Max Capital Group Ltd. (NASDAQ:MXGL) (BSX:MXGL.BH) (“Max”) today
reported net income of $36.4 million, or $0.63 per diluted share,
for the quarter ended March 31, 2010, compared to net income of
$44.5 million, or $0.78 per diluted share, for the quarter ended
March 31, 2009.
Net operating income for the first quarter of 2010 was $40.7
million, or $0.71 per diluted share, compared to net operating
income of $46.9 million, or $0.82 per diluted share, last year.
Annualized net operating return on average shareholders’ equity for
the first quarter of 2010 was 10.2%.
W. Marston (Marty) Becker, Chairman and Chief Executive Officer
of Max, said: “The continuation of Max’s very solid financial
results this quarter reflects the balance, diversification and
flexibility that are the cornerstones of our business model. Where
market conditions continue to provide attractive returns, we are
well positioned to expand our presence, while scaling back in areas
with softer pricing. As a result, our combined ratios have been
maintained at strong levels even as we have decreased gross
premiums written.
“Another key factor in the quarter was our relatively low
property catastrophe losses. Considering the size of the industry
losses for the headline cat events during the first quarter, we
believe our estimated losses of approximately $10.0 million
illustrate our conservative underwriting strategy, which is
designed to limit our exposure to property cat events.
“Looking forward, our new Latin America team is firmly
establishing itself in the market, and we expect it to make a
meaningful contribution to group results before the end of this
year.
“Most importantly, our ability to write a broad mix of short-
and long-tail product lines from multiple jurisdictions should be
further enhanced as a result of our pending merger with Harbor
Point, which was approved by Max’s and Harbor Point’s respective
shareholders on April 29. Once the closing occurs, the combined
entity, which will be branded as Alterra Capital Holdings Limited,
will bring together the first-class reinsurance group at Harbor
Point with Max’s broad base of established underwriting platforms
in major insurance markets worldwide. We are excited by the many
opportunities that the enhanced capital base and scale of Alterra
will bring to all of our underwriting platforms,” Becker added.
First quarter 2010 results for Max include:
- Property and casualty gross
premiums written of $370.3 million, representing a decrease of
$63.4 million, or (14.6)%; net premiums written of $217.2 million,
representing a decrease of $52.2 million, or (19.4)%; and net
premiums earned of $193.5 million, representing an increase of $3.7
million, or 1.9%; each as compared to the same quarter in
2009;
- Property and casualty combined
ratio of 90.5%, compared to 89.7% in the same quarter in 2009;
- Property catastrophe event
losses of $9.6 million compared to $3.4 million in the same quarter
in 2009;
- Net favorable development on
prior years’ loss reserves of $17.1 million, or 8.8 combined ratio
points, compared to $12.3 million, or 6.5 combined ratio points in
the same quarter in 2009;
- Net investment income of $48.4
million compared to $40.5 million in the same quarter in 2009, an
increase of 19.5%;
- Net operating income of $40.7
million, or $0.71 per diluted share, representing an annualized net
operating return on average shareholders’ equity of 10.2%; and
- Book value per diluted share of
$27.86 at March 31, 2010, representing an increase of 1.8% from
December 31, 2009.
Gross premiums written from property and casualty underwriting
for the quarter ended March 31, 2010 were $370.3 million, generated
by the segments as follows: insurance $66.4 million; reinsurance
$154.9 million; U.S. specialty $76.9 million; and Max at Lloyd’s
$72.1 million.
Segment combined ratios for the first quarter of 2010 were 86.1%
for insurance, 92.7% for reinsurance, 98.8% for U.S. specialty and
82.5% for Max at Lloyd’s.
Gross premiums written decreased by $21.3 million or (24.3)% for
insurance and by $78.1 million or (33.5)% for reinsurance. Gross
premiums written increased by $8.1 million, or 11.8% for U.S.
specialty and by $27.9 million, or 63.1%, for Max at Lloyd’s
compared with the quarter ended March 31, 2009. There were no new
contracts written within the life and annuity segment during the
first quarter of 2010.
