PXRE Reports Third Quarter Results

Net Income of $4.5 Million 


HAMILTON, Bermuda, Nov. 8  /PRNewswire-FirstCall/ -- PXRE Group Ltd. (NYSE:PXT) today announced results for the third quarter ended September 30, 2006.  Notable items for the quarter included:

  * On a fully diluted basis, book value per share increased during the
    quarter by $0.14 to $6.65 at September 30, 2006
  * Net income before convertible preferred share dividends was $4.5 million
    compared to net loss before convertible preferred share dividends of
    $317.3 million in the third quarter of 2005



Jeffrey L. Radke, President & Chief Executive Officer of PXRE Group, commented, "Our Board of Directors is continuing to explore various strategic alternatives that would maximize value for shareholders and we remain optimistic that we will find a solution other than runoff.  As discussed in the past, however, 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."

For the quarter ended September 30, 2006, net income before convertible preferred share dividends was $4.5 million compared to net loss before convertible preferred share dividends of $317.3 million in the third quarter of 2005.  The increase in net income before convertible preferred shares is primarily attributable to the absence of any significant loss events in the quarter as well as favorable development on our loss reserves, offset by a decrease in net premiums earned due to the cancellation and non-renewal of the majority of our reinsurance portfolio following our ratings downgrades in February 2006.  The net loss before convertible preferred share dividends for the third quarter of 2005 was primarily driven by the net impact of Hurricanes Katrina and Rita of $349.9 million, after tax, reinsurance recoveries on our outwards reinsurance program and the impact of inwards and outwards reinstatement and additional premiums.

Net premiums earned for the quarter decreased 92%, or $63.2 million, to $5.6 million from $68.8 million for the year-earlier period.  This decrease in net premiums earned can be attributed to the cancellations and non-renewal of the majority of our reinsurance portfolio following our ratings downgrades by the major rating agencies in February 2006.

                     Revenues and Net Premiums Earned

                        Three Months Ended          Nine Months Ended
  ($000's)                 September 30,               September 30,
                                          Change                      Change
                          2006      2005     %        2006      2005     %

  Revenues             $20,289   $82,662   (75)   $136,026  $262,724   (48)

  Net Premiums Earned:
    Cat & Risk Excess  $ 5,979   $68,878   (91)   $ 98,417  $232,389   (58)
    Exited                (363)      (61)   N/M       (405)     (718)  (44)
                       $ 5,616   $68,817   (92)   $ 98,012  $231,671   (58)




Net premiums written in the third quarter of 2006 decreased 79%, or $78.6 million, to $20.7 million from $99.3 million for the same period of 2005.  This decrease in net premiums written is due to the cancellation and non-renewal of the majority of our reinsurance portfolio following our ratings downgrades by the major rating agencies in February 2006.

                           Net Premiums Written

                       Three Months Ended          Nine Months Ended
  ($000's)                September 30,               September 30,
                                         Change                      Change
                         2006      2005     %        2006      2005     %
  Net Premiums Written:
    Cat & Risk Excess  $21,054   $99,346   (79)    $72,088  $277,066   (74)
    Exited                (363)      (65)   N/M       (410)     (726)  (44)
                       $20,691   $99,281   (79)    $71,678  $276,340   (74)




Net investment income for the third quarter of 2006 increased 8%, or $1.1 million, to $14.6 million from $13.5 million for the corresponding period of 2005 primarily as a result of a $6.2 million increase in income from our fixed maturity and short-term investment portfolio, offset, in part, by a $5.5 million decrease in income from our hedge funds.  The increase in income from our fixed income and short-term investment portfolio was due to an increase in invested assets attributable to cash flow principally from the proceeds of capital raising activities in the fourth quarter of 2005 and from the proceeds from the redemptions of our hedge fund investments which have been received during the first nine months of 2006.  The net return on the fixed maturity and short-term investment portfolios increased to 5.2% for the quarter, on an annualized basis, compared to 3.8% during the comparable prior year period.  As previously communicated, PXRE submitted redemption notices for its entire hedge fund portfolio in February 2006, and as a result income from hedge funds will continue to decrease in future quarters as we receive the remaining proceeds from our various hedge fund investments.  As of September 30, 2006, we have received redemption proceeds from 91% of the hedge fund assets held on our December 31, 2005 balance sheet.

