Max Re Capital Ltd. Reports Second Quarter Net Income of $0.27 Per Diluted Share

Share Name	Share Symbol	Market	Type
Max RE Capital Ltd. (MM)	NASDAQ:MXRE	NASDAQ	Common Stock

Max Reinsurance (NASDAQ:MXRE)
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HAMILTON, Bermuda, July 28 /PRNewswire-FirstCall/ -- Max Re Capital Ltd. (NASDAQ:MXRE) today reported net income for the three months ended June 30, 2006 of $17.3 million, or net income of $0.27 per diluted share, compared to net income of $23.3 million, or net income of $0.47 per diluted share, for the three months ended June 30, 2005. Net operating income, which represents net income adjusted for net realized gains and losses on sales of fixed maturities, for the three months ended June 30, 2006 was $22.6 million, or net operating income of $0.36 per diluted share, compared with net operating income of $22.5 million, or net operating income of $0.45 per diluted share, for the three months ended June 30, 2005. For the six months ended June 30, 2006, the Company had net income of $90.2 million, or net income of $1.42 per diluted share, compared to $61.0 million, or $1.22 per diluted share, for the six months ended June 30, 2005. For the six months ended June 30, 2006, the Company had net operating income of $97.1 million, or net operating income of $1.53 per diluted share, compared to $59.8 million, or $1.20 per diluted share, for the six months ended June 30, 2005. (Logo: http://www.newscom.com/cgi-bin/prnh/20010918/MXRELOGO-b ) Robert J. Cooney, Chairman, President and Chief Executive Officer, commented, "Our second quarter results reflect continuing solid underwriting performance and a difficult environment for investment returns. Gross premiums written for the quarter increased 16% over the same period in 2005 principally due to additional property business written in 2006. Our favorable net income for the period was partially offset by a decline in the carrying value of fixed maturities leading to a marginal increase in shareholders equity for the six months ended June 30, 2006." Gross premiums written for the three months ended June 30, 2006 were $284.0 million, of which $241.2 million came from property and casualty underwriting and $42.8 million came from life and annuity underwriting, compared to $245.1 million, of which $211.0 million came from property and casualty underwriting and $34.1 million came from life and annuity underwriting, for the three months ended June 30, 2005. Net premiums earned for the three months ended June 30, 2006 were $199.2 million compared to $192.1 million for the same period of 2005. Gross premiums written for the six months ended June 30, 2006 were $539.9 million compared to $700.8 million for the first six months of 2005. Property and casualty reinsurance, property and casualty insurance and life and annuity reinsurance accounted for 55%, 37% and 8%, respectively, of gross premiums written for the first six months of 2006, compared to 50%, 25% and 25%, respectively, for the same period in 2005. Net premiums earned for the first six months of 2006 decreased 28.3% to $358.9 million compared to $500.4 million for the same period in 2005. The decline in gross premiums written and net premiums earned in the six months ended June 30, 2006 compared to the same period in 2005 principally relates to decreased life and annuity business written and earned. Net investment income for the three months ended June 30, 2006 increased to $36.5 million, from $25.0 million for the same period in 2005 and is attributable to a year over year increase in cash and fixed maturities balances and higher yields on fixed maturities investments. Net investment income for the six months ended June 30, 2006 increased $21.8 million, to $70.5 million, compared to $48.7 million for the same period in 2005. Net losses on alternative investments for the three months ended June 30, 2006 were $5.6 million, or a (0.39)% rate of