second quarter as a result of the Northridge earthquake, the company reported yesterday.

The company, parent of property catastrophe carrier Mid Ocean Reinsurance Company Ltd., said net income dropped 29.4 percent from $18.8 million in the February 1 to April 30 period. Per share earnings fell from 50 cents to 35 cents.

But net operating income, excluding net gains and losses on investments, for the second quarter was $22.9 million ($0.61 per share), a 79 percent increase on a pro forma basis over the same period in 1993.

The reduced profits came as a direct result of the net provision of $35 million for the Northridge earthquake, which follows a first quarter provision of $37 million.

The $72 million includes $46.8 million of paid and outstanding claims, and $25.2 million in claims incurred but not reported as of May 27, based on an estimated industry-wide loss in excess of $6 billion.

Net income for the second quarter of this year included net losses on investments of $9.7 million, compared to a gain of $6 million in the second quarter of the prior year, reflecting the significant downturn in global bond markets.

President and CEO, Mr. Michael A. Butt, commented, "We were gratified by the continued growth of our business, which resulted from further increases in existing clients' accounts, as well as new business. There was an increase in written premiums in all our major geographical areas of business.

"We are pleased that we were able to achieve a substantial profit despite the second worst catastrophe loss in US history, and the worst bond market in many years. Looking to the future, we believe that Mid Ocean is very well positioned strategically to take full advantage of the rapid changes continuing in our business.'' Revenues for the second quarter were $81.4 million, a 96.4 per cent increase over the $41.5 million reported in the same quarter of 1993. Gross written premiums reported for the second quarter decreased 15.1 per cent to $56.8 million from $67 million in the second quarter of 1993 due to timing differences in recording premiums written and a change in the estimation process for sign downs and premium adjustments.

Net earned premiums for the second quarter were $77.5 million, up 149.5 per cent from $31.1 million in the previous year's second quarter.

Net investment income excluding net gains or losses on investments was $13.6 million in the 1994 second quarter, compared with $4.4 million in the same period a year ago, an increase of 211.8 per cent. The net investment income increase can be attributed to a substantially larger investment base in 1994, and higher yields as compared to 1993.

For the six month period to April 30, net profit rose more than 21 percent, to $29.8 million ($0.79 per share), compared to $24.6 Million ($0.68 per share) on a pro forma basis in the prior year.

Net operating income for the six months, excluding net gains or losses on investments was $32.6 million ($0.86 per share), an 82.9 per cent increase on a pro forma basis for the same period in 1993.

Gross written premiums were $282.1 million for the six months of 1994, compared to $197 million a year ago, a 43.2 per cent increase. Net premiums earned were $135.8 million, versus $40.1 million in 1993. Net investment income was $26.6 million in the first half of 1994, compared to $7.8 million in the first six months of 1993. Net losses on investments were $2.8 million, compared to net gains of $6.8 million in the first six months of the prior year.

Total assets to the end of April were $1.18 billion, up from $954 million at the end of fiscal 1993. Shareholders equity was $749.9 million, down from $769.4 million as a result of the decline in the unrealised appreciation on investments. Fully diluted book value per share was $20.36 at quarter's end, as compared to $20.82 per share at 1993 fiscal year end.

Mr. Michael Butt.