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 $1.25 billion; its shares were traded at around $21.85 with and P/S ratio of 1.7. 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 nine months ended September 30, 2009 was $183.6 million, an increase of $264.8 million from a loss of $81.2 million for the same period in 2008. Diluted book value per share has increased 18.2% to $26.54 at September 30, 2009 compared to December 31, 2008. Our property and casualty underwriting business is producing gross premium volumes ahead of plan for the year to date. Gross premiums written for our property and casualty segments for the nine months ended September 30, 2009 have increased 33.9% over the same period in 2008, with net premiums earned increasing by 40.1%. This growth reflects the continued build out of our U.S specialty segment, with an increase in gross premiums written of $85.1 million over the comparable prior year-to-date period, and the addition of our Max at Lloyds segment at the end of 2008 which has contributed $110.6 million of gross premiums written for the year-to-date period. Weve seen attractive rates in certain casualty and short tail lines during 2009, and our diversified underwriting platforms enables us to take advantage of opportunities where market conditions are favorable.
Our four property and casualty segments produced an aggregate combined ratio for the nine months ended September 30, 2009 of 90.5%, compared to a combined ratio of 89.1% for the nine months ended September 30, 2008. Net losses incurred in the nine months ended September 30, 2009 related to property catastrophe events were $3.4 million, compared to $50.0 million, net of reinstatement premiums of $7.4 million, in the same period in 2008. We recognized net favorable development on prior year loss reserves of $47.5 million for the nine months ended September 30, 2009, compared to $88.6 million for the same period in 2008. The favorable development in the 2009 period relates principally to our property and professional liability lines of business, offset by adverse development in the marine and energy lines. Absent the net favorable loss development our combined ratios for the nine months ended September 30, 2009 and 2008 were 98.6% and 110.3%, respectively. Favorable loss reserve development is primarily due to lower than expected claims emergence on prior year contracts.
Over the nine months ended September 30, 2009 we have significantly reduced our external borrowings. We have repaid $150.0 million in bank loans and $225.0 million on our swap loan, reducing both balances to zero. These actions have reduced our total debt from $466.4 million at December 31, 2008 to $91.4 million at September 30, 2009.
Our underwriting and investment performance resulted in an annualized return on average shareholders equity of 17.3% for the nine months ended September 30, 2009, compared to negative 7.6% for the same period in 2008. Diluted book value per common share increased 18.2% from $22.46 at December 31, 2008 to $26.54 at September 30, 2009. Diluted book value per common share is computed using the treasury stock method, which assumes that in-the-money options and warrants are exercised and the proceeds received are used to purchase common shares in the market. Under this method diluted common shares outstanding were 58,272,865 and 57,017,157 at September 30, 2009 and December 31, 2008, respectively.
Following the termination of the amalgamation agreement with IPC on June 12, 2009, and as a result of IPC entering into an Agreement and Plan of Amalgamation with another company on July 9, 2009, the Company received a termination fee of $50.0 million from IPC. This fee was received on July 9, 2009 and is reflected in our results for the three months ended September 30, 2009, net of $8.6 million of expenses.
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