percent to $63.7 million in contrast with the 0.2 percent increase in the net operating income to $49.4 million.

Total revenues increased 26 percent to $166.5 million, as gross premiums rose marginally by one percent to $261.6 million. Net premiums earned were up 14 percent to $123 million.

Net investment income, excluding net gains or losses on investments, was $26.4 million for the quarter or up 11 percent. Net investment gains were $14.3 million, compared to $2.7 million in the first quarter in 1997.

Combined ratio for the quarter climbed 71.8 percent to 80 percent, as both the loss and expense ratios were higher.

Net losses and loss expenses incurred rose from $51.44 million to $62.3 million.

President and CEO Michael Butt said, "We are pleased with our first quarter results particularly as they include a $9 million provision for the Canadian ice storms.

"We should note Mid Ocean and the marketplace are still in the early stages of determining the ultimate magnitude of this loss and there can be no assurance whether the provision will prove adequate or not.

"As expected, the January 1 renewal season was difficult, but the Mid Ocean Reinsurance account held up relatively well. Gross written premiums were down approximately ten percent and, if adjusted for the recognition of two years premium of a major account in the first quarter of 1997, were down by only six percent.

"Because the Brockbank Group reports one month in arrears, these figures do not include the January 1 renewals for that book of business. These will be included in our next quarter and will reflect our increased underwriting participation in the syndicates for 1998.

"Pricing remains under pressure across all lines, however, I am encouraged that our strategy and market positioning are attracting to the group new business opportunities at acceptable terms, as well as strong continued support from our clients and intermediaries.'' Diluted net operating income per share was $1.25, compared to $1.36 in the first quarter in 1997.

The company has adopted FASB statement 128 which establishes new standards for computing and reporting earnings per share and all per share amounts reflect the prescribed changes. Prior earnings per share amounts have been restated.

Total assets at the end of the first quarter January 31, were $2.45 billion, up eight percent from $2.27 billion at the end of fiscal 1997. Shareholders' equity was $1.41 billion, up three percent from $1.37 billion at the end of fiscal 1997.

Fully diluted book value per share was $36.06 at January 31, as compared to $35.14 per share three months earlier.