Balance Sheet
Total invested assets, including cash and cash equivalents, were
$5.3 billion at March 31, 2010, an increase of $85.4 million from
December 31, 2009. The credit quality of Max’s fixed maturities
investment portfolio remains high. At March 31, 2010, 95.9% of the
fixed maturities portfolio (by carrying value) was
investment-grade, compared to 96.7% at December 31, 2009. Max
recognized other-than-temporary impairment losses through earnings
of $0.4 million for the first quarter of 2010, compared to no
impairment losses during the same period in 2009.
Net investment income for the first quarter of 2010 increased to
$48.4 million from $40.5 million for the same period in 2009. The
increase in net investment income reflects a reduction in cash
balances and increased allocation to higher-yielding fixed maturity
securities.
During the first quarter of 2010, under the Board-approved share
repurchase authorization, Max repurchased 516,957 of its common
shares at an average price of $23.00 per share for a total amount
of $11.9 million. There were no repurchases of common shares in the
first quarter of 2009.
Shareholders’ equity was $1,613.1 million at March 31, 2010, an
increase of 3.1% over December 31, 2009. Book value per share at
March 31, 2010 was $28.31 compared to $28.01 at December 31, 2009,
an increase of 1.1%. Book value per diluted share at March 31, 2010
was $27.86 compared to $27.36 at December 31, 2009, an increase of
1.8%.
Amalgamation with Harbor Point
Limited
Actions required to consummate the amalgamation with Harbor
Point Limited (“Harbor Point”) were approved by the shareholders of
both Max and Harbor Point on April 29, 2010, and closing is
expected to occur in the second quarter of 2010.
First quarter 2010 results for Harbor Point include:
- Net income of $33.5 million
compared to $41.5 million in the same quarter in 2009;
- Gross premiums written of $306.6
million compared to $228.5 million in the same quarter in 2009, an
increase of 34.2%;
- Net premiums earned of $144.1
million compared to $127.3 million in the same quarter in 2009, an
increase of 13.2%;
- Combined ratio of 94.3% compared
to 82.0% in the same quarter in 2009;
- Property catastrophe event
losses of $35.0 million compared to $3.3 million in the same
quarter in 2009;
- Net favorable development on
prior years’ loss reserves of $9.6 million, or 6.6 combined ratio
points, compared to $0.3 million, or 0.2 combined ratio points, in
the same quarter in 2009;
- Net investment income of $16.5
million compared to $18.7 million in the same quarter in 2009;
and
- Shareholders’ equity of $1,926.1
million at March 31, 2010, representing an increase of 1.9% from
December 31, 2009.
A copy of Max’s financial supplement for the first quarter will
be available on Max’s website at www.maxcapgroup.com shortly after
the release of earnings.
Max will host a conference call on Tuesday, May 4, 2010 at
10:00am (EDT) to discuss this release with interested investors and
shareholders. The conference call can be accessed via telephone by
dialing 1-888-679-8018 (toll-free U.S.) or 1-617-213-4845
(international) and using access code 79071725. Live broadcast of
the conference call will also be available through Max’s website at
www.maxcapgroup.com.
Max Capital Group Ltd. is a global enterprise dedicated to
providing diversified specialty insurance and reinsurance products
to corporations, public entities, property and casualty insurers,
and life and health insurers in major markets worldwide. Harbor
Point Limited is a Bermuda-based holding company with property and
casualty reinsurance operations in Bermuda, the USA and the UK.
Non-GAAP Financial Measures
In presenting Max’s results, management has included and
discussed net operating income per diluted share, net operating
return on average shareholders’ equity, book value per share and
diluted book value per share. Such measures are “non-GAAP financial
measures” as defined in Regulation G. Management believes that
these non-GAAP financial measures, which may be defined differently
by other companies, allow for a more complete understanding of
Max’s business. These measures, however, should not be viewed as a
substitute for those determined in accordance with U.S. GAAP. The
reconciliation of such measures to their respective most directly
comparable U.S. GAAP financial measures is presented in the
attached financial information in accordance with Regulation G.
Cautionary Note Regarding Forward-Looking Statements
This press release may include forward-looking statements, both
with respect to Max and its industry, that reflect its current
views with respect to future events and financial performance.
