million, or 53 cents per share, compared to net income of $3.2 million, or 23 cents per share, for the same quarter of 1999.

ESG's chairman and CEO, John C. Head III, admitted the results were disappointing, although the company predicts improved future earnings as the North American market undergoes an expected 25 percent rate increase.

For the first six months of the year, the company recorded a net loss of $13.6 million. Last year, the company earned $7.2 million during the same period.

The company approved the sale of its health care division on August 10 which, along with a discontinued subsidiary in Indonesia, caused a net loss to the company of $3 million during the quarter ended June 30 and $5.9 million during the first six months of 2000. ESG's board expects to completely divest the health care division by August 31.

For the three months ended June 30, 2000, gross premiums were $48.5 million, an increase of $7.8 million over the same period in 1999. For the first half of the year, gross premiums decreased by $27.9 million compared with the same period in 1999 to $159.9 million.

"As we continue down the path outlined by our business strategy, we will stick to our knitting of Accident & Health reinsurance and developing our Asia direct marketing operations, disposing of non-strategic activity along the way,'' said Mr. Head.

" Our key challenge now is to keep steady, sure and patient, in line with our business plan.'' ESG's board of directors has declared a quarterly dividend of eight cents per share payable on September 28 to shareholders of record on September 15.