The Company had negative incurred losses for the quarter of $6.0 million. This negative incurred loss amount was due to two factors.  First, the Company had $3.7 million of net favorable development in its 2006 accident year loss reserves which was caused by lower than expected reported losses for the 2006 accident year on a year-to-date basis along with the absence of any significant property catastrophe events in the third quarter.  Second, the Company had net favorable development of $2.3 million for prior-year losses and loss expenses during the quarter.  Losses and loss expenses incurred in the third quarter of 2005 were $409.0 million, which was primarily attributable to Hurricanes Katrina and Rita which occurred during the third quarter of 2005.

The expense ratio was 232.4% for the third quarter of 2006 compared to 28.8% in the year-earlier quarter due to the decrease in net premiums earned in 2006 and an increase in operating expenses of $4.0 million in 2006.  The increase was largely 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, the class action securities lawsuits filed against the Company during the second quarter of 2006 as well as employee severance and retention expenses.

                               GAAP Ratios

                                 Three Months Ended       Nine Months Ended
                                    September 30,           September 30,
                                  2006         2005       2006        2005

  Loss Ratio, All Lines         (106.2)%      594.3 %     12.9 %     206.5 %
  Expense Ratio                  232.4         28.8       52.8        25.2
  Combined Ratio                 126.2 %      623.1 %     65.7 %     231.7 %

  Loss Ratio, Cat & Risk
   Excess                       (120.4)%      585.7 %     10.5 %     203.1 %




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 $4.8 million in other reinsurance related expense was due to the change in fair value of this derivative during the quarter ended September 30, 2006.

Operating results reflect a tax benefit of $32.5 million for the third quarter of 2005.  No tax benefit was recognized during the third quarter of 2006.

On a fully diluted basis, book value per share increased to $6.65 at September 30, 2006 from $6.51 per share at June 30, 2006.  During the third quarter of 2006, PXRE recorded a change in net after-tax unrealized appreciation in investments of $7.6 million in other comprehensive income, which resulted in a $0.10 increase in fully diluted book value per share.  The cause of this increase in value was primarily a decrease 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 third quarter financial results on Thursday, November 9, 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 December 9, 2006 at http://www.pxre.com/.  In addition, a replay of the call will be available from November 9, 2006 - November 16, 2006 by dialing [phone].  Callers dialing from outside the U.S. and Canada can access the replay by dialing [phone].  Please enter 1092468 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 November 8, 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.  As of November 6, 2006, in excess of 80% of our in- force business as of January 1, 2006 has either been cancelled or non-renewed and we anticipate that this percentage will increase; (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 our 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      Nine Months Ended
                                   September 30,          September 30,
                                 2006        2005       2006        2005

  Gross premiums written        $32,537   $ 236,146   $131,824   $ 427,708
  Net premiums written          $20,691   $  99,281    $71,678   $ 276,340

  Revenues                      $20,289   $  82,662   $136,026   $ 262,724
  Losses and expenses           (15,829)   (432,536)   (87,814)   (547,420)
  Income (loss) before income
   taxes and convertible
   preferred share dividends      4,460    (349,874)    48,212    (284,696)
  Income tax benefit                  -     (32,531)         -     (33,603)
  Net income (loss) before
   convertible preferred
   share dividends              $ 4,460   $(317,343)  $ 48,212   $(251,093)
  Net income (loss) per
   diluted common share         $  0.06   $  (11.17)  $   0.63   $  (10.02)
  Average diluted shares
   outstanding (000's)           77,120      33,550     77,051      33,307
  Average diluted shares
   outstanding when
   antidilutive (000's)               -      28,529          -      25,649