Statements that include the words “expect,” “intend,” “plan,”
“believe,” “project,” “anticipate,” “will,” “may” and similar
statements of a future or forward-looking nature identify
forward-looking statements. All forward-looking statements address
matters that involve risks and uncertainties. Accordingly, there
are or will be important factors that could cause actual results to
differ materially from those indicated in such statements and you
should not place undue reliance on any such statements.
Max believes that these factors include, but are not limited to,
the following: (1) the adequacy of loss reserves and the need to
adjust such reserves as claims develop over time; (2) the failure
of any of the loss limitation methods employed; (3) the effects of
emerging claims and coverage issues; (4) changes in general
economic conditions, including changes in capital and credit
markets; (5) the effect of competition and cyclical trends,
including with respect to demand and pricing in the insurance and
reinsurance markets; (6) any lowering or loss of financial ratings;
(7) the occurrence of natural or man-made catastrophic events with
a frequency or severity exceeding expectations; (8) the loss of
business provided to Max or Harbor Point by their major brokers;
(9) the effect on each of Max’s and Harbor Point’s investment
portfolio of changing financial market conditions including
inflation, interest rates, liquidity and other factors; (10) tax
and regulatory changes and conditions; (11) the integration of Max
and Harbor Point or new business ventures Max may enter into; and
(12) retention of key personnel, as well as management’s response
to any of the aforementioned factors.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included herein and elsewhere,
including the Risk Factors included in Max’s most recent report on
Form 10-K and other documents on file with the Securities and
Exchange Commission. Any forward-looking statements made in this
press release are qualified by these cautionary statements, and
there can be no assurance that the actual results or developments
anticipated by Max will be realized or, even if substantially
realized, that they will have the expected consequences to, or
effects on, Max or its business or operations. Max undertakes no
obligation to update publicly or revise any forward-looking
statement, whether as a result of new information, future
developments or otherwise.
MAX
CAPITAL GROUP LTD.
CONSOLIDATED BALANCE SHEETS (Expressed in
thousands of United States Dollars, except per share and share
amounts)
March 31, 2010 December 31,
2009 (unaudited)
ASSETS Cash and cash equivalents
$ 690,246 $ 702,278 Fixed maturities, trading at fair value 219,332
228,696 Fixed maturities, available for sale at fair value
3,158,131 3,007,356 Fixed maturities, held to maturity at amortized
cost (fair value $1,013,315) 954,696 1,005,947 Other investments,
at fair value 322,160 314,849 Accrued interest income 51,906 57,215
Premiums receivable
617,560 567,301 Losses and benefits recoverable from reinsurers
1,023,224 1,001,373 Deferred acquisition costs 72,195 65,648
Prepaid reinsurance premiums 232,947 190,613 Trades pending
settlement - 76,031 Other assets 131,809 122,439
Total assets $ 7,474,206 $ 7,339,746
LIABILITIES Property and casualty losses $ 3,220,357 $
3,178,094 Life and annuity benefits 1,306,916 1,372,513 Deposit
liabilities 149,028 152,629 Funds withheld from reinsurers 138,984
140,079 Unearned property and casualty premiums 690,013 628,161
Reinsurance balances payable 168,329 146,085 Accounts payable and
accrued expenses 61,955 67,088 Trades pending settlement 35,033 -
Senior notes 90,475 90,464
Total liabilities
5,861,090 5,775,113
SHAREHOLDERS'
EQUITY
Preferred shares (par value $1.00)
20,000,000 shares authorized; no shares issued or outstanding
- -
Common shares (par value $1.00)
200,000,000 shares authorized; 56,979,568 (2009 - 55,867,125)
shares issued and outstanding
56,980 55,867 Additional paid-in capital 744,466 752,309
Accumulated other comprehensive income 49,822 25,431 Retained
earnings 761,848 731,026
Total shareholders'
equity 1,613,116 1,564,633
Total
liabilities and shareholders' equity $ 7,474,206 $ 7,339,746
Book value per share $ 28.31 $ 28.01
Diluted book value per share $ 27.86 $ 27.36
Diluted tangible book value per share $ 27.02 $ 26.51
Diluted shares outstanding 57,890,681 57,178,458
MAX
CAPITAL GROUP LTD.
