Max Re has announced that its Audit and Risk Management Committee has concluded its previously announced internal investigation.
The internal investigation was initiated to consider whether three finite risk retrocessional contracts were properly accounted for by the company.
The review supported the company's original determination that the three contracts in question contained sufficient risk transfer to meet the requirements of Financial Accounting Standard No 113 to be accounted for as reinsurance.
However, the review caused the company to re-evaluate other accounting aspects relating to these three contracts.
This re-evaluation led Max Re to conclude that a restatement of the company's audited financial statements for the years 2001-2005 is warranted.
The effect of the restatement for the last five fiscal years is to decrease 2005 net income by $0.4m, to increase 2004 net income by $1.6m, to decrease 2003 net income by $2.0m, to leave 2002 net income unchanged and to decrease 2001 net income by $14.0m.
Max Re plans to file a Form 10-K/A for 2005 restating its results and its Form 10-Q for the period ended 31 March 2006 with the SEC within fifteen business days.