                                                   Sept. 30,    Dec. 31,
  Financial Position:                                2006         2005
    Cash and investments                          $1,321,176   $1,660,996
    Total assets                                   1,525,708    2,116,047
    Reserve for losses and loss
     expenses                                        727,765    1,320,126
    Shareholders' equity                             515,669      465,318
    Book value per common share(1)                      6.65         6.01
    Statutory surplus:
      PXRE Reinsurance Ltd.                          573,100(2)   530,775(3)
      PXRE Reinsurance Company                       136,600(4)   126,991



                                 Three Months Ended      Nine Months Ended
                                    September 30,          September 30,
                                  2006        2005       2006        2005
  GAAP Ratios:
   Loss ratio                    (106.2)%     594.3 %     12.9 %     206.5 %
   Expense ratio                  232.4 %      28.8 %     52.8 %      25.2 %
   Combined ratio                 126.2 %     623.1 %     65.7 %     231.7 %

  Losses Incurred by Segment:
   Cat & Risk Excess            $(7,196)  $ 403,451    $10,337   $ 471,956
   Exited                         1,230       5,507      2,347       6,565
                                $(5,966)  $ 408,958    $12,684   $ 478,521

  Commission and Brokerage,
   Net of Fee Income by Segment:
   Cat & Risk Excess            $ 1,813   $  12,625    $17,891   $  31,425
   Exited                           (43)        (33)       186        (183)
                                $ 1,770   $  12,592    $18,077   $  31,242

  Underwriting Income
   (Loss) by Segment: (5)
   Cat & Risk Excess            $11,362   $(347,198)   $70,189   $(270,992)
   Exited                        (1,550)     (5,535)    (2,938)     (7,100)
                                $ 9,812   $(352,733)   $67,251   $(278,092)



                                 Three Months Ended      Nine Months Ended
                                    September 30,          September 30,
                                  2006        2005       2006        2005
  Underwriting Income (Loss)
   Reconciled to Income (Loss)
   Before Income Taxes and
   Convertible Preferred
   Share Dividends:
    Underwriting income
     (loss)(5)                   $ 9,812   $(352,733)   $67,251   $(278,092)
    Net investment income         14,600      13,526     45,761      30,649
    Net realized investment
     gains (losses)                   57         (34)    (7,981)       (366)
    Other reinsurance related
     expense                      (4,762)          -    (10,738)          -
    Operating expenses           (11,284)     (7,255)   (33,641)    (27,103)
    Foreign exchange (losses)
     gains                          (347)        237     (1,612)      1,053
    Interest expense              (3,616)     (3,615)   (10,828)    (10,837)
    Income (loss) before income
     taxes and convertible
     preferred share dividends   $ 4,460   $(349,874)   $48,212   $(284,696)

  (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 (Loss) 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 September 30, 2006.

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

                                               September 30,    December 31,
                                                   2006            2005
                                                (Unaudited)
  Assets
         Investments:
           Fixed maturities, at fair value:
            Available-for-sale
             (amortized cost $528,696 and
              $1,212,299, respectively)       $  528,528        $1,208,248
            Trading (cost $13,143 and
             $28,225, respectively)               13,506            25,796
           Short-term investments, at
            fair value                           737,195           261,076
           Hedge funds, at fair value
            (cost $17,374 and
             $132,690, respectively)              18,655           148,230
           Other invested assets, at fair
            value (cost $1,880 and
            $2,806 respectively)                   2,478             3,142
             Total investments                 1,300,362         1,646,492
         Cash                                     20,814            14,504
         Accrued investment income                 4,842            10,809
         Premiums receivable, net                110,315           217,446
         Other receivables                         7,561            17,000
         Reinsurance recoverable on
          paid losses                              2,203             4,223
         Reinsurance recoverable on
          unpaid losses                           37,146           107,655
         Ceded unearned premiums                  10,139             1,379
         Deferred acquisition costs                1,324             5,487
         Income tax recoverable                        -             6,295
         Other assets                             31,002            84,757
             Total assets                     $1,525,708        $2,116,047