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (Unaudited) (Expressed in thousands of
United States Dollars, except per share and share amounts)
Three Months Ended March 31
2010
2009
REVENUES Gross premiums written $ 371,139 $ 434,273
Reinsurance premiums ceded (153,220 ) (164,379 ) Net
premiums written $ 217,919 $ 269,894 Earned
premiums $ 304,997 $ 309,382 Earned premiums ceded (110,757
) (119,100 ) Net premiums earned 194,240 190,282 Net
investment income 48,390 40,488 Net realized and unrealized gains
on investments 6,422 18,441 Total other-than-temporary
impairment losses (698 ) - Portion of loss recognized in other
comprehensive income (loss), before taxes 278
- Net impairment losses recognized in earnings (420 ) -
Other income 344 1,306 Total revenues
248,976 250,517
LOSSES AND
EXPENSES Net losses and loss expenses 124,965 124,723 Claims
and policy benefits 17,659 14,332 Acquisition costs 24,244 20,630
Interest expense 4,942 3,939 Net foreign exchange gains (2,452 )
(3,476 ) Merger and acquisition expenses 4,744 5,223 General and
administrative expenses 36,528 39,060 Total losses
and expenses 210,630 204,431
INCOME BEFORE TAXES 38,346 46,086 Income tax expense
1,965 1,547
NET INCOME
36,381 44,539 Change in net unrealized gains and losses on
fixed maturities, net of tax 34,131 (66,098 ) Foreign currency
translation adjustment (9,740 ) 3,909
COMPREHENSIVE INCOME (LOSS) $ 60,772 $ (17,650 )
Basic earnings per share $ 0.64 $ 0.79 Diluted
earnings per share $ 0.63 $ 0.78 Net operating income
per diluted share $ 0.71 $ 0.82 Weighted
average shares outstanding - basic 56,516,593
56,637,291 Weighted average shares outstanding - diluted
57,383,748 57,183,826
MAX
CAPITAL GROUP LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY (Unaudited) (Expressed in thousands of
United States Dollars)
Three Months Ended March 31
2010
2009
Common shares Balance, beginning of period $ 55,867 $ 55,806
Issuance of common shares, net 1,630 77 Repurchase of shares
(517 ) - Balance, end of period 56,980
55,883
Additional paid-in capital
Balance, beginning of period 752,309 763,391 Issuance of common
shares, net (1,619 ) 318 Stock based compensation expense 5,147
4,876 Repurchase of shares (11,371 ) -
Balance, end of period 744,466 768,585
Accumulated other comprehensive income (loss)
Balance, beginning of period 25,431 (45,399 ) Holding gains
(losses) on available for sale securities arising in period (1)
35,244 (66,146 ) Net realized (gains) losses on available for sale
securities included in net income (1) (835 ) 48 Portion of
other-than-temporary impairment losses recognised in other
comprehensive income (1) (278 ) - Foreign currency translation
adjustment (9,740 ) 3,909 Balance, end of
period 49,822 (107,588 )
Retained
earnings Balance, beginning of period 731,026 506,533 Net
income 36,381 44,539 Dividends paid (5,559 ) (5,090 )
Balance, end of period 761,848 545,982
Total shareholders' equity $ 1,613,116 $
1,262,862 (1) Net of tax
MAX
CAPITAL GROUP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Expressed in thousands of United States Dollars)
Three Months Ended March 31
2010
2009
OPERATING ACTIVITIES Net income $ 36,381 $ 44,539
Adjustments to reconcile net income to net cash provided by
