Exhibit 99.1
Swan Building NEWS RELEASE
26 Victoria Street, Hamilton HM12
Bermuda
441 296 5858
441 296 6162 FAX
PXRE Group Ltd. [PXRE Logo]
Contact: John Modin
Senior Vice President and
Chief Financial Officer
(441) 296-5858
PXRE SECOND QUARTER EARNINGS INCREASE 13% TO $21.5 MILLION
FROM $19.0 MILLION IN THE SAME PERIOD LAST YEAR
----------------------------
COMPANY DECLARES REGULAR QUARTERLY DIVIDEND
HAMILTON, Bermuda (August 6, 2003) - PXRE Group Ltd. (NYSE: PXT) today announced
higher profits for the second quarter ended June 30, 2003. PXRE's net income for
the quarter increased 13% to $21.5 million from $19.0 million in the second
quarter of 2002. Net income per diluted share totaled $0.93 for the quarter
compared with $0.88 in the year-earlier period.
PXRE's annualized return on equity for the second quarter of 2003 was
18.8%.
On a fully diluted basis, PXRE's book value per share increased 3%
during the quarter to $21.32 per share at June 30, 2003, from $20.76 per share
at March 31, 2003.
Gerald L. Radke, the Chairman of PXRE Group, who retired as Chief
Executive Officer on June 30, 2003, commenting on the announcement, said, "I am
extremely pleased by the strong growth achieved by the Company during my last
quarter as CEO. As I hand over the reins to our new CEO, Jeff Radke, I am
confident that the Company is well positioned to continue to build on the
success we have experienced over the last six quarters."
As a result of the continued strong growth in PXRE's net premiums
earned, revenues rose 70% for the quarter compared with the year-earlier period.
Most notably, net premiums earned in PXRE's core Catastrophe and Risk Excess
segment increased 73% compared with the second quarter of 2002.
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PXT Reports Second Quarter Results
Page 2
August 6, 2003
The following table outlines revenues for the three and six months
ended June 30, 2003 and 2002, along with net premiums earned - the largest
component of the Company's revenue:
Revenues and Net Premiums Earned
- -----------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
($000's) June 30, June 30,
------------------------------ -----------------------------
2003 2002 Change % 2003 2002 Change %
-------------- --------------- ---------- --------------- ------------- ----------
Revenues $ 93,790 $ 55,308 70 $ 185,313 $ 120,293 54
============== =============== =============== =============
Net Premiums Earned:
Cat & Risk Excess $ 65,784 $ 38,038 73 $ 126,341 $ 75,305 68
Finite 13,364 (260) N/M 34,214 8,314 312
Other Lines 2,804 1,307 115 3,946 3,828 3
Exited 2,063 6,678 (69) 4,287 17,472 (75)
-------------- --------------- --------------- -------------
$ 84,015 $ 45,763 84 $ 168,788 $ 104,919 61
============== =============== =============== =============
Net premiums written increased 180% in the quarter versus the second
quarter of 2002. The change primarily reflected a $28.7 million increase in the
Catastrophe and Risk Excess segment. The following table outlines net premiums
written for the three and six months ended June 30, 2003 and 2002:
Net Premiums Written
- -----------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
($000's) June 30, June 30,
------------------------------ ------------------------------
2003 2002 Change % 2003 2002 Change %
-------------- --------------- ---------- --------------- -------------- ---------
Net Premiums Written:
Cat & Risk Excess $ 51,277 $ 22,561 127 $ 138,043 $ 86,729 59
Finite 3,044 (669) N/M 5,405 29,692 (82)
Other Lines 1,541 992 55 4,085 2,842 44
Exited 2,183 (2,161) N/M 3,856 5,121 (25)
-------------- --------------- --------------- --------------
$ 58,045 $ 20,723 180 $ 151,389 $ 124,384 22
============== =============== =============== ==============
Net investment income for the second quarter of 2003 increased 2% to
$8.6 million from $8.4 million in the corresponding period of 2002. The return
of PXRE's hedge fund portfolio increased to 4.7% in the second quarter of 2003
compared to 0.8% in the second quarter of 2002. Net realized investment gains
for the second quarter of 2003 were $0.1 million compared with gains of $0.5
million in the second quarter of 2002. Interest expense decreased to $2.7
million in the second quarter of 2003 from $3.0 million in the prior-year
quarter.
PXRE's GAAP loss ratio for the second quarter of 2003 was 53.3%
compared with 41.2% in the second quarter of 2002. PXRE increased prior-year
loss reserves by $18.1 million in the second quarter of 2003 primarily due to
development in the Company's aerospace and exited lines businesses. This expense
was partially mitigated by $2.1 million of related premiums. The expense ratio
increased to 27.8% in the second quarter of 2003 from 23.9% in the year-earlier
quarter due primarily to the commissions associated with the Finite net premiums
earned.
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PXT Reports Second Quarter Results
Page 3
August 6, 2003
The following table outlines the Company's GAAP ratios for the three
and six months ended June 30, 2003 and 2002:
GAAP Ratios
- ------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ ----------------------------------
2003 2002 2003 2002
----------------- ------------------ ---------------- -----------------
Loss Ratio, All Lines 53.3% 41.2% 46.0% 34.4%
Expense Ratio 27.8 23.9 30.4 29.5
----------------- ------------------ ---------------- -----------------
Combined Ratio 81.1% 65.1% 76.4% 63.9%
================= ================== ================ =================
Loss Ratio, Continuing Lines 46.9% 19.1% 38.1% 15.7%
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 September 2, 2003, to stockholders of record as of
August 18, 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 (August 7, 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
September 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.
