Bermuda-based insurer and reinsurer, Terra Nova (Bermuda) Holdings Ltd. has declared a $73.4 million net profit for the year to December 31, a 13.1 percent increase over the year before.

The successful year came after gross premiums written soared 52.4 percent to $550.2 million, fuelled by a fourth quarter in which premium shot up 216.4 percent to $118.1 million.

The increase in gross premium was mainly as a result of the group's increased participation in the Octavian syndicates in 1997 and $39.1 million of premiums related to reinsurance to close off "orphaned'' Lloyd's syndicates from the 1993 underwriting year.

Net premiums written rose 55.4 percent to $483.5 million, with a 224.9 percent increase to $114.8 million in the fourth quarter alone.

Chairman and CEO William O. Bailey stated: "Terra Nova continues to produce favourable earnings and premium growth in spite of the highly competitive markets in which the group operates. The strong growth in premiums written will result in increased cash flow and investment income in 1998.

"The additional insurance capacity required in the syndicates managed by Octavian increases the insurance component of our total business. The acquisition of Corifrance during the year has increased our presence in continental Europe, providing improved access to important reinsurance markets.

"Our strong balance sheet and loss reserve position provides Terra Nova with the ability to further develop its diversified business as opportunities arise.'' During the fourth quarter, the company adopted Statement of Financial Accounting Standards No. 128 -- earnings per share, and restated previously reported per share amounts to conform with the new standard.

Losses and loss adjustment expenses jumped more than $100 million from $178.3 million to $282.5 million.

Realised investment gains after tax were $10.5 million, up from $7.7 million the year before. An underwriting profit of $7.5 million (1996: $7.9 million) was reported for the year.

The combined ratio rose to 98.2 percent (1996: 97.2 percent), as the loss ratio increased from 64 percent to 67.4 percent and the expense ratio fell from 33.2 percent to 30.8 percent.

The combined ratios in both 1996 and 1997 reflect the absence of significant large losses and any adverse development for prior year claims.

Net investment income increased nine percent to $85.1 million. The increase in invested assets was partially offset by lower portfolio yields.

Total assets at December 31 were $2.2 billion, up $300 million from the year before. Shareholders' equity rose 20.8 percent to $481.9 million. That increase is primarily from retained earnings of $69 million, and, an increase in the unrealised after tax appreciation of investments of $20.1 million.

The company repurchased $10 million of its common stock under a stock repurchase programme authorised in the second quarter.

Book value per share at December 31 was $18.96, nearly 23 percent higher than it was a year before.

William Bailey