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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                ----------------

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                                ----------------

For the fiscal year ended December 31, 1996      Commission File Number 0-15428

                                PXRE CORPORATION

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                DELAWARE                                     06-1183996
       (STATE OR OTHER JURISDICTION OF                      (IRS EMPLOYER
        INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NUMBER)


                         399 THORNALL STREET, 14TH FLOOR
                                EDISON, NJ 08837
                            TELEPHONE: (908) 906-8100
     (Address including zip code, and telephone number, including area code
                  of registrant's principal executive offices)


Securities registered pursuant to Section 12(b) of the Act: COMMON STOCK, PAR
VALUE $0.01 PER SHARE

Securities registered pursuant to Section 12(g) of the Act:  NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months,  and (2) has been subject to such filing  requirements
for the past 90 days.

               Yes     X                           No
                      ---                             ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  as of March 21, 1997  computed by reference to the closing  price of
the stock as of the close of business on March 21, 1997 was $338,104,066.  As of
March 21, 1997, 13,929,504  shares  of the registrant's common stock were issued
and outstanding.


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                             DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<S>                <C>
Part III                Portions of PXRE Corporation's definitive Proxy  Statement for the Annual
                        Meeting of Shareholders to be held on June 5, 1997.

Part IV                 Portions of PXRE Corporation's Proxy Statement dated May 3, 1995.

Part IV                 Portions of PXRE Corporation's Proxy Statement dated April 22, 1994.

Part IV                 Portions of PXRE Corporation's Proxy Statement dated April 23, 1993

Part IV                 Portions of PXRE Corporation's Proxy Statement dated April 12, 1991.

Part IV                 Portions of PXRE Corporation's Proxy Statement dated April 13, 1990.
</TABLE>


 

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                                     PART I

ITEM 1. BUSINESS

INTRODUCTION

        PXRE  Corporation  ("PXRE"),  through its  wholly-owned  subsidiary PXRE
Reinsurance  Company ("PXRE  Reinsurance"),  provides  reinsurance  products and
services to a national and international marketplace,  principally on commercial
and personal  property  risks and marine and aviation  risks,  with a particular
focus on catastrophe-related coverages. PXRE solicits its treaty and facultative
reinsurance  business from the worldwide brokerage market. PXRE also employs its
property reinsurance  underwriting expertise and generates management fee income
by   managing    business    for   other    insurers   and    reinsurers.    See
"Business--Retrocession Agreements."

        PXRE was  organized  in July 1986 as a Delaware  corporation  by Phoenix
Home Life Mutual  Insurance  Company  ("Phoenix Home Life") to succeed,  through
PXRE Reinsurance,  to the property and casualty  reinsurance business carried on
since  1982 by  Phoenix  General  Insurance  Company,  formerly  a  wholly-owned
subsidiary of Phoenix Home Life.  As of March 21, 1997,  Phoenix Home Life owned
less than 5% of the outstanding common stock of PXRE.

        In  November  1993,  PXRE  sponsored  the  initial  public  offering  of
Transnational  Re  Corporation  ("TREX") to raise capital and take  advantage of
favorable conditions in the worldwide  retrocessional  reinsurance market. PXRE,
through  PXRE  Reinsurance,  retained a 21%  ownership  position in TREX and had
responsibility  for  the  day-to-day  operations  of  TREX,  including  all  the
reinsurance  operations of its  subsidiary,  Transnational  Reinsurance  Company
("Transnational  Reinsurance").  TREX and Transnational  Reinsurance had no paid
employees.

        On December 11, 1996,  PXRE  completed  the merger of TREX with and into
PXRE (the  "Merger"),  pursuant to which each share of common  stock of TREX was
converted  into the right to receive  1.0575  shares of PXRE common  stock.  The
Merger  resulted from the  realization by the management and Boards of Directors
of both  PXRE and TREX  that  conditions  had  become  more  competitive  in the
retrocessional reinsurance marketplace, and that the reinsurance markets, rating
agencies and the capital  markets are placing  increased  importance on the size
and  financial  strength  of  reinsurance  companies,  which size and  financial
strength would be augmented by the Merger.  Following the Merger,  Transnational
Reinsurance became a wholly-owned subsidiary of PXRE Reinsurance. The Merger has
been accounted for using the purchase method of accounting; therefore net income
of TREX  (including  Transnational  Reinsurance)  has been  included  in  PXRE's
consolidated results of operations from the date of acquisition.

INDUSTRY BACKGROUND

        Primary insurers and certain reinsurers (also known as ceding companies)
purchase reinsurance  principally to reduce their liability on individual risks,
to protect themselves against



                                       -2-


 

<PAGE>
<PAGE>


catastrophic  losses  and to enhance  their  ratio of total net  liabilities  to
capital and surplus. In consideration for providing reinsurance, PXRE receives a
share of the premiums written by the ceding company. In certain instances,  PXRE
in turn  purchases  reinsurance  protection  from other  reinsurers  pursuant to
retrocession  agreements  and  surrenders  to such  reinsurers  a portion of the
premiums it receives from ceding companies.

        There are two principal  types of reinsurance:  facultative  reinsurance
and treaty reinsurance.  In facultative  reinsurance,  the reinsurer  separately
underwrites each individual risk. In treaty  reinsurance,  the reinsurer and the
ceding company  negotiate a contractual  arrangement which reinsures a specified
portion  of  a  type  or  category  of  risk.  In  the  underwriting  of  treaty
reinsurance,  the reinsurer does not separately  evaluate each  individual  risk
assumed,  as it must in the  underwriting  of  facultative  reinsurance,  and in
general  depends  on the  original  underwriting  decisions  made by the  ceding
company.

        Treaty  reinsurance  can be written on either a pro rata or an excess of
loss basis.  In pro rata  reinsurance,  the  reinsurer  agrees,  in return for a
percentage of the premiums,  to share in a proportional  amount of the losses up
to the limit,  if any, of the  reinsurance  agreement.  Premiums that the ceding
company pays to the reinsurer are  proportional  to the premiums that the ceding
company receives,  and the reinsurer  generally pays the ceding company a ceding
commission  to  reimburse  the  ceding  company  for the  expenses  incurred  in
obtaining  the  business.  In excess of loss treaty  reinsurance,  the reinsurer
indemnifies  the  ceding  company  for a portion  of the  losses  on  underlying
policies  which  exceed  a  specified  loss  retention  amount  up to an  amount
specified in the reinsurance agreement.  Premiums paid by the ceding company for
excess of loss coverage may not be directly  proportional to the premiums on the
underlying  policies because the reinsurer does not assume a proportional  share
of the underlying risk.

        Excess of loss treaty reinsurance can, in turn, be written on a per risk
or catastrophe  basis. Per risk excess of loss  reinsurance  protects the ceding
company  against a loss  resulting  from a single risk or location.  Catastrophe
excess of loss  reinsurance  protects a ceding company from an accumulation of a
large number of related losses resulting from a variety of risks which may occur
in a given catastrophe, and hence is a highly volatile business.

        Retrocessional reinsurance is reinsurance provided by one reinsurer (the
retrocessionaire)  to another  reinsurer (the ceding company or retrocedent) who
purchases  retrocessional  reinsurance for reasons similar to those that cause a
primary insurer to purchase reinsurance:  principally to reduce its liability on
individual risks, to protect itself against  catastrophic losses and to maintain
acceptable  regulatory  ratios.  In consideration for providing  reinsurance,  a
retrocessionaire receives a share of the premiums written by the ceding company.
While PXRE's  retrocessional  coverage focuses on the property market, PXRE also
writes marine and aviation retrocessional reinsurance.



                                       -3-
 

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<PAGE>


CORPORATE STRATEGY

        PXRE's strategy is to commit and withhold its underwriting  capacity and
to alter its mix of  business  at any given  point in time to focus on  business
where  management  believes  that  above  average  underwriting  results  can be
achieved, and to supplement its underwriting commitments and generate management
fee income by managing business for other insurers and reinsurers.

        PXRE has been  pursuing a strategy of  focusing  on  catastrophe-related
coverages.  Catastrophe-related  coverages include catastrophe coverage provided
to ceding insurance companies and retrocessional  catastrophe  coverage provided
to other  reinsurers.  This  strategy  had been  designed to  capitalize  on the
substantial  improvements  in pricing and other terms of these  coverages  which
evolved following high levels of catastrophic  loss activity  experienced by the
worldwide reinsurance industry. Coverage terms have been deteriorating since the
beginning of 1995,  in response to which PXRE has been  contracting  its premium
volume. Rather than maximizing premium growth during periods of excess capacity,
PXRE's management  focuses its efforts on preserving a proper  risk/reward ratio
in the business it maintains, moving to layers of risk that are less affected by
competitive pressures, or reducing commitments when necessary. For both 1996 and
1995,  catastrophe-related  coverages  represented  approximately  68% of PXRE's
gross premiums written, as compared to 69% in 1994.

        PXRE has also been  diversifying  its exposures and taking  advantage of
business  opportunities  in  international  reinsurance  markets.  This business
includes both  reinsurance  contracts  protecting  risks  underwritten by United
States  ceding  companies  for the foreign  operations  of their  United  States
insureds and  reinsurance in which the reinsured is  foreign-based.  In December
1996,  PXRE  announced that it had, like several other U.S.  companies,  made an
investment in the Lloyd's of London ("Lloyd's") market,  forming a new syndicate
(PG Butler  Syndicate  1224). The new syndicate will have an initial capacity to
underwrite  'L'35  million  in  annual  premiums  ($60  million  at December 31,
1996 exchange rates) commencing with the 1997 renewal season. Management expects
the  syndicate  will provide PXRE with access to Lloyd's  worldwide  licenses in
insurance,  reinsurance and surplus lines,  create additional  opportunities for
PXRE and, in conjunction with PXRE's Brussels office,  further strengthen PXRE's
presence in the worldwide insurance and reinsurance  markets.  For both 1996 and
1995,  international  reinsurance  (principally the United Kingdom,  Continental
Europe,  Australia  and Asia)  represented  approximately  71% of gross  written
premiums,  compared  to  approximately  64% in  1994.  See  Note 12 of  Notes to
Consolidated Financial Statements.

        PXRE's   catastrophe   retrocessional   facilities  and  associated  net
exposures  have  fluctuated  with  PXRE's  commitment  and  withholding  of  its
underwriting capacity.

BUSINESS WRITTEN

        Substantially  all of the reinsurance  that PXRE currently  writes is on
property  risks,  both  commercial and personal,  and marine and aviation risks.
(Although   PXRE  has  written  some  casualty



                                      -4-
 

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reinsurance  in  the  past,  it  substantially   reduced  its  writing  of  such
reinsurance in 1986 and currently confines its casualty  reinsurance  activities
to the  marine  and  aviation  business.)  Catastrophe  coverage  by its  nature
protects  both  commercial  and  personal  property  risks  since such  coverage
protects a ceding company from an accumulation of individual losses  (commercial
and personal) arising from a catastrophic event. The majority of PXRE's pro rata
and risk excess business is written on commercial property risks.

        Treaty  reinsurance  represents the major portion of PXRE's  reinsurance
portfolio.  PXRE typically participates in treaties with other reinsurers.  PXRE
occasionally  will  underwrite  100% of a treaty,  but it usually  underwrites a
substantially  smaller  percentage.   PXRE  believes  that  underwriting  treaty
reinsurance on this basis  potentially  involves less risk in the long-term than
underwriting  facultative reinsurance on the basis of an independent re-analysis
of  underwritten  risks,  due to the fact that the  risks  which  generally  are
available for  facultative  reinsurance are usually more difficult to assess and
often protect  against more hazardous  exposures than those available for treaty
reinsurance.  Emphasis  on treaty  reinsurance  also  allows  PXRE to maintain a
smaller  staff than would be necessary  to write the same volume of  facultative
reinsurance.

        PXRE's mix of business on a gross premiums written basis is set forth in
the following table for the periods indicated:

                      DISTRIBUTION OF GROSS PREMIUMS WRITTEN

<TABLE>
<CAPTION>

                                             Year Ended December 31,
                               -----------------------------------------------------
                                      1996              1995                1994
                                 --------------    --------------      --------------
Type of Business                 Amount  Percent  Amount   Percent   Amount    Percent
                                 ------  -------  ------   -------   ------     ------
                                        (in thousands, except percentages)
<S>                         <C>         <C>     <C>       <C>      <C>       <C>
Reinsurance:
Treaty:
  Catastrophe-Related          $ 78,013    68.2%  $105,985    68.2%  $122,990     68.5%
  Pro Rata                        3,126     2.7      3,427     2.2      6,132      3.4
  Marine & Aviation              15,619    13.7     26,155    16.8     31,176     17.3
  Risk Excess                     9,278     8.1     10,894     7.0     11,163      6.2
Facultative                       8,312     7.3      8,919     5.8      8,225      4.6
Primary Insurance                    --      --         --      --         (2)       --
                               --------   -----   --------   -----   --------    -----
        Total                  $114,348   100.0%  $155,380   100.0%  $179,684    100.0%
                               ========   =====   ========   =====   ========    =====
</TABLE>


        Catastrophe-related  coverages experienced  substantial  improvements in
pricing and other terms  following  high levels of  catastrophic  loss  activity
experienced  by the worldwide  reinsurance  industry.  Coverage  terms have been
deteriorating since the beginning of 1995. In response,  PXRE has been moving to
layers of risk that are less affected by competitive pressures, or reducing


                                      -5-
 

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commitments  when  necessary,  which has resulted in the  contraction in premium
volume for catastrophe-related coverages since 1994.

        In late 1992, management decided to deemphasize pro rata and risk excess
business because  competition  among reinsurers for such business and the levels
of  premium  rates  charged by  primary  insurers  for  property  insurance  had
adversely impacted the profitability of such business. In addition, pro rata and
risk excess business incurred  substantial  losses from Hurricane Andrew in 1992
reflecting the vulnerability of these lines of business to a major  catastrophic
event.

        PXRE also writes marine and aviation  reinsurance,  although its premium
volume  for these  coverages  has been  contracting  since 1994 in  response  to
increasing competition.

        Facultative  reinsurance  premium  volume has not changed  significantly
during the period and  represented  approximately  7% of PXRE's  gross  premiums
written for 1996, up from 6% and 5% in 1995 and 1994,  respectively,  due to the
contraction in premium volumes of other types of business.

RETROCESSIONAL AGREEMENTS

        The following table sets forth certain information  regarding the volume
of  premiums  PXRE has  ceded to other  reinsurers  pursuant  to  retrocessional
agreements for the periods indicated:

<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                                 -----------------------------------------
                                                    1996          1995          1994
                                                 ---------    ---------      ---------
                                                                (in thousands)
<S>                                            <C>          <C>           <C>
Gross premiums written                            $114,348      $155,380      $179,684
Reinsurance premiums ceded:
    Managed business participants                   21,238        26,774        29,842
    Catastrophe coverage                             5,427         6,180        12,602
    TREX management agreement (1)                   19,965        24,790        28,722
                                                  --------     ---------      --------
       Total reinsurance premiums ceded             46,630        57,744        71,166
                                                  --------     ---------      --------
Net premiums written                              $ 67,718     $  97,636      $108,518
                                                  ========     =========      ========
</TABLE>

----------------

(1)     Consists of premiums  written by PXRE and  retroceded  to  Transnational
        Reinsurance  as  required  by the  management  agreement  to which  such
        companies  were parties prior to the  Merger.  See "Business--Management
        Agreement."

        PXRE has been  able to  increase  its  underwriting  commitments  and to
generate  management fee income by retroceding some of its underwritten risks to
other reinsurers through various retrocessional  arrangements whereby it manages
business  for  such  participants.  In 1996,  PXRE  was a party  to  three  such
arrangements.  The first such  arrangement,  which is  subject  to renewal  each
January 1 and which has been renewed  effective  January 1, 1997, is referred to
as the AMA. The AMA is a pool consisting of a number of insurance companies (the
"Pool"),  for which  PXRE acts as  reinsurance  manager.  In 1996,  the Pool was
comprised of Merrimack Mutual Fire Insurance  Company,  Pennsylvania  Lumbermens
Mutual Insurance Company and NRMA Insurance Limited.


                                      -6-
 

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For 1997, Auto-Owners Insurance Company has been added to the Pool. It is PXRE's
policy that in order to join the Pool, companies must have a rating by A.M. Best
Company,  Inc. ("A.M.  Best") of "A-" or better,  other than foreign  companies,
most of which  (including  the foreign  participant in the AMA) are not rated by
A.M. Best, an independent  insurance  industry rating  organization  which rates
insurance companies upon factors of concern to policyholders. Under the terms of
the agreements  governing the Pool, if a  participating  company's  rating falls
below "A-",  it  generally  will be  required  to withdraw  from the Pool in the
following year.  PXRE receives,  as reinsurance  manager,  a commission of 5% of
premiums ceded, as well as a contingent  profit commission equal to a percentage
of any ultimate  underwriting  profits in connection with the reinsurance ceded.
The contingent profit commission is paid over a three-year period and is subject
to adjustment based on cumulative experience.

        The second such retrocessional arrangement,  which was renewed effective
January 1, 1997, is with Trenwick  America  Reinsurance  Corporation  ("Trenwick
Group").  PXRE  receives,  as  reinsurance  manager,  a management  fee of 5% of
premiums ceded, as well as a contingent  profit commission equal to a percentage
of any ultimate  underwriting  profits in connection with the reinsurance ceded.
The contingent profit commission is paid over a three-year period and is subject
to adjustment based on cumulative experience.  Trenwick Group is currently rated
"A+ (Superior)" by A.M. Best.

        The third such retrocessional  arrangement is with Investors Reinsurance
Ltd., a Barbados reinsurer  ("Investors Re"),  pursuant to which PXRE has agreed
to offer to cede to  Investors Re in each of the years 1996 through 2000 a quota
share of PXRE's  business.  The quota share to be ceded to  Investors Re in each
such year will vary based  upon,  among  other  things,  the volume of  business
written  by  PXRE,  subject  to a  minimum  annual  cession.  Pursuant  to  this
arrangement,  PXRE receives an override  commission of 4.2% of premiums ceded as
well as a profit  commission equal to a percentage of the net profits in respect
of  the  reinsurance  ceded.  Because  Investors  Re  is  not  licensed  in  any
jurisdiction in the United States, the retrocessional  arrangement provides that
a trust  fund  must be  maintained  and/or  letters  of  credit  established  by
Investors Re for the benefit of PXRE to secure Investors Re's obligations.



                                      -7-
 

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        The  following   table  sets  forth  PXRE's  earned   commissions   from
retrocessionaires  pursuant  to its three  managed  business  arrangements  (not
including Transnational Reinsurance) for the periods indicated:

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                               --------------------------------
                                                1996          1995        1994
                                               ------        ------       -----
                                                       (in thousands)

<S>                                          <C>           <C>          <C>
Commission                                     $1,043        $1,376       $1,532
Contingent profit commission(1)                 2,477         1,515        2,096
                                               ------        ------       ------
   Total                                       $3,520        $2,891       $3,628
                                               ======        ======       ======
</TABLE>

----------------

(1)    Contingent  profit  commission  is paid over a  three-year  period and is
       subject to adjustment  based on cumulative  experience  under the AMA and
       Trenwick  Group  arrangements  and is paid annually under the arrangement
       with Investors Re.

        In the past,  PXRE has entered  into other  retrocessional  arrangements
providing catastrophic protection.  In recent years, PXRE reduced, upon renewal,
its own  catastrophe  retrocessional  facilities  and has borne  the  associated
increase in net exposures. As the cost of catastrophe  retrocessional facilities
has declined since 1995,  PXRE has again commenced  selectively  purchasing such
coverage,   although   PXRE  did  not  purchase  any   significant   catastrophe
retrocessional coverage in 1995 or 1996.

        PXRE has a  committee  consisting  of its chief  executive  officer  and
senior  underwriting  executives  responsible for the selection of reinsurers as
managed business participants or as participating  reinsurers in the catastrophe
coverage  protecting PXRE.  Proposed  reinsurers are evaluated at least annually
based  on  consideration  of a  number  of  factors  including  the  management,
financial  statements  and the  historical  experience  of the  reinsurer.  This
procedure  is followed  whether or not a rating has been  assigned to a proposed
reinsurer by any rating organization.  All reinsurers,  whether obtained through
direct contact or the use of reinsurance intermediaries, are subject to approval
by PXRE.

        At December 31, 1996,  estimated losses recoverable  (including incurred
but not  reported  losses) from  retrocessionaires  were  $18,065,000  including
$2,432,000 of paid loss recoverables.  Since its inception, PXRE has had minimal
amounts of uncollectible  reinsurance.  It may not be appropriate to extrapolate
future   experience  from  such  historical   experience.   In  the  event  that
retrocessionaires are unable to meet their contractual  obligations,  PXRE would
be liable for such defaulted amounts.

MANAGEMENT AGREEMENT

        From November 8, 1993 until the Merger,  PXRE Reinsurance was party to a
management  agreement (the "Management  Agreement") with TREX and  Transnational
Reinsurance.


                                      -8-
 

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<PAGE>

        Under the Management Agreement,  PXRE Reinsurance had responsibility for
the day-to-day operations of TREX and Transnational  Reinsurance,  including all
the reinsurance operations of Transnational Reinsurance.  TREX and Transnational
Reinsurance  did not have any operating  properties,  systems or paid employees.
Pursuant  to  the  Management  Agreement,  PXRE  Reinsurance  provided  all  the
operating facilities,  systems,  equipment and management and clerical employees
required  to  conduct  the  businesses  of TREX and  Transnational  Reinsurance.
Following the Merger,  Transnational  Reinsurance  is no longer  writing any new
reinsurance  business.  Premiums ceded to Transnational  Reinsurance in 1996 and
prior years will be retained by PXRE Reinsurance upon renewal in 1997.

        Transnational   Reinsurance   paid  PXRE  Reinsurance  an  annual  basic
management  fee under the  Management  Agreement  equal to 5% of gross  premiums
written (including reinstatement premiums less return premiums) of Transnational
Reinsurance  and  its  consolidated   subsidiaries  (if  any)  as  reflected  in
Transnational Reinsurance's statutory quarterly and annual statements filed with
state insurance  authorities.  TREX and Transnational  Reinsurance also paid all
expenses directly  attributable to them, including a proportionate share of PXRE
Reinsurance's  rental  expenses  with  respect  to office  space  based on gross
premiums  written for the management  year.  PXRE's earned  management fees from
Transnational  Reinsurance pursuant to the Management Agreement were $2,512,000,
$3,526,000 and $3,364,000 for 1996, 1995 and 1994, respectively.

LOSS LIABILITIES AND CLAIMS

        PXRE establishes losses and loss expense  liabilities (to cover expenses
related to settling  claims,  including legal and other fees) to provide for the
ultimate cost of settlement and  administration of claims for losses,  including
claims  that have been  reported to it by its  reinsureds  and claims for losses
that have occurred but have not yet been  reported to PXRE.  Under United States
generally  accepted  accounting  principles  ("GAAP"),  PXRE is not permitted to
establish loss reserves until an event which may give rise to a claim occurs.

        For reported losses, PXRE first establishes liabilities when it receives
notice of the claim.  It is PXRE's general policy to establish  liabilities  for
reported  losses in an amount equal to the  liability set by the  reinsured.  In
certain instances, PXRE will conduct an investigation to determine if the amount
established by the reinsured is appropriate or if it should be adjusted.

        For  incurred but not  reported  losses,  a variety of methods have been
developed in the insurance industry for use in determining such liabilities.  In
general,  these  methods  involve the  extrapolation  of  reported  loss data to
estimate ultimate losses.  PXRE's loss calculation methods generally rely upon a
projection  of ultimate  losses based upon the  historical  patterns of reported
loss development. Additionally, PXRE makes provision through its liabilities for
incurred  but  not  reported  losses  for  any  identified  deficiencies  in the
liabilities for reported losses set by its reinsureds.


                                      -9-
 

<PAGE>
<PAGE>

        The following  table provides a  reconciliation  of beginning and ending
loss and loss expense liabilities under GAAP for the fiscal years ended December
31, 1996,  1995 and 1994. PXRE does not discount such  liabilities;  that is, it
does not calculate them on a present value basis.

