months to May 31 more than 50 percent to $98.4 million, the excess liability insurer said yesterday.

EXEL said it had net income of $98.4 million ($1.81 per share) compared to $191.5 million ($3.43 per share) in 1993.

EXEL Senior vice president of investor relations Mr. Gavin Arton, said: "In the second quarter the managers were the victims of the declining bond market.

But it is difficult comparing those results to the same period last year, because as you would recall 1993 was a boom year in investments and one couldn't have anticipated a repeat of last year's results.'' Roughly 85 percent of EXEL's $3.3 billion investment portfolio had been committed to the bond market for the period. There were small investment gains realised over the first quarter.

But the company reported operating income, excluding realised investment results, for the six month period at $111.2 million, or $2.04 per share, an increase of six percent from $107.5 million or $1.92 per share in 1993.

Net operating income for the second quarter, excluding realised investment results, was $51.6 million or $0.95 per share, compared with $55.4 million or $1.00 per share for the period in 1993.

Chairman Mr. Michael J. Kevany said: "Our current operating results reflect the continuing competitive conditions in the excess casualty market.

Business retention remains very high, despite challenges predominately from US insurers to significantly lower prices to unprofitable levels and include coverages that would normally command higher premiums.

"I am confident that our underwriting discipline will enable the company to remain profitable in the core renewal franchise, while good growth will continue to be obtained through a higher number of multi-year contracts and new business written by our European subsidiary.

"... It was expected that the changes in the fixed investment markets in the first half of this year would result in significantly lower returns than a year ago.

"The company's total return active investment management style has served it well since it was adopted in 1990 and overall returns from this approach continue to exceed those that would have been achieved under a more passive approach.

"While our investment results are indicative of the general market, our investment managers have done relatively well and outperformed their benchmarks during the second quarter. It is nonetheless disappointing to report a decline in net income for the period as a result of the high level of realised losses taken in 1994 as the managers reposition their portfolios for higher returns in the future.'' Net income for 1994's second quarter was $18.9 million or $0.35 per share, compared with $101 million or $1.82 per share in 1993.

Revenues were $141.8 million compared with $205.1 million for the quarter a year ago. For the six months, revenues were $347.4 million versus $394 million.

Total assets at May 31 were $3.9 billion, up from $3.6 billion on November 30.

Shareholders' equity was $1.7 billion compared with $1.8 billion. Fully diluted book value per share was $31.59 compared with $33.61.

Gross premiums written for the second quarter were up 13 percent to $122 million, from $107 million the year before. The 1994 gross premiums written include $14.9 million of premiums relating to multi-year contracts that will be earned in future years. Excluding this amount, gross premiums written were $107.1 million, essentially unchanged from 1993's second quarter.

For the first six months of this year, gross premiums written were $325.2 million, up 34 per cent from $242.6 million in 1993. Excluding prepaid preiums written for future years and surcharges, gross premiums written were $249 million, an increase of three per cent.

Net earned premiums for the second quarter were $128 million, up 13 per cent from 1993's $113.2 million. For six months, earned premiums were $265.8 million this year compared to $220.2 million last year, an increase of 21 percent.

Net investment income, excluding realised gains, improved slightly in the second quarter of 1994 to $42.9 million from $42.7 million in 1993. Realised investment losses in the second quarter were $32.6 million, compared with gains in the period a year ago of $45.6 million.

For the first six months, net investment income was $86.4 million, an increase of two percent from $85.1 million in 1993. Realised investment losses for the six month period were $12.7 million, compared with gains of $84 million.

The company earned $3.6 million from its equity in affiliate, Mid Ocean Ltd., for the second quarters of both years. The company's equity in the net earnings of Mid Ocean Ltd. for the first six months of 1994 was $7.9 million, compared with $4.8 million in 1993's first half.