Max Capital Group posted a big increase in profits for the first quarter and handily beat analysts' estimates, as gross premiums written soared.

The Bermuda-based insurer and reinsurer reported net income of $44.5 million, or $0.78 per diluted share, compared to $7.7 million, or $0.13 per share, for the three months ended March 31, 2008.

Net operating income rose almost seven-fold to $41.7 million, or 73 cents a share. Analysts on average expected the company to earn 63 cents a share, excluding special items, according to Reuters Estimates.

The company, which has agreed to merge with Bermuda-based reinsurer IPC Holdings later this year — a move that has been challenged by the hostile takeover efforts of Validus Holdings, another Bermuda reinsurer — has benefited from the extension of its global reach over the past two years.

Gross premiums written were $433.7 million, compared to $306 million for the same three months last year, an increase of 41.7 percent.

Max said the increase reflected the addition of the company's Max at Lloyd's segment, the continued build-out of the US specialty platform, and modest organic growth in each of the company's other property and casualty segments.

The bulk of business was written through Max's Bermuda and Dublin platforms, and around one fifth of total gross premiums written in the agriculture reinsurance line.

Max chief executive officer Marston Becker said: "Strong growth in gross premiums written was primarily driven by the expansion of Max's global reach in the US and at Lloyd's. Loss ratios continue in line with plan, highlighting the benefits of Max's diversified underwriting philosophy.

"We expect this trend to continue throughout 2009 as we see modest rate/exposure improvements in many classes of business relative to 2008. Likewise, the continued reduction of our alternative investments as a percentage of our total invested assets is progressing to plan and will continue throughout 2009."

Mr. Becker also spoke positively about the IPC amalgamation plan, despite the efforts of Validus to derail it. Whether the merger happens will depend on the votes of Max and IPC shareholders on dates yet to be announced.

"Our pending merger with IPC is progressing well," Mr. Becker said. "Many regulatory approvals have already been received and we are on track for shareholder meetings and an expected closing in June 2009.

"The new combined organisation will be strongly positioned as a global underwriter of specialty insurance and reinsurance, which in turn, will drive enhanced returns and value for our shareholders.

"With rates across many lines beginning to move positively, the marketplace timing for this transaction is very good."

Max has significantly scaled down its investments in hedge funds and other alternative investments. At March 31, 2009, the company had 72.5 percent, or $3.2 billion, of the $4.4 billion cash and fixed maturities portfolio held in cash, government and government agency-backed securities, or AAA-rated securities.