1991 -- a 61 percent drop on the previous year.

Chairman Mr. Colin O'Connor blamed the performance largely on poor investment returns.

Dramatic reductions in short-term interest rates cut the company's gross investment income from 10.2 percent in 1990 to nine percent, he said.

Net investment income was down 37 percent from $7.45 million to $4.7 million over the 12 months to December 31, 1991.

Mr. O'Connor said: "During 1991, we saw few signs of harder markets in the business classes we prefer to write.

"Many suggest that this is the time to write catastrophe business but this class remains unattractive to us because the increased rates available are offset by the greater cost of reinsurance (and management time) as the retrocession market implodes.'' In his chairman's report, he had a light hearted dig at the financial reinsurance industry.

"Catastrophe business is also offered in the guise of `financial reinsurance' but the terms are generally unattractive and cedants expect extraordinary profit commissions,'' he said.

"Indeed, prospective exposures of all types now come under the trendy rubric of financial reinsurance. The latest jargon is `shared risk', which sounds as though it involves hazardous couplings.

"The concept may have a longer shelf life than the Warholian 15 minutes it deserves, but what most of these financial reinsurances offer is much more risk for much less premium. Financial reinsurance has become popular with cedants because it's a buyer's market.'' Belvedere's total revenues for 1991 were $39.8 million, up 14 percent on the previous year. The company wrote premiums worth $38.6 million, an increase of 29 percent. The firm's underwriting and operating expenses came to $38.5 million, up 22 percent.

Capital and surplus increased slightly to $22.15 million from $22.03 million.

The company's ratio of loss reserves to liquid assets increased from 0.78 to 1 in 1990 to 0.87 to 1 in 1991.

Assets at the end of the financial year stood at $117.4 million and liabilities came to $95.2 million.

Belvedere Insurance underwrites general insurance and reinsurance on a worldwide basis. The company is wholly-owned by Caliban Holdings, which is jointly owned by Citicorp, which has the controlling interest, and Belvedere's management team.

Belvedere's annual report showed that Caliban borrowed $11 million from its own subsidiary, Prospero, during 1990 to pay off its external debt.

Belvedere Insurance 1991 results Profit $1.3m Revenue $39.8m Expenses $38.5m Assets $117.4m Liabilities $95.2m.