Exhibit 99.2
PXRE Group Ltd.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value per share)
| September 30, 2005 | December 31, 2004 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Investments: | |||||||
| Fixed maturities: | |||||||
| Available-for-sale (amortized cost $923,560 and $705,204, respectively) | $ | 910,967 | $ | 701,798 | |||
| Trading (cost $28,225 and $13,725, respectively) | 27,667 | 15,483 | |||||
| Short-term investments | 174,226 | 296,318 | |||||
| Hedge funds (cost $129,027 and $ 86,549, respectively) | 144,671 | 129,118 | |||||
| Other invested assets (cost $4,177 and $5,663, respectively) | 4,433 | 6,823 | |||||
| Total investments | 1,261,964 | 1,149,540 | |||||
| Cash | 18,010 | 15,668 | |||||
| Accrued investment income | 9,621 | 8,054 | |||||
| Premiums receivable, net | 188,170 | 93,116 | |||||
| Other receivables | 11,161 | 35,315 | |||||
| Reinsurance recoverable on paid losses | 6,281 | 8,003 | |||||
| Reinsurance recoverable on unpaid losses | 271,956 | 61,215 | |||||
| Ceded unearned premiums | 2,061 | 3,500 | |||||
| Deferred acquisition costs | 7,736 | 1,745 | |||||
| Income tax recoverable | 47,833 | 31,594 | |||||
| Other assets | 46,801 | 46,666 | |||||
| Total assets | $ | 1,871,594 | $ | 1,454,416 | |||
| LIABILITIES | |||||||
| Losses and loss expenses | $ | 985,441 | $ | 460,084 | |||
| Unearned premiums | 59,182 | 15,952 | |||||
| Subordinated debt | 167,080 | 167,075 | |||||
| Reinsurance balances payable | 121,486 | 10,937 | |||||
| Deposit liabilities | 70,330 | 72,143 | |||||
| Other liabilities | 28,116 | 31,670 | |||||
| Total liabilities | 1,431,635 | 757,861 | |||||
| SHAREHOLDERS' EQUITY | |||||||
| Serial convertible preferred shares, $1.00 par value, | |||||||
| $10,000 stated value – 10 million shares authorized, 0.01 million | |||||||
| and 0.02 million shares issued and outstanding, respectively | 58,132 | 163,871 | |||||
| Common shares, $1.00 par value – 50 million shares authorized, | |||||||
| 29.4 million and 20.5 million shares issued and outstanding, respectively | 29,395 | 20,469 | |||||
| Additional paid-in capital | 445,425 | 329,730 | |||||
| Accumulated other comprehensive loss net of deferred income | |||||||
| tax benefit of $1,932 and $1,616, respectively | (12,269 | ) | (4,855 | ) | |||
| (Accumulated deficit)/retained earnings | (71,041 | ) | 194,081 | ||||
| Restricted shares at cost (0.5 million and 0.4 million shares, respectively) | (9,683 | ) | (6,741 | ) | |||
| Total shareholders' equity | 439,959 | 696,555 | |||||
| Total liabilities and shareholders' equity | $ | 1,871,594 | $ | 1,454,416 | |||
PXRE Group Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS
(Dollars in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||
| (Unaudited) | ||||||||||||
| Revenues | ||||||||||||
| Net premiums earned | $ | 68,817 | $ | 89,799 | $ | 231,671 | $ | 228,316 | ||||
| Net investment income | 13,526 | 5,157 | 30,649 | 16,941 | ||||||||
| Net realized investment (losses) gains | (34 | ) | (40 | ) | (366 | ) | 11 | |||||
| Fee income | 353 | 695 | 770 | 1,556 | ||||||||
| 82,662 | 95,611 | 262,724 | 246,824 | |||||||||
| Losses and Expenses | ||||||||||||
| Losses and loss expenses incurred | 408,958 | 156,335 | 478,521 | 192,551 | ||||||||
| Commission and brokerage | 12,945 | 8,900 | 32,012 | 28,286 | ||||||||
| Operating expenses | 7,255 | 8,272 | 27,103 | 30,760 | ||||||||
