EXHIBIT 99.1
Contact: Investors:
PXRE Group Ltd. The Ruth Group
John Modin Jeffrey Goldberger
Chief Financial Officer 646 536-7033
441 296-5858 jgoldberger@theruthgroup.com
john_modin@pxre.com
[LOGO] NEWS RELEASE
[LOGO] [LOGO]
PXRE REPORTS THIRD QUARTER
NET INCOME INCREASED 116%
---------------------------
COMPANY DECLARES REGULAR QUARTERLY DIVIDEND
HAMILTON, Bermuda -- (PR Newswire) -- November 5, 2003 -- PXRE Group
Ltd. (NYSE: PXT) today announced results for the third quarter ended September
30, 2003. Highlights in the quarter included:
o Net income increased 116% to $23.7 million from $11.0 million
o Net income per diluted share was $1.01 compared to $0.50
o Underwriting income was up 115%
o Net premiums written in the catastrophe and risk excess
segment were up 43%
o Annualized return on equity was 20%
o On a fully diluted basis, book value per share was $21.72 at
September 30, 2003
Jeffrey L. Radke, the President & Chief Executive Officer of PXRE
Group, commented, "I am very pleased to report that PXRE recorded the highest
quarterly profit in the Company's history. These record results were achieved
despite the large number of natural catastrophes that occurred during the
quarter, which I believe is a testament to our underwriting approach and
discipline. Our core property catastrophe business continues to benefit from a
strong underwriting environment and we fully expect this market to remain
healthy into 2004."
Mr. Radke continued, "This was my first full quarter as President and
CEO and one of my priorities has been to resolve the recent adverse loss
development issues in our exited lines segment that have detracted from the
strong results in our core catastrophe and risk excess segment. Accordingly, we
initiated a reserve review in the third quarter of 2003. This review included an
independent third-party analysis by a nationally recognized actuarial firm of
the exited general liability line of business, the line which drove the adverse
loss development in the last year. As a consequence of our review, the third
quarter results include a $6.1 million after-tax net reserve strengthening. With
this increase, our reserves for the general liability line exceed the best
estimate of the independent actuarial firm."
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Revenue for the third quarter of 2003 was $76.7 million compared to
$86.5 million in the same period a year ago. Net premiums earned for the quarter
were $69.1 million compared to $75.7 million in the year-earlier period, as
strong continued growth in our core catastrophe and risk excess segment
partially offset a planned reduction in our finite and exited lines segments.
Specifically, during the third quarter of 2003 net premiums earned in our
catastrophe and risk excess segment grew 30% to $62.0 million compared to $48.0
million in the comparable period of 2002.
Revenues and Net Premiums Earned
- ---------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
($000's) September 30, September 30,
-------------------------------- ---------- --------------------
2003 2002 Change % 2003 2002 Change %
--------- --------- -------- --------- --------- -------
Revenues $ 76,726 $ 86,462 (11) $ 262,040 $ 206,755 27
========= ========= ========= =========
Net Premiums Earned:
Cat & Risk Excess $ 61,994 $ 47,864 30 $ 188,335 $ 123,170 53
Finite 5,192 18,024 (71) 39,406 26,338 50
Other Lines 2,408 2,035 18 6,354 5,862 8
Exited (512) 7,818 (107) 3,775 25,291 (85)
----------- --------- --------- ---------
$ 69,082 $ 75,741 (9) $ 237,870 $ 180,661 32
=========== ========= ========= =========
Net premiums written increased 5% to $70.0 million in the third quarter
versus the same period in 2002. The increase reflects a $21.1 million or 43%
increase in the Company's core catastrophe and risk excess segment.
Net Premiums Written
- ----------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
($000's) September 30, September 30,
-------------------------------- ----------------------------------
2003 2002 Change % 2003 2002 Change %
---------- -------- -------- ---------- -------- ---------
Net Premiums Written:
Cat & Risk Excess $ 70,507 $ 49,430 43 $ 208,550 $136,160 53
Finite (2,091) 12,754 (116) 3,315 42,446 (92)
Other Lines 2,357 3,218 (27) 6,442 6,059 6
Exited (731) 1,407 (152) 3,124 6,528 (52)
---------- -------- ---------- --------
$ 70,042 $ 66,809 5 $ 221,431 $191,193 16
========== ======== ========== ========
Net investment income for the third quarter of 2003 increased 20% to
$6.0 million from $5.0 million in the corresponding period of 2002. The return
of PXRE's hedge fund portfolio increased to 2.1% in the third quarter of 2003
from 0.5% in the third quarter of 2002. Net realized investment gains for the
third quarter of 2003 were $0.5 million compared with gains of $4.8 million in
the third quarter of 2002. Interest expense was $2.8 million in both the third
quarter of 2003 and 2002.
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PXRE's GAAP loss ratio for the third quarter of 2003 was 51.2% compared
with 63.7% in the third quarter of 2002. The loss ratio in the Company's core
catastrophe and risk excess segment was only 19.3%, as the Company did not
suffer any significant losses as a result of the various third quarter
catastrophe events. The favorable loss experience in the Company's core segment
was offset, however, by prior-year loss development, net of related premium
offsets and tax, of $6.1 million in the third quarter of 2003 primarily due to
development in the Company's exited lines businesses. The expense ratio
decreased to 18.3% in the third quarter of 2003 from 25.4% in the year-earlier
quarter due primarily to a finite contract in which an increase in assumed
losses was offset by a reduction in ceding commissions.
