After healthy investment earnings and an absence of major loss activity, Bermuda-based Mid Ocean Ltd.'s second quarter unaudited profit surged to $55.6 million, the company reported yesterday.

The catastrophe reinsurer reported $13.2 million profit in the prior year's second quarter.

For the half year, the company's profit rose to $73.6 million compared to $29.8 million for the six months ended April 30, 1994. Operating income for that period was $90.6 million and $29.2 million respectively.

"The absence of major loss activity added to profitability for the quarter.

Our premium growth for the quarter was in the non-property catastrophe portion of our book,'' said Mid Ocean president and CEO Mr. Michael Butt.

"We are pleased to report that the value of our investment portfolio increased substantially in second quarter, due in large part to the favourable movements of interest rates and currencies,'' he said.

Net investment income rose 71 percent to $18.7 million from $11 million for the same quarter a year earlier.

The increase in investment income can be attributed to a larger investment base and attaining higher yields. At the end of second quarter, Mid Ocean significantly reduced its exposure to non-US dollar denominated securities, he said.

"We believe this will reduce overall portfolio volatility although it could lower investment yield and potential return relative to what we might have achieved with our previous strategies.'' Half year net investment income was $36 million compared to $23.1 million while losses on investments were $16.9 million compared to gains of $.7 million.

Earnings per share for the quarter ended April 30 were $1.46 compared to 35 cents per share a year earlier.

Operating income, excluding investment gains and losses, was $49.7 million compared to $20.3 million a year earlier.

Per share earnings for the first six months were $1.94 compared to 79 cents.

Second quarter revenues were $123.5 million, a 52 percent increase over the $81.4 million reported in the same quarter last year.

Gross premiums written dropped two percent to $55.6 million from $56.8 million.

The decline was attributed to a drop in reinstatement premiums resulting primarily from the Northridge earthquake.

Net premiums earned were $98.9 million, up 28 percent from $77.5 million earlier.

Premiums written for the six months were $357.1 million compared to $282.1 million, an increase of 27 percent. Net premiums earned were $189.2 million compared to $135.8 million.

Quarter expenses declined to $67.9 million from $68.2 million while corresponding half year amounts were $134.7 million and $129.8 million.

Assets at April 30 were $1.53 billion, up from $1.22 billion at the end of fiscal 1994, an increase of 25 percent.

Shareholders' equity was $920.2 million, up from $804.6 million.

Fully diluted book value per share was $24.51 and the end of the quarter compared to $21.68 a year earlier.

"Second quarter results are very much in line with our expectations on the underwriting side of our operations,'' said Mr. Butt.

"In looking at the rest of the year, gross written premiums may decline modestly, as compared to the last half of 1994. This is because, absent any additional loss charges, reinstatement premiums are likely to be comparatively lower during the period,'' he said.

"And the property catastrophe marketplace, which represents the bulk of business we expect to write in the second half, requires increased selectivity.'' Mid Ocean, through its subsidiary Mid Ocean Reinsurance Ltd., provides property catastrophe reinsurance and other reinsurance to insurers and reinsurers.