| Foreign exchange gains | (237 | ) | (382 | ) | (1,053 | ) | (22 | ) | ||||
| Interest expense | 3,615 | 3,817 | 10,837 | 10,947 | ||||||||
| 432,536 | 176,942 | 547,420 | 262,522 | |||||||||
| Loss before income taxes, cumulative effect of accounting change and convertible preferred share dividends | (349,874 | ) | (81,331 | ) | (284,696 | ) | (15,698 | ) | ||||
| Income tax benefit | (32,531 | ) | (8,157 | ) | (33,603 | ) | (6,844 | ) | ||||
| Loss before cumulative effect of accounting change and convertible preferred share dividends | (317,343 | ) | (73,174 | ) | (251,093 | ) | (8,854 | ) | ||||
| Cumulative effect of accounting change, net of $0.2 million tax benefit | — | — | — | (1,053 | ) | |||||||
| Net loss before convertible preferred share dividends | $ | (317,343 | ) | $ | (73,174 | ) | $ | (251,093 | ) | $ | (9,907 | ) |
| Convertible preferred share dividends | 1,241 | 3,583 | 5,878 | 10,540 | ||||||||
| Net loss to common shareholders | $ | (318,584 | ) | $ | (76,757 | ) | $ | (256,971 | ) | $ | (20,447 | ) |
| Comprehensive Operations, Net of Tax | ||||||||||||
| Net loss before convertible preferred share dividends | $ | (317,343 | ) | $ | (73,174 | ) | $ | (251,093 | ) | $ | (9,907 | ) |
| Net change in unrealized (depreciation) appreciation on investments | (6,062 | ) | 6,597 | (7,626 | ) | (2,952 | ) | |||||
| Reclassification adjustments for (gains) losses included in net loss | (5 | ) | (41 | ) | 212 | 143 | ||||||
| Comprehensive loss | $ | (323,410 | ) | $ | (66,618 | ) | $ | (258,507 | ) | $ | (12,716 | ) |
| Per Share | ||||||||||||
| Basic: | ||||||||||||
| Loss before cumulative effect of accounting change and convertible preferred share dividends | $ | (11.13 | ) | $ | (5.22 | ) | $ | (9.79 | ) | $ | (0.64 | ) |
| Cumulative effect of accounting change | — | — | — | (0.08 | ) | |||||||
| Convertible preferred share dividends | (0.04 | ) | (0.26 | ) | (0.23 | ) | (0.77 | ) | ||||
| Net loss to common shareholders | $ | (11.17 | ) | $ | (5.48 | ) | $ | (10.02 | ) | $ | (1.49 | ) |
| Average shares outstanding (000's) | 28,529 | 13,995 | 25,649 | 13,753 | ||||||||
| Diluted: | ||||||||||||
| Net loss before cumulative effect of accounting change | $ | (11.17 | ) | $ | (5.48 | ) | $ | (10.02 | ) | $ | (1.41 | ) |
| Cumulative effect of accounting change | — | — | — | (0.08 | ) | |||||||
| Net loss | $ | (11.17 | ) | $ | (5.48 | ) | $ | (10.02 | ) | $ | (1.49 | ) |
| Average shares outstanding (000's) | 28,529 | 13,995 | 25,649 | 13,753 | ||||||||
PXRE Group Ltd.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||
| (Unaudited) | ||||||||||||
| Convertible Preferred Shares | ||||||||||||
| Balance at beginning of period | $ | 63,371 | $ | 179,147 | $ | 163,871 | $ | 172,190 | ||||
| Conversion of convertible preferred shares | (5,239 | ) | — | (109,108 | ) | — | ||||||
| Dividends to convertible preferred shareholders | — | 3,583 | 3,369 | 10,540 | ||||||||
| Balance at end of period | $ | 58,132 | $ | 182,730 | $ | 58,132 | $ | 182,730 | ||||
| Common Shares | ||||||||||||
| Balance at beginning of period | $ | 28,813 | $ | 14,384 | $ | 20,469 | $ | 13,277 | ||||
| Issuance of common shares, net | 582 | 42 | 8,926 | 1,149 | ||||||||
| Balance at end of period | $ | 29,395 | $ | 14,426 | $ | 29,395 | $ | 14,426 | ||||
| Additional Paid-in Capital | ||||||||||||
