EXHIBIT 99.1
Swan Building NEWS RELEASE
26 Victoria Street, Hamilton HM12
Bermuda
441 296 5858
441 296 6162 FAX
PXRE Group Ltd. [LOGO OMITTED]
Contact: John Modin
Senior Vice President and
Chief Financial Officer
(441) 296-5858
PXRE FIRST QUARTER EARNINGS INCREASE 30% TO $23.6 MILLION
FROM $18.2 MILLION IN THE SAME PERIOD LAST YEAR
---------------------------
COMPANY DECLARES REGULAR QUARTERLY DIVIDEND
HAMILTON, Bermuda (May 7, 2003) - PXRE Group Ltd. (NYSE: PXT) today announced
significantly higher profits for the first quarter ended March 31, 2003.
PXRE's net income for the quarter increased 30% to $23.6 million from $18.2
million in the first quarter of 2002. Net income per diluted share totaled
$1.04 for the quarter compared with $1.51 in the year-earlier period. On a pro
forma basis, assuming that the $150 million convertible preferred shares
issued in April 2002 had been issued January 1, 2002, net income per diluted
share was $0.90 in the year-earlier period.
PXRE's annualized return on equity for the first quarter of 2003 was
21.9%.
On a fully diluted basis, PXRE's book value per share increased 2% during
the quarter to $20.76 per share at March 31, 2003, from $20.33 per share at
December 31, 2002.
Commenting on the announcement, Jeffrey L. Radke, President and Chief
Operating Officer, said, "We are very pleased to announce the highest
quarterly profit in PXRE's history. The strong performance this quarter of
Catastrophe and Risk Excess business once again demonstrates that PXRE holds a
strong competitive position in its core specialty business and that we are
well positioned to continue to take advantage of the existing favorable
reinsurance market conditions."
As a result of the continued strong growth in PXRE's net premiums earned,
revenues rose 41% for the quarter compared with the year-earlier period. Most
notably, net premiums earned in PXRE's core Catastrophe and Risk Excess
segment increased 62% while the Finite segment increased 143% for the quarter
compared with the first quarter of 2002.
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PXT Reports First Quarter Results
Page 2
May 7, 2003
The following table outlines revenues for the quarters ended March 31, 2003
and 2002, along with net premiums earned - the largest component of the
Company's revenue:
Revenues and Net Premiums Earned
-----------------------------------------------------------------------------
Three Months Ended
($000's) March 31,
--------------------------
2003 2002 Change %
---------------------------------------
Revenues $ 91,522 $ 64,985 41
==========================
Net Premiums Earned
Cat & Risk Excess $ 60,557 $ 37,267 62
Finite 20,850 8,573 143
Other Lines 1,142 2,520 (55)
Exited 2,223 10,796 (79)
--------------------------
$ 84,772 $ 59,156 43
==========================
Net premiums written declined 10% in the quarter versus the first quarter
of 2002. The change primarily reflected a $28.0 million decline in the Finite
segment offset, in part, by growth of $22.6 million in the Catastrophe and
Risk Excess segment. The following table outlines net premiums written for the
quarters ended March 31, 2003 and 2002:
Net Premiums Written
-----------------------------------------------------------------------------
Three Months Ended
($000's) March 31,
--------------------------
2003 2002 Change %
---------------------------------------
Net Premiums Written
Cat & Risk Excess $ 86,767 $ 64,167 35
Finite 2,362 30,362 (92)
Other Lines 2,544 1,850 38
Exited 1,671 7,282 (77)
--------------------------
$ 93,344 $ 103,661 (10)
============ =============
Net investment income for the first quarter of 2003 increased 34% to $5.5
million from $4.1 million in the corresponding period of 2002, primarily as a
result of an increase in invested assets attributable to the proceeds of the
issuance of preferred stock in April 2002, offset by a decline in interest
yields. Investment income related to PXRE's hedge fund portfolio declined
slightly during the quarter, producing an annualized return of 8.2% compared
to 9.9% in the first quarter of 2002. Net realized investment losses for the
first quarter of 2003 were negligible compared with net realized investment
gains of $0.5 million in the first quarter of 2002. Interest expense increased
to $2.3 million in the first quarter of 2003 from $0.7 million in the
prior-year quarter, primarily due to the recognition through earnings of an
interest rate swap accounted for in prior periods as a hedge against the
interest on the variable rate bank debt. This charge did not impact
stockholders' equity since it was previously recorded as a component of other
comprehensive income.
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PXT Reports First Quarter Results
Page 3
May 7, 2003
PXRE's GAAP loss ratio for the first quarter of 2003 was 38.8% compared
with 29.1% in the first quarter of 2002. There was no significant catastrophe
activity during the first quarter of 2003. PXRE increased loss reserves by
$13.2 million in the first quarter of 2003, primarily in its exited
businesses. This charge was partially offset by $1.4 million of associated
reinstatement premium also from exited businesses. The expense ratio declined
to 32.9% in the first quarter of 2003 from 33.9% in the year-earlier quarter
due to the increase in net premiums earned.
