HAMILTON, Bermuda -- PXRE Group Ltd. (NYSE:PXT) today announced significantly higher profits for the second quarter and six months ended June 30, 2002.

Highlights of the Company's financial results included a 412% increase in net income for the quarter, which rose to $19.0 million from $3.7 million in the second quarter of 2001.

On a diluted per share basis, net income increased 184% to $0.88 from $0.31 in the year-earlier period. For the six months ended June 30, 2002, net income increased 397% to $37.3 million from $7.5 million in the prior-year period. On a diluted per share basis, net income for the first half increased 251% to $2.21 from $0.63 in the same period last year.

PXRE's annualised return on equity for the quarter was 19.9%.

PXRE's book value per share, on a fully converted basis, was $19.48 per share at June 30, 2002. This represented an increase of 5% over the pro forma amount reported for the first quarter of 2002, which reflected the closing of a $150 million preferred share offering on April 4, 2002.

Pro forma diluted earnings per share for the first half of 2002 were $1.76. These pro forma figures assume that the preferred shares were issued on January 1, 2002, and the Company had achieved a 4 percent annualized yield on the new capital during the first quarter of 2002.

Commenting on the announcement, Gerald L. Radke, chairman and chief executive officer, said: "We are pleased with PXRE's growth in business and profits during the second quarter.

"The catastrophe reinsurance market has remained firm, with higher rates, improved terms and favorable conditions that are largely unchanged from those witnessed at the January 1 renewals.

"In addition to strong premium growth in our core lines, our strategy of investing in high-quality bonds and a well-diversified hedge fund portfolio has enabled PXRE to produce attractive investment returns despite the current turmoil in the financial markets." Further, Radke noted that PXRE's net loss related to the events of September 11 remain below the original estimate of $35 million.

Concluding, Radke added: "Our decision to refocus on our core catastrophe business has enabled us to take full advantage of favorable reinsurance market conditions. Against this backdrop, our Catastrophe and Risk Excess segment continues to provide strong, profitable growth, and we have written a substantial amount of new business with the July 1 renewals. As a result, absent any significant catastrophe loss activity in the second half of the year, we believe we can anticipate a return on equity for 2002 of at least 20 percent."

Revenues rose 5 percent to $55.3 million in the second quarter from $52.8 million in the year-earlier quarter. Net premiums earned, the largest component of revenues, increased six percent in the second quarter to $45.8 million from $43.3 million in the second quarter last year. Net premiums earned on the Company's core Catastrophe and Risk Excess segment for the second quarter of 2002 increased 104% to $38.0 million in the quarter. This strong growth was partially offset by lower net premiums earned from the Company's Finite and Exited Lines segments.

The Finite segment was affected by the return of premium resulting from PXRE's decision to terminate a portion of a large contract, locking in the Company's underwriting margin. The Exited Lines segment continues its planned runoff as demonstrated by the reduced premium levels for the segment. Through the first half of 2002, revenues rose 7% to $120.3 million from $112.9 million in the same period last year. Net premiums earned in the first half increased 15% to $104.9 million from $91.3 million in the same period last year; while Catastrophe and Risk Excess net premiums earned increased 88% to $75.3 million for the period.

Gross premiums written in the second quarter declined 14 percent to $41.8 million from $48.5 million in the same period last year, obscuring a 47% increase ($11.2 million) in the Catastrophe and Risk Excess segment. This overall decline was primarily due to a reduction of $16.6 million in premiums from Exited Lines. For the first half of 2002, gross premiums written rose 32 percent to $167.1 million from $126.5 million in the year-earlier period, driven by gains in the Catastrophe and Risk Excess and Finite segments that more than compensated for an 82% decline in Exited Lines.

Net premiums written in the second quarter declined 44 percent to $20.7 million from $37.0 million in the same quarter last year, obscuring a 62 percent increase in the Catastrophe and Risk Excess segment. This overall decline reflected lower net premiums written from the Finite segment.

Net premiums written through the first half of 2002 rose 34 percent to $124.4 million from $93.1 million in the year-earlier period, with Catastrophe and Risk Excess up 111percent to $86.7 million.