The chief executive of PXRe Group Ltd. moved to assure clients and investors last night that the Bermuda property-catastrophe reinsurer was able to meet its obligations despite recent ratings downgrades and a fourth quarter 2005 loss of $446.5 million.

PXRe's disclosed last week a $330.3 million increase in the estimated pre-tax net impact for Hurricanes Katrina, Wilma and Rita which resulted in financial strength and credit ratings downgrades to the "B" range by A.M. Best Co., Standard & Poor's and Moody's Investor Services.

Jeffrey L. Radke, President & Chief Executive Officer of PXRE Group, said last night in the company's earnings release," Although the fourth quarter loss and recent rating actions are extremely disappointing, PXRE remains financially sound and able to meet all of our obligations to clients. We also have sufficient liquidity to meet all currently foreseen needs and have taken a number of steps to even further improve our liquidity in order to meet contingencies that may arise."

Mr. Radke continued, "We have built a 23-year track record of promptly paying claims and providing superior underwriting services to our clients. We are hopeful that our financial soundness and strong service track record will allow us to continue trading with our clients and brokers."

More than 75 percent of PXRe's current reinsurance clients however have the right to cancel their reinsurance contracts because of either the recent ratings downgrade or reduction of in the company's capital. Since PXRe would experience a substantial loss in premium volume if such rights are exercised, the company said it is now exploring a range of strategic alternatives. It announced last week that it had hired investment bank Lazard to advise it on its options.

As of September 30, 2005, the Company had income tax recoverables of $47.8 million, but because of uncertainty due to the recent ratings downgrades, the company said that it has recorded a valuation allowance against certain assets, which reduced the income tax recoverable to $6.3 million as of December 31, 2005. As a result, the company saw a reversal of approximately $30.9 million of tax benefits that had previously reduced the net impact of Hurricanes Katrina and Rita on the Company's results at September 30, 2005.

The company said that the $330.3 million increase in the estimated pre-tax net impact for the hurricanes results from its assessment of recent loss reports, as well as notifications from two counter parties exercising their rights to cancel and commute retrocessional coverage based on ratings downgrades and material changes to the company.

PXRe posted an accumulated deficit of $527.3 million at December 31, 2005. Since the size of its share premium account is $550 million as of December 31, 2005, it is currently prohibited under Bermuda company law from paying dividends or making distributions from its contributed surplus to its shareholders. The Board of Directors has determined that it is in the best interests of PXRE to reduce the share premium account to zero and allocate $550 million to the company's contributed surplus as permitted under Bermuda company law. This reduction of the share premium account and reallocation to the Company's contributed surplus requires the approval of PXRE's shareholders at a General Meeting.

The company also announced that Robert Fiondella has retired from the Company's Board of Directors effective immediately due to

health reasons.

Gerald Radke, Chairman of PXRE Group, said, "We are sorry to be losing Bob's wisdom and insight on the Board, but understand his decision to retire.

Bob was instrumental in the formation of the Company and has served on PXRE's board since the Company's origination in 1982. He made significant

contributions to PXRE's development over the past 23 years. I know that I speak for the entire organization in wishing Bob all the best."

PXRE shares fell $7.84 to $4.05 last Friday after earlier falling to $3.88, the lowest since the shares began trading on the New York Stock Exchange at the end of 1996. The stock gained 2.4 percent in trading ahead of the earnings release yesterday to close at $4.25 on the New York Stock Exchange.

PXRE Limited 4Q 06 Report Card:

Results for the last three months of the year compared to the same period a year ago

- Net loss: $446.5 million, compared with earnings of $32.8 million in the fourth quarter 2004

- Net investment income: $14.6 million, a -- percent improvement from $9.2 million a the fourth quarter 2004

- Book value per share: $6.01 at December 31, 2005 from $13.01 per share at September 30, 2005

- Shareholders' equity: $465.3 million at December 31, 2005 compared with $696.6 million at year end 2004

- Accumulated deficit: $527.3 million at December 31, 2005