Leading Bermuda insurer XL Capital turned a $184 million profit in the third quarter one year after losing $840 million as a result of the September 11 terrorist attacks.

XL said it made the profit for the three months to the September 30 as a result of strong premium increases and new business.

The profit translates to a profit per share of $1.34 a share, compared to a loss of $6.70 a share in 2001. XL also recorded a net operating profit of $221 million or $1.61 a share compared to an operating loss of $761.8 million in the same period in 2001.

"Our insurance and reinsurance businesses have enjoyed a robust third quarter, with significant rate increases and new business contributing to strong underwriting results in

the quarter. I am particularly pleased with our general operations combined ratio of 91 percent in the quarter."

"However, while the managers of our investment affiliates generally outperformed their benchmarks and the overall investment markets in the third quarter, their absolute performance resulted in a small loss when compared to their strong performance a year ago," he added.

Mr. O'Hara predicted that insurance rates would continue to increase, or remain hard, "for some time". Bermuda insurers have benefited from the "hard market" which has come after a decade of low rates.

Mr. O'Hara warned earlier this month that XL would not meet analysts' predictions that the company would earn $1.67 for the quarter, saying "terrible investment markets" would cut operating earnings to below analysts' estimates for the quarter.

Mr. O'Hara also warned that the company was facing $50 million $50 million in claims from recent European floods, but that would be offset by better experience in other areas.

XL said it had recorded net income of $181.8 million, or of $1.32 per share, for the nine months to September 30, 2002, compared with a net loss of $492.5 million, or a loss of $3.93 per share, during the same period in 2001.

It said net operating income for the first nine months of 2002 was $456.4 million, or $3.32 per share, compared with a net operating loss of $445.0 million, or $3.55 per share, for the nine months ended September 30, 2001.

For the quarter, XL reported gross premiums written of $2.655 billion compared to $1.193 billion and net premiums earned of $2.162 billion compared to $751.5 million in 2001.

Total assets as of September 30, 2002 were $34.1 billion compared with $28 billion as of December 31, 2001. Net investment income from general operations was $161.1 million in the third quarter of 2002, compared with $152.2 million in 2001's third quarter. Net investment income from general operations was $474.6 million in the first nine months of 2002, compared with $446.5 million in 2001's first nine months.

Net investment income from life operations was $26.2 million in the third quarter of 2002 and $58.6 million for the nine months of 2002. In 2001, there was no investment income from life operations. The combined ratio for the Company's general operations was 91 percent in the third quarter of 2002 compared with 233.3 percent in the third quarter of 2001.

The loss ratios were 61.8 percent and 195.4 percent in the third quarters of 2002 and 2001, respectively, with corresponding expense ratios of 29.2 percent and 37.9 percent for the same quarters, respectively.