  Liabilities
         Losses and loss expenses             $  727,765        $1,320,126
         Unearned premiums                        14,961            32,512
         Subordinated debt                       167,087           167,081
         Reinsurance balances payable             16,145            30,244
         Deposit liabilities                      56,161            68,270
         Income tax payable                           31                 -
         Other liabilities                        27,889            32,496
             Total liabilities                 1,010,039         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,
          72.3 million and 72.3 million
          shares issued and outstanding,
          respectively                            72,346            72,281
         Additional paid-in capital              873,009           875,224
         Accumulated other comprehensive
          loss                                    (1,382)           (5,468)
         Accumulated deficit                    (482,838)         (527,349)
         Restricted shares at cost (0.4
          million and 0.5 million shares,
          respectively)                           (3,598)           (7,502)
             Total shareholders' equity          515,669           465,318
             Total liabilities and
              shareholders' equity            $1,525,708        $2,116,047



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

                                  Three Months Ended    Nine Months Ended
                                     September 30,         September 30,
                                   2006        2005      2006        2005
                                     (Unaudited)            (Unaudited)

  Revenues
         Net premiums earned     $ 5,616      $68,817  $98,012     $231,671
         Net investment income    14,600       13,526   45,761       30,649
         Net realized
          investment gains
          (losses)                    57          (34)  (7,981)        (366)
         Fee income                   16          353      234          770
                                  20,289       82,662  136,026      262,724

  Losses and Expenses
         Losses and loss
          expenses incurred       (5,966)     408,958   12,684      478,521
         Commission and
          brokerage                1,786       12,945   18,311       32,012
         Other reinsurance
          related expense          4,762            -   10,738            -
         Operating expenses       11,284        7,255   33,641       27,103
         Foreign exchange
          losses (gains)             347         (237)   1,612       (1,053)
         Interest expense          3,616        3,615   10,828       10,837
                                  15,829      432,536   87,814      547,420

         Income (loss) before
          income taxes and
          convertible preferred
          share dividends          4,460     (349,874)  48,212     (284,696)
         Income tax benefit            -      (32,531)       -      (33,603)
         Net income (loss)
          before convertible
          preferred share
          dividends              $ 4,460    $(317,343) $48,212    $(251,093)
         Convertible preferred
          share dividends          1,163        1,241    3,701        5,878
         Net income (loss) to
          common shareholders    $ 3,297    $(318,584) $44,511    $(256,971)

  Comprehensive Income (Loss),
   Net of Tax
         Net income (loss)
          before convertible
          preferred share
          dividends              $ 4,460    $(317,343) $48,212    $(251,093)
         Net change in
          unrealized
          appreciation
          (depreciation) on
          investments              7,702       (6,062)  (4,013)      (7,626)
         Reclassification
          adjustments for
          (gains) losses
          included in net
          income                     (57)          (5)   7,976          212
         Minimum additional
          pension liability            -            -      123            -
         Comprehensive income
          (loss)                 $12,105    $(323,410) $52,298    $(258,507)

  Per Share
         Basic:
         Income (loss) before
          convertible preferred
          share dividends        $  0.06    $  (11.13) $  0.67    $   (9.79)
         Convertible preferred
          share dividends          (0.02)       (0.04)   (0.05)       (0.23)
         Net income (loss) to
          common shareholders    $  0.04    $  (11.17) $  0.62    $  (10.02)
         Average shares
          outstanding (000's)     72,002       28,529   71,944       25,649

         Diluted:
         Net income (loss)       $  0.06    $  (11.17) $  0.63    $  (10.02)
         Average shares
          outstanding (000's)     77,120       28,529   77,051       25,649



