percent to $21.1 million, its results posted last night showed.

The company issued a statement blaming the drop from $24.4 million in the same period a year ago on a lower level of securities sales.

And an underwriting loss of $1.7 million was posted for the quarter compared with a $700,000 profit last year, reflecting lower rates in virtually all classes of business written.

Its combined ratio was pushed up to 101.2 percent from 99.5 percent in 1998's first quarter, and book value per share dropped 13 cents from $22.51 to $22.38 over the same period.

But operating earnings for the quarter rose ten percent from $16 million last year to $17.6 million and diluted per share operating earnings for the quarter rose 9.7 percent to 68 cents.

Terra Nova writes specialty property, casualty, marine and aviation insurance and reinsurance business through its UK, Bermuda and French wholly owned operating entities including Octavian Syndicate Management Limited, which runs the eight Lloyd's syndicates in which Terra Nova takes part.

Last night chairman John Dwyer said the $1.7 million underwriting loss reflected the "most difficult underwriting environment for many years''.

"The result reflects the difficult pricing environment which continues to prevail in the UK auto market, little or no improvement in the marine market and increased severity and frequency of losses in our property account.

"Our strategy of growth through the acquisition of mature portfolios of business, developed by disciplined underwriters, has served us well as our underwriters confronted these difficult market conditions.

"The best and most difficult work occurs at the worst times in the pricing cycle when there is no reportable payoff. "Our people continue to push for rate increases and decline inadequately priced business to achieve an underwriting profit and we're proud of their performance in this market.'' Net income per share on a diluted basis was 81 cents per share for the quarter -- down from 94 cents after last year's first quarter.

And quarterly net realised investment gains after tax sunk from $8.4 million to $3.5 million year-on-year due to "variability in net income arising from the timing of securities sales''.

Terra Nova income slumps Gross written premiums were $380.9 million -- up 12.6 percent on the first quarter last year largely due to Terra Nova's increased participation in the Octavian syndicates.

Net written premiums for the quarter rose nine percent to $307.2 million from $281.8 million a year ago.

Total assets on March 31 this year were $2.7 billion, up from $2.5 billion at year end 1998 resulting from the growth in premium revenue.

And the company posted net investment income of $23.1 million -- up 2.2 percent on the first quarter last year's result of $22.6 million.