posted a sixth consecutive year of improvement in its financial condition, as total assets rose 16 percent to $436.8 million and capital and surplus improved 19 percent to $386.8 million, both record levels.

Net income declined 16 percent as a result of lower premiums and increased loss reserves. Year-on-year underwriting income decreased 19 percent to $18.7 million.

Petroleum industry mutual, OIL, last week released details of how net income contributed by insurance operations were $39.7 million and diversified investment activities contributed $213.7 million to growth in the overall capital and surplus of the company.

The OCIL subsidiary is celebrating its first decade of service to 66 energy industry policyholders.

President and CEO, Jon King, said: "Capital and surplus has increased five-fold since 1986 and has almost tripled since I joined the company in 1991. This is a further indication of the strength and security that has evolved in OCIL.

"We are fortunate to have experienced an extended period of no recorded losses and have benefited from two consecutive years of most satisfactory investment performance with the company's investment subsidiaries returning 13 percent in 1996 and 19 percent in 1995.'' OCIL's global membership, measured by gross assets and gross revenues insured, exceeded $925 billion and $775 billion, respectively and is represented by most of the world's leading international oil and petrochemical companies.

The company's financial strength, as measured by its overall claims-paying ability continues to improve and currently provides for the potential payment of more than five $100-million losses in one policy year.

Jack Wesley, senior vice president and chief operating officer, said: "This provides a high degree of security to our policyholders, considering that in our ten year history, only four industry losses have exceeded OCIL's current minimum attachment point. Three losses were paid by the company. The fourth loss occurred to a current policyholder, prior to joining OCIL.'' Premiums written rose a modest one per cent to $42.2 million, the highest level in four years, which included $40.7 million in general liability premium and $1.5 million in directors & officers (D&O).

Losses and loss expense declined significantly from $15.4 million in 1995 to $5.8 million in 1996.

Mr. King said: "Increased capacity and falling rates are the new challenges.

How long can the current market cycle sustain itself? Can the good fortune of five loss-free years continue?'' He said: "We did not expect much growth in membership in 1996, given the high level of participation we have achieved in the petroleum industry and the accelerated consolidation of businesses within the industry.

"We feel very fortunate that despite the highly competitive market environment our six new "Class of 1996 Policyholders'' with total assets exceeding $30 billion, identified the long term product value that the company provides.

"I am also pleased to note that some of our newest members include world-class petrochemical, pipeline, and oil trading companies. This reflects our goal of broadening and diversifying the company's energy book of business.

This business goal will take on more importance in the coming year as we see more indications of mergers, acquisitions, restructuring, and alliances within our membership.''