in net income for the first quarter to March 31 parallelled developments for the alternative risk transfer (ART) business written exclusively at the Bermuda subsidiary, Sphere Drake Underwriting Management (Bermuda) Ltd.

(SDUMBL).

SDUMBL's ART business showed that net premiums written in Bermuda dropped nearly 54 percent from $18.5 million to $8.5 million when this year's first quarter is compared to the same period last year.

Net premiums earned were down from nearly $18.3 million to just over $8.9 million. The loss and loss adjustment expense ratios rose from 70 percent to 78.7 percent.

SDUMBL finance director Richard Gray conceded, "The market is extremely difficult at the moment and we have done a bit of weeding out of the portfolio. It's a combination of these factors. There is some business we have decided not to write any longer.

"We will not write business at unrealistic rates. And we are reserving on a much more conservative basis than we were 12 months ago.

"Like everyone else, we are finding it tough at the moment and waiting for the position to change.'' Sphere Drake, the parent company, declared net income for the period at $1.6 million, more than an 81 percent drop from the $8.5 million for the same period in 1996. The results were impacted by a number of factors, including $1.1 million in restructuring charges with regard to the company's "strategic review''.

President and CEO, Michael Watson, said there were benefits already being derived from the company's restructuring in a tough market, but said, "Bringing the company's infrastructure in line with our reduced premium goals remains a significant challenge over the balance of 1997.'' He said to compete in the future, the company must improve their claims paying ability ratings through the further strengthening of the balance sheet and capital base.

Overall net premiums written for continuing operations decreased from $110.6 million to $68.2 million across the comparative periods, a more than 38 percent drop, $25 million of which relates to the company's whole account reinsurance protection that was not written until the second quarter last year.