Exhibit 99.2
PXRE CONSOLIDATED BALANCE SHEETS
GROUP LTD. (Dollars in thousands, except par value per share)
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JUNE 30, DECEMBER 31,
2004 2003
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(Unaudited)
ASSETS Investments:
Fixed maturities:
Available-for-sale (amortized cost $594,109 and $613,833, respectively) $ 584,559 $ 617,658
Trading (cost $20,370 and $20,370, respectively) 20,931 21,451
Short-term investments 297,092 175,771
Hedge funds (cost $88,433 and $87,691, respectively) 124,710 121,466
Other invested assets (cost $6,944 and $9,365, respectively) 7,922 10,173
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Total investments 1,035,214 946,519
Cash 21,730 65,808
Accrued investment income 5,458 5,490
Premiums receivable, net 66,999 79,501
Other receivables 46,155 30,695
Reinsurance recoverable on paid losses 9,627 15,494
Reinsurance recoverable on unpaid losses 132,203 146,924
Ceded unearned premiums 6,118 10,454
Deferred acquisition costs 2,192 2,495
Income tax recoverable 23,248 14,133
Other assets 47,297 42,134
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Total assets $ 1,396,241 $ 1,359,647
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LIABILITIES Losses and loss expenses $ 428,469 $ 450,635
Unearned premiums 19,274 21,566
Subordinated debt 167,072 -
Reinsurance balances payable 42,684 53,373
Deposit liabilities 72,765 80,583
Other liabilities 30,773 32,133
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Total liabilities 761,037 638,290
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Minority interest in consolidated subsidiaries:
Company-obligated mandatorily redeemable capital trust
pass-through securities of subsidiary trusts holding solely a
company-guaranteed related subordinated debt - 156,841
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SHAREHOLDERS' Serial convertible preferred shares, $1.00 par value, $10,000 stated
EQUITY value -- 10 million shares authorized, 0.02 million shares
issued and outstanding 179,147 172,190
Common shares, $1.00 par value -- 50 million shares
authorized, 14.4 million and 13.3 million shares issued
and outstanding, respectively 14,384 13,277
Additional paid-in capital 214,703 192,078
Accumulated other comprehensive income net of deferred income
tax (benefit) expense of $(1,426) and $1,242, respectively (7,673) 1,692
Retained earnings 243,297 188,670
Restricted shares at cost (0.4 million and 0.3 million shares, respectively) (8,654) (3,391)
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Total shareholders' equity 635,204 564,516
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Total liabilities and shareholders' equity $ 1,396,241 $ 1,359,647
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The accompanying notes are an integral part of these statements.
PXRE CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
GROUP LTD. (Dollars in thousands, except per share amounts)
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THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
---- ---- ---- ----
(Unaudited) (Unaudited)
REVENUES Net premiums earned $ 69,565 $ 84,015 $ 138,517 $ 168,788
Net investment income 4,915 8,557 11,784 14,032
Net realized investment (losses) gains (38) 110 51 109
Fee income 262 1,108 861 2,384
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74,704 93,790 151,213 185,313
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LOSSES AND Losses and loss expenses incurred 18,077 44,654 36,216 77,254
EXPENSES Commissions and brokerage 10,214 14,618 19,386 34,645
Operating expenses 9,868 10,488 22,488 19,664
Foreign exchange losses (gains) 94 (492) 360 (252)
Interest expense 3,455 245 7,130 2,504
Minority interest in consolidated
subsidiaries - 2,428 - 4,533
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41,708 71,941 85,580 138,348
-------- -------- --------- ---------
Income before income taxes
and cumulative effect of
accounting change 32,996 21,849 65,633 46,965
Income tax provision 660 371 1,313 1,880
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Income before cumulative effect
of accounting change and convertible
preferred share dividends 32,336 21,478 64,320 45,085
Cumulative effect of accounting change,
