Bermuda Reinsurer Trims Hedge Fund Portfolio After Losses

Jan 6 2009 | 1:18pm ET

Publicly-traded reinsurance firm Max Capital Group yesterday said it is scaling back its alternatives portfolio this year after suffering losses last year.

The company estimates that the loss on its alternative investments for the quarter ending Dec. 31 is 8%, or a reduction in value of approximately $85 million. Its hedge fund portfolio, which stood at 18.6% of its portfolio as of Sept. 30, scaled down to an estimated to be approximately 16% at the end of December. This number is expected to further decrease to 14% or below by the end of March 2009 because of redemption requests, said the firm.

“We plan to bring Max's allocation to alternative investments within a target range of 10% to 15% of total invested assets, with a view to mitigating future volatility,” said Marston Becker, chairman and CEO of Max Capital.

Becker added that the company’s fixed income portfolio of cash and fixed maturities, which represented 81.4% of the company's total invested assets of approximately $5.0 billion as of Sept. 30, “continued to perform well, notwithstanding recent market volatility” last year.

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