Bermuda-based insurance company Max Re has shifted from a business model that once targeted high investment returns to use of more traditional insurance products but not because of any pressure from the US Government, CEO Robert Cooney told The Royal Gazette this week.

Mr. Cooney said the company had seen "great opportunity" in, for the time being, moving into more traditional insurance products.

He added that the move away from the company's original model, with a greater focus on investment returns, could be attributed to challenged climate of the markets right now, and that was likely to continue for some time.

But Mr. Cooney did not rule out Max Re returning to its original model if and when markets bounced back. Mr. Cooney said the shift was not due to any concern about the possibility that the US Treasury might issue new rules that could limit tax benefits to insurance companies that could be seen as investment vehicles although calling themselves insurance ventures.

In Business Insurance this week, Mr. Cooney was quoted as saying: "We're counting on making an underwriting profit, not counting on strong investment gains," he said. Mr. Cooney added: "When Max Re was set up, it was with the idea of matching asset classes and hedge funds to our long-term liabilities," and said the company had aimed for higher returns on investments by investing in bonds and hedge funds."

But there could be some heat aimed at Max Re, and some other insurance companies, with the Wall Street Journal this week reporting that the US Treasury's top tax official Pamela Olson, in a written statement, said the tax benefits promised by some insurance based hedge fund investments "may well not be as advertised."

The Journal also reported that the Treasury could soon change the rules that might limit the tax benefits for investors in companies that, "despite their names, take on little insurance risk".

But Mr. Cooney said he did not feel the Treasury was after bona fide insurance companies, such as Max Re, but rather "investment companies in an insurance wrapper". The Wall Street Journal however cited the company as a "hedge fund affiliated insurance company," and said company documents not only spelled out the potential tax benefits for US investors but also warned that the Internal Revenue Service (IRS) could someday take those benefits away.