Max Re Capital's move away from hedging and into traditional reinsurance has led to the company going from the red to the black in the third quarter.

The company, which officially opened its new offices on Pitts Bay Road on Thursday, posted a net loss of $14.3 million for the third quarter in 2002, but this quarter posted a profit of $38.8 million for the same period.

"Our third quarter profitable underwriting result is reflective of the increasingly larger percentage of traditional reinsurance and direct insurance in our property and casualty portfolio," said Robert Cooney, chairman, president and chief executive officer of Max Re.

The company said that the hard market had shifted its earnings focus towards traditional property casualty lines and good investment returns did the rest.

Mr. Cooney said in a release: "Accelerating earned premium combined with attractive underwriting margins has dramatically shifted our earnings focus towards underwriting income.

Total income this quarter was again augmented appreciably by a fourth consecutive quarter of strong alternative investment results."

Gross premiums written for the three months ended September 30, 2003, were $188.6 million.

This came entirely from property and casualty underwriting, compared to $65.7 million, also all from property and casualty underwriting, for the three months ended September 30, 2002.

Net premiums earned for the three months ended September 30, 2003, were $178.7 million compared to $96.9 million for the same period of 2002.

Net investment income, excluding realised and unrealised gains and losses, for the three months ended September 30, 2003, increased slightly to $13.9 million, from $13.8 million for the same period in 2002.

Net gains on alternative investments for the three months ended September 30, 2003, were $28.1 million, or a 3.35 percent rate of return, compared to net gains on alternative investments of $1.1 million, or a 0.25 percent rate of return, for the same period of 2002.

Total revenue for the three months ended September 30, 2003, increased 106 percent to $233.5 million, compared to $113.5 million of total revenue for the same period in 2002.

The company said that growth in revenue is principally attributable to an 85 percent increase in net premiums earned and to improved performance on the alternative investments for the three months ended September 30, 2003, compared to the same period in 2002.

In the release the company also said the increase in net premiums earned and the improved performance on the alternative investments also account for the increase in total revenues year to date through September 30, 2003, compared to the same period in 2002. Losses, benefits and experience refunds were $139.7 million for the three months ended September 30, 2003, compared to $95.5 million for the same period in 2002.

The increase in losses, benefits and experience refunds is principally attributable to the increase in premiums earned, said the company, adding that loss experience on contracts in force developed as expected during the quarter.

General and administrative expenses for the third quarter of 2003, were $10.9 million compared to $4.9 million for the same period in 2002 and resulted principally from expenses associated with establishing the company's direct insurance operations and expanding the company's traditional reinsurance staff, added the release.