Bermuda-based Max Re Capital Ltd. yesterday reported a net loss of $5.7 million for the year ended December 31, 2002.

The insurer had a good fourth quarter, but not good enough to recover from poor results mainly stemming from poor investments earlier this year.

Net income for the fourth quarter was up at $11.0 million or $0.29 per diluted share, compared to net income of $10.1 million, or income of $0.26 per diluted share for the same period in 2001.

The company suffered a net loss for the year of $5.7 million, or a loss of $0.15 per diluted share, compared to net income of $2.5 million, or income of $0.06 per diluted share, for last year.

Gross premiums for the quarter were down on last year's levels.

Gross written premiums decreased dramatically to $124.9 million for the quarter, compared to $239.4 million, comprised of $139.3 million from property and casualty underwriting and $100.1 million from life and annuity underwriting, for the fourth quarter last year.

Chief financial officer, Keith Hynes, explained that the company moved towards traditional property and casualty risk which typically has lower premium levels than the life and annuity levels and the structured property casualty reinsurance that comprised the premium in the fourth quarter last year. He added that the company is still quoting in these segments, but in the fourth quarter had not found the pricing levels attractive.

For the year ended December 31, 2002, gross premiums written was $656.0 million, comprised of $641.3 million from property and casualty underwriting and $14.7 million from life and annuity underwriting, compared to 2001 gross premiums written of $710.6 million, comprised of property and casualty underwriting of $496.5 million and life and annuity underwriting of $214.1 million.

The combined ratio for the property and casualty business was 96 percent.

Mr. Hynes admitted that this was a little high, but added: "We believe that we're conservatively reserving and the reserves will develop down to a lower number."

Included in gross premiums written for the three months ended December 31, 2002 is $32.3 million of premium stemming from contractual provisions contained in a contract written in a previous year which provided for additional premium in the event of additional reported losses.

Total revenue for the quarter was $201.6 million, compared to $272.8 million of total revenue for the same period in 2001.

For 2002, total revenue was $503.9 million compared to $581.0 million for 2001.

Net investment income, excluding realised and unrealised gains and losses, for the quarter increased to $25.4 million, compared to $11.9 million for the same period in 2001. Net investment income, excluding realised and unrealised gains and losses, for the year increased $21.1 million, to $65.0 million, compared to $43.9 million for the same period in 2001.

Nearly $10 million of the net investment income came from interest income from the reinsurance contract discussed above, which also provided for the receipt of interest when additional premiums are received.

Alternative investments fared better than last year. The net gain for alternative investments for the quarter was $26.0 million, compared to $14.4 million last year.

Invested assets were $2.0 billion as of December 31, 2002, with an allocation of approximately 68 percent to cash and fixed maturities and an allocation of approximately 32 percent to alternative investments.

The ratio of invested assets to minority interest and total shareholders' equity was 2.87 at December 31, 2002, compared to 2.32 last year.

The company saw a rise in general and administrative expenses attributed mainly to growing personnel costs. The figure for the final quarter were $7.7 million (5.9 percent of net premiums earned) compared to $6.4 million last year and the annual total was $2.2 million higher than last year.

Minority interest and shareholders' equity was $709.8 million at December 31, 2002.

Combined book value per share at December 31, 2002, including conversion of the non-voting Max Re Ltd. common shares held by the founding investors, was $15.73 per share compared to $14.92 at December 31, 2001.