Max Re Capital Ltd. and its subsidiaries have had their ratings affirmed by ratings agency Fitch, saying that the Bermuda-based insurer?s flexible approach to underwriting risk outweighed uncertainty surrounding a Securities and Exchange Commission (SEC) inquiry related to the company?s recent earnings restatement.

Fitch Ratings the ?A? insurer financial strength ratings of Max Re Ltd. and its Dublin-based subsidiaries, Max Re Europe Limited and Max Insurance Europe Limited. Fitch also affirmed the ?A-? issuer default rating of Max Re Capital Ltd., the Bermuda-based holding company of Max Re Ltd. The outlook on al of the ratings is stable.

?The ratings reflect Max Re?s disciplined and flexible approach to underwriting risks, limited investment portfolio downside risk, and favourable parent company financial flexibility,? said Fitch.

Fitch noted the company?s experience since it was founded in 2000 and its ability to change its underwriting strategy to suit market conditions, but noted changes in the company?s business model to underwrite traditional property/casualty reinsurance and insurance focus, principally in long-tail casualty lines, but also, more recently, in short-tail property and property catastrophe business, increased its execution risk.

Fitch also said cited Max Re?s investment strategy had consistently produced positive returns, albeit at levels less than those initially expected, ?demonstrating its limited downside?.

Fitch also said: Max Re?s earnings restatement and investigations by the Securities and Exchange Commission: ?In May, 2006, Max Re restated its financial results for the years 2001 through 2005 following an internal investigation by the company?s audit and risk management committee of three finite risk retrocessional contracts written in 2001 and 2003 that were found to be accounted for incorrectly.

?The cumulative effect of the restatement was to reduce year-end 2005 shareholders? equity by $18.3 million, or about 1.5 percent. While the financial statement effect of the restatement was minor, it highlights the increased level of scrutiny surrounding the use of finite reinsurance.

?In connection with the internal investigation, the company voluntarily contacted the SEC in March 2006. Subsequently, in June 2006, Max Re received a request from the SEC to voluntarily provide certain information related to the restatement. Fitch views the restatement as unfortunate but not as a meaningful risk factor within the context of the current environment of corporate governance and Section 404 of the Sarbanes-Oxley Act. Fitch does not expect that the SEC inquiry will result in any significant restatement or negative impact to the company?s competitive position.?