Max Capital Group Ltd. and its subsidiaries' rating outlook remains negative after it was its Issuer Default Ratings (IDR) and Insurer Financial Strength ratings by Fitch Ratings.

Fitch said Max Capital's ratings continued to reflect the company's disciplined and flexible approach to managing risk, favourable underwriting results posted in recent years, sizable cash balances and conservative financial leverage.

But partially offsetting these positives is the execution risk derived from Max Capital's growing diversified specialty product strategy, which includes an expansion into the London market with the acquisition of Imagine Group (UK) Ltd. (renamed Max UK Holdings Ltd.) in November 2008 and the launch of Max Specialty Insurance Company in 2007 as the company's US-based excess and surplus lines platform, said the ratings agency.

Fitch expects Max Capital to maintain its disciplined underwriting approach in the overall competitive market rate environment and return to overall profitability in 2009.

The negative outlook reflected the potential for further reductions in capital, particularly from additional significant losses in the volatile alternative investment portfolio, although exposure to this asset class is being further reduced and returns have been positive thus far in 2009, said the ratings agency.

If the company suffers significant losses, the ratings could be lowered, however, if Max Capital is able to continue to improve its operating earnings and generate consistent internal capital growth in the near to intermediate term, the outlook could return to stable, it added.