Terra Nova (Bermuda) Holdings Limited has added its name to a growing list of local insurers and reinsurers who have reported substantial losses resulting from a number of natural catastrophes toward the end of last year.

But the company received a double whammy as it was also hit with losses and costs associated with closing and merging certain business units.

As a result of these losses, and the decline in investment valuations in the first three quarters of the year, Terra Nova's book value per share declined to $17.50 from $22.51 at December 31, 1998.

Terra Nova's Chairman John J. Dwyer said underwriting results for the year were determined by two significant events.

"First, 1999 was the worst year for international catastrophe losses in recent history. Terra Nova's share of these catastrophes and large losses for the year was $59 million, including $42 million of catastrophe losses in the fourth quarter.

"Secondly, we were active in closing certain businesses, such as our decisions to exit company market marine hull and energy business at the beginning of the year and to exit high street motor business in the second quarter, and in re-structuring and combining others, such as the merger of our aviation syndicate 959 into our marine syndicate 1009.

Underwriting losses in 1999 from businesses Terra Nova will not pursue this year, together with associated closure costs, totaled $122 million in the year.

Mr. Dwyer said the future appeared brighter for the company.

"Notwithstanding a very disappointing year, with the restructuring behind us and assuming a more normal level of catastrophes, the company is well positioned to take advantage of improvements in pricing that we expect to see continuing throughout 2000,'' he said.

Mr. Dwyer attributed the underwriting loss for the fourth quarter of the year to three key factors: Major catastrophe losses; Additional reinsurance costs incurred in protecting the aviation and satellite business written by the company's Lloyd's Syndicate 959; Late reporting of claims relating to certain property loss events.

Major players in the catastrophe losses were Lothar and Martin, two intense windstorms which caused severe damage to heavily industrialised and populated areas of Western Europe in the final week of the year.

They were described as the worst in 400 years and are expected to generate heavy losses for the insurance industry.

"Current industry estimates are in the range of $5 billion to $6 billion,'' said Mr. Dwyer.

"The storms produced the most severe damage in France, Switzerland and Germany, countries in which Terra Nova has important client relationships and provides related insurance and reinsurance coverage. We expect net claims from these two storms to be approximately $30 million.'' Other catastrophes included Anatol, another severe storm, which hit Denmark earlier in they year and hurricanes Jose and Lenny in the Caribbean. Net claims from the trio are expected to be near $12 million.

"Secondly, we took a charge in the quarter to recognise the cost of buying additional reinsurance protection for the aviation and satellite business written by our Lloyd's Syndicate 959, which was merged into Syndicate 1009 for the 2000 underwriting year,'' he continued.

"Lastly, we experienced adverse development on claims relating to certain 1999 property loss events, in large part because of late reported losses on international proportional treaties.'' Mr. Dwyer wrapped up by noting: "Our operational transition in contemplation of the Markel merger is proceeding very well as we prepare for the special shareholder meetings on March 16, and the closing scheduled for March 24, 2000.'' Figured for the fourth quarter and the year reveal the following.

Fourth quarter operating losses per diluted share were $3.01 compared to earnings of $0.72 in 1998. For the full year, operating losses were $2.13 per diluted share compared to earnings of $2.72 per diluted share in 1998.

The net loss, which includes net realised investment gains, was $81.2 million in the fourth quarter compared to net income of $19.2 million in the same period a year ago.

The net loss per diluted share was $3.09 in the quarter compared to net income of $0.74 per diluted share in 1998. The net loss for the full year was $35 million, or $1.34 per diluted share, compared to net income of $72.4 million, or $2.77 per diluted share, a year ago.

Gross written premiums were $154.7 million in the fourth quarter, compared to $166 million written in the fourth quarter of 1998. Gross written premiums for the full year were $864.9 million, up 13.9 percent from $759.4 million written a year ago.