PXRE Reports Second Quarter Results Net Income of $2.1 Million

HAMILTON, Bermuda, Aug. 7  /PRNewswire-FirstCall/ -- PXRE Group Ltd. (NYSE:PXT) today announced results for the second quarter ended June 30, 2006.  Notable items for the quarter included:

  - On a fully diluted basis, book value per share was $6.51 at June 30,
    2006
  - Net income before convertible preferred share dividends was $2.1 million
    compared to $43.5 million in the second quarter of 2005



Jeffrey L. Radke, President & Chief Executive Officer of PXRE Group, commented, "Our Board of Directors remains focused on finding a strategic alternative that would maximize value for shareholders."

Mr. Radke continued, "PXRE's catastrophe exposure is declining as a result of the cancellations and non-renewals in our reinsurance portfolio.  As of August 1, 2006, approximately 82% of our in-force business that was in effect on January 1, 2006 has either been cancelled or non-renewed, and it is anticipated that this percentage will increase as additional contracts are non-renewed on a going forward basis.  Despite these cancellations and non-renewals, we will continue to have significant catastrophe exposures for the balance of 2006."

Mr. Radke continued, "We have also seen continued evidence that our loss reserves for Hurricanes Katrina, Rita and Wilma are adequate.  For the second consecutive quarter, we did not experience any material development on our reserves for the 2005 hurricanes.  Additionally, we engaged a nationally recognized actuarial firm to review our groupwide loss reserves as of June 30, 2006 and their loss estimates for the 2005 hurricanes, as well as for the remainder of our reserves, were consistent with the level of our carried reserves.  Property loss reserves for hurricane events tend to mature more quickly than most other types of property and casualty loss reserves.  While the unique causation issues surrounding Hurricane Katrina introduce more uncertainty than is usually the case for hurricane events, our industry has historically seen little change in property loss reserves associated with hurricanes after one year or more has passed since the event occurred."

Mr. Radke continued, "We are hopeful that the Company will be able to achieve a strategic alternative that is attractive to our shareholders.  If our Board of Directors concludes that no other alternative would be in the best interests of our shareholders, it may determine that the best option is to place PXRE's reinsurance business into runoff and eventually commence an orderly winding up of PXRE's operations over some period of time that is not currently determinable.  We have therefore begun to take various steps to facilitate such a runoff, including the negotiation of commutations.  During the second quarter, our exited lines reserves decreased by approximately 46%, primarily due to commutations.  We have also begun discussions with a number of our largest cedents to negotiate commutations of our 2005 hurricane reserves."

For the quarter ended June 30, 2006, net income before convertible preferred share dividends was $2.1 million compared to $43.5 million in the second quarter of 2005.  The decrease in net income is primarily attributable to a decrease in net premiums earned due to the cancellation or non-renewal of many of our assumed reinsurance contracts following our ratings downgrade in February 2006, offset by the absence of any significant loss events in the quarter.

Net premiums earned for the quarter decreased 82%, or $68.1 million, to $15.3 million from $83.4 million for the year-earlier period.  This decrease in net premiums earned can be attributed to the cancellations or non-renewal of the majority of our reinsurance portfolio following our ratings downgrades by the major rating agencies in February 2006.  The decrease in net premiums earned also reflected an increase in ceded premiums earned of $10.2 million associated with increased excess of loss retrocessional catastrophe coverage during 2006, including a collateralized catastrophe facility entered into during the fourth quarter of 2005 to protect the Company against a severe catastrophe event.

                     Revenues and Net Premiums Earned

                             Three Months Ended        Six Months Ended
  ($000's)                        June 30,                 June 30,
                                            Change                    Change
                            2006     2005     %      2006      2005     %
   Revenues                $25,206  $90,082  (72)  $115,737  $180,062  (36)

  Net Premiums Earned:
   Cat & Risk Excess       $15,442  $83,371  (81)  $ 92,438  $163,512  (43)
   Exited                     (133)      49 (371)       (42)     (658) (94)
                           $15,309  $83,420  (82)  $ 92,396  $162,854  (43)




Net premiums written in the second quarter of 2006 decreased by $91.4 million, to negative $27.9 million from $63.5 million for the same period of 2005.  This decrease in net premiums written is due to the high level of return premiums attributable to the cancellation of many of our reinsurance contracts following our ratings downgrades by the major rating agencies in February 2006.  In addition, one large North America pro rata contract was terminated on a cut-off basis during the quarter, which resulted in a reduction of written premium of $18.1 million compared to the same period of 2005.  The decrease in net premiums written was also due to an increase in ceded premiums written of $2.4 million associated with excess of loss retrocessional catastrophe coverage during 2006, including a collateralized catastrophe facility entered into during the fourth quarter of 2005 to protect the Company against a severe catastrophe event.

