NU Online News Service, Nov. 4, 3:14 p.m. EST
Max Capital Group Ltd. reported third-quarter net income of $95.3 million, compared to a 2008 third-quarter net loss of $163.2 million.
The results stemmed from positive underwriting performance and improved investment results, W. Marston Becker, chairman and chief executive officer of the Hamilton, Bermuda-based (re)insurer, said in a statement.
For the first nine months of 2009, the company reported net income of $183.6 million compared to a 2008 nine-month net loss of $81.2 million.
Third-quarter gross premiums written increased 28.9 percent to $265.9 million, with $81.1 million generated by Bermuda/Dublin insurance, a 0.2 percent increase; $94.1 million by Bermuda/Dublin reinsurance, a 29.8 percent increase; $69.4 million by U.S. specialty, a 31.2 percent increase; and $21.1 million by Max at Lloyd's.
Net premiums earned increased to $208 million, or 46.9 percent in the third quarter compared to the period a year ago.
The combined ratio for the quarter improved 8.1 points to 90.9. Bermuda/Dublin insurance had a combined ratio of 80.2; Bermuda/Dublin reinsurance was 94.9; U.S. specialty was 99.7; and Max at Lloyd's was 84.2.
On the investment side, Max Capital reported 2009 third-quarter net investment income of $42.8 million, down from $45.3 million a year ago.
The company also reported net gains on other investments of $23.3 million compared to a net loss of $158.8 million in 2008, and net realized gains on fixed maturities of $1.3 million compared to a net loss of $3.8 million in the 2008 third quarter.
In a conference call, Mr. Becker said, "Max continues to maintain a high-quality liquid investment portfolio, with a larger than normal cash position in our invested assets. Part of this stems from receiving proceeds as we continue to reduce our allocation to hedge funds."
Max ended the quarter with just over 7 percent of invested assets in hedge funds, he said, and the company expects to be in its target of 5 percent to 7 percent by year end.
Mr. Becker said the bulk of the company's excess cash position reflects a strategic decision to maintain a defensive investment posture. "While we are giving up some income over the short term, we are very well positioned to opportunistically re-invest as the fixed income markets continue to evolve," he said.
Regarding the quarterly results overall, Mr. Becker said in a statement, "Our strong third-quarter results reflect positive underwriting performance from all segments and a significant increase in book value per share. Max's underwriting results have benefited from the continued build-out of our global platforms in both the U.S. and at Lloyd's, and a benign Atlantic hurricane season."
He added, "An improvement in the investment market has lifted the fair value of our investment portfolio, contributing to the substantial book value increase for the quarter."
Max Capital also declared a dividend of 10 cents per share, payable Nov. 30 to shareholders of record as of Nov. 16.
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