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PXT Reports Second Quarter Results
Page 4
August 6, 2003
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) adverse development on loss
reserves related to business written in current and prior years; (vi) lower than
estimated retrocessional recoveries on unpaid losses, including the effects of
losses due to a decline in the creditworthiness of PXRE's retrocessionaires;
(vii) 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;
(viii) 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; (ix) market
fluctuations with respect to PXRE's portfolio of hedge funds and other privately
held securities: liquidity risk, credit risk and market risk; (x) foreign
currency fluctuations resulting in exchange gains or losses; (xi) a contention
by the United States Internal Revenue Service that PXRE or PXRE's offshore
subsidiaries are subject to U.S. taxation; and (xii) 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 Second Quarter Results
Page 5
August 6, 2003
PXRE Group Ltd.
Unaudited Financial Highlights
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ --------------
Gross premiums written $ 66,378 $ 41,791 $ 178,848 $ 167,147
============ ============ ============ ============
Net premiums written $ 58,045 $ 20,723 $ 151,389 $ 124,384
============ ============ ============ ============
Revenues $ 93,790 $ 55,308 $ 185,313 $ 120,293
Losses and expenses (71,941) (33,315) (138,348) (74,821)
------------ ------------ ------------ ------------
Income before income taxes 21,849 21,993 46,965 45,472
Income tax provision (371) (2,949) (1,880) (8,196)
------------ ------------ ------------ ------------
Net income before preferred stock dividends $ 21,478 $ 19,044 $ 45,085 $ 37,276
============ ============ ============ ============
Net income per diluted common share $ 0.93 $ 0.88 $ 1.96 $ 2.21
============ ============ ============ ============
Average shares outstanding (000's) 23,183 21,655 22,959 16,863
GAAP Ratios:
Loss ratio 53.3% 41.2% 46.0% 34.4%
Expense ratio 27.8% 23.9% 30.4% 29.5%
------------ ------------ ------------ ------------
Combined ratio 81.1% 65.1% 76.4% 63.9%
============ ============ ============ ============
Losses Incurred by Segment:
Cat & Risk Excess $ 28,173 $ 9,397 $ 38,291 $ 14,244
Excess of Loss Cessions (59) (1,422) (144) (3,356)
------------ ------------ ------------ ------------
28,114 7,975 38,147 10,888
Finite 9,392 (163) 24,300 2,439
Other Lines 1,686 (1,149) 2,390 7
Exited 6,378 11,412 14,992 22,328
------------ ------------ ------------ ------------
$ 45,570 $ 18,075 $ 79,829 $ 35,662
============ ============ ============ ============
Commission and Brokerage, Net of Fee Income by Segment:
Cat & Risk Excess $ 6,353 $ 4,263 $ 12,761 $ 8,265
Excess of Loss Cessions (140) (2,035) 3,542 (3,143)
------------ ------------ ------------ ------------
6,213 2,228 16,303 5,122
Finite 5,778 601 14,645 3,708
Other Lines 928 447 953 1,318
Exited 590 1,392 339 5,676
------------ ------------ ------------ ------------
$ 13,509 $ 4,668 $ 32,240 $ 15,824
============ ============ ============ ============
Underwriting Income (Loss) by Segment:
Cat & Risk Excess $ 37,520 $ 30,571 $ 87,932 $ 63,700
Excess of Loss Cessions (6,063) (2,736) (16,041) (4,405)
------------ ------------ ------------ ------------
31,457 27,835 71,891 59,295
Finite (1,806) (698) (4,731) 2,167
Other Lines 190 2,009 603 2,503
Exited (4,905) (6,126) (11,044) (10,532)
------------ ------------ ------------ ------------
$ 24,936 $ 23,020 $ 56,719 $ 53,433
============ ============ ============ ============
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PXT Reports Second Quarter Results
Page 6
August 6, 2003
June 30, Dec. 31,
Financial Position: 2003 2002
---------- ----------
Cash and investments $ 959,276 $ 805,331
Total assets 1,320,417 1,237,142
Reserve for losses and loss expenses 442,997 447,829
Stockholders' equity 500,531 453,464
Book value per common share (1) 21.32 20.33
Return on equity 18.8%(2) 16.5%
Statutory surplus:
PXRE Reinsurance Company $ 423,380(3) $ 457,217
PXRE Reinsurance Ltd. 311,617(4) 70,609
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------------------
2003 2002 2003 2002
--------- -------- -------- ----------
Underwriting Income (Loss) Reconciled to Income Before Income
Taxes:
Net underwriting income $ 24,936 $ 23,020 $ 56,719 $ 53,433
Net investment income 8,557 8,445 14,032 12,532
Net realized investment gains 110 514 109 1,003
Interest expense (245) (754) (2,504) (1,499)
Minority interest in consolidated subsidiary (2,428) (2,199) (4,533) (4,423)
Other operating expenses (9,851) (6,223) (19,013) (15,094)
Unrealized foreign exchange gains (losses) on losses
incurred 771 (787) 2,176 (422)
Other (1) (23) (21) (58)
-------- -------- -------- --------
Income before income taxes $ 21,849 $ 21,993 $ 46,965 $ 45,472
======== ======== ======== ========
(1) After considering convertible preferred shares.
(2) Annualized.
(3) Estimated.
(4) Estimated and before inter-company eliminations.
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 June 30, 2003.
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