Bermuda-based reinsurer Mid Ocean Ltd. yesterday reported a healthy third quarter profit of $46.2 million.

Though the three-month results are down 30 percent compared to last year's third quarter net income of $66.1 million, nine month profit is ahead of earlier results.

For the nine months to July 31, profit was up 11 percent to $155 million, or $4.21 per share, compared to $139.8 million, or $3.70 per share.

Amid an "extremely competitive'' market, "operating results for the quarter were good and much in line with our expectations,'' Mid Ocean president and CEO Michael Butt said.

"However, the major consolidations taking place within the industry confirm our view that the flight to quality continues,'' he said.

Third quarter net operating income, excluding net gains and losses on investments, was $54.6 million compared to $50.8 million, an increase of seven percent.

Revenue was $134.1 million compared to $123.5 million earlier, an increase of nine percent.

"We benefited from a lack of significant catastrophe losses in the quarter but experienced a negative comparison to the prior year's quarter in terms of realised investment gains and losses,'' Mr. Butt said.

Net quarter losses and loss expenses rose 42 percent to $56.7 million from $39.8 million.

Quarter acquisition, operational and organisational expenses rose 63 percent to $28.5 million from $17.5 million.

Total expenses rose to $86.7 million from $57.3 million, an increase of 51 percent.

For third quarter 1996, Mid Ocean reported net realised investment losses of $8.4 million compared to net realised investment gains of $15.4 million earlier.

Net investment income, excluding net gains or losses on investments, was $21.1 million compared to $18.7 million, an increase of 12 percent.

Realised investment gains or losses result from the disposal of securities while investment income is the income from securities and other non-business investments like dividends and interest.

Mid Ocean attributed the increase in net investment income to a larger investment base though yields were lower.

"We continue to make progress in diversifying our book of business. Given our investment in Brockbank Group, we are very pleased to see the Lloyd's reconstruction and renewal offer become unconditional,'' Mr. Butt said.

Mid Ocean is a majority shareholder in Brockbank Group and provides corporate capital to Lloyd's syndicates managed by Brockbank's managing agency.

Quarter net premiums earned were $114.1 million, up 26 percent, compared to $90.8 million.

Brockbank accounted for $13.5 million of the increase in earned premium, Mid Ocean said.

Third quarter gross premiums written rose 72 percent to $116.4 million, which includes $45.5 million from Brockbank Group not reflected earlier, from $67.8 million.

Quarter combined ratio was 74.7 percent compared to 63.1 percent while combined ratio over the nine months was 71.6 percent compared to 69 percent.

Mid Ocean also reported, for the nine month period, net operating income excluding net gains or losses on investments, was $156.2 million compared to $141.4 million.

For the nine months, revenues rose to $389.5 million from $332.9 million.

Gross premiums written were $520.5 million compared to $425 million. Net premiums earned were $318.5 million versus $280 million while net investment income was $60 million compared to $54.8 million.

Also for the nine months, losses on investments were $1.2 million compared to a net loss of $1.6 million in the first nine months of the prior year.

Assets at July 31 were $1,030 shy of $2 billion.

At fiscal 1995 year end assets were just under $1.7 billion.

Shareholders' equity was $1.05 billion at July 31 compared to $968.8 million at the end of fiscal 1995.

Fully diluted book value per share was $29.19 at quarter's end compared to $26.87 at fiscal year end.

"Operating results for the quarter were good and much in line with our expectations. However, the major consolidations taking place within the industry confirm our view that the flight to quality continues.'' -- Mid Ocean president and CEO Michael Butt (above).