Fitch Ratings said today that the ratings of PXRE Group (PXRE) remain on rating watch negative.

The decision follows the reinsurer's second quarter earnings announcement.

The ratings agency said that there was continued uncertainty related to PXRE's future viability and business direction as the company continues to explore strategic alternatives and negotiate commutations.

Fitch said it believes such actions often signal a distressed situation and potential run-off.

Fitch also voiced concern over the company's ability to continue to operate profitably given its increased expenses, reduced premium base, and the potential for inadequately set reserves.

Roughly 82% of PXRE's in-force business as of 1 January 2006 has either been non-renewed or cancelled. PXRE expects nearly all remaining business will expire by 1 January 2007.

Fitch also cited:

  • Senior management changes previously announced, which include the resignation of the company's chief operating officer effective 17 July 2006.

  • Shareholder lawsuits previously announced, with their ultimate financial impact unknown.

    Fitch originally placed the ratings on Rating Watch Negative on 17 February 2006, following PXRE's announcement that the company had increased its pre-tax net loss estimates for hurricanes Katrina, Rita, and Wilma by $281m-$311m and decided to explore strategic alternatives.

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