Best Affirms PXRE ‘A-’ Ratings; Off of Review; Outlook Negative

A.M. Best Co. announced that it has removed from under review and affirmed the financial strength rating of “A-” (Excellent) and issuer credit ratings (ICR) of “a-” for the reinsurance subsidiaries of the PXRE Group Ltd. The rating actions apply to PXRE Reinsurance Ltd. (Bermuda) and PXRE Reinsurance Company (Hartford, CT).

Best also removed from under review and affirmed the issuer credit rating of “bbb-” and all existing debt ratings of PXRE, and assigned indicative debt ratings of “bbb-” to senior unsecured debt, “bb+” to subordinated debt and “bb” to preferred stock that can be issued under PXRE’s recently filed $700 million universal shelf registration. All the ratings have been assigned a negative outlook.

“The affirmations follow A.M. Best’s review of PXRE’s capitalization action plan after incurring losses from hurricanes Katrina, Rita and Wilma,” said the announcement. “This action plan includes both a reduction in the company’s risk profile and addition to capital. As part of this plan, PXRE issued risk linked securities providing coverage for a significant catastrophic event and a potential second catastrophic event. The combination of these actions has stabilized PXRE’s current ratings.”

Best said it had assigned the negative outlook “until these new strategies and risk mitigation procedures have been fully tested.” It also indicated it would “closely monitor the effectiveness of the new strategies and procedures with each catastrophic event.”