NU Online News Service, June 17, 3:54 p.m. EDT

Fitch Ratings said it will take no rating action on Max Capital Group Ltd. after the Bermuda reinsurer withdrew its bid for a merger with IPC Holdings Ltd.

Shareholders of IPC voted down Max's proposal on June 12, defying the recommendations of IPC's board, which favored Max's proposal over a rival offer from Validus Holdings, Ltd.

Fitch said it had viewed the potential Max transaction as creating "a more diversified, multi-line reinsurance and insurance company, with a larger and more stable underwriting platform."

The Chicago-based rating agency said, "While the combination would have added a significant amount of short-tail catastrophe risk to Max Capital's property/casualty business, it also would have considerably decreased Max Capital's higher than industry average investment leverage. However, overall, Fitch did not consider the merger to be a key issue driving a potential rating action."

Max's Insurer Financial Strength rating remains A, "strong" and its Issuer Default Rating remains A-minus, also "strong."

The outlook is negative. Fitch said it revised the outlook to negative from stable in March due to "capital declines from investment losses that affected Max Capital and almost all insurers as a result of unprecedented market volatility."

Special Reports /

Fitch: Max Ratings Unchanged After Failed IPC Deal

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