Max Re Capital Ltd. said Tuesday that a restatement of financial reports for the years 2001 through 2005 has resulted in a net decrease in shareholder equity of $18.3 million.
The Bermuda-based company, which has a market capitalization of $1.37 billion, initiated the restatement after examining whether three finite risk retrocession contracts contained enough risk transfer to justify their accounting treatment.
Max Re said its audit committee concluded the finite risk accounting was legitimate in regard to risk transfer. But it found concerns with other aspects of the accounting for the contracts, and thus ordered the restatement.
The reinsurer said the threat of delisting by Nasdaq Stock Market has diminished considerably with its plans to file appropriate quarterly and annual reports within 15 days to the Securities and Exchange Commission.
The carrier also said yesterday it would announce its first-quarter 2006 financial results today after the close of trading.
Bank of America property-casualty analyst Brian Meredith said the conclusion of the investigation was a positive factor for the company and continues to rate the shares a buy.
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