million in the third quarter, the Bermuda-based risk management company reported yesterday.

The company attributed the gain to increases in its alternative market programmes and strong renewals, but said it was offset by a somewhat more difficult operating environment for the company's workers' compensation business, particularly in California''.

Net income for the third quarter and the first nine months of the year amounted to $6.19 million, or $0.47 per common share, and $17.8 million or $1.34 per share. That compares to last year's corresponding figures of $5.72 million or $0.43 per share and $14.9 million or $1.12 per share.

However, the 1993 third quarter operating income included a number of unusual items, including a tax benefit from the exercise of employees' stock options, which added an estimated $800,000 or $0.06 per common share to both the 1993 third quarter and nine month operating results.

Excluding the effect of these unusual items last year, the company said its operating income increased 22 percent and 27 percent, respectively, for the third quarter and first nine months of 1994 over the corresponding 1993 periods. Net income increased 26 percent in both periods.

The Legion Insurance Company added 19 new programmes during the third quarter as compared to 16 in the corresponding period last year. The total number of new programmes added this year is now up to 52, the same number of new programmes sold during the first nine months of last year.

Legion's renewal rate in the third quarter declined to 70 percent, as compared to 79 percent in 1993, bringing the renewal rate for the first nine months of 1994 to 82 percent as compared to 76 percent for the first nine months of 1994. This brings the total number of Legion programmes to 182, a 21 percent increase on 1993.

Gross premiums written increased 21 percent to $214.4 million for the first nine months of 1994, when compared to $176.6 million in 1993. Premiums earned increased 19 percent to $48.9 million for the nine month period, compared with $41.2 million in 1993, despite a third quarter 1994 decrease of two percent compared to 1993, resulting from timing differences in the reporting of the assigned risk pool premiums in 1993.

Investment income increased by 18 percent to $2.9 million for the third quarter and 20 percent to $8.4 million for the first nine months of 1994 due to interest rate increases.

This significant increase in interest rates which has taken place during the nine months of 1994 has resulted in an unrealised loss of $6.3 million after tax in the company's investment portfolio at September 30, 1994.

Operating expenses were $6.8 million for the third quarter and $19.5 million for the nine months to September 30, 1994, up 21 and 20 percent respectively over 1993. The increase in operating expenses was attributed to the growth in personnel and other expenses resulting from the increased number of client programmes.

Mutual Risk Management Ltd. (MM) common shares closed up 37.5 cents at $27.75 on the New York Stock Exchange yesterday.