HAMILTON, Bermuda, March 16 /PRNewswire-FirstCall/ -- PXRE Group
Ltd. (the "Company") today announced the correction of a technical
error in certain diluted earnings per share disclosures that was
discovered in the process of finalizing the Company's Annual Report
on Form 10-K with respect to net (loss) income before convertible
preferred share dividends per diluted common share and net (loss)
income per diluted common share reported in the press release
issued on March 14, 2007 (the "Press Release") announcing the
Company's results for the quarter and year ended December 31, 2006.
Net (loss) income before convertible preferred share dividends per
diluted common share for the year ended December 31, 2006 was $0.40
rather than $0.37 as previously reported. Net (loss) income per
diluted common share for the year ended December 31, 2006 was
$0.33, rather than $0.37 as previously reported. This correction
had no impact on the Company's Unaudited Consolidated Balance
Sheets including total shareholders' equity as of December 31, 2006
nor did it have any impact on any amounts reported on the Unaudited
Consolidated Statements of Operations and Comprehensive Operations
other than the diluted earnings per share disclosures referred to
above. It also had no impact on Unaudited Consolidated Statements
of Shareholders' Equity or Unaudited Consolidated Statements of
Cash Flows. Lastly, this correction had no impact on fully diluted
book value per common share as of December 31, 2006. Corrected
preliminary unaudited financial highlights and unaudited financial
statements are attached hereto. PXRE Group Ltd. Unaudited Financial
Highlights (Dollars in thousands except per share amounts) Three
Months Ended Twelve Months Ended December 31, December 31, 2006
2005 2006 2005 Gross premiums written $6,952 $114,617 $138,776
$542,325 Net premiums written $(18,169) $130,665 $53,509 $407,005
Revenues $1,776 $157,097 $137,802 $419,821 Losses and expenses
(20,889) (564,052) (108,703) (1,111,472) (Loss) income before
income taxes and convertible preferred share dividends (19,113)
(406,955) 29,099 (691,651) Income tax expense (597) (39,510) (597)
(5,907) Net (loss) income before convertible preferred share
dividends $(19,710) $(446,465) $28,502 $(697,558) Net (loss) income
to common shareholders $(20,873) $(447,627) $23,638 $(704,598) Net
(loss) income per diluted common share $(0.29) $(8.45) $0.33
$(21.65) Average diluted shares outstanding (000's) 77,156 73,555
77,072 43,517 Average diluted shares outstanding when antidilutive
(000's) 72,006 52,987 71,959 32,541 Dec. 31, 2006 Dec. 31, 2005
Financial Position: Cash and investments $1,216,392 $1,660,996
Total assets 1,401,343 2,116,047 Reserve for losses and loss
expenses 603,241 1,320,126 Shareholders' equity 496,767 465,318
Book value per common share (1) 6.41 6.01 Statutory surplus: PXRE
Reinsurance Ltd. 564,209(2) 530,775(3) PXRE Reinsurance Company
137,974(4) 126,991 Three Months Ended Twelve Months Ended December
31, December 31, 2006 2005 2006 2005 GAAP Ratios: Loss ratio 1.8%
340.2% 14.7% 260.5% Expense ratio (78.2%) 17.1% 73.7% 21.9%
Combined ratio (76.4%) 357.3% 88.4% 282.4% Losses Incurred by
Segment: Cat & Risk Excess $(3,847) $532,815 $6,490 $1,004,771
Exited 3,606 187 5,953 6,752 $(241) $533,002 $12,443 $1,011,523
Commission and Brokerage, Net of Fee Income by Segment: Cat &
Risk Excess $806 $17,831 $18,697 $49,256 Exited - (114) 186 (297)
$806 $17,717 $18,883 $48,959 Underwriting (Loss) Income by Segment:
(5) Cat & Risk Excess $(10,428) $(393,453) $59,761 $(664,445)
Exited (3,620) (613) (6,558) (7,713) $(14,048) $(394,066) $53,203
$(672,158) Three Months Ended Twelve Months Ended December 31,
December 31, 2006 2005 2006 2005 Underwriting (Loss) Income
Reconciled to (Loss) Income Before Income Taxes and Convertible
Preferred Share Dividends: Underwriting (loss) income (5) $(14,048)
$(394,066) $53,203 $(672,158) Net investment income 14,893 14,643
60,654 45,292 Net realized investment gains (losses) 172 (14,370)
(7,809) (14,736) Other fee income 185 - 185 - Other reinsurance
related expense (7,124) (936) (17,862) (936) Operating expenses
(9,732) (9,105) (43,373) (36,208) Foreign exchange gains (losses)
168 494 (1,444) 1,547 Interest expense (3,627) (3,615) (14,455)
(14,452) (Loss) income before income taxes and convertible
preferred share dividends $(19,113) $(406,955) $29,099 $(691,651)
(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 Company's reported
underwriting results are its best measure of profitability for its
individual underwriting segments and accordingly are disclosed in
