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News and Information Article
Net Income of $4.5 Million
HAMILTON, Bermuda, Nov. 8 /-FirstCall/ -- PXRE Group Ltd.
(NYSE: PXT) today announced results for the third quarter ended September
30, 2006. Notable items for the quarter included:
* On a fully diluted basis, book value per share increased during the
quarter by $0.14 to $6.65 at September 30, 2006
* Net income before convertible preferred share dividends was $4.5 million
compared to net loss before convertible preferred share dividends of
$317.3 million in the third quarter of 2005
Jeffrey L. Radke, President & Chief Executive Officer of PXRE Group,
commented, "Our Board of Directors is continuing to explore various
strategic alternatives that would maximize value for shareholders and we
remain optimistic that we will find a solution other than runoff. As
discussed in the past, however, if our Board of Directors concludes that no
other alternative would be in the best interests of our shareholders, it
may determine that the best option is to place PXREs reinsurance business
into runoff and eventually commence an orderly winding up of PXREs
operations over some period of time that is not currently determinable."
For the quarter ended September 30, 2006, net income before convertible
preferred share dividends was $4.5 million compared to net loss before
convertible preferred share dividends of $317.3 million in the third
quarter of 2005. The increase in net income before convertible preferred
shares is primarily attributable to the absence of any significant loss
events in the quarter as well as favorable development on our loss
reserves, offset by a decrease in net premiums earned due to the
cancellation and non-renewal of the majority of our reinsurance portfolio
following our ratings downgrades in February 2006. The net loss before
convertible preferred share dividends for the third quarter of 2005 was
primarily driven by the net impact of Hurricanes Katrina and Rita of $349.9
million, after tax, reinsurance recoveries on our outwards reinsurance
program and the impact of inwards and outwards reinstatement and additional
premiums.
Net premiums earned for the quarter decreased 92%, or $63.2 million, to
$5.6 million from $68.8 million for the year-earlier period. This decrease
in net premiums earned can be attributed to the cancellations and
non-renewal of the majority of our reinsurance portfolio following our
ratings downgrades by the major rating agencies in February 2006.
Revenues and Net Premiums Earned
Three Months Ended Nine Months Ended
($000s) September 30, September 30,
Change Change
2006 2005 % 2006 2005 %
Revenues $20,289 $82,662 (75) $136,026 $262,724 (48)
Net Premiums Earned:
Cat & Risk Excess $ 5,979 $68,878 (91) $ 98,417 $232,389 (58)
Exited (363) (61) N/M (405) (718) (44)
$ 5,616 $68,817 (92) $ 98,012 $231,671 (58)
Net premiums written in the third quarter of 2006 decreased 79%, or
$78.6 million, to $20.7 million from $99.3 million for the same period of
2005. This decrease in net premiums written is due to the cancellation and
non-renewal of the majority of our reinsurance portfolio following our
ratings downgrades by the major rating agencies in February 2006.
Net Premiums Written
Three Months Ended Nine Months Ended
($000s) September 30, September 30,
Change Change
2006 2005 % 2006 2005 %
Net Premiums Written:
Cat & Risk Excess $21,054 $99,346 (79) $72,088 $277,066 (74)
Exited (363) (65) N/M (410) (726) (44)
$20,691 $99,281 (79) $71,678 $276,340 (74)
Net investment income for the third quarter of 2006 increased 8%, or
$1.1 million, to $14.6 million from $13.5 million for the corresponding
period of 2005 primarily as a result of a $6.2 million increase in income
from our fixed maturity and short-term investment portfolio, offset, in
part, by a $5.5 million decrease in income from our hedge funds. The
increase in income from our fixed income and short-term investment
portfolio was due to an increase in invested assets attributable to cash
flow principally from the proceeds of capital raising activities in the
fourth quarter of 2005 and from the proceeds from the redemptions of our
hedge fund investments which have been received during the first nine
months of 2006. The net return on the fixed maturity and short-term
investment portfolios increased to 5.2% for the quarter, on an annualized
basis, compared to 3.8% during the comparable prior year period. As
previously communicated, PXRE submitted redemption notices for its entire
hedge fund portfolio in February 2006, and as a result income from hedge
funds will continue to decrease in future quarters as we receive the
remaining proceeds from our various hedge fund investments. As of September
30, 2006, we have received redemption proceeds from 91% of the hedge fund
assets held on our December 31, 2005 balance sheet.
