Bermuda-based reinsurer PXRE Group Ltd. yesterday reported a 51 percent jump in net income as underwriting income rose and claims fell.

PXRE, which stopped writing exited the finite risk insurance during the quarter, said net income for the quarter rose to $32.3 million from $21.5 million in the three months to June 30, 2003.

“We are pleased with this quarter's results. Our Cat and Risk business continues to perform exceptionally well in this attractive rate environment,” said PXRE president and chief executive officer Jeffrey L. Radke.

“The market continues to behave as we anticipated with only moderate rate reductions in peak zones.

“We have continued to increase our US catastrophe and worldwide retrocessional books of business, as the returns offered at these rate levels remain attractive.

“Larger rate reductions occurred in some non-peak zones such as Latin America and Australia. We have taken appropriate steps, trimming exposure in those areas which no longer generate adequate returns on capital. Overall, we expect moderate growth for the full year in our cat and risk net premiums earned.”

He added: “During the quarter, we completed the re-focus of PXRE by exiting the Finite risk line of business. As a result, the Finite risk business is now included in our Exited Lines segment.”

Mr. Radke said the company maintained a short duration fixed income portfolio, which reduced the impact of interest rate hikes in the quarter.

Because the company stopped writing finite risk reinsurance in the quarter, revenue fell 20 percent to $74.7 million from $93.8 million for the same period a year ago.

Net premiums earned for the quarter decreased 17 percent fell to $69.6 million from $84 million for the year-earlier period. Net premiums earned in the Company's core catastrophe and risk excess segment for the quarter were $66.2 million compared to $68.6 million for the year-earlier period.

Net investment income for the second quarter of 2004 fell 43 percent to $4.9 million from $8.6 million in 2003 primarily as a result of a $4.4 million decrease in income from hedge funds, offset by $1 million of additional income from the fixed maturity and short-term investment portfolios.

PXRE's loss ratio for the second quarter of 2004 was 26 percent compared with 53.1 percent for the second quarter of 2003. The expense ratio was 28.5 percent for the second quarter of 2004 compared to 28.6 percent in the year-earlier quarter.

The company's combined ration was 54.5 percent compared to 81.7 percent a year earlier.