<TABLE>
<CAPTION>

                                                              YEAR ENDED DECEMBER 31,
                                                           -----------------------------

                                                             1996       1995       1994
                                                            ------     ------     ------
                                                                   (IN THOUSANDS)

<S>                                                      <C>        <C>        <C>
Gross GAAP liability for losses and
  loss expenses at beginning of year.....................  $72,719     $81,836    $71,739
Less: Gross reserves of subsidiary
  at date subsidiary was sold............................       --          --        297
Add: Gross provision for losses and loss expenses--
  Occurring in current year..............................   27,327      43,388     85,805
  Occurring in prior years...............................   10,510       5,982      6,746
                                                           -------    --------    -------
    Total gross provision(1).............................   37,837      49,370     92,551
                                                           -------    --------    -------
Less: Gross payments for losses and loss expenses--
  Occurring in current year..............................    6,469      16,886     44,337
  Occurring in prior years...............................   42,698      41,601     37,820
                                                           -------    --------    -------
    Total gross payments.................................   49,167      58,487     82,157
                                                           -------    --------    -------
Gross GAAP liability for losses
  and loss expenses at end of year.......................  $61,389     $72,719    $81,836
Add: Gross reserves of TREX
   at date of Merger(2)..................................    9,589         --         --
                                                           -------     -------    -------
    Total gross liability................................  $70,978     $72,719    $81,836
                                                           =======     =======    =======
Ceded GAAP liability for losses
  and loss expenses at end of year....................... (27,154)    (28,295)   (35,788)
Net GAAP liability for losses
  and loss expenses at end of year.......................  $43,824     $44,424    $46,048
                                                           =======     =======    =======
Foreign currency adjustment..............................    (145)        (86)      (124)
                                                           =======     =======    =======
Gross SAP liability for losses and
  loss expenses at end of year...........................  $70,833     $72,633    $81,712
                                                           =======     =======    =======
</TABLE>
---------------
(1)      The  GAAP  provision  for losses and loss expenses includes net foreign
         currency exchange (losses) gains of ($41,000), $39,000   and ($338,000)
         for 1996, 1995 and 1994, respectively.

(2)      Liabilities assumed from TREX at December 11, 1996.


        The  following  table  presents the  development  of PXRE's GAAP balance
sheet  liability  for losses and loss  expenses for the period 1986 through 1996
for PXRE and its predecessor. The top line of the table shows the liabilities at
the  balance  sheet date for each of the  indicated  years.  This  reflects  the
estimated  amounts of losses and loss  expenses for claims  arising in that year
and all prior years that are unpaid at the balance sheet date,  including losses
incurred but not yet reported to PXRE.  The upper portion of the table shows the
cumulative amounts  subsequently paid as of successive years with respect to the
liability.  The lower  portion  of the table  shows  the  reestimated  amount of
previously  recorded  liability  based  on  experience  as of the  end  of  each
succeeding year. The estimates  change as more  information  becomes known about
the  frequency  and  severity  of claims  for  individual  years.  A  redundancy
(deficiency)  exists when the reestimated  liability at each December 31 is less
(greater) than the prior liability estimate. The "cumulative redundancy


                                      -10-
 

<PAGE>
<PAGE>


(deficiency)"   depicted  in  the  table,  for  any  particular  calendar  year,
represents  the aggregate  change in the initial  estimates  over all subsequent
calendar years.


        Each  amount in the table below  includes  the effects of all changes in
amounts for prior  periods.  For  example,  if a loss  determined  in 1989 to be
$150,000 was first reserved in 1986 at $100,000,  the $50,000 deficiency (actual
loss minus original  estimate)  would be included in the  cumulative  redundancy
(deficiency)  in each of the years  1986-1988  shown below.  This table does not
present accident or policy year development data.

        Loss and loss expense  liabilities  for December 31, 1996,  1995,  1994,
1993,  1992 and 1991 are  presented on a gross basis  (excluding  the effects of
losses recoverable from  retrocessionaires).  Loss and loss expense  liabilities
for  December  31,  1990 and prior  periods  are  stated  on a net basis  (after
deduction for losses recoverable from retrocessionaires)  because gross incurred
but not reported  liability data were not developed by PXRE at any date prior to
December  31, 1991 as it was not  required  for  statutory  reporting  purposes.
Furthermore,  it is not  practicable  for PXRE  currently  to  reconstruct  this
information.



                                      -11-
 

<PAGE>
<PAGE>


<TABLE>
<CAPTION>

                                                                       Year Ended December 31,
                             -------------------------------------------------------------------------------------------------------
                              1996     1995     1994      1993      1992      1991      1990      1989    1988      1987      1986
                             ------   ------   ------    ------    ------    ------    ------    ------  ------    ------    -----
                                                                    (in thousands, except percentages)
<S>                         <C>      <C>      <C>       <C>       <C>       <C>       <C>       <C>      <C>       <C>       <C>    
Liabilities for losses and
  loss expenses...........  $70,978  $72,719  $81,836   $71,442   $88,668   $62,664   $31,632   $37,963  $34,627   $30,301   $23,671

Cumulative amount of
  liability paid through:
  One year later..........            42,698   41,601    37,820    59,773    35,575    15,688    18,421   16,183    11,416     9,597
  Two years later.........                     58,968    54,400    79,926    48,393    25,466    28,178   21,597    19,107    12,212
  Three years later.......                               60,850    89,519    52,301    29,066    31,852   23,779    20,673    16,564
  Four years later........                                         94,261    55,022    30,117    33,980   24,689    21,280    17,175
  Five years later........                                                   56,976    31,528    34,434   25,980    21,783    17,574
  Six years later.........                                                             32,137    35,408   26,085    22,632    17,821
  Seven years later.......                                                                       36,003   26,531    22,724    18,584
  Eight years later.......                                                                                27,167    22,955    18,745
  Nine years later........                                                                                          23,435    19,139
  Ten years later.........                                                                                                    19,083

Liabilities reestimated as of:
  One year later..........            83,228   87,818    78,188   101,423    67,165    33,874    37,211   31,863    28,663    20,688
  Two years later.........                     87,750    76,902   103,632    62,262    33,726    37,800   29,506    26,765    19,549
  Three years later.......                               74,683   105,165    62,827    33,488    36,588   27,944    25,354    19,185
  Four years later........                                        103,801    63,032    33,682    36,881   27,480    23,829    19,370
  Five years later........                                                   62,593    34,310    37,023   27,751    23,604    19,000
  Six years later.........                                                             33,777    37,667   27,878    23,874    18,838
  Seven years later.......                                                                       37,166   28,063    23,898    19,207
  Eight years later.......                                                                                27,959    24,018    19,448
  Nine years later........                                                                                          23,954    19,603
  Ten years later.........                                                                                                    19,507

Gross cumulative redundancy
  (deficiency) through
  December 31, 1996:
  Amount..................          (10,509)  (5,914)   (3,241)  (15,133)        71        NA        NA       NA        NA        NA
  Percentage..............             (14%)     (7%)      (5%)     (17%)        0%        NA        NA       NA        NA        NA
Retrocessional recoveries.             7,260    2,467     1,924     3,515   (1,584)        NA        NA       NA        NA        NA

Net cumulative redundancy
  (deficiency) through
  December 31, 1996:
                                     ------   ------    ------   -------    ------    ------        ---    -----     -----     -----
  Amount..................           (3,249)  (3,447)   (1,317)  (11,618)   (1,513)   (2,145)       797    6,668     6,347     4,164
  Percentage..............              (7%)     (7%)      (3%)     (33%)      (4%)      (7%)        2%      19%       21%       18%
</TABLE>



                                      -12-
 

<PAGE>
<PAGE>



        During 1996, PXRE incurred  development from prior year losses amounting
to $3,249,000  primarily due to Hurricanes  Marilyn and Luis.  During 1995, PXRE
incurred development from prior year losses amounting to $4,311,000 primarily as
a result of losses from the Northridge  earthquake.  During 1994,  PXRE incurred
development from prior year losses amounting to $3,261,000 primarily as a result
of marine pro rata losses and 1993 Midwest flood activity.  During 1993,  PXRE's
management  strengthened  the  liability  for incurred  but not reported  losses
occurring in prior years by $10,499,000,  of which approximately  $5,394,000 was
the result of additional  information received with respect to Hurricanes Andrew
and Iniki and  approximately  $3,330,000 was the result of losses under a number
of pro rata reinsurance  treaties.  During 1992, PXRE's management  strengthened
the liability for incurred but not reported  losses  occurring in prior years by
$2,355,000 of which $2,036,000 was the result of additional information received
with respect to losses under a number of pro rata reinsurance treaties. In 1991,
PXRE's  management  strengthened  the  liability  for losses  and loss  expenses
occurring  in  prior  years  by  $2,242,000,  of  which  $1,196,000  was  due to
unfavorable  development  experienced on PXRE's marine and aviation  reinsurance
business.  PXRE commenced  writing  marine and aviation  reinsurance in 1988 and
estimated  the amounts of losses and loss  expenses for claims on such  business
during 1988 and  subsequent  periods based on  cumulative  experience as of such
time.  As more  information  became  available,  prior  estimates  were revised.
Approximately $740,000 of the balance of the liability strengthening in 1991 was
attributable  to changes in 1991 in the loss amounts  applicable to catastrophes
which  occurred in 1989 and  1990,years  impacted by high levels of  catastrophe
loss activity. Management of PXRE believes that the strengthening of reserves in
fiscal years 1991 through 1996 is  attributable  to the factors  described above
and not to any material changes in reserving methods or assumptions.  Management
of PXRE further  believes that the cumulative  reserve  redundancies  during the
period  1986  through  1989  demonstrated  by the above  table was  attributable
principally to significant changes in primary insurance rates commencing in 1985
and a favorable change in loss activity during the period.

        PXRE's  management  believes  that its overall  liability for losses and
loss expenses at December 31, 1996, is adequate. In contrast to casualty losses,
which  frequently are slow to be reported and may be determined only through the
lengthy,  unpredictable  process  of  litigation,  property  losses  tend  to be
reported  more  promptly  and usually are settled  within a shorter time period.
However, the estimation of losses for catastrophe  reinsurers is inherently less
reliable  than for  reinsurers  of risks  which have an  established  historical
pattern of losses.  In  addition,  insured  events which occur near the end of a
reporting  period,  as well as, with  respect to PXRE's  retrocessional  book of
business,  the significant delay in losses being reported to insurance carriers,
reinsurers  and finally  retrocessionaires,  require  PXRE to make  estimates of
losses based on limited  information  from ceding companies and based on its own
underwriting data. Because of the inherent uncertainty in the reserving process,
as well as PXRE's writings of a small amount of casualty reinsurance, there is a
risk that  PXRE's  liability  for losses  and loss  expenses  could  prove to be
inadequate in any year, with a consequent  adverse impact on future earnings and
stockholders'  equity.  Moreover,  such risk could be  exacerbated to the extent
management of PXRE forgoes catastrophe retrocessional coverage. Also, conditions
and trends that have affected reserve


                                      -13-
 

<PAGE>
<PAGE>


development in the past may not necessarily occur in the future. Accordingly, it
would not be appropriate  to extrapolate  future  redundancies  or  deficiencies
based on the foregoing.

INVESTMENTS

        PXRE's  management has established general procedures and guidelines for
its  investment  portfolio  and  oversees  investment  management carried out by
Phoenix  Duff  &  Phelps  Corporation   ("Phoenix  Duff  &  Phelps"),  a  public
majority-owned  subsidiary  of Phoenix  Home  Life.  Although  these  investment
guidelines  stress  conservation  of  principal,  diversification  of risk,  and
liquidity,  investments are subject to market-wide  risks and  fluctuations,  as
well as to risk  inherent in  particular  securities.  As at  December  31,1996,
PXRE's  investment   portfolio  consisted  primarily  of  fixed  maturities  and
short-term investments. In 1994, PXRE's Board of Directors approved a resolution
allowing PXRE to invest up to 15% of its consolidated net worth in equities.  As
at December 31, 1996,  PXRE had invested  $6,850,000 in equity  securities.  The
investment  policies  and all  investments  of PXRE are approved by its Board of
Directors.

              The following table summarizes the investments of PXRE at December
31, 1996 and 1995:

                             ANALYSIS OF INVESTMENTS

<TABLE>
<CAPTION>

                                               December 31, 1996     December 31, 1995
                                              -------------------    -------------------
                                               Amount  Percent       Amount    Percent
                                               ------  -------       ------    -------
                                                 (in thousands, except percentages)

<S>                                         <C>        <C>        <C>         <C>
Fixed maturities (at amortized cost):
   United States government securities         $180,519    39.2%     $165,406     62.9%

   United States government agency
     mortgage and asset-backed securities        87,861    19.1        50,942     19.3
   
   Other mortgage and asset-backed securities    55,314    12.0

   Obligations of states and political          
     subdivisions                                70,268    15.2           --        --
                                               --------   -----      --------    -----
        Total fixed maturities                  393,962    85.5       216,348     82.2
Equity securities (at cost)                       6,850     1.5         5,000      1.9
Short-term investments                           59,792    13.0        41,722     15.9
                                               --------   -----      --------    -----
        Total investments                      $460,604   100.0%     $263,070    100.0%
                                               ========   =====      ========    =====
</TABLE>


        In 1995,  PXRE sold its holdings of municipal  bonds and  reinvested the
proceeds  principally in treasury  securities.  In 1996, PXRE acquired municipal
bonds from TREX as part of the assets and  liabilities  received  as a result of
the Merger.



                                      -14-
 

<PAGE>
<PAGE>



        The following  table  indicates the composition of PXRE's fixed maturity
investments (at amortized cost),  including short-term  investments,  by time to
maturity at December 31, 1996 and 1995:

                     COMPOSITION OF INVESTMENTS BY MATURITY



<TABLE>
<CAPTION>

                                          December 31, 1996     December 31, 1995
                                         -------------------    -------------------
                                          Amount    Percent       Amount    Percent
                                          ------    -------       ------    -------
                                                 (in thousands, except percentages)
<S>                                     <C>        <C>        <C>         <C>
Maturity(1)
-----------
One year or less                          $ 89,868      19.8%     $50,694      19.7%
Over 1 year through 5 years                151,500      33.4       89,860      34.8
Over 5 years through 10 years               58,449      12.9       66,574      25.8
Over 10 years through 20 years              10,762       2.4           --        --
                                         ---------     -----     --------     -----
                                           310,579      68.5      207,128      80.3

United States government agency
   and other mortgage and asset-backed     143,175      31.5       50,942      19.7
   securities                            ---------     -----     --------     -----

       Total                             $453,754      100.0%     $258,070    100.0%
                                         =========     =====     =========    =====
</TABLE>

----------
(1)   Based on stated maturity dates with no prepayment assumptions.

        The  average  market  yield  to  maturity  of  PXRE's  fixed  maturities
portfolio  at  December  31,  1996 and  December  31,  1995  was 5.7% and  5.3%,
respectively.  At December 31, 1996,  the fair value of PXRE's fixed  maturities
portfolio  exceeded its amortized  cost by $589,000.  At December 31, 1995,  the
fair value of PXRE's fixed maturities  portfolio  exceeded its amortized cost by
$5,009,000.


                                      -15-



 

<PAGE>
<PAGE>


        The following table indicates the composition of PXRE's fixed maturities
portfolio (at amortized cost),  excluding short-term  investments,  by rating at
December 31, 1996 and 1995:

               COMPOSITION OF FIXED MATURITIES PORTFOLIO BY RATING

<TABLE>
<CAPTION>

                                          December 31, 1996     December 31, 1995
                                         -------------------    -------------------
                                          Amount    Percent       Amount    Percent
                                          ------    -------       ------    -------
                                                 (in thousands, except percentages)
<S>                                     <C>        <C>        <C>         <C>
Ratings(1)

United States government securities       $180,519      45.8%   $ 165,406     76.5%

United States government agency
  mortgage and asset-backed                 87,861      22.3       50,942     23.5
  securities

Other mortgage and asset-backed
  securities

  Aaa and/or AAA                            50,318      12.8           --        --
  Baa2 and/or BBB                            4,996       1.3           --        --

Obligations of states and political
  subdivisions

  Aaa and/or AAA                            30,726       7.8           --        --
  Aa and/or AA                              37,511       9.5           --        --
  A1 and/or A                                2,031       0.5           --        --
                                          --------     -----      --------    -----
       Total                              $393,962     100.0%     $216,348    100.0%
                                          ========     =====      ========    =====
</TABLE>

----------------
(1)  Ratings  as  assigned  by  Moody's  Investors Service, Inc. ("Moody's") and
     Standard  &  Poor's  Corporation  ("S&P"),  respectively.  Such ratings are
     generally assigned upon the issuance of the securities, subject to revision
     on the basis of ongoing evaluations.

        PXRE's   management   continually   evaluates  the  composition  of  the
investment  portfolio  and  repositions  the  portfolio  in  response  to market
conditions in order to improve returns while maintaining  liquidity and superior
credit  quality.  Consistent  with the foregoing,  in the first quarter of 1997,
PXRE began to  further  diversify  its  investment  portfolio  by  reducing  its
investments  in U.S.  government  securities  and  increasing  its investment in
equity securities and other types of debt securities.

MARKETING

       In  the  United  States, PXRE  currently  reinsures  both  national   and
regional  insurance  and  reinsurance  companies  headquartered  mainly  in  the
Northeast  and  Midwest.   PXRE  also  provides  reinsurance  for  international
insurance and  reinsurance  companies  principally  headquartered  in the United
Kingdom, Continental Europe, Australia, and Asia.

      PXRE obtains most of its facultative business and substantially all of its
treaty business  through reinsurance  intermediaries  which represent reinsureds
in  negotiations  for  the  purchase  of  reinsurance.  None of the  reinsurance
intermediaries  through  which  PXRE  obtains business are authorized to arrange
any  business  in  the  name  of  PXRE without PXRE's  approval.  PXRE pays such
intermediaries or brokers  commissions based on the amount  of premiums and type
of business



                                      -16-
 

<PAGE>
<PAGE>

ceded. These payments  constitute part of PXRE's total acquisition costs and are
included in its underwriting expenses. PXRE generally pays reinsurance brokerage
fees believed to be comparable to industry norms.

        Approximately  21.1% and 14.9% of gross premiums  written in fiscal year
1996 were  arranged  through the  worldwide  branch  offices of Guy  Carpenter &
Company,  Inc., a subsidiary of Marsh & McLennan  Companies,  Inc. and Alexander
Howden Reinsurance Brokers Ltd.,  respectively.  The commissions paid by PXRE to
these  intermediaries  are  generally  at the same  rates as those paid to other
intermediaries.

COMPETITION

        The  reinsurance  industry is highly  competitive  and is  undergoing  a
variety of  challenging  developments.  The  industry  has in recent years moved
toward  greater   consolidation   as  ceding  companies  have  placed  increased
importance  on size and  financial  strength  in the  selection  of  reinsurers.
Additionally,  reinsurers are tapping new markets and complementing  their range
of  traditional  reinsurance  products with  innovative new products which bring
together capital markets and reinsurance experience. PXRE competes with numerous
major  international  and domestic  reinsurance and insurance  companies.  These
competitors,  many of which have substantially greater financial,  marketing and
management  resources  than PXRE,  include  independent  reinsurance  companies,
subsidiaries,  or  affiliates  of  established  worldwide  insurance  companies,
reinsurance   departments  of  certain  commercial  insurance   companies,   and
underwriting syndicates. PXRE also may face competition from new market entrants
or from market  participants that determine to devote greater amounts of capital
to the types of business written by PXRE.

        Although PXRE obtains most of its facultative business and substantially
all of its treaty business through  reinsurance  intermediaries  or brokers,  it
competes  indirectly with  reinsurers who obtain business  directly from primary
insurers because PXRE's brokers must compete with direct reinsurers for business
to be forwarded to PXRE.  PXRE  therefore  competes  both with  reinsurers  that
obtain  business  directly from reinsureds and with reinsurers that obtain their
business through intermediaries and brokers.

        Competition in the types of reinsurance  business which PXRE underwrites
is based on many factors,  including the perceived overall financial strength of
the reinsurers,  premiums charged, other terms and conditions, A.M. Best rating,
service offered,  speed of service  (including  claims  payment),  and perceived
technical  ability and experience of staff. The number of jurisdictions in which
a  reinsurer  is licensed or  authorized  to do business is also a factor.  PXRE
Reinsurance  is licensed,  accredited,  or otherwise  authorized or permitted to
conduct  reinsurance  business in all states (except Arkansas,  Hawaii,  Kansas,
Oklahoma, Vermont, and Washington) and the District of Columbia and Puerto Rico.

        In  December  1996,  after the  announcement  of the Merger,  A.M.  Best
affirmed PXRE Reinsurance's rating of "A (Excellent)".  Management believes that
this rating enhances the


                                      -17-
 

<PAGE>
<PAGE>

competitive position of PXRE Reinsurance.  A.M. Best is an independent insurance
rating  organization  whose  ratings are based on an  analysis of the  financial
condition and operating  performance of an insurance or  reinsurance  company as
they relate to the industry in general.  These ratings  represent an independent
opinion of a company's financial strength and ability to meet its obligations to
policyholders,   although  such  ratings  may  not  reflect  the  considerations
applicable to an investment in an insurance or  reinsurance  company.  A.M. Best
reviews its ratings at least  annually and there can be no  assurance  that this
rating will be maintained in the future.

OTHER OPERATIONS

              In  March  1995,  PXRE  and  TREX  entered  into a  joint  venture
arrangement to trade in catastrophe  futures and option contracts on the Chicago
Board of Trade (the  "CBOT").  As a result of the  Merger,  this  venture is now
wholly-owned by PXRE, which has committed $5 million to it. Although the venture
has developed a number of trading  strategies,  the low level of activity in the
CBOT market for  catastrophe  futures has kept trade volume to a minimum through
December 31, 1996.

        In December 1996,  PXRE  completed its investment in Lloyd's,  forming a
new syndicate (PG Butler Syndicate 1224). The new syndicate will have an initial
capacity to underwrite 'L'35 million in annual premiums ($60 million at December
31, 1996  exchange  rates)commencing  with the 1997 renewal  season.  Management
expects  the  syndicate  will  provide  PXRE with  access to  Lloyd's  worldwide
licenses  in  insurance,   reinsurance  and  surplus  lines,  create  additional
opportunities for PXRE and, in conjunction with PXRE's Brussels office,  further
strengthen PXRE's presence in the worldwide  insurance and reinsurance  markets.
The  syndicate  will employ the same  underwriting  philosophy  as PXRE and will
expand and contract its writings  according to the adequacy of pricing for given
exposures. In the current competitive environment, the syndicate is not expected
to utilize its full underwriting capacity. In connection with the capitalization
of the  syndicate,  PXRE has placed on deposit  $42,975,000  of U.S.  government
securities as  collateral  for Lloyd's.  In addition,  PXRE obtained a letter of
credit  for the  benefit  of  Lloyd's  in the  amount of  $15,355,000,  which is
collateralized by U.S.  government  securities in approximately the same amount.
Management  of PXRE  anticipates  that  the  results  of the  syndicate  will be
reported on a quarter lag.

REGULATION

        PXRE,  PXRE  Reinsurance  and  Transnational  Reinsurance are subject to
regulation   under  the  insurance   statutes  of  various   states,   including
Connecticut,  the  domiciliary  state  of  PXRE  Reinsurance  and  Transnational
Reinsurance.  The  regulation  and  supervision  to which PXRE  Reinsurance  and
Transnational  Reinsurance  is subject  relate  primarily  to the  standards  of
solvency that must be met and maintained, licensing requirements for reinsurers,
the nature of and limitations on investments,  restrictions on the size of risks
which may be insured,  deposits of  securities  for the benefit of a  reinsured,
methods of  accounting,  periodic  examinations  of the financial  condition and
affairs of reinsurers, the form and content of reports of financial condition


                                      -18-
 

<PAGE>
<PAGE>

required to be filed, and reserves for losses,  and other purposes.  In general,
such regulation is for the protection of the reinsureds and,  ultimately,  their
policyholders, rather than investors.

        In addition,  PXRE, PXRE Reinsurance and  Transnational  Reinsurance are
subject  to  regulation  by state  insurance  authorities  under  the  insurance
statutes and insurance  holding company  statutes of various  states,  including
Connecticut.  These laws and regulations vary from state to state, but generally
require an  insurance  holding  company and  insurers  and  reinsurers  that are
subsidiaries  of an  insurance  holding  company  to  register  with  the  state
regulatory  authorities  and to file  with  those  authorities  certain  reports
including information concerning their capital structure,  ownership,  financial
condition,  and general  business  operations.  Moreover,  PXRE  Reinsurance and
Transnational  Reinsurance  may not enter into certain  transactions,  including
certain reinsurance  agreements,  management agreements,  and service contracts,
with  members  of its  insurance  holding  company  system,  unless it has first
notified the Connecticut  Insurance  Commissioner of its intention to enter into
any  such  transaction  and  the  Connecticut  Insurance  Commissioner  has  not
disapproved of such  transaction  within the period specified by the Connecticut
insurance  statute.  Among other things,  such  transactions  are subject to the
requirements  that  their  terms be fair  and  reasonable,  charges  or fees for
services  performed be  reasonable  and the  interests of  policyholders  not be
adversely affected.

        State laws also require  prior notice or regulatory  agency  approval of
direct or indirect changes in control of an insurer,  reinsurer,  or its holding
company,  and of certain significant  intercorporate  transfers of assets within
the holding company  structure.An  investor who acquires shares  representing or
convertible  into more than 10% of the voting  power of the  securities  of PXRE
would become subject to at least some of such  regulations,  would be subject to
approval by the  Connecticut  Insurance  Commissioner  prior to  acquiring  such
shares,  and would be required  to file  certain  notices  and reports  with the
Commissioner prior to such acquisition.

