Bermuda-based reinsurer Mid Ocean Re is bracing for even more pressure on premium rates for property catastrophe business in 1997 than was experienced last year.

And Mid Ocean anticipates that certain ceding companies may increase their retentions, while some may increase the upper limits of their reinsurance programmes.

As a result, premiums in several segments of Mid Ocean's book of business may be down, compared to fiscal 1996. But additional premiums should be generated by four quarters of the Brockbank Group.

In the year to October 31, more than 30 percent of gross premiums written by Mid Ocean Re were in property catastrophe, by far the largest line.

But that is the lowest percentage of the total book of business in its four year history. The change came as the company diversified into new lines of business.

When the highly-capitalised reinsurer concluded its first full year in 1993, some 63 percent of their writings involved property catastrophe covers.

The following year it dipped to 60 percent and fell further to 46 percent by fiscal end 1995.

Their just released annual report & accounts for 1996 estimates that premium rates in their book of business fell six percent on major US business, and by 11 percent for the UK, 16 percent for Japan and seven percent in Australian markets.

Mid Ocean Ltd. Chairman Robert J. Newhouse Jr. and president and CEO, Michael A. Butt, said in a letter to shareholders: "Looking ahead, we see an industry faced with ever-increasing mergers, consolidations and restructurings, as well as an oversupply of capital, all of which contribute to greater and greater competition in rates and conditions in all lines of our business.

"Despite these factors, we remain confident that Mid Ocean will continue to provide increased value to our shareholders.'' The company intends to build the business through the application of the same underlying principles which made it successful in their first four years of operation. They include: "a disciplined, analytical, questioning and often sceptical view of opportunities; a requirement that those opportunities bring demonstrable value to the existing whole of our operations; and the wholehearted and determined pursuit of those opportunities once they are positively identified.'' The company's bottom line profits improved 15.7 percent year-over-year to $211.6 million, after gross written premiums of $566.3 million, a 27 percent increase over the year before.

The significant growth is attributable to the opening of a London branch office writing marine, energy and aviation excess of loss reinsurance together with the acquisition of 51 percent of the Brockbank Group.

Gross premiums written attributable to the new dedicated Lloyd's syndicates managed by Brockbank amounted to $147.6 million over three quarters of the year, while another syndicate managed by Brockbank and reinsured by Mid Ocean Re, decreased by $21.5 million, resulting in a net increase of $126.1 million.

In the aggregate, gross premiums written for the remainder of the book of business was flat. But the cat book decreased $33.9 million, while the marine and energy book declined $6.4 million.

The decreases were offset by increases in aviation, satellite and other lines.

Mid Ocean ceded nearly four times as much business away over the year ($40.6 million), most because of the Brockbank business that has traditionally purchased a significant amount of reinsurance.

Incurred loss and loss expenses for the year were $211.9 million, net of reinsurance recoveries of $4.6 million, compared to $198.7 million for the year to October 1995, net of reinsurance recoveries of $1.4 million.

At October 31, 1996, net loss reserves amounted to $422.3, compared to $329 million a year before.

The company paid losses during fiscal 1996 of $118.6 million, including $11.3 million in respect of the Northridge earthquake, $13.4 million related to Hurricanes Luis and Marilyn and $11.2 million in respect of three risk excess losses.