net of $0.2 million tax expense - - (1,053) -
-------- -------- --------- ---------
Net income before convertible
preferred share dividends $ 32,336 $ 21,478 $ 63,267 $ 45,085
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Convertible preferred
share dividends 3,513 3,245 6,956 6,427
-------- -------- --------- ---------
Net income available to
common shareholders $ 28,823 $ 18,233 $ 56,311 $ 38,658
======== ======== ========= =========
COMPREHENSIVE Net income before convertible
INCOME, NET preferred share dividends $ 32,336 $ 21,478 $ 63,267 $ 45,085
OF TAX Net unrealized (depreciation)
appreciation on investments (14,888) 1,635 (9,365) 1,746
Net unrealized appreciation
on cash flow hedge - - - 946
-------- -------- --------- ---------
Comprehensive income $ 17,448 $ 23,113 $ 53,902 $ 47,777
======== ======== ========= =========
PER SHARE Basic:
Income before cumulative
effect of accounting
change and convertible
preferred share dividends $ 2.34 $ 1.80 $ 4.72 $ 3.79
Cumulative effect of
accounting change - - (0.08) -
Convertible preferred
share dividends (0.25) (0.27) (0.51) (0.54)
-------- -------- --------- ---------
Net income available to
common shareholders $ 2.09 $ 1.53 $ 4.13 $ 3.25
======== ======== ========= =========
Average shares
outstanding (000's) 13,822 11,921 13,632 11,911
======== ======== ========= =========
Diluted:
Income before cumulative
effect of accounting change $ 1.20 $ 0.93 $ 2.41 $ 1.96
Cumulative effect
of accounting change - - (0.04) -
-------- -------- --------- ---------
Net income $ 1.20 $ 0.93 $ 2.37 $ 1.96
======== ======== ========= =========
Average shares outstanding (000's) 27,021 23,183 26,664 22,959
======== ======== ========= =========
The accompanying notes are an integral part of these statements.
PXRE CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
GROUP LTD. (Dollars in thousands)
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THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
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(Unaudited) (Unaudited)
CONVERTIBLE Balance at beginning of period $ 175,634 $ 162,259 $ 172,190 $ 159,077
PREFERRED SHARES Dividends to convertible
preferred shareholders 3,513 3,245 6,957 6,427
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Balance at end of period $ 179,147 $ 165,504 $ 179,147 $ 165,504
========= ========= ========= =========
COMMON SHARES Balance at beginning of period $ 14,101 $ 12,177 $ 13,277 $ 12,030
Issuance of shares, net 283 (8) 1,107 139
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Balance at end of period $ 14,384 $ 12,169 $ 14,384 $ 12,169
========= ========= ========= =========
ADDITIONAL Balance at beginning of period $ 209,717 $ 172,271 $ 192,078 $ 168,866
PAID-IN CAPITAL Issuance of shares 4,334 (201) 21,217 3,140
Other 652 26 1,408 90
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Balance at end of period $ 214,703 $ 172,096 $ 214,703 $ 172,096
========= ========= ========= =========
ACCUMULATED Balance at beginning of period $ 7,215 $ 8,198 $ 1,692 $ 7,142
OTHER Change in unrealized gains (14,888) 1,636 (9,365) 1,746
COMPREHENSIVE Change in cash flow hedge - - - 946
INCOME --------- --------- --------- ---------
Balance at end of period $ (7,673) $ 9,834 $ (7,673) $ 9,834
========= ========= ========= =========
RETAINED Balance at beginning of period $ 215,322 $ 127,755 $ 188,670 $ 108,062
EARNINGS Net income before convertible
preferred share dividends 32,336 21,478 63,267 45,085
Dividends to convertible
preferred shareholders (3,513) (3,245) (6,957) (6,427)
Dividends to common shareholders (848) (732) (1,683) (1,464)
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Balance at end of period $ 243,297 $ 145,256 $ 243,297 $ 145,256
========= ========= ========= =========
RESTRICTED SHARES Balance at beginning of period $ (9,007) $ (4,782) $ (3,391) $ (1,713)
Issuance of restricted shares (370) (764) (7,336) (4,609)
Amortization of restricted shares 723 1,218 2,073 1,994
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Balance at end of period $ (8,654) $ (4,328) $ (8,654) $ (4,328)
========= ========= ========= =========
TOTAL Balance at beginning of period $ 612,982 $ 477,878 $ 564,516 $ 453,464
SHAREHOLDERS' Issuance of shares 4,618 (209) 22,325 3,279
