Bermuda insurance risk manager Mutual Risk Management is poised to settled another of its long-running disputes - and has seen fee income rise by 42 percent during the second quarter of the year.

And while operating income was down four percent from $12.3 million in the second quarter of 2000 to $11.8 million in the corresponding quarter this year, things appear to be looking up for the Church Street, Hamilton financial and insurance services firm.

This has all occurred since MRM, which has been dogged by a string of litigations for outstanding claims, was partly bought out by a team headed up by XL Capital which gave the company a cash boost of $112.5 million in April.

In a joint statement, Robert A. Mulderig, Chairman and Chief Executive Officer and John Kessock, Jr., President said: "The improvement in property casualty pricing continued to positively affect new unit sales and fee income in our Corporate Risk Management business segment."This will continue to have a positive impact on our mix of business and our performance as we move through 2001."

In February the company took a $46.1 million charge in connection with the legal disputes for reinsurance that was due but unlikely to be collected. It also said it would vigorously attempt to settle the outstanding disputes.

At the beginning of the year there were seven outstanding litigations, but two were settled in February. By the end of last quarter the number of litigations had fallen to five.

As of June 30, 2001, the company said it was involved in four reinsurance disputes in arbitration involving approximately $51 million of unreimbursed paid losses and an estimated $62 million of unpaid reserves.

As previously announced, during the second quarter MRM reached a settlement in an arbitration dispute with a reinsurer on one of Legion's principal workers' compensation treaties.

And yesterday the company announced that the number will have been reduced to three, after a preliminary settlement was reached in another of the reinsurance disputes in arbitration.

Fee income increased in the second quarter to $33.8 million and was also up 40 percent to $65.6 million for the first six months.

Pre-tax profit margins from fee-based operations grew to 27 percent for the second quarter and 28 percent for the first six months of 2001 as compared to 25 percent and 26 percent in the corresponding 2000 periods

The joint statement added: "Sales for the second quarter of 2001 produced 11 new Corporate Risk Management accounts compared to 5 in the 2000 second quarter.

"Corporate Risk Management fees increased by 18 percent in the quarter while Financial Services fees continued their impressive results, achieving growth of 108 percent in the quarter. Excluding the effect of our recent trust company acquisition, Financial Services fees still grew by 46 percent for the six months." Insurance Operations contributed $8.3 million of operating income for the six months ended June 30, 2001 as compared to $7.8 million in the corresponding 2000 period. Cash flow from operations for the first six months was positive $2.6 million.

Return on equity was 12.5 percent for the first six months of 2001.

Corporate Risk Management, which involves providing services to businesses and associations seeking to insure a portion of their risk in a loss sensitive Alternative Market structure, accounted for 41 percent of total fee income in both the second quarter and the first six months of 2001.

Corporate Risk Management fees increased by 18 percent in the second quarter to $13.7 million, and by 23 percent in the first six months to $27.1 million.

Profit margins were 25 percent in the second quarter and 27 percent for the first six months of 2001, compared to 27 percent and 25 percent in the corresponding 2000 periods.

MRM said it expects that a continuing firming of prices generally and the affirmation of the Legion Companies' A minus (Excellent) rating by A.M. Best will continue to generate the sale of Corporate Risk Management accounts and associated fees.