Max Re's announcement that independent auditors are reviewing three finite retrocessional reinsurance contracts, which could possibly reduce fourth-quarter retained earnings by up to $50 million, most likely won't affect the company's ratings, according to one leading analyst.
Hamilton, Bermuda-based Max Re Capital Ltd. announced on March 24 that the Audit and Risk Management Committee initiated by its board of directors, with the assistance of outside advisers, would review the questionable reinsurance contracts written in 2001 and 2003.
The aim of the review is to determine whether the company properly accounted for the finite re deals–principally whether they contain sufficient risk transfer to meet the requirements of Financial Accounting Standard No. 113, Max Re said.
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