Fitch Ratings said today that PXRE Group Ltd. remains on Rating Watch Negative following the Bermuda-based carrier's second-quarter earnings announcement earlier this month.
PXRE Group Ltd. reported second-quarter net income fell to $2.1 million from $43.5 million in the same 2005 period. The company asked to be unrated after a downgrade by A.M. Best Co. and management has said it is seriously considering going out of business.
Fitch listed the following factors for its action:
o Continued uncertainty related to PXRE's future viability and business direction as the company continues to explore strategic alternatives and negotiate commutations.
o Concerns regarding the company's ability to continue to operate profitably given its increased expenses, reduced premium base and the potential for inadequately set reserves. Roughly 82 percent of PXRE's in-force business as of Jan. 1 has either been nonrenewed or cancelled. PXRE expects nearly all remaining business will expire by Jan. 1, 2007.
o Senior management changes previously announced, which include the resignation of Guy Hengesbaugh, the company's chief operating officer, on July 17.
o Shareholder lawsuits previously announced, with their ultimate financial impact unknown.
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