A decline in earned premiums and net realised losses on investments sent third quarter net income for Bermuda-based Oil Casualty Insurance, Ltd. (OCIL) tumbling nearly 99 percent.

In a quarter in which no losses were incurred, the company posted a profit of $172,000 for the three months to August 31 -- a significant decline compared to the same period a year ago, when the company made $14,290,000.

Net income for the first nine months was down nearly 22 percent from $43.7 million last year to $34.3 million this year.

Net premiums earned for the quarter fell more than 69 percent from $5.3 million to $1.6 million, reflecting highly competitive pricing that has been characteristic of the year to date. The results also suffered from a higher average attachment point and slightly lower average limits.

Net premiums earned over the nine month period fell more than 42 percent from nearly $17.8 million to nearly $10.3 million.

The company more than doubled, year-over-year, the gross reinsurance premiums ceded. For both the quarter and the nine month period, it rose from nearly $14.6 million last year to more than $31.7 million.

The fall in world wide equity prices against rising bond prices also impacted the company's results.

OCIL declared net realised losses on investments of nearly $5.8 million, compared with net realised gains of $4.2 million during the same period last year.

For the nine month period, there were net realised gains on investments of nearly $11.4 million, or $1,545,000 less than for the comparative period last year.

OCIL said in a prepared statement yesterday: "For the second quarter of the fiscal year, the value of OCIL's investments decreased by $33.3 million (6.5 percent).

"This decrease reflected primarily interest and dividend income of $6.5 million, net realised losses of $5.8 million and a $33-million decrease in the level of unrealised gains.

OCIL's net income takes a plunge "The large decrease in the level of unrealised gains, shown as a separate component of shareholders' equity, has been caused by the reclassification of OCIL's investment portfolios from available-for-sale to trading. For portfolios classed as trading, all of the unrealised gains or losses are included in the statement of operations, as opposed to being shown separately in shareholders' equity.

"The net realised loss amount of $5.8 million at the end of the quarter, therefore includes the unrealised losses at August 31, 1998, which amounted to $5.2 million. For the nine months ending August 31, 1998, the value of OCIL's investments increased by $11.9 million (2.6 percent).'' OCIL is an oil industry-owned provider of casualty insurance to the energy industry. It was established in 1986 to act as a stabilising influence to commercial market coverage available to its members, as well as the entire petroleum industry.

Managed by Oil Management Services Ltd., the company provides general liability, D&O and other coverages to the industry.