States plummeted 17.6 percent on the previous year, a new study has found.

The A.M. Best Co report published yesterday revealed the $6.5 billion drop which left net income for the industry at around $30 billion compared to 1997's total industry income of $36.8 billion.

It blamed the decrease on sky-rocketing underwriting losses which added up to $17.9 billion -- about $12 billion greater than the $5.7 billion loss the industry experienced in the previous year.

While operating income dismally trailed 1997's results, realised capital gains added $18.2 billion to the industry's total net income.

Without these gains, the drop in net income would have been even more dramatic.

A.M. Best's property /casualty vice president Martin Sheffield warned that too much should not be read into the bad news.

He said the larger underwriting losses were primarily a reflection of 1997's remarkably high profitability.

"The 1998 results represented a return to typical underwriting results for the 1990s and 1997 was an unusually profitable year.'' While pre-tax operating earnings and net income have risen steadily since 1994, investment income has been stable and, besides the anomalous 1997 results, underwriting losses also have remained steady, he said.

Full details of the statistical study were published in yesterday's edition of BestWeek.