        The  principal  sources of cash for the payment of  operating  expenses,
debt service obligations, and dividends by PXRE are the receipt of dividends and
net tax allocation payments from PXRE Reinsurance and Transnational Reinsurance.
Under the  Connecticut  insurance laws, the maximum amount of dividends or other
distributions  that  PXRE  Reinsurance  may  declare  or pay to  PXRE,  and that
Transnational  Reinsurance  may declare or pay to PXRE  Reinsurance,  within any
twelve-month period,  without regulatory  approval,  is limited to the lesser of
(a) earned surplus or (b) the greater of 10% of policyholder surplus at December
31 of the  preceding  year,  or 100% of net income for the  twelve-month  period
ended  December 31 of the preceding  year,  all  determined  in accordance  with
statutory accounting principles ("SAP").  Accordingly, the Connecticut insurance
laws could limit the amount of  dividends  available  for  distribution  by PXRE
Reinsurance or  Transnational  Reinsurance  without prior  regulatory  approval,
depending upon a variety of factors  outside the control of PXRE,  including the
frequency and severity of  catastrophe  and other loss events and changes in the
reinsurance  market,  in the  insurance  regulatory  environment  and in general
economic conditions.  The maximum amount of dividends or distributions that PXRE
Reinsurance  may  declare  and pay in  1997,  without  regulatory  approval,  is
$40,013,000. During 1996, $21,000,000 in dividends were paid by PXRE Reinsurance
to PXRE. The maximum amount of



                                      -19-
 

<PAGE>
<PAGE>

dividends or distributions that Transnational Reinsurance may declare and pay in
1997, without regulatory approval,  is $21,874,000.  During 1996,  $5,000,000 in
dividends  were paid by  Transnational  Reinsurance  to TREX and  $16,500,000 in
dividends  were  paid by  Transnational  Reinsurance  to PXRE  Reinsurance.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Liquidity and Capital Resources."


        Additionally,   Connecticut  adopted,   effective  September  28,  1994,
regulations  respecting certain minimum capital  requirements,  for property and
casualty  companies,  based upon a model adopted by the National  Association of
Insurance Commissioners (the "NAIC"). The risk-based capital regulations provide
for the use of a formula to measure statutory capital and surplus needs based on
the risk  characteristics  of a company's  products and investment  portfolio to
identify  weakly   capitalized   companies.   As  at  December  31,  1996,  PXRE
Reinsurance's  surplus and  Transnational  Reinsurance's  surplus  substantially
exceeded their respective calculated risk-based capital.

        In  addition,  from  time to time  various  regulatory  and  legislative
changes have been proposed in the insurance  industry,  some of which could have
an effect on  reinsurers.  Among the proposals that have in the past been or are
at present being considered are the possible  introduction of federal regulation
in  addition  to,  or in lieu of,  the  current  system of state  regulation  of
insurers,  the initiative to create a federally  guaranteed disaster reinsurance
pool prefunded by insurers, and proposals in various state legislatures (some of
which  proposals have been enacted) to conform  portions of their insurance laws
and regulations to various model acts adopted by the NAIC. Furthermore, the NAIC
has commenced a project to codify statutory accounting practices,  the result of
which is  expected  to  constitute  the only  source of  "prescribed"  statutory
accounting  practices.  Accordingly,  that  project,  which  is  expected  to be
completed  in 1999,  will  likely  change the  definitions  of what  constitutes
prescribed  versus  permitted  statutory  accounting  practices  and will likely
result in changes to the accounting  policies that insurance  enterprises use to
prepare their statutory financial statements.  The NAIC is an organization which
assists state insurance  supervisory officials in achieving insurance regulatory
objectives,  including the maintenance and improvement of state regulation. PXRE
is unable to predict what effect, if any, the foregoing developments may have on
its operations and financial condition in the future.

        The  NAIC's  Insurance   Regulatory   Information  System  ("IRIS")  was
developed by a committee of state insurance regulators and is primarily intended
to assist state insurance  departments in executing their statutory  mandates to
oversee the  financial  condition  of  insurance  companies  operating  in their
respective  states.  IRIS identifies eleven industry ratios and specifies "usual
values" for each ratio.  Departure  from the usual values on four or more of the
ratios can lead to inquiries from individual state insurance commissioners as to
certain aspects of an insurer's business. For the years ended December 31, 1996,
1995 and 1994, PXRE Reinsurance's  results were within the usual values for each
of the 11  ratios,  except  for one  ratio  in each of  1996  and  1994.  PXRE's
management believes these ratios fell outside the usual range in 1996 due to the
increase  in  surplus  after  Transnational  Reinsurance  became a  wholly-owned
subsidiary  of PXRE  Reinsurance  and in 1994 due largely to PXRE  Reinsurance's
expansion  of net  premiums  written  resulting  from rate  increases on new and
renewal catastrophe-related business and financing transactions which


                                      -20-
 

<PAGE>
<PAGE>

generated capital to support these writings.  During this period,  Transnational
Reinsurance's results were within the usual values for each of the 11 ratios.

EMPLOYEES

        PXRE  employs  53  full-time  employees.  None of  PXRE's  employees  is
represented by a labor union, and management considers its relationship with its
employees to be excellent.

ITEM 2. PROPERTIES

        PXRE leases a total of approximately  28,400 square feet of office space
in Edison,  New Jersey (PXRE's  corporate  headquarters),  New York, New York (a
satellite office), London, England and Brussels, Belgium. The Edison, New Jersey
lease, which covers approximately 24,000 square feet of office space, was signed
in 1994 and is for a term of 15 years at a fixed  annual  rent of  approximately
$370,000  (inclusive of basic  electricity)  and additional  rents on account of
PXRE's  proportionate  share of  increases  in building  operating  expenses and
property taxes over calendar year 1994.

ITEM 3. PENDING LEGAL PROCEEDINGS

        PXRE is not a party to any material pending legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        The Merger and an amendment to the Restated Certificate of Incorporation
of PXRE were submitted to a vote of the stockholders of PXRE, and approved, at a
special stockholders' meeting held December 9, 1996.



                                      -21-
 

<PAGE>
<PAGE>



                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        Since December 31, 1996,  PXRE's common stock has been listed on the New
York Stock Exchange under the symbol "PXT".  Prior to December 31, 1996,  PXRE's
common stock was traded on The NASDAQ Stock Market under the symbol "PXRE".  The
following  table  sets  forth  for the  periods  indicated  the high and low bid
quotations  for PXRE's common stock as reported by NASDAQ and cash dividends per
share of common stock declared and subsequently paid:


<TABLE>
<CAPTION>
                                               Bid Price
                                              ------------
                                            High         Low              Dividends
<S>                                       <C>            <C>                 <C> 
1995:
First Quarter                             28.75          21.75               0.15
Second Quarter                            26.50          21.00               0.15
Third Quarter                             29.75          23.50               0.15
Fourth Quarter                            27.50          22.75               0.18

1996:
First Quarter                             28.00          24.00               0.18
Second Quarter                            27.00          23.75               0.18
Third Quarter                             24.50          22.25               0.18
Fourth Quarter                            25.50         22.875               0.21
</TABLE>


        These prices represent quotations by dealers and do not include markups,
markdowns, or commissions, and do not necessarily represent actual transactions.
As of March 21, 1997, there were 13,929,504  shares  of  the common stock issued
and  outstanding,  which shares were held by  approximately  150 shareholders of
record and, based on PXRE's best  information,  in excess  of  2,200  beneficial
owners  of the  common  stock.  See  Notes 10 and 11 of  Notes  to  Consolidated
Financial  Statements  for  information  with  respect  to shares  reserved  for
issuance under employee benefit and stock option plans.

        Beginning in the fourth quarter of 1989, PXRE has each quarter  declared
and  subsequently  paid cash  dividends on its common stock.  The dividend rate,
which initially was $0.05 per share, was increased in the fourth quarter of 1993
to $0.075 per share,  in the fourth  quarter of 1994 to $0.15 per share,  in the
fourth quarter of 1995 to $0.18 per share,  and in the fourth quarter of 1996 to
$0.21 per share.

        The  payment  of  dividends  on  the  common  stock  is  subject  to the
discretion of the Board of Directors  which will consider,  among other factors,
PXRE's operating results, overall financial


                                      -22-
 

<PAGE>
<PAGE>


condition, capital requirements and general business conditions. There can be no
assurance that dividends will be paid in the future.

              As a holding company, PXRE is largely dependent upon dividends and
net tax allocation payments from PXRE Reinsurance and Transnational  Reinsurance
to pay dividends to PXRE's  shareholders.  PXRE  Reinsurance  and  Transnational
Reinsurance  are  subject  to state  laws that may  restrict  their  ability  to
distribute dividends. In addition,  certain covenants in the indenture governing
PXRE's  Senior  Notes  may  restrict  PXRE's  ability  to  pay  dividends.   See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Liquidity  and Capital  Resources"  and  "Business--Regulation"  for
further information concerning restrictions contained in the indenture governing
PXRE's Senior Notes and under state insurance law.



                                      -23-
 

<PAGE>
<PAGE>



ITEM 6. SELECTED FINANCIAL DATA.


<TABLE>
<CAPTION>

                                                         Year Ended December 31,
                                       --------------------------------------------------------
                                           1996        1995       1994     1993         1992
                                           (1)                          (2)(3)(4)(5) (2)(3)(5)
                                           ----        ----       ----  ------------  --------
                                             (in thousands, except per share data and ratios)
<S>                                      <C>         <C>        <C>        <C>        <C>
INCOME STATEMENT DATA:
Gross premiums written                   $114,348    $155,380   $179,684   $116,975   $100,951
Premiums ceded                             46,630    (57,744)   (71,166)   (39,469)   (51,320)
                                         --------    --------   --------   --------   --------
Net premiums written                       67,718      97,636    108,518     77,506     49,631
Change in unearned premiums                 5,078       (494)      2,083      1,422    (1,196)
                                         --------    --------   --------   --------   --------
Net premiums earned                        72,796      97,142    110,601     78,928     48,435
Net investment income                      16,782      14,730     13,786      8,011      5,083
Net realized investment gains (losses)         94          85    (1,164)    (1,526)        392
Gain on sale of subsidiary(4)                  --          --         --     10,564         --
Management fee(1)                           6,032       6,417      6,992      3,158        809
Agency commissions                             --          --         --         --        257
                                         --------    --------   --------   --------   --------
          Total revenues                   95,704     118,374    130,215     99,135     54,976
                                         --------    --------   --------   --------   --------
Losses and loss expenses incurred          18,564      34,716     52,647     40,570     39,778
Commissions and brokerage                  12,874      13,251     15,026     13,339     13,162
Other operating expenses                   12,262      11,237      8,365      8,917      9,332
Interest expense                            6,957       7,143      7,789      2,740        319
                                         --------    --------   --------   --------   --------
          Total losses and expenses        50,657      66,347     83,827     65,566     62,591
                                         --------    --------   --------   --------   --------
Income (loss) before income taxes, 
  equity in net earnings of TREX and 
  cumulative effect of accounting change   45,047      52,027     46,388     33,569    (7,615)

Equity in net earnings of TREX(4)           3,898       5,948      4,141         84         --

Income tax provision (benefit)             15,644      18,189     15,700     11,008    (3,322)
                                         --------    --------   --------   --------   --------
Net income (loss)
   (before cumulative effect
   of accounting change)                   33,301      39,786     34,829     22,645    (4,293)
Cumulative effect of adopting FASB
  No. 109                                      --          --         --         --       433
                                         --------    --------   --------   --------   --------
Net income (loss)                        $ 33,301    $ 39,786    $34,829   $ 22,645  $ (3,860)
                                         ========    ========    =======   ========  ======== 
Preferred stock dividend(6)                     0         599      2,005      2,056     1,419
                                         ========    ========    =======   ========  ======== 
Net income (loss) available to common
   stockholders (before cumulative
effect of accounting change)             $ 33,301    $ 39,187    $32,824   $ 20,589  $ (5,712)
                                         ========    ========    =======   ========  ======== 
</TABLE>


                                      -24-


 

<PAGE>
<PAGE>

<TABLE>
<CAPTION>

                                                         Year Ended December 31,
                                       --------------------------------------------------------
                                           1996        1995       1994     1993         1992
                                           (1)                          (2)(3)(4)(5) (2)(3)(5)
                                           ----        ----       ----  ------------  --------
                                             (in thousands, except per share data and ratios)
<S>                                      <C>         <C>        <C>        <C>        <C>
Ratio of earnings to fixed charges(7)      7.15        7.90        6.73        12.12        --

Ratio of earnings to combined fixed
  charges and preferred dividends(7)       7.15        7.04        4.90         6.02        --
   
Primary earnings per common share:
   Net income (loss)
   (before cumulative effect
   of accounting change)                $  3.68     $  4.74     $  4.89      $  3.34  $  (1.48)
   Cumulative effect of accounting
    change                                   --         --           --           --      0.11
                                        -------     -------     -------      -------  --------
   Net income (loss)                    $  3.68     $  4.74     $  4.89      $  3.34  $  (1.37)
                                        =======     =======     =======      =======  ========
   Average common shares
    outstanding(6)                        9,046       8,275       6,710        6,170     3,851
                                        =======     =======     =======      =======  ========
Fully diluted earnings per common
share:
   Net income (loss)
   (before cumulative effect
   of accounting change)               $  3.68     $  4.48      $  3.94      $  2.70  $  (1.48)
   Cumulative effect of accounting
    change                                  --          --           --           --      0.11
                                        -------     -------     -------      -------  --------
   Net income (loss)                   $  3.68     $  4.48      $  3.94      $  2.70  $  (1.37)
                                        =======     =======     =======      =======  ========
   Average common shares
   outstanding(1)                        9,060       8,874        8,847        8,380     3,851
                                        =======     =======     =======      =======  ========

Cash dividends per common share        $  0.72     $  0.63     $  0.375     $  0.225   $  0.20

OTHER OPERATING DATA:

GAAP loss ratio(8)                        25.5%       35.7%        47.6%        51.4%     82.1%
GAAP underwriting expense ratio(8)        26.2%       18.6%        14.8%        24.2%     44.2%
                                        -------     -------     -------      -------  --------
GAAP combined ratio(8)                    51.7%       54.3%        62.4%        75.6%    126.3%
                                        =======     =======     =======      =======  ========

                                                       As of December 31,

                                     ---------------------------------------------------------
                                        1996        1995        1994          1993       1992
                                        ----        ----        ----          ----       ----
BALANCE SHEET DATA:

Cash and investments                  $467,078    $269,089     $231,789     $248,949  $ 81,994
Total assets                           543,324     393,465      353,794      349,251   205,484
Losses and loss expenses                70,977      72,719       81,836       71,442    88,668
Note payable                            64,725      67,775       69,700       75,000     5,250
Total stockholders' equity             357,678     211,162      166,771      142,690    69,728
Book value per common share           $  25.63    $  24.15     $  21.27    $   18.06  $  11.20
Statutory capital and surplus of
   PXRE Reinsurance                   $400,133    $250,231     $211,988     $185,844  $ 65,221
</TABLE>

--------------------------------
(1)      On  December  11,  1996,  PXRE  merged  with TREX.  The Merger has been
         accounted  for as a purchase.  Accordingly,  TREX has been  included in
         PXRE's consolidated results of operations from the date of acquisition,
         which resulted in  incremental  earnings of $1,253,000 in 1996. For the
         period from  January 1, 1996 until  December 11,  1996,  PXRE  recorded
         equity in net earnings of TREX amounting to  $3,898,000.  Fully diluted
         average shares outstanding reflects the shares issued to holders



                                      -25-
 

<PAGE>
<PAGE>


         of TREX  common  shares in  connection  with the  Merger.  Included  in
         management fee was $2,512,000,  $3,526,000 and $3,364,000 in 1996, 1995
         and 1994, respectively, earned from TREX prior to the Merger.

(2)      Effective  January 1, 1993,  PXRE  adopted  the  FASB's  SFAS No.  113,
         "Accounting  and  Reporting  for  Reinsurance  of  Short-Duration   and
         Long-Duration Contracts". As a result of such adoption, PXRE effected a
         December  31,  1992  balance  sheet   reclassification   to  assets  of
         $53,314,969  of  reinsurance  recoverables  on losses and loss  expense
         liabilities  and $5,529,292 of ceded unearned  premiums in 1992,  which
         were previously deducted from liabilities. The adoption of SFAS No. 113
         had no effect on PXRE's  net income for the years  ended  December  31,
         1993 or 1992.

(3)      The FASB's Emerging  Issues Task Force ("EITF")  reached a consensus on
         July 22, 1993 regarding Issue No. 93-6,  "Accounting for  Multiple-Year
         Retrospectively-Rated  Contracts by Ceding and  Assuming  Enterprises."
         The EITF consensus  requires that affected  companies should accrue the
         lesser  of   termination   penalties  or  the  effect  of   prospective
         adjustments  in rates or  coverages  triggered by the loss event in the
         period that a loss is recorded.  The EITF mandate required  adoption of
         this consensus no later than the third quarter of 1993. As described in
         Note 2 to PXRE's Consolidated  Financial  Statements for the year ended
         December 31, 1993, PXRE had certain retrocessional catastrophe coverage
         for its  principal  types  of  business.  Certain  of  these  contracts
         provided  for  terms  of  three  or  more  years  and  had  contractual
         adjustments  regarding rates and/or coverages when losses are recovered
         under these contracts.  Although PXRE was provided with the opportunity
         to  cancel  some of these  contracts  without  penalty,  PXRE  chose to
         continue  the  contracts to obtain the  coverage  provided  thereunder.
         Accordingly,  PXRE believed  that the  appropriate  application  of the
         EITF's consensus was to record in the third quarter of 1992 incremental
         premiums that  resulted from  Hurricane  Andrew loss  recoveries  under
         these contracts.  This change increased 1992 third quarter ceded earned
         premiums by $5,772,000,  deferred income tax benefit by $1,962,000, net
         loss  by  $3,810,000  and  loss  per  common  share  by  $0.99.   These
         adjustments were determined on the basis of losses estimated by PXRE at
         December 31, 1992.  The  financial  statements  for years prior to 1992
         were not affected.  Also, due to additional information received during
         the first six months of 1993 with respect to Hurricane  Andrew  losses,
         PXRE reported,  in the second quarter of 1993, an additional $2,500,000
         of  ceded  premium   expenses  through  the  application  of  the  EITF
         consensus.  The statutory  capital and surplus of PXRE  Reinsurance has
         not been adjusted.

(4)      Until the  fourth  quarter  of 1993,  Transnational  Reinsurance  was a
         wholly-owned  subsidiary  of PXRE  Reinsurance.  On November 1, 1993, a
         registration  statement  relating to an initial  public  offering  (the
         "Offering")  by TREX of  5,750,000  shares  of Class A common  stock at
         $20.00  per share  was  declared  effective.  In  conjunction  with the
         formation  of TREX and  registration  of TREX's Class A common stock in
         the Offering,  all of the  outstanding  capital stock of  Transnational
         Reinsurance was contributed by PXRE Reinsurance to TREX in exchange for
         the issuance of  1,535,848  shares of TREX's Class B common stock which
         caused PXRE Reinsurance's holdings of TREX's Class B common stock (when
         combined  with the 100 shares of Class B common  stock  contributed  to
         PXRE  Reinsurance  by  PXRE  in  connection  with  the  closing  of the
         Offering) to  constitute  approximately  21% of all of the  outstanding
         common stock of TREX immediately after the Offering.  Thereafter, TREX,
         through Transnational Reinsurance, specialized principally in providing
         brokered  property  retrocessional  reinsurance and marine and aviation
         retrocessional  reinsurance  in the  United  States  and  international
         markets pursuant to a Management Agreement with PXRE Reinsurance.  As a
         result of this transaction,  PXRE recorded a gain on sale in the fourth
         quarter  of  1993   amounting  to   $10,564,000  on  a  pre-tax  basis,
         representing the difference between PXRE Reinsurance's  interest in the
         net assets of Transnational  Reinsurance immediately after the Offering
         and the  historical  book  value  of its  investment  in  Transnational
         Reinsurance.  Subsequent to the Offering until December 11, 1996,  PXRE
         accounted for its  investment in TREX on the equity method as described
         in Note 1.

(5)      During the second  quarter  of 1992,  PXRE  completed  an  offering  of
         1,059,800  depository  shares,  each  representing  1/100 of a share of
         PXRE's  Series  A  Cumulative  Convertible  Preferred  Stock.  The  net
         proceeds of $24,403,000 were contributed to PXRE Reinsurance's surplus.
         During  the first  quarter  of 1993,  PXRE  completed  an  offering  of
         2,300,000  shares of common  stock.  The net  proceeds  of  $46,942,000
         (except for $5,000,000 which was retained by PXRE for general corporate
         purposes) were contributed to PXRE  Reinsurance's  surplus.  During the
         third  quarter of 1993,  PXRE  completed  an  offering  of  $75,000,000
         principal  amount of 9.75% Senior  Notes due 2003.  The net proceeds of
         $72,150,000 (except for approximately $3,938,000 which was used by PXRE
         to repay all amounts  outstanding under and retire a term loan facility
         and $15,000,000  which was retained by PXRE to provide support for debt
         service on the Senior  Notes) were  contributed  to PXRE  Reinsurance's
         surplus.

(6)      During 1995, all of the outstanding  shares of Series A Preferred Stock
         were  converted  into shares of PXRE's  common  stock.  To date,  these
         convertible   preferred  shares  were  the  principal  reason  for  the
         difference between primary and fully diluted earnings per share.


                                      -26-
 

<PAGE>
<PAGE>



(7)      The historical  ratios of earnings to fixed charges were  determined by
         dividing  consolidated earnings by total fixed charges. For purposes of
         these  computations (i) earnings consist of consolidated  income before
         considering  income taxes, fixed charges and minority interest and (ii)
         fixed charges consist of interest on  indebtedness  and that portion of
         rentals  which is  deemed  by PXRE's  management  to be an  appropriate
         interest  factor.  Earnings  were  inadequate to cover fixed charges by
         $7,615,000 for the year ended December 31, 1992. The historical  ratios
         of earnings to combined  fixed  charges and  preferred  dividends  were
         determined by dividing consolidated earnings by total fixed charges and
         preferred  dividends.  Earnings were  inadequate to cover fixed charges
         and preferred  dividends by $9,034,000  for the year ended December 31,
         1992.

(8)      The loss,  underwriting  expense and  combined  ratios  included  under
         "Other Operating Data" have been derived from the audited  consolidated
         statements of income of PXRE prepared in accordance with GAAP.


                                      -27-
 

<PAGE>
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

              PXRE provides  reinsurance products and services to a domestic and
international  marketplace,  with principal  emphasis on commercial and personal
property  risks and marine and aviation  risks,  and with a particular  focus on
catastrophe-related coverages.

              PXRE  exercises  discipline  in  committing  and  withholding  its
underwriting  capacity  and  altering  its mix of  business to  concentrate  its
underwriting  capacity at any given  point in time on those types of  businesses
where  management  believes  that  above  average  underwriting  results  can be
achieved.  PXRE has been pursuing a strategy of focusing on  catastrophe-related
coverages in both the international and domestic markets.

              PXRE also generates management fee income by managing business for
other  insurers  and  reinsurers,  either by  accepting  additional  amounts  of
coverage  on  underwritten  risks and  retroceding  such  additional  amounts to
participants through various retrocessional  arrangements or, in one case, until
the Merger with TREX described  below,  by managing the  underwriting  and other
day-to-day operations of a publicly-owned reinsurance group.

              At   December   31,   1996,   PXRE  was  a  party  to  three  such
retrocessional  arrangements.  One such  arrangement is with a group of insurers
referred to as the AMA; another is with Trenwick Group; and a third  arrangement
is with Investors Re, a Barbados reinsurer. Under these arrangements, PXRE cedes
some of its underwritten risks to the participants, subject to maximum aggregate
liabilities  per  reinsurance  program.   PXRE  receives  a  management  fee  or
commission  of 5% of premiums  ceded (4.2% for Investors Re) and a percentage of
any ultimate  underwriting  profits in connection  with the  reinsurance  ceded.
Under the  arrangements  with these  participants,  such  percentage of ultimate
underwriting  profits is subject to adjustment  based on cumulative  experience.
Future  management  fee income is dependent upon the amount of business ceded to
the participants and the profitability of that business.

              In  the  past,   PXRE  has  entered   into  other   retrocessional
arrangements  providing  catastrophic  protection.  In  recent  years,  PXRE has
reduced,  upon renewal,  its own catastrophe  retrocessional  facilities and has
borne the  associated  increase  in net  exposures.  As the cost of  catastrophe
retrocessional  facilities  has declined  since 1995,  PXRE has again  commenced
selectively  purchasing  such  coverage,  although  PXRE  did not  purchase  any
significant catastrophe retrocessional coverage in 1995 or 1996.

