Terra Nova (Bermuda) Holdings Ltd. improved net income for the first quarter to March 31 by 10.2 percent to $18.1 million, when compared with the same three months in 1996.

Operating earnings after tax, which exclude realised investment gains and losses, for the first quarter were $14.1 million, up 27.7 percent.

Gross premiums written for the first quarter soared 12.8 percent higher to $227.7 million. Net premiums written were up 6.2 percent to $183.2 million.

Terra Nova chairman and CEO, William Bailey, said, "The Terra Nova group produced solid growth in earnings and in premium income in spite of very competitive conditions in most of its business segments.

"Generally favourable loss experience and the lower cost of reinsurance protections both contributed to better earnings. Our strategy to expand our business, largely through greater participation in the premium writings of Octavian syndicates, has increased the insurance component of our total business at a time when market conditions make expansion in the reinsurance sector undesireable.'' "The benefits of this strategy should continue to be demonstrated over the balance of this year and next as our growth at Lloyd's increases in importance to the group's overall results.'' The underwriting profit for the period was some $600,000 (1996: $700,000), as the combined ratio stood at 99.2 percent (1996: 99.1 percent). The loss ratio declined from 69.3 percent to 65.3 percent, with the expense ratio increasing from 29.8 percent to 33.9 percent.

The company said the ratios reflect the group's changed mix of business resulting from their greater participation in the Octavian syndicates.

Net investment income was $20 million, 7.8 percent above the comparative period, as a result of a 10.6 percent increase in average invested assets, partially offset by lower portfolio yields.

Total assets at March 31 were $1.988 billion, or $121 million above that of three months before. Shareholders' equity was $394.9 million at March 31, one percent down on the year end figure.

Retained earnings of $17.6 million were more than offset by a reduction of $22.6 million in the amount of unrealised investment gains after tax, largely due to weaker bond markets during the quarter. Book value per share decreased correspondingly to $15.28 at March 31, compared to $15.43 at year end 1996.