the footnotes to the Company's 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 fee income, other reinsurance related expense,
operating expenses, foreign exchange gains or losses, or interest
expense to its respective underwriting segments. 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 Company's 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 face risks related to our
proposed merger with Argonaut; (ii) if the merger with Argonaut is
not completed, unless the Board of Directors identifies and
implements a different operating strategic solution, we will not
write or earn any material premiums in the future and, as a result,
we expect to incur material operating losses since our remaining
revenue is insufficient to cover our projected operating and other
expenses; (iii) if the merger with Argonaut is not consummated, we
may not be able to identify or implement a strategic alternative
for PXRE; (iv) if the merger with Argonaut is not consummated and
our Board of Directors concludes that no other 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; (v) if the
merger with Argonaut is not consummated and 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 additional
material charges or termination fees in connection with our
collateralized catastrophe facility and certain multiyear ceded
reinsurance agreements; (vi) our ability to continue to operate our
business and to consummate the merger with Argonaut or to identify,
evaluate and complete any other strategic alternative is dependent
on our ability to retain our management and other key employees,
and we may not be able to do so; (vii) adverse events in 2006
negatively have affected the market price of our common shares,
which may lead to further securities litigation, administrative
proceedings or both being brought against us; (viii) reserving for
losses includes significant estimates, which are also subject to
inherent uncertainties; (ix) because of potential exposure to
catastrophes in the future, our financial results may vary
significantly from period to period; (x) we operate in a highly
competitive environment and no assurance can be given that we will
be able to compete effectively in this environment; (xi)
reinsurance prices may decline, which could affect our
profitability; (xii) we may require additional capital in the
future; (xiii) our investment portfolio is subject to significant
market and credit risks which could result in an adverse impact on
our financial position or results; (xiv) we have exited the finite
reinsurance business, but claims in respect of finite reinsurance
could have an adverse effect on our results of operations; (xv) our
reliance on reinsurance brokers exposes us to their credit risk;
(xvi) we may be adversely affected by foreign currency
fluctuations; (xvii) retrocessional reinsurance subjects us to
credit risk and may become unavailable on acceptable terms; (xviii)
we have exhausted our retrocessional coverage with respect to
Hurricane Katrina, leaving us exposed to further losses; (xix)
recoveries under our collateralized facility 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 this facility; (xx) our
inability to provide the necessary collateral could affect our
ability to offer reinsurance in certain markets; (xxi) 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; (xxii)
regulatory constraints may restrict our ability to operate our
business; (xxiii) 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 (xxiv) 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 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. 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-K for the
year ended December 31, 2006. PXRE Consolidated Balance Sheets
Group Ltd. (Dollars in thousands, except par value per share)
December 31, 2006 2005 Assets Investments: Fixed maturities, at
fair value: Available-for-sale (amortized cost $502,307 and
$1,212,299, respectively) $502,254 $1,208,248 Trading (cost $14,794
and $28,225, respectively) 15,497 25,796 Short-term investments, at
fair value 671,197 261,076 Hedge funds, at fair value (cost $11,583
and $132,690, respectively) 12,766 148,230 Other invested assets,
at fair value (cost $1,717 and $2,806, respectively) 2,427 3,142
Total investments 1,204,141 1,646,492 Cash 12,251 14,504 Accrued
investment income 3,830 10,809 Premiums receivable, net 93,325
217,446 Other receivables 7,321 17,000 Reinsurance recoverable on
paid losses 3,324 4,223 Reinsurance recoverable on unpaid losses
35,327 107,655 Ceded unearned premiums - 1,379 Deferred acquisition