operating activities: Stock based compensation 5,147 4,876
Amortization of premium on fixed maturities 696 1,176 Accretion of
deposit liabilities 1,582 565 Net realized and unrealized gains on
investments (6,422 ) (18,441 ) Net impairment losses recognized in
earnings 420 - Changes in: Accrued interest income 5,164 7,058
Premiums receivable (53,109 ) (119,802 ) Losses and benefits
recoverable from reinsurers (28,814 ) (35,247 ) Deferred
acquisition costs (7,534 ) (12,912 ) Prepaid reinsurance premiums
(43,777 ) (45,927 ) Other assets (11,814 ) 2,244 Property and
casualty losses 72,320 74,576 Life and annuity benefits (9,700 )
(10,045 ) Funds withheld from reinsurers (1,094 ) (15,215 )
Unearned property and casualty premiums 68,789 117,718 Reinsurance
balances payable 22,578 4,520 Accounts payable and accrued expenses
(4,013 ) (27,511 ) Cash provided by (used in)
operating activities 46,800 (27,828 )
INVESTING ACTIVITIES Purchases of available for sale
securities (422,965 ) (154,597 ) Sales of available for sale
securities 132,632 60,785 Redemptions of available for sale
securities 196,732 134,133 Purchases of trading securities (7,058 )
(26,073 ) Sales of trading securities - 28,539 Redemptions of
trading securities 6,312 2,164 Purchases of held to maturity
securities (10,243 ) - Redemptions of held to maturity securities
10,311 - Net sales of other investments 70,976 140,837
Cash (used in) provided by investing activities
(23,303 ) 185,788
FINANCING ACTIVITIES
Net proceeds from issuance of common shares 11 395 Repurchase of
common shares (11,888 ) - Net repayments of bank loans - (75,000 )
Dividends paid (5,559 ) (5,090 ) Additions to deposit liabilities
2,006 11,649 Payment of deposit liabilities (7,378 ) (77,143 )
Cash used in financing activities (22,808 )
(145,189 ) Effect of exchange rate changes on foreign
currency cash (12,721 ) (6,598 ) Net (decrease) increase in
cash and cash equivalents (12,032 ) 6,173 Cash and cash
equivalents, beginning of period 702,278 949,404
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 690,246 $
955,577
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION: Interest paid totaled $nil and $3,568 for
the three months ended March 31, 2010 and 2009, respectively.
Corporate taxes paid totaled $nil and $nil for the three months
ended March 31, 2010 and 2009, respectively.
MAX
CAPITAL GROUP LTD.
SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED
MARCH 31, 2010 (Unaudited) (Expressed in thousands of United
States Dollars)
Year to Date Segment Information:
Property & Casualty Life & Annuity
Corporate Consolidated Insurance
Reinsurance U.S. Specialty
Max at Lloyd's Total Reinsurance
Gross premiums written $ 66,421 $ 154,851 $ 76,887 $ 72,117
$ 370,276 $ 863 $ - $ 371,139 Reinsurance premiums ceded
(38,576 ) (45,351 ) (49,227 )
(19,959 ) (153,113 ) (107 )
- (153,220 ) Net premiums
written $ 27,845 $ 109,500 $ 27,660
$ 52,158 $ 217,163 $ 756
$ - $ 217,919 Earned
premiums $ 97,041 $ 95,743 $ 73,890 $ 37,460 $ 304,134 $ 863 $ - $
304,997 Earned premiums ceded (47,246 )
(15,958 ) (39,977 ) (7,469 )
(110,650 ) (107 ) -
(110,757 ) Net premiums earned 49,795 79,785 33,913
29,991 193,484 756 - 194,240 Net investment income 6,169
10,904 1,341 2,017 20,431 13,099 14,860 48,390 Net realized and