The following table outlines the Company's GAAP ratios for the quarters
ended March 31, 2003 and 2002:
GAAP Ratios
---------------------------------------------------------------------------------
Three Months Ended
March 31,
---------------------------------
2003 2002
---------------------------------
Loss Ratio, All Lines 38.8% 29.1%
Expense Ratio 32.9 33.9
---------------------------------
Combined Ratio 71.7% 63.0%
=================================
Loss Ratio, Continuing Lines 29.4% 13.0%
As the Company previously announced, additional experienced underwriters
were hired in its Bermuda office. Primarily as a result of the volume of
business written by its Bermuda subsidiary at the January 1, 2003 renewal
season, PXRE's effective tax rate was 6% in the first quarter of 2003,
compared with 22.3% in the first quarter of 2002.
Separately, the Company announced that its Board of Directors has
declared a regular quarterly cash dividend of $0.06 per common share. The
dividend will be paid on June 6, 2003, to stockholders of record as of May 23,
2003.
PXRE - with operations in Bermuda, Barbados, the United States and Europe
- - provides reinsurance products and services to a worldwide marketplace. The
Company's primary focus is providing property catastrophe and retrocessional
coverage, where it has been among the leading franchises for two decades. The
Company also provides marine and aerospace and finite reinsurance products and
services. The Company's shares trade on the New York Stock Exchange under the
symbol "PXT".
A public, listen-only simulcast and replay of PXRE's first quarter
conference call will begin at 10:00 a.m. Eastern Time tomorrow (May 8, 2003)
and may be accessed with appropriate software at the Company's web site or at
www.companyboardroom.com. A replay of this call will be available using these
same links beginning at approximately noon tomorrow and continuing through
June 8, 2003.
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PXT Reports First Quarter Results
Page 4
May 7, 2003
Quarterly financial statements are available on the Company's website
under the press release section of News and Events. To request other printed
investor material from PXRE or additional copies of this news release, please
call (441) 296-5858, send e-mail to Investor_Relations@pxregroup.com, or visit
www.pxregroup.com.
Statements in this release that are not strictly historical are
forward-looking and are based upon current expectations and assumptions of
management. Statements included herein, as well as statements made by or on
behalf of PXRE in its communications and discussions with investors and
analysts in the normal course of business through meetings, phone calls and
conference calls, which are not historical in nature are intended to be, and
are hereby identified as, "forward-looking statements" for purposes of the
safe harbor provided by Section 21E of the Securities Exchange Act of 1934 as
amended. These forward-looking statements, identified by words such as
"intend," "believe," "anticipate," "expect," "outlook," or variations of such
words or similar expressions, are based upon current expectations and are
subject to risks and uncertainties. PXRE cautions investors and analysts that
actual results or events could differ materially from those set forth or
implied by the forward-looking statements and related assumptions, depending
on the outcome of certain important factors including, but not limited to, the
following: (i) significant catastrophe losses or losses under other coverages,
the timing and extent of which are difficult to predict; (ii) changes in the
level of competition in the reinsurance or primary insurance markets that
impact the volume or profitability of business (these changes include, but are
not limited to, the intensification of price competition, the entry of new
competitors, existing competitors exiting the market and competitors'
development of new products); (iii) the lowering or loss of one of the
financial or claims paying ratings of PXRE's or one or more of PXRE's
subsidiaries; (iv) changes in the demand for reinsurance, including changes in
the amount of risk that PXRE's clients elect to maintain for their own
account; (v) risks associated with the termination and run-off of PXRE's
diversification initiatives; (vi) adverse development on loss reserves related
to business written in current and prior years; (vii) lower than estimated
retrocessional recoveries on unpaid losses, including the effects of losses
due to a decline in the creditworthiness of PXRE's retrocessionaires; (viii)
increases in interest rates, which cause a reduction in the market value of
PXRE's interest rate sensitive investments, including its fixed income
investment portfolio and potential underperformance in PXRE's finite
coverages; (ix) decreases in interest rates causing a reduction of income
earned on net cash flow from operations and the reinvestment of the proceeds
from sales, calls or maturities of existing investments and shortfalls in cash
flows necessary to pay fixed rate amounts due to finite contract
counterparties; (x) market fluctuations in equity securities and with respect
to PXRE's portfolio of hedge funds and other privately held securities:
leverage, concentration of investments, lack of liquidity, market fluctuations
and direction (including as a result of interest rate fluctuations and
direction, with respect to price levels and volatility thereof) currency
fluctuations, credit risk, yield curve risk, spread risk between two or more
similar securities, political risk, counterparty risk and risks relating to
settlements on foreign exchanges; (xi) foreign currency fluctuations resulting
in exchange gains or losses; (xii) a contention by the United States Internal
Revenue Service that PXRE or PXRE's offshore subsidiaries are subject to U.S.
taxation; and (xiii) changes in tax laws, tax treaties, tax rules and
interpretations. In addition to the factors outlined above that are directly
related to PXRE's business, PXRE is also subject to general business risks,
including, but not limited to, adverse state, federal or foreign legislation
and regulation, adverse publicity or news coverage, changes in general
economic factors, the loss of key employees and other factors set forth in
PXRE's SEC filings. The factors listed above should not be construed as
exhaustive. Therefore, actual results or outcomes may differ materially from
what is expressed or forecasted in such forward-looking statements.