return, compared to net gains on alternative investments of $3.6 million, or a 0.26% rate of return, for the same period of 2005. For the six months ended June 30, 2006, alternative investments have returned 4.00%, compared to 1.46% for the same period in 2005. Invested assets were $4.4 billion as of June 30, 2006, with an allocation of approximately 70% to cash and fixed maturities and 30% to alternative investments. Losses and benefits were $164.7 million for the three months ended June 30, 2006 compared to $155.7 million for the same period in 2005. The increase in losses and benefits for the three months ended June 30, 2006 is principally attributable to the increase in premiums earned. Losses and benefits for the six months ended June 30, 2006 were $289.7 million compared to $423.1 million for the same period in 2005. The decrease for the six months ended June 30, 2006 compared to the same period in 2005 is principally attributable to the decrease in net premiums earned from life and annuity underwriting. Acquisition costs for the three months ended June 30, 2006 were $18.8 million compared to $17.9 million for the three months ended June 30, 2005, the increase resulting from additional net premiums earned in 2006. Acquisition costs are principally related to our property and casualty reinsurance and insurance segments. Interest expense for the three months ended June 30, 2006 was $7.7 million compared to $13.4 million for the same period in 2005, principally attributable to lower interest crediting rates on funds withheld balances with reinsurers in the three months ended June 30, 2006 compared to the three months ended June 30, 2005. General and administrative expenses for the three months ended June 30, 2006 were $16.4 million compared to $12.3 million for the same period in 2005. General and administrative expenses for the three months ended June 30, 2006 increased principally due to increased personnel costs. Shareholders' equity was $1,211.7 million at June 30, 2006. Book value per share at June 30, 2006 was $20.39 per share, compared to $20.38 at December 31, 2005. Annualized operating return on average shareholders' equity for the six months ended June 30, 2006 was 16.1%. Max Re Capital Ltd., through its principal operating subsidiaries, Max Re Ltd., Max Insurance Europe Limited and Max Re Europe Limited, offers customized insurance and reinsurance solutions to property and casualty insurers, life and health insurers and large corporations. The above remarks about future expectations, plans and prospects from the Company are forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those suggested by such statements, including the risk that the SEC's view of the conclusions reached by the Audit and Risk Management Committee of our Board of Directors in connection with the internal review of three finite risk retrocessional contracts written in 2001 and 2003, which caused the Company to conclude that a restatement of the Company's audited financial statements for the years ended December 31, 2005, 2004, 2003, 2002 and 2001 is warranted, may differ, perhaps materially. For further information regarding cautionary statements and factors affecting future results, please refer to documents filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future developments or otherwise. MAX RE CAPITAL LTD. CONSOLIDATED BALANCE SHEETS (Expressed in thousands of United States Dollars, except per share and share amounts) June 30, 2006 December 31, 2005 (Unaudited) (Restated) ASSETS Cash and cash equivalents $353,271 $314,031 Fixed maturities, available for sale at fair value 2,770,203 2,682,864 Alternative investments, at fair value 1,322,571 1,230,889 Accrued interest income 32,294 32,632 Premiums receivable 421,051 398,666 Losses and benefits recoverable from reinsurers 673,522 646,669 Funds withheld 15,724 16,932 Deferred acquisition costs 73,370 69,015 Prepaid reinsurance premiums 119,187 