The Bermuda-based PXRE Group Ltd. also fell victim to the third quarter disaster, posting a net loss of $317.3 million, compared to a net loss of $73.2 million in the third quarter of 2004, which wasnâ€™t particularly favorable to the insurance industry either.
The impact of Hurricanes Katrina and Rita resulted in a net operating loss per adjusted diluted share of $9.46 compared to a net operating loss per adjusted diluted share of $2.67 in the third quarter of 2004. The total net operating loss was $317.4 million, compared to a net operating loss of $73.4 million in the same period of 2004.
President and CEO Jeffrey L. Radke commented: “Hurricanes Katrina and Rita will make the third quarter of 2005 the most costly quarter in history for the reinsurance industry in terms of insured catastrophe loss. PXRE’s loss for the quarter is correspondingly large but the storms again demonstrated the strength of PXRE’s risk management, as our losses were within our expectations for such major events.”
Radke continued: “The strategic market position we have earned over the past 23 years through our dedication to customer service and prompt claims payment gives us confidence in our ability to thrive in the wake of Hurricanes Katrina and Rita, and recent feedback from communications with brokers validates that confidence. Indeed, our recent success in raising $474 million of equity capital reflects investors’ belief in the strength of PXRE’s franchise, which flows from our focused strategy and proven risk management.”
How bad was it? PXRE said its â€œGAAP loss ratio for the third quarter of 2005 was 594.3 percent compared to 174.1 percent for the third quarter of 2004. Loss and loss expenses incurred in the third quarter of 2005 were $409.0 million, which included $356.7 million of net losses attributable to Hurricanes Katrina and Rita. Loss and loss expenses incurred in the third quarter of 2004 were $156.3 million, which included $135.7 million of net losses attributable to the 2004 hurricanes. The expense ratio was 28.8 percent for the third quarter of 2005 compared to 18.3 percent in the year-earlier quarter due to the lower net premiums earned.â€
The Groupâ€™s net premiums earned were also hit, decreasing â€œby 23 percent, or $21.0 million, to $68.8 million from $89.8 million for the year-earlier period,â€ said the announcement. It also noted: â€œIncluded in net premiums earned for the quarter were net ceded reinstatement premiums earned of $25.9 million associated with Hurricanes Katrina and Rita, as compared to net assumed reinstatement premiums earned of $24.6 million associated with the 2004 storms. Before the effects of hurricane related reinstatement premiums in both current year and prior year period, the Company experienced growth in net premiums earned of 37 percent.â€
Radke remains upbeat. He stated: â€œFollowing our successful capital raising efforts, PXRE now has $914 million of pro-forma shareholders’ equity and approximately $1.1 billion of pro-forma capital as of September 30, 2005, which represent the highest levels in our history. Our increased size positions us well to take advantage of both the expected substantial increases in rates and improved terms and conditions for each of the lines of business we write. We expect the scope of these changes to be at least as pronounced in our lines of business as those experienced after other market-changing events such as the World Trade Center disaster in 2001 and Hurricane Andrew in 1992.”
However, he also warned: â€œGiven the current uncertainty of the net impact of Hurricane Wilma on the Company’s fourth quarter results, PXRE has withdrawn its previously disclosed guidance for the year and will not be providing revised guidance for 2005 at this time.â€
The full report can be obtained on the groupâ€™s Website at: http://www.pxregroup.com.
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