PXRE Group Ltd. yesterday announced significantly higher profits for the fourth quarter and year ended December 31, 2002.

PXRE's net income for the quarter increased 96 percent to $16.3 million, up from $8.3 million in the fourth quarter of 2001. Net income per diluted share totalled $0.73 for the quarter compared with $0.70 in the year-earlier period.

For the year ended December 31, 2002, net income was $64.5 million versus a net loss of $18.0 million in 2001. Net income per diluted share for 2002 was $3.28 versus a net loss of $1.55 per diluted share in 2001.

PXRE's annualised return on equity was 14.6 percent for the quarter and its return on equity was 16.5 percent for the year.

On a fully diluted basis, PXRE's book value per share increased 1% during the quarter from $20.05 at September 30, 2002 to $20.33 per share at December 31, 2002.

Gerald L. Radke, chairman and chief executive officer, said, "We are very pleased with the company's strong performance in 2002 and fully expect that PXRE will continue to build on this success in the coming year. Based on our experience during the critical January 1 renewal season, we expect 2003 net earned premium growth of more than 35 percent in our core catastrophe and risk excess segment and 20 percent overall.

The additional capacity provided by the reinsurer P-1 Re Ltd., established in December 2002, and expected additional management fee income will assist efforts in 2003. Based on this outlook, we anticipate net income per diluted share for 2003 in the range of $4.00 to $4.25, assuming normalised catastrophe activity."

There was strong growth in PXRE's net premiums earned which totalled $88.7 million for the quarter and $269 million for the year. This reflects a rise of 67 percent for the quarter and year 52 percent for the year ended December 31, 2002.

Most notably, net premiums earned in PXRE's core Catastrophe and Risk Excess segment increased 94 percent for the quarter and 191 percent for the year compared with the corresponding prior-year periods.

Net premiums written rose significantly in both the quarter (+144 percent) and year (+91 percent) compared with prior-year periods. Growth during the fourth quarter primarily reflected an increase of $52.7 million in the Finite segment and $18.8 million in the Catastrophe and Risk Excess segment.

The annual growth in net premiums written primarily reflected increases of $117.8 million in the Catastrophe and Risk Excess segment and $69.1 million in the Finite segment.

Net investment income for the fourth quarter of 2002 increased 21 percent to $7.4 million from $6.1 million in the same period of 2001, primarily as a result of an increase in invested assets attributable to the proceeds of the issuance of preferred stock in April 2002, as well as cash flow from operations.

Investment income related to PXRE's hedge fund portfolio also increased slightly during the quarter, returning 3.3 percent compared to 3.0 percent in the fourth quarter of 2001. Net realised investment gains for the fourth quarter of 2002 were $3.2 million compared with losses of $0.2 million in the fourth quarter of 2001.

PXRE's GAAP loss ratio for the fourth quarter of 2002 improved to 47.9 percent, a result of reduced loss activity in 2002.

The expense ratio increased to 36.3 percent in the fourth quarter of 2002 from 31.5 percent in the year-earlier quarter due to incentive compensation expenses that vary with return on equity and costs incurred in connection with the establishment of a reinsurance facility with P-1 Re Ltd.

During the fourth quarter of 2002, PXRE recorded an after-tax unrealised loss of $3.0 million in other comprehensive income, largely related to a decrease in the value of the company's fixed income portfolio.

Separately, the company declared a regular quarterly cash dividend of $0.06 per common share. The dividend will be paid on March 10, 2003 to stockholders of record as of February 24, 2003.