Insurance, will cease underwriting.

The company, which was intent on providing an alternative to soaring aviation premiums, will stop underwriting when the current period of insurance expires and as of yesterday was not accepting new risks.

The company will go into run-off from April 1.

The decision to bring a halt to its underwriting operations is attributed to "a volatile and erratic aviation insurance market''.

It is the directors' view that the company does not have a viable long term future in this climate.

Volatility of the aviation market prevented Airline Mutual Insurance (AMI) from building up reserves, which meant it could not perform the function of a mutual and offer cheaper premiums than market, said the company.

AMI operated as a following underwriter, taking a small line of about 5 percent of airlines' complete cover.

"The decision was not influenced by any question of insolvency but, rather, that it was prudent to pursue this course from a solvent base,'' said a statement released by the directors.

AMI's daily operations were run by a subsidiary company based in the Isle of Mann. In Bermuda, Thomas R. Miller & Sons, manager of the world's largest ship owners' P&I club, and various marine and transport based mutuals, acted as the company's principal representative.

The International Air Transport Association (IATA), which represents the major international airlines, set up AMI in 1987.

Back in the mid-80s, carriers found their premiums had risen by an average of 40 percent.

The company started operations with a membership of about 20 international carriers. There were 45 by the end of the company's last financial year, ending March 1993.

Reaction to the formation of AMI was mixed at its inception. In 1986, when the idea of setting up the company was first mooted, London insurers specialising in aviation were confident that the traditional market would retain the cream of the airline industry.