percent to $7.7 million in 1998, making up in investment returns what it lost on risk coverage, according to its latest annual report.

"This result was achieved despite deterioration in the net underwriting income due primarily to our involvement in two significant catastrophe losses,'' company chairman John Austin stated. "However, the investment performance again exceeded the levels projected.'' Realised investment income was $7.9 million. The combined realised and unrealised investment returns were up 45 percent on 1997.

Meanwhile president and chief executive officer Willy Hersberger weighed in with criticism of fellow insurers for driving prices down in the competitive market.

"It appeared that underwriters were determined to generate cash at any price with the hope that investments would bridge the gap between premium and loss expectancies,'' he said.

Harrington took a different tack by not insuring a number of clients. He said the company was able to keep most "top quality accounts'' at reduced premiums leading to a lower premium volume.

In 1998 Harrington took in gross premiums earned of $27.26 million compared to $35.96 million in 1997. The company had net premiums earned of $3.61 million in 1998 compared to $5.11 million in 1997.

Net losses and loss expenses incurred were $3.68 million compared to $1.22 million in 1997. Net underwriting loss was $238,715 for the year compared to a profit of $1.76 million in 1997.

During the year Harrington incurred seven losses from property damage compared to 19 a year earlier. The company had two multi-million dollar losses from Hurricane Georges in September. The larger loss occured at a refinery in Pascagoula, Mississippi. The combination of wind and water damage cost Harrington $1.3 million.

Shareholder's equity was up $25 million to $123 million at year end.

Since 1995 Harrington has offered capacity to the captive market of major industrial and commercial corporations. The firm, which has three staff members on the Island, was founded in 1995 by Swiss Re and Winterthul.