with net operating income of $5.9 million, or $0.17 per share - diluted for the three
months ended March 31, 2001. Net income for the three months ended March 31, 2002 was $2.6 million, or $0.07 per share, compared to net income of $5.2 million, or $0.19 per share for the same period in 2001.
Commenting on the Company's first quarter results, Robert J. Cooney, Chairman, President and Chief Executive Officer, stated, "Our first quarter produced record premiums written and demonstrates the demand for our products in the current market.
While our investment portfolio performed below expectations, strong underwriting results enabled us to achieve a net operating profit for the quarter."
Gross written premiums and deposits received for the three months ended March 31, 2002 were $382.5 million, compared to $276.2 million for the three months ended March 31, 2001. Property & Casualty underwriting produced $367.9 million of written
premiums and deposits during the three months ended March 31, 2002 compared to $276.2 million of written premiums (and no deposits received) during the same period in 2001. Life & Annuity underwriting produced $14.7 million of written premiums during the three months ended March 31, 2002, compared to none for the same period in 2001.
Net written premiums for the three months ended March 31, 2002 were $308.0 million, compared to $268.0 million for the same period of 2001.
Total revenue for the first quarter of 2002 increased 29% to $102.6 million, compared to
$79.6 million total revenue for the first quarter of 2001. Growth in revenue is principally
attributable to a 55% increase in earned premiums for the three months ended March 31, 2002 compared to the same period in 2001.
The Company's cost of funds declined to 5.78% as of March 31, 2002 from 6.31% as of December 31, 2001. General and administrative expenses for the three months ended March 31, 2002 were $5.9 million compared to $5.1 million for the three months ended March 31, 2001. General and administrative expenses for the first quarter of 2002 were 5.0% of net earned premium and deposits received, compared to 9.2% of net earned
premium and deposits received for the first quarter of 2001.
Net investment income, excluding realized and unrealized gains and losses, for the three
months ended March 31, 2002 increased to $12.4 million, compared to $8.8 million for the same period in 2001.
Net gains on alternative investments for the three months ended March 31, 2002 was $2.7
million, or 0.41%, compared to net gains on alternative investments of $14.8 million, or
3.6%, for the same period of 2001.
During the quarter we completed a $100 million sale of shares of Max Re Diversified
Strategies, Ltd., our fund of funds subsidiary. Simultaneous with the sale, we entered
into a total return swap transaction with the purchaser of these shares whereby we receive
the return earned on these shares in exchange for a variable rate of interest. Under U.S.
generally accepted accounting principles, these transactions are viewed on a combined
basis and accounted for as a financing transaction, which results in the recording of a
bank loan.
Invested assets were $1.7 billion as of March 31, 2002, with an allocation of 63% to cash
and fixed maturities and an allocation of 37% to alternative investments. The ratio of
invested assets to minority interest and total shareholders' equity was 2.49 at March 31,
2002, compared to 1.79 as of March 31, 2001.
Minority interest and shareholders' equity was $686.2 million at March 31, 2002.
Combined book value per share, including conversion of the non-voting Max Re Ltd.
common shares held by the founding investors, at March 31, 2002 was $14.62 per share.
Max Re Capital Ltd. will host a conference call today at 10:00 a.m. Eastern Time to
discuss this release. Live broadcast of the conference call will be available through our
website at www.maxre.bm.
Max Re Capital Ltd., through its principal operating subsidiary, Max Re Ltd., offers
customized reinsurance solutions to property and casualty insurers, life and health
insurers, and large corporations.
The above remarks about future expectations, plans and prospects for the Company are
forward-looking statements for purposes of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties. The factors that could cause actual results to differ materially from those
suggested by such statements include but are not limited to those discussed in the
Company's prospectus filed with the Securities and Exchange Commission. Max Re undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future developments or otherwise.