PXRE has announced that it has entered into a $300m collateralised reinsurance agreement with Atlantic & Western Re, a Cayman Island reinsurance company to guard against "extreme loss scenarios".
This new reinsurance coverage is designed to protect PXRE from extreme catastrophe losses arising from hurricanes in the Eastern and Gulf coasts of the United States, windstorms in northern Europe and earthquakes in California over the next 5 years.
Jeffrey Radke, president and chief executive of PXRE, said: "With the completion of this transaction, we are supplementing our risk management program to provide further insulation for our equity from large but remote catastrophe events.
"I fully expect that our ability to execute this transaction so quickly following Hurricanes Katrina, Rita and Wilma at an 8.7% annual cost of capital will prove to be a competitive advantage in the coming renewal season."
The new reinsurance provides two layers of protection over the next 5 years to PXRE. The first provides $200m of coverage for losses arising from hurricanes in the Eastern and Gulf coasts of the United States, windstorms in northern Europe and earthquakes in California.
The second layer provides $100m of coverage for losses arising from hurricanes in the Eastern and Gulf coasts of the United States and windstorms in northern Europe.
