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| Breaking News |
Friday 12th June 2009: 22:39 |
Max Capital writes to shareholders explaining IPC loss
Max Capital has written a letter to shareholders after IPC shareholders voted against the merger between the two Bermudian (re)insurers.
It said: "Max Capital today announced the termination of its merger agreement with IPC Holdings following the announcement by IPC that it had not obtained the requisite vote at its annual general shareholder meeting on June 12, 2009. While a majority of IPC shareholders did not recognize the value creation of the combined entity, the voting returns from Max shareholders were overwhelmingly positive – with over 90% in favor of the transaction.
Thank you to all of our shareholders for the time you gave us as we worked hard to communicate what we – as well as you – believed was a very good deal for both Max and IPC shareholders. In the end, the Max Board of Directors did not believe that further enhancement of our proposal would be advantageous for our shareholders. While the IPC combination would have been an attractive combination to enhance our size and scale, we wanted to ensure Max shareholders were properly rewarded for the value that Max was bringing to the transaction.
Max is a very vibrant and successful business with significant shareholder upside and more than adequate capital to execute our business plan. We have successfully expanded our underwriting platforms in Bermuda, Dublin, the US, and Lloyd’s, together operating on a consolidated balance sheet with over $7 billion in total assets. Each is performing well, both in terms of growth in gross written premium and attractive underwriting performance. Prospects for profitable growth in both insurance and reinsurance lines remain favorable.
Our diversified portfolio of business delivers more stable and higher risk adjusted returns over time. Over the coming months, we anticipate that we will likely add selected underwriting teams to our U.S. and London platforms and expand into selected specialty classes that build on our position in each of these markets. We continue to reduce our allocation to alternative investments, which should free up additional capital in support of our underwriting activities and reduce volatility in our investment results going forward. Our investment performance in the second half of 2008 reflected a tough investment climate, which we believe led to a valuation gap with our diversified specialty insurance and reinsurance peers.
As of March 31, 2009 less than 12% of invested assets were in hedge funds and alternative assets and by year end we plan to be at 5% - 7% of invested assets. We believe these actions should enable us to close the valuation gap that exists today between Max and its diversified specialty insurance and reinsurance peers.
We have a strong underwriting track record that has withstood the test of time. Going forward, our financial results will speak for themselves.
Our job is to capitalize on our strong, global diversified platform to deliver those results and, in turn, very attractive returns for Max’s shareholders. While this merger was time consuming for our management team, we have a terrific group of executives in each of our businesses that have been focused on driving our business forward. We continue to see strong underwriting performance across our company and remain very optimistic about our outlook for 2009 and into 2010. All of our businesses are performing well and we continue to enjoy an improving pricing environment.
We would like to thank the IPC management team and members of their board for being great partners throughout our discussions and we wish them well. We appreciate your support these past few weeks, with the numerous phone calls, emails, and visits. We received a lot of great feedback from our shareholders and we look forward to continuing to maintain this kind of open dialogue with all of you. In July Max will observe its 10-year anniversary.
Looking back, we are proud of what we have accomplished, and we believe the best is yet to come."
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