The Bermuda-based Max Capital Group Ltd. reported net income of $36.4 million, or $0.63 per diluted share, for the quarter ended March 31, 2010, compared to net income of $44.5 million, or $0.78 per diluted share, for the quarter ended March 31, 2009.
Net operating income, which excludes capital gains/losses, for the first quarter of 2010 was $40.7 million, or $0.71 per diluted share, compared to net operating income of $46.9 million, or $0.82 per diluted share, last year. Annualized net operating return on average shareholders’ equity for the first quarter of 2010 was 10.2 percent.”
Other earnings highlights for the first quarter included the following:
— Property and casualty gross premiums written of $370.3 million, representing a decrease of $63.4 million, or (14.6) percent; net premiums written of $217.2 million, representing a decrease of $52.2 million, or (19.4) percent; and net premiums earned of $193.5 million, representing an increase of $3.7 million, or 1.9 percent; each as compared to the same quarter in 2009;
— Property and casualty combined ratio of 90.5 percent, compared to 89.7 percent in the same quarter in 2009;
— Property catastrophe event losses of $9.6 million compared to $3.4 million in the same quarter in 2009;
— Net favorable development on prior years’ loss reserves of $17.1 million, or 8.8 combined ratio points, compared to $12.3 million, or 6.5 combined ratio points in the same quarter in 2009;
— Net investment income of $48.4 million compared to $40.5 million in the same quarter in 2009, an increase of 19.5 percent;
— Net operating income of $40.7 million, or $0.71 per diluted share, representing an annualized net operating return on average shareholders’ equity of 10.2 percent; and
— Book value per diluted share of $27.86 at March 31, 2010, representing an increase of 1.8 percent from December 31, 2009.
Max’s bulletin also noted that “gross premiums written from property and casualty underwriting for the quarter ended March 31, 2010 were $370.3 million, generated by the segments as follows: insurance $66.4 million; reinsurance $154.9 million; U.S. specialty $76.9 million; and Max at Lloyd’s $72.1 million.”
Chairman and CEO Marston (Marty) Becker commented: “The continuation of Max’s very solid financial results this quarter reflects the balance, diversification and flexibility that are the cornerstones of our business model. Where market conditions continue to provide attractive returns, we are well positioned to expand our presence, while scaling back in areas with softer pricing. As a result, our combined ratios have been maintained at strong levels even as we have decreased gross premiums written.
“Another key factor in the quarter was our relatively low property catastrophe losses. Considering the size of the industry losses for the headline cat events during the first quarter, we believe our estimated losses of approximately $10.0 million illustrate our conservative underwriting strategy, which is designed to limit our exposure to property cat events.
“Looking forward, our new Latin America team is firmly establishing itself in the market, and we expect it to make a meaningful contribution to group results before the end of this year.
“Most importantly, our ability to write a broad mix of short- and long-tail product lines from multiple jurisdictions should be further enhanced as a result of our pending merger with Harbor Point, which was approved by Max’s and Harbor Point’s respective shareholders on April 29. Once the closing occurs, the combined entity, which will be branded as Alterra Capital Holdings Limited, will bring together the first-class reinsurance group at Harbor Point with Max’s broad base of established underwriting platforms in major insurance markets worldwide.We are excited by the many opportunities that the enhanced capital base and scale of Alterra will bring to all of our underwriting platforms,” Becker added.
Segment combined ratios for the first quarter of 2010 were 86.1 percent for insurance, 92.7 percent for reinsurance, 98.8 percent for U.S. specialty and 82.5 percent for Max at Lloyd’s.Gross premiums written decreased by $21.3 million or (24.3) percent for insurance and by $78.1 million or (33.5) percent for reinsurance. Gross premiums written increased by $8.1 million, or 11.8 percent for U.S. specialty and by $27.9 million, or 63.1 percent, for Max at Lloyd’s compared with the quarter ended March 31, 2009. There were no new contracts written within the life and annuity segment during the first quarter of 2010.
Max Capital also noted that the “actions required to consummate the amalgamation with Harbor Point Limited were approved by the shareholders of both Max and Harbor Point on April 29, 2010, and closing is expected to occur in the second quarter of 2010.”
The full earnings report, and details on accessing the earnings conference call, held May 4,, 2010 may be obtained on the Company’s web site at: www.maxcapgroup.com.
Source: Max Capital
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