The Company had negative incurred losses for the quarter of $6.0
million. This negative incurred loss amount was due to two factors. First,
the Company had $3.7 million of net favorable development in its 2006
accident year loss reserves which was caused by lower than expected
reported losses for the 2006 accident year on a year-to-date basis along
with the absence of any significant property catastrophe events in the
third quarter. Second, the Company had net favorable development of $2.3
million for prior-year losses and loss expenses during the quarter. Losses
and loss expenses incurred in the third quarter of 2005 were $409.0
million, which was primarily attributable to Hurricanes Katrina and Rita
which occurred during the third quarter of 2005.
The expense ratio was 232.4% for the third quarter of 2006 compared to
28.8% in the year-earlier quarter due to the decrease in net premiums
earned in 2006 and an increase in operating expenses of $4.0 million in
2006. The increase was largely related to additional fees to attorneys and
financial advisors which have been incurred as a result of our ratings
downgrades, the Board of Directors decision to explore strategic
alternatives for the Company, the class action securities lawsuits filed
against the Company during the second quarter of 2006 as well as employee
severance and retention expenses.
GAAP Ratios
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Loss Ratio, All Lines (106.2)% 594.3 % 12.9 % 206.5 %
Expense Ratio 232.4 28.8 52.8 25.2
Combined Ratio 126.2 % 623.1 % 65.7 % 231.7 %
Loss Ratio, Cat & Risk
Excess (120.4)% 585.7 % 10.5 % 203.1 %
In the fourth quarter of 2005, PXRE sponsored a catastrophe bond
transaction which was determined to be a derivative and recorded at fair
value on the Companys balance sheet. The increase of $4.8 million in other
reinsurance related expense was due to the change in fair value of this
derivative during the quarter ended September 30, 2006.
Operating results reflect a tax benefit of $32.5 million for the third
quarter of 2005. No tax benefit was recognized during the third quarter of
2006.
On a fully diluted basis, book value per share increased to $6.65 at
September 30, 2006 from $6.51 per share at June 30, 2006. During the third
quarter of 2006, PXRE recorded a change in net after-tax unrealized
appreciation in investments of $7.6 million in other comprehensive income,
which resulted in a $0.10 increase in fully diluted book value per share.
The cause of this increase in value was primarily a decrease in interest
rates during the quarter.
PXRE -- with operations in Bermuda, Europe and the United States --
provides reinsurance products and services to a worldwide marketplace. The
Companys primary focus is providing property catastrophe reinsurance and
retrocessional coverage. The Company also provides marine, aviation and
aerospace products and services. The Companys 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 9, 2006 at 10:00
a.m. Eastern Time.
A live webcast of the conference call will be available online at
http://www.pxre.com. The dial-in numbers are (888) 515-2235 for U.S. and Canadian
callers and (719) 457-2601 for international callers. Following the
conclusion of the presentation, the webcast will remain available online
through December 9, 2006 at http://www.pxre.com. In addition, a replay of the call
will be available from November 9, 2006 - November 16, 2006 by dialing
(888) 203-1112. Callers dialing from outside the U.S. and Canada can access
the replay by dialing (719) 457-0820. Please enter 1092468 as the
conference ID.