| Balance at beginning of period | $ | 437,198 | $ | 214,703 | $ | 329,730 | $ | 192,078 | ||||
| Issuance of common shares, net | 7,781 | 615 | 114,631 | 21,832 | ||||||||
| Tax effect of stock options exercised | 446 | 16 | 1,064 | 1,424 | ||||||||
| Balance at end of period | $ | 445,425 | $ | 215,334 | $ | 445,425 | $ | 215,334 | ||||
| Accumulated Other Comprehensive Income | ||||||||||||
| Balance at beginning of period | $ | (6,202 | ) | $ | (7,673 | ) | $ | (4,855 | ) | $ | 1,692 | |
| Change in unrealized (losses) gains | (6,067 | ) | 6,556 | (7,414 | ) | (2,809 | ) | |||||
| Balance at end of period | $ | (12,269 | ) | $ | (1,117 | ) | $ | (12,269 | ) | $ | (1,117 | ) |
| (Accumulated Deficit) / Retained Earnings | ||||||||||||
| Balance at beginning of period | $ | 251,014 | $ | 243,297 | $ | 194,081 | $ | 188,670 | ||||
| Net loss before convertible preferred share dividends | (317,343 | ) | (73,174 | ) | (251,093 | ) | (9,907 | ) | ||||
| Dividends to convertible preferred shareholders | (1,241 | ) | (3,583 | ) | (5,878 | ) | (10,540 | ) | ||||
| Dividends to common shareholders | (3,471 | ) | (867 | ) | (8,151 | ) | (2,550 | ) | ||||
| Balance at end of period | $ | (71,041 | ) | $ | 165,673 | $ | (71,041 | ) | $ | 165,673 | ||
| Restricted Shares | ||||||||||||
| Balance at beginning of period | $ | (10,727 | ) | $ | (8,654 | ) | $ | (6,741 | ) | $ | (3,391 | ) |
| Issuance of restricted shares | — | — | (6,069 | ) | (7,336 | ) | ||||||
| Amortization of restricted shares | 1,044 | 854 | 3,127 | 2,927 | ||||||||
| Balance at end of period | $ | (9,683 | ) | $ | (7,800 | ) | $ | (9,683 | ) | $ | (7,800 | ) |
| Total Shareholders' Equity | ||||||||||||
| Balance at beginning of period | $ | 763,467 | $ | 635,204 | $ | 696,555 | $ | 564,516 | ||||
| Conversion of convertible preferred shares | (5,239 | ) | — | (109,108 | ) | — | ||||||
| Issuance of common shares, net | 8,363 | 657 | 123,557 | 22,981 | ||||||||
| Restricted shares, net | 1,044 | 854 | (2,942 | ) | (4,409 | ) | ||||||
| Unrealized (depreciation) appreciation on investments, net of deferred income tax | (6,067 | ) | 6,556 | (7,414 | ) | (2,809 | ) | |||||
| Net loss before convertible preferred share dividends | (317,343 | ) | (73,174 | ) | (251,093 | ) | (9,907 | ) | ||||
| Dividends to preferred shareholders | (1,241 | ) | — | (2,509 | ) | — | ||||||
| Dividends to common shareholders | (3,471 | ) | (867 | ) | (8,151 | ) | (2,550 | ) | ||||
| Tax effect of stock options exercised | 446 | 16 | 1,064 | 1,424 | ||||||||
| Balance at end of period | $ | 439,959 | $ | 569,246 | $ | 439,959 | $ | 569,246 | ||||
PXRE Group Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||
| (Unaudited) | ||||||||||||
| Cash Flow from Operating Activities | ||||||||||||
| Premiums collected, net of reinsurance | $ | 110,376 | $ | 73,662 | $ | 291,835 | $ | 216,037 | ||||
| Loss and loss adjustment expenses paid, net of reinsurance | (57,683 | ) | (27,310 | ) | (162,183 | ) | (65,103 | ) | ||||
| Commission and brokerage received (paid), net of fee income | 353 | (25,686 | ) | (14,110 | ) | (51,388 | ) | |||||
| Operating expenses paid | (7,157 | ) | (8,951 | ) | (24,695 | ) | (30,644 | ) | ||||
| Net investment income received | 6,731 | 3,516 | 23,963 | 12,798 | ||||||||
| Interest paid | (5,799 | ) | (5,978 | ) | (12,964 | ) | (13,346 | ) | ||||
| Income taxes recovered (paid) | 3 | (132 | ) | 18,472 | (6,093 | ) | ||||||