              In November 1993,  PXRE  sponsored the initial public  offering of
TREX to  raise  capital  and  take  advantage  of  favorable  conditions  in the
worldwide  retrocessional  reinsurance  market.  PXRE, through PXRE Reinsurance,
retained  a 21%  ownership  position  in  TREX  and had  responsibility  for the
day-to-day  operations of TREX, including all the reinsurance  operations of its
subsidiary,


                                      -28-
 

<PAGE>
<PAGE>


Transnational Reinsurance under the Management Agreement. TREX and Transnational
Reinsurance had no paid employees.

              Under  the  terms  of  the  Management  Agreement,   Transnational
Reinsurance  shared in certain specified business of PXRE that was classified as
property retrocessional reinsurance business, marine and aviation retrocessional
reinsurance  or marine and aviation  reinsurance  and  facultative  reinsurance.
Transnational Reinsurance was also entitled to share similarly in other property
reinsurance  business,  if any,  which PXRE,  from  time-to-time,  proposed that
Transnational Reinsurance underwrite and which Transnational Reinsurance's Board
of Directors approved.

              Transnational Reinsurance paid PXRE an annual basic management fee
under the Management  Agreement equal to 5% of gross premiums written (including
reinstatement  premiums less return premiums) of  Transnational  Reinsurance and
its   consolidated   subsidiaries   (if  any)  as  reflected  in   Transnational
Reinsurance's  statutory  quarterly  and  annual  statements  filed  with  state
insurance authorities. TREX and Transnational Reinsurance also paid all expenses
directly  attributable to them, including a proportionate share of PXRE's rental
expenses  with respect to office space based on gross  premiums  written for the
management  year and time spent by officers and  employees of PXRE in connection
with the  preparation of reports filed by TREX with the SEC and proxy  materials
and annual reports sent to TREX shareholders.

              On December 11, 1996,  PXRE  completed the Merger of TREX with and
into PXRE,  pursuant to which each share of common  stock of TREX was  converted
into the  right to  receive  1.0575  shares of PXRE  common  stock.  The  Merger
resulted from the  realization by the management and Boards of Directors of both
PXRE and TREX that conditions had become more competitive in the  retrocessional
reinsurance  marketplace,  and that the reinsurance markets, rating agencies and
the capital markets are placing  increased  importance on the size and financial
strength of reinsurance  companies,  which size and financial  strength would be
augmented by the Merger. Following the Merger,  Transnational Reinsurance became
a wholly-owned subsidiary of PXRE Reinsurance. The Merger has been accounted for
using the purchase method of accounting; therefore net income of TREX (including
Transnational  Reinsurance) has been included in PXRE's consolidated  results of
operation from the date of acquisition.

CERTAIN RISKS AND UNCERTAINTIES

              As a reinsurer  principally  of property and  catastrophe  related
coverages in both the  international  and  domestic  markets,  PXRE's  operating
results in any given period depend to a large extent on the number and magnitude
of natural and man-made  catastrophes  such as hurricanes,  windstorms,  floods,
earthquakes, spells of severely cold weather, fires and explosions.

              The estimation of losses for catastrophe  reinsurers is inherently
less reliable than for reinsurers of risks which have an established  historical
pattern of losses.  In  addition,  insured  events which occur near the end of a
reporting  period,  as well as with  respect  to PXRE's  retrocessional  book of
business,  the significant delay in losses being reported to insurance carriers,
reinsurers and


                                      -29-
 

<PAGE>
<PAGE>

finally  retrocessionaires,  require  PXRE to make  estimates of losses based on
limited  information  from ceding  companies  and based on its own  underwriting
data.  Because of the  uncertainty  in the process of estimating its losses from
insured  events,  there is a risk that  PXRE's  liabilities  for losses and loss
expenses  could prove to be  inadequate,  with a  consequent  adverse  impact on
future earnings and stockholders' equity. Additionally,  as a consequence of its
emphasis on property  reinsurance,  PXRE may forgo potential  investment  income
because  property  losses are typically  settled within a shorter period of time
than casualty losses.

        PXRE maintains only minimal catastrophe retrocessional coverage. In view
of the increased  underwritings of catastrophe  related  reinsurance and the net
exposure   being  retained  by  PXRE,  the  occurrence  of  one  or  more  major
catastrophes  in any given period (such as  Hurricanes  Andrew and Iniki in 1992
and the Northridge  Earthquake in 1994) could have a material  adverse impact on
PXRE's results of operations  and financial  condition and result in substantial
liquidation of investments and outflows of cash as losses are paid.

        As PXRE  underwrites  risks  from a large  number of  insurers  based on
information  generally  supplied  by  reinsurance  brokers,  there  is a risk of
developing a concentration of exposure to loss in certain geographic areas prone
to specific types of catastrophes. PXRE has developed systems and software tools
to  monitor  and  manage  the  accumulation  of its  exposure  to  such  losses.
Management has established guidelines for maximum tolerable losses from a single
or multiple  catastrophic event based on historical data;  however, no assurance
can  be  given  that  these  maximums  will  not  be  exceeded  in  some  future
catastrophe.

        Premiums on reinsurance business assumed are recorded as earned on a pro
rata basis over the  contract  period  based upon  estimated  subject  premiums.
Management  must estimate the subject  premiums  associated with the treaties in
order to determine  the level of earned  premiums for a reporting  period.  Such
estimates are based on  information  from brokers which can be subject to change
as new information  becomes  available.  Because of the inherent  uncertainty in
this process,  there is the risk that premiums and related  receivable  balances
may turn out to be higher or lower than reported.

        Although PXRE's investment  guidelines stress conservation of principal,
diversification  of risk, and liquidity,  investments are subject to market-wide
risks and  fluctuations,  as well as to risk inherent in particular  securities.
Accordingly, the estimated fair value of PXRE's investments does not necessarily
represent  the amount which could be realized upon future sale  particularly  if
PXRE were required to liquidate a  substantial  portion of its portfolio to fund
catastrophic losses.

        Premium  receivables and loss reserves include  business  denominated in
currencies  other  than U.S.  dollars.  PXRE is exposed  to the  possibility  of
significant  claims in  currencies  other  than U.S.  dollars.  While PXRE holds
positions denominated in foreign currencies to mitigate, in part, the effects of
currency fluctuations on its results of operations,  it currently does not hedge
its currency exposures before a catastrophic event which may produce a claim.


                                      -30-
 

<PAGE>
<PAGE>


        PXRE relies primarily on cash dividends and net tax allocation  payments
from its subsidiaries PXRE Reinsurance and Transnational  Reinsurance to pay its
operating expenses, to meet its debt service obligations and to pay common stock
dividends to PXRE's  stockholders.  The payment of dividends by PXRE Reinsurance
to PXRE, and by  Transnational  Reinsurance to PXRE  Reinsurance,  is subject to
limits imposed under the insurance  laws and  regulations  of  Connecticut,  the
state of  incorporation  and  domicile  of PXRE  Reinsurance  and  Transnational
Reinsurance,  as well as certain  restrictions arising in connection with PXRE's
outstanding indebtedness.

        In the event the  amount of  dividends  available,  together  with other
sources of funds,  are not  sufficient  to permit PXRE to meet its debt service,
other obligations and to pay cash dividends, it would be necessary to obtain the
approval  of the  Connecticut  Insurance  Commissioner  prior to the  payment of
additional dividends by PXRE Reinsurance (or Transnational Reinsurance). If such
approval were not obtained,  PXRE would have to adopt one or more  alternatives,
such as refinancing or  restructuring  its  indebtedness  or seeking  additional
equity. There can be no assurance that any of these strategies could be effected
on satisfactory terms, if at all.

        The reinsurance business is increasingly competitive and is undergoing a
variety of  challenging  developments.  The  industry  has in recent years moved
toward  greater   consolidation   as  ceding  companies  have  placed  increased
importance  on size and  financial  strength  in the  selection  of  reinsurers.
Additionally,  reinsurers are tapping new markets and complementing  their range
of  traditional  reinsurance  products with  innovative new products which bring
together capital markets and reinsurance experience. PXRE competes with numerous
major international and domestic  reinsurance and insurance  companies,  many of
which have substantially  greater financial,  marketing and management resources
than PXRE.

COMPARISON OF 1996 AND 1995

<TABLE>
<CAPTION>

                                                          Year Ended December 31,
                                                          -----------------------
                                                          1996               1995   Decrease
                                                          ----               ----   --------
                                                         (in thousands)                 %
<S>                                                    <C>               <C>         <C>
Gross premiums written                                 $114,348          $155,380    (26.4)

        Ceded premiums:
        --------------
               Managed business participants             21,238            26,774    (20.7)
               TREX Management Agreement                 19,965            24,790    (19.5)
               Catastrophe coverage                       5,427             6,180    (12.2)
                                                       --------          --------
                     Total reinsurance premiums
                      ceded                              46,630            57,744    (19.2)
                                                       --------          --------

Net premiums written                                   $ 67,718          $ 97,636    (30.6)
                                                       ========          ========
</TABLE>


                                      -31-
 

<PAGE>
<PAGE>

        Gross premiums  written for 1996 decreased  26.4% to  $114,348,000  from
$155,380,000 for 1995. Net premiums earned for the year ended December 31, 1996,
decreased 25.1% to $72,796,000 from $97,142,000 in the year-earlier  period. Net
premiums  written  for the year ended  December  31,  1996,  decreased  30.6% to
$67,718,000  from  $97,636,000  for the  corresponding  period  of  1995.  Gross
written,  net written and net earned  premium for 1996 declined from  prior-year
levels  reflecting  the  increasingly  competitive  business  environment.  PXRE
continued its planned  response to this situation by  withdrawing  capacity from
areas of  coverage  not  offering  appropriate  compensation  for the  exposure.
Management  anticipates  that this trend will  continue  during  1997,  although
business  written  by PXRE's  newly-established  Lloyd's  syndicate  (PG  Butler
Syndicate 1224) is expected to partially cushion reductions  elsewhere in PXRE's
business.  Net  premiums  written and earned were also  adversely  affected by a
$3,798,000 reduction in reinstatement premiums resulting from a reduced level of
loss activity in 1996,  as well as by $2,522,000 of cessions  related to the new
retrocessional arrangement with Investors Re.

        Premiums ceded by PXRE to its managed  business  participants  decreased
20.7% to $21,238,000  for 1996 compared with  $26,774,000 for 1995. The decrease
in premiums  ceded to these  programs  was due to the  decrease in the amount of
premiums  written  by  PXRE.  During  1996,  prior  to the  Merger,  PXRE  ceded
$19,965,000 of premiums compared to $24,790,000 during the twelve months of 1995
to  Transnational   Reinsurance  in  lieu  of  direct  reinsurance  writings  by
Transnational  Reinsurance.  In 1997,  premiums  which prior to the Merger would
have  been  ceded  to   Transnational   Reinsurance  will  be  retained  in  the
consolidated  PXRE  results.  Management  fee income  from all  sources for 1996
decreased to $6,032,000  from  $6,417,000 in 1995. The decrease  reflected lower
premium  volume,  offset,  in part, by an  improvement in the  profitability  of
business  ceded to managed  business  participants.  Included in management  fee
income  was  $2,512,000  earned  from  TREX  in  1996  prior to  the  Merger and
$3,526,000  in 1995.


        Ceded  premiums for  catastrophe  programs for 1996  decreased  12.2% to
$5,427,000 from $6,180,000 for the comparable  period of 1995 primarily  because
of the lower cost of coverage purchased.

        The  underwriting  results  of  a  property  and  casualty  insurer  are
discussed frequently by reference to its loss ratio,  underwriting expense ratio
and  combined  ratio.  The loss ratio is the result of dividing  losses and loss
expenses incurred by net premiums earned. The underwriting  expense ratio is the
result of dividing underwriting expenses (reduced by management fees, if any) by
net premiums written for purposes of SAP and net premiums earned for purposes of
GAAP.  The  combined  ratio is the sum of the loss  ratio  and the  underwriting
expense ratio. A combined ratio under 100% indicates  underwriting profits and a
combined ratio exceeding 100% indicates  underwriting losses. The combined ratio
does not reflect  the effect of  investment  income on  operating  results.  The
ratios discussed below have been calculated on a GAAP basis.

        The  loss  ratio  was  25.5%  for  1996  compared with  35.7%  for 1995.
Catastrophe  losses were $18,487,000 gross and $9,166,000 net for 1996 and prior
accident  years as compared with  $28,439,000 gross and $20,073,000 net for 1995
and prior accident years.


                                      -32-
 

<PAGE>
<PAGE>


        Significant  catastrophe  and  risk  losses  affecting  the  year  ended
December 31, 1996 loss ratio are as follows:

<TABLE>
<CAPTION>

                                                                 AMOUNT OF LOSSES
                                                                 ----------------
LOSS EVENT                                                GROSS                  NET
----------                                                -----                  ---
                                                                  (in thousands)

<S>                                                       <C>                   <C>   
Hurricanes Marilyn and Luis                               $8,064                $2,995
Hurricane Fran                                             4,218                 2,827
Northridge earthquake                                      1,646                 1,438
Eurotunnel fire                                            1,260                 1,022
Credit Lyonnais fire                                       2,669                   723
</TABLE>


        Significant  catastrophe  and  risk  losses  affecting  the  year  ended
December 31, 1995 loss ratio are as follows:

<TABLE>
<CAPTION>

                                                               AMOUNT OF LOSSES
                                                               ----------------
LOSS EVENT                                                GROSS                  NET
----------                                                -----                  ---
                                                                  (in thousands)

<S>                                                      <C>                    <C>   
Hurricane Marilyn                                        $13,463                $9,886
Northridge earthquake                                      8,899                 6,030
Hurricane Luis                                             5,119                 3,710
Milliken factory fire                                      7,314                 5,932
</TABLE>


        The  provision  for  losses  and loss  expenses  includes  the effect of
foreign  exchange  movements on PXRE's  liability for losses and loss  expenses,
resulting in a foreign currency  exchange loss of $41,000 for 1996 compared to a
gain of $39,000 for 1995.

        During 1996, PXRE experienced a deficiency of $3,249,000, net, for prior
year losses and loss expenses  primarily due to Hurricanes Marilyn and Luis. The
loss  ratio for 1995 was  unfavorably  affected  by  increases  to  reserves  of
$4,311,000, net, for prior year losses and loss expenses primarily from the 1994
Northridge earthquake.

        The  underwriting  expense  ratio was 26.2% for 1996 compared with 18.6%
for 1995. The increase was substantially due to the increased operating expenses
discussed  below and the decline in premiums  earned.  As a result of the above,
the combined ratio was 51.7% for 1996 compared with 54.3% for 1995.

        Other  operating   expenses  increased  to  $12,262,000  for  1996  from
$11,237,000 in 1995. The operating expense increase for 1996 primarily  reflects
an increase of $301,000  related to changes in benefit plans,  additional  staff
salaries, increased incentive compensation and other related benefits.


                                      -33-
 

<PAGE>
<PAGE>

Included in other  operating  expenses were foreign  currency  exchange gains of
$143,000 for 1996 compared to gains of $196,000 for 1995.

        Interest   expense   decreased  to  $6,957,000  in  1996 from $7,143,000
in 1995 due to PXRE Reinsurance's purchase of $3,050,000 par value of its parent
company's  9.75% Senior Notes during the second and third quarters of 1996 at an
average price of 106.1%.

        Net  investment income  for  1996  increased 13.9% to  $16,782,000  from
$14,730,000  for 1995.  The increase in net  investment  income was caused by an
increase in average  investments  for 1996 compared  with the previous  year, as
well as an increase in PXRE's pre-tax investment yield to 6.4% for 1996 compared
to 5.9% for 1995,  both calculated  using  amortized cost and investment  income
before investment  expenses.  The increase in pre-tax investment yield primarily
reflects the redeployment of PXRE's tax-exempt investment portfolio into taxable
securities, including some higher yielding mortgage and asset-backed securities,
in the fourth quarter of 1995 and throughout 1996. Net realized investment gains
for 1996 were $94,000 compared with net realized gains of $85,000 for 1995. PXRE
recorded directly to equity a $3,214,000  after-tax  unrealized  decrease in the
value of its  investment  portfolio  during  1996,  reflecting  the effect of an
increase in interest rates during the first half of 1996.

        The  net  effects  of  foreign  currency  exchange   fluctuations   were
gains of  $102,000  in 1996 and gains of $235,000  for 1995.  See  "Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations--Liquidity and Capital Resources."

        Net   income   for   the   year   ended   December  31,  1996   includes
$3,898,000 which represents  PXRE's  approximately  22.1% equity share of TREX's
net earnings through December 11, 1996 as compared with $5,948,000  representing
PXRE's  approximately 21.9% share of TREX's net earnings in 1995. Net income for
1996 also  reflects  $1,253,000  attributable  to 100% of  incremental  earnings
following the Merger on December 11, 1996 through the end of the year.

        For  the  reasons   discussed   above,   net income  was $33,301,000 for
the year ended December 31, 1996 compared to net income of  $39,786,000  for the
year ended December 31, 1995.  Primary net income per common share was $3.68 for
1996 compared to net income per common share of $4.74 for 1995 (after  provision
for cumulative  dividends of $598,900 on the Series A Preferred  Stock) based on
average  shares  outstanding  of  9,046,000 in 1996 and  8,275,000 in 1995.  The
change in the number of primary shares outstanding  relates to the conversion of
the preferred shares outstanding to common shares in the second quarter of 1995.
Fully  diluted  net income per common  share was $3.68 for 1996  compared to net
income per common share of $4.48 for 1995 based on average shares outstanding of
9,060,000  in 1996 and  8,874,000  in 1995.  The  change in the  number of fully
diluted  shares  outstanding  relates to the 1.0575  shares of PXRE common stock
exchanged for each share of common stock of TREX in connection with the Merger.



                                      -34-
 

<PAGE>
<PAGE>


COMPARISON OF 1995 AND 1994

<TABLE>
<CAPTION>


                                             Year Ended December 31,
                                            -----------------------
                                              1995           1994        Decrease
                                              ----           ----        --------
                                                (in thousands)            %
<S>                                           <C>            <C>            <C> 
Gross premiums written                       $155,380       $179,684      (13.5)

Ceded premiums:
    Managed business participants              26,774         29,842      (10.3)
    TREX Management Agreement                  24,790         28,722      (13.7)
    Catastrophe coverage                        6,359         12,183      (47.8)
    Other                                        (179)           419     (142.7)
                                             --------       --------
       Total reinsurance premiums ceded        57,744         71,166      (18.9)
                                             --------       --------

Net premiums written                         $ 97,636       $108,518      (10.0)
                                             ========       ========
</TABLE>


        Net premiums  written for the year ended  December  31, 1995,  decreased
10.0% to $97,636,000  from  $108,518,000 for the  corresponding  period of 1994.
Gross  premiums   written  for  1995  decreased  13.5%  to   $155,380,000   from
$179,684,000 for 1994. Net premiums earned for the year ended December 31, 1995,
decreased 12.2% to $97,142,000  from  $110,601,000 in the  year-earlier  period.
Gross  written,  net  written  and net earned  premium  decreased  in 1995 which
reflected PXRE's planned  response to the trend of increased  competition in the
property catastrophe reinsurance market experienced since the end of 1994 and to
loss activity in the aviation  business.  In response to these pressures  during
1995,  PXRE  continued to accept some price  concessions  when  consistent  with
exposures,  moved to  layers of risk that  were  less  affected  by  competitive
pressures, or reduced commitments where warranted.

        Premiums ceded by PXRE to its managed  business  participants  decreased
10.3% to $26,774,000  for 1995 compared with  $29,842,000 for 1994. The decrease
in premiums  ceded to these  programs  was due to the decrease in the amount and
percentage of gross premiums  written by PXRE on behalf of the managed  business
participants. During 1995, pursuant to the Management Agreement, PXRE also ceded
$24,790,000 of premiums compared to $28,722,000 during the corresponding  period
of 1994 to Transnational  Reinsurance in lieu of direct reinsurance  writings by
Transnational  Reinsurance.  Management  fee income  from all  sources  for 1995
decreased to $6,417,000  from  $6,992,000 in 1994.  The decrease  reflected loss
activity that resulted in decreased  profitability of business managed for other
companies.

        Ceded premiums for  catastrophe  programs for 1995 decreased  47.8% from
the  comparable  period of 1994  primarily  because of the lower  level of ceded
reinstatement premiums resulting from the reduced level of loss activity in 1995
and management's decision to commute certain reinsurance coverages subsequent to
the first quarter of 1994.


                                      -35-
 

<PAGE>
<PAGE>


        The loss ratio was 35.7% for 1995 compared with 47.6% for 1994. The loss
ratio for 1995 reflected  incurred  catastrophe  losses of $28,439,000 gross and
$20,073,000  net for 1995 and prior accident years as compared with  $69,833,000
gross and $37,213,000 net for 1994 and prior accident years.

        Significant  catastrophe  and  risk  losses  affecting  the  year  ended
December 31, 1995 loss ratio are outlined in "Comparison of 1996 and 1995."

        Significant  catastrophe  losses  affecting  the   year  ended  December
31, 1994 loss ratio are as follows:

<TABLE>
<CAPTION>

                                                               AMOUNT OF LOSSES
                                                               ----------------

LOSS EVENT                                                GROSS                 NET
----------                                                -----                 ---
                                                                (in thousands)

<S>                                                      <C>                  <C>    
Northridge earthquake                                    $42,709               $21,180
Three satellite losses                                    12,045                 8,022
Four aircraft losses                                      10,600                 5,138
</TABLE>


        The  provision  for  losses  and loss  expenses  includes  the effect of
foreign  exchange  movements on PXRE's  liability for losses and loss  expenses,
resulting in a foreign currency  exchange gain of $39,000 for 1995 compared to a
loss of $338,000 for 1994.

        During 1995, PXRE experienced a deficiency of $4,311,000, net, for prior
year losses and loss expenses primarily from the 1994 Northridge earthquake. The
loss  ratio for 1994 was  unfavorably  affected  by  increases  to  reserves  of
$3,261,000, net, for prior year losses and loss expenses.

        The  underwriting  expense  ratio was 18.6% for 1995 compared with 14.8%
for 1994.  The increase was  substantially  due to the effect of a provision for
contingent  commissions related to the low level of losses incurred. As a result
of the above,  the  combined  ratio was 54.3% for 1995  compared  with 62.4% for
1994.

        Other  operating   expenses  increased  to  $11,237,000  for  1995  from
$8,365,000 in 1994. The operating  expense increase for 1995 primarily  reflects
an increase of $1,653,000 related to changes in benefit plans,  additional staff
salaries,  increased  incentive  compensation and other related  benefits.  Also
contributing  to the increases  were  additional  costs of $216,000  under a new
lease in Edison,  New Jersey,  and an increase in depreciation  expense from the
capital expenditures of $3,200,000 for PXRE's new facilities including additions
to electronic data processing  equipment.  Included in other operating  expenses
were foreign  currency  exchange gains of $196,000 for 1995 compared to gains of
$1,156,000 for 1994.

        Interest expense decreased to $7,143,000 in 1995 from $7,789,000 in 1994
due to  repurchase  of  $5,300,000  par value of PXRE's 9.75% Senior  Notes,  at
prices from 99.25 to 99.625 during the fourth


                                      -36-
 

<PAGE>
<PAGE>

quarter of 1994 and the  repurchase of  $1,925,000  par value of Senior Notes at
prices  ranging from 104.625 to 105.0 during the third quarter of 1995. The loss
on repurchase was not material.

        Net  investment  income  for 1995  increased  6.8% to  $14,730,000  from
$13,786,000 for 1994. The increase in net investment income was caused by a 5.0%
increase in average  investments  for 1995 compared  with the previous  year, as
well as an increase in PXRE's pre-tax investment yield to 5.9% for 1995 compared
to 5.8% for 1994. Net realized  investment  gains for 1995 were $85,000 compared
with net realized  losses of  $1,164,000  for 1994.  PXRE  recorded  directly to
equity a $9,759,000 after-tax unrealized increase in the value of its investment
portfolio during 1995, resulting from the decline in interest rates during 1995.

        The net effects of foreign currency exchange fluctuations were losses of
$235,000 in 1995 and gains of $818,000 for 1994.  See  "Management's  Discussion
and Analysis of Financial  Condition  and Results of  Operations--Liquidity  and
Capital Resources."

        Net income for the year ended  December  31,  1995  included  $5,948,000
which represents PXRE's  approximately 21.9% equity share of TREX's net earnings
as compared with $4,141,000  representing  PXRE's  approximately  21.2% share of
TREX's  net  earnings  in 1994.  The  change in the  equity  in TREX's  earnings
reflects  the  higher  level of  TREX's  net  income  and the  change  in PXRE's
ownership.  The change in PXRE's  ownership of TREX resulted from the repurchase
by TREX of 270,100 shares of its publicly owned Class A shares during 1995.

