fell 11.5 percent to $16.5 million, due to lower underwriting profits for the three months and higher realised investment gains for the comparative period last year.

Net realised investment gains after tax for the six month period were down from $8.5 million to $5.3 million, and down for the second quarter from $3 million to $1.2 million.

It held net income for the first six months of the year to $34.6 million, down 1.3 percent from the year before.

An underwriting profit of $1.1 million was reported for the first six months of 1997, compared to $2.5 million reported for the same period last year. Net operating earnings for the second quarter declined by 1.9 percent to $15.3 million, but for the first six months increased 10.4 percent to $29.4 million.

Gross premiums written jumped 26.4 percent in the first half to $331.8 million and soared 71.5 percent in the second quarter to $104.1 million.

Terra Nova credited premium growth to the group's participation in the Octavian syndicates in 1997 and the writing of $12.1 million of non-recurring premiums related to reinsurance to close of "orphaned'' Lloyd's syndicates from the 1993 underwriting year.

For the first half of the year, net premiums written were up 23.6 percent to $278.3 million, and up 80.4 percent to $95.1 million in the second quarter.

Chairman and CEO, William O. Bailey, said, "Terra Nova continues to produce satisfactory earnings at the half year, considering the competitive markets in which the group operates.

Terra Nova's second quarter income falls "The strong growth in net premiums written will generate improved cash flow for the balance of this year and 1998.

"Our strategy to expand our business largely through increased participation in the premium writing of the Octavian syndicates has, and will, continue to increase the insurance component of our total business at a time when market conditions make internal expansion in the reinsurance sector less desireable.

"Our strong balance sheet and growing shareholders' equity is being recognised by the rating agencies and provides us with the ability to further develop our business as opportunities arise.'' Net investment income improved by 5.9 pecent to $41.1 million for the first half of the year, and 3.9 percent higher or $21.1 million for the second quarter. An increase in invested assets is partially offset by lower portfolio yields.

Total assets at June 30 were $2 billion, nearly $134 million higher than six months before.

Shareholders' equity rose 5.9 percent in the same period to $422.3 million.

The increase came primarily from retained earinings of $32.8 million, being partially offset by the company repurchasing $10 million of its common stock.

Book value per share rose in six months by 7.8 percent to $16.64.

Just this week, Terra Nova (Bermuda) Holdings Ltd. declared a quarterly dividend of a nickel a share, payable September 26 to common shareholders of record on September 5.

Terra Nova is the Bermuda holding company for four wholly owned operating entities, which are involved in the writing of diverse property, casualty, marine and aviation insurance and reinsurance business on a worldwide basis.

The four are Terra Nova Insurance Co. Ltd. in the UK, Terra Nova (Bermuda) Insurance Co. Ltd., Terra Nova Capital Ltd. and Octavian Syndicate Management Ltd. which manages seven Lloyd's syndicates in which the company has a participation.