Max Re Capital Ltd. Reports 2ndQ Net Income of $0.81 per Diluted Share

August 5, 2003

Bermuda-based Max Re Capital Ltd. reported net income for the three months ended June 30, 2003 of $30.8 million, or net income of $0.81 per diluted share, compared to a net loss of $5.0 million, or a net loss of $0.13 per diluted share, for the three months ended June 30, 2002. Net operating income before minority interest, which represents net income before minority interest reduced by net realized gains on sale of fixed maturities, for the three months ended June 30, 2003 was $36.0 million, or net operating income of $0.79 per diluted share, compared with a net operating loss before minority interest of $8.4 million, or a net operating loss of $0.18 per diluted share, for the three months ended June 30, 2002.

For the six months ended June 30, 2003, the Company had net income of $45.4 million, or net income of $1.19 per diluted share, compared to a net loss of $2.4 million, or a net loss of $0.06 per diluted share, for the six months ended June 30, 2002. For the six months ended June 30, 2003, the Company had net operating income before minority interest of $50.7 million, or net operating income of $1.12 per diluted share, compared to a net operating loss of $5.5 million, or a net operating loss $0.12 per diluted share, for the six months ended June 30, 2002.

Robert J. Cooney, chairman, president and CEO, commented, “Our second quarter results are indicative of an attractive underwriting period and a recovering investment environment. The Company’s shift to increased risk underwriting and steadfast commitment to a diversified investment strategy that includes fixed income securities and alternative assets was rewarded this quarter. Our alternative investment portfolio has achieved record results during the last six-month period and, coupled with increasing profits from property and casualty alternative risk and traditional reinsurance underwriting, has resulted in the Company producing record net operating income for the first six months of 2003.”

Gross premiums written for the three months ended June 30, 2003 was $165.8 million, coming entirely from property and casualty underwriting, compared to $121.5 million, also coming from property and casualty underwriting, for the three months ended June 30, 2002. Net premiums earned for the three months ended June 30, 2003 were $143.3 million compared to $65.3 million for the same period of 2002. Current year to date premiums written are $596.3 million compared to $465.4 million for the first six months of 2002. Net premiums earned for the first six months of 2003 are $287.0 million compared to $150.8 million for the same period in 2002.

Net investment income, excluding realized and unrealized gains and losses, for the three months ended June 30, 2003, increased to $15.1 million, compared to $13.4 million for the same period in 2002. Net investment income for the six months ended June 30, 2003 increased $3.8 million, to $29.6 million, compared to $25.8 million for the same period in 2002. Net gains on alternative investments for the three months ended June 30, 2003 were $45.2 million, or a 5.84 percent return, for the quarter, compared to net gains on alternative investments of $2.9 million, or a 0.44 percent return, for the same period of 2002. For the six months ended June 30, 2003, alternative investments have returned 9.12 percent, compared to 0.85 percent for the same period in 2002. Invested assets were $2.3 billion as of June 30, 2003, with an allocation of approximately 65 percent to cash and fixed maturities and 35 percent to alternative investments.

Total revenue for the three months ended June 30, 2003 increased 139 percent to $206.3 million, compared to $86.2 million of total revenue for the same period in 2002. Growth in revenue is principally attributable to a 119 percent increase in net premiums earned and to significantly improved performance on the alternative investments for the three months ended June 30, 2003 compared to the same period in 2002. The increase in net premiums earned and the improved performance on the alternative investments also account for the increase in total revenues year to date through June 30, 2003 compared to the same period in 2002.

Losses, benefits and experience refunds were $114.4 million for the three months ended June 30, 2003 compared to $66.9 million for the same period in 2002. The increase in losses, benefits and experience refunds is principally attributable to the increase in premiums written and earned. Loss experience on contracts in force developed as expected during the quarter with only one significant adverse adjustment, which amounted to $3.5 million, relating to a life and annuity contract written in a prior year. Losses, benefits and experience refunds for the six months ended June 30, 2003 were $228.8 million compared to $134.4 million for the same period in 2002.

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