S&P Affirms PXRE ‘A-‘ Ratings; Off CreditWatch

November 21, 2005

Standard & Poor’s Rating Services announced that it has removed from CreditWatch and affirmed its “A-” counterparty credit and financial strength ratings on Bermuda-based PXRE Reinsurance Ltd. and U.S.-based PXRE Reinsurance Co. (collectively PXRE). S&P also removed from CreditWatch and affirmed its “BBB-” counterparty credit ratings on holding company PXRE Corp. and on PXRE Group Ltd. The outlook on all of the ratings is stable.

S&P noted that it had removed the ratings from CreditWatch “due to the capital benefit derived from the mandatory exchange of $375 million of series D perpetual preferred shares to common equity.”

Credit analyst Steven Ader explained: “The mandatory exchange provision was triggered by the approval of common shareholders authorizing an additional $300 million of common shares and approving the exchange of the series D perpetual shares into common shares. Accordingly, Standard & Poor’s views PXRE’s capital adequacy as strong and well appropriate for the rating level.”

S&P also noted: “The ratings on PXRE reflect the companies’ strong competitive position within the Bermuda catastrophe reinsurance and retrocessional market, historically strong operating performance, and strong capital adequacy. Volatility in earnings and capital is expected to diminish based on the company’s recent successful catastrophe bond issuance and other volatility reducing initiatives.

“The ratings and outlook incorporate the expectation that PXRE’s monoline property catastrophe profile exposes it to greater earnings and capital volatility than diversified, multiline peers. In addition to maintaining strong capital adequacy of more than 160 percent, PXRE is expected to resume its historical track record of posting strong results relative to its peers while sustaining a reduced volatility profile.

“If PXRE is able to meet these expectations during future catastrophic events and less favorable market cycles, Standard & Poor’s will consider a positive outlook. Alternatively, a shortfall in these expectations will likely lead to negative rating actions.”

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