Max Re Capital Ltd. reported yesterday that first-quarter net income nearly doubled compared to the same period last year.
The Bermuda-based carrier posted net income of $72.9 million, compared with $37.7 million for the first three months of last year.
The earnings announcement came the day after the carrier said that an earnings restatement for the years 2001-2005 to correct accounting on finite risk contracts would decrease shareholder equity by about $18 million. Max Re is challenging a delisting from Nasdaq Stock Market on the basis of its failure to file quarterly and annual reports that met Securities and Exchange Commission deadlines.
Robert J. Cooney, chairman, president and chief executive officer, said the first-quarter results reflect solid underwriting performance coupled with strong investment returns.
Gross premiums written declined more than 75 percent in the first quarter, largely due to reduced volume in the life and annuity business, he noted.
"Our property and casualty reinsurance premium volume declined in line with our expectations as we reduced our participation on certain casualty and specialty reinsurance renewals," he said.
Efforts to diversify the business through such smaller participations and increase the number of transactions bound in the quarter continued in the period, he said.
Gross premiums written for the quarter ended March 31 were $255.9 million, of which $255.1 million came from property and casualty underwriting and $800,000 from life and annuity underwriting.
This compared to first-quarter premiums written last year of $455.7 million, of which $312.5 million came from property and casualty underwriting and $143.2 million from life and annuity underwriting.
Net investment income for the quarter increased to $34 million, from $23.7 million for the same period in 2005, and is principally attributable to a year-over-year increase in cash and fixed maturities balances, the company said.
Total revenue for the three months decreased 28.9 percent to $247.5 million, compared with $348.1 million for the same period in 2005.
Bank of Securities property-casualty analyst Brian Meredith expressed disappointment with top-line growth. "We wonder what the company is using its new capital for," he wrote.
But with the conclusion of the internal investigation concerning finite reinsurance and the opportunities in the property market, he said the company is still a good buy.
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