Boosted by a 67 percent increase in fee revenue from its programme business, Bermuda-based Mutual Risk Management made a profit of $16.19 million for the third quarter ended September 30, a 24 percent gain over third quarter 1997.

For the nine month period the company had net income of $45.26 million, a gain of 30 percent over the same period last year.

Over the third quarter Mutual Risk had basic earnings per common share of 37 cents on a diluted basis. Operating income for the third quarter rose 26 percent to a record $16.15 million for the quarter compared to the same period last year.

Fee income grew by 36 percent to $38 million, and 33 percent to $102.4 million for the first nine months of 1998.

The company's operating expenses increased 42 percent to $23.4 million for the quarter, and by 38 percent to $63.2 million for the nine month period.

"The increase in operating expenses is attributable to recent acquisitions, growth in personnel and other expenses resulting from the increased business in each segment, as well as the costs associated with the revised executive incentive plan in the financial services segment,'' the company stated.

Mutual Risk's programme business increased 67 percent in the third quarter to $23.8 million and by 70 percent to $57.9 million in the first nine months of the financial year. Programme business involves replacing traditional insurers and negotiating between producers of specialty books of business and reinsurers.

Over all the company wrote gross premiums of $614 million for the first nine months of 1998, while premiums earned increased 18 percent to $74 million. For the third quarter premiums earned decreased 12 percent to $24.4 million.

"The decrease in earned premium in the third quarter of 1998 was due to a decline of $7.2 million in premiums related to involuntary workers' compensation business which the company is required to assume,'' Mutual Risk stated. "Such premiums have no financial impact on the company because any gain or loss on these premiums are credited or charged to client accounts.'' Corporate risk management accounted for 22 percent of total fee income during the third quarter, and 28 percent for the first nine months. Corporate risk is the company's original business segment and involves providing services to businesses and associations looking to insure a portion of their risk in a loss sensitive alternative market structure.

Financial services, built on the company's acquisition of Hemisphere Management Ltd., accounted for 10 percent of total fee income. Fees from financial services increased in the quarter by 92 percent to $3.9 million, and 71 percent to $10.1 million in the nine month period.

The growth came from the increase in number of mutual funds under administration to 193, a gain of 69 over the end of September 1997.

Earlier this week the company announced it had signed an agreement to buy Bermuda-based International Advisory Services Group of Companies (IAS). The acquisition cost was not stated.

IAS is the largest independent captive manager in Bermuda with about 100 client companies writing about $1.1 billion in annual premium.