                           Net Premiums Written

                             Three Months Ended        Six Months Ended
  ($000's)                        June 30,                 June 30,
                                            Change                    Change
                            2006     2005     %      2006      2005     %
  Net Premiums Written:
   Cat & Risk Excess       (27,772) $63,411  (144)  $51,034  $177,721  (71)
   Exited                     (134)      43  (412)      (47)     (661) (93)
                          ($27,906) $63,454  (144)  $50,987  $177,060  (71)




Net investment income for the second quarter of 2006 increased 98%, or $6.6 million, to $13.2 million from $6.7 million for the corresponding period of 2005 primarily as a result of a $7.0 million increase in income from our fixed maturity and short-term investment portfolio, offset, in part, by a $0.6 million decrease in income from our hedge funds.  The increase in income from our fixed income and short-term investment portfolio was due to a net return on the fixed maturity and short-term investment portfolios of 5.1% for the quarter, on an annualized basis, compared to 3.6% during the comparable prior year period and an increase in invested assets attributable to cash flow principally from the proceeds of capital raising activities in the fourth quarter of 2005.  The decrease in income from our hedge fund portfolio was the result of a return of negative 1.4 % on the hedge funds for the quarter compared to positive 0.1% for the second quarter of 2005.  As previously communicated, PXRE submitted redemption notices for its entire hedge fund portfolio in February 2006, and as a result income from hedge funds is expected to significantly decrease in future quarters as we receive the proceeds from our various hedge fund investments.  As of June 30, 2006 we have received the redemption proceeds from 79% of the hedge fund assets held on our December 31, 2005 balance sheet.   Net realized investment losses for the second quarter of 2006 were $3.4 million compared to $0.2 million in the second quarter of 2005, primarily due to $3.3 million in other than temporary impairment charges.

PXRE's GAAP loss ratio for the second quarter of 2006 was 5.6% compared to 30.1% for the second quarter of 2005.  Losses and loss expenses incurred in the second quarter of 2006 were $0.9 million.  While there were no significant property catastrophe losses during the second quarter of both 2006 and 2005, we had overall favorable loss reserve development of $7.5 million on prior year reserves during the quarter ended June 30, 2006.  We did not experience material development on our reserves for the 2005 hurricanes during the quarter.

The expense ratio was 104.5% for the second quarter of 2006 compared to 24.0% in the year-earlier quarter due to the decrease in net premiums earned and an increase in operating expenses of $0.9 million in 2006 related to additional fees to attorneys and financial advisors which have been incurred as a result of our ratings downgrades, the Board of Directors' decision to explore strategic alternatives for the Company and the class action securities lawsuits filed against the Company during the quarter.

                               GAAP Ratios

                                     Three Months Ended     Six Months Ended
                                          June 30,              June 30,
                                       2006      2005        2006      2005
  Loss Ratio, All Lines                 5.6%     30.1%       20.2%     42.7%
  Expense Ratio                       104.5%     24.0%       41.8%     23.6%
  Combined Ratio                      110.1%     54.1%       62.0%     66.3%

  Loss Ratio, Cat & Risk Excess        10.7%     28.5%       19.0%     41.9%




In the fourth quarter of 2005, PXRE sponsored a catastrophe bond transaction which was determined to be a derivative and recorded at fair value on the Company's balance sheet.  The increase of $2.3 million in other reinsurance related expense was due to the change in fair value of this derivative during the quarter ended June 30, 2006.

Operating results reflect a tax benefit of $1.0 million for the second quarter of 2005.  No tax benefit was recognized during the second quarter of 2006.

