Max Capital Posts $94 Million Q4 Loss; $175 Million FY Loss

February 12, 2009

The Bermuda-based Max Capital Group reported a net loss for the three months ended December 31, 2008, of $94.1 million, or $1.67 per diluted share, compared to net income of $62.4 million, or $1.00 per diluted share, for the three months ended December 31, 2007.

Max Capital’s fourth quarter net operating loss, which excludes after-tax net realized gains and losses on fixed maturities and foreign exchange, was $85.0 million, or $1.51 per diluted share, compared to net operating income of $63.4 million, or $1.01 per diluted share, for the three months ended December 31, 2007.

For the year ended December 31, 2008, the Company had a net loss of $175.3 million, or $3.10 per diluted share, compared to net income of $303.2 million, or $4.75 per diluted share, for the year ended December 31, 2007. For the year ended December 31, 2008, the Company had a net operating loss of $146.7 million, or $2.59 per diluted share, compared to net operating income of $307.2 million, or $4.81 per diluted share, for the year ended December 31, 2007.

Chairman and CEO W. Marston (Marty) Becker commented: “In 2008, solid performances by our underwriting units were overshadowed by losses in our alternative investment portfolio. In a year generally regarded as being a soft pricing year, as well as having the fourth-highest U.S. property losses from catastrophes, our losses have been limited compared to many of our peers and our overall combined ratios have remained attractive.

“Max Specialty, our U.S. excess and surplus lines operation, grew considerably during 2008 and we expanded our specialty insurance and reinsurance capabilities with our fourth-quarter acquisition of Max at Lloyd’s, which provided us entry to the world’s most famous specialty insurance marketplace. We believe this greater product and geographic diversification will allow us to take advantage of more favorable market conditions as they emerge, and will help limit the volatility of our future underwriting results.

“On the investment side, Max has not been immune to the turmoil of the financial markets, and the negative return and volatility experienced by our alternative investments was worse than we had previously modeled. Late last year we announced our intention to reduce and rebalance our alternative investment allocation and this process is well under way. Total alternative investments are less than 15% of invested assets at year-end and we expect them to be less than 12% by the end of March 2009. The decision to change our asset mix in this way reflects the growing strength and scale of our underwriting platforms.

“Looking ahead, while we expect the market to remain in transition throughout 2009, opportunities continue to arise. Max Capital and our individual platforms are well-positioned from both a business and capital standpoint to continue to compete effectively and to take advantage of market dislocations,” Becker concluded.

The earnings reported also stated that gross premiums written from P/C underwriting for the year ended December 31, 2008, “were $1.0121 billion compared to $776.3 million for the year ended December 31, 2007, an increase of 30.4 percent. The increase in gross premiums written reflects year-over-year increases in all of the Company’s property and casualty segments, with particularly strong growth in the U.S. specialty insurance segment in its first full year of operations.

“Net premiums earned from property and casualty underwriting for the year ended December 31, 2008 were $571.9 million compared to $516.5 million for the same period of 2007, reflecting additional premiums written. Life and annuity reinsurance gross premiums written for the year ended December 31, 2008 were $242.2 million compared to $302.0 million for the same period in 2007, reflecting three new reinsurance transactions written in 2008 compared to six in 2007.”

The full report, additional information, and a replay of the earnings conference call may be obtained on the Group’s web site at: www.maxcapgroup.com.

Source: Max Capital

Was this article valuable?

Here are more articles you may enjoy.