Bermuda-based Max Re Capital Ltd. yesterday reported that its results for the last year had jumped to $120.6 million compared to a net loss of $5.8 million the year before.

The strong earnings followed strong business with the company?s gross premiums written exceeding the $1 billion mark in 2003.

Also reporting yesterday on its fourth quarter results, the company said it had seen its net income for the three months ended December 31, 2003 climb to $36.4 million ? a more than two-fold gain from the $11 million in earnings during the same period of 2002.

The company was able to achieve its solid results despite a $20 million reserve increase in 2003.

CFO Keith Hynes, speaking with analysts on the company?s earnings call yesterday, said Max Re had decided to boost the reserves for a ?poor performing structured property and casualty reinsurance contract? after loss notices for the client were in excess of what was expected.

Mr. Hynes said the company had acted conservatively ? setting aside more than may be necessary ? in boosting the level of its reserves, which related to a whole account stop loss transaction which principally experienced adverse development along workers compensation and Directors & Officers (D&O) lines.

He did not rule out getting back some of the $20 million that had been used to boost reserves down the road, but also said it should be sufficient to cover any adverse developments from that account. Mr. Hynes said that independent third-party actuaries and auditors were in agreement with the reserve estimates calculated by Max Re?s internal auditors. Max Re CEO Robert Cooney said: ?All aspects of our business performed well in 2003. We exceeded $1 billion in gross premiums written, our property and casualty business produced an underwriting profit, and our alternative investments returned 16.57 percent. All of these factors led to (record) net operating income before minority interest of $111.6 million.?

During the year, the company reported that the bulk of its business written was along traditional property & casualty (P&C) lines in insurance and reinsurance, with $901.5 million worth of business coming in. Of that the company ceded $132.9 million to reinsurers for a net premiums written total of $768.6 million. Max Re also wrote $108 million in life business, and ceded $21.6 million of that for a net written premium total of $86.6 million.

Mr. Hynes said that about 50 percent ? or $75 million ? of the business it has written had been ceded to Grand Central Re in 2003 for structured and life lines. But he added that Max Re and Grand Central Re would no longer be doing business together, including no ceded business to the company in 2004.

The development prompted questions from Banc America analyst Brian Meredith but Mr. Hynes said that as the company anticipated shrinking of it structured business in 2004, ?so the lack of that reinsurance capacity will not have a significant impact on us.?

He said that the company?s move to write more traditional lines ? including the company?s establishing insurance operations here and in Dublin in the last year ? continued to pay off, with there still being more opportunity on the traditional side of business compared to structured reinsurance.

The company?s combined ratios ? an indication of how much the company has earned per premium dollar underwritten ? stood at 117.6 percent for structured reinsurance business (indicating a loss of 17.6 cents on each dollar of business written); 86.6 percent for traditional reinsurance business (earnings of 13.4 cents on each dollar of business written); 93.8 percent on its alternative risk transfer business (6.2 cents on each dollar of business written) and 92.8 percent on its book of traditional insurance business. In total, the company?s combined ratio for its P&C operations stood at 99.8 percent.

The company also earned on its investments with net investment income for the three months ended December 31, 2003 dropping off from $16.7 million compared to $24.8 million for the same period in 2002. For 2003, net investment income also fell off slightly to $60.1 million from $64.4 million during the prior year.

On the expense side, general and administrative expenses for the fourth quarter were $10 million compared to $5.9 million during the previous period. And for the year the total came to $39.8 million compared to $21.3 million in 2002.

Mr. Hynes largely attributed the increase in expenses during 2003 to the company?s set up of its insurance operations and expansion of its traditional reinsurance staff. As a percentage of net premiums earned, this year?s expense levels were constant with 2002 at 5.5 percent.