second quarter to May 31, compared to $211.6 million for the same period last year. It brought net income for the first half of the year to $326 million, up from $319.7 million for the first half of the fiscal year 1997.

Net income included realised gains of $74.5 million (1997: $126.3 million) and $137.5 million (1997: $158.9 million) for the second quarter and first six months of the year, respectively.

Net operating income, excluding realised investment gains, increased 12 percent to $96 million for the quarter, and increased 17 percent for the six month period to $188.5 million.

The company explained that cash or economic income, net operating income excluding amortisation of goodwill, was $99.4 million and $195.2 million for the three month and six month periods.

The difference between operating income and cash income is expected to increase by an incremental $32 million per year, upon completion of the announced merger with Bermuda reinsurer, Mid Ocean Ltd.

President and CEO, Brian O'Hara commented: "The strong operating results reported for both the second quarter and first six months of 1998 reflect our commitment to maintaining underwriting discipline and implementation of strategic initiatives to grow the company, including the purchase of GCR Holdings Ltd. in 1997.'' Total revenues, including capital gains, were $296.7 million (1997: $326 million) for the quarter and $572.2 million (1997: $543.2 million) for the six month period. Total assets in the six months to May 31 grew $600 million to $6.7 billion. Shareholders' equity grew $300 million in the same period to $2.8 billion.

Gross premiums written for the quarter were $116.9 million (1997: $81.3 million) and for the first six months were $367.2 million (1997: $185.6 million).

Net premiums written for the quarter and the first six months were $99.2 million and $316.6 million, respectively.

Net investment income, excluding realised gains, was $60.5 million in the second quarter and $118 million for the six months.

EXEL Ltd. earned $19.7 million and $34.9 million in the second quarter and first six months, respectively, from its equity in the net earnings of its affiliates, primarily its 24.7 percent in Mid Ocean Ltd. The merger of the two companies is expected to close this summer.

The combined ratio was 86.8 percent for the quarter and 83.9 percent for the six months.