83,493 Other assets 24,213 23,001 Total assets $5,805,406 $5,498,192 LIABILITIES Property and casualty losses $2,183,741 $2,006,032 Life and annuity benefits 902,851 854,224 Deposit liabilities 199,268 225,328 Funds withheld from reinsurers 406,869 435,942 Unearned property and casualty premiums 530,617 442,976 Reinsurance balances payable 106,184 90,781 Accounts payable and accrued expenses 114,153 94,043 Bank loan 150,000 150,000 Total liabilities 4,593,683 4,299,326 SHAREHOLDERS' EQUITY Preferred shares (par value $1.00) 20,000,000 shares authorized; no shares issued or outstanding -- -- Common shares (par value $1.00) 200,000,000 shares authorized; 59,425,278 (2005 - 58,829,354) shares issued and outstanding 59,425 58,829 Additional paid-in capital 940,077 926,386 Loans receivable from common share sales (300) (465) Unearned stock grant compensation (20,723) (14,574) Accumulated other comprehensive income (loss) (74,711) 4,981 Retained earnings 307,955 223,709 Total shareholders' equity 1,211,723 1,198,866 Total liabilities and shareholders' equity $5,805,406 $5,498,192 Book Value Per Share $20.39 $20.38 MAX RE CAPITAL LTD. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) (Expressed in thousands of United States Dollars, except shares and per share amounts) Three Months Ended June 30 Six Months Ended June 30 2006 2005 2006 2005 (Restated) (Restated) REVENUES Gross premiums written $283,967 $245,107 $539,891 $700,796 Reinsurance premiums ceded (73,639) (52,705) (131,401) (96,724) Net premiums written $210,328 $192,402 $408,490 $604,072 Earned premiums $249,283 $235,598 $455,409 $585,926 Earned premiums ceded (50,094) (43,517) (96,463) (85,521) Net premiums earned 199,189 192,081 358,946 500,405 Net investment income 36,497 24,965 70,526 48,654 Net gains on alternative investments (5,636) 3,597 49,223 17,974 Net realized gains (losses) on sale of fixed maturities (5,285) 813 (6,960) 1,203 Other income 165 1,182 664 2,500 Total revenues 224,930 222,638 472,399 570,736 LOSSES AND EXPENSES Losses and benefits 164,746 155,717 289,706 423,142 Acquisition costs 18,847 17,921 40,390 39,423 Interest expense 7,662 13,372 14,007 19,604 General and administrative expenses 16,354 12,310 38,112 27,567 Total losses and expenses 207,609 199,320 382,215 509,736 NET INCOME 17,321 23,318 90,184 61,000 Change in net unrealized appreciation of fixed maturities (31,104) 49,248 (81,174) 27,733 Foreign currency translation adjustment 383 (3,716) 1,482 (4,325) COMPREHENSIVE INCOME (LOSS) $(13,400) $68,850 $10,492 $84,408 Basic earnings per share $0.29 $0.50 $1.52 $1.32 Diluted earnings per share $0.27 $0.47 $1.42 $1.22 Diluted net operating earnings per share $0.36 $0.45 $1.53 $1.20 Weighted average shares outstanding - basic 59,386,469 46,258,301 59,336,432 46,155,728 Weighted average shares outstanding - diluted 63,340,090 49,746,583 63,638,422 49,773,858 MAX RE CAPITAL LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Expressed in thousands of United States Dollars) Six Months Ended June 30, 2006 2005 (Restated) Preferred shares Balance, beginning of period $-- $-- Balance, end of period -- -- Common shares Balance, beginning of period 58,829 45,826 Issue of shares 596 609 Repurchase of shares -- (335) Balance, end of period 59,425 46,100 Additional paid-in capital Balance, beginning of period 926,386 648,446 Issue of common shares 13,257 11,478 Stock option expense 434 412 Repurchase of shares -- (7,025) Balance, end of period 940,077 653,311 Loans receivable from common share sales Balance, beginning of period (465) (10,515) Loans repaid 165 10,050 Balance, end of period (300) (465) Unearned stock grant compensation Balance, beginning of period (14,574) (13,294) Stock grants awarded (12,587) (10,812) Amortization 6,438 4,824 Balance, end of period (20,723) (19,282) Accumulated other comprehensive income (loss) Balance, beginning of period 4,981 22,227 Holding (losses) gains on fixed maturities