Max Capital profits are up but premiums take a tumble as the company invests more in reinsurance

Max Capital Group has reported net income for the second quarter of 2007 of $94.1m, compared to net income of $19.7m for the second quarter of 2006. The company also announced its board had approved a dramatic increase in its share buyback plans.

Net operating income, which represents net income excluding after-tax net realised gains and losses on sales of fixed maturities, was $94.4m compared with net operating income of $25m for the same period in 2006.

For the six months, the company had net income of $174.1m, compared to $95m for the first six months of 2006. Net operating income was $175.5m, compared to $102m in 2006.

W Marston Becker, chairman and chief executive officer of Max Capital Group, said: “Our results for the second quarter continue the strong underwriting performance and solid investment returns for Max.

“Gross premiums written for the quarter remain down compared to 2006, but continue in line with our 2007 expectations. We have continued our underwriting focus on a balanced and diversified strategy.

“During the quarter we commenced underwriting excess and surplus lines in the US through our newly established excess and surplus lines platform, Max Specialty Insurance Company, which underwrites in niche markets. We expect Max Specialty to be an increasingly significant source of profitable growth for Max in the quarters and years ahead.”

Gross premiums written for the second quarter were $241.5m, of which $240.7m came from property and casualty underwriting and $0.8m from life and annuity underwriting, compared to $284m in 2006, of which $241.2m came from property and casualty underwriting and $42.8m from life and annuity underwriting.

Gross premiums written for the six months were $455.1m compared to $539.9m for the first six months of 2006. Net premiums earned for the first six months of 2007 decreased 22.7% to $277.4m compared to $358.9m for the same period in 2006. The decline in net premiums earned principally reflects the lower volume of gross premium written and the increase in the company’s use of reinsurance in order to manage its net exposure retained.

During the three months ended 30 June 2007, Max Capital Group repurchased 715,400 common shares or approximately $20m of shares outstanding under the board-approved share repurchase plan. On 27 July Max Capital’s board of directors approved an increase in the share repurchase plan, increasing the dollar value of shares that may be repurchased to $100m from the $30m remaining under the previous share repurchase authorisation.