        For the reasons discussed above, net income was $39,786,000 for the year
ended December 31, 1995 compared to net income of $34,829,000 for the year ended
December 31, 1994. Primary net income per common share was $4.74 for 1995 (after
provision for cumulative  dividends of $598,900 on the Series A Preferred Stock)
compared to net income per common share of $4.89 for 1994 (after  provision  for
cumulative  dividends of  $2,005,000  on the Series A Preferred  Stock) based on
average  shares  outstanding  of  8,275,000 in 1995 and  6,710,000 in 1994.  The
change in the number of shares  outstanding  relates primarily to the conversion
of all the remaining  convertible preferred shares to common shares in May 1995.
Fully  diluted net income per common share was $4.48 for 1995  compared to $3.94
for 1994 based on average shares  outstanding of 8,874,000 in 1995 and 8,847,000
in 1994.

LIQUIDITY AND CAPITAL RESOURCES

        PXRE relies primarily on cash dividends and net tax allocation  payments
from its subsidiaries PXRE Reinsurance and Transnational  Reinsurance to pay its
operating expenses and income taxes, to meet its debt service obligations and to
pay dividends to PXRE stockholders. The payment of dividends by PXRE Reinsurance
to PXRE and by  Transnational  Reinsurance  to PXRE  Reinsurance  is  subject to
limits imposed under the insurance  laws and  regulations  of  Connecticut,  the
state of  incorporation  and  domicile  of PXRE  Reinsurance  and  Transnational
Reinsurance,  as well as certain  restrictions  arising in connection  with PXRE
Senior Notes discussed below.  Under the Connecticut  insurance law, the maximum
amount of dividends or other  distributions that PXRE Reinsurance may declare or
pay to PXRE,  and that  Transnational  Reinsurance  may  declare  or pay to PXRE
Reinsurance,  within any twelve-month period,  without regulatory  approval,  is
limited  to the  lesser  of (a)  earned  surplus  or (b) the  greater  of 10% of
policyholders'  surplus  at  December  31 of the  preceding  year or 100% of net
income for the twelve-


                                      -37-
 

<PAGE>
<PAGE>

month  period  ending  December 31 of the  preceding  year,  all  determined  in
accordance with SAP. Accordingly, the Connecticut insurance laws could limit the
amount  of  dividends   available  for   distribution  by  PXRE  Reinsurance  or
Transnational  Reinsurance without prior regulatory  approval,  depending upon a
variety of factors  outside the control of PXRE,  including  the  frequency  and
severity of  catastrophe  and other loss  events and changes in the  reinsurance
market,  in  the  insurance  regulatory  environment  and  in  general  economic
conditions.   The  maximum  amount  of  dividends  or  distributions  that  PXRE
Reinsurance  may  declare  and pay in  1997,  without  regulatory  approval,  is
$40,013,000. During 1996, $21,000,000 in dividends were paid by PXRE Reinsurance
to PXRE  Corporation.  The maximum  amount of  dividends or  distributions  that
Transnational  Reinsurance  may  declare  and pay in  1997,  without  regulatory
approval,  is  $21,874,000.  During 1996,  $5,000,000 in dividends  were paid by
Transnational  Reinsurance  to TREX and  $16,500,000  in dividends  were paid by
Transnational Reinsurance to PXRE Reinsurance.

        Other sources of funds available to PXRE include investments retained by
PXRE to provide support for debt service on its Senior Notes. Net tax allocation
payments by PXRE Reinsurance and Transnational  Reinsurance are also expected to
be a source of funds available to PXRE.

        In the event the  amount of  dividends  available,  together  with other
sources of funds, are not sufficient to permit PXRE to meet its debt service and
other obligations and to pay cash dividends, it would be necessary to obtain the
approval  of the  Connecticut  Insurance  Commissioner  prior to the  payment of
additional dividends by PXRE Reinsurance (or Transnational Reinsurance). If such
approval were not obtained,  PXRE would have to adopt one or more  alternatives,
such as refinancing or  restructuring  its  indebtedness  or seeking  additional
equity. There can be no assurance that any of these strategies could be effected
on satisfactory terms, if at all. In the event that PXRE were unable to generate
sufficient cash flow and were otherwise unable to obtain funds necessary to meet
required payments of principal and interest on its  indebtedness,  PXRE could be
in default under the terms of the agreements governing such indebtedness. In the
event of such default,  the holders of such indebtedness  could elect to declare
all of the funds borrowed thereunder to be due and payable together with accrued
and unpaid interest.

        In  August  1993,  PXRE  completed  a  public  offering  of  $75,000,000
principal amount of 9.75% Senior Notes due August 15, 2003.  Interest is payable
on the Senior Notes semi-annually.  Interest expense,  including amortization of
debt  offering  costs,  for 1996 in  respect  of the Senior  Notes  amounted  to
approximately $6,957,000. Interest expense associated with the Senior Notes will
amount to  approximately  $6,559,000 for 1997. On and after August 15, 1998, the
Senior  Notes may be  redeemed  at the option of PXRE,  in whole or in part,  at
redemption  prices  (expressed as  percentages  of the principal  amount),  plus
accrued  and unpaid  interest to the date fixed for  redemption,  of 103.656% at
August 15,  1998,  declining  to 100% at August  15,  2001 and  thereafter.  The
Indenture  governing  the Senior Notes  contains  covenants  which,  among other
things,  limit the ability of PXRE and its  Restricted  Subsidiaries  (including
PXRE  Reinsurance):  (a)  to  incur  additional  indebtedness  (except  for  the
incurrence of Permitted Indebtedness and the incurrence of other Indebtedness by
PXRE in circumstances where no


                                      -38-
 

<PAGE>
<PAGE>



Default or Event of Default exists and the  Consolidated  Fixed Charge  Coverage
Ratio of PXRE would be greater than 2:1 after giving  effect to the  incurrence)
and, in the case of the Restricted  Subsidiaries,  to issue preferred stock; (b)
to pay dividends, repurchase stock and to make certain other Restricted Payments
(other than,  among other things,  if no Default or Event of Default  exists (x)
Restricted  Payments  after August 31, 1993,  not exceeding in the aggregate the
sum of  $3,000,000  plus 50% of  Consolidated  Net  Income (or minus 100% of any
loss) from such date (with  certain  adjustments),  plus the  amounts of certain
equity   proceeds  and  certain   reductions  in  Investments  in   Unrestricted
Subsidiaries,  provided,  that  at the  time  of  such  Restricted  Payment  the
Consolidated  Fixed  Charge  Coverage  Ratio is  greater  than  2.0,  and (y) in
addition to permitted Restricted Payments referred to in clause (x), the payment
of cash  dividends on Qualified  Capital Stock after August 31, 1993 of up to an
aggregate of  $6,000,000,  provided,  that such dividends on common stock do not
exceed  $0.25 per share in any year);  (c) to sell or permit the issuance of any
stock of PXRE Reinsurance or any other Principal  Insurance  Subsidiary;  (d) to
sell or transfer  other  assets  (other than for at least Fair Market  Value and
generally  for not less  than 75% in cash or Cash  Equivalents);  (e) to  create
liens upon the properties or assets of PXRE or its Restricted  Subsidiaries;  or
(f) to  engage  in  any  business  other  than  the  insurance  and  reinsurance
businesses and other businesses  incidental and related  thereto.  The Indenture
also provides  that within 30 days after a Change of Control of PXRE,  PXRE will
offer to purchase  all the Senior  Notes then  outstanding  at a purchase  price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of such purchase.

        PXRE's Board of Directors has authorized the repurchase of Senior  Notes
in negotiated  or  open market transactions. By December 31, 1995, PXRE or  PXRE
Reinsurance had purchased $7,225,000  principal amount of Senior Notes. In 1996,
PXRE Reinsurance  purchased $3,050,000 principal amount of PXRE's  Senior Notes.
Since January 1, 1997, PXRE  has  repurchased $24,900,000  principal  amount  of
Senior Notes at an average price of 107.6%.

        PXRE files  federal  income tax returns for itself and all of its direct
or indirect domestic subsidiaries that satisfy the stock ownership  requirements
for   consolidation   for  federal  income  tax  purposes   (collectively,   the
"Subsidiaries"). PXRE is party to an Agreement Concerning Filing of Consolidated
Federal Income Tax Returns (the "Tax  Allocation  Agreement")  pursuant to which
each  Subsidiary  makes tax  payments to PXRE in an amount  equal to the federal
income tax payment that would have been payable by such Subsidiary for such year
if it had filed a separate  income tax return for such year. PXRE is required to
provide for payment of the  consolidated  federal  income tax  liability for the
entire group. If the aggregate  amount of tax payments made in any tax year by a
Subsidiary  is less than (or  greater  than) the annual tax  liability  for such
Subsidiary  on a  stand-alone  basis  for such  year,  such  Subsidiary  will be
required to make up such  deficiency (or receive a credit if payments exceed the
separate return tax liability) to PXRE.

        The primary sources of liquidity for PXRE  Reinsurance are net cash flow
from operating  activities  (including  interest income from  investments),  the
maturity or sale of investments,  borrowings,  capital  contributions,  advances
from  PXRE  and,   subsequent  to  the  Merger,   dividends  from  Transnational
Reinsurance.  Funds are applied  primarily  to the payment of claims,  operating
expenses and income taxes


                                      -39-
 

<PAGE>
<PAGE>

and to the purchase of fixed maturity and short-term  investments.  Premiums are
typically received in advance of related claim payments.

        Net  cash  flow  provided  by  operations  was  $28,033,000  during 1996
compared   with  net  cash  flow  provided  by  operations  of  $32,412,000  and
$30,988,000 during 1995 and 1994, respectively,  due to the  effects  of  timing
of  collection  of  receivables  and  reinsurance  recoverables  and payments of
losses.

        PXRE's management has established  general procedures and guidelines for
its  investment  portfolio  and oversees  investment  management  carried out by
Phoenix Duff & Phelps, a public majority-owned  subsidiary of Phoenix Home Life.
Although  these  investment   guidelines   stress   conservation  of  principal,
diversification  of risk and liquidity,  investments  are subject to market-wide
risks and fluctuations, as well as to risk inherent in particular securities. As
at December  31,  1996,  98.3% of PXRE's  investment  portfolio  (at fair value)
consisted of fixed maturities and short-term investments,  while the balance was
in equity  securities.  The investment  policies and all investments of PXRE are
approved by its Board of Directors.

        Of PXRE's fixed maturities  portfolio at December 31, 1996, 98.7% of the
fair  value was in  obligations  rated  "A1" or "A" or better by Moody's or S&P,
respectively,  or in government or  government-backed  securities.  Mortgage and
asset-backed  securities  (principally  GNMAs)  accounted  for  36.1%  of  fixed
maturities  based on fair value at December 31, 1996. PXRE has no investments in
real estate or commercial  mortgage loans.  The average market yield to maturity
of PXRE's fixed maturities  portfolio at December 31, 1996 and 1995 was 5.7% and
5.3%, respectively.

        Fixed  maturity  investments  are  reported at fair value,  with the net
unrealized  gain or  loss,  net of tax,  reported  as a  separate  component  of
stockholders'  equity.  PXRE recorded directly to equity a $3,214,000  after-tax
unrealized  decrease  in the  value  of its  investment  portfolio  during  1996
reflecting  an  increase  in  interest  rates  during  the  period.   Short-term
investments are carried at amortized cost which approximates fair value.  PXRE's
short-term   investments,   principally   high-grade   commercial   paper,  were
$59,792,000  at December 31, 1996 compared to  $41,722,000 at December 31, 1995.
The increase at December 31, 1996 was principally due to short-term  investments
acquired in the Merger.

        During the fourth quarter of 1996, PXRE raised the quarterly dividend on
its common  stock from $0.18 per share to $0.21 per share.  The  increase in the
dividend will result in an annual additional  outlay of approximately  $993,000,
based on the shares outstanding prior to the Merger. An additional annual outlay
of $4,771,000 will result from the shares exchanged as a result of the Merger.

        Book value per share was $25.63 at December  31,  1996,  based on shares
outstanding of approximately 13,954,000.

        In April 1995,  PXRE's Board of Directors  authorized the purchase of up
to  700,000  shares of its  common  stock from  time to time  in open  market or
private  block  purchase  transactions.  Since  inception of this  purchase plan
through December 31, 1996, PXRE purchased 531,400 of the  700,000  shares  at  a
cost of $12,538,000.


                                      -40-
 

<PAGE>
<PAGE>

        In March 1995, PXRE and TREX entered into a joint venture arrangement to
trade in  catastrophe  futures and  options  contracts  on the Chicago  Board of
Trade. The venture is now wholly-owned by PXRE, which has committed $5.0 million
to this  venture.  Although the joint  venture has developed a number of trading
strategies, the low level of activity in the CBOT market for catastrophe futures
has kept trade volume to a minimum through December 31, 1996.

        PXRE  may be  subject  to  gains  and  losses  resulting  from  currency
fluctuations because  substantially all of its investments  are  denominated  in
U.S. dollars, while some of its net liability exposure is  in  currencies  other
than U.S. dollars.  PXRE  holds,  and  expects  to  continue  to  hold, currency
positions  and  has  made,  and   expects   to   continue  to  make, investments
denominated  in foreign currencies to mitigate, in part, the effects of currency
fluctuations on its results of  operations.  Currency  holdings and  investments
denominated in foreign  currencies  do  not  constitute  a  material  portion of
PXRE's  investment portfolio and,  in  the  opinion  of  PXRE's  management, are
sufficiently liquid for its needs.

        In December 1996, PXRE completed an investment in Lloyd's, forming a new
syndicate (PG Butler Syndicate 1224) and a presence in London. The new syndicate
will  have  an  initial capacity  to underwrite 'L'35 million in annual premiums
($60  million at December  31, 1996  exchange  rates)  commencing  with the 1997
renewal season. In connection with the capitalization of the syndicate, PXRE has
placed on deposit  $42,975,000 of U.S.  government  securities as collateral for
Lloyds. In addition, PXRE issued a letter of credit for the benefit of Lloyds in
the amount of $15,355,000, which is collateralized by U.S. government securities
in approximately the same amount.

        All amounts classified as reinsurance  recoverable at December 31, 1996,
are considered by management of PXRE to be collectible in all material respects.

INCOME TAXES

        PXRE's  effective tax rate for 1996, 1995 and 1994 was 32.0%,  31.4% and
31.1%,  respectively,  which differs from the statutory rate  principally due to
tax-exempt  income,  state and local taxes and tax on undistributed  earnings of
unconsolidated affiliates. The change in the effective rate in 1996 reflects the
higher  relative  proportion  of  underwriting  income  compared  to  tax-exempt
municipal bond income.

SUBSEQUENT EVENT

        In January 1997, PXRE completed a $100 million offering of 8.85% Capital
Trust Pass-through  Securities'sm'  (TRUPS'sm')  through PXRE Capital Trust I in
an institutional private placement. Proceeds of the transaction will be used for
general  corporate  purposes,  which may include the redemption or the purchase,
from time-to-time, in the open market or in privately negotiated transactions or
otherwise, of outstanding  indebtedness and common stock of PXRE. The consent of
holders of PXRE's Senior Notes to certain amendments to the Indenture  governing
the Senior Notes was obtained in connection with this offering.



                                      -41-
 

<PAGE>
<PAGE>


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This report on Form 10-K contains various forward-looking statements and
includes assumptions concerning PXRE's operations, future results and prospects.
Statements  included herein 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 Exchange Act.  These  forward-
looking statements are based on current expectations and are subject to risk and
uncertainties.  PXRE  cautions the  reader 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 the following:  (i) significant  catastrophe losses,
the timing and extent of which are  difficult  to  predict;  (ii) changes in the
level of competition in the reinsurance or primary insurance markets that impact
the  volume  or  profitability  of the  property-casualty  reinsurance  business
(these changes include, but are not  limited  to, the  intensification  of price
competition,  the entry  of new competitors,  existing competitors  exiting  the
market  and the development of new products  by new and  existing  competitors);
(iii) changes in the demand for reinsurance,  including changes in the amount of
ceding companies' retentions; (iv) adverse  development on loss reserves related
to  business written in  prior years;  (v) lower than  estimated  retrocessional
recoveries on unpaid  losses, including  the  effects of losses due to a decline
in the creditworthiness of PXRE's  retrocessionaires; (vi) increases in interest
rates,  which  cause  a  reduction  in the market  value of PXRE's interest rate
sensitive  investments, including  its fixed  income investment  portfolio;  and
(vii) decreases  in interest  rates causing a  reduction of income earned on net
cash flow from operations and the reinvestment of the proceeds from sales, calls
or maturities of existing investments.

        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 and the
loss of key employees.



                                      -42-
 

<PAGE>
<PAGE>

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The following financial statements are filed as part of this Form 10-K:

<TABLE>
<CAPTION>


                                                                                      Page
                                                                                      ----
<S>                                                                                <C>
PXRE Corporation:

               Report of Independent Accountants                                       F-1

               Consolidated Balance Sheets
                 at December 31, 1996 and 1995                                         F-2

               Consolidated Statements of Income
                 for the years ended December 31,
                 1996, 1995 and 1994                                                   F-3

               Consolidated Statements of
                 Stockholders' Equity for the years
                 ended December 31, 1996, 1995 and 1994                                F-4

               Consolidated Statements of Cash Flow
                 for the years ended December 31,
                 1996, 1995 and 1994                                                   F-5

               Notes to Consolidated Financial
                 Statements                                                            F-6
</TABLE>

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        No  disclosure  hereunder  is  required  as  PXRE  has not  changed  its
accountants during the 24 months preceding December 31, 1996.



                                      -43-
 

<PAGE>
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  information  required by this Item 10 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

         The  information  required by this Item 11 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required by this Item 12 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required by this Item 13 is contained in PXRE's Proxy
Statement, which information is incorporated herein by reference and which Proxy
Statement will be filed within 120 days of the end of PXRE's 1996 fiscal year.



                                      -44-
 

<PAGE>
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

        1.     The following documents are filed as part of this Form 10-K:

               (1)    Financial Statements

<TABLE>
<CAPTION>

                                                                                Page
                                                                                ----
<S>                                                                          <C>
PXRE Corporation:

        Report of Independent Accountants                                        F-1

        Consolidated Balance Sheets at
          December 31, 1996 and 1995                                             F-2

        Consolidated Statements of Income for the years
          ended December 31, 1996, 1995 and 1994                                 F-3

        Consolidated Statements of  Stockholders' Equity
          for the years ended December 31, 1996, 1995 and 1994                   F-4

        Consolidated Statements of Cash Flow for the years
          ended December 31, 1996, 1995 and 1994                                 F-5

        Notes to Consolidated Financial Statements                               F-6

               (2)    Financial Statements Schedules

        Schedule I - Summary of Investments
        (The  information  required by this Schedule is presented
        in the financial  statements and the notes thereto included
        in this Form 10-K.)                                                      ---

        Schedule II - Condensed Financial Information of Registrant             F-27

        Schedule III - Supplementary Insurance Information                      F-28

        Schedule IV - Reinsurance

        (The information required by this Schedule is presented
        in the financial statements and the notes thereto included
        in this form 10-K.)                                                      ---
</TABLE>


                                      -45-

 

<PAGE>
<PAGE>


<TABLE>
<CAPTION>
<S>                                                                          <C>
        Schedule VI -- Supplemental Information Concerning
        Property/Casualty Insurance Operations                                  F-28

        Report of Independent Accountants on the Financial Statement
        Schedules and Consent of Independent Accountants                        F-29

        All other financial statement schedules have been omitted
        as inapplicable.
</TABLE>

        (3)  Exhibits

        (3) Certificate of Incorporation  and By-laws of PXRE  Corporation.  The
Restated  Certificate  of  Incorporation  and By-laws of PXRE  Corporation  were
previously filed with PXRE's Registration Statement on Form S-1 dated August 29,
1986,  as amended by  Amendment  No. 1 thereto  dated  February  19, 1987 and by
Amendment No. 2 thereto dated March 25, 1987 (File No. 33-8406), as Exhibits 3.1
and 3.2 thereto,  and are incorporated  herein by reference.  The Certificate of
Designations  designating the Series A Cumulative Convertible Preferred Stock of
PXRE Corporation was previously filed with PXRE's Registration Statement on Form
S-2 dated  February 21, 1992,  as amended by Amendment No. 1 thereto dated April
1, 1992 and by Amendment No. 2 thereto dated April 13, 1992 and by Amendment No.
3 thereto dated April 23, 1992 (File No.  33-45893) as Exhibit 4.5 thereto,  and
is incorporated herein by reference.  The Certificate of Amendment dated May 20,
1993 to PXRE's Restated  Certificate of Incorporation  was previously filed with
PXRE's Registration  Statement on Forms S-8 and S-3 dated June 3, 1993 (File No.
33-63768) as Exhibit 4.3 thereto,  and is incorporated herein by reference.  The
Certificate of Amendment  dated May 19, 1994 to PXRE's  Restated  Certificate of
Incorporation  was  previously  filed as Exhibit 3 to the Annual  Report on Form
10-K of PXRE for the fiscal year ended December 31, 1994 (File No. 0-15428), and
is incorporated herein by reference. The Certificate of Amendment dated December
9, 1996 to PXRE's Restated  Certificate of  Incorporation  was previously  filed
with PXRE's  Registration  Statement on Form S-3 dated January 3, 1997 (File No.
333-19207),  and is incorporated herein by reference.  The Certificate of Merger
of Transnational Re Corporation into PXRE Corporation,  dated December 11, 1996,
is attached  hereto as Exhibit 3.  Article IV,  Section 1 of the By-laws of PXRE
Corporation,  as amended on June 8, 1995, was  previously  filed as Exhibit 3 to
the Annual  Report on Form 10-K of PXRE for the fiscal year ended  December  31,
1995 (File No. 0-15428), and is incorporated herein by reference.

        (4)    Instruments Defining the Rights of Security Holders.

        4.1 Trust  Indenture,  dated as of August 31,  1993,  between  PXRE,  as
issuer,  and The  First  National  Bank  of  Boston,  as  trustee,  relating  to
$75,000,000 principal amount of 9.75% Senior Notes of PXRE due 2003 (Exhibit 4.1
to PXRE's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993
(File No. 0-15428), and incorporated herein by reference).


                                      -46-
 

<PAGE>
<PAGE>


        4.2 Supplemental  Indenture,  dated as of January 24, 1997, between PXRE
and State  Street Bank and Trust  Company,  as  Successor  Trustee,  relating to
$75,000,000  original  principal  amount of 9.75%  Senior Notes of PXRE due 2003
(attached hereto as Exhibit 4.2).

        4.3  Indenture,  dated as of January 29,  1997,  between  PXRE and First
Union National Bank, as Trustee (attached hereto as Exhibit 4.3).

        4.4 First Supplemental Indenture,  dated as of January 29, 1997, between
PXRE and First  Union  National  Bank,  as Trustee,  in respect of PXRE's  8.85%
Junior Subordinated  Deferrable Interest Debentures due 2027 (attached hereto as
Exhibit 4.4).

        4.5 Amended and Restated  Declaration  of Trust of PXRE Capital Trust I,
dated as of January  29,  1997,  among  PXRE,  as  sponsor,  the  Administrators
thereof, First Union Bank of Delaware, as Delaware Trustee, First Union National
Bank, as Institutional  Trustee,  and the holders from time to time of undivided
interests  in the assets of PXRE  Capital  Trust I  (attached  hereto as Exhibit
4.5).

        4.6  Capital  Securities  Guarantee  Agreement,  dated as of January 29,
1997, between PXRE and First Union National Bank, as Guarantee Trustee (attached
hereto as Exhibit 4.6).

        4.7 Common Securities Guarantee Agreement, dated as of January 29, 1997,
executed by PXRE (attached hereto as Exhibit 4.7).

        (10) Material Contracts.  The material contracts of PXRE are as follows:

        10.1 Registration Rights Agreement,  dated January 29, 1997, among PXRE,
PXRE Capital Trust I and Salomon Brothers Inc, as  Representative of the Initial
Purchasers (attached hereto as Exhibit 10.1).

        10.2  Purchase  Agreement  among PXRE,  PXRE Capital Trust I and Salomon
Brothers Inc, as  Representative  of the Initial  Purchasers,  dated January 24,
1997 (attached hereto as Exhibit 10.2).

        10.3  PXRE   Reinsurance   Company   Management   Agreement  among  PXRE
Reinsurance  and,  among  others,   Merrimack  Mutual  Fire  Insurance   Company
("Merrimack"),  Pennsylvania  Lumbermens Mutual Insurance Company ("Pennsylvania
Lumbermens"), and NRMA Insurance Limited ("NRMA") (Exhibit 10.1 to PXRE's Annual
Report on Form 10-K for the  fiscal  year  ended  December  31,  1991  (File No.
0-15428), and incorporated herein by reference);  letter dated November 28, 1990
from Pennsylvania  Lumbermens confirming reduced participation  (Exhibit 10.7 to
PXRE's Form S-2  Registration  Statement  dated February 21, 1992, as amended by
Amendment No. 1 thereto dated April 1, 1992 and by Amendment No. 2 thereto dated
April 13,  1992 and by  Amendment  No. 3 thereto  dated April 23, 1992 (File No.
33-45893),  and  incorporated  herein by reference);  and cover notes respecting
January 1997 renewals by Merrimack,  Pennsylvania  Lumbermens and NRMA and cover
note  respecting   participation  commencing  January  1,  1997  by  Auto-Owners
Insurance Company (attached hereto as Exhibit 10.3).


