and is changing its aproach to business, almost doubled its net income in the first quarter of 2001.

Net income for the three months to March 31 was $11.463 million and last year it was $6.931 million. This represents an income increase per common share to $0.28 from $0.17.

Robert Mulderig, chairman and chief executive officer, and John Kessock, president, said in a joint statement: "The improvement in property casualty pricing has positively affected new unit sales and fee income in our corporate risk management business segment. This will continue to have a positive impact on our mix of business and therefore our performance as we move through 2001.

"Corporate risk management sales for the first quarter of 2001 produced 16 new accounts compared to six in the 2000 first quarter. Corporate risk management fees increased by 28 percent in the quarter and financial services fees continued their strong growth in the quarter at 98 percent. Excluding the effect of the acquisition of Valmet in the quarter, the financial services fees grew by an impressive 46 percent.

"In conjunction with the previously announced investment in the company led by XL Capital, AM Best affirmed the A-(Excellent) rating of our insurance companies. This quarter marks the beginning of the transition from our former program business model to a specialty insurance operation. We have amended the income statement presentation and restated the comparative quarter to reflect this.'' Mutual Risk shares, traded on the New York Stock Exchange, jumped $1.14 to close at $8.10 on the news.

Net premiums earned were $63,436 million, compared to $55.773 million in 2000, but net investment income fell to $6.405 million compared to $12.566 in the same quarter 2000. Fee income was up 39 percent to $31.861 million from $22.939 million in 2000.

Pre-tax profit margins from fee based operations were 28 percent in the first quarter of 2001, up slightly from 27 percent in 2000.

Operating income increased by nine percent to $12.455 million, compared with $11.453 million in 2000. Insurance operations contributed $4.6 million of operating income in this quarter, a 57 percent increase over last year.

The company's specialty brokerage business produced $4.4 million of fee income in the first quarter, representing 14 percent of total fee income. Specialty brokerage fees fell by 13 percent, primarily due to the cancellation of a number of the company's programs and timing of certain renewals. As a result of the decreased fees profit margins declined to 24 percent in the first quarter, compared with 34 percent in 2000.

Financial services business accounted for 37 percent of the total quarter's fee income. Mutual fund assets under administration exceeded $42 billion and the recent acquisition of Valmet added $3.2 million in fees in the quarter.

Losses and loss expenses increased to $43.8 million in the quarter for a loss ratio of 69 percent as compared to $34.3 million for a loss ratio of 61.4 percent in 2000. Acquisition and underwriting expenses amounted to $16.6 million as compared to $19.5 million in 2000, and operating expenses increased 29 percent to $22.9 million for the quarter.

The company said no new reinsurance disputes occcurred during the quarter, but as of March 31 2001 it was still involved in five reinsurance disputes. These involve approximately $57 million of unreimbursed paid losses and an estimated $70 million of unpaid reserves.

The annual general meeting of shareholders, due on May 16, has been postponed to a later date. A replay of a conference call about the results will be available on May 15 until 2.30 p.m. Bermuda time at 1-800-633-6284.