Max Capital Group Ltd. comfortably beat the analysts' expectations with second-quarter earnings of $43.8 million, as insurance policy sales grew strongly.

But the net income figure, which broke down to 76 cents per share, was down by 41 percent on the $74.2 million, or $1.26 per share, earned in the same period last year.

Max reaped the benefits from the expansion of its underwriting platform into the US and London markets over the past two years, as gross premiums written from property and casualty operations rose to $355.5 million for the three-month period, up 29 percent from $275.7 million last year.

Operating profit, which typically excludes investment losses and gains, was 83 cents a share. Analysts were looking for a profit of 73 cents a share, excluding items, according to Reuters Estimates.

Max chairman and chief executive officer Marston Becker said: "Our underwriting platforms in Bermuda, Dublin, the US and at Lloyd's have all produced favourable results for the quarter. For the second consecutive quarter we posted strong growth in gross premiums written, primarily driven by the expansion of Max's newer specialty underwriting platforms in the US and at Lloyd's.

"Overall loss and combined ratios remain at attractive levels, benefiting from our disciplined underwriting and successful diversification strategy.

"We continue to see attractive opportunities and are focused on adding new products and teams to each of our global platforms. Market conditions continue to support 2009 as a more attractive underwriting year than 2008."

In the past, Max has invested up to a fifth of its portfolio in alternative investments, including hedge funds. The company has moved away from that strategy.

Mr. Becker said: "Hedge funds now represent 8.5 percent of total invested assets and will be further reduced to five to seven percent by year end."

Net investment income for the quarter was $41.8 million compared to $42.5 million for the same period in 2008. Max said the decline from a year ago reflects lower yields on the higher cash and cash equivalents balance held by the company.

The company said it continues to hold a higher than normal cash balance as it rebalances asset allocation and strategically positions its portfolios for the changing fixed income markets.

Max recorded improved performance for the first six months of the year, with net income of $88.3 million, or $1.54 per share, compared to of $82 million, or $1.38 per diluted share for the first half of 2008.

Max's hedge fund portfolio returned 5.23 percent, or a net gain of $39.4 million, in the first six months of the year.

Shareholders' equity was $1.36 billion at June 30, 2009 and book value per share was $24.09, compared to $22.28 at March 31, 2009, an increase of 8.1 percent.

Annualised net operating return on average shareholders' equity for the second quarter was 14.6 percent.

MAX CAPITAL Q2 REPORT CARD

Net income: $47.8 million compared to $74.2 million in 2008.

Gross premiums written: $396.5 million compared to $369.3 million in 2008.

Combined ratio: 90.8 percent compared to 74.9 percent in 2008.