Quarterly financial statements are expected to be available on the
Companys website under the press release section of News and Events after
market close on November 8, 2006. 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@pxre.com, or visit
http://www.pxre.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," or "expects" or variations of such
words or similar expressions are based on current expectations, speak only
as of the date thereof, and are subject to risk and uncertainties. In light
of the risks and uncertainties inherent in all future projections, the
forward-looking statements in this report should not be considered as a
representation by us or any other person that the Companys objectives or
plans will be achieved. The Company 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) we are exploring strategic alternatives and
the implementation of any of these alternatives could involve substantial
uncertainties and risks, including, among other things, the risk of failure
in the implementation thereof and significant restructuring costs; (ii) as
a result of the recent decline in our ratings and decline in capital, more
than 75% of our clients as of January 1, 2006, measured by premium volume,
may have the right to cancel their reinsurance contracts. As of November 6,
2006, in excess of 80% of our in- force business as of January 1, 2006 has
either been cancelled or non-renewed and we anticipate that this percentage
will increase; (iii) the downgrade in, and withdrawal of, the ratings of
our reinsurance subsidiaries by rating agencies will materially and
negatively impact our business and results of operations; (iv) the decline
in, and withdrawal of, our ratings and reduction in our surplus will allow
clients to terminate their contracts with us and, with respect to ceded
reinsurance, may require us to transfer premiums retained by us into a
beneficiary trust; (v) we may not be able to identify or implement
strategic alternatives for PXRE; (vi) if our Board of Directors concludes
that no feasible strategic alternative would be in the best interests of
our shareholders, it may determine that the best course of action is to
place the reinsurance operations of PXRE into runoff and eventually
commence an orderly winding up and liquidation of PXRE operations over some
period of time that is not currently determinable; (vii) if the Board of
Directors elects to pursue a strategic alternative that does not involve
the continuation of meaningful property catastrophe reinsurance business,
there is a risk that the Company could incur material charges or
termination fees in connection with our collateralized catastrophe
facilities and certain multiyear ceded reinsurance agreements; (viii) our
ability to continue to operate our business and to identify, evaluate and
complete any strategic alternative are dependent on our ability to retain
our management and other key employees, and we may not be able to do so;
(ix) the market price of our common stock has declined and may decline
further as a result of our announcements of increased loss estimates for
losses due to Hurricanes Katrina, Rita and Wilma and the ratings downgrades
we have experienced; (x) the Company faces significant litigation related
to alleged securities law violations; (xi) recent adverse events have
affected the market price of our common shares, which may lead to further
securities litigation, administrative proceedings or both being brought
against us; (xii) reserving for losses includes significant estimates which
are also subject to inherent uncertainties; (xiii) because of exposure to
catastrophes, our financial results may vary significantly from period to
period; (xiv) we may be overexposed to losses in certain geographic areas
for certain types of catastrophe events; (xv) we may be overexposed to
smaller catastrophe losses and for certain geographic areas and perils due
to the cancellations of a substantial portion of our assumed reinsurance
contracts following our recent ratings downgrade; (xvi) we operate in a
highly competitive environment and no assurance can be given that we will
be able to compete effectively in this environment; (xvii) reinsurance
prices may decline, which could affect our profitability; (xviii) we may
require additional capital in the future; (xix) our investment portfolio is
subject to significant market and credit risks which could result in an
adverse impact on our financial position or results; (xx) because we depend
on a few reinsurance brokers for a large portion of revenue, loss of
business provided by any one or more of them could adversely affect us;
(xxi) the impact of investigations of broker fee and placement arrangements
could adversely impact our ability to write more business; (xxii) we have
exited the finite reinsurance business, but claims in respect of finite
reinsurance could have an adverse effect on our results of operations;
(xxiii) our reliance on reinsurance brokers exposes us to their credit
risk; (xxiv) we may be adversely affected by foreign currency fluctuations;
(xxv) retrocessional reinsurance subjects us to credit risk and may become
unavailable on acceptable terms; (xxvi) we have exhausted our
retrocessional coverage with respect to Hurricane Katrina, leaving us
exposed to further losses; (xxvii) recoveries under portions of our
collateralized facilities are triggered by modeled loss to a notional
portfolio, rather than our actual losses arising from a catastrophe event,
which creates a potential mismatch between the risks assumed through our
inwards reinsurance business and the protection afforded by these
facilities; (xxviii) our inability to provide the necessary collateral to
cedents could affect our ability to offer reinsurance in certain markets;
(xxix) the insurance and reinsurance business is historically cyclical, and
we may experience periods with excess underwriting capacity and unfavorable
premium rates; conversely, we may have a shortage of underwriting capacity
when premium rates are strong; (xxx) regulatory constraints may restrict
our ability to operate our business; (xxxi) any determination by the United
States Internal Revenue Service ("IRS") that we or our offshore
subsidiaries are subject to U.S. taxation could result in a material
adverse impact on the our financial position or results; and (xxxii) any
changes in tax laws, tax treaties, tax rules and interpretations could
result in a material adverse impact on our financial position or results.