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

                                 Three Months Ended    Nine Months Ended
                                    September 30,         September 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           -      (5,239)         -    (109,108)
          Dividends to
           convertible
           preferred
           shareholders               -           -          -       3,369
            Balance at end of
             period           $  58,132   $  58,132  $  58,132    $ 58,132

  Common Shares
          Balance at
           beginning of
           period             $  72,408   $  28,813  $  72,281    $ 20,469
          (Cancellation)
           issuance of
           common shares, net       (62)        582         65       8,926
            Balance at end of
             period           $  72,346   $  29,395  $  72,346    $ 29,395

  Additional Paid-in Capital
          Balance at
           beginning of
           period             $ 874,648   $ 437,198  $ 875,224    $329,730
          (Cancellation)
           issuance of
           common shares, net    (1,639)      7,781     (2,215)    114,631
          Tax effect of
           stock options
           exercised                  -         446          -       1,064
            Balance at end of
             period           $ 873,009   $ 445,425  $ 873,009    $445,425

  Accumulated Other
   Comprehensive Income
          Balance at
           beginning of
           period             $  (9,027)  $  (6,202) $  (5,468)   $ (4,855)
          Change in
           unrealized gains
           (losses) on
           investments            7,645      (6,067)     3,963      (7,414)
          Change in minimum
           additional
           pension liability          -           -        123           -
            Balance at end of
             period           $  (1,382)  $ (12,269) $  (1,382)   $(12,269)

  (Accumulated
   Deficit)/Retained Earnings
          Balance at
           beginning of
           period             $(486,135)  $ 251,014  $(527,349)   $194,081
          Net income (loss)
           before
           convertible
           preferred share
           dividends              4,460    (317,343)    48,212    (251,093)
          Dividends to
           convertible
           preferred
           shareholders          (1,163)     (1,241)    (3,701)     (5,878)
          Dividends to
           common
           shareholders               -      (3,471)         -      (8,151)
            Balance at end of
             period           $(482,838)  $ (71,041) $(482,838)   $(71,041)

  Restricted Shares
          Balance at
           beginning of
           period             $  (5,488)  $ (10,727) $  (7,502)    $(6,741)
          Cancellation
           (issuance) of
           restricted
           shares, net            1,773           -      2,376      (6,069)
          Amortization of
           restricted shares        117       1,044      1,528       3,127
            Balance at end of
             period           $  (3,598)  $  (9,683) $  (3,598)    $(9,683)

  Total Shareholders' Equity
          Balance at
           beginning of
           period             $ 504,538   $ 763,467   $465,318    $696,555
          Conversion of
           convertible
           preferred shares           -      (5,239)         -    (109,108)
          (Cancellation)
           issuance of
           common shares, net    (1,701)      8,363     (2,150)    123,557
          Restricted shares,
           net                    1,890       1,044      3,904      (2,942)
          Unrealized
           appreciation
           (depreciation) on
           investments            7,645      (6,067)     3,963      (7,414)
          Minimum additional
           pension liability          -           -        123           -
          Net income (loss)
           before
           convertible
           preferred share
           dividends              4,460    (317,343)    48,212    (251,093)
          Dividends to
           convertible
           preferred
           shareholders          (1,163)     (1,241)    (3,701)     (2,509)
          Dividends to
           common
           shareholders               -      (3,471)         -      (8,151)
          Tax effect of
           stock options
           exercised                  -         446          -       1,064
            Balance at end of
             period           $ 515,669   $ 439,959   $515,669    $439,959



