Bermuda-based Max Re Capital Ltd. announced that the “Audit and Risk Management Committee of its Board of Directors has initiated, with the assistance of outside advisors, a review of three finite risk retrocessional contracts written in 2001 and 2003 to determine whether the Company properly accounted for them, principally with respect to whether they contain sufficient risk transfer to meet the requirements of Financial Accounting Standard No. 113.”
The bulletin also noted that the Committee “has voluntarily contacted the Securities and Exchange Commission.”
Max Re also indicated that “as a result of the investigation of the contracts in question, the Company may be, but has not yet determined whether it will be, required to restate its financial statements for the years ending December 31, 2001 through 2005.
“Although the allocation among the periods would have to be determined, the Company believes that the cumulative adjustment from these contracts would be a reduction to retained earnings at December 31, 2005 of not more than approximately US$50 million, or approximately 4 percent of shareholders’ equity.”
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