On a fully diluted basis, book value per share increased to $6.51 at June 30, 2006 from $6.50 per share at March 31, 2006.  During the second quarter of 2006, PXRE recorded a change in net after-tax unrealized depreciation in investments of $0.7 million in other comprehensive income, which resulted in a $0.01 decrease in fully diluted book value per share.  The cause of this decrease in value was primarily an increase in interest rates during the quarter.

PXRE - with operations in Bermuda, Europe and the United States - provides reinsurance products and services to a worldwide marketplace.  The Company's primary focus is providing property catastrophe reinsurance and retrocessional coverage.  The Company also provides marine, aviation and aerospace products and services.  The Company's shares trade on the New York Stock Exchange under the symbol "PXT."

PXRE Group Ltd. is scheduled to hold a conference call with respect to its second quarter financial results on Tuesday, August 8, 2006 at 10:00 a.m. Eastern Time.

A live webcast of the conference call will be available online at http://www.pxre.com/.  The dial-in numbers are [phone] for U.S. and Canadian callers and [phone] for international callers.  Following the conclusion of the presentation, the webcast will remain available online through September 8, 2006 at http://www.pxre.com/.  In addition, a replay of the call will be available from August 8, 2006 - August 15, 2006 by dialing [phone].  Callers dialing from outside the U.S. and Canada can access the replay by dialing [phone].  Please enter 6634737 as the conference ID.

Quarterly financial statements are expected to be available on the Company's website under the press release section of News and Events after market close on August 7, 2006.  To request other printed investor material from PXRE or additional copies of this news release, please call [phone], send e-mail to , or visit http://www.pxre.com/.

