MAX CAPITAL Q4

REPORT CARD

Net income: Loss of $94.1 million compared to profit of $62.4 million in 2007

Combined ratio: 99.6 percent compared to 94.9 percent in 2007

Gross premiums written: $372.1 million compared to $400.2 million in 2007

Max Capital Group suffered a fourth-quarter loss of $94.1 million, but chairman and CEO Marston Becker maintained that his company fared better than many, with limited losses from its alternative investments compared to its rivals.

The Bermuda insurer's loss broke down to $1.67 per share, compared to a profit of $62.4 million, or $1 per share for the fourth quarter of 2007.

Net operating loss, which represents net income or loss excluding after-tax net realised gains and losses on fixed maturities and foreign exchange, for the three months ended December 31, 2008, was $85 million or $1.51 per share, compared to net operating income of $63.4 million or $1.01 per share, for the three months ended December 31, 2007.

For the full year 2008, the company had a net loss of $175.3 million, or $3.10 per share, compared to net income of $303.2 million or $4.75 per share, for the previous year.

Mr. Becker said: "In 2008, solid performances by our underwriting units were overshadowed by losses in our alternative investment portfolio. In a year generally regarded as being a soft pricing year, as well as having the fourth-highest US property losses from catastrophes, our losses have been limited compared to many of our peers and our overall combined ratios have remained attractive.

"Max Specialty, our US excess and surplus lines operation, grew considerably during 2008 and we expanded our specialty insurance and reinsurance capabilities with our fourth-quarter acquisition of Max at Lloyd's, which provided us entry to the world's most famous specialty insurance marketplace. We believe this greater product and geographic diversification will allow us to take advantage of more favorable market conditions as they emerge, and will help limit the volatility of our future underwriting results.

"On the investment side, Max has not been immune to the turmoil of the financial markets, and the negative return and volatility experienced by our alternative investments was worse than we had previously modeled. Late last year we announced our intention to reduce and rebalance our alternative investment allocation and this process is well under way.

"Total alternative investments are less than 15 percent of invested assets at year-end and we expect them to be less than 12 percent by the end of March 2009. The decision to change our asset mix in this way reflects the growing strength and scale of our underwriting platforms.

"Looking ahead, while we expect the market to remain in transition throughout 2009, opportunities continue to arise. Max Capital and our individual platforms are well-positioned from both a business and capital standpoint to continue to compete effectively and to take advantage of market dislocations."