costs 8 5,487 Income tax recoverable - 6,295 Other assets 41,816
84,757 Total assets $1,401,343 $2,116,047 Liabilities Losses and
loss expenses $603,241 $1,320,126 Unearned premiums 113 32,512
Subordinated debt 167,089 167,081 Reinsurance balances payable
34,649 30,244 Deposit liabilities 54,425 68,270 Income tax payable
597 - Other liabilities 44,462 32,496 Total liabilities 904,576
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, 72.4 million and 72.3
million shares issued and outstanding, respectively 72,351 72,281
Additional paid-in capital 873,142 875,224 Accumulated other
comprehensive loss (100) (5,468) Accumulated deficit (503,711)
(527,349) Restricted shares at cost (0.4 million and 0.5 million
shares, respectively) (3,047) (7,502) Total shareholders' equity
496,767 465,318 Total liabilities and shareholders' equity
$1,401,343 $2,116,047 Consolidated Statements of Operations and
Comprehensive PXRE Operations Group Ltd. (Dollars in thousands,
except per share amounts) Three Months Ended Twelve Months Ended
December 31, December 31, 2006 2005 2006 2005 Revenues Net premiums
earned $(13,483) $156,653 $84,529 $388,324 Net investment income
14,893 14,643 60,654 45,292 Net realized investment gains (losses)
172 (14,370) (7,809) (14,736) Fee income 194 171 428 941 1,776
157,097 137,802 419,821 Losses and Expenses Losses and loss
expenses incurred (241) 533,002 12,443 1,011,523 Commission and
brokerage 815 17,888 19,126 49,900 Other reinsurance related
expense 7,124 936 17,862 936 Operating expenses 9,732 9,105 43,373
36,208 Foreign exchange (gains) losses (168) (494) 1,444 (1,547)
Interest expense 3,627 3,615 14,455 14,452 20,889 564,052 108,703
1,111,472 (Loss) income before income taxes and convertible
preferred share dividends (19,113) (406,955) 29,099 (691,651)
Income tax provision 597 39,510 597 5,907 Net (loss) income before
convertible preferred share dividends $(19,710) $(446,465) $28,502
$(697,558) Convertible preferred share dividends 1,163 1,162 4,864
7,040 Net (loss) income to common shareholders $(20,873) $(447,627)
$23,638 $(704,598) Comprehensive Operations, Net of Tax Net (loss)
income before convertible preferred share dividends $(19,710)
$(446,465) $28,502 $(697,558) Net change in unrealized appreciation
(depreciation) on investments 84 (4,435) (3,929) (12,061)
Reclassification adjustments for losses included in net (loss)
income 20 11,952 7,996 12,164 Minimum additional pension liability
1,847 (716) 1,970 (716) Comprehensive (loss) income $(17,759)
$(439,664) $34,539 $(698,171) Per Share Basic: (Loss) income before
convertible preferred share dividends $(0.27) $(8.43) $0.40
$(21.43) Net (loss) income to common shareholders $(0.29) $(8.45)
$0.33 $(21.65) Average shares outstanding (000's) 72,006 52,987
71,954 32,541 Diluted: Net (loss) income before convertible
preferred share dividends $(0.29) $(8.45) $0.40 $(21.65) Net (loss)
income $(0.29) $(8.45) $0.33 $(21.65) Average shares outstanding
(000's) 72,006 52,987 71,959 32,541 PXRE Consolidated Statements of
Shareholders' Equity Group (Dollars in thousands) Ltd. Three Months
Ended Twelve Months Ended December 31, December 31, 2006 2005 2006
2005 Convertible Preferred Shares Balance at beginning of period
$58,132 $58,132 $58,132 $163,871 Conversion of convertible
preferred shares - - - (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
$72,346 $29,395 $72,281 $20,469 Issuance of common shares, net 5
42,886 70 51,812 Balance at end of period $72,351 $72,281 $72,351
$72,281 Additional Paid-in Capital Balance at beginning of period
$873,009 $445,425 $875,224 $329,730 Issuance (cancellation) of
common shares, net 133 429,799 (2,082) 544,430 Tax effect of stock
options exercised - - - 1,064 Balance at end of period $873,142
$875,224 $873,142 $875,224 Accumulated Other Comprehensive
Operations Balance at beginning of period $(1,382) $(12,269)
$(5,468) $(4,855) Change in unrealized gains on investments 104
7,517 4,067 103 Change in minimum additional pension liability
1,847 (716) 1,970 (716) Incremental effect of applying FAS 158
(669) - (669) - Balance at end of period $(100) $(5,468) $(100)
$(5,468) (Accumulated Deficit)/Retained Earnings Balance at
beginning of period $(482,838) $(71,041) $(527,349) $194,081 Net
(loss) income before convertible preferred share dividends (19,710)
(446,465) 28,502 (697,558) Dividends to convertible preferred
shareholders (1,163) (1,162) (4,864) (7,040) Dividends to common
shareholders - (8,681) - (16,832) Balance at end of period
