Bermuda-based Stockton Reinsurance Ltd. has declared record profits of $134,360,000 for the year to March 31, a near 527 percent increase over last year's $25.5 million.

The income excludes a near $13.6 million for the minority interest, which brought income before then to nearly $148 million.

Directors and officers of the company concluded in their year end report that shareholders' equity of a staggering 49.4 percent or $406,087,000 (1996: $271.7 million) puts the firm in the top tier of specialty underwriters in the world.

They said, "Despite consolidation in the marketplace, the insurance and reinsurance world continues to seek alternative solutions to traditional problems. In that regard, the innovative products that Stockton Re provides are in growing demand.'' Fuelled by strong investment results, Stockton Re's earnings came just before two key vice presidents and directors, Richard Black and Mike Cascio, left the company under undisclosed circumstances this summer.

Industry sources speculated a fall-out between the firm and the two men who brought the company and the reinsurance world successfully together. Observers cited Messrs. Black and Cascio as key reasons for that success. They both had moved from top underwriting positions at finite risk reinsurer, Centre Re, to start up Stockton Re.

President Thomas F. Dailey, in announcing the surprise departures this July, said, "I am particularly pleased with the continued growth in size and stature of our insurance business and we are very grateful for the contribution that Michael and Richard have made to building that business.

Clearly, their talents will be missed by all of us.'' Total assets for Stockton Re have skyrocketed from $400 million in 1995 to nearly $729 million in 1996 and more than $1.2 billion by the end of this March.

Despite difficult market conditions, the volume of Stockton Re's business has increased considerably, especially in terms of multi-year contracts, with US GAAP recorded premiums of $196.9 million (1996: $56.3 million), part of the total contracted premiums written during the year of $437.4 million.

Net premiums earned rose from $26.5 million in 1996 to $98.3 million in 1997.

The underwriting results were dramatically supplemented by a strong investment performance. Net investment income rose to more than $150 million (1996: $64.5 million).

The result was a compound return on shareholders' equity for the three years since underwriting began of 24 percent, consistent with the 24.2 percent compound return on equity experienced by parent Stockton Holdings Ltd. since 1969.

Stockton Re is an insurer and reinsurer of specialty risks, including both traditional and finite products, the latter often written on a multi-year basis and across several lines.

Classes of business written to date include: whole account stop loss; workers' compensation; professional liability; mortgage indemnity; automobile & general liability; marine & general liability; property catastrophe; group health & disability; crop hail & multi-peril crop insurance; credit insurance; structured settlement insurance; and COFR guaranty insurance.

The company had added an insurance and reinsurance underwriting function to a group with an established 25-year global track record in private investment.

Stockton Re is now an insurer and reinsurer of specialty risks, including both traditional and finite products.

The largest stake holder in parent Stockton Holdings Ltd. is Orix Corp. (about 40 percent), the largest non-banking financial services company in Japan.

Goldman Sachs & Co. came aboard shortly after the end of the financial year in March, as part of an overall transaction that included its subsidiary purchasing Stockton's investment management business, a reported $20 million in additional equity into the Stockton group and the establishment of a long term investment advisory relationship.

Investment services to Stockton had previously been supplied by Stockton subsidiary, Commodities Corp. Ltd. (CCL), a New Jersey asset management firm.