In addition to the factors outlined above that are directly related to
PXREs 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 PXREs
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.
PXRE Group Ltd.
Unaudited Financial Highlights
(Dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Gross premiums written $32,537 $ 236,146 $131,824 $ 427,708
Net premiums written $20,691 $ 99,281 $71,678 $ 276,340
Revenues $20,289 $ 82,662 $136,026 $ 262,724
Losses and expenses (15,829) (432,536) (87,814) (547,420)
Income (loss) before income
taxes and convertible
preferred share dividends 4,460 (349,874) 48,212 (284,696)
Income tax benefit - (32,531) - (33,603)
Net income (loss) before
convertible preferred
share dividends $ 4,460 $(317,343) $ 48,212 $(251,093)
Net income (loss) per
diluted common share $ 0.06 $ (11.17) $ 0.63 $ (10.02)
Average diluted shares
outstanding (000s) 77,120 33,550 77,051 33,307
Average diluted shares
outstanding when
antidilutive (000s) - 28,529 - 25,649
Sept. 30, Dec. 31,
Financial Position: 2006 2005
Cash and investments $1,321,176 $1,660,996
Total assets 1,525,708 2,116,047
Reserve for losses and loss
expenses 727,765 1,320,126
Shareholders equity 515,669 465,318
Book value per common share(1) 6.65 6.01
Statutory surplus:
PXRE Reinsurance Ltd. 573,100(2) 530,775(3)
PXRE Reinsurance Company 136,600(4) 126,991
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
GAAP Ratios:
Loss ratio (106.2)% 594.3 % 12.9 % 206.5 %
Expense ratio 232.4 % 28.8 % 52.8 % 25.2 %
Combined ratio 126.2 % 623.1 % 65.7 % 231.7 %
Losses Incurred by Segment:
Cat & Risk Excess $(7,196) $ 403,451 $10,337 $ 471,956
Exited 1,230 5,507 2,347 6,565
$(5,966) $ 408,958 $12,684 $ 478,521
Commission and Brokerage,
Net of Fee Income by Segment:
Cat & Risk Excess $ 1,813 $ 12,625 $17,891 $ 31,425
Exited (43) (33) 186 (183)
$ 1,770 $ 12,592 $18,077 $ 31,242
Underwriting Income
(Loss) by Segment: (5)
Cat & Risk Excess $11,362 $(347,198) $70,189 $(270,992)
Exited (1,550) (5,535) (2,938) (7,100)
$ 9,812 $(352,733) $67,251 $(278,092)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Underwriting Income (Loss)
Reconciled to Income (Loss)
Before Income Taxes and
Convertible Preferred
Share Dividends:
Underwriting income
(loss)(5) $ 9,812 $(352,733) $67,251 $(278,092)
Net investment income 14,600 13,526 45,761 30,649
Net realized investment
gains (losses) 57 (34) (7,981) (366)
Other reinsurance related
expense (4,762) - (10,738) -
Operating expenses (11,284) (7,255) (33,641) (27,103)
Foreign exchange (losses)
gains (347) 237 (1,612) 1,053
Interest expense (3,616) (3,615) (10,828) (10,837)
Income (loss) before income
taxes and convertible
preferred share dividends $ 4,460 $(349,874) $48,212 $(284,696)
(1) After considering convertible preferred shares.
(2) Estimated and before inter-company eliminations.
(3) Before inter-company eliminations.
(4) Estimated.