| Trading portfolio purchased | (3,276 | ) | — | (17,685 | ) | — | ||||||
| Trading portfolio disposed | 3,369 | 6,965 | 3,369 | 6,965 | ||||||||
| Deposit (paid) received | (2,744 | ) | 2,373 | (1,813 | ) | (5,445 | ) | |||||
| Other | 3,840 | 18,640 | 2,856 | 17,346 | ||||||||
| Net cash provided by operating activities | 48,013 | 37,099 | 107,045 | 81,127 | ||||||||
| Cash Flow from Investing Activities | ||||||||||||
| Fixed maturities available for sale purchased | (77,912 | ) | (133,889 | ) | (372,936 | ) | (350,946 | ) | ||||
| Fixed maturities available for sale disposed or matured | 35,362 | 58,133 | 151,016 | 296,853 | ||||||||
| Hedge funds purchased | (5,000 | ) | (8,123 | ) | (119,888 | ) | (13,123 | ) | ||||
| Hedge funds disposed | 6,546 | 4,127 | 115,049 | 10,160 | ||||||||
| Other invested assets disposed | 852 | 1,425 | 2,244 | 4,083 | ||||||||
| Net change in short-term investments | (3,450 | ) | 44,199 | 122,092 | (77,122 | ) | ||||||
| Receivable for securities | 344 | (3,497 | ) | — | (8,770 | ) | ||||||
| Payable for securities | (1,527 | ) | 48 | — | 30 | |||||||
| Net cash used by investing activities | (44,785 | ) | (37,577 | ) | (102,423 | ) | (138,835 | ) | ||||
| Cash Flow from Financing Activities | ||||||||||||
| Proceeds from issuance of common shares | 3,125 | 690 | 8,947 | 16,432 | ||||||||
| Cash dividends paid to common shareholders | (3,471 | ) | (866 | ) | (8,151 | ) | (2,550 | ) | ||||
| Cash dividends paid to preferred shareholders | (1,241 | ) | — | (2,509 | ) | — | ||||||
| Cost of shares repurchased | — | (32 | ) | (567 | ) | (938 | ) | |||||
| Net cash (used) provided by financing activities | (1,587 | ) | (208 | ) | (2,280 | ) | 12,944 | |||||
| Net change in cash | 1,641 | (686 | ) | 2,342 | (44,764 | ) | ||||||
| Cash, beginning of period | 16,369 | 21,730 | 15,668 | 65,808 | ||||||||
| Cash, end of period | $ | 18,010 | $ | 21,044 | $ | 18,010 | $ | 21,044 | ||||
| Reconciliation of net loss to net cash provided by operating activities: | ||||||||||||
| Net loss before convertible preferred share dividends | $ | (317,343 | ) | $ | (73,174 | ) | $ | (251,093 | ) | $ | (9,907 | ) |
| Adjustments to reconcile net loss to net cash provided by | ||||||||||||
| operating activities: | ||||||||||||
| Losses and loss expenses | 566,685 | 89,032 | 525,357 | 66,866 | ||||||||
| Unearned premiums | 30,465 | 22,836 | 44,670 | 24,880 | ||||||||
| Deferred acquisition costs | (2,506 | ) | (2,170 | ) | (5,991 | ) | (1,867 | ) | ||||
| Receivables | (79,186 | ) | (19,373 | ) | (70,900 | ) | (17,057 | ) | ||||
| Reinsurance balances payable | 108,339 | (15,884 | ) | 110,549 | (26,573 | ) | ||||||
| Reinsurance recoverable | (215,411 | ) | 63,050 | (209,020 | ) | 83,638 | ||||||
| Income taxes | (32,528 | ) | (8,286 | ) | (14,858 | ) | (12,933 | ) | ||||
| Equity in earnings of limited partnerships | (6,030 | ) | (1,328 | ) | (10,568 | ) | (6,013 | ) | ||||
| Trading portfolio purchased | (3,276 | ) | — | (17,685 | ) | — | ||||||
| Trading portfolio disposed | 3,369 | 6,965 | 3,369 | 6,965 | ||||||||
| Deposit liability | (2,744 | ) | 2,373 | (1,813 | ) | (5,445 | ) | |||||
| Receivable on commutation | — | (23,054 | ) | — | (23,054 | ) | ||||||
| Other | (1,821 | ) | (3,888 | ) | 5,028 | 1,627 | ||||||
| Net cash provided by operating activities | $ | 48,013 | $ | 37,099 | $ | 107,045 | $ | 81,127 | ||||