Max Capital Group Ltd. through its principal operating subsidiaries provides specialty insurance and reinsurance products to corporations public entities property and casualty insurers and life and health insurers. The Company also provides reinsurance for existing blocks of Life & Annuity business. Max Capital Group Ltd. has a market cap of $1.13 billion; its shares were traded at around $19.86 with and P/S ratio of 1.6. The dividend yield of Max Capital Group Ltd. stocks is 1.8%. Max Capital Group Ltd. had an annual average earning growth of 11.3% over the past 5 years. Highlight of Business Operations: Net income for the six months ended June 30, 2009 was $88.3 million, an increase of 7.7% over the same period in 2008. Diluted book value per share has increased 4.8% to $23.53 at June 30, 2009 compared to December 31, 2008. Our five underwriting segments are each producing gross premium volumes in line or ahead of plan for the year to date, with particularly strong growth coming from our U.S. specialty segment and the addition of our Max at Lloyds segment. Gross premiums written for our property and casualty segments for the six months ended June 30, 2009 have increased 35.7% over the same period in 2008, with net premiums earned increasing by a similar percentage.
For the six months ended June 30, 2009, gross premiums written increased by 13.4%, 7.6%, and 84.4% for our Bermuda/Dublin insurance, Bermuda/Dublin reinsurance and U.S. specialty segments, respectively, which drove a corresponding increase in net premiums earned over the comparable 2008 period. In addition, our newest segment, Max at Lloyds, contributed $89.5 million of gross premiums written and $46.7 million of net premiums earned for the current period. Our four property and casualty segments produced an aggregate combined ratio for the six months ended June 30, 2009 of 90.3%, with underwriting income of $85.8 million, compared to a combined ratio of 84.0% and underwriting income of $83.1 million for the six months ended June 30, 2008. Net losses incurred in the six months ended June 30, 2009 related to property catastrophe events were $3.4 million, compared to insignificant losses in the same period in 2008. Net losses incurred for the six months ended June 30, 2009 include $7.0 million for significant aviation events. We recognized net favorable development on prior year loss reserves of $32.3 million for the six months ended June 30, 2009, compared to $36.3 million for the same period in 2008. The favorable development in the 2009 period relates principally to 2005 and prior accident years for our casualty lines of business and to the 2007/2008 accident years for our property lines of business. Absent the net favorable loss development our combined ratios for the six months ended June 30, 2009 and 2008 were 98.8% and 97.1%, respectively. Favorable loss reserve development is primarily due to lower than expected claims emergence on prior year contracts.
Net investment income for the six months ended June 30, 2009 was $82.2 million, a decrease of 10.7% compared to the same period in 2008. The reduction in net investment income is principally attributable to our maintenance of a significant allocation to cash and cash equivalents during the six months ended June 30, 2009, averaging approximately 18.7% of invested assets, compared to approximately 9.3% on average during the six month period ended June 30, 2008. We anticipate this ratio to decrease as we deploy cash to reduce debt and seek attractive investment opportunities. Net unrealized losses on our fixed maturities portfolio recorded within other comprehensive income were $29.2 million for the six months ended June 30, 2009. At June 30, 2009, net unrealized losses on our available for sale securities were 1.2% of our available for sale fixed maturities portfolio. The credit quality of our fixed maturities investments remains high, with 62.5% of our fixed maturities at June 30, 2009 being held in U.S. government, agency, or AAA-rated securities. We, together with our investment advisors, perform regular reviews of our available for sale fixed maturities portfolio to identify the potential for other-than-temporary impairments. For the six months ended June 30, 2009 and 2008, we recorded other-than-temporary impairment losses through earnings of $2.0 million and $3.1 million, respectively.
For the six months ended June 30, 2009, the return on our hedge fund portfolio was 5.23%, compared to a return of 5.36% for the HFRI Fund of Funds Composite Index, which we believe to be the most comparable benchmark. Net gains on our hedge fund portfolio were $39.4 million and $13.8 million for the six months ended June 30, 2009 and 2008, respectively. As of June 30, 2009, our allocation of invested assets to the hedge fund portfolio was 8.5%, compared to 20.0% as of June 30, 2008. We believe our reduced allocation to hedge funds and the rebalancing of our portfolio has significantly reduced the potential volatility of our investment returns. With the reduction in the size of our hedge fund portfolio, we now manage our hedge funds internally. Accordingly, earlier this year we hired certain research staff from Alstra and terminated our investment advisor agreement with Alstra.
Over the six months ended June 30, 2009 we have significantly reduced our external borrowings. We have fully repaid $150.0 million in bank loans and have reduced our swap loan balance by $120.0 million. These actions have reduced our total debt from $466.4 million at December 31, 2008 to $196.4 million at June 30, 2009.
Net losses and loss expenses. Our 74.4% loss ratio has decreased 5.8 percentage points from the same period in 2008. For the three months ended June 30, 2009 we recognized net favorable development on prior year reserves of $8.4 million, principally in our aviation and professional liability lines of business, compared to no significant reserve development for the three months ended June 30, 2008. Net losses for the three months ended June 30, 2009 include a net loss of $2.8 million related to the Air France Airbus crash.
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