EQUITY Restricted shares, net 352 454 (5,264) (2,615)
Unrealized (depreciation) appreciation
on investments, net of deferred
income tax (14,888) 1,636 (9,365) 1,746
Unrealized appreciation on cash
flow hedge, net of deferred
income tax - - - 946
Net income before convertible
preferred share dividends 32,336 21,478 63,267 45,085
Dividends to common shareholders (848) (732) (1,683) (1,464)
Other 652 26 1,408 90
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Balance at end of period $ 635,204 $ 500,531 $ 635,204 $ 500,531
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
PXRE CONSOLIDATED STATEMENTS OF CASH FLOWS
GROUP LTD. (Dollars in thousands)
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THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
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(Unaudited)
CASH FLOW Premiums collected, net of reinsurance $ 50,659 $ 54,529 $ 142,375 $ 151,194
FROM OPERATING Loss and loss adjustment expenses paid,
ACTIVITIES net of reinsurance (17,288) (24,099) (37,793) (33,719)
Commission and brokerage paid, net of fee income (8,958) (5,665) (17,571) (18,141)
Operating expenses paid (8,597) (4,579) (21,693) (15,240)
Net investment income received 6,373 1,808 9,281 5,184
Interest paid (1,572) (46) (7,368) (4,794)
Income taxes paid (4,709) (8,100) (5,961) (11,623)
Trading portfolio purchased - - - (5,688)
Trading portfolio disposed - 8,496 - 8,496
Deposit (paid) received (3,043) 3,281 (7,818) 34,218
Other (3,381) 5,866 (14,698) (2,477)
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Net cash provided by operating activities 9,484 31,491 38,754 107,410
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CASH FLOW Fixed maturities available for sale purchased (42,108) (150,645) (217,057) (154,459)
FROM INVESTING Fixed maturities available for sale disposed or matured 136,250 29,414 238,720 64,576
ACTIVITIES Hedge funds purchased (5,000) (3,000) (5,000) (7,000)
Hedge funds disposed 1,005 9,005 6,033 16,841
Other invested assets purchased - (16) - (121)
Other invested assets disposed 1,767 660 2,658 1,038
Net change in short-term investments (100,729) 74,027 (121,321) (10,448)
Payable for securities - 37,138 (18) 37,371
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Net cash used by investing activities (8,815) (3,417) (95,985) (52,202)
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CASH FLOW Proceeds from issuance of common shares 4,360 256 15,742 542
FROM FINANCING Cash dividends paid to common shareholders (848) (732) (1,683) (1,464)
ACTIVITIES Proceeds from issuance of minority interest in
consolidated subsidiaries - 32,500 - 32,500
Repayment of debt - (10,000) - (30,000)
Cost of shares repurchased (263) (1,230) (906) (1,872)
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Net cash provided by financing activities 3,249 20,794 13,153 (294)
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Net change in cash 3,918 48,868 (44,078) 54,914
Cash, beginning of period 17,812 52,676 65,808 46,630
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Cash, end of period $ 21,730 $ 101,544 $ 21,730 $ 101,544
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The accompanying notes are an integral part of these statements.
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income before convertible preferred share dividends $ 32,336 $ 21,478 $ 63,267 $ 45,085
Adjustments to reconcile net income to net cash
provided by operating activities:
Losses and loss expenses (8,211) 5,386 (22,166) (4,831)
Unearned premiums (18,528) (25,971) 2,044 (17,399)
Deferred acquisition costs 337 6,221 303 13,294
Receivables (10,642) 11,206 (2,957) 9,561
Reinsurance balances payable (5,789) (10,093) (10,689) (14,588)
Reinsurance recoverable 8,998 14,916 20,588 48,367
Income taxes (4,037) (7,727) (4,647) (9,742)
Equity in earnings of limited partnerships (1,261) (5,472) (4,685) (7,849)
Trading portfolio purchased - - - (5,688)
Trading portfolio disposed - 8,496 - 8,496
Deposit liability (3,043) 3,281 (7,818) 34,218
Other 19,324 9,770 5,514 8,486
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Net cash provided by operating activities $ 9,484 $ 31,491 $ 38,754 $ 107,410
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