insurer, Harrington International Insurance Ltd., to declare a $6.6-million profit for the year to December 31 -- a 164 percent improvement over the $2.5-million profit the year before.

Net income per share rose from $3.58 in 1996 to $9.43 in 1997. Assets grew 10.9 percent to $164.3 million.

But while chairman John O. Austin was generally pleased with the result, he said the success was conducted against a background of further price erosion and a significant increase in capital funds.

He added: "A combination of low loss ratios and a buoyant equity market, particularly in Europe and North America, coupled with the absence of any major catastrophe affecting the insurance industry, have exacerbated competition at all levels.

"This is particularly true of the commercial and industrial property lines which are core to Harrington's business.'' With further consolidation in insurance and other financial services industries, Mr. Austin is not optimistic about an improvement in the market this year, citing evidence that trading conditions will remain difficult.

He also noted that it is only in the most catastrophe-prone areas of the developed market where a shortage of capacity still exists, and where major events would seriously impact industry results.

But while the Bermudian market as a whole (1997: $25 billion in written premium, with aggregated capital and surplus of more than $40 billion) could grow in this difficult environment, Harrington suffered a one-quarter reduction in its gross written premium volume from $44.6 million down to $33.3 million, when compared with the year before.

New president and CEO, Willy Hersberger, explained the decline as the combined effect of rate reductions on the portfolio maintained, and discontinued accounts because of competition. Net premiums earned declined nearly 14 percent to $5.1 million.

Mr. Hersberger noted the decline of insurance rates accelerated in 1997, and the availability of huge capacities at rock-bottom prices had slowed or halted the move toward high retentions and integrated risk financing.

He said, "It appears that property insurance capacity will continue to be a low-priced commodity, which very much curtails our chances for quality growth in this line of business.

"Harrington is therefore seriously contemplating alternative or traditional insurance areas in which to employ its capital and achieve additional diversification.'' The company's gross loss ratio was satisfactory at 37.4 percent, but comes at a time of low loss experience in the market, generally. Net losses and loss expenses incurred were $1,221,915. In 1996, it was $4,229,715.

Sixteen property losses occurred during 1997, compared to 19 the previous year. The largest loss was a fire at an automotive battery production facility in Wales for $2.9 million. Harrington's net loss after an application of reinsurance was $300,000.

They benefited from a $2.2 million subrogation recovery from a 1996 marine loss, with Harrington's share about $100,000. The net loss ratio for the year was 23.9 percent, compared to 71.5 percent in 1996.

Total realised and unrealised investment returns were 21.9 percent (1996: 9.5 percent), exceeding the budget by a wide margin. Total realised investment income for 1997 was $4.8 million. Unrealised appreciation on investments at December 31 amounted to $18.1 million.

Harrington International Insurance Ltd., through Harrington Holdings Ltd., is owned by Swiss Re and "Winterthur'' Swiss Insurance Co. The company acts as a reinsurer of captives. The property business underwritten includes fire and business interruption risks and machinery breakdown.

JOHN O. AUSTIN -- Harrington chief not optimistic about an improvement in market this year.