Statements in this release that are not strictly historical are forward-looking and are based upon current expectations and assumptions of management.  Statements included herein, as well as statements made by or on behalf of PXRE in its communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, which are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 as amended.  These forward-looking statements, identified by words such as "intend," "believe," "anticipate," or "expects" or variations of such words or similar expressions are based on current expectations, speak only as of the date thereof, and are subject to risk and uncertainties.  In light of the risks and uncertainties inherent in all future projections, the forward-looking statements in this report should not be considered as a representation by us or any other person that the Company's objectives or plans will be achieved.  The Company cautions investors and analysts that actual results or events could differ materially from those set forth or implied by the forward-looking statements and related assumptions, depending on the outcome of certain important factors including, but not limited to, the following: (i) we are exploring strategic alternatives and the implementation of any of these alternatives could involve substantial uncertainties and risks, including, among other things, the risk of failure in the implementation thereof and significant restructuring costs; (ii) as a result of the recent decline in our ratings and decline in capital, more than 75% of our clients as of January 1, 2006, measured by premium volume, may have the right to cancel their reinsurance contracts, which could result in a substantial loss in premium volume in 2006 and subsequent periods; (iii) the downgrade in, and withdrawal of, the ratings of our reinsurance subsidiaries by rating agencies will materially and negatively impact our business and results of operations; (iv) the decline in, and withdrawal of, our ratings and reduction in our surplus will allow clients to terminate their contracts with us and, with respect to ceded reinsurance, may require us to transfer premiums retained by us into a beneficiary trust; (v) we may not be able to identify or implement strategic alternatives for PXRE; (vi) if our Board of Directors concludes that no feasible strategic alternative would be in the best interests of our shareholders, it may determine that the best course of action is to place the reinsurance operations of PXRE into runoff and eventually commence an orderly winding up and liquidation of PXRE operations over some period of time that is not currently determinable; (vii) if the Board of Directors elects to pursue a strategic alternative that does not involve the continuation of meaningful property catastrophe reinsurance business, there is a risk that the Company could incur material charges or termination fees in connection with our collateralized catastrophe facilities and certain multiyear ceded reinsurance agreements; (viii) our ability to continue to operate our business and to identify, evaluate and complete any strategic alternative are dependent on our ability to retain our management and other key employees, and we may not be able to do so;  (ix) the market price of our common stock has declined and may decline further as a result of our announcements of increased loss estimates for losses due to Hurricanes Katrina, Rita and Wilma and the ratings downgrades we have experienced; (x) the Company faces significant litigation related to alleged securities law violations; (xi) recent adverse events have affected the market price of our common shares, which may lead to further securities litigation, administrative proceedings or both being brought against us; (xii) reserving for losses includes significant estimates which are also subject to inherent uncertainties;  (xiii) because of exposure to catastrophes, our financial results may vary significantly from period to period; (xiv) we may be overexposed to losses in certain geographic areas for certain types of catastrophe events; (xv) we may be overexposed to smaller catastrophe losses and for certain geographic areas and perils due to the cancellations of a substantial portion of our assumed reinsurance contracts following our recent ratings downgrade; (xvi) we operate in a highly competitive environment and no assurance can be given that we will be able to compete effectively in this environment; (xvii) reinsurance prices may decline, which could affect our profitability; (xviii) we may require additional capital in the future;  (xix) our investment portfolio is subject to significant market and credit risks which could result in an adverse impact on our financial position or results; (xx) because we depend on a few reinsurance brokers for a large portion of revenue, loss of business provided by any one or more of them could adversely affect us; (xxi) the impact of investigations of broker fee and placement arrangements could adversely impact our ability to write more business; (xxii) we have exited the finite reinsurance business, but claims in respect of finite reinsurance could have an adverse effect on our results of operations; (xxiii) our reliance on reinsurance brokers exposes us to their credit risk; (xxiv) we may be adversely affected by foreign currency fluctuations; (xxv) retrocessional reinsurance subjects us to credit risk and may become unavailable on acceptable terms; (xxvi) we have exhausted our retrocessional coverage with respect to Hurricane Katrina, leaving us exposed to further losses; (xxvii) recoveries under portions of our collateralized facilities are triggered by modeled loss to a notional portfolio, rather than our actual losses arising from a catastrophe event, which creates a potential mismatch between the risks assumed through our inwards reinsurance business and the protection afforded by these facilities; (xxviii) our inability to provide the necessary collateral to cedents could affect its ability to offer reinsurance in certain markets; (xxix) the insurance and reinsurance business is historically cyclical, and we may experience periods with excess underwriting capacity and unfavorable premium rates; conversely, we may have a shortage of underwriting capacity when premium rates are strong; (xxx) regulatory constraints may restrict our ability to operate our business; (xxxi) any determination by the United States Internal Revenue Service ("IRS") that we or our offshore subsidiaries are subject to U.S. taxation could result in a material adverse impact on the our financial position or results; and (xxxii) any changes in tax laws, tax treaties, tax rules and interpretations could result in a material adverse impact on our financial position or results.  In addition to the factors outlined above that are directly related to PXRE's business, PXRE is also subject to general business risks, including, but not limited to, adverse state, federal or foreign legislation and regulation, adverse publicity or news coverage, changes in general economic factors, the loss of key employees and other factors set forth in PXRE's SEC filings.  The factors listed above should not be construed as exhaustive.  Therefore, actual results or outcomes may differ materially from what is expressed or forecasted in such forward-looking statements.

PXRE undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events (including catastrophe events), or otherwise.

                             PXRE Group Ltd.
                      Unaudited Financial Highlights
             (Dollars in thousands except per share amounts)

                                      Three Months Ended   Six Months Ended
                                           June 30,            June 30,
                                        2006     2005      2006      2005

  Gross premiums written              ($22,098) $66,863  $ 99,287  $191,563
  Net premiums written                ($27,906) $63,454  $ 50,987  $177,060

  Revenues                             $25,206  $90,082  $115,737  $180,062
  Losses and expenses                  (23,066) (47,583)  (71,985) (114,884)
  Income before income taxes and
   convertible preferred share
   dividends                             2,140   42,499    43,752    65,178
  Income tax benefit                         -   (1,008)        -    (1,072)
  Net income before convertible
   preferred share dividends           $ 2,140  $43,507  $ 43,752  $ 66,250
  Net income per diluted common share  $  0.03  $  1.30  $   0.57  $   2.00
  Average diluted shares outstanding
   (000's)                              77,090   33,359    77,025    33,186