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

                                  Three Months Ended    Nine Months Ended
                                     September 30,         September 30,
                                   2006        2005      2006        2005
                                     (Unaudited)            (Unaudited)
  Cash Flows from Operating
   Activities
         Premiums collected,
          net of reinsurance   $  28,232   $ 110,376   $164,733   $ 291,835
         Loss and loss
          adjustment expenses
          paid, net of
          reinsurance            (94,772)    (57,683)  (497,362)   (162,183)
         Commission and
          brokerage (paid)
          received, net of fee
          income                  (2,750)        353     (7,566)    (14,110)
         Operating expenses
          paid                    (7,053)     (7,157)   (34,754)    (24,695)
         Net investment income
          received                15,589       6,731     42,989      23,963
         Interest paid            (5,799)     (5,799)   (12,953)    (12,964)
         Income taxes
          recovered                6,235           3      6,326      18,472
         Trading portfolio
          purchased               (1,897)     (3,276)   (29,893)    (17,685)
         Trading portfolio
          disposed                 1,923       3,369     42,917       3,369
         Deposit paid               (297)     (2,744)   (12,109)     (1,813)
         Other                    13,881       3,840     10,274       2,856
          Net cash (used)
           provided by
           operating
           activities            (46,708)     48,013   (327,398)    107,045

  Cash Flows from Investing
   Activities
         Fixed maturities
          available for sale
          purchased                 (404)    (77,912)   (67,442)   (372,936)
         Fixed maturities
          available for sale
          disposed or matured    140,470      35,362    744,307     151,016
         Hedge funds purchased         -      (5,000)    (4,000)   (119,888)
         Hedge funds disposed     21,716       6,546    139,080     115,049
         Other invested assets
          purchased                    -           -        (35)          -
         Other invested assets
          disposed                   220         852      1,391       2,244
         Net change in short-
          term investments      (111,639)     (3,450)  (476,119)    122,092
         Receivable for
          securities                   -         344          -           -
         Payable for
          securities                (100)     (1,527)         -           -
          Net cash provided
           (used) by investing
           activities             50,263     (44,785)   337,182    (102,423)

  Cash Flows from Financing
   Activities
         Proceeds from issuance
          of common shares            71       3,125        490       8,947
         Cash dividends paid to
          common shareholders          -      (3,471)         -      (8,151)
         Cash dividends paid to
          preferred
          shareholders            (1,163)     (1,241)    (3,701)     (2,509)
         Cost of shares
          repurchased                  -           -       (263)       (567)
          Net cash used by
           financing activities   (1,092)     (1,587)    (3,474)     (2,280)

         Net change in cash        2,463       1,641      6,310       2,342
         Cash, beginning of
          period                  18,351      16,369     14,504      15,668
         Cash, end of period   $  20,814   $  18,010   $ 20,814   $  18,010

         Reconciliation of net
          income (loss) to net
          cash (used) provided
          by operating
          activities:
         Net income (loss)
          before convertible
          preferred share
          dividends            $   4,460   $(317,343)  $ 48,212   $(251,093)
         Adjustments to
          reconcile net income
          (loss) to net cash
          (used) provided by
           operating
            activities:
         Losses and loss
          expenses              (114,143)    566,685   (592,360)    525,357
         Unearned premiums        15,097      30,465    (26,311)     44,670
         Deferred acquisition
          costs                     (943)     (2,506)     4,163      (5,991)
         Receivables              14,410     (79,186)   116,571     (70,900)
         Reinsurance balances
          payable                 (6,183)    108,339    (14,099)    110,549
         Reinsurance
          recoverable             13,405    (215,411)    72,530    (209,020)
         Income taxes              6,235     (32,528)     6,326     (14,858)
         Equity in earnings of
          limited partnerships      (157)     (6,030)    (6,196)    (10,568)
         Trading portfolio
          purchased               (1,897)     (3,276)   (29,893)    (17,685)
         Trading portfolio
          disposed                 1,923       3,369     42,917       3,369
         Deposit liability          (297)     (2,744)   (12,109)     (1,813)
         Receivable on
          commutation                  -           -     35,154           -
         Other                    21,382      (1,821)    27,697       5,028
          Net cash (used)
           provided by
           operating
           activities          $ (46,708)  $  48,013  $(327,398)  $ 107,045


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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