Audit ‘Not Completed’ Says Max Re; Estimates Q1 Net at $74.2 Million

Bermuda-based Max Re Capital Ltd. announced that the Audit and Risk Management Committee has not yet completed its previously announced internal investigation. “Consequently, KPMG, the Company’s auditors, have not completed their Statement of Auditing Standards 100 review of financial information for the first three months of 2006,” said the bulletin.

Max Re added that, “subject to the results of the investigation and KPMG’s SAS 100 review,” it believes that its net income for the three months ended March 31, 2006 is US$74.2 million or US$1.17 per diluted share.

It also reiterated its position concerning the audit (See IJ Website March 27) that it “continues to believe that if, as a result of the Audit and Risk Management Committee’s investigation, a restatement were determined to be necessary, that the cumulative effect to retained earnings at December 31, 2005 would be not more than approximately US$50 million.”

As a cautionary statement, however, the bulletin also added the following: “As previously reported, the Audit and Risk Management Committee has contacted the Securities and Exchange Commission in connection with the Company’s internal investigation. Notwithstanding the Company’s current belief, there can be no assurance that the internal investigation (which is addressing the accounting for certain other contractual features in addition to the risk transfer issues of the three finite risk contracts identified in the March 24, 2006 press release), the SAS 100 review or any SEC inquiry or review will not result in material changes to retained earnings as of December 31, 2005 or net income for the quarter ended March 31, 2006 or to information contained in the Company’s past SEC filings, including financial statements and financial information.”

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