net loss of $10,512,000 for the year to the end of December 1994, in stark contrast to their $90,117,000 profit in the year before.

It was the sixth time in the last ten years that the company has reported a loss. There are bright spots. For one thing it is by far, the smallest reported loss in that ten year period. Two years ago they lost almost $81 million. In 1988 and 1989, the company reported losses of more than $454 million and almost $258 million, respectively.

The catastrophe cover insurer's president and CEO, Mr. K. Doyle Stephens, admitted in the president's report that given the risk profile of the activities of the oil companies that are shareholders of the insurer, the yearly operating results are subject to volatility.

The 1993 operating and investment performance had the firm's surplus and capital at the beginning of 1994 at the highest level in the 23 years since inception.

Mr. Stephens said that there were only two occurrences that resulted in the establishment of loss reserves. But those two events caused the company to establish $215 million in combined reserves, resulting in the $10.5 million in losses.

One of the claims involved a blow out and subsequent well control and pollution damage at an ENI oil well in Northern Italy. The other claim resulted from an explosion and fire at a Shell Oil Company chemicals plant in southern Ohio.

Mr. Stephens said: "As there was a $22.2 million decline in the equity value of OIL's investment subsidiary, Oil Investment Corporation Ltd., the company's surplus declined modestly by $32.7 million, resulting in total capital funds of $1,084.1 million at the end of 1994.

"The fact that OIL emerged from 1994 with a near record level of capital funds despite a difficult year of operating and investment performance clearly demonstrates the company's value as a dependable, long term source of insurance capacity for its members.'' Net premiums written and earned for 1994 totaled $256.5 million, the second highest level in the history of the firm. OIL elected not to purchase reinsurance from the commercial market for the year.

Benefiting from lower interest expense as a result of decreased levels of borrowing, OIL's operating expenses were $21.2 million, a reduction of $12.5 million from 1993.

The combination of the 1994 net loss and the decline in the equity value of investment portfolios held by the company's investment subsidiary, Oil Investment Corporation Ltd., resulted in OIL's capital and surplus being $1,084.1 million at the year's end -- the second highest level in the history of the company. Total assets reached a record level of $1,832.2 million.

The investment subsidiary's portfolio declined 1.1 percent, which Mr. Stephens accepted as "reasonable'' considering the difficult investment environment.

Meanwhile, Oil Casualty Insurance Ltd. (OCIL) reported net income from insurance operations was $9.3 million compared to $5.5 million in 1993. The company's capital and surplus increased by $5.2 million to end the year at $250.1 million.

Positive net income from insurance operations in the parent company was partly offset by a $4.1 million reduction in the equity value of OCIL's wholly owned investment subsidiary, Oil Casualty Investment Corporation Ltd.