                                      -47-
 

<PAGE>
<PAGE>

        10.4  Tax  Settlement   Agreement  dated  June  21,  1991  between  PXRE
Corporation, PXRE Reinsurance Company and PM Holdings, Inc. (Exhibit 10.2 to the
Annual  Report on Form 10-K of PXRE for the fiscal  year ended  December 3, 1991
(File No. 0-15428), and incorporated herein by reference).

        10.5 Investment  Advisory Agreement between PXRE Reinsurance Company and
Phoenix  Investment  Counsel,  Inc., dated February 25, 1987 and effective as of
January 1, 1987  (Exhibit  10.10 to Amendment  No. 1 dated  February 19, 1987 to
PXRE's Form S-1  Registration  Statement  dated August 29, 1986, as subsequently
amended by Amendment No. 2 thereto dated March 25, 1987 (File No. 33-8406),  and
incorporated herein by reference).

        10.6 Amendment to Investment Advisory Agreement between PXRE Reinsurance
Company and Phoenix  Investment  Counsel,  Inc.,  effective  retroactively as of
January 1, 1987  (Exhibit 10.3 to the Annual Report on Form 10-K of PXRE for the
fiscal year ended December 31, 1991 (File No. 0-15428),  and incorporated herein
by reference).

        10.7  Amendment  No. 2 to  Investment  Advisory  Agreement  between PXRE
Reinsurance  Company and  Phoenix  Investment  Counsel,  Inc.,  effective  as of
November 1, 1989.  (Exhibit  10.4 to the Annual  Report on Form 10-K of PXRE for
the fiscal year ended  December 31, 1991 (File No.  0-15428),  and  incorporated
herein by reference).

        10.8 Amended and Restated  Agreement  Concerning  Filing of Consolidated
Federal  Income Tax Returns  dated as of August 23, 1993  between  PXRE and PXRE
Reinsurance  (Exhibit  10.8 to the  Annual  Report  on Form 10-K of PXRE for the
fiscal year ended December 31, 1993 (File No. 0-15428),  and incorporated herein
by reference).

        10.9 Employee  Stock  Purchase  Plan,  as amended  (Appendix A to PXRE's
Proxy Statement dated April 23, 1993, and incorporated herein by reference).(M)

        10.10  Executive  Long-Term  Bonus Plan  (Exhibit  10.6 to PXRE's Annual
Report on Form 10-K for the  fiscal  year  ended  December  31,  1991  (File No.
0-15428), and incorporated herein by reference) and Amendment thereto made as of
August 22, 1991 (Exhibit 10.14 to PXRE's Form S-2  Registration  Statement dated
February 21, 1992, as amended by Amendment No. 1 thereto dated April 1, 1992 and
by Amendment  No. 2 thereto  dated April 13, 1992 and by Amendment No. 3 thereto
dated  April  23,  1992  (File  No.  33-45893),   and  incorporated   herein  by
reference).(M)

        10.11  Executive  Severance  Plan  (Exhibit 10.1 to the Annual Report on
Form  10-K of PXRE for the  fiscal  year  ended  December  31,  1989  (File  No.
0-15428), and incorporated herein by reference).

        10.12  1988  Stock  Option  Plan,  as  amended  (Exhibit  A to the first
Prospectus forming part of PXRE's Form S-8 and S-3 Registration  Statement dated
June 21, 1990 (File No. 33-35521), and incorporated herein by reference).(M)


(M) indicates a management contract or compensatory plan or arrangement in which
    the directors and/or executive officers of PXRE participate.


                                      -48-
 

<PAGE>
<PAGE>

        10.13 1987 Stock  Option  Plan,  as amended  (Appendix B to PXRE's Proxy
Statement dated April 13, 1990, and incorporated herein by reference).(M)

        10.14  Non-Employee  Director  Deferred Stock Plan (Appendix A to PXRE's
Proxy Statement dated April 12, 1991, and incorporated herein by reference).(M)

        10.15  Restated   Employee  Annual  Incentive  Bonus  Plan,  as  amended
(Appendix A to PXRE's Proxy  Statement  dated April 22, 1994,  and  incorporated
herein by reference).(M)

        10.16  1992  Officer  Incentive  Plan, as amended  (Appendix B to PXRE's
Proxy Statement dated April 22, 1994 and incorporated herein by reference).(M)

        10.17 Quota Share Retrocessional  Agreement between PXRE Reinsurance and
Trenwick America Reinsurance  Corporation (Exhibit 10.21 to the Annual Report on
Form  10-K of PXRE for the  fiscal  year  ended  December  31,  1993  (File  No.
0-15428), and incorporated herein by reference).

        10.18  Management  Agreement  dated as of  November  8, 1993  among PXRE
Reinsurance,  Transnational Re Corporation and Transnational Reinsurance Company
(Exhibit  10.22 to the Annual  Report on Form 10-K of PXRE for the  fiscal  year
ended  December  31,  1993  (File  No.  0-15428),  and  incorporated  herein  by
reference),  as  amended by  Amendment  No. 1 thereto,  dated  December  1, 1994
(Exhibit  10.21 to the Annual  Report on Form 10-K of PXRE for the  fiscal  year
ended  December  31,  1994  (File  No.  0-15428),  and  incorporated  herein  by
reference).

        10.19  Aggregate  Excess  of  Loss  Reinsurance  Agreement  dated  as of
November 8, 1993 between  PXRE  Reinsurance,  as  reinsurer,  and  Transnational
Reinsurance  Company,  as reinsured  (Exhibit 10.23 to the Annual Report on Form
10-K of PXRE for the fiscal year ended December 31, 1993 (File No. 0-15428), and
incorporated herein by reference).

        10.20  Services  Agreement  dated as of December  11, 1996  between PXRE
Reinsurance  Company and Transnational  Reinsurance  Company (attached hereto as
Exhibit 10.20).

        10.21  Addendum No. 2 dated  November 10, 1994 to the PXRE Group Amended
and Restated  Agreement  Concerning  Filing of  Consolidated  Federal Income Tax
Returns  (Exhibit 10.22 to the Annual Report on Form 10-K of PXRE for the fiscal
year ended  December 31, 1994 (File No.  0-15428),  and  incorporated  herein by
reference).

        10.22  Addendum  No. 3 dated as of  December  11, 1996 to the PXRE Group
Amended and Restated Agreement  Concerning Filing of Consolidated Federal Income
Tax Returns (attached hereto as Exhibit 10.22).

        10.23  Amendment  dated  August 1994 to the  Severance  Plan for Certain
Executives of PXRE Corporation  (Exhibit 10.23 to the Annual Report on Form 10-K
of PXRE for the fiscal  year ended  December  31, 1994 (File No.  0-15428),  and
incorporated herein by reference).(M)


(M) indicates a management contract or compensatory plan or arrangement in which
    the directors and/or executive officers of PXRE participate.

                                      -49-
 

<PAGE>
<PAGE>


        10.24  Lease  dated May 9, 1994  between  Thornall  Associates  and PXRE
Corporation  (Exhibit  10.24 to the  Annual  Report on Form 10-K of PXRE for the
fiscal year ended December 31, 1994 (File No. 0-15428),  and incorporated herein
by reference).

        10.25 Director  Stock Option Plan (Appendix A to PXRE's Proxy  Statement
dated May 3, 1995, and incorporated herein by reference).(M)

        10.26  Amendment No. 3 to  Investment  Advisory  Agreement  between PXRE
Reinsurance Company and Phoenix Investment Counsel,  Inc. effective June 1, 1995
(Exhibit  10.26 to the Annual  Report on Form 10-K of PXRE for the  fiscal  year
ended  December  31,  1995  (File  No.  0-15428),  and  incorporated  herein  by
reference).

        10.27  Agreement  and Plan of Merger dated as of August 22, 1996 between
PXRE and Transnational Re Corporation, as amended by Amendment No. 1 dated as of
September  27, 1996 and Amendment No. 2 dated as of October 24, 1996 (Annex A to
PXRE's  Form S-4  Registration  Statement  dated  October  30,  1996  (File  No.
333-15087), and incorporated herein by reference).

        10.28  Amended  and  Restated   Investment  Advisory  Agreement  between
Transnational  Reinsurance Company and Phoenix Investment  Counsel,  Inc., dated
November 8, 1993 (Exhibit 10.4 to Transnational  Re Corporation's  Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 (File No.  0-22376) and
incorporated  herein  by  refernece),  as  amended  by  the  Amendment  thereto,
effective June 1, 1995 (Exhibit 10.11 to Transnational  Re Corporation's  Annual
Report on Form 10-K for the  fiscal  year  ended  December  31,  1995  (File No.
0-22376) and incorporated herein by reference).

        10.29  Investment  Management  Agreement,  effective  January  29,  1997
between PXRE Corporation and Phoenix Investment  Counsel,  Inc. (attached hereto
as Exhibit 10.29).

        (11) Statement re computation of earnings per share (attached  hereto as
Exhibit 11).

        (12) Statement re computation of ratios (attached hereto as Exhibit 12).

        (21) List of Subsidiaries.  At December 31, 1996, PXRE had the following
subsidiaries:   PXRE  Reinsurance  Company,  a  Connecticut  insurance  company;
Transnational  Reinsurance Company, a Connecticut  insurance company; PXRE Ltd.,
an English  company  (the sole member of PG Butler  Syndicate  1224 at Lloyd's);
PXRE Managing Agency Ltd. (the managing  agency for PG Butler  Syndicate 1224 at
Lloyd's);  PXRE  Trading  Corporation,  a  Delaware  corporation;  TREX  Trading
Corporation,  a Delaware  corporation;  PX/TX  Associates,  a  Delaware  general
partnership (of which PXRE Trading and TREX Trading are the only partners);  and
CAT Fund, L.P., a Delaware limited partnership (of which PX/TX Associates is the
sole  general  partner and PXRE  Trading and TREX  Trading are the only  limited
partners).   (See  the   discussion   in  this  Form  10-K  under  the  captions
"Business--Management  Agreement"  and "--Other  Operations"  and  "Management's
Discussion and Analysis of Financial Condition and Results of Operations.")


(M) indicates a management contract or compensatory plan or arrangement in which
    the directors and/or executive officers of PXRE participate.

                                      -50-
 

<PAGE>
<PAGE>


        (23)  Consents of Experts and Counsel.  The consent of Price  Waterhouse
LLP,  independent  accountants  to PXRE, is included as part of Item 14(a)(2) of
this Form 10-K.

        (24) Power of  Attorney.  Copies of the powers of  attorney  executed by
each of Robert W. Fiondella,  Franklin D. Haftl,  Bernard Kelly, Wendy Luscombe,
Edward P. Lyons,  Philip R. McLoughlin,  David W. Searfoss,  Donald H. Trautlein
and Wilson Wilde are attached hereto as Exhibit 24.

        (27) Financial Data Schedule.  Exhibit 27 included in electronic  filing
only.

        (28)  Information from reports  furnished to state insurance  regulatory
authorities. Filed in paper under cover of Form SE.

        (b)   Current Reports.

              None.

        (c)   See Item 14(a)(3) above.

        (d)   See Item 14(a)(2) above.


                                      -51-
 

<PAGE>
<PAGE>


                                   SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, PXRE  Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                    PXRE CORPORATION

                                    By:/s/ Gerald L. Radke
                                       -------------------
                                        Gerald L. Radke
                                        Its Chairman of the Board,
                                        President and Chief
                                        Executive Officer

                                    Date:  March 26, 1997

        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this report has been  signed  below by the  following  persons on behalf of PXRE
Corporation and in the capacity and on the dates indicated:

By:/s/ Gerald L. Radke                             By:/s/ Sanford M. Kimmel
   ----------------------                             ---------------------
        Gerald L. Radke                               Sanford M. Kimmel
        Its Chairman of the Board,                    Its Senior Vice President,
        President and Chief                           Treasurer and Chief
        Executive Officer                             Financial Officer
        (Principal Executive                          (Principal Financial
        Officer) and Director                         Officer and Principal
                                                      Accounting Officer)

Date:  March 26, 1997                              Date:  March 26, 1997


By*_______________________                         By*______________________
        Robert W. Fiondella                           Franklin D. Haftl
        Director                                      Director


Date:  March 26, 1997                              Date:  March 26, 1997


                                      -52-

 

<PAGE>
<PAGE>
By*_______________________                            By*______________________
        Bernard Kelly                                     Wendy Luscombe
        Director                                          Director

Date:  March 26, 1997                                 Date:  March 26, 1997


By*_______________________                            By*_______________________
        Edward Lyons                                      Philip R. McLoughlin
        Director                                          Director

Date:  March 26, 1997                                 Date:  March 26, 1997



By*_______________________                            By*______________________
        David W. Searfoss                                 Donald H. Trautlein
        Director                                          Director

Date:  March 26, 1997                                 Date:  March 26, 1997



By*______________________
        Wilson Wilde
        Director

Date:  March 26, 1997

                                    *By:/s/ Gerald L. Radke
                                        ____________________
                                          Gerald L. Radke
                                          Attorney-in-Fact

                                      -53-





<PAGE>
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
PXRE CORPORATION

        In our opinion,  the  accompanying  consolidated  balance sheets and the
related  consolidated  statements of income, of stockholders' equity and of cash
flow present fairly, in all material  respects,  the financial  position of PXRE
Corporation and its  subsidiaries at December 31, 1996 and 1995, and the results
of their  operations  and their  cash  flow for each of the  three  years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.  These financial  statements are the responsibility of the Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion  expressed
above.

PRICE WATERHOUSE LLP
New York, New York
February 13, 1997

                                      F-1



<PAGE>
<PAGE>




PXRE              CONSOLIDATED BALANCE SHEETS
CORPORATION

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                              1996           1995
                                                                              ----           ----
<S>               <C>                                                     <C>            <C>
Assets            Investments:
                    Fixed maturities, available for sale, at fair value
                      (amortized cost $393,962,000 and $216,348,000,
                      respectively)                                       $394,551,703   $221,356,767

                    Equity securities, at fair value (cost $6,850,000
                      and $5,000,000)                                        7,796,392      5,172,428
                    Short-term investments                                  59,791,879     41,721,656
                                                                          ------------   ------------
                        Total investments                                  462,139,974    268,250,851

                    Cash                                                     4,938,481        838,548
                    Accrued investment income                                5,046,899      3,343,505
                    Receivables:
                    Unreported premiums                                     16,849,578     23,376,727
                    Balances due from intermediaries and brokers             6,279,368      6,335,593
                    Other receivables                                        9,281,392      6,793,881
                    Reinsurance recoverable                                 18,065,126     34,097,408
                    Ceded unearned premiums                                  3,728,424      5,433,030
                    Deferred acquisition costs                               1,449,050      1,564,926
                    Income tax recoverable                                   2,204,026        479,473
                    Deferred income tax recoverable                          3,586,489              0
                    Investment in equity of TREX                                     0     36,003,384
                    Receivable from affiliates                                       0        446,799
                    Other assets                                             9,755,399      9,119,750
                                                                          ------------   ------------
                        Total assets                                      $543,324,206   $396,083,875
                                                                          ============   ============
Liabilities         Losses and loss expenses                               $70,977,449    $72,718,914
                    Unearned premiums                                       11,042,260     13,685,391
                    Reinsurance balances payable                             4,635,449     14,346,394
                    Notes payable                                           64,725,000     67,775,000
                    Deferred income tax payable                                      0      3,653,102
                    Contingent commission payable                           12,772,478      2,618,438
                    Excess of fair market value of net assets of TREX        7,942,374              0
                    Other liabilities                                       13,551,418     10,124,460
                                                                          ------------   ------------
                         Total liabilities                                 185,646,428    184,921,699
                                                                          ------------   ------------

Stockholders'       Common stock, $.01 par value -- 40,000,000 and
equity               20,000,000 shares authorized; 14,705,782 and
                     8,983,896 shares issued                                   147,058         89,839
                                                                               
                    Additional paid-in capital                             252,978,182    117,668,048
                                                                           
                    Net unrealized appreciation on investments, net of
                      deferred income tax expense of $306,000 and
                      $1,813,000                                               568,405      3,782,500
                    Retained earnings                                      118,705,257     91,882,834
                    Treasury stock at cost (750,876 and 238,755 shares)    (14,090,289)    (1,719,459)
                    Restricted stock at cost (53,279 and 34,000 shares)       (630,835)      (541,586)
                                                                          ------------   ------------
                        Total stockholders' equity                         357,677,778    211,162,176
                                                                          -------------  ------------
                        Total liabilities and stockholders' equity        $543,324,206   $396,083,875
                                                                          =============  ============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                       F-2




<PAGE>
<PAGE>




PXRE            CONSOLIDATED STATEMENTS OF INCOME
CORPORATION

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                          1996               1995                 1994
                                                          ----               ----                 ----
<S>            <C>                                   <C>                <C>                   <C> 
Revenues       Net premiums earned                   $ 72,795,454       $  97,141,693         $110,601,155
               Net investment income                   16,782,371          14,729,566           13,786,304
               Net realized investment gains
                (losses)                                   94,158              85,302           (1,163,963)
               Management fees: Non-affiliate           3,519,703           2,891,128            3,627,699
                                TREX                    2,512,303           3,526,213            3,364,117
                                                     ------------       -------------         ------------
               Total revenues                          95,703,989         118,373,902          130,215,312
                                                     ------------       -------------         ------------
Losses and     Losses and loss expenses incurred       18,563,608          34,716,270           52,647,445
expenses       Commissions and brokerage               12,873,668          13,251,070           15,025,774
               Other operating expenses                12,261,949          11,236,843            8,365,035
               Interest expense                         6,957,057           7,143,097            7,789,213
                                                     ------------       -------------         ------------
               Total expenses                          50,656,282          66,347,280           83,827,467
                                                     ------------       -------------         ------------
               Income before income taxes
                and equity in net
                earnings of TREX                       45,047,707          52,026,622           46,387,845
               Equity in net earnings of TREX           3,897,568           5,947,956            4,141,219
               Income tax provision                    15,644,000          18,189,000           15,700,000
                                                     ------------       -------------         ------------
               Net income                            $ 33,301,275       $  39,785,578         $ 34,829,064
                                                     ============       =============         ============
               Preferred stock dividend              $          0       $     598,928         $  2,004,800
                                                     ============       =============         ============
               Net income available to common
                stockholders                         $ 33,301,275       $  39,186,650         $ 32,824,264
                                                     ============       =============         ============
Per share      Primary:
                 Net income                          $       3.68       $        4.74         $       4.89
                                                     ============       =============         ============
                 Average shares outstanding             9,046,332           8,275,125            6,709,823
                                                     ============       =============         ============
               Fully diluted:
                 Net income                          $       3.68       $        4.48         $       3.94
                                                     ============       =============         ============
                 Average shares outstanding             9,060,022           8,873,785            8,847,045
                                                     ============       =============         ============
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       F-3





<PAGE>
<PAGE>




PXRE                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CORPORATION          YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               UNREALIZED
                                                ADDITIONAL    APPRECIATION                                                TOTAL
                            PREFERRED  COMMON     PAID-IN    (DEPRECIATION)   RETAINED     RESTRICTED     TREASURY     STOCKHOLDERS'
                              STOCK    STOCK      CAPITAL    ON INVESTMENTS   EARNINGS       STOCK          STOCK         EQUITY
                              -----    -----      -------    --------------   --------       -----          -----         ------
<S>                            <C>    <C>       <C>           <C>           <C>            <C>          <C>            <C>
Balance at January l, 1994     $100   $67,849   $114,336,608  $ 2,667,621   $27,584,795    $        0   $(1,966,743)   $142,690,230
Net income                                                                   34,829,064                                  34,829,064
Issuance of common stock                1,367      2,551,761                                                              2,553,128
Issuance of treasury stock                                                                                  106,056         106,056
Issuance of restricted stock                                                                 (283,550)                     (283,550)
Dividends:
  Preferred stock                                                            (2,004,800)                                 (2,004,800)
  Common stock                                                               (2,475,211)                                 (2,475,211)
Change in fair value for the                                   (7,788,344)                                               (7,788,344)
  year net
Equity in net change in TREX
  depreciation                                                   (855,631)                                                 (855,631)
                               ----------------------------------------------------------------------------------------------------
Balance at December 31, 1994   $100  $ 69,216   $116,888,369  $(5,976,354) $ 57,933,848     $(283,550) $ (1,860,687)   $166,770,942
Net income                                                                   39,785,578                                  39,785,578
Conversion of preferred stock  (100)                 (20,260)                                                               (20,360)
Issuance of common stock               20,623        692,869                                                                713,492
Issuance of treasury stock                                                                                  141,228         141,228
Issuance of restricted stock                                                                 (499,005)                     (499,005)
Amortization of restricted stock                                                              240,969                       240,969
Dividends:
  Preferred stock                                                              (598,928)                                   (598,928)
  Common stock                                                               (5,237,664)                                 (5,237,664)
Change in fair value for the                                    8,488,420                                                 8,488,420
  year, net
Equity in net change in TREX
  appreciation                                                  1,270,434                                                 1,270,434
Other                                                107,070                                                                107,070
                               ----------------------------------------------------------------------------------------------------
Balance at Deccmber 31, 1995   $  O  $ 89,839   $117,668,048  $ 3,782,500  $ 91,882,834     $(541,586) $ (1,719,459)   $211,162,176
Net income                                                                   33,301,275                                  33,301,275
Issuance of common stock                  417        823,192                                                                823,609
Issuance of common stock in
  TREX merger                          56,802    134,304,932                                                            134,361,734
Issuance of treasury stock                                                                                  166,745         166,745
Repurchase of treasury stock                                                                            (12,537,575)    (12,537,575)
Issuance of restricted stock                                                                 (501,027)                     (501,027)
Amortization of restricted
  stock                                                                                       411,778                       411,778
Dividends paid to common
  stockholders                                                               (6,478,852)                                 (6,478,852)
Change in fair value for the
  year, net                                                    (2,799,292)                                               (2,799,292)
Equity in net change in TREX
  depreciation                                                    (414,803)                                                (414,803)
Other                                                182,010                                                                182,010
                               ----------------------------------------------------------------------------------------------------
Balance at December 31, 1996   $  O  $147,058   $252,978,182  $   568,405  $118,705,257     $(630,835) $(14,090,289)   $357,677,778
                               ====================================================================================================
</TABLE>


The accompanying notes are an integral part of these statements.

                                       F-4






<PAGE>
<PAGE>




PXRE                CONSOLIDATED STATEMENTS OF CASH FLOW
CORPORATION

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                   Years Ended December 31,
                                                                           1996               1995               1994
                                                                           ----               ----               ----
<S>                 <C>                                               <C>                <C>                <C>
Cash flow           Net income                                        $  33,301,275      $  39,785,578      $  34,829,064
from operating      Adjustments to reconcile net income to
activities           net cash provided by operating activities:
                      Losses and loss expenses                          (12,964,561)        (9,116,644)        10,393,119
                      Unearned premiums                                  (5,077,857)           691,911         (2,280,603)
                      Deferred acquisition costs                          1,284,615           (701,788)           760,020
                      Receivables                                        14,313,128         (3,177,725)        (8,687,535)
                      Reinsurance balances payable                       (3,431,682)           (18,467)         4,458,381
                      Reinsurance recoverable                             4,511,644         11,306,688        (10,270,669)
                    Income tax recoverable                                1,126,162            477,805          2,993,492
                    Equity in net earnings of affiliate                  (3,574,171)        (5,849,161)        (4,090,535)
                    Other                                                (1,455,299)          (985,918)         2,883,752
                                                                      -------------      -------------      -------------
                      Net cash provided by operating activities          28,033,254         32,412,279         30,988,486
                                                                      -------------      -------------      -------------
Cash flow           Cost of fixed maturity investments                  (83,760,831)      (176,462,916)       (70,376,940)
from investing      Fixed maturity investments matured/disposed          62,189,176        171,764,371         50,306,999
activities          Payable for securities                               (2,496,232)         2,496,232        (28,493,966)
                    Cost of equity securities                            (1,849,539)        (5,000,000)                 0
                    Investment in joint venture                                   0         (2,000,000)                 0
                    Cash acquired from merger with TREX                   1,260,611                  0                  0
                    Net change in short-term investments                 22,485,844        (14,909,109)        24,042,715
                                                                      -------------      -------------      -------------
                      Net cash used by investing activities              (2,170,971)       (24,111,422)       (24,521,192)
                                                                      -------------      -------------      -------------
Cash flow           Proceeds from issuance of common stock                  489,327            335,355          1,443,460
from financing      Cash dividends paid to preferred stockholders                 0           (933,061)        (2,004,800)
activities          Cash dividends paid to common stockholders           (6,478,852)        (5,237,664)        (2,475,211)
                    Repurchase of debt                                   (3,235,250)        (2,016,188)        (5,274,750)
                    Cost of treasury stock                              (12,537,575)                 0                  0
                                                                      -------------      -------------      -------------
                      Net cash used by financing activities             (21,762,350)        (7,851,558)        (8,311,301)
                                                                      -------------      -------------      -------------
                    Net change in cash                                    4,099,933            449,299         (1,844,007)
                    Cash, beginning of period                               838,548            389,249          2,233,256
                                                                      -------------      -------------      -------------
                    Cash, end of period                               $   4,938,481      $     838,548      $     389,249
                                                                      =============      =============      =============

                    Supplemental disclosure of cash flow information
                      Non cash investing and financing activities:
                       Fair value of assets acquired                  $ 161,130,734      $           0      $           0
                       Liabilities assumed                               28,496,767                  0                  0
                                                                      -------------      -------------      -------------
                       Stock issued in merger with TREX               $ 132,633,967      $           0      $           0
                                                                      =============      =============      =============

</TABLE>



The accompanying notes are an integral part of these statements.