(5) Underwriting Income (Loss) by Segment (a GAAP financial measure): The
Companys reported underwriting results are its best measure of
profitability for its individual underwriting segments and accordingly
are disclosed in the footnotes to the Companys financial statements
required by SFAS 131, Disclosures about Segments of an Enterprise and
Related Information. Underwriting Income (Loss) by Segment is
calculated by subtracting losses and loss expenses incurred and
commission and brokerage, net of fee income from net earned premiums.
PXRE does not allocate net investment income, net realized investment
gains (losses), other reinsurance related expense, operating expenses,
foreign exchange gains or losses, or interest expense to its
respective underwriting segments.
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, 2006.
PXRE Consolidated Balance Sheets
Group Ltd. (Dollars in thousands, except par value per share)
September 30, December 31,
2006 2005
(Unaudited)
Assets
Investments:
Fixed maturities, at fair value:
Available-for-sale
(amortized cost $528,696 and
$1,212,299, respectively) $ 528,528 $1,208,248
Trading (cost $13,143 and
$28,225, respectively) 13,506 25,796
Short-term investments, at
fair value 737,195 261,076
Hedge funds, at fair value
(cost $17,374 and
$132,690, respectively) 18,655 148,230
Other invested assets, at fair
value (cost $1,880 and
$2,806 respectively) 2,478 3,142
Total investments 1,300,362 1,646,492
Cash 20,814 14,504
Accrued investment income 4,842 10,809
Premiums receivable, net 110,315 217,446
Other receivables 7,561 17,000
Reinsurance recoverable on
paid losses 2,203 4,223
Reinsurance recoverable on
unpaid losses 37,146 107,655
Ceded unearned premiums 10,139 1,379
Deferred acquisition costs 1,324 5,487
Income tax recoverable - 6,295
Other assets 31,002 84,757
Total assets $1,525,708 $2,116,047
Liabilities
Losses and loss expenses $ 727,765 $1,320,126
Unearned premiums 14,961 32,512
Subordinated debt 167,087 167,081
Reinsurance balances payable 16,145 30,244
Deposit liabilities 56,161 68,270
Income tax payable 31 -
Other liabilities 27,889 32,496
Total liabilities 1,010,039 1,650,729
Shareholders Equity
Serial convertible preferred
shares, $1.00 par value,
$10,000 stated value --
30 million shares authorized,
0.01 million and 0.01 million
shares issued and outstanding,
respectively 58,132 58,132
Common shares, $1.00 par value
-- 350 million shares authorized,
72.3 million and 72.3 million
shares issued and outstanding,
respectively 72,346 72,281
Additional paid-in capital 873,009 875,224
Accumulated other comprehensive
loss (1,382) (5,468)
Accumulated deficit (482,838) (527,349)
Restricted shares at cost (0.4
million and 0.5 million shares,
respectively) (3,598) (7,502)
Total shareholders equity 515,669 465,318
Total liabilities and
shareholders equity $1,525,708 $2,116,047
PXRE Consolidated Statements of Operations and Comprehensive Operations
Group
Ltd. (Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
(Unaudited) (Unaudited)
Revenues
Net premiums earned $ 5,616 $68,817 $98,012 $231,671
Net investment income 14,600 13,526 45,761 30,649
Net realized
investment gains
(losses) 57 (34) (7,981) (366)
Fee income 16 353 234 770
20,289 82,662 136,026 262,724
Losses and Expenses
Losses and loss
expenses incurred (5,966) 408,958 12,684 478,521
Commission and
brokerage 1,786 12,945 18,311 32,012
Other reinsurance
related expense 4,762 - 10,738 -
Operating expenses 11,284 7,255 33,641 27,103
Foreign exchange
losses (gains) 347 (237) 1,612 (1,053)
Interest expense 3,616 3,615 10,828 10,837
