Sphere Drake Holdings Ltd. (SDH) lifted its 1994 profit by 28.3 percent to $40.4 million or $2.20 per share.

The profit for 1993 was $31.5 million or $1.71 per share, according to a release yesterday from the company.

The company wrote net premiums of $500.6 million compared to $339.1 million a year earlier, an increase of 47.6 percent.

Fourth quarter net premiums written jumped 40 percent from $83.5 million to $113.5 million.

"Improved pro forma earnings for 1994 were primarily derived from a significant growth in net premiums written demonstrating the effective utilisation of the capital received from the September 1993 initial public offering,'' said Mr. Ian Dean, president and Chief Executive Officer of SDH.

"A large part of this growth is attributable to the successful development of our Bermuda subsidiary in its first full year of operation following an increase in capital of $100 million from the proceeds of the IPO,'' he added.

But SDH's fourth quarter earnings of $13.1 million or 71 cents per share were off five percent from the $13.8 or 75 cents per share earned a year earlier.

The company also reported losses on the sale of investments for the year and quarter were $4.1 million and $2.1 million respectively compared to gains of $18.3 million and $5.2 million for comparable periods in 1993.

SDH underwrites international property and casualty insurance and reinsurance and ART business through its operating subsidiaries in Bermuda and London.

The combined ratios for SDH, full year and fourth quarter were 101.8 percent and 107.7 percent respectively compared to 98.6 percent and 93.2 percent earlier.

Combined ratios measure the percentage of premiums paid out in losses and expenses.

"There were a number of unusual factors contributing to the increase in the full year's combined ratio. The high frequency and type of aviation losses experienced during the year impacted the results of the company's marine and aviation business by a before tax total of $33 million which accounted for 7.2 percent of the full year's combined ratio,'' according to the release.

Revenues excluding realised investment gains and losses for the full year and fourth quarter were $497.7 million, up 37 percent, and $144.2 million, up 35.1 percent respectively, over revenues for the prior year's periods resulting from significant premium growth.

Investment income rose 32.6 percent to $38.2 million for 1994 and by 66.7 percent to $10.5 million for the fourth quarter compared to $28.8 million and $6.3 million earlier.

The increase in average investment yield was 6.3 percent in 1994 compared to 5.9 percent in 1993.

Income from continuing operations for the year ended December 31, 1994 increased to $36.2 million or $1.97 cents per share from $33.9 million or $2.62 per share. For the 1994's fourth quarter, corresponding figures were $11.1 million or 60 cents per share, compared with $17.3 million or 94 cents per share for the same period a year earlier.

Net loss from the January, 1994 California earthquake was reduced to $6.1 million compared to $9.5 million due to more reinsurance benefit triggered by an increase in the total insured loss.

SDH does not expect to be materially impacted by the Kobe earthquake. SDH yesterday also reported a dividend of four cents per share to be paid April 11 to shareholders of record March 23.

In fourth quarter, the company strengthened reserves for a number of classes, principally the early years of operation of the protection and indemnity account.

Services Inc., an indemnity provided to the company for loss reserve development for 1986 and prior year, was closed.