percent riding on the back of a $209.2 million hike in gross written premium.

But results would have been much better if Hurricane Mitch had not blown in causing losses to exceed the company's already substantial loss provisions.

Operating earnings for 1998's fourth quarter increased 6.9 percent to $18.6 million compared to $17.4 million in 1997's fourth quarter.

And for the full year operating earnings were $70.9 million or $2.72 per diluted share up 12.7 percent from $62.9 million in 1997.

But an underwriting profit of just $6.6 million was reported for 1998 compared to $7.5 million in the previous year.

Fourth quarter net realised investment gains after tax were $600,000 compared to $2.4 million in 1997 but for the full year were up from $10.5 million to $13.1 million.

Terra Nova chairman John Dwyer said the company had overcome difficult market conditions to produce another quarter of underwriting profit and solid growth in operating earnings and premium.

"The company's loss from Hurricane Georges is now estimated at $15 million.

"The related increase of $7.5 million in the fourth quarter reflects the delays in reporting associated with difficulties our clients had in inspecting and reporting their claims.

"Hurricane Mitch added an additional $2 million of losses in the fourth quarter which means that in 1998 we exceeded the large loss provision that the company maintains in anticipation of such events.'' He said despite 1998's cumulative rate increases of 15 percent in the motor syndicates and more increases in January, it was clear that extra hikes would be required this year to achieve the expected level of underwriting profits.

He said a last quarter $106 million loss portfolio transfer from Terra Nova Insurance Company to Terra Nova (Bermuda) was an ongoing effort to balance the organisation's internal leverage and improve subsidiary capital utilisation.