it may not proceed with its planend $100 million public debt offering for subsidiary, Sphere Drake Plc.

In May, Sphere Drake announced the filing of a registration statement with the Securities and Exchange Commission for the public debt offering.

At the time, it said the offering was being underwritten by Donaldson, Lufkin & Jenrette Securities Corp., Salomon Brothers Inc. and Smith Barney Inc.

But the firm has now noted, through a second quarter report to shareholders, that "as the market for such public debt has become less favourable since that date (May 5, 1995), we are now investigating alternative methods of financing, including syndicated bank debt''.

Sphere Drake underwrites specialty lines of international property and casualty insurance and reinsurance through its operating subsidiaries in Bermuda and London. The business consists of marine and aviation and non-marine insurance and reinsurance risks worldwide, and alternative risk transfer (ART) business in Bermuda, with an emphasis on US-based clients.

Under the May plan, Sphere Drake Holdings expected to contribute $46 million of the net proceeds from the offering to UK insurance and reinsurance subsidiary, Sphere Drake Insurance Plc, to increase its capital and surplus.

The balance of the net proceeds was to be used to repay bank borrowings of about $26 million and about $26 million in intercompany debt.

Figures first published last month showed that ART business written in Bermuda showed an increase in net premiums written of 35.4 percent to $22.7 million in the second quarter to June 30, 1995.

Figures for the first six months also showed an increase of 15.1 percent to $33.5 million.

The company now reports: "Although we are experiencing a more competitive underwriting environment in this sector, the account continues to demonstrate very good potential for profit.

"Growth is somewhat restrained, in line with our expectations, as we maintain our stringent underwriting standards consistent with our strategy not to compete at rates which do not offer adequate opportunities for profitability.

"The loss and loss adjustment expense ratio was 61.1 percent for the second quarter 1995, compared to 64.5 percent in the corresponding quarter in 1994.

The ratio for the first six months was 62.5 percent in 1995, compared with 63.8 percent for the corresponding period last year.'' Meanwhile, Sphere Drake Holdings Ltd.'s chairman, Mr. Michael C. Stoddart and president and CEO, Mr. Ian H. Dean, said in a joint statement that the results for the company in the second quarter and the first half overall, are satisfactory, although some downward pressure has been exerted on rates in certain lines of business.

"Our strategy of foregoing business when pricing and terms and conditions offer inadequate prospects for profitability means that growth will be limited for the remainder of 1995, but we continue to believe that opportunities exist for profitable underwriting.'' The company told shareholders: "The results of the second quarter and first six months of 1995 demonstrate a satisfactory performance on the business written. At the beginning of 1995, we anticipated a reduced rate of growth compared with that achieved last year, primarily due to softer market conditions in certain classes of business, most particularly the reinsurance lines.

"The current rate of growth is consistent with our strategy to write business only where we perceive opportunities exist for adequate profitability. We will not compromise our standards simply to achieve increased premium volume.''