WASHINGTON (Dow Jones Newswires) ? PXRE Group Ltd. (PXT) said on Tuesday that a court has dismissed a June 24, 2003 lawsuit the company filed against Lumbermens Mutual Casualty Co.

According to a filing on Tuesday with the Securities and Exchange Commission, the company said as a result of the court?s decision it has elected to record an additional loss reserve of $14.75 million as of September 30, resulting in a negative after-tax impact of $9.6 million on earnings in the quarter ended September 30.

In June 2003, PXRE Group unit PXRE Reinsurance Co. performed an audit of a portfolio of treaties reinsured under an April 2000 agreement with Lumbermens Mutual Casualty.

As a result of its June 2003 audit, PXRE Reinsurance said it identified problems and believed that Lumbermens defrauded the company, breached its duty of utmost good faith, and breached its contractual obligations and fiduciary duties under the agreement, the filing said.

PXRE Reinsurance filed its suit against Lumbermens seeking rescission of the agreement and/or compensatory and punitive damages, the filing said.

The court has granted partial summary judgment to Lumbermens and dismissed PXRE Reinsurance?s claims. PXRE Reinsurance said it is filing a motion for reconsideration.