diversification, there were record earnings for Bermuda-based insurer, EXEL Ltd., with net income rising to unprecedented heights in both the third quarter to August 31 and cumulatively for the first nine months of the financial year.

Profit mushroomed 220 percent from $64.5 million (72 cents per share) in the third quarter of 1996 to $206.6 million ($2.41 per share) in the 1997 third quarter.

For this year's first nine months, net income was $526.3 million or $6.09 a share, up from last year's $360.6 million or $3.88 per share.

Net operating income, excluding realised investment results, for the quarter rose 36 percent to $90.2 million and climbed 27 percent for the nine month period to $250.9 million.

President and CEO of EXEL Ltd., Brian M. O'Hara, said, "These results reflect the impact of our diversification strategy and focus on maintaining the profitability of our core business, despite continuing competitive pressure on pricing.

"Our acquisition of GCR Holdings Ltd. during the third quarter was accretive to third quarter earnings and has enabled the company to become a major factor in the reinsurance industry.'' Gross premiums written for the third quarter were $134.5 million, down from $189.5 million for the same period in 1996. But after adjusting for premiums relating to multi-year contracts and the impact of the specialty reinsurance assumed (SRA) Triplicat policies, gross premiums written were $178.6 million, higher than the $175 million in the third quarter of 1996.

Considering the same adjustment for nine month premiums, gross premiums written were $432.9 million, in line with the $431.2 million for the first nine months of 1996.

Third quarter net earned premiums were up from $124.5 million to $138 million, and for the nine months were $1 million higher than for the same period in 1996 at $387.7 million.

After adjusting for premiums relating to SRA policies, net earned premiums for the quarter and the nine months were $140.2 million and $395 million, respectively, as opposed to $127.6 million and $372.6 million for the comparison periods.

The company earned $16.2 million for the three months from its 25 percent stake in the net earnings of affiliates, primarily Bermuda-based reinsurer, Mid Ocean Ltd., up from $13.1 million in last year's third quarter.

And for nine months from the same sources, earnings improved from $43.5 million to $45.1 million.

Excluding realised investment gains of $116.4 million, third quarter net investment income was $56.1 million. In the 1996 third quarter, excluding realised investment losses of $4.6 million, net investment income was $50.3 million.

For the nine months, net investment income in 1997 was $161.8 million, compared with $148.3 million in 1996. Realised investment gains for the nine month period of 1997 were $275.3 million, compared with gains of $147.7 million in 1996.

When compared to last year, this year's total revenues improved from $183.3 million to $326.8 million, and from $726.2 million to $870 million for the three month and nine month periods, respectively.

Total assets at August 31 were $5.7 billion, up from $5 billion nine months before. During the same period, shareholders' equity grew more than $253 million to $2.4 billion and fully diluted book value per share grew $3.87 to $28.08. The third quarter combined ratio was improved from 95 percent last year to 81.3 percent this year. The nine month combined ratio was 85.8 percent, compared to 94 percent last year.

This reflected among other things, the decrease in loss ratios for 1997, as a result of shorter-tailed business through the growth of reinsurance business and the acquisition of GCR.

During the fiscal year, the company has repurchased 3.4 million shares and currently has authorisation to repurchase a further 2.4 million shares.

BRIAN O'HARA -- Company "a major factor'' in reinsurance industry.