  Financial Position:                                June 30,    Dec. 31,
                                                       2006        2005
   Cash and investments                            $1,360,560  $1,660,996
   Total assets                                     1,629,893   2,116,047
   Reserve for losses and loss expenses               841,908   1,320,126
   Shareholders' equity                               504,538     465,318
   Book value per common share (1)                       6.51        6.01
   Statutory surplus:
    PXRE Reinsurance Ltd.                             555,900(2)  530,775(3)
    PXRE Reinsurance Company                          133,500(4)  126,991




                                     Three Months Ended     Six Months Ended
                                          June 30,              June 30,
                                       2006      2005        2006      2005

  GAAP Ratios:
   Loss ratio                           5.6%     30.1%       20.2%    42.7%
   Expense ratio                      104.5%     24.0%       41.8%    23.6%
   Combined ratio                     110.1%     54.1%       62.0%    66.3%

  Losses Incurred by Segment:
  Cat & Risk Excess                   $1,654   $23,739     $17,533  $68,505
  Exited                                (804)    1,386       1,117    1,058
                                      $  850   $25,125     $18,650  $69,563

  Commission and Brokerage, Net of
   Fee Income by Segment:
   Cat & Risk Excess                  $4,336   $ 9,546     $16,078  $18,802
   Exited                                267        37         229     (152)
                                      $4,603   $ 9,583     $16,307  $18,650

  Underwriting Income (Loss) by
   Segment: (5)
   Cat & Risk Excess                  $9,452   $50,086     $58,827  $76,205
   Exited                                404    (1,374)     (1,388)  (1,564)
                                      $9,856   $48,712     $57,439  $74,641



                                     Three Months Ended     Six Months Ended
                                          June 30,              June 30,
                                       2006      2005        2006      2005
  Underwriting Income Reconciled to
   Income Before Income Taxes and
   Convertible Preferred Share
   Dividends:
   Underwriting income (5)            $9,856   $48,712     $57,439  $74,641
   Net investment income              13,249     6,681      31,161   17,123
   Net realized investment losses     (3,379)     (225)     (8,038)    (332)
   Other reinsurance related expense  (2,255)        -      (5,976)       -
   Operating expenses                (11,392)  (10,471)    (22,357) (19,848)
   Foreign exchange (losses) gains      (338)    1,414      (1,265)     816
   Interest expense                   (3,601)   (3,612)     (7,212)  (7,222)
   Income before income taxes and
    convertible preferred share
    dividends                         $2,140   $42,499     $43,752  $65,178


  (1) After considering convertible preferred shares.
  (2) Estimated and before inter-company eliminations.
  (3) Before inter-company eliminations.
  (4) Estimated.
  (5) Underwriting Income (Loss) by Segment (a GAAP financial measure):  The
      Company's reported underwriting results are its best measure of
      profitability for its individual underwriting segments and accordingly
      are disclosed in the footnotes to the Company's financial statements
      required by SFAS 131, Disclosures about Segments of an Enterprise and
      Related Information.  Underwriting Income by Segment is calculated by
      subtracting losses and loss expenses incurred and commission and
      brokerage, net of fee income from net earned premiums.  PXRE does not
      allocate net investment income, net realized investment gains
      (losses), other reinsurance related expense, operating expenses,
      foreign exchange gains or losses, or interest expense to its
      respective underwriting segments.



These preliminary financial statements are unaudited and do not include footnotes that customarily accompany a complete set of financial statements; these footnotes will be furnished when the Company makes its filing on Form 10-Q for the quarter ended June 30, 2006.

  PXRE            Consolidated Balance Sheets
  Group Ltd.      (Dollars in thousands, except par value per share)

                                                  June 30,      December 31,
                                                    2006            2005
                                                 (Unaudited)

  Assets
         Investments:
          Fixed maturities, at fair value:
           Available-for-sale (amortized cost
            $667,891 and $1,212,299,
            respectively)                       $  658,712       $1,208,248
           Trading (cost $35,359 and
            $28,225, respectively)                  37,176           25,796
          Short-term investments, at fair value    603,410          261,076
          Hedge funds, at fair value (cost
           $35,451 and $132,690, respectively)      40,260          148,230
          Other invested assets, at fair value
           (cost $2,071 and $2,806, respectively)    2,651            3,142
            Total investments                    1,342,209        1,646,492
         Cash                                       18,351           14,504
         Accrued investment income                   5,380           10,809
         Premiums receivable, net                  124,017          217,446
         Other receivables                           8,268           17,000
         Reinsurance recoverable on paid losses      7,813            4,223
         Reinsurance recoverable on unpaid losses   44,941          107,655
         Ceded unearned premiums                    13,877            1,379
         Deferred acquisition costs                    381            5,487
         Income tax recoverable                      6,204            6,295
         Other assets                               58,452           84,757
            Total assets                        $1,629,893       $2,116,047