unrealized gains (losses) on investments 306 318 - (182 ) 442 5,916
64 6,422 Net impairment losses recognized in earnings - - - - - -
(420 ) (420 ) Other income (11 ) -
5 178 172
(28 ) 200
344 Total revenues 56,259 91,007 35,259 32,004
214,529 19,743 14,704 248,976 Net losses and loss expenses
37,279 50,065 21,363 16,258 124,965 - - 124,965 Claims and policy
benefits - - - - - 17,659 - 17,659 Acquisition costs (309 ) 14,966
3,674 5,767 24,098 146 - 24,244 Interest expense 234 1,701 - -
1,935 1,363 1,644 4,942 Net foreign exchange (gains) losses - - -
(2,709 ) (2,709 ) - 257 (2,452 ) Merger and acquisition expenses -
- - - - - 4,744 4,744 General and administrative expenses
5,897 8,959 8,472
2,713 26,041
657 9,830 36,528
Total losses and expenses 43,101 75,691 33,509 22,029
174,330 19,825 16,475 210,630
Income (loss) before taxes $ 13,158 $ 15,316
$ 1,750 $ 9,975 $ 40,199
$ (82 ) $ (1,771 ) $ 38,346
Loss Ratio (a) 74.9 % 62.7 % 63.0 % 54.2 % 64.6 % Combined
Ratio (b) 86.1 % 92.7 % 98.8 % 82.5 % 90.5 %
SCHEDULE OF
SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED MARCH 31, 2009
(Unaudited) (Expressed in thousands of United States Dollars)
Year to Date Segment Information: Property &
Casualty Life & Annuity
Corporate Consolidated Insurance
Reinsurance U.S. Specialty Max at
Lloyd's Total Reinsurance
Gross premiums written $ 87,682 $ 232,982 $ 68,833 $ 44,179 $
433,676 $ 597 $ - $ 434,273 Reinsurance premiums ceded
(54,941 ) (51,383 ) (40,661 )
(17,301 ) (164,286 ) (93 )
- (164,379 ) Net premiums
written $ 32,741 $ 181,599 $ 28,172
$ 26,878 $ 269,390 $ 504
$ - $ 269,894 Earned
premiums $ 102,197 $ 123,986 $ 54,356 $ 28,246 $ 308,785 $ 597 $ -
$ 309,382 Earned premiums ceded (52,153 )
(26,519 ) (32,951 ) (7,384 )
(119,007 ) (93 ) -
(119,100 ) Net premiums earned 50,044 97,467 21,405 20,862
189,778 504 - 190,282 Net investment income 5,241 9,228
1,593 822 16,884 11,566 12,038 40,488 Net realized and unrealized
gains on investments 1,236 3,042 148 467 4,893 7,868 5,680 18,441
Net impairment losses recognized in earnings - - - - - - - - Other
income 1,147 -
(152 ) 72 1,067
- 239 1,306
Total revenues 57,668 109,737 22,994 22,223 212,622 19,938
17,957 250,517 Net losses and loss expenses 36,464 66,215
12,085 9,959 124,723 - - 124,723 Claims and policy benefits - - - -
- 14,332 - 14,332 Acquisition costs (1,402 ) 17,463 1,224 3,152
20,437 193 - 20,630 Interest expense - (497 ) - - (497 ) (383 )
4,819 3,939 Net foreign exchange (gains) losses - - - (3,510 )
(3,510 ) - 34 (3,476 ) Merger and acquisition expenses - - - - - -
5,223 5,223 General and administrative expenses 5,129
7,524 7,756
4,721 25,130 694
13,236 39,060 Total
losses and expenses 40,191 90,705 21,065 14,322 166,283 14,836
23,312 204,431
Income
(loss) before taxes $ 17,477 $ 19,032 $
1,929 $ 7,901 $ 46,339 $
5,102 $ (5,355 ) $ 46,086 Loss
Ratio (a) 72.9 % 67.9 % 56.5 % 47.7 % 65.7 % Combined Ratio (b)
80.3 % 93.6 % 98.4 % 85.5 % 89.7 %
(a) The loss ratio is calculated
by dividing net losses and loss expenses by net premiums
earned.
(b) The combined ratio is calculated by dividing the sum of net
losses and loss expenses, acquisition costs and general and
administrative expenses by net premiums earned.
MAX
CAPITAL GROUP LTD.
