Max Capital Group Ltd. chairman and chief executive officer Marty Becker says his company achieved "meaningful profits" in 2009 and aims to further increase its book of business by about five percent this year.

In his annual letter to shareholders, Mr. Becker said the company had reduced the proportion of hedge fund investments in its portfolio from 14 percent to six percent during the year, bringing it in line with most of its industry peers.

Max does not publish full-year results until February 9, but Mr. Becker released some details of 2009 performance in his letter, including that gross premiums written totalled $1.33 billion.

"On balance, Max had a strong year operationally, and produced meaningful profits [EmDash] in contrast to 2008, when, despite having had a great operating year, financial crisis-related losses on our hedge fund investments took a severe toll on our bottom line," Mr. Becker wrote.

Max's overall combined ratio [EmDash] the percentage of premium dollars spent on claims and expanses [EmDash] was a healthy 89 percent. The company's London-based operating platform Max at Lloyd's made $130 million in gross written premiums from the first full year of ownership [EmDash] around a tenth of the group's business.

"We expect net operating income per diluted share of between $3.40 and $3.70, which implies a net operating return on average shareholders' equity (ROE) of between 13.8 percent and 14.9 percent," Mr. Becker wrote.

"Book value per diluted share is estimated to be between $27.10 and $27.40, versus $22.46 at December 31, 2008 and $26.54 at September 30 2009, a gain in book value per diluted share for the year of approximately 21 percent to 22 percent."

On the prospects for this year, Mr. Becker said: "It would seem many industry observers have a cautious outlook for the present industry pricing environment and for underwriting prospects in 2010.

>"Pricing is certainly soft in several product segments, but it is not uniform across all classes of business and market segments. Many companies are demonstrating their underwriting skills by carefully selecting those classes of business in which they can effectively compete, and are, hence, navigating their way to maintaining a profitable book of business.

"We feel Max has proved that it is and will continue to be one of these companies. We have shrunk our presence in the softer/less-profitable classes of business, and have increased in others where we see more opportunity."

He added that property and casualty gross premiums written were expected to amount to about $1.4 billion in 2010. Mr. Becker anticipates that $50 million of that growth will come from Max's new Latin American operations, launched last month.

The Max boss also referred to the company's efforts to merge with Bermuda reinsurer IPC Holdings Ltd., derailed by a hostile takeover bid from Validus Holdings Ltd. that was eventually successful.

"We believed the transaction represented a good opportunity to add scale to Max and, naturally, we were disappointed with the outcome," Mr. Becker said.

"Given our belief that efforts to achieve such scale should never surpass the commensurate value created for our shareholders, we believe the difficult decision to hold our offer price was the right one.

"Max did, however, receive a termination fee that, after associated costs, contributed some $30 million ($0.54 per share) to our book value for the year.

"Although we consider enhanced scale to be desirable, Max continues to be a very vibrant and successful business with more than adequate capital to execute our 2010 business plan."