PXRE undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events (including catastrophe
events), or otherwise.
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PXT Reports First Quarter Results
Page 5
May 7, 2003
PXRE Group Ltd.
Unaudited Financial Highlights
(Dollars in thousands except per share amounts)
Three Months Ended
March 31,
-------------------------------
2003 2002
--------------- ---------------
Gross premiums written $ 112,470 $ 125,357
=============== ===============
Net premiums written $ 93,344 $ 103,661
=============== ===============
Revenues $ 91,522 $ 64,985
Losses and expenses (66,408) (41,505)
--------------- ---------------
Income before income taxes 25,114 23,480
Income tax provision (1,507) (5,247)
--------------- ---------------
Net income before preferred stock dividends $ 23,607 $ 18,233
=============== ===============
Net income per diluted common share $ 1.04 $ 1.51
=============== ===============
Average shares outstanding (000's) 22,664 12,037
GAAP Ratios:
Loss ratio 38.8% 29.1%
Expense ratio 32.9% 33.9%
--------------- ---------------
Combined ratio 71.7% 63.0%
=============== ===============
Net premiums written to surplus(1) 0.69:1 1.10:1
Losses Incurred by Segment:
Cat & Risk Excess $ 10,119 $ 4,847
Excess of Loss Cessions (87) (1,935)
--------------- ---------------
10,032 2,912
Finite 14,908 2,602
Other Lines 704 1,157
Exited 8,613 10,917
--------------- ---------------
$ 34,257 $ 17,588
=============== ===============
Commission and Brokerage, Net of Fee Income by Segment:
Cat & Risk Excess $ 6,409 $ 4,001
Excess of Loss Cessions 3,681 (1,109)
--------------- ---------------
10,090 2,892
Finite 8,867 3,107
Other Lines 25 871
Exited (251) 4,286
--------------- ---------------
$ 18,731 $ 11,156
=============== ===============
Underwriting Income (Loss) by Segment:
Cat & Risk Excess $ 50,413 $ 33,131
Excess of Loss Cessions (9,978) (1,668)
--------------- ---------------
40,435 31,463
Finite (2,925) 2,863
Other Lines 413 493
Exited (6,139) (4,407)
--------------- ---------------
$ 31,784 $ 30,412
=============== ===============
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PXT Reports First Quarter Results
Page 6
May 7, 2003
-------------------------------
March 31, Dec. 31,
2003 2002
Financial Position: -------------------------------
Cash and investments $ 868,624 $ 805,331
Total assets 1,265,589 1,237,142
Reserve for losses and loss expenses 437,612 447,829
Stockholders' equity 477,878 453,464
Book value per common share (2) 20.76 20.33
Return on equity 21.9%(3) 16.5%
Statutory surplus:
PXRE Reinsurance Company 448,994(4) 457,217
PXRE Reinsurance Ltd. 93,109(4) 70,600
Three Months Ended
March 31,
-------------------------------
2003 2002
--------------- ---------------
Underwriting Income (Loss) Reconciled to Income Before Income Taxes:
Net underwriting income $ 31,784 $ 30,412
Net investment income 5,475 4,087
Net realized investment (losses) gains (1) 489
Interest expense (2,259) (745)
Minority interest in consolidated subsidiary (2,106) (2,224)
Other operating expenses (9,162) (8,870)
Unrealized foreign exchange gains on losses incurred 1,403 365
Other loss (20) (34)
--------------- ---------------
Income before income taxes $ 25,114 $ 23,480
=============== ===============
Pro-forma Information: (5)
Net income as reported $ 18,233
Interest income on new capital, net of tax 1,413
---------------
Pro-forma net income $ 19,646
===============
Average shares outstanding as reported 12,037
Equivalent shares of convertible preferred shares 9,751
---------------
Pro-forma average shares outstanding 21,788
---------------
Pro-forma net income per diluted common share $ 0.90
===============
(1) Annualized net premiums written for the period divided by estimated ending capital and surplus.
(2) After considering convertible preferred shares.
(3) Annualized.
(4) Estimated.
(5) On April 4, 2002, PXRE completed a preferred share offering for $150 million. Pro forma amounts assume that the
preferred shares were issued January 1, 2002, accruing an annualized dividend of 8% from January 1, 2002, payable
in convertible preferred shares, and that the Company earned a 4% annualized yield on the new capital. The Company
believes that the pro forma information provides useful comparative information for the quarters ended March 31,
2003, and March 31, 2002
These preliminary financial statements are unaudited and do not include footnotes that customarily accompany a
complete set of financial statements; these footnotes will be furnished when the Company makes its filing on Form
10-Q for the quarter ended March 31, 2003.
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