income for the year to December 31 of $47,938,000, after a successful year in which company assets grew more than a half a billion dollars to $2.147 billion.

The successful year was aided by substantial increases in fee income and premiums earned.

Chairman and CEO Robert A. Mulderig and president John Kessock Jr. said in a joint statement: "The operating results for both the fourth quarter and the full 1997 year were excellent, aided by the strong growth of our Program Business segment where fees grew by 143 percent in the year.

"Our new financial services segment also provided excellent growth in its second year with fees growing by 44 percent.

"Operating income for the fourth quarter grew by 33 percent to a record $13.3 million or 32 cents per common share on a diluted basis, a 28 percent increase.

"For the full 1997 year operating income increased by 27 percent to $49 million or $1.19 per common share on a diluted basis, a 21 percent increase over 1996. Return on equity continues to meet our expectation of 20 percent for 1997.'' Fee income for the year increased 31 percent to $105.9 million. The pre-tax profit margin was 41 percent, compared to 40 percent the year before.

Investment income amounted to $26.3 million, a 17 percent increase year-over-year, primarily as a result of an increase in invested assets and somewhat higher rates of return on those assets.

Program Business, the fastest growing business segment, involves the company replacing traditional insurers and acting as a conduit between producers of specialty books of business and reinsurers wishing to write that business.

In 1997 Program Business accounted for 45 percent of total fee income (1996: 24 percent).

The company acquired Small Business Underwriters in 1997, expanded Professional Underwriters Corp. into New York state and assimilated Hugo Trust Ltd. into subsidiary Hemisphere Management Ltd.

Gross premiums written soared 61 percent to $655.4 million for the year, a quarter of a million dollars higher than the year before. Premiums earned increased 49 percent to $84.2 million. Both increases were attributable to the expansion of the Program Business.

Corporate Risk Management, the company's original business segment, involves providing services to businesses and associations seeking to insure a portion of their risk in a loss sensitive Alternative Market structure.

Fees from this business decreased 14 percent for the year to $42.6 million, as it accounted for 40 percent of total fee income for the year, down from 61 percent in 1996.

The declines are a direct result, the company said, of the continuing soft insurance market and a trend of declines in worker compensation rates.

The Specialty Brokerage segment provides access to Alternative Risk Transfer insurers and reinsurers in Bermuda and Europe. Fees grew 25 percent to $7 million.

Financial Services, the company's newest business segment, is being built on the 1996 acquisition of Hemisphere, which provides administrative services to offshore mutual funds and other companies.

Fees increased by 44 percent to $8.7 million, as a result of an increase in the number of mutual funds under administration.