fourth quarter to December 31 of $3,361,000, compared to a slight profit of $833,000 for the same period to December 1993.

This brought the combined loss for the year to $31,192,000 or $1.19 a share, compared with a profit in the previous fiscal year of $17,508,000 or $0.77 per share.

The company attributed fourth quarter losses to the continuing increases in market interest rates, which resulted in additional net realised losses taken during the quarter, partially offset by higher net investment income.

Pre-tax investment income for the fourth quarter of 1994 was $15.4 million, versus $9 million for the last three months of 1993.

ZRC is headquartered in New York, but owned predominantly by Bermuda-based holding company, Zurich Centre Investments Ltd.

The company had after-tax net operating income, excluding realised capital losses for the fourth quarter of $1.7 million ($0.07 a share) compared with the previous year's fourth quarter after-tax net operating loss of $0.2 million ($0.01 per share), excluding capital gains.

Realised capital losses (net of tax) were $5.1 million or approximately $0.19 per share compared to after-tax capital gains of $1.0 million ($0.04 per share) for the period.

The majority of the difference in net income between this past year and the year before is derived from after-tax realised capital losses of $28.2 million for the 1994 year versus capital gains of $14.8 million for the 1993 year.

ZRC's net after-tax Northridge earthquake and winter storms loss totaled $7.9 million and contributed 5.5 percentage points to the company's total 1994 statutory combined ratio of 114.6 percent, down from 126.1 for 1993.

Chairman Mr. Steven Gluckstern, said: "Consistent with our unrelenting focus on building intrinsic business value, we have grown our business in several important ways in 1994.

"First we believe we have assembled a team of professionals unmatched in our segment of the industry; second, our client base has expanded significantly; third, we completed a number of programmes that were significant for their uniqueness and complexity; and finally, in early 1995, we signed definitive agreements to acquire Re Capital Corporation.

"All of these actions underscore our dedication to employing our substantial capital base thoughtfully while maintaining our focus on ROE underwriting.'' Net premiums for the fourth quarter soared 258 percent to $102.3 million, when compared to 1993 fourth quarter figures. Fourth quarter net earned premiums catapulted 220 percent to $76.5 million.

For 1994, net premiums written were up 205 percent to $309.6 million and net earned premiums were up 160 percent to $224.6 million.

Mr. Richard E. Smith, executive vice president and chief operating officer, said further reductions in the expense ratio can be expected this year.

Net cash flow from operations rose from $11.1 million (1993) to $154.1 million (1994). Fourth quarter net cash flow went from $10.2 million (1993) to $50 million (1994).

Mr. Peter Porrino, senior vice president and chief financial officer said: "The difficult bond market extended into the fourth quarter and ZRC's investment performance continues to reflect both the positive and negative consequences of this challenging environment and our total return investment philosophy.

"While our investment results show realised losses, the yield on our investments has been rising steadily and increased on a pre-tax basis, by approximately 215 basis points over ... 1993.''