Capital Re Corp. Wednesday reported net income of $10.4 million, or 70 cents a share, in the first quarter, up 15.6% from $9 million, or 60 cents, in the first quarter of 1993.

Capital Re Corp. is the holding company for Capital Reinsurance Co., which serves the municipal bond insurers, and Capital Mortgage Reinsurance Co., which serves the mortgage guaranty industry.

Michael E. Satz, Capital Re's chairman and chief executive officer, attributed the contributions made by Capital Mortgage Reinsurance Co. as a major reason the firm was able to post increased profits despite the slowdown in municipal volume, which negatively affected the earnings of the primary bond insurers.

"Notwithstanding a marked reduction in new issue municipal bonds, the performance of Capital Re in the first quarter of 1994 reflects the continued strength of the financial guaranty reinsurance business and, in particular, the strength of facultative opportunities for municipal bond reinsurance," Satz said in a statement. "Moreover, first quarter results underscore the material impact on revenues of the company's diversification into residential mortgage guaranty reinsurance."

Other financial measures bear out Capital Re's ability to avoid the deleterious impact lower municipal volume had on its major clients, the bond insurers.

Net premiums written increased 32.7%, to $20.7 million from $15.6 million in 1993's first quarter. Municipal reinsurance comprised $11.2 million of net premiums written in 1994's first quarter, while mortgage reinsurance activity accounted for $7.5 million, Capital Re's press release said.

The firm's statutory capital base rose to $368.9 million at March 31 from $303.8 million at yearend 1993.

On the New York Stock Exchange yesterday, shares of Capital Re Corp. rose one point to close at 20 1/4. The company released its results after the close of trading Wednesday.

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