of premiums written to drop in 1997 as the market for catastrophe insurance continues to tighten.

The warning came as the insurer released its third quarter and nine month operating results.

For the three months to September 30, the company said profits dropped from $41.9 million in 1995 to $35.5 million this year. Earnings per share fell 16.7 percent from $1.68 to $1.40.

For the first nine months of the year, earnings dropped to $114.9 million to $122.5 million, or to $4.41 per share from $5.21 in 1995.

Gross written premiums for the quarter declined nine percent from $81.1 million to $73.6 million. For the nine months period, they fell eight percent to $253.2 million from $276.6 million in 1995.

RenaissanceRe president and CEO James Stanard said despite a high level of hurricanes in the quarter, the company's loss ratio was consistent with its ration in 1995.

"The market for property catastrophe reinsurance continues to be competitive,'' he said. "Given our focus on maintaining the quality of our portfolio, we expect our premium written to decline in 1997.

"Our technical capabilities allow us to design custom products that reduce our clients' catastrophe exposures and fit our portfolio requirements.'' The company also announced that it is planning to return some of its excess capital to its shareholders, joining a trend announced by LaSalle Re earlier this month.

"With the conclusion of this year's hurricane season the company is now building excess capital,'' Mr. Stanard said. "Capital not needed to support the company's underwriting activities will be returned to shareholders.

Management and the board are currently assessing the most effective way to return excess capital.'' The company also said it is attempting to "mitigate the effects of US income taxation on the company and its shareholders'' and is finalising proxy statements for a special meeting of shareholders where the board will recommend an increase in the size of the board, the creation of two series of diluted voting capital shares and some amendments to the company's by-laws.