earnings for the first quarter of this year, the company announced yesterday.

And the impact on the bottom line of the Bermuda contribution to net premiums written diminished as other sources of business grew more rapidly.

Premiums written in the Bermuda Alternative Risk Transfer Market (ART) increased by $600,000 to $12.36 million in the period.

But that represented 7.8 percent of net premiums written, a reduction from 13.2 percent a year ago.

Through its operating subsidiaries, Sphere Drake Holdings Ltd. underwrites property and casualty insurance and reinsurance primarily in the London market.

Earnings increased to $8.2 million ($0.45 per share) from $6.3 million ($0.34 per share) in pro forma income from continuing operations.

The combined ratio for Sphere Drake in this year's first quarter was 97.2 percent, which compared favourably with 102.4 percent for the same period in 1993. The loss and loss expense ratio for Bermuda (ART) slipped from 61.6 percent to 63.1 percent.

President and UK CEO, Mr. Ian H. Dean, commented: "The increase in pro forma income illustrates the continuing trend in profitability which we expect to be sustained. This is reflective of the improvement in combined ratio coupled with growth in premiums.

"The growth in net premiums written demonstrates that the proceeds of the initial public offering in September last year are being utilised to write greater volumes of business in our profitable business segments.

"There is a delay in the growth of net premiums earned accentuated by the effect of the earnings patterns of our ceded reinsurance protection premiums, which are being earned earlier than the assumed business premiums.

"This has a significant effect on the first quarter, but will earn its way out during the course of the year.'' Continuing operations produced income for the first quarter of 1994 of $8.6 million (47 cents per share) from $7 million (64 cents per share) for the same period in 1993.

Total revenues, excluding realised investment gains, were up 8.4 percent to $90 million.

Net premiums earned increased from $75.4 million to $82 million while net premiums written increased from $88.7 million to $158.8 million.

Net investment income improved from $7.5 million to $7.9 million.

Operating costs increased from $75. million to $80.6 million.

Even allowing for delays in the reporting of certain losses, the company does not expect that their earnings will be materially affected by exposure to January's California earthquake or bad winter weather across the eastern US.

The company projected their net loss from the earthquake to not exceed $4 million and losses from the cold snap to be minimal.

Sphere Drake reported earnings on a pro forma basis in order to provide comparative figures for the two periods. The figures are adjusted to reflect the exclusion of realised investment gains, the discontinuance of the UK automobile insurance operations and the impact on investment income of the associated sale of assets. The changes also reflect the assumed interest income on the proceeds from the common stock issued in the company's recently completed initial public offering.

Sphere Drake Holdings' underwriting of property and casualty insurance and reinsurance through its operating subsidiaries is mainly done in the London market, but also from Bermuda.

The company's business predominantly consists of a wide range of marine and aviation and non-marine insurance and reinsurance risks worldwide, with an emphasis on US-based clients, as well as its presence in the Bermuda Alternative Risk Transfer Market.

Sphere Drake's shares closed up 25 cents to $14.63 on the New York Stock Exchange.