arising in period (88,134) 28,936 Net realized losses (gains) included in net income 6,960 (1,203) Currency translation adjustments 1,482 (4,325) Balance, end of period (74,711) 45,635 Retained earnings Balance, beginning of period 223,709 226,336 Net income 90,184 61,000 Dividends paid (5,938) (3,711) Balance, end of period 307,955 283,625 Total shareholders' equity $1,211,723 $1,008,924 MAX RE CAPITAL LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Expressed in thousands of United States Dollars) Six Months Ended June 30 2006 2005 (Restated) OPERATING ACTIVITIES Net income $90,184 $61,000 Adjustments to reconcile net income to net cash from operating activities: Amortization of unearned stock based compensation 6,872 5,236 Amortization of premium on fixed maturities 3,554 4,642 Net realized (gains) losses on sale of fixed maturities 6,960 (1,203) Alternative investments (91,566) (50,298) Accrued interest income 338 (1,396) Premiums receivable (22,385) (50,517) Losses and benefits recoverable from reinsurers (26,853) (4,269) Funds withheld 1,208 723 Deferred acquisition costs (4,355) (34,397) Prepaid reinsurance premiums (35,694) (10,115) Other assets (1,212) (1,294) Property and casualty losses 177,709 40,897 Life and annuity benefits 48,627 123,070 Funds withheld from reinsurers (29,073) (18,070) Unearned property and casualty premiums 87,641 110,429 Reinsurance balances payable 15,403 (2,892) Accounts payable and accrued expenses 20,110 (29,758) Cash from operating activities 247,468 141,788 INVESTING ACTIVITIES Purchase of fixed maturities (611,157) (774,613) Sales of fixed maturities 342,102 689,499 Redemptions of fixed maturities 89,912 19,420 Cash used in investing activities (179,143) (65,694) FINANCING ACTIVITIES Net proceeds from issuance of common shares 1,266 1,275 Repurchase of common shares -- (7,360) Dividends (5,938) (3,711) Additions to deposit liabilities 11,048 15,460 Payment of deposit liabilities (37,108) (56,266) Notes and loans repaid 165 10,050 Cash used in financing activities (30,567) (40,552) Effect of exchange rate on cash 1,482 (4,325) Net increase in cash and cash equivalents 39,240 31,217 Cash and cash equivalents, beginning of period 314,031 239,188 CASH AND CASH EQUIVALENTS, END OF PERIOD $353,271 $270,405 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid totaled $5,767 and $3,469 for the six months ended June 30, 2006 and 2005, respectively. MAX RE CAPITAL LTD. SCHEDULE OF SUPPLEMENTAL DATA - SIX MONTHS TO JUNE 30, 2006 (Unaudited) Year to Date Segment Information: Property & Casualty (in 000's US$) Reinsurance Insurance Total Gross premiums written $298,773 $197,547 $496,320 Reinsurance premiums ceded (27,523) (103,617) (131,140) Net premiums written $271,250 $93,930 $365,180 Earned premiums $232,671 $179,167 $411,838 Earned premiums ceded (15,307) (80,895) (96,202) Net premiums earned 217,364 98,272 315,636 Net investment income -- -- -- Net gains on alternative investments -- -- -- Net realized losses on sales of fixed maturities -- -- -- Other income -- -- -- Total revenues 217,364 98,272 315,636 Losses and benefits 152,006 74,832 226,838 Acquisition costs 39,403 443 39,846 Interest expense -- -- -- General and administrative expenses 10,972 6,873 17,845 Total losses and expenses 202,381 82,148 284,529 Net income (loss) $14,983 $16,124 $31,107 Loss Ratio (a) 69.9% 76.1% 71.9% Combined Ratio (b) 93.1% 83.6% 90.1% (a) The loss ratio is calculated by dividing losses and benefits by net premiums earned. (b) The combined ratio is calculated by dividing total losses and expenses by net premiums earned. Year to Date Segment Information: Life & Annuity Corporate Consolidated (in 000's US$) Reinsurance Gross premiums written $43,571 $-- $539,891 Reinsurance premiums ceded (261) -- (131,401) Net premiums written $43,310 $-- $408,490 Earned premiums $43,571 $-- $455,409 Earned premiums ceded (261) -- (96,463) Net premiums earned 43,310 -- 358,946 Net