SCHEDULE OF SUPPLEMENTAL
PREMIUM DATA–THREE MONTHS ENDED MARCH 31, 2010 (Unaudited)
(Expressed in thousands of United States Dollars)
Gross
Premiums Written by Type of Risk:
Three Months Ended March
31, 2010
Three Months Ended March 31,
2009
Gross Premiums Written Percentage of Total Gross Premiums
Written
Movement on Prior Year
Period
Gross Premiums Written Percentage of Total Gross Premiums
Written Property & Casualty: Insurance: Aviation S $ 2,349
0.6 % (62.0 %) $ 6,185 1.4 % Excess Liability L 23,648 6.4 % (31.7
%) 34,648 8.0 % Professional Liability L 27,573 7.4 % (15.0 %)
32,441 7.5 % Property S 12,851 3.5 % (10.8 %) 14,408
3.3 % 66,421 17.9 % (24.2 %) 87,682 20.2 % Reinsurance: Agriculture
S 35,806 9.6 % (59.2 %) 87,666 20.2 % Aviation S 4,822 1.3 % 15.9 %
4,159 0.9 % General Casualty L 13,051 3.5 % (28.1 %) 18,141 4.2 %
Marine & Energy S 4,100 1.1 % (54.8 %) 9,078 2.1 % Medical
Malpractice L 27,155 7.3 % (25.4 %) 36,393 8.4 % Other S 989 0.3 %
(47.0 %) 1,866 0.4 % Professional Liability L 11,919 3.2 % 22.7 %
9,711 2.2 % Property S 45,933 12.4 % 8.9 % 42,181 9.7 % Whole
Account L 2,573 0.7 % (41.2 %) 4,375 1.0 % Workers' Compensation L
8,503 2.3 % (56.2 %) 19,412 4.5 % 154,851 41.7 %
(33.5 %) 232,982 53.6 % U.S. Specialty: General Liability L 23,014
6.2 % 21.5 % 18,943 4.4 % Marine S 16,063 4.3 % 8.7 % 14,781 3.4 %
Professional Liability L 2,246 0.6 % n/a - - Property S
35,564 9.6 % 1.3 % 35,109 8.1 % 76,887 20.7 % 11.7 % 68,833
15.9 % Max at Lloyd's: Accident & Health S 13,410 3.6 % 8.1 %
12,410 2.9 % Aviation S 4,403 1.2 % n/a - - Financial Institutions
L 6,088 1.6 % 59.2 % 3,824 0.9 % International Casualty L 13,684
3.7 % n/a - - Professional Liability L 6,896 1.9 % 147.6 % 2,785
0.6 % Property S 27,636 7.4 % 9.8 % 25,160 5.8 %
72,117 19.4 % 63.2 % 44,179 10.2 %
Aggregate Property & Casualty $ 370,276 99.7 % (14.6 %)
$ 433,676 99.9 % Life & Annuity: Annuity $ - - n/a $ - -
Life 863 0.3 % 44.6 % 597 0.1 % Aggregate Life
& Annuity $ 863 0.3 % 44.6 % $ 597 0.1 %
Aggregate P&C and Life & Annuity $ 371,139
100.0 % (14.5 %) $ 434,273 100.0 % S =
Short tail lines $ 203,926 55.1 % $ 253,003 58.3 % L = Long tail
lines 166,350 44.9 % 180,673 41.7 % Aggregate
Property & Casualty $ 370,276 $ 433,676
MAX
CAPITAL GROUP LTD.
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(Unaudited) Net Operating Income per Diluted
Share (Expressed in thousands of United States Dollars, except
per share and share amounts)
Three Months Ended March 31
2010
2009
Net income $ 36,381 $ 44,539 Net realized and unrealized
losses (gains) on fixed maturities, net of tax (1) 1,236 (285 )
Foreign exchange losses gains, net of tax (1,680 ) (2,544 ) Merger
and acquisition expenses, net of tax 4,744
5,223 Net operating income $ 40,681 $ 46,933
Net income per diluted share $ 0.63 $ 0.78 Net realized and
unrealized losses (gains) on fixed maturities, net of tax (1) 0.02
(0.01 ) Foreign exchange losses gains, net of tax (0.03 ) (0.04 )
Merger and acquisition expenses, net of tax 0.09
0.09 Net operating income per diluted share $ 0.71
$ 0.82 Weighted average shares outstanding -
basic 56,516,593 56,637,291 Weighted
average shares outstanding - diluted 57,383,748
57,183,826
(1) Net realized and unrealized
losses (gains) on fixed maturities includes realized and unrealized
(gains) losses on trading securities, realised (gains) losses on
available for sale securities, net impairment losses recognized in
earnings, and changes in fair value of investment derivatives.