                                      F-5








<PAGE>
<PAGE>

PXRE                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CORPORATION                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

-------------------------------------------------------------------------------


1.  SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION AND CONSOLIDATION

        The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP"). These
statements reflect the consolidated operations of PXRE Corporation and its
subsidiaries (collectively referred to as "PXRE"), PXRE Reinsurance Company
("PXRE Reinsurance"), PXRE Trading Corporation ("PXRE Trading"), PXRE Ltd. and
PXRE Managing Agency Limited. In addition, following the merger of PXRE and
Transnational Re Corporation ("TREX") as described further in Note 2, the
consolidated operations include Transnational Reinsurance Company
("Transnational Reinsurance") and TREX Trading Corporation ("TREX Trading")
since December 11, 1996. During the two years ended December 31, 1995 and 1994
and the period up to December 11, 1996, PXRE owned approximately 21% of TREX,
which in turn owned 100% of Transnational Reinsurance, and accounted for this
investment under the equity method. Following the merger, Transnational
Reinsurance became a wholly-owned subsidiary of PXRE Reinsurance. All material
transactions between the consolidated companies have been eliminated in
preparing these consolidated financial statements.

        Certain reclassifications have been made for 1995 and 1994 to conform
with the 1996 presentation.

    INVESTMENT AT EQUITY

        Investments in affiliated companies (20% to 50% owned) are accounted for
under the equity method.

    PREMIUMS ASSUMED AND CEDED

        Premiums on reinsurance business assumed are recorded as earned on a pro
rata basis over the contract period based on estimated subject premiums.
Adjustments based on actual subject premium are recorded once ascertained. The
portion of premiums written relating to unexpired coverages at the end of the
period is recorded as unearned premiums. Reinsurance premiums ceded are recorded
as incurred on a pro rata basis over the contract period.

    DEFERRED ACQUISITION COSTS

        Acquisition costs consist of commissions and brokerage expenses incurred
in connection with contract issuance, net of acquisition costs ceded. These
costs are deferred and amortized over the period in which the related premiums
are earned. Deferred acquisition costs are reviewed periodically to determine
that they do not exceed recoverable amounts after allowing for anticipated
investment income. Amortization of acquisition costs amounted to $12,874,000,
$13,251,000 and $15,026,000 in 1996, 1995 and 1994, respectively.

                                       F-6





<PAGE>
<PAGE>


    MANAGEMENT FEES

        Management fees are recorded as earned under various arrangements
whereby PXRE Reinsurance acts as underwriting manager for other insurers and
reinsurers, including TREX up to the date of the merger, as discussed in Note 2.
These fees are initially based on premium volume, but are adjusted through
contingent profit commissions related to underwriting results measured over a
period of years.

    LOSSES AND LOSS EXPENSE LIABILITIES

        Liabilities for losses and loss expenses are established in amounts
estimated to settle incurred losses. Losses and loss expense liabilities are
based on individual case estimates provided for reported losses for known events
and estimates of incurred but not reported losses. Losses and loss expense
liabilities are necessarily based on estimates and the ultimate liabilities may
vary from such estimates. Any adjustments to these estimates are reflected in
income when known.

        Reinsurance recoverable on paid losses and reinsurance recoverable on
unpaid losses are reported as assets. Reinsurance recoverable on paid losses
represents amounts recoverable from retrocessionaires at the end of the period
for gross losses previously paid. Provisions are established for all reinsurance
recoveries which are considered doubtful.

    INVESTMENTS

        Fixed maturity investments and equity securities are considered
available for sale and are reported at fair value. Unrealized losses, as a
result of temporary changes in fair value during the period such investments are
held, are reflected net of income taxes in stockholders' equity. Unrealized
losses which are not temporary are charged to operations. Short-term
investments, which have an original maturity of one year or less, are carried at
amortized cost which approximates fair value. Realized gains or losses on
disposition of investments are determined on the basis of specific
identification. The amortization of premiums and accretion of discount for fixed
maturity investments is computed utilizing the interest method. The effective
yield under the interest method is adjusted for anticipated prepayments.

    FAIR VALUE OF FINANCIAL INSTRUMENTS

        Fair values of certain assets and liabilities are disclosed in the notes
to the consolidated financial statements based on published market values, if
available, or estimates based upon fair values of similar issues. Fair values
are reported in Notes 5 and 6.

    LEASEHOLD IMPROVEMENTS, FURNITURE AND EQUIPMENT AND OTHER ASSETS

        Leasehold improvements, furniture and equipment, included in other
assets, are carried at depreciated cost. Depreciation and amortization are
calculated on a straight-line method principally over 15 years. Acquired
insurance licenses are carried at amortized cost.

                                       F-7





<PAGE>
<PAGE>


    DEBT ISSUANCE COSTS

        Debt issuance costs of $2,850,000 associated with the August 1993
issuance of Senior Notes are being amortized over the term of the related debt
on a straight-line method. Such amortization expense amounted to $338,000,
$324,000 and $456,000 in 1996, 1995 and 1994, respectively, including the pro
rata charge of $84,000 and $59,000 relating to $3,050,000 and $1,925,000 of
repurchased debt in 1996 and 1995, respectively.

    EXCESS OF FAIR MARKET VALUE OF NET ASSETS OF BUSINESS ACQUIRED OVER COST

        The excess of fair market value of net assets of TREX business acquired
over cost is amortized on a straight-line basis over three years. The
amortization recorded in 1996 was $145,000.

    FOREIGN EXCHANGE

        Foreign currency assets and liabilities are translated at the exchange
rate in effect at the balance sheet date. Resulting gains and losses are
reflected in income for the period.

    FEDERAL INCOME TAXES

        Deferred tax assets and liabilities reflect the expected future tax
consequences of temporary differences between carrying amounts and the tax bases
of PXRE's assets and liabilities.

    EARNINGS PER SHARE

        Primary earnings per share are determined by dividing net earnings
(after deducting cumulative preferred stock dividends) by the weighted average
number of shares outstanding of common stock and common stock equivalents. On a
fully diluted basis, both net earnings and shares outstanding were adjusted to
assume the conversion of convertible preferred stock from the date of issue,
unless the effect of the assumed conversion was anti-dilutive.

    STOCK-BASED COMPENSATION

        Effective January 1, 1996, PXRE adopted Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No.
123"). SFAS No. 123 establishes a "fair value based method" of accounting for
all stock options, but allows for the continued application of the intrinsic
value concept under existing accounting rules prescribed by Accounting
Principles Board Opinion No. 25 ("APB"). PXRE will continue to value its stock
options using the guidance of APB 25 and, as required by SFAS No. 123, discloses
in Note 11 to the consolidated financial statements, net income and earnings per
share had PXRE valued its stock options using the fair value based method.

                                       F-8





<PAGE>
<PAGE>


2.  ACQUISITION

        On December 11, 1996, PXRE merged with TREX. Pursuant to the merger
agreement, each share of common stock of TREX has been canceled, and holders of
shares of common stock of TREX exchanged each such share for 1.0575 shares of
PXRE common stock and cash in lieu of fractional shares. The merger has been
accounted for using the purchase method of accounting, and, accordingly, the
purchase price has been allocated to the assets purchased and the liabilities
assumed based upon the fair values at the date of merger. The value assigned to
the PXRE common stock issued was $129,738,000. This includes a deferred tax
adjustment for the liability previously provided by PXRE with respect to its
investment in TREX which is no longer required and reduces the purchase price
allocated, as well as transaction costs. The excess of the fair value of the net
assets acquired over the purchase price, amounting to approximately $8,087,000,
has been recorded as negative goodwill and is being amortized on a straight-line
basis over 3 years.

        The net income of TREX has been included in PXRE's consolidated results
of operations from the date of acquisition and amounted to $1,253,000 in 1996.
On the basis of a pro forma consolidation of the results of operations as if the
acquisition had taken place at the beginning of 1996 rather than December 11,
1996, consolidated net revenues would have been $153,410,000 for 1996.
Consolidated pro forma net income and fully diluted net income per share would
have been $49,706,000 and $3.44 in 1996. Such pro forma amounts are not
necessarily indicative of what the actual consolidated results of net income
might have been if the merger had been effective at the beginning of 1996.

        Summarized financial information for TREX at December 31, 1995 included
total assets of $202,441,298, total stockholders' equity of $164,870,961,
revenues of $79,123,597 and net income of $27,267,276.

    MANAGEMENT AGREEMENT

        Under the Management Agreement between TREX, Transnational Reinsurance
and PXRE Reinsurance, Transnational Reinsurance paid PXRE Reinsurance an annual
basic management fee equal to 5% of Transnational Reinsurance's gross written
premiums. TREX was also required to reimburse PXRE for all expenses directly
attributable to it. This agreement terminated upon the merger.

3.  BUSINESS, RISKS AND OTHER MATTERS

        PXRE, through its wholly-owned subsidiaries PXRE Reinsurance and
Transnational Reinsurance, from December 11, 1996, provides treaty and
facultative reinsurance to primary insurers and reinsurers on commercial and
personal property risks, and marine and aviation risks. Its newly formed
London-based managing agency, which will oversee the affairs of PXRE's newly
formed underwriting syndicate at Lloyd's-PG Butler Syndicate 1224, will extend
PXRE's underwriting opportunities in these and other similar short-tail lines of
business. PXRE also conducts trade operations in catastrophe futures and option
contracts on the Chicago Board of Trade ("CBOT"), although the low level of
activity in the CBOT market for catastrophe futures has kept trade volume to a
minimum through December 31, 1996.

                                       F-9





<PAGE>
<PAGE>


        PXRE solicits its treaty and facultative reinsurance business from the
worldwide reinsurance brokerage market, committing and withholding its
underwriting capacity and altering its mix of business to focus on business
where management believes that above average underwriting results can be
achieved. To supplement its underwriting capacity and generate management fee
income, PXRE manages business for other insurers and reinsurers through
retrocessional agreements and management agreements. In recent years, PXRE has
been pursuing a strategy of focusing on catastrophe related coverages and
diversifying its exposures by writing a substantial amount of international
reinsurance. See "Certain Risks and Uncertainties" in Management's Discussion
and Analysis of Financial Condition and Results of Operations for further
information regarding PXRE's business and risks affecting these consolidated
financial statements.

4.  UNDERWRITING PROGRAMS

        Premiums written and earned for the years ended December 31, 1996, 1995
and 1994 are as follows:

<TABLE>
<CAPTION>
                                              1996             1995               1994
                                              ----             ----               ----
<S>                                       <C>               <C>               <C>         
Premiums written
Assumed                                   $114,347,965      $155,380,180      $179,685,909
Direct                                               0                 0            (1,630)
Ceded:  Managed business participants      (21,237,657)      (26,773,867)      (29,841,808)
        Catastrophe coverage                (5,427,393)       (6,180,126)      (12,601,642)
        TREX management agreement          (19,965,317)      (24,790,377)      (28,722,490)
                                          ------------      ------------      ------------
Total reinsurance premiums ceded           (46,630,367)      (57,744,370)      (71,165,940)
                                          ------------      ------------      ------------
Net premiums written                      $ 67,717,598      $ 97,635,810      $108,518,339
                                          ============      ============      ============

                                              1996             1995               1994
                                              ----             ----               ----
Premiums earned
Assumed                                   $120,727,383      $154,155,712      $180,296,809
Direct                                               0                 0            (1,630)
Ceded                                      (47,931,929)      (57,014,019)      (69,694,024)
                                          ------------      ------------      ------------
Net premiums earned                       $ 72,795,454      $ 97,141,693      $110,601,155
                                          ============      ============      ============
</TABLE>

        Substantially all premiums written were assumed through reinsurance
brokers or intermediaries. In 1996, 1995 and 1994, two, two and one reinsurance
intermediaries, respectively, individually accounted for more than 10% of gross
premiums written, and collectively accounted for approximately 36%, 34% and 21%
of gross premiums written, respectively.

        Under the terms of the management agreement described in Note 2, PXRE
retroceded $19,965,000, $24,790,000 and $28,722,000 of premiums written to
Transnational Reinsurance in 1996, 1995 and 1994, respectively.

                                      F-10





<PAGE>
<PAGE>

        In the past, PXRE has entered into retrocessional arrangements providing
catastrophe protection. In recent years, PXRE reduced, upon renewal, its own
catastrophe excess of loss retrocessional facilities (and associated premiums
ceded) and has borne the associated increase in net exposures while pursuing
various retrocessional arrangements whereby it manages business for
participants. As the cost of catastrophe retrocessional facilities has declined
since 1995, PXRE has again commenced selectively purchasing such coverage,
although PXRE did not purchase any significant retrocessional coverage in 1996
or 1995. In the event that retrocessionaires are unable to meet their
contractual obligations, PXRE would be liable for such defaulted amounts.

        The components of reinsurance recoverable as stated in the December 31,
1996 and 1995 consolidated balance sheets are as follows:

                                              1996            1995
                                              ----            ----
    Losses and loss expense liabilities   $15,633,287     $28,242,045
    Loss payments                           2,431,839       5,855,363
                                          -----------     -----------
                                          $18,065,126     $34,097,408
                                          ===========     ===========

        The components of losses and loss expenses incurred as shown in the
December 31, 1996, 1995 and 1994 consolidated statements of income are as
follows:

                               1996            1995            1994
                               ----            ----            ----
    Assumed               $ 37,837,120    $ 49,370,127    $ 92,550,583
    Ceded                  (19,273,512)    (14,653,857)    (39,903,138)
                          ------------    ------------    ------------
    Net                   $ 18,563,608    $ 34,716,270    $ 52,647,445
                          ============    ============    ============

        Activity in the losses and loss expense liability for the years ended
December 31, 1996, 1995 and 1994 is summarized as follows:

<TABLE>
<CAPTION>
                                            1996            1995            1994
                                            ----            ----            ----
<S>                                    <C>             <C>             <C>         
    Net balance January 1              $ 44,424,388    $ 46,044,699    $ 43,460,531
      Plus reinsurance recoverables      28,294,526      35,790,859      27,981,908
                                       ------------    ------------    ------------
    Gross balance at January 1           72,718,914      81,835,558      71,442,439
                                       ------------    ------------    ------------

    Gross reserves of TREX at date
      of acquisition                      9,588,507               -               -

    Incurred related to:
       Current year                      27,327,387      43,388,163      85,804,406
       Prior years                       10,509,733       5,981,969      6,746,180
                                       ------------    ------------    ------------
       Total incurred                    37,837,120      49,370,132     92,550,586
                                       ------------    ------------    ------------

    Paid related to:
       Current year                       6,468,736      16,885,840      44,337,530
       Prior years                       42,698,356      41,600,936      37,819,937
                                       ------------    ------------    ------------
       Total paid                        49,167,092      58,486,776      82,157,467
                                       ------------    ------------    ------------

    Gross balance at December 31       $ 70,977,449    $ 72,718,914    $ 81,835,558
                                       ============    ============    ============
</TABLE>


                                      F-11





<PAGE>
<PAGE>


        As a result of changes in estimates of insured events in prior years,
the net provision for losses and loss expenses increased by approximately
$3,249,000 in 1996 primarily due to Hurricanes Marilyn and Luis; $4,311,000 in
1995 primarily due to the Northridge earthquake; and $3,261,000 in 1994
primarily due to marine pro rata experience.

5.  INVESTMENTS

        The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair value of investments in fixed maturities and equity securities as
of December 31, 1996 and 1995 are shown below:

<TABLE>
<CAPTION>
                                                             Gross           Gross         Estimated
                                           Amortized      Unrealized       Unrealized         Fair
                                             Cost            Gains           Losses          Value
                                             ----            -----           ------          -----
<S>                                       <C>             <C>             <C>             <C>         
1996
United States government securities       $180,519,485    $  1,570,671    $    876,482    $181,213,674
United States government agency
  mortgage and asset-backed securities      87,861,645       1,515,801       2,743,510      86,633,936
Other mortgage and asset-backed
  securities                                55,313,776         645,089         252,128      55,706,737
Obligations of states and political
  subdivisions                              70,267,795         810,409          80,848      70,997,356
                                          ------------    ------------    ------------    ------------
    Total fixed maturities                $393,962,701    $  4,541,970    $  3,952,968    $394,551,703
                                          ============    ============    ============    ============

Equity securities                         $  6,849,538    $    946,854    $          0    $  7,796,392
                                          ============    ============    ============    ============


                                                             Gross           Gross         Estimated
                                           Amortized      Unrealized       Unrealized         Fair
                                             Cost            Gains           Losses          Value
                                             ----            -----           ------          -----
1995
United States government securities       $165,405,594    $  5,855,375    $          0    $171,260,969
United States government agency
  mortgage and asset-backed securities      50,942,612          12,419         859,233      50,095,798
                                          ------------    ------------    ------------    ------------
     Total fixed maturities               $216,348,206    $  5,867,794    $    859,233    $221,356,767
                                          ============    ============    ============    ============

Equity securities                         $  5,000,000    $    172,428    $          0    $  5,172,428
                                          ============    ============    ============    ============
</TABLE>


                                      F-12





<PAGE>
<PAGE>


        Proceeds, gross realized gains, and gross realized losses from sales of
fixed maturity investments before maturity date or securities that prepay and
from sales of equity securities were as follows:

                                       1996           1995           1994
                                       ----           ----           ----
    Proceeds
       Fixed maturities           $ 54,359,191    $126,497,804    $21,562,415
                                  ============    ============    ===========
       Equity securities          $  1,532,961    $          0    $         0
                                  ============    ============    ===========

    Gross Gains
       Fixed maturities           $    540,687    $  2,303,300    $         0
       Equity securities                85,711               0              0
                                  ------------    ------------    -----------
                                       626,398       2,303,300              0
    Gross Losses
       Fixed maturities               (532,240)     (2,217,998)    (1,163,963)
                                  ------------    ------------    ------------

    Net realized gains (losses)   $     94,158    $     85,302    $(1,163,963)
                                  ============    ============    ============



    NET INVESTMENT INCOME

        The components of net investment income were as follows:

                                       1996            1995            1994
                                       ----            ----            ----
    Fixed maturity investments    $ 15,642,139    $ 12,896,608    $ 12,259,456
    Equity securities                   42,062          76,704               0
    Short-term investments           1,744,703       2,019,693       1,639,348
                                  ------------    ------------    ------------
                                    17,428,904      14,993,005      13,898,804
    Less investment expenses           646,533         263,439         112,500
                                  ------------    ------------    ------------
    Net investment income         $ 16,782,371    $ 14,729,566    $ 13,786,304
                                  ============    ============    ============


    INVESTMENT EXPENSES

        Investment expenses primarily represent fees paid to Phoenix Duff &
Phelps Corporation, a public majority-owned subsidiary of Phoenix Home Life
Mutual Insurance Company which owned 4.6% of the outstanding common stock of
PXRE at December 31, 1996.

                                      F-13





<PAGE>
<PAGE>


    INVESTMENT MATURITY DISTRIBUTIONS

        The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1996 by contractual maturity date is shown below.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.

<TABLE>
<CAPTION>
                                                                             Estimated
                                                Amortized                       Fair
      Maturity                                     Cost            %            Value            %
      --------                                     ----           ---           -----           ---
<S>                                            <C>                 <C>      <C>                 <C>
      One year or less                         $ 30,076,318        7.6      $ 30,168,502        7.7
      Over 1 through 5 years                    151,500,011       38.5       151,634,979       38.4
      Over 5 through 10 years                    58,449,075       14.8        59,322,226       15.0
      Over 10 through 20 years                   10,761,876        2.7        11,085,323        2.8
                                               ------------      -----      ------------      -----
                                                250,787,280       63.6       252,211,030       63.9
      United States government agency and
        other mortgage and asset-backed
        securities                              143,175,421       36.4       142,340,673       36.1
                                               ------------      -----      ------------      -----
           Total                               $393,962,701      100.0      $394,551,703      100.0
                                               ============      =====      ============      =====
</TABLE>

        In addition to fixed maturities, PXRE held $59,791,879 and $41,721,656
of short-term investments at December 31, 1996 and 1995, respectively, comprised
principally of high-grade commercial paper with original maturities of one year
or less.

    RESTRICTED ASSETS

        Under the terms of certain reinsurance agreements, irrevocable letters
of credit in the amount of $2,933,000 were issued at December 31, 1996, in
respect of reported loss reserves and unearned premiums. Investments with a par
value of $4,000,000 have been pledged as collateral with issuing banks. In
addition, securities with a par value of $8,122,000 at December 31, 1996 were on
deposit with various state insurance departments in order to comply with
insurance laws.

        PXRE, in connection with the startup of PXRE Ltd.'s Syndicate No. 1224,
has placed on deposit $42,975,000 of United States government securities as
collateral for Lloyd's of London. In addition, PXRE issued a letter of credit
for the benefit of Lloyd's of London in the amount of $15,355,000 at a cost of
25 basis points. The letter of credit is collateralized by United States
government securities of approximately the same amount.

                                      F-14





<PAGE>
<PAGE>


6.  NOTES PAYABLE AND CREDIT ARRANGEMENTS

        In August 1993, PXRE completed a public offering of $75,000,000 of 9.75%
Senior Notes due August 15, 2003. The net balance outstanding, after
repurchases, at December 31, 1996 and 1995, amounting to $64,725,000 and
$67,775,000, respectively, is carried at par which approximates fair market
value. Interest is payable on the Senior Notes semi-annually commencing February
15, 1994. The notes are redeemable on or after August 15, 1998 at the option of
PXRE, initially at 103.656%, declining to 100% at August 15, 2001 and
thereafter, plus accrued and unpaid interest. The Indenture governing the Senior
Notes contains certain covenants which, among other things, limit the ability of
PXRE (a) to incur certain additional indebtedness and, in the case of the
Restricted Subsidiaries (as defined), to issue preferred stock; (b) to pay
dividends, repurchase stock and to make certain other Restricted Payments (as
defined); (c) to sell or transfer other assets; (d) to create liens; or (e) to
engage in any business other than the insurance and reinsurance businesses and
other businesses incidental and related thereto. In addition, the Indenture does
not permit PXRE to sell or issue any stock of PXRE Reinsurance or any other
Principal Insurance Subsidiary. The Indenture also provides that in the event of
a Change of Control, PXRE will offer, within 30 days, to purchase all the Senior
Notes then outstanding at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any.

        PXRE Reinsurance has a $10,000,000 unsecured line of credit facility at
the lending bank's base rate. At December 31, 1996, no amount was outstanding
under this line of credit. No commitment fee was required for this facility.

        Interest and commitment fees paid, were $6,469,000, $6,728,000 and
$7,354,000 for 1996, 1995 and 1994, respectively.