15,829 432,536 87,814 547,420
Income (loss) before
income taxes and
convertible preferred
share dividends 4,460 (349,874) 48,212 (284,696)
Income tax benefit - (32,531) - (33,603)
Net income (loss)
before convertible
preferred share
dividends $ 4,460 $(317,343) $48,212 $(251,093)
Convertible preferred
share dividends 1,163 1,241 3,701 5,878
Net income (loss) to
common shareholders $ 3,297 $(318,584) $44,511 $(256,971)
Comprehensive Income (Loss),
Net of Tax
Net income (loss)
before convertible
preferred share
dividends $ 4,460 $(317,343) $48,212 $(251,093)
Net change in
unrealized
appreciation
(depreciation) on
investments 7,702 (6,062) (4,013) (7,626)
Reclassification
adjustments for
(gains) losses
included in net
income (57) (5) 7,976 212
Minimum additional
pension liability - - 123 -
Comprehensive income
(loss) $12,105 $(323,410) $52,298 $(258,507)
Per Share
Basic:
Income (loss) before
convertible preferred
share dividends $ 0.06 $ (11.13) $ 0.67 $ (9.79)
Convertible preferred
share dividends (0.02) (0.04) (0.05) (0.23)
Net income (loss) to
common shareholders $ 0.04 $ (11.17) $ 0.62 $ (10.02)
Average shares
outstanding (000s) 72,002 28,529 71,944 25,649
Diluted:
Net income (loss) $ 0.06 $ (11.17) $ 0.63 $ (10.02)
Average shares
outstanding (000s) 77,120 28,529 77,051 25,649
PXRE Consolidated Statements of Shareholders Equity
Group Ltd. (Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
(Unaudited) (Unaudited)
Convertible Preferred Shares
Balance at beginning
of period $ 58,132 $ 63,371 $ 58,132 $ 163,871
Conversion of
convertible
preferred shares - (5,239) - (109,108)
Dividends to
convertible
preferred
shareholders - - - 3,369
Balance at end of
period $ 58,132 $ 58,132 $ 58,132 $ 58,132
Common Shares
Balance at
beginning of
period $ 72,408 $ 28,813 $ 72,281 $ 20,469
(Cancellation)
issuance of
common shares, net (62) 582 65 8,926
Balance at end of
period $ 72,346 $ 29,395 $ 72,346 $ 29,395
Additional Paid-in Capital
Balance at
beginning of
period $ 874,648 $ 437,198 $ 875,224 $329,730
(Cancellation)
issuance of
common shares, net (1,639) 7,781 (2,215) 114,631
Tax effect of
stock options
exercised - 446 - 1,064
Balance at end of
period $ 873,009 $ 445,425 $ 873,009 $445,425
Accumulated Other
Comprehensive Income
Balance at
beginning of
period $ (9,027) $ (6,202) $ (5,468) $ (4,855)
Change in
unrealized gains
(losses) on
investments 7,645 (6,067) 3,963 (7,414)
Change in minimum
additional
pension liability - - 123 -
Balance at end of
period $ (1,382) $ (12,269) $ (1,382) $(12,269)
(Accumulated
Deficit)/Retained Earnings
Balance at
beginning of
period $(486,135) $ 251,014 $(527,349) $194,081
Net income (loss)
before
convertible
preferred share
dividends 4,460 (317,343) 48,212 (251,093)
Dividends to
convertible
preferred
shareholders (1,163) (1,241) (3,701) (5,878)
Dividends to
common
shareholders - (3,471) - (8,151)
Balance at end of
period $(482,838) $ (71,041) $(482,838) $(71,041)
Restricted Shares
Balance at
beginning of
period $ (5,488) $ (10,727) $ (7,502) $(6,741)
Cancellation
(issuance) of
restricted
shares, net 1,773 - 2,376 (6,069)
Amortization of
restricted shares 117 1,044 1,528 3,127
Balance at end of
period $ (3,598) $ (9,683) $ (3,598) $(9,683)
Total Shareholders Equity
Balance at
beginning of
period $ 504,538 $ 763,467 $465,318 $696,555
Conversion of
convertible
preferred shares - (5,239) - (109,108)
(Cancellation)
issuance of
common shares, net (1,701) 8,363 (2,150) 123,557
Restricted shares,
net 1,890 1,044 3,904 (2,942)
Unrealized
appreciation
(depreciation) on
