Bermuda-based PXRE Group Ltd. announced results for the second quarter ended June 30, 2005. Highlights for the quarter included:
* Net operating income per diluted share was $1.27 compared to $1.21 in the second quarter of 2004;
* Net income was $43.5 million, or $1.30 per diluted share, compared to $32.3 million, or $1.20 per diluted share, in the second quarter of 2004;
* Net premiums earned increased by 20% compared to the prior year period;
* Underwriting income was $48.7 million;
* Annualized return on equity was 25.7%
* For the quarter, annualized total return to common shareholders was
30.5%, comprised of an increase in book value per share from $21.38 to $22.73 and a $0.12 per share dividend.
Jeffrey Radke, president & CEO of PXRE Group, commented, “We continue to successfully execute our strategy, as evidenced by net income of $43.5 million achieved during the quarter, the highest quarterly net income in PXRE’s history. Against the backdrop of a challenging property reinsurance environment, our strong market position with our focus on retrocessional business has allowed PXRE to take advantage of opportunities available in certain segments of the market. We remain on track to achieve our previously announced goal of 10% cat and risk excess earned premium growth in 2005.
“We do not expect to experience significant losses from the hurricanes that occurred in July 2005. Our loss estimates are preliminary, however, as history has proven that it is difficult to accurately estimate losses in the immediate aftermath of a catastrophe. Assuming our preliminary estimates are accurate, we continue to expect to achieve earnings of $4.50 to $5.00 per diluted share for 2005 if no major catastrophes occur during the rest of 2005.”
Net premiums earned for the quarter increased by 20%, or $13.9 million, to $83.4 million from $69.6 million for the year-earlier period.
Net investment income for the second quarter of 2005 increased 36%, or $1.8 million, to $6.7 million from $4.9 million for the corresponding period of 2004, primarily as a result of increased income in our fixed maturity and short-term investment portfolio of $2.2 million. The increase in net investment income in the fixed maturity and short-term investment portfolio is primarily due to an increase in invested assets attributable to cash flow from operating and financing activities.
PXRE’s GAAP loss ratio for the second quarter of 2005 was 30.1% compared to 26.0% for the second quarter of 2004. The loss ratio in the company’s catastrophe and risk excess segment was 28.5% compared to 21.3% in the year-earlier period. Loss and loss expenses incurred in the second quarter of 2005 were $25.1 million which included $11.9 million of prior year net losses, primarily attributable to additional claims reported with respect to the 2004 storms.
The expense ratio was 24.0% for the second quarter of 2005 compared to 28.5% in the year-earlier quarter. The decrease in the expense ratio is attributable primarily to the increase in net premiums earned.
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