TWST: Would you start with a brief summary of Max Capital?
Mr. Becker: Max Capital celebrates its 10th anniversary this year. The company was founded in 1999 and it has accomplished a number of important milestones along the way, evolving into one of a handful of global enterprises operating in both the specialty insurance and reinsurance arenas. Max today has over 300 employees with major underwriting platforms in Bermuda, Dublin, six US cities, and in London at Lloyd's.
TWST: It's a tough time to be talking about financial services given the existing turmoil in the market. Where do you think we are at this point?
Mr. Becker: I think the property and casualty market is different from the rest of the financial sector. Most property and casualty companies have fairly conservative asset portfolios. At the same time, with the cost of capital having increased so much across the spectrum, the pricing of property and casualty products is actually improving for the carriers right now. So it's an unusually good place to be during a recession.
TWST: Do you foresee anything coming along in the realm of public policy that will affect you?
Mr. Becker: Clearly, the Obama Administration has been very vocal about its desire to put in place different rules for oversight of offshore jurisdictions — not just insurance, but all types of financial services and other products. My guess is most of that would be favorable for companies like Max, because it will clear up the regulatory structure in the US. I think it's highly probable that it will contain federal oversight of insurance. Currently, there are 50 different state oversight insurance bodies, which are very different, and for companies like us, the US is an expensive place to do business. If there were simplified federal rules, it would really level the playing field in the US arena. So my expectation is that there will be legislation, and I think it will have a number of elements. But, on balance, I think it will probably be positive for our industry and for the Bermuda market.
TWST: What's on the agenda for the company over the next 12 months? What are your priorities and what will make that time frame a success?
Mr. Becker: At Max, we have been very successful at building out our franchise without diluting shareholder value. In 2007, we started a business in the US called Max Specialty, which this year is expected to generate over $250 million of premiums, and, in November 2008, we announced the acquisition of a Lloyd's platform that we now call Max at Lloyd's. So, I think what you're going to see is a continued focus on organic growth, bringing on additional specialty teams into our combined enterprise and probably adding specialization in London and the US.
TWST: What are the key metrics that investors should focus on as they track your performance?
Mr. Becker: What they should focus on is a reasonable rate of organic growth, supported by a better than average combined ratio. We pride ourselves on being an effective underwriting organization. So Max's combined ratios for its different lines of business have been largely attractive and, in fact, generally better than our peer group average. What one would expect as we grow is that we continue to focus on the proper risk quantification and profiling that enables us to consistently deliver those results.