PXRE Concludes $194 Million Catastrophe Reinsurance Deal to Increase Underwriting Capacity

December 24, 2002

Bermuda-based PXRE Group Ltd. announced that it has entered into a quota share reinsurance agreement with P-1 Re Ltd. which will provide the company with $194 million in funded reinsurance protection against property catastrophe, marine, aviation, satellite and per-risk losses over the next two years.

The arrangement with P-1 Re Ltd., described as a “a newly formed special purpose Bermuda reinsurer capitalized by a group of private institutional investors,” is also expected to generate significant underwriting management fee income for PXRE.

Commenting on the announcement, Jeffrey L. Radke, PXRE President and COO, indicated that “In practice, this transaction will allow us to increase the capacity that we can offer to our clients and enhance our profile in the reinsurance market. Indeed, the transaction is consistent with our goal of gaining access to capital to better serve our existing and future clients while at the same time prudently managing our balance sheet and reducing the risk we retain. The additional fee income generated by the facility also should have a very positive impact on our bottom line.”

“Clearly, this transaction will figure prominently in our growth strategy for the next two years as we seek to build on the substantial growth we have experienced in 2002,” he continued. “Hard market conditions persist for virtually all reinsurance and retrocessional products, and we see no indications of this easing in the near future. Consequently, we believe this reinsurance agreement represents an important resource for us during the year-end renewal season to help support the additional premiums we expect to write.”

Radke noted that PXRE’s net written premiums in the core Catastrophe and Risk Excess segment already have increased 266% through the first nine months of 2002 compared with the same period in 2001. Excluding the impact of the September 11th events, net written premiums in this segment increased more than 100% in that same period.

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