Fitch: PXRE's Ratings Remain on Watch Negative After Shelf Registration Announcement.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. commented today that ratings of PXRE Group Ltd. (PXRE), PXRE Capital Trust I, PXRE Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Ltd., and PXRE Reinsurance Company remain on Rating Watch Negative following PXRE's announcement of a $300 million shelf registration filed on Sept. 15, 2005. The ratings are listed below. Fitch views the potential capital as a positive credit event. Based on PXRE's current estimate of a net loss from Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. of between $235 million and $300 million, the amount raised could be enough to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. the loss if industry losses fall within PXRE's $30 billion-$40 billion assumption. Fitch also notes that in the past, major insurance losses have spurred significant increases in insurance prices, which PXRE could be in a position to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. , depending on the capital raised and ultimate net loss from Katrina. The speed with which PXRE will be able to successfully raise capital will be an indication of the capital market's confidence in both PXRE's organization and future reinsurance pricing. As a predominantly property catastrophe writer, Fitch expects PXRE will experience a certain amount of catastrophe losses from time to time. Nonetheless, Fitch notes that the present loss estimates are significant, representing from 30%-40% of PXRE's June 30, 2005, shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . This indicates to Fitch that PXRE's book of business contained a much greater concentration of risk than Fitch previously believed. The additional capital provided under the shelf registration will replenish losses and replace capital lost to Hurricane Katrina; however, it will not cure potential issues with PXRE's risk management. Fitch also notes that significant uncertainties remain. Loss estimates from Hurricane Katrina continue to develop, and Fitch believes this event presents unprecedented risks to the insurance industry. Thus, Fitch believes it may take longer than normal for these losses to fully develop. Fitch further notes that PXRE's loss estimates are based on an industry loss estimate of $30 billion to $40 billion. With some estimates of the industry loss now as high as $60 billion, it is possible that PXRE's loss could grow above the high end of its estimated range. Fitch expects to be able to resolve the Rating Watch only after PXRE successfully raises adequate capital, Fitch obtains a better understanding of PXRE's risk exposure, and Fitch believes there is a reasonably stable estimate of the industry's and PXRE's ultimate loss from Hurricane Katrina. Given the very unusual nature of this loss, this could take an extended period of time. Resolution of the Rating Watch will depend upon PXRE's capital base, net of storm losses and capital replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. , and Fitch's updated assessment of PXRE's risk concentration relative to the capital base. If PXRE is unable to raise capital as planned, the rating will likely be downgraded, potentially by more than one notch notch (noch) incisure; an indentation on the edge of a bone or other organ. aortic notch dicrotic n. cardiac notch 1. . Current ratings remain on Rating Watch Negative by Fitch: PXRE Group Ltd. --Long-term rating 'BBB-'. PXRE Capital Trust I --Trust preferred securities $100 million 8.85% due Feb. 1, 2027 'BB+'. PXRE Reinsurance Company PXRE Reinsurance Ltd. --Insurer financial strength 'A-'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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