investment income -- 70,526 70,526 Net gains on alternative investments -- 49,223 49,223 Net realized losses on sales of fixed maturities -- (6,960) (6,960) Other income -- 664 664 Total revenues 43,310 113,453 472,399 Losses and benefits 62,868 -- 289,706 Acquisition costs 544 -- 40,390 Interest expense -- 14,007 14,007 General and administrative expenses 1,317 18,950 38,112 Total losses and expenses 64,729 32,957 382,215 Net income (loss) $(21,419) $80,496 $90,184 SCHEDULE OF SUPPLEMENTAL DATA - THREE MONTHS TO JUNE 30, 2006 (Unaudited) Quarter Segment Information: Property & Casualty (in 000's US$) Reinsurance Insurance Total Gross premiums written $113,790 $127,381 $241,171 Reinsurance premiums ceded (11,464) (62,069) (73,533) Net premiums written $102,326 $65,312 $167,638 Earned premiums $115,637 $90,850 $206,487 Earned premiums ceded (7,391) (42,597) (49,988) Net premiums earned 108,246 48,253 156,499 Net investment income -- -- -- Net losses on alternative investments -- -- -- Net realized losses on sales of fixed maturities -- -- -- Other income -- -- -- Total revenues 108,246 48,253 156,499 Losses and benefits 75,199 37,723 112,922 Acquisition costs 18,572 (10) 18,562 Interest expense -- -- -- General and administrative expenses 5,211 3,183 8,394 Total losses and expenses 98,982 40,896 139,878 Net income (loss) $9,264 $7,357 $16,621 Loss Ratio (a) 69.5% 78.2% 72.2% Combined Ratio (b) 91.4% 84.8% 89.4% Quarter Segment Information: Life & Annuity Corporate Consolidated (in 000's US$) Reinsurance Gross premiums written $42,796 $-- $283,967 Reinsurance premiums ceded (106) -- (73,639) Net premiums written $42,690 $-- $210,328 Earned premiums $42,796 $-- $249,283 Earned premiums ceded (106) -- (50,094) Net premiums earned 42,690 -- 199,189 Net investment income -- 36,497 36,497 Net losses on alternative investments -- (5,636) (5,636) Net realized losses on sales of fixed maturities -- (5,285) (5,285) Other income -- 165 165 Total revenues 42,690 25,741 224,930 Losses and benefits 51,824 -- 164,746 Acquisition costs 285 -- 18,847 Interest expense -- 7,662 7,662 General and administrative expenses 674 7,286 16,354 Total losses and expenses 52,783 14,948 207,609 Net income (loss) $(10,093) $10,793 $17,321 MAX RE CAPITAL LTD. SCHEDULE OF SUPPLEMENTAL DATA - JUNE 30, 2006 (Unaudited) Periodic Rate of Return Fair Investment Last Year Last Last Selected Investment Value* %'s 3 to Date 12 60 Months Months Months** Return Data: Cash and Fixed Maturities $3,123,474 70.3% 0.15% -0.47% -0.13% 4.77% Global Macro $117,479 2.6% -1.41% -0.04% 6.54% 9.01% Long / Short Equity 205,105 4.6% -3.47% -1.37% -1.44% 3.81% Convertible Arbitrage 1,636 0.0% 0.63% -0.29% 1.70% 4.21% Diversified Arbitrage 207,956 4.7% 0.85% 7.78% 19.14% 9.49% Distressed Securities 211,340 4.8% 2.03% 8.43% 14.98% 17.67% Opportunistic 27,607 0.6% 5.01% 15.89% 30.17% 14.86% Emerging Markets 134,982 3.0% -0.18% 5.69% 11.48% 16.51% Fixed Income Arbitrage 25,560 0.6% 0.92% 11.07% 11.41% 6.31% Event-Driven Arbitrage 170,910 3.8% -1.81% 3.90% 8.54% 10.62% Commodity Trading Advisers 68,777 1.5% -0.68% -0.69% 2.72% 4.64% Credit Long / Short 114,543 2.6% 1.12% 6.05% 12.41% 8.98% MDS 1,285,895 28.9% -0.54% 3.84% 8.77% 8.34% Reinsurance Private Equity 36,675 0.8% 5.29% 9.82% -41.93% -6.20% Alternative Investments $1,322,571 29.7% -0.39% 4.00% 5.93% 7.73% Total Investments $4,446,045 100.0% -0.01% 0.85% 1.68% 5.71% * Expressed in thousands of United States Dollars **Annualized Contact: Keith S. Hynes N. James Tees Executive Vice President & CFO Senior Vice President & Treasurer 441-296-8800 441-296-8800 http://www.newscom.com/cgi-bin/prnh/20010918/MXRELOGO-b http://photoarchive.ap.org/ DATASOURCE: Max Re Capital Ltd. CONTACT: Keith S. Hynes, Executive Vice President & CFO, , or N. James Tees, Senior Vice President & Treasurer, , both of Max Re, +1-441-296-8800

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MXRE Max RE Capital Ltd. (MM)