  Liabilities
         Losses and loss expenses               $  841,908       $1,320,126
         Unearned premiums                           3,602           32,512
         Subordinated debt                         167,085          167,081
         Reinsurance balances payable               22,328           30,244
         Deposit liabilities                        56,458           68,270
         Other liabilities                          33,974           32,496
            Total liabilities                    1,125,355        1,650,729

  Shareholders' Equity
         Serial convertible preferred shares,
          $1.00 par value, $10,000 stated
          value -- 30 million shares
          authorized, 0.01 million and 0.01
          million shares issued and outstanding,
          respectively                              58,132           58,132
         Common shares, $1.00 par value --
          350 million shares authorized, 72.4
          million and 72.3 million shares issued
          and outstanding, respectively             72,408           72,281
         Additional paid-in capital                874,648          875,224
         Accumulated other comprehensive loss       (9,027)          (5,468)
         Accumulated deficit                      (486,135)        (527,349)
         Restricted shares at cost (0.4 million
          and 0.5 million shares, respectively)     (5,488)          (7,502)
            Total shareholders' equity             504,538          465,318
            Total liabilities and
             shareholders' equity               $1,629,893       $2,116,047



  PXRE         Consolidated Statements of Income and Comprehensive Income
  Group Ltd.  (Dollars in thousands, except per share amounts)

                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                     2006       2005     2006        2005
                                       (Unaudited)         (Unaudited)


  Revenues
         Net premiums earned        $15,309    $83,420  $92,396    $162,854
         Net investment income       13,249      6,681   31,161      17,123
         Net realized investment
          losses                     (3,379)      (225)  (8,038)       (332)
         Fee income                      27        206      218         417
                                     25,206     90,082  115,737     180,062
  Losses and Expenses
         Losses and loss expenses
          incurred                      850     25,125   18,650      69,563
         Commission and brokerage     4,630      9,789   16,525      19,067
         Other reinsurance
          related expense             2,255          -    5,976           -
         Operating expenses          11,392     10,471   22,357      19,848
         Foreign exchange losses
          (gains)                       338     (1,414)   1,265        (816)
         Interest expense             3,601      3,612    7,212       7,222
                                     23,066     47,583   71,985     114,884


         Income before income
          taxes and convertible
          preferred share
          dividends                   2,140     42,499   43,752      65,178
         Income tax benefit               -     (1,008)       -      (1,072)
         Net income before
          convertible preferred
          share dividends           $ 2,140    $43,507  $43,752    $ 66,250
         Convertible preferred
          share dividends             1,375      1,268    2,538       4,637
         Net income to common
          shareholders              $   765    $42,239  $41,214    $ 61,613

  Comprehensive Income,
   Net of Tax
         Net income before
          convertible preferred
          share dividends           $ 2,140    $43,507  $43,752    $ 66,250
         Net change in unrealized
          (depreciation)
          appreciation on
          investments                (4,087)     5,783  (11,715)     (1,564)
         Reclassification
          adjustments for losses
          included in net income      3,374        161    8,033         217
         Minimum additional
          pension liability               -          -      123           -
         Comprehensive income       $ 1,427    $49,451  $40,193    $ 64,903

  Per Share
         Basic:
          Income before
           convertible preferred
           share dividends          $  0.03    $  1.54  $  0.61    $   2.73
          Convertible preferred
           share dividends            (0.02)     (0.04)   (0.04)      (0.19)
          Net income to common
           shareholders             $  0.01    $  1.50  $  0.57    $   2.54
          Average shares
           outstanding (000's)       71,986     28,179   71,927      24,236