$(503,711) $(527,349) $(503,711) $(527,349) Restricted Shares
Balance at beginning of period $(3,598) $(9,683) $(7,502) $(6,741)
Cancellation (issuance) of restricted shares, net - 1,503 2,376
(4,566) Amortization of restricted shares 551 678 2,079 3,805
Balance at end of period $(3,047) $(7,502) $(3,047) $(7,502) Total
Shareholders' Equity Balance at beginning of period $515,669
$439,959 $465,318 $696,555 Conversion of convertible preferred
shares - - - (109,108) Issuance (cancellation) of common shares,
net 138 472,685 (2,012) 596,242 Restricted shares, net 551 2,181
4,455 (761) Unrealized appreciation on investments 104 7,517 4,067
103 Minimum additional pension liability and effect of applying FAS
158 1,178 (716) 1,301 (716) Net (loss) income before convertible
preferred share dividends (19,710) (446,465) 28,502 (697,558)
Dividends to convertible preferred shareholders (1,163) (1,162)
(4,864) (3,671) Dividends to common shareholders - (8,681) -
(16,832) Tax effect of stock options exercised - - - 1,064 Balance
at end of period $496,767 $465,318 $496,767 $465,318 PXRE
Consolidated Statements of Cash Flows Group (Dollars in thousands)
Ltd. Three Months Ended Twelve Months Ended December 31, December
31, 2006 2005 2006 2005 Cash Flows from Operating Activities
Premiums collected, net of reinsurance $17,302 $10,147 $182,035
$301,982 Losses and loss adjustment expenses paid, net of
reinsurance (123,585) (67,112) (620,947) (229,295) Commission and
brokerage received (paid), net of fee income 412 (14,617) (7,154)
(28,727) Operating expenses paid (11,213) (6,971) (45,967) (31,666)
Net investment income received 14,191 13,825 57,180 37,788 Interest
paid (1,385) (1,374) (14,338) (14,338) Income taxes (paid)
recovered (31) (144) 6,295 18,328 Trading portfolio purchased
(8,499) - (38,392) (17,685) Trading portfolio disposed 7,222 -
50,139 3,369 Deposit paid (1,736) (2,060) (13,845) (3,873) Other
473 (11,464) 10,747 (8,608) Net cash (used) provided by operating
activities (106,849) (79,770) (434,247) 27,275 Cash Flows from
Investing Activities Fixed maturities available for sale purchased
(23,068) (360,140) (90,510) (733,076) Fixed maturities available
for sale disposed or matured 50,178 58,747 794,485 209,763 Hedge
funds purchased - (9,500) (4,000) (129,388) Hedge funds disposed
6,017 8,170 145,097 123,219 Other invested assets purchased - -
(35) - Other invested assets disposed 186 1,494 1,577 3,738 Net
change in short- term investments 65,998 (86,850) (410,121) 35,242
Net cash provided (used) by investing activities 99,311 (388,079)
436,493 (490,502) Cash Flows from Financing Activities Proceeds
from issuance of common shares 138 474,222 628 483,169 Cash
dividends paid to common shareholders - (8,681) - (16,832) Cash
dividends paid to preferred shareholders (1,163) (1,162) (4,864)
(3,671) Cost of shares repurchased - (36) (263) (603) Net cash
(used) provided by financing activities (1,025) 464,343 (4,499)
462,063 Net change in cash (8,563) (3,506) (2,253) (1,164) Cash,
beginning of period 20,814 18,010 14,504 15,668 Cash, end of period
$12,251 $14,504 $12,251 $14,504 Reconciliation of net (loss) income
to net cash (used) provided by operating activities: Net (loss)
income before convertible preferred share dividends $(19,710)
$(446,465) $28,502 $(697,558) Adjustments to reconcile net (loss)
income to net cash (used) provided by operating activities: Losses
and loss expenses (124,525) 334,684 (716,885) 860,041 Unearned
premiums (4,709) (25,989) (31,020) 18,681 Deferred acquisition
costs 1,316 2,249 5,479 (3,742) Receivables 17,229 (35,115) 133,800
(106,015) Reinsurance balances payable 18,504 (91,242) 4,405 19,307
Reinsurance recoverable 698 166,359 73,228 (42,661) Income taxes
566 39,365 6,892 24,507 Equity in earnings of limited partnerships
(264) (2,432) (6,460) (13,000) Trading portfolio purchased (8,499)
- (38,392) (17,685) Trading portfolio disposed 7,222 - 50,139 3,369
Deposit liability (1,736) (2,060) (13,845) (3,873) Receivable on
commutation - (35,154) 35,154 (35,154) Other 7,059 16,030 34,756
21,058 Net cash (used) provided by operating activities $(106,849)
$(79,770) $(434,247) $27,275 Contact: Investors: PXRE Group Ltd.
Sard Verbinnen & Co Robert P. Myron Jamie Tully/Lesley Bogdanow
Chief Financial Officer 212-687-8080 441-296-5858 DATASOURCE: PXRE
Group Ltd. CONTACT: Robert P. Myron, Chief Financial Officer, PXRE
Group Ltd., +1-441-296-5858, ; Investors, Jamie Tully, , or Lesley
Bogdanow, both of Sard Verbinnen & Co, +1-212-687-8080 Web
site: http://www.pxre.com/
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