Max Capital Group Ltd. saw its profits drop by 90 percent over the first quarter of 2008, mainly due to losses on investments.

The Bermuda-based insurance and reinsurance company's net income slid from $80 million, or $1.24 per fully diluted share, in the 2007 first quarter, to $7.7 million, or 13 cents per share for the same period this year.

Net first-quarter operating income, which excludes after-tax net realised gains and losses on sales of fixed maturities, was $6.3 million or $0.11 per fully diluted share, versus $81 million, or $1.26 per share, over the same period last year.

In April Max Capital announced that it expected the return on its alternative investments for the first quarter of 2008 to be minus 2.11 percent, and the impact of the unrealised mark-to-market losses on its alternative investment portfolio in the first quarter, as compared to the company's targeted two percent quarterly return, was expected to be a decrease of approximately 83 cents in earnings per share.

Alternative investments, at fair value, stood at $999.8 million in this year's first quarter compared to $1.1 billion in 2007.

But conversely, gross premiums written for property and casualty insurance were up at $306 million in the first quarter 2008 compared to $213 million for the same period last year, reflecting the company's new agriculture business written and the growth of its property and casualty US specialty segment.

Net premiums earned during this year's first quarter were $135.8 million versus $139.4 million for the same period of 2007.

Marston Becker, chairman and chief executive officer of Max Capital, said: "Max had another good underwriting quarter from all property and casualty units. Our gross written premium growth in the quarter was directly related to some of our 2007 initiatives.

"Max Specialty continues to develop well and our addition of agricultural reinsurance expertise was timely, given the escalating prices in the commodity markets. As we indicated on April 18 our alternative investment results were below our quarterly target but better than comparable indexes.

Acquisition costs for the three months ended March 31, 2008, were $9.6 million compared to $14.9 million for the three months ended March 31, 2007. The decrease in the 2008 quarter versus the same period in 2007 is mainly attributed to a change in the mix of business written, with agriculture reinsurance lowering the average acquisition cost ratio for the reinsurance segment.