Max Capital Group Ltd. saw its profits slip almost $20 million during the second quarter of 2008 amid tough trading conditions.

Net income fell to $74.2 million or $1.26 per share this quarter from $94.1 million or $1.45 per share for the same period last year.

The company's net operating income also dropped from $94.4 million or $1.46 per share to $76.1 million or $1.29 per share during the same timespan.

For the first six months of 2008, the company reported net income of $82 million or $1.38 cents per share in contrast to $175.5 million or $2.72 per share for the first half of last year.

W Marston Becker, chairman and chief executive officer of Max Capital Group Ltd., said: "Second quarter results continue to reflect the benefits of Max's disciplined underwriting and diversified investment philosophy. Each of our business segments are on plan through six months.

"Moreover, this consistent performance has been complemented by favourable development of reserves associated with prior periods.

"Property and casualty gross premium written growth is flat across our organisation other than the expected organic growth in our developing US specialty operations; invested asset growth is on plan although reinvestment rates on fixed maturities are below our original projections; and alternative investment returns have outperformed the relevant indices with a positive return of 3.34 percent in the second quarter."

Gross premiums written from property and casualty underwriting for the three months ended June 30, 2008, were up 14.5 percent at $275.7 million compared to $240.7 million for the corresponding period last year, reflecting the growth of the company's property and casualty US specialty segment, which started underwriting in the second quarter of 2007.

Meanwhile gross premiums written and net premiums earned from life and annuity underwriting during the second quarter 2008 were $93.6 million and $93.4 million respectively, compared to $800,000 and $700,000 for the same period last year. This increase is due to the closing of a life and annuity reinsurance transaction for $92.8 million of gross premiums written during the three months ended June 30, 2008.

MAX CAPITAL

Q2 REPORT CARD

Net income: $74.2 million compared to $94.1 million in 2007

Combined ratio: 79.4 percent compared to 95.6 percent in 2007

Gross premiums written: $369.3 million compared to $241.5 million in 2007