Bermuda-based PXRE Group Ltd. announced significantly higher profits for the fourth quarter and year ended Dec. 31, 2002.
PXRE’s net income for the quarter increased 96 percent to $16.3 million, up from $8.3 million in the fourth quarter of 2001. Net income per diluted share totaled $0.73 for the quarter compared with $0.70 in the year-earlier period. For the year ended Dec. 31, 2002, net income was $64.5 million versus a net loss of $18.0 million in 2001. Net income per diluted share for 2002 was $3.28 versus a net loss of $1.55 per diluted share in 2001. PXRE’s annualized return on equity was 14.6 percent for the quarter and its return on equity was 16.5 percent for the year.
On a fully diluted basis, PXRE’s book value per share increased 1 percent during the quarter from $20.05 at Sept. 30, 2002 to $20.33 per share at Dec. 31, 2002.
Gerald Radke, chairman and CEO, noted “We are very pleased with the company’s strong performance in 2002 and fully expect that PXRE will continue to build on this success in the coming year. Based on our experience during the critical January 1 renewal season, we expect 2003 net earned premium growth of more than 35 percent in our core catastrophe and risk excess segment and 20% overall. The additional capacity provided by the reinsurer P-1 Re Ltd., established in December 2002, and expected additional management fee income will assist efforts in 2003. Based on this outlook, we anticipate net income per diluted share for 2003 in the range of $4.00 to $4.25, assuming normalized catastrophe activity.”
As a result of the continued strong growth in PXRE’s net premiums earned, revenue rose significantly in both the quarter (+67 percent) and year (+52 percent) ended Dec. 31, 2002. Most notably, net premiums earned in PXRE’s core Catastrophe and Risk Excess segment increased 94 percent for the quarter and 191 percent for the year compared with the corresponding prior-year periods.
PXRE’s GAAP loss ratio for the fourth quarter of 2002 improved to 47.9 percent, a result of reduced loss activity in 2002. The expense ratio increased to 36.3 percent in the fourth quarter of 2002 from 31.5 percent in the year-earlier quarter due to incentive compensation expenses that vary with return on equity and costs incurred in connection with the establishment of a reinsurance facility with P-1 Re Ltd.
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