MarketWatch – Max Re Capital slashed the amount of money it’s willing to invest in hedge funds after the Bermuda-based reinsurer’s alternative investment portfolio lost $31 million during the third quarter.
Net income came in at $26.5 million, or 42 cents a share, vs. a net loss of $44.2 million, 96 cents a share, a year earlier. Operating earnings, which exclude net realized gains and losses on sales of fixed maturities, were $26.8 million, or 42 cents a share.
Net losses on alternative investments in the quarter were $31 million, compared to net gains of $35.6 million a year earlier, Max Re reported.
Like other insurers and reinsurers, Max Re collects premiums in return for underwriting risks. However, the company differs from many rivals because it takes a large chunk of those premiums and invests them in hedge funds. Max Re aimed to put 20% to 40% of its investment portfolio in hedge funds, according to its latest annual report.
However, after the third-quarter hedge fund losses, Max Re Chief Executive W. Marston Becker said the company now plans to put 15% to 20% of invested assets in alternative investments.
