Bermuda-based ESG Re Ltd. has reported that in the second quarter of 2001 it recorded a consolidated net loss of $5.9 million, or $0.50 per share.

The company also reported an underwriting profit of $1.2 million in the quarter which, together with investment income and gains from the sale of securities, covered most of the company's operating costs.

The company said the majority of the loss in the quarter was the result of a $4.2 million write-down of the company's carrying value of its other investments and an additional provision of $0.9 million to its legal reserve, which covers various contingent matters, it added.

Alasdair P. Davis, chief executive officer of ESG Re Ltd., said: "We are beginning to see in our operating results the benefits of executing our business plan with respect to our stated strategies of select reinsurance writings and the partnership enterprise segment.

"Furthermore, following the work done late last year to increase loss reserves to address the underwriting issues of the past, we initiated full reviews and audits of all entities where ESG holds a minority shareholding interest.

"Based on the initial results of this exercise, we believe it to be prudent to adjust the company's carrying value for these investments."

Mr. Davis added that the company was on target on both fronts of their business plan. He added: "Our key markets continue to perform well and represent our best opportunity to return to overall profitability in the second half of this year."

The company had a net loss of $ 5.9 million compared to a net loss of $9.3 million for the second quarter last year.