Fitch Ratings has downgraded the long-term rating of PXRE Group to 'BB+' from 'BBB-'.
Fitch said it has also downgraded the rating on PXRE Capital Trust I's preferred securities to 'BB' from 'BB+' and the insurer financial strength rating on PXRE's lead operating subsidiaries, PXRE Reinsurance and PXRE Reinsurance Company, to 'BBB+' from 'A-'.
The ratings agency said all ratings have been removed from rating watch negative and now have a negative outlook.
Fitch said its rating actions follow PXRE's announcement of third-quarter 2005 earnings and updated estimates for hurricane losses.
The company's year-to-date hurricane-related losses are estimated at $350m, not including Hurricane Wilma, which equates to roughly half of PXRE's beginning of the year shareholders' equity.
Fitch noted that PXRE's loss estimates are based on an industry loss estimate of $35bn-$40bn, and with some estimates of the industry loss as high as $60bn, it warned of the possibility that PXRE's losses could develop adversely.
It added that the move reflects its updated view of the catastrophe risk inherent in PXRE's book of business and the resultant capital and earnings volatility.
Fitch said that while PXRE has replenished lost capital, the downgrade is less reflective of near-term capital levels and more reflective of its lack of confidence in PXRE's future performance and core underwriting abilities.
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