As of May 31, the company purchased 3.4 million of its shares in first six months. Under its share repurchase authorisation, EXEL can still buy back an additional 2.4 million shares.

Total assets at May 31 were $5.3 billion, compared with $5 billion at Nov. 30, 1996. Fully diluted book value per share at May 31 was $25.82 compared with $24.21 at November 30, 1996.

After adjustments, net premiums written increased 24 percent to $102.1 million in the second quarter 1997, from $82.2 million in the same period last year.

Net investment income, excluding realised gains, was $54.2 million in the second quarter 1997 compared with $50.2 million in 1996. Realised investment gains for the six month period were $158.9 million, compared with $152.3 million in the same period last year.

EXEL earned $15.7 million from its equity in the net earning of its affiliates, primarily Mid Ocean Ltd., in the second quarter. In the same period last year EXEL earned $14.3 million from its affiliates. The company owns 25.6 percent of Mid Ocean Ltd.