GAAP Ratios
- ---------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2003 2002 2003 2002
-------- ------ --------- -------
Loss Ratio, All Lines 51.2% 63.7% 47.5% 46.7%
Expense Ratio 18.3 25.4 26.9 27.8
-------- ------ --------- -------
Combined Ratio 69.5% 89.1% 74.4% 74.5%
======== ====== ========= ========
Loss Ratio, Cat & Risk Excess 19.3% 52.0% 26.7% 29.0%
During the third quarter of 2003, PXRE recorded an after-tax unrealized
loss of $4.0 million in other comprehensive income ($0.17 decrease in book
value) largely due to an increase in interest rates during the quarter.
On a fully diluted basis, book value per share increased 2% to $21.72
per share at September 30, 2003, from $21.32 per share at June 30, 2003.
Also during the quarter, a lower court judgment in favor of PXRE Group
was affirmed by the United States Court of Appeals for the Third Circuit. The
defendant, Terra Nova Insurance Company Limited, has since paid the $9.8 million
judgment to the Company. PXRE had previously recorded this amount as a
receivable and as a result, there was no income statement impact for the third
quarter.
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 November 28, 2003, to stockholders of record as of
November 14, 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. 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."
PXRE Group Ltd. is scheduled to hold a conference call with respect to
its third quarter financial results on Thursday, November 6, 2003 at 10:00 a.m.
Eastern Time.
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A live webcast of the conference call will be available online at
www.pxregroup.com. The dial-in numbers are (888) 335-6540 for domestic callers
and (973) 935-8508 for international callers. The reservation number for both is
4230449.
Quarterly financial statements are expected to be available on the
Company's website under the press release section of News and Events after
market close on November 5, 2003. 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) 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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PXRE Group Ltd.
Unaudited Financial Highlights
(Dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Gross premiums written $ 95,275 $ 120,734 $ 274,123 $ 287,881
========= ========= ========= =========
Net premiums written $ 70,042 $ 66,809 $ 221,431 $ 191,193
========= ========= ========= =========
Revenues $ 76,726 $ 86,462 $ 262,040 $ 206,755
Losses and expenses (51,995) (71,274) (190,344) (146,095)
--------- --------- --------- ---------
Income before income taxes 24,731 15,188 71,696 60,660
Income tax provision (1,007) (4,179) (2,887) (12,375)
--------- --------- --------- ---------
Net income before preferred share dividends $ 23,724 $ 11,009 $ 68,809 $ 48,285
========= ========= ========= =========
Net income per diluted common share $ 1.01 $ 0.50 $ 2.97 $ 2.59
========= ========= ========= =========
Average shares outstanding (000's) 23,583 22,137 23,201 18,630
GAAP Ratios:
Loss ratio 51.2% 63.7% 47.5% 46.7%
Expense ratio 18.3% 25.4% 26.9% 27.8%
--------- --------- --------- ---------
Combined ratio 69.5% 89.1% 74.4% 74.5%
========= ========= ========= =========
Losses Incurred by Segment:
Catastrophe & Risk Excess $ 12,555 $ 24,674 $ 50,847 $ 38,917
Excess of Loss Cessions (592) 211 (737) (3,145)
--------- --------- --------- ---------
11,963 24,885 50,110 35,772
Finite 10,564 10,288 34,863 12,727
Other Lines 202 1,623 2,592 1,630
Exited 13,534 12,087 28,525 34,415
--------- --------- --------- ---------
$ 36,263 $ 48,883 $ 116,090 $ 84,544
========= ========= ========= =========
Commission and Brokerage, Net of Fee Income by Segment:
Catastrophe & Risk Excess $ 6,028 $ 5,364 $ 18,790 $ 13,628
Excess of Loss Cessions (211) (2,333) 3,331 (5,477)
--------- --------- --------- ---------
5,817 3,031 22,121 8,151
Finite (4,114) 7,267 10,530 10,976
Other Lines 593 465 1,546 1,784
Exited (226) 1,781 114 7,457
--------- --------- --------- ---------
$ 2,070 $ 12,544 $ 34,311 $ 28,368
========= ========= ========= =========
Underwriting Income (Loss) by Segment:
Catastrophe & Risk Excess $ 50,776 $ 24,600 $ 138,708 $ 88,302
Excess of Loss Cessions (6,562) (4,652) (22,604) (9,055)
--------- --------- --------- ---------
44,214 19,948 116,104 79,247
Finite (1,258) 469 (5,987) 2,635
Other Lines 1,613 (53) 2,216 2,448
Exited (13,820) (6,050) (24,864) (16,581)
--------- --------- --------- ---------
$ 30,749 $ 14,314 $ 87,469 $ 67,749
========= ========= ========= =========
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Sept. 30, Dec. 31,
Financial Position: 2003 2002
---------- ----------
Cash and investments $1,011,299 $ 805,331
Total assets 1,388,091 1,237,142
Reserve for losses and loss expenses 437,310 447,829
Shareholders' equity 520,132 453,464
Book value per common share (1) 21.72 20.33
Return on equity 20.0%(2) 16.5%
Statutory surplus:
PXRE Reinsurance Company $ 411,000(3) $ 457,217
PXRE Reinsurance Ltd. 329,000(4) 70,609
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
Underwriting Income Reconciled to Income Before Income Taxes:
Net underwriting income $ 30,749 $ 14,314 $ 87,469 $ 67,749
Net investment income 5,994 5,011 20,026 17,543
Net realized investment gains 502 4,782 611 5,785
Interest expense (2,817) (2,825) (9,854) (8,747)
Other operating expenses (10,573) (6,696) (29,586) (21,790)
Unrealized foreign exchange gains on losses incurred 876 616 3,052 194
Other -- (14) (22) (74)
-------- -------- -------- --------
Income before income taxes $ 24,731 $ 15,188 $ 71,696 $ 60,660
======== ======== ======== ========
(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 September 30, 2003.
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