Annualized Return and Annualized Net
Operating Return on Average Shareholders' Equity (Expressed in
thousands of United States Dollars)
Three Months Ended March
31
2010
2009
Net income $ 36,381 $ 44,539 Annualized net income 145,524
178,156 Net operating income $ 40,681 $ 46,933 Annualized
net operating income 162,724 187,732 Beginning shareholders'
equity $ 1,564,633 $ 1,280,331 Ending shareholders' equity
1,613,116 1,262,862 Average shareholders' equity 1,588,875
1,271,597 Annualized return on average shareholders' equity
9.2 % 14.0 % Annualized net operating return on average
shareholders' equity 10.2 % 14.8 %
Diluted
Tangible Book Value Per Share (Expressed in thousands of United
States Dollars, except per share and share amounts)
March 31, 2010
December 31, 2009
Shareholders' equity $ 1,613,116 $ 1,564,633 Goodwill and
intangible assets (48,686 ) (48,686 ) Tangible book
value $ 1,564,430 $ 1,515,947 Diluted shares
outstanding 57,890,681 57,178,458 Diluted tangible book
value per share $ 27.02 $ 26.51
MAX
CAPITAL GROUP LTD.
SCHEDULE OF SUPPLEMENTAL INVESTMENT
DATA– MARCH 31, 2010 (Unaudited) (Expressed in thousands of
United States Dollars)
Type of Investment As at
March 31, 2010 Investment Distribution As at December
31, 2009 Investment Distribution Cash and cash
equivalents $ 690,246 12.9 % $ 702,278 13.4 %
U.S. government and agencies 635,025 11.9 % 525,427 10.0 % Non-U.S.
government 71,899 1.4 % 82,027 1.5 % Corporate securities 1,406,131
26.3 % 1,375,999 26.2 % Municipal securities 105,722 2.0 % 83,658
1.6 % Asset-backed securities 80,816 1.5 % 102,006 1.9 %
Residential mortgage-backed securities 787,997 14.7 % 763,974 14.5
% Commercial mortgage-backed securities 289,873
5.4 % 302,961 5.8 % Fixed maturities at fair
value $ 3,377,463 63.2 % $ 3,236,052 61.5 %
U.S. government and agencies $ 20,550 0.4 % $ 14,050 0.3 % Non-U.S.
government 544,527 10.2 % 573,250 10.9 % Corporate securities
389,619 7.3 % 418,647 7.9 %
Fixed maturities at amortized cost $ 954,696 17.9 % $
1,005,947 19.1 % Other investments $ 322,160
6.0 % $ 314,849 6.0 % Total invested assets $ 5,344,565
100.0 % $ 5,259,126 100.0 %
Credit Rating As at March 31, 2010 Ratings
Distribution As at December 31, 2009 Ratings
Distribution U.S. government and agencies (1) $
1,355,551 31.3 % $ 1,214,895 28.6 % AAA 701,036 16.2 % 720,364 17.0
% AA 326,142 7.5 % 325,997 7.7 % A 732,917 16.9 % 731,723 17.3 %
BBB 86,925 2.0 % 100,841 2.4 % BB 23,884 0.6 % 34,781 0.8 % B or
lower 151,008 3.5 % 107,451 2.5 % Fixed
Maturities at fair value $ 3,377,463 78.0 % $ 3,236,052 76.3 %
U.S. government and agencies $ 20,550 0.5 % $ 14,050 0.3 %
AAA 675,447 15.6 % 717,954 16.9 % AA 94,101 2.2 % 101,675 2.4 % A
150,602 3.5 % 158,141 3.7 % BBB 12,609 0.2 % 12,672 0.3 % BB - - -
- B or lower 1,387 0.0 % 1,455 0.1 %
Fixed Maturities at amortized cost $ 954,696 22.0 % $ 1,005,947
23.7 % Total fixed maturities $
4,332,159 100.0 % $ 4,241,999 100.0 %
(1) Included within U.S. Government and Agencies are Agency-issued
Residential Mortgage-Backed Securities with a fair value of
$720,526 (December 31, 2009; $689,468)
Three Months Ended
March 31
2010
2009
Net investment income $ 48,390 $ 40,488
Change in fair value of other investments 7,288 18,013 Realized and
unrealized (losses) gains on trading fixed maturities (182 ) 467
Net realized gains (losses) on available for sale fixed maturities
838 (39 ) Change in fair value of derivatives (1,522 )
- Net realized and unrealized gains on investments $
6,422 $ 18,441 Net impairment losses
recognized in earnings $ (420 ) $ -
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