investments 7,645 (6,067) 3,963 (7,414)
Minimum additional
pension liability - - 123 -
Net income (loss)
before
convertible
preferred share
dividends 4,460 (317,343) 48,212 (251,093)
Dividends to
convertible
preferred
shareholders (1,163) (1,241) (3,701) (2,509)
Dividends to
common
shareholders - (3,471) - (8,151)
Tax effect of
stock options
exercised - 446 - 1,064
Balance at end of
period $ 515,669 $ 439,959 $515,669 $439,959
PXRE Consolidated Statements of Cash Flows
Group Ltd. (Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
(Unaudited) (Unaudited)
Cash Flows from Operating
Activities
Premiums collected,
net of reinsurance $ 28,232 $ 110,376 $164,733 $ 291,835
Loss and loss
adjustment expenses
paid, net of
reinsurance (94,772) (57,683) (497,362) (162,183)
Commission and
brokerage (paid)
received, net of fee
income (2,750) 353 (7,566) (14,110)
Operating expenses
paid (7,053) (7,157) (34,754) (24,695)
Net investment income
received 15,589 6,731 42,989 23,963
Interest paid (5,799) (5,799) (12,953) (12,964)
Income taxes
recovered 6,235 3 6,326 18,472
Trading portfolio
purchased (1,897) (3,276) (29,893) (17,685)
Trading portfolio
disposed 1,923 3,369 42,917 3,369
Deposit paid (297) (2,744) (12,109) (1,813)
Other 13,881 3,840 10,274 2,856
Net cash (used)
provided by
operating
activities (46,708) 48,013 (327,398) 107,045
Cash Flows from Investing
Activities
Fixed maturities
available for sale
purchased (404) (77,912) (67,442) (372,936)
Fixed maturities
available for sale
disposed or matured 140,470 35,362 744,307 151,016
Hedge funds purchased - (5,000) (4,000) (119,888)
Hedge funds disposed 21,716 6,546 139,080 115,049
Other invested assets
purchased - - (35) -
Other invested assets
disposed 220 852 1,391 2,244
Net change in short-
term investments (111,639) (3,450) (476,119) 122,092
Receivable for
securities - 344 - -
Payable for
securities (100) (1,527) - -
Net cash provided
(used) by investing
activities 50,263 (44,785) 337,182 (102,423)
Cash Flows from Financing
Activities
Proceeds from issuance
of common shares 71 3,125 490 8,947
Cash dividends paid to
common shareholders - (3,471) - (8,151)
Cash dividends paid to
preferred
shareholders (1,163) (1,241) (3,701) (2,509)
Cost of shares
repurchased - - (263) (567)
Net cash used by
financing activities (1,092) (1,587) (3,474) (2,280)
Net change in cash 2,463 1,641 6,310 2,342
Cash, beginning of
period 18,351 16,369 14,504 15,668
Cash, end of period $ 20,814 $ 18,010 $ 20,814 $ 18,010
Reconciliation of net
income (loss) to net
cash (used) provided
by operating
activities:
Net income (loss)
before convertible
preferred share
dividends $ 4,460 $(317,343) $ 48,212 $(251,093)
Adjustments to
reconcile net income
(loss) to net cash
(used) provided by
operating
activities:
Losses and loss
expenses (114,143) 566,685 (592,360) 525,357
Unearned premiums 15,097 30,465 (26,311) 44,670
Deferred acquisition
costs (943) (2,506) 4,163 (5,991)
Receivables 14,410 (79,186) 116,571 (70,900)
Reinsurance balances
payable (6,183) 108,339 (14,099) 110,549
Reinsurance
recoverable 13,405 (215,411) 72,530 (209,020)
Income taxes 6,235 (32,528) 6,326 (14,858)
Equity in earnings of
limited partnerships (157) (6,030) (6,196) (10,568)
Trading portfolio
purchased (1,897) (3,276) (29,893) (17,685)
Trading portfolio
disposed 1,923 3,369 42,917 3,369
Deposit liability (297) (2,744) (12,109) (1,813)
Receivable on
commutation - - 35,154 -
Other 21,382 (1,821) 27,697 5,028
Net cash (used)
provided by
operating
activities $ (46,708) $ 48,013 $(327,398) $ 107,045
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