Tough competition has adversly affected Bermuda-based Oil Casualty Insurance Ltd.

The company's net premiums earned declined 90 percent to $400,000 in the second quarter ended May 31 compared to the same period last year.

The company suffered a loss of $10,000 during the quarter compared to a profit of $3.45 million in net underwriting income the same period last year. However investment income buoyed the company's net income to $13.28 million compared to $19.84 million a year ago.

For the six month period, OCIL had net income of $18.89 million, a decline of 47 percent in the six months ended May 31 1998. The six month period just ended included a $97,000 underwriting loss and $20.99 million in net investment income.

"The decrease in premiums, as in the first quarter of 1998/99, reflected highly competitive pricing, a higher average attachment point, and slightly lower average limits,'' the company said.

A new reinsurance programme, with the company being 100 percent insured, also contributed to a reduction in net premiums earned. The company had no new losses to report during the quarter.

During the second quarter, shareholders' equity increased by $13 million due to favourable investment results. In the first six months shareholders' equity decreased by $118 million as a result of a reorganisation in December 1998 which resulted in a reduction of $137 million.

OCIL was established by the petroleum industry to provide casualty insurance.

Managed by Oil Management Services Ltd, the company provides general liability, directors & officers and other cover to the industry.