PXRE Group Ltd. reported second-quarter net income fell to $2.1 million from $43.5 million in the same 2005 period in the wake of an April ratings withdrawal that has the carrier seriously considering going out of business, management said.
The Bermuda-based carrier said that 82 percent of its in-force business had declined due to either cancellations or nonrenewals during the quarter.
In April, A.M. Best downgraded the financial strength rating of the carrier to “B” and the company requested it be taken out of the rating system. The action came after the company's February announcement of a material increase in losses from the 2005 hurricanes.
Chief Executive Officer Jeffrey Radke said the company will continue to have significant catastrophe exposures for the rest of 2006, despite the loss of business.
Mr. Radke said the carrier is still looking for a “strategic alternative.”
“If the board of directors concludes that no other alternative would be in the best interest of the shareholders, it may determine that the best option is to place PXRE's reinsurance business into runoff,” he said.
He added that the company has already taken steps to facilitate such a runoff with the start of commutation negotiations.
Net premiums written in the second quarter decreased $91.4 million to negative $27.9 from $63.5 million in the same 2005 period.
The decrease was attributed to a high level of return premiums as a result of the cancellation of many contracts following the initial ratings downgrade in February.
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