While it affirmed the PXRE Group’s overall A (Excellent) rating, A.M. Best nevertheless revised the outlook for PXRE Reinsurance Co. and Transnational Insurance Co. to negative due to a number of recent adverse results.
The Group reported a $34.2 million operating loss for the first six months,”primarily emanating from the group’s property catastrophe reinsurance operations.” This came on top of “adverse development in the amount of $40 million from catastrophic events occurring in 1999, principally in Europe and Asia.”
“Operating performance in the last three years has been significantly below historical trends, reflecting the group’s declining premium base and profitability due in large part to its continued concentration in its catastrophe-related products that have been susceptible to market competition and rate degradation,” said the announcement.
A.M. Best also cited losses in the Lloyd’s market and expenses incurred in efforts to diversify as additional reasons for the change in rating outlook, and promised to keep a close watch on future operations.
The A (Excellent) rating was affirmed, however, as PXRE is still seen as a strongly capitalized and well managed reinsurer. “It’s conservative operating leverage has enabled it to withstand recent large losses with minimal impact on financial stability. Despite the significant deterioration in the group’s earnings in recent years, the group has demonstrated underwriting discipline in an intensively competitive environment while it continues to diversify its business platform,” concluded the report.
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