plunged more than 58 percent to $85.8 million, compared with $206.6 million for the same period last year.

It brought net income for the first nine months to August 31 down to $411.8 million -- a near 22 percent decline from $526.3 million for the same period in 1997.

The company reported one-time, third quarter charges of $17.5 million related to the realignment of Exel's operations following its August merger with Mid Ocean Ltd.

All reported figures for the current period provide for the one month inclusion of Mid Ocean.

President and CEO Brian M. O'Hara stated, "These are reasonable results given the current difficult market environment.'' Losses and loss expenses exceeded $91.1 million for the three month period (1997: $85 million) and were $256.4 million for the nine month period (1997: $261.3 million).

Still, the combined ratio for the nine months was 83.2 percent in 1998, compared with 85.8 percent in 1997.

Mr. O'Hara said of the merger, "We have created an organisation that is strategically positioned to lead in key insurance and reinsurance markets.'' Revenues, including realised losses and gains, for the third quarter of 1998 were $240.4 million, compared with $326.8 million a year ago. For the first nine months revenues, including realised losses and gains, were $812.6 million, compared with $870.0 million in the first nine months of 1997.

Total assets as of August 31, 1998 were $9.9 billion, compared with $6.1 billion as of November 30, 1997. Shareholders' equity was $4.5 billion as of August 31, 1998 compared with $2.5 billion at November 30, 1997. Fully diluted book value per share as of August 31, 1998 was $40.77 compared with $29.33 as of November 30, 1997.

Gross premiums written for the third quarter of 1998 were $243.8 million, up from $134.5 million in the same quarter of 1997. For the first nine months of 1998, gross premiums written were $611.0 million, up from $320.1 million in 1997.

Net earned premiums for the third quarter of 1998 were $155.5 million, compared with the prior year's third quarter of (1997: $138.0 million). For the nine months, net earned premiums were $433.2 million (1997: $387.7 million).

Net investment income, excluding realised losses, rose from $56.1 million in last year's third quarter to $71.0 million. Realised investment losses in the third quarter of 1998 were $2.8 million, compared with gains of $116.4 million a year-ago.

For nine months, net investment income in 1998 was $189.0 million (1997: $161.8 million) and realised investment gains were $134.7 million (1997: $275.3 million).

In the third quarter of 1998, the company earned $14.6 million from its equity in the net earnings of its affiliates (primarily Mid Ocean prior to merger completion) compared with $16.2 million in 1997's third quarter.