Max Re's announcement that independent auditors are reviewing three finite retrocessional contracts, which could possibly reduce fourth-quarter retained earnings by up to $50 million, most likely won't affect the company's ratings, according to an industry analyst.
Hamilton, Bermuda-based Max Re Capital Ltd. announced Friday that the Audit and Risk Management Committee of its board of directors initiated, with the assistance of outside advisors, a review of the contracts written in 2001 and 2003.
The aim of the review is 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 company said.
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