Hamilton, Bermuda-based reinsurer PXRE reported a more than $4 million profit in the third quarter of this year, but is still considering going into runoff unless some alternatives are found that would be more advantageous to shareholder value, the company's chief executive said.
During an analysts' conference call today, Jeffrey L. Radke, president and chief executive officer, said the primary focus of the board is to protect shareholder value. He noted that he expected the board of directors to explore alternatives to runoff–either a sale or merger of the company–but no decision has been made on the direction the company would take.
PXRE was hammered by losses from Hurricanes Katrina, Rita and Wilma in 2005, resulting in the downgrade of the company's financial strength rating to "B" by A.M. Best. Subsequently, the insurer lost a significant amount of in-force business through cancellation or nonrenewals.
The company reported that as of Nov. 6 an excess of 80 percent of its in-force business was cancelled or nonrenewed. It added that it expected the percentage to increase.
"Our board of directors is continuing to explore various strategic alternatives that would maximize value for shareholders, and we remain optimistic that we will find a solution other than runoff," Mr. Radke said in a statement.
The company reported net income in the third quarter of $4.46 million, or 6 cents a share, compared with a loss of $317 million, or loss of $11.17 a share. Net premium written dropped from $99.3 million in 2005 to $20.7 million for the quarter.
For the nine months, net income stands at $48 million, or 63 cents a share, compared with a loss of $251 million, or loss of $10.02 a share, in 2005. Net premium written has dropped from $276 million in 2005 to $72 million.
Mr. Radke said the company has 45 employees, "close to minimum for a company writing no new business."
He said the company has written no new policies this year and most of its contracts would be terminated by the end of the year. The bulk of the contracts, he indicated, were on the property line, with little long-tail casualty business.
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