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HAMILTON, Bermuda--Max Re Capital Ltd.'s chairman and chief executive officer, Robert J. Cooney, has stepped down in the wake of a reopened investigation into the reinsurer's accounting for certain finite risk contracts, Max Re announced late Sunday.
Mr. Cooney--who founded Hamilton, Bermuda-based Max Re in 1999 after departing as president and chief operating officer of XL Insurance Ltd.--resigned effective immediately, though he will be available as a consultant to the company until Dec. 31, Max Re said in a statement.
Mr. Cooney additionally resigned from the boards of the company and each of its subsidiaries.
Max Re's board named W. Marston Becker, a director at Max Re since 2004, as chairman and acting chief executive officer. Mr. Becker currently serves as an insurance consultant and heads the runoff for Bermuda-based LaSalle Re Holdings Ltd., and he previously has served as chairman and CEO of Trenwick Group Ltd. and as a director of Royal & SunAlliance USA.
Max Re also announced that its executive vp and chief risk officer, Peter A. Minton, has assumed the additional role of chief operating officer. Meanwhile, Angelo Guagliano--executive vp of Max Re's operating subsidiary, Max Re Ltd., and president of Max Re Ltd.'s insurance division--has assumed the role of chief underwriting officer for all of the company's insurance and reinsurance operations.
"After founding and leading Max Re for seven years, I have submitted my resignation because I believe it is in the best interests of the company to do so," Mr. Cooney said in the statement. "I am confident that Max Re will continue to succeed and grow under the new management team put in place," he noted.
Mr. Cooney's departure coincides with Max Re's reopening of an internal investigation earlier this year into finite risk retrocessional contracts written by the reinsurer in 2001 and 2003.
That investigation, conducted by the reinsurer's audit and risk management committee, was concluded in May 2006 and found that the three contracts in question did not violate federal accounting rules and contained enough risk transfer to meet Financial Accounting Standards Board criteria to be accounted for as reinsurance. However, Max Re still decided to restate its results for several years (BI, June 5).
Max Re said the finite risk probe was relaunched after new information provided to the company's audit committee suggested the possibility of an oral side agreement that existed and applied to two of the three contracts.
"The available evidence does not allow for a definitive conclusion as to the existence of such an oral agreement," but "because some of the evidence suggests such an agreement, the company believes there is an insufficient basis to conclude that there was risk transfer with respect to these two contracts."
Accordingly, the company is again restating its earnings for the years 2001 through 2005, as well as for the first half of 2006.
The company delayed its third-quarter earnings conference call--scheduled for Oct. 30--but noted in its statement that the restatement's effect on prior earnings would not exceed about $10 million and that it is in the process of making an amended filing with the Securities and Exchange Commission.
Calls to Max Re were not immediately returned.