A.M. Best Co. has assigned indicative ratings of “bbb” to senior debt, “bbb-” to subordinated debt and “bb+” to trust preferred and preferred stock of the Bermuda-based PXRE Group Ltd.’s $300 million mixed shelf offering that was recently filed with the Securities and Exchange Commission.
The existing issuer credit, debt and financial strength ratings of PXRE and its subsidiaries remain unchanged. The outlooks on all ratings were placed under review with negative implications following PXRE’s recent announcement that its estimate of after tax net losses from Hurricane Katrina is in the range of $235 to $300 million, which is approximately 30% to 40% of the company’s reported June 2005 shareholders’ equity. As a result of the Katrina loss, there is significant pressure on PXRE’s risk-adjusted capital position, which the company will seek to resolve through the issuance of securities listed in this registration.
The ratings of PXRE and its operating subsidiaries, along with all debt issues, will remain under review with negative implications pending the company’s capital raising initiative, which is expected to take place in the short term.
However, further catastrophe losses in the short term may expedite A.M. Best’s review and potentially result in a rating downgrade. A.M. Best will continue to hold discussions with PXRE’s management in order to assess the company’s risk management capabilities and to reevaluate the level of capital necessary to support PXRE’s risk profile.
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