         Diluted:
          Net income                $  0.03    $  1.30  $  0.57    $   2.00
          Average shares
           outstanding (000's)       77,090     33,359   77,025      33,186




  PXRE           Consolidated Statements of Shareholders' Equity
  Group Ltd.     (Dollars in thousands)

                                Three Months Ended      Six Months Ended
                                     June 30,               June 30,
                                 2006        2005       2006        2005
                                   (Unaudited)            (Unaudited)

  Convertible Preferred Shares
        Balance at beginning
         of period             $ 58,132    $ 63,371   $ 58,132    $163,871
        Conversion of
         convertible preferred
         shares                       -           -          -    (103,869)
        Dividends to
         convertible preferred
         shareholders                 -           -          -       3,369
          Balance at end of
           period              $ 58,132    $ 63,371   $ 58,132    $ 63,371

  Common Shares
        Balance at beginning
         of period             $ 72,410    $ 28,646   $ 72,281    $ 20,469
        (Cancellation) issuance
         of common shares, net       (2)        167        127       8,344
          Balance at end of
           period              $ 72,408    $ 28,813   $ 72,408    $ 28,813

  Additional Paid-in Capital
        Balance at beginning
         of period             $875,228    $433,811   $875,224    $329,730
        (Cancellation) issuance
         of common shares, net     (580)      3,137       (576)    106,850
        Tax effect of stock
         options exercised            -         250          -         618
          Balance at end of
           period              $874,648    $437,198   $874,648    $437,198

  Accumulated Other
   Comprehensive Income
        Balance at beginning
         of period             $ (8,314)   $(12,146)  $ (5,468)   $ (4,855)
        Change in unrealized
         (losses) gains on
         investments               (713)      5,944     (3,682)     (1,347)
        Change in minimum
         additional pension
         liability                    -           -        123           -
          Balance at end of
           period              $ (9,027)   $ (6,202)  $ (9,027)   $ (6,202)

  (Accumulated Deficit)/
   Retained Earnings
        Balance at beginning
         of period            $(486,900)   $212,221  $(527,349)   $194,081
        Net income before
         convertible
         preferred share
         dividends                2,140      43,507     43,752      66,250
        Dividends to
         convertible
         preferred
         shareholders            (1,375)     (1,268)    (2,538)     (4,637)
        Dividends to common
         shareholders                 -      (3,446)         -      (4,680)
          Balance at end of
           period             $(486,135)   $251,014  $(486,135)   $251,014

  Restricted Shares
        Balance at beginning
         of period             $ (6,846)   $(11,304)  $ (7,502)   $ (6,741)
        Cancellation
         (issuance) of
         restricted shares,
         net                        743        (617)       603      (6,069)
        Amortization of
         restricted shares          615       1,194      1,411       2,083
          Balance at end of
           period              $ (5,488)   $(10,727)  $ (5,488)   $(10,727)

  Total Shareholders' Equity
        Balance at beginning
         of period             $503,710    $714,599   $465,318    $696,555
        Conversion of
         convertible
         preferred shares             -           -          -    (103,869)
        (Cancellation)
         issuance of common
         shares, net               (582)      3,304       (449)    115,194
        Restricted shares, net    1,358         577      2,014      (3,986)
        Unrealized
         (depreciation)
         appreciation on
         investments               (713)      5,944     (3,682)     (1,347)
        Minimum additional
         pension liability            -           -        123           -
        Net income before
         convertible
         preferred share
         dividends                2,140      43,507     43,752      66,250
        Dividends to
         convertible
         preferred
         shareholders            (1,375)     (1,268)    (2,538)     (1,268)
        Dividends to common
         shareholders                 -      (3,446)         -      (4,680)
        Tax effect of stock
         options exercised            -         250          -         618
          Balance at end of
           period              $504,538    $763,467   $504,538    $763,467



  PXRE           Consolidated Statements of Cash Flows
  Group Ltd.     (Dollars in thousands)


