Bermuda reinsurer ESG Re has posted a $5.5 million or $0.47 per share loss in the first quarter despite an upward trend for the company's results after losing a large contract in North America in 2000, the company reported last week.

ESG Re's chief executive officer, Alasdair Davis, said that the technical results from 2001 and 2002 so far continued to be favourable and that the company should return to profitability during 2002.

In a release Mr. Davis, said the the loss resulted "primarily from a loss on one contract in the 2000 underwriting year in the North American operation".

He added: "The technical results from 2001 and 2002 underwriting years continues to be favourable and demonstrates that the business strategy is sound and will provide a platform for return to profitability in 2002."

The result for the quarter included realised investment losses of $1.1 million.

Mr. Davis added that the investment in ESG Direct and its full service capability had recently led to the acquisition of several new clients in its European operations.

And the release added that the investment would lead "to a more balanced portfolio between ESG Direct and ESG Re, with significantly improved loss and acquisition cost ratios"

For the three months ended March 31, 2002, the company had a net loss of $5.5 million compared to a net loss of $3.9 million for the first quarter of 2001.

The net loss per share for the three months ended March 31, 2002 was $0.47 compared with a net loss per share of $0.33 for the first quarter 2001.

The net operating loss for the first quarter 2002, which excludes realised investment losses, was $0.37 per share. Net operating loss for the first quarter 2001, which excludes realised investment gains and a loss on an equity investment, was $0.39 per share.

For the three months ended March 31, 2002, the company underwrote a book of $21.4 million of gross premiums, of which $(8.5) million was placed with co-reinsurers and $4.0 million retroceded, thereby assuming $25.9 million for its own account, the company said.

Reported written premium for the quarter includes the effect of a co-reinsurance management agreement for business underwritten by the company's North American operations.

For the comparable three-month period ended March 31, 2001, ESG underwrote $45.3 million, of which it assumed $37.2 million for its own account.

The decrease in gross premiums written during the three month period ended March 31, 2002 is in line with expectations and reflects the company's strategy of select underwriting, together with write-downs on estimated premiums in respect of the Company's North American medical business, the release added.

Total revenues for the three months ended March 31, 2002 were $37.1 million, consisting of net premiums earned of $35.8 million, net investment income of $1.8 million, net realised investment losses of $1.1 million and management fee revenue of $0.5 million.

For the three months ended March 31, 2001 total revenues were $44.7 million consisting of net premiums earned of $40.3 million, net investment income of $3.4 million, realised investment gains of $ 0.7 million, management fee revenue of $0.2 million and loss on equity investments of less than $0.1 million.