Hit by volatility in investment markets and a reduction in written premiums, net income for the first half of the fiscal year for Bermuda-based Stockton Reinsurance Ltd. fell nearly 28 percent to $46.6 million compared to $64.3 million for the same period last year.

Stockton, in fact, had to bounce back in the second quarter to September 30 from a $29.4 million loss in the first quarter.

But second quarter profit was up nearly 45 percent to $77.7 million, when compared with last year's second quarter results of $53.7 million, as a result of higher net investment income in the last three months.

Gross premiums written in the second quarter plummeted from $62 million to $11.6 million and year-to-date gross premiums plunged from $73.3 million last year to $24.6 million.

The company clarified that as finite contracts are developed individually for each client, premiums written vary from year to year according to the timing of binding contracts.

Net premiums earned for the quarter were $33.9 million compared to $57.7 million for the same period in the last fiscal year.

In keeping with the quarterly decrease in gross premiums, insurance and reinsurance expenses and acquisition expenses fell from $57.0 million for last year's period to $37.4 million for the same period this year.

Net premiums earned for the six-month period were down slightly to $76.3 million from $79.4 million. Insurance and reinsurance expenses and acquisition expenses were $78.8 million compared to $77.2 million for the same period last year.

The company said that new president Daniel V. Malloy has been hiring a respected team of underwriters and actuaries to prepare Stockton Re for a new future.

Mr. Malloy commented: "We are encouraged by the quality of the opportunities which our underwriting team is now reviewing. We believe that there will be a number of new, significant long-term relationships entered into by Stockton Re between now and year-end, which will be attractive to both our clients and us.'' Diversified investment strategies produced net investment income of $85 million for the quarter, an improvement over the $60.2 million in the corresponding quarter of the previous year. Investment income for the six-month period was down from $73.3 million to $55.6 million.

Stockton Re's surplus and reserves are invested by two wholly-owned subsidiaries, Stockton Reinsurance Investments Ltd. (managed by Goldman Sachs Asset Management) and Hamilton Partners Ltd. using an integrated approach to asset and liability risk management.

Chairman of parent, Stockton Holdings Ltd., Robert G. Easton commented, "We are particularly pleased with both the quarterly and year to date results from our investment strategies considering the volatility in the global financial markets over the past several months.'' Stockton Re, an independent professional reinsurer provides a wide variety of risk transfer coverages with a focus on customised finite reinsurance.