Max Capital Group Ltd. returned to profit in the fourth quarter of 2009 as the company's Bermuda and Dublin re/insurance operations led the way with more than 68 percent of its property and casualty gross premiums written last year.

The re/insurer recorded net income of $62.6 million, or $1.08 per share, for the fourth quarter compared to a net loss of $94.1 million, or $1.67 per share, for the same period in 2008.

But gross premiums written were down at $278.3 million from $372.1 million over the respective period.

The Bermuda/Dublin insurance segment accounted for $125 million and its re/insurance division for $66.7 million of the total gross premiums written from property and casualty underwriting for the fourth quarter of 2009.

Net operating income for the 2009 fourth quarter was $60.5 million, or $1.04 per share, versus a net operating loss of $85.5 million, or $1.52 per share, in the previous year. Annualised net operating return on average shareholders' equity for the 2009 fourth quarter was 15.5 percent.

For the full year 2009, the company reported net income of $246.2 million, or $4.26 per share, compared to a net loss of $175.3 million, or $3.10 per share, in 2008.

Marston Becker, chairman and CEO of Max Capital, said: "Max's financial results for 2009 reflect another very successful year both operationally and financially, producing a significant increase in book value for our shareholders.

"We have continued to emphasise diversification and the maintenance of a good balance between specialty insurance and reinsurance, and short and long-tail business, finely tuning proportions based on prevailing market conditions.

"In 2009, as our long-tail lines experienced more competition and softer market conditions, across the group we achieved more robust growth in short-tail lines. We believe our balanced underwriting portfolio helps drive consistency in underwriting results throughout the cycle.

"Our investment portfolio rebounded significantly from 2008, generating a total return of 6.7 percent.

"While our core Bermuda/Dublin insurance and reinsurance segments generated over 68 percent of our property and casualty gross premiums written in 2009, we successfully expanded our other underwriting operations. Max Specialty continued to develop on target, and Max at Lloyd's had a very successful first full year as a member of Max, contributing meaningfully to group profitability with a combined ratio of 86.3 percent.

"In late 2009, we announced the establishment of a Latin American reinsurance operation and the appointment of experienced, leading underwriters for that market.

"We believe this dedicated local presence will enable us to develop Latin America into a strong source of attractive business for Max.

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"Looking forward, we will remain strongly focused on executing a business model designed to produce a 15 percent return on equity across the cycle; however, in this softer portion of the cycle, we are anticipating an ROE of approximately 13 percent in 2010, with some incremental benefit from share repurchases."

Net favourable development on prior year loss reserves was $30.9 million, or 15 points on the combined ratio.

Net gains on other investments of $13.8 million compared to a net loss of $88 million in 2008, while book value per diluted share increased by 3.1 percent during the quarter to $27.36 at December 31, 2009.