Bermuda-based ESG Re Ltd.?s net loss of $3.4 million for the third quarter of 2003 was double the loss it made a year earlier of $1.7 million, but the company said it was still writing new business.

The company, which in September decided to take former auditor Deloitte and Touche to court looking for more than $20 million in damages, has been struggling under the burden of a legacy of underwriting losses.

For the quarter ended September 30, the company reported $4.9 million in losses and loss expenses, $9 million in acquisition costs and $11.8 million in administrative expenses, leaving a total expense of $25.7 million for the period. The company?s net premiums written was $37.3 million, marginally down on the same quarter a year earlier when this figure stood at $38 million.

?We successfully wrote new business of $38.0 million in the reinsurance segment in the quarter and we expect to continue to write further amounts of reinsurance business in the fourth quarter of the year,? said Alasdair Davis, chief executive officer of the medical, personal accident, life and special risk reinsurer.

?Furthermore, we continue to grow the direct segment where premiums written for the nine months ended September 30, 2003 were $24.7 million compared to $18.9 million for the same period last year. We have also settled the CNA Re litigation matter which removes a significant uncertainty from the balance sheet?.

ESG Re also reported total revenues for the three months ended September 30, 2003 of $22.3 million, including net premiums earned of $21.3 million.

This is down considerably on the same three months last year, when revenues were $38.2 million and net premiums earned were $35.3 million. The company posted an underwriting profit for the quarter of $7.4 million before accounting for the increase in legal reserve of $5.9 million, the company added in a release yesterday.

The company also reported gross written premiums of $44.2 million for the quarter. Operational expenses for the quarter were $11.8 million including a charge of $5.9 million in respect of an increase in the legal reserve to cover exposures in relation to treaties under arbitration and investigation, said the company and other operating expenses amounted to $5.9 million which was in line with budgeted costs, it added.

The legal action, filed by ESG Re with the Superior Court of California in September, follows Deloitte stepping down as ESG?s auditor last year.

ESG said its action was intended as a means of seeking compensation for what it cited as damage caused to itself following Deloitte?s withdrawal including the loss of existing and potential new business.