                                   Three Months Ended     Six Months Ended
                                        June 30,              June 30,
                                    2006       2005       2006       2005
                                      (Unaudited)           (Unaudited)
  Cash Flows from
   Operating Activities
       Premiums collected, net
        of reinsurance             $(6,157)   $71,568   $136,501   $181,459
       Loss and loss adjustment
        expenses paid, net of
        reinsurance               (139,269)   (58,164)  (402,590)  (104,500)
       Commission and brokerage
        received (paid), net of
        fee income                   4,179      4,241     (4,816)   (14,463)
       Operating expenses paid     (14,560)    (6,593)   (27,701)   (17,538)
       Net investment income
        received                     9,472      9,929     27,400     17,232
       Interest paid                (1,360)    (1,371)    (7,154)    (7,165)
       Income taxes (paid)
        recovered                     (123)    11,283         91     18,469
       Trading portfolio
        purchased                  (52,175)       (13)  (101,714)   (14,409)
       Trading portfolio disposed   52,445          -     92,566          -
       Deposit (paid) received      (8,275)     3,983    (11,812)       931
       Other                          (726)      (927)    (3,607)      (984)
         Net cash (used) provided
          by operating activities (156,549)    33,936   (302,836)    59,032

  Cash Flows from
   Investing Activities
       Fixed maturities available
        for sale purchased             (47)  (107,034)   (67,038)  (295,024)
       Fixed maturities available
        for sale disposed or
        matured                     34,304     59,108    603,837    115,654
       Hedge funds purchased             -     (9,536)    (4,000)  (114,888)
       Hedge funds disposed        104,248      9,698    117,364    108,503
       Other invested assets
        purchased                      (35)         -        (35)         -
       Other invested assets
        disposed                       598         25      1,171      1,392
       Net change in short-term
        investments                 19,704     15,061   (342,334)   125,542
       Receivable for securities         -     11,516          -       (344)
       Payable for securities          100    (20,389)       100      1,527
         Net cash provided (used)
          by investing activities  158,872    (41,551)   309,065    (57,638)

  Cash Flows from
   Financing Activities
       Proceeds from issuance of
        common shares                  162      2,693        419      5,822
       Cash dividends paid to
        common shareholders              -     (3,446)         -     (4,680)
       Cash dividends paid to
        preferred shareholders      (1,375)    (1,268)    (2,538)    (1,268)
       Cost of shares repurchased        -         (6)      (263)      (567)
         Net cash used by
          financing activities      (1,213)    (2,027)    (2,382)      (693)

       Net change in cash            1,110     (9,642)     3,847        701
       Cash, beginning of period    17,241     26,011     14,504     15,668
       Cash, end of period        $ 18,351   $ 16,369   $ 18,351   $ 16,369

   Reconciliation of net income to
    net cash (used) provided by
    operating activities:
       Net income before
        convertible preferred
        share dividends           $  2,140   $ 43,507   $ 43,752   $ 66,250
       Adjustments to reconcile
        net income to net cash
        (used) provided by
        operating activities:
         Losses and loss expenses (168,131)   (41,809)  (478,217)   (41,328)
         Unearned premiums         (43,215)   (19,967)   (41,408)    14,205
         Deferred acquisition
          costs                      9,825      1,567      5,106     (3,485)
         Receivables                24,902     20,922    102,161      8,286
         Reinsurance balances
          payable                   (2,365)    (1,755)    (7,916)     2,210
         Reinsurance recoverable    29,711      8,770     59,125      6,391
         Income taxes                 (123)    10,549         91     17,670
         Equity in earnings of
          limited partnerships        (167)      (135)    (6,039)    (4,538)
         Trading portfolio
          purchased                (52,175)       (13)  (101,714)   (14,409)
         Trading portfolio
          disposed                  52,445          -     92,566          -
         Deposit liability          (8,275)     3,983    (11,812)       931
         Receivable on
          commutation                    -          -     35,154          -
         Other                      (1,121)     8,317      6,315      6,849
          Net cash (used)
           provided by operating
           activities            $(156,549)  $ 33,936  $(302,836)  $ 59,032


DATASOURCE: PXRE Group Ltd.



CONTACT:  Robert P. Myron, Chief Financial Officer, PXRE Group Ltd.,

[phone], ; Investors - Jamie Tully, or Lesley

Bogdanow, both of Citigate Sard Verbinnen, [phone],

 



Web site:  http://www.pxre.com/ 

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