7.  INCOME TAXES

        The components of the provision for income taxes for the years ended
December 31, 1996, 1995 and 1994 are as follows:

                                       1996            1995            1994
                                       ----            ----            ----
    Current
      Federal                      $14,310,000     $15,265,000     $10,607,000
      State and local                  319,000         374,000         293,000
      Foreign                          539,000       2,109,000       3,899,000
                                   -----------     -----------     -----------
                                    15,168,000      17,748,000      14,799,000
    Deferred                           476,000         441,000         901,000
                                   -----------     -----------     -----------
    Income tax provision           $15,644,000     $18,189,000     $15,700,000
                                   ===========     ===========     ===========
    Income taxes paid              $15,730,000     $16,507,000     $10,246,000
                                   ===========     ===========     ===========


                                      F-15





<PAGE>
<PAGE>


        The income tax provision for each of the years presented differs from
the amounts determined by applying the applicable U.S. statutory federal income
tax rate to pre-tax income as a result of the following:

<TABLE>
<CAPTION>
                                               1996           1995            1994
                                               ----           ----            ----
<S>                                        <C>             <C>             <C>        
    Income taxes at statutory rates        $15,767,000     $18,209,000     $16,235,000
    Tax-exempt interest income                 (48,000)     (1,086,000)     (1,520,000)
    Adjustments of prior years' items          102,000         244,000         266,000
    Foreign tax provision                    1,022,000       2,109,000       3,899,000
    Foreign tax credit utilized             (1,105,000)     (2,284,000)     (3,412,000)
    State and local provision,
      net of federal benefit                   207,000         243,000         191,000
    Excess of fair market value of
    net assets of TREX over cost               (51,000)              0               0
    Other, net
                                              (250,000)        754,000          41,000
                                           -----------      ----------     -----------
    Total income tax provision             $15,644,000     $18,189,000     $15,700,000
                                           ===========     ===========     ===========
</TABLE>

        The significant components of the net deferred tax provision (benefit)
for the years ended December 31, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                                1996            1995            1994
                                                ----            ----            ----
<S>                                         <C>             <C>             <C>        
    Discounted losses and loss expenses     $  330,000      $  108,000      $ (762,000)
    Unearned premiums                          277,000         (62,000)        153,000
    Deferred acquisition costs                (213,000)        220,000        (266,000)
    Deferred compensation and benefits         (75,000)       (266,000)              0
    Unrealized foreign exchange                (42,000)         (4,000)        168,000
    Foreign tax credit carryforward           (157,000)       (893,000)              0
    Capital loss carryforward                   47,000               0               0
    Discount on long-term bonds, net           149,000         618,000               0
    Appreciation on undistributed
       earnings of affiliate                   139,000         692,000               0
    Accrued ceded premiums                           0          37,000       1,588,000
    Other, net                                  21,000          (9,000)         20,000
                                            ----------      ----------      ----------
      Total deferred tax provision          $  476,000      $  441,000      $  901,000
                                            ==========      ==========      ==========
</TABLE>


                                      F-16





<PAGE>
<PAGE>


        The significant components of the net deferred income tax asset
(liability) are as follows:

                                                 1996                1995
    Deferred tax asset:                          ----                ----
     Discounted losses and loss expenses         $ 2,193,000     $ 1,952,000
     Unearned premiums                               510,000         598,000
     Deferred compensation and benefits            1,434,000         343,000
     Foreign tax credit carryforward               1,050,000         893,000
     Capital loss carryforward                       356,000          61,000
     Other, net                                      248,000          50,000
                                                 -----------     -----------
     Total deferred income tax asset               5,791,000       3,897,000
                                                 -----------     -----------

    Deferred income tax liability:
     Deferred acquisition costs                    (501,000)        (522,000)
     Tax effect of net unrealized
       appreciation on investments                 (538,000)      (1,813,000)
     Unrealized foreign exchange                   (133,000)        (198,000)
     Discount on long-term bonds, net              (960,000)        (628,000)
     Appreciation on undistributed
       earnings of affiliate                              0         (692,000)
     Gain from sale of subsidiary                         0       (3,697,000)
     Other, net                                     (72,000)               0
                                                 -----------     -----------
     Total deferred income tax liability          (2,204,000)     (7,550,000)
                                                 -----------     -----------
     Net deferred income tax asset (liability)   $ 3,587,000     $(3,653,000)
                                                 ===========     ===========

8.  LEASES AND RENTALS

        Rental expenses for operating leases, principally with respect to office
space and equipment, amounted to $939,000, $1,190,000 and $923,000 in 1996, 1995
and 1994, respectively.

        Future net minimum rental payments under non-cancelable operating leases
aggregate $7,430,000 as follows: 1997--$672,000; 1998--$596,000; 1999--$520,000;
2000--$502,000; and thereafter $5,140,000.

9.  STOCKHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS

    STOCKHOLDERS' EQUITY

        Authorized and issued common stock (1 cent par value) of PXRE consisted
of 40,000,000 and 14,705,782 shares as of December 31, 1996 and 20,000,000 and
8,983,896 as of December 31, 1995, respectively.

        In addition, at December 31, 1996, there were 500,000 shares of serial
preferred stock (1 cent par value) authorized and none outstanding. The Board of
Directors is authorized to determine the terms of each series of preferred stock
which may be issued. During the second quarter of 1992, PXRE completed an
offering of 1,059,800 depositary shares, each representing 1/100 of a share of
PXRE's Series A Cumulative Preferred Stock. Each depositary share paid dividends
at an annual rate of 8% on its $25 per share liquidation value and was
redeemable at the option of PXRE on or after May 1, 1995.

                                      F-17





<PAGE>
<PAGE>


        PXRE exercised its option to redeem PXRE's Series A Preferred Stock (and
the related depositary shares) on May 1, 1995. At December 31, 1994, there were
10,009 shares of Series A Preferred Stock (1,000,900 depositary shares)
outstanding. During the second quarter of 1995, all of the outstanding shares of
Series A Preferred Stock were converted into shares of PXRE's common stock,
resulting in the issuance of approximately 1,760,000 shares of PXRE's common
stock. Each depositary share had a conversion price of $12.29 per depositary
share and was valued for conversion purposes at $25.00, resulting in
approximately 2.0342 shares of common stock for each depositary share converted.

    DIVIDEND RESTRICTIONS

        The Insurance Department of the State of Connecticut, in which PXRE
Reinsurance is domiciled, recognizes as net income and surplus (stockholders'
equity) those amounts determined in conformity with statutory accounting
practices ("SAP") prescribed or permitted by the department, which differ in
certain respects from GAAP. The amount of statutory capital and surplus at
December 31 and statutory net income of PXRE Reinsurance for the periods then
ended, as filed with insurance regulatory authorities are as follows:

                                          1996           1995           1994
                                          ----           ----           ----
   PXRE Reinsurance
     Statutory capital and surplus    $400,133,000   $250,231,000   $211,988,000
     Statutory net income             $ 35,436,000   $ 37,996,000   $ 33,538,000

        PXRE Reinsurance is subject to state regulatory restrictions which limit
the maximum amount of annual dividends or other distributions, including loans
or cash advances, available to stockholders without prior approval of the
Insurance Commissioner of the State of Connecticut.

        As of December 31, 1996, the maximum amount of dividends and other
distributions which may be made by PXRE Reinsurance during 1997 without prior
approval is limited to approximately $40,013,000. Accordingly, the remaining
amount of its capital and surplus is considered restricted.

        Under the terms of the Senior Notes, dividends to PXRE stockholders in
any year are limited as described in Note 6.

                                      F-18





<PAGE>
<PAGE>


10.  EMPLOYEE BENEFITS

     BENEFIT PLANS

        Effective January 1, 1993, PXRE adopted a non-contributory defined
benefit pension plan covering all employees with one year or more of service and
who had attained age 21. Benefits are generally based on years of service and
compensation. PXRE funds the plan in amounts not less than the minimum statutory
funding requirement nor more than the maximum amount that can be deducted for
Federal income tax purposes.

        PXRE also sponsors a supplemental executive retirement plan. This plan
is nonqualified and provides certain key employees benefits in excess of normal
pension benefits.

        The net pension expenses for the company-sponsored plans included the
following components at December 31, based on a January 1, valuation date (the
latest actuarial estimate):

                                                    1996       1995      1994
                                                    ----       ----      ----
Service cost of benefits earned                   $254,748   $185,584   $71,909
Interest cost on projected benefit obligations     194,999    268,173     8,578
Return on plan assets                                 (747)      (633)     (156)
Net amortization of deferred prior service cost    112,338    166,318      (202)
                                                  --------   --------   -------
Pension expense                                   $561,338   $619,442   $80,129
                                                  ========   ========   =======

        The following table sets forth the funded status of the plans and
amounts recognized in the consolidated balance sheets:

                                                        1996           1995
                                                        ----           ----
Actuarial present value of benefit obligations:
  Vested benefits                                   $ 1,229,468    $ 1,071,776
  Non vested                                            176,466         48,568
                                                    -----------    -----------
Accumulated benefit obligation                        1,405,934      1,120,344
Effect of future salary increases                     1,512,094      1,380,611
                                                    -----------    -----------
Projected benefit obligation                          2,918,028      2,500,955
Plan assets at fair value                                26,076         11,507
                                                    -----------    -----------
Funded status                                        (2,891,952)    (2,489,448)
Unrecognized net gain                                   159,862        140,969
Unrecognized prior service cost                       1,355,864      1,519,769
                                                    -----------    -----------
Accrued pension liability                           $(1,376,226)   $  (828,710)
                                                    ===========    ===========

        The assumptions used in computing the information above were as follows:

                                                   1996           1995
                                                   ----           ----
        Discount rate-pension expense              7.5%           7.0%
        Expected long-term rate of return          8.0%           8.0%
        Future compensation growth rate            5.0%           5.0%


                                      F-19





<PAGE>
<PAGE>


     EMPLOYEE STOCK PURCHASE PLAN

        PXRE maintains an Employee Stock Purchase Plan under which it has
reserved 36,832 shares of its common stock for issuance to PXRE personnel. The
price per share is the lesser of 85% of the fair market value at either the date
granted or the date exercised. Under the plan 4,946, 3,768 and 3,388 shares of
PXRE common stock were issued for total consideration of approximately $103,000,
$84,000 and $74,000 in 1996, 1995 and 1994, respectively.

11.  STOCK OPTIONS AND GRANTS

        During 1987, PXRE granted six officers options to purchase shares of
common stock. All of these options are currently exercisable and expire on March
25, 1997. At December 31, 1996, 161,550 of these options had been exercised.

        PXRE adopted in 1988, a plan which provides for the grant of incentive
stock options and non-qualified stock options to officers and key employees.
Options granted under the 1988 Stock Option Plan have a term of 10 years and
become exercisable in four equal annual installments. The exercise price for
options granted pursuant to the plan must be equal to or exceed the fair market
value of the common stock on the date the option is granted. At December 31,
1996, 261,834 options had been exercised under the 1988 Stock Option Plan. In
1992, the Board of Directors resolved to freeze the 1988 Stock Option Plan as of
December 31, 1992, so that no further options could be granted thereafter under
this plan.

        In 1992, a Restated Employee Annual Incentive Bonus Plan was approved.
Incentive compensation is based in part on return on equity compared to a target
return on equity and in part on the discretion of the Restated Bonus Plan
Committee. In 1996 and 1995, $1,673,000 and $1,757,000, respectively, was
incurred under this plan. In addition, 30% of any bonus granted to certain
levels of employees is paid in restricted shares of common stock. As of December
31, 1996, 54,163 restricted shares had been granted under this plan.

        In 1992, PXRE adopted a 1992 Officer Incentive Plan which provides for
the grant of incentive stock options, non-qualified stock options and awards of
shares of common stock subject to certain restrictions. Options granted under
the plan have a term of 10 years and generally become exercisable in four equal
annual installments commencing one year from the date of grant. The exercise
price for the incentive stock options must be equal to or exceed the fair market
value of the common stock on the date the option is granted. The exercise price
for the non-qualified options may be less than, equal to, or greater than the
fair market value of the common stock on the date of grant, but not less than
50% of such fair market value. As of December 31, 1996, 235,913 options and no
shares of restricted stock had been granted under this plan.

                                      F-20





<PAGE>
<PAGE>


        Information regarding the option plans described above is as follows:

                                               Number        Option Price
                                             of Shares      Per Share Range

      Outstanding at December 31, 1993        377,093       $ 8.00 - $25.00
        Options granted                        56,330           $23.875
        Options exercised                     130,541       $ 8.00 - $13.00
        Options canceled                        1,486       $ 8.75 - $25.00
                                              -------
      Outstanding at December 31, 1994        301,396       $ 8.00 - $25.00
        Options granted                        64,621           $24.875
        Options exercised                      22,528       $ 8.75 - $25.00
        Options canceled                          589      $23.875 - $25.00
                                              -------
      Outstanding at December 31, 1995        342,900       $ 8.00 - $25.00
        Options granted                        73,748           $24.75
        Options exercised                      36,659       $ 8.75 - $25.00
        Options canceled                        6,966      $23.875 - $25.00
                                              -------
      Outstanding at December 31, 1996        373,023       $ 8.00 - $25.00
                                              =======

        Total authorized common stock reserved for grants of stock options and
restricted stock under the above plans is 833,830 shares. Total shares of
214,429 relate to stock options which are exercisable at December 31, 1996, at
exercise prices between $8.00 and $25.00. All options become exercisable upon a
change of control of PXRE as defined by the plans.

        In 1995, PXRE adopted a non-employee Director Stock Option Plan which
provides for an annual grant of 1,000 options per director from 1995 to 2005
inclusive. Options granted under the plan have a term of 10 years from the date
of grant and are exercisable in three equal annual installments commencing one
year from the date of grant. The exercise price of the options is the fair
market value on the date of grant. As of December 31, 1996, 16,000 options were
granted and 2,667 were exercisable.

        As discussed in Note 1, PXRE adopted SFAS No. 123 as of January 1, 1996.
As permitted by SFAS No. 123, PXRE has elected to continue to account for its
stock option plans under the accounting rules prescribed by APB 25, under which
no compensation costs are recognized as an expense. Had compensation costs for
the stock options been determined using the fair value method of accounting as
recommended by SFAS No. 123, net income and earnings per share for 1996 and 1995
would have been reduced to the following pro forma amounts:

                                           1996          1995
                                           ----          ----
Net income
  As reported                           $33,301,275   $39,785,578
  Pro forma                              33,028,582    39,642,572
Primary income per share
  As reported                                 $3.68         $4.74
  Pro forma                                    3.65          4.72
Fully diluted income per share
  As reported                                 $3.68         $4.48
  Pro forma                                    3.65          4.47


                                      F-21





<PAGE>
<PAGE>


        Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.

        The fair value of each option granted in 1996 and 1995 was estimated on
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions: risk-free interest of 5.94% for 1996 and
7.58% for 1995; expected lives of 5 years for 1996 and 1995; expected volatility
of 36.25% for 1996 and 40.73% for 1995; and expected dividend yield of 3.03% for
1996 and 2.53% for 1995.

        A summary of the status of the employee and director stock option plans
at December 31, 1996, 1995 and 1994 and changes during the years then ended is
presented below:

<TABLE>
<CAPTION>
                                                                       1996                        1995
                                                             -------------------------   -------------------------
                                                                          Weighted                    Weighted
                                                                           Average                     Average
                                                             Shares     Exercise Price   Shares     Exercise Price
<S>                                                          <C>            <C>          <C>            <C>  
Options outstanding at beginning of year                     350,900        16.93        301,396        14.66
Options granted                                               81,748        24.77         72,621        24.70
Options exercised                                             36,659        10.52         22,528        11.22
Options canceled                                               6,966        24.58            589        24.45
                                                             -------                     -------
Options outstanding at end of year                           389,023        19.04        350,900        16.93
                                                             -------                     -------
Options exercisable at end of year                           217,069        14.62        200,386        12.48
                                                             -------                     -------
Weighted average fair value per share of options granted                    24.77                       24.70
</TABLE>

        Options outstanding at December 31, 1996 included 149,736 options with
exercise prices ranging from $8.00 to $13.00 per share and a weighted average
remaining contractual life of 4.08 years and 239,287 options with exercise
prices ranging from $23.25 to $25.00 per share and a weighted average remaining
contractual life of 7.49 years. Options exercisable at December 31, 1996
included 149,736 options with a weighted average remaining contractual life of
4.08 years and 67,333 options with a weighted average remaining contractual life
of 6.74 years.

        In 1990, PXRE adopted a non-employee Director Deferred Stock Plan
granting 2,000 shares of its common stock to each non-employee Board member at
the time specified in the plan. The 10,000 shares of stock granted to Board
members who are not employees of PXRE or Phoenix Home Life Mutual Insurance
Company will be issued to Board members at or after their retirement according
to the option selected from those defined in the Plan. The 6,000 shares granted
to Board members who are employees of Phoenix Home Life Mutual Insurance Company
were issued on August 24, 1993. Increases and (decreases) to the obligations
under the Plan amounted to $(17,500), $(25,000) and $65,750 in 1996, 1995 and
1994, respectively.

                                      F-22





<PAGE>
<PAGE>


12.  SEGMENT INFORMATION

        PXRE operates in one significant industry segment: property and casualty
reinsurance. Domestic gross premiums written represent U.S. based risks written
by U.S. based reinsureds. All other gross premiums written are considered
international (principally the United Kingdom, Continental Europe, Australia and
Asia).

<TABLE>
<CAPTION>
                              1996       %            1995        %           1994       %
                              ----       -            ----        -           ----       -
<S>                      <C>             <C>     <C>              <C>    <C>             <C>
Gross premiums written:
  Domestic               $ 32,594,000    29      $ 44,824,000     29     $ 64,857,000    36
  International            81,754,000    71       110,556,000     71      114,827,000    64
                         ------------   ---      ------------    ---     ------------   ---
                         $114,348,000   100      $155,380,000    100     $179,684,000   100
                         ============   ===      ============    ===     ============   ===
</TABLE>

        PXRE has offices in New Jersey, Brussels and London. The following table
shows net premiums earned, operating profit and the aggregate carrying amount of
identifiable assets by operational area:

                                         U.S.         Foreign
                                      Operations     Operations     Consolidated
                                      ----------     ----------     ------------
1996
Net premiums earned                  $ 65,276,931    $ 7,518,523    $ 72,795,454
Operating profit before interest
  expense, income taxes and
  corporate expenses                 $ 49,036,857    $ 3,435,216    $ 52,472,073
Identifiable assets                  $501,902,023    $41,422,183    $543,324,206

1995
Net premiums earned                  $ 84,368,246    $12,773,447    $ 97,141,693
Operating profit before interest
  expense, income taxes and
  corporate expenses                 $ 52,145,099    $ 6,610,747    $ 58,755,846
Identifiable assets                  $362,484,683    $33,599,192    $396,083,875

13.  QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED)

        The following are unaudited quarterly results of operations on a
consolidated basis for the years ended December 31, 1996 and 1995. Quarterly
results necessarily rely heavily on estimates. This and certain other factors,
such as catastrophic losses, call for caution in drawing specific conclusions
from quarterly results. Due to changes in the number of average shares
outstanding, quarterly earnings per share may not add to the total for the year.

        The common stock price ranges are bid quotations as reported by the New
York Stock Exchange at December 31, 1996, and by the NASDAQ National Market
System in prior periods.

                                      F-23





<PAGE>
<PAGE>


<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                              MARCH 31         JUNE 30        SEPTEMBER 30     DECEMBER 31
                                              --------         -------        ------------     -----------
<S>                                         <C>              <C>             <C>               <C>
1996
Net premiums written                        $ 25,346,471     $ 10,740,389     $ 21,783,058     $  9,847,680
                                            ============     ============     ============     ============
Revenues:
  Net premiums earned                       $ 19,420,401     $ 17,099,362     $ 17,793,201     $ 18,482,490
  Net investment income                        3,911,470        4,198,688        4,065,756        4,606,457
  Realized investment (losses) gains             (74,937)        (100,752)         (44,575)         314,422
Management fees: Non-affiliate                 1,765,398          632,341          868,581          253,382
                 TREX                            706,828          634,933          674,342          496,200
                                            ------------     ------------     ------------     ------------
      Total revenues                          25,729,160       22,464,572       23,357,305       24,152,951
                                            ------------     ------------     ------------     ------------
Losses and expenses:
 Losses and loss expenses incurred             4,939,674        4,160,747        6,072,159        3,391,028
  Commissions and brokerage                    3,555,589        3,083,632        3,015,707        3,218,740
  Other operating expenses                     3,184,722        3,341,610        2,623,326        3,112,290
  Interest expense                             1,717,123        1,887,115        1,713,471        1,639,348
                                            ------------     ------------     ------------     ------------
      Total expenses                          13,397,108       12,473,104       13,424,663       11,361,406
                                            ------------     ------------     ------------     ------------
Income before income taxes and
  equity in net earnings of TREX              12,332,052        9,991,468        9,932,642       12,791,545
Equity in net earnings of TREX                 1,293,188          690,932        1,159,611          753,837
Income tax provision                           4,316,000        3,497,000        3,477,000        4,354,000
                                            ------------     ------------     ------------     ------------
      Net income                            $  9,309,240     $  7,185,400     $  7,615,253     $  9,191,382
                                            ============     ============     ============     ============
Primary earnings per common share:
  Net income                                $       1.05     $        .81     $       0.86             0.95
                                            ============     ============     ============     ============
  Average shares outstanding                   8,862,762        8,878,482        8,820,090        9,633,984
                                            ============     ============     ============     ============
Fully diluted earnings per common share:
  Net income                                $       1.05     $        .81     $       0.86     $       0.95
                                            ============     ============     ============     ============
  Average shares outstanding                   8,881,863        8,878,482        8,820,090        9,640,439
                                            ============     ============     ============     ============

Dividends paid per common share             $       0.18     $       0.18     $       0.18     $       0.21
Price Range of Common Stock:
    High                                    $      28.00     $      27.00     $      24.50     $      25.50
    Low                                     $      24.00     $      23.75     $      22.25     $      22.875
</TABLE>


                                      F-24





<PAGE>
<PAGE>


<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                              -----------------------------------------------------------
                                              MARCH 31         JUNE 30       SEPTEMBER 30     DECEMBER 31
                                              --------         -------       ------------     -----------
<S>                                         <C>             <C>              <C>             <C>         
1995
Net premiums written                        $ 35,802,653    $ 17,706,219     $ 28,815,447    $ 15,311,490
                                            ============    ============     ============    ============
Revenues:
  Net premiums earned                       $ 23,556,101    $ 25,142,048     $ 24,320,379    $ 24,123,165
  Net investment income                        3,427,447       3,503,210        3,874,380       3,924,529
  Realized investment (losses) gains                   0        (768,280)         282,068         571,515
  Management fees:  TREX                         822,944         849,319          924,618         929,332
                    Non-affiliate              1,198,196         477,956          730,669         484,307
                                            ------------    ------------     ------------    ------------
      Total revenues                          29,004,688      29,204,253       30,132,114      30,032,848
                                            ------------    ------------     ------------    ------------
Losses and expenses:
  Losses and loss expenses incurred (1)       10,750,624       4,249,959       12,050,871       7,664,815
  Commissions and brokerage                    2,903,343       3,663,308        3,159,969       3,524,450
  Other operating expenses                     1,869,649       3,191,706        3,007,294       3,168,196
  Interest expense                             1,752,711       1,779,218        1,891,543       1,719,625
                                            ------------    ------------     ------------    ------------
      Total expenses                          17,276,327      12,884,191       20,109,677      16,077,086
                                            ------------    ------------     ------------    ------------

Income before income taxes and
  equity in net earnings of TREX              11,728,361      16,320,062       10,022,437      13,955,762
Equity in net earnings of TREX                 1,259,231       1,786,463        1,406,155       1,496,107
Income tax provision                           4,114,000       5,656,000        3,555,000       4,864,000
                                            ------------    ------------     ------------    ------------
      Net income                            $  8,873,592    $ 12,450,525     $  7,873,592    $ 10,587,869
                                            ============    ============     ============    ============

Preferred stock dividend                    $    501,200    $     98,478     $          0    $          0
                                            ============    ============     ============    ============
Net income available to
  common stockholders                       $  8,372,392    $ 12,352,047     $  7,873,592    $ 10,587,869
                                            ============    ============     ============    ============

Primary earnings per common share:
  Net income                                $       1.19    $       1.48     $       0.89    $       1.19
                                            ============    ============     ============    ============
  Average shares outstanding                   7,050,633       8,341,774        8,860,923       8,876,496
                                            ============    ============     ============    ============

Fully diluted earnings per common share:
  Net income                                $       1.00    $       1.41     $       0.89    $       1.19
                                            ============    ============     ============    ============
  Average shares outstanding                   8,851,874       8,842,170        8,887,193       8,881,911
                                            ============    ============     ============    ============

Dividends paid per common share             $       0.15    $       0.15     $       0.15    $       0.18
Price Range of Common Stock:
    High                                    $      28.75    $      26.50     $      29.75    $      27.50
    Low                                     $      21.75    $      21.00     $      23.50    $      22.75
</TABLE>

(1)  The losses and loss expenses incurred during the third and fourth
     quarters, reflect the release of approximately $3,055,000 and $750,000,
     respectively, of loss provisions recorded for the Kobe earthquake in the
     first quarter.

                                      F-25





<PAGE>
<PAGE>


14.  SUBSEQUENT EVENT

        In January 1997, PXRE completed a $100 million offering of 8.85% Capital
Trust Pass-through Securities (TRUPS sm) through PXRE Capital Trust I in an
institutional private placement. Proceeds of the transaction will be used for
general corporate purposes, which may include the redemption or the purchase,
from time-to-time, in the open market or in privately negotiated transactions or
otherwise, of outstanding indebtedness and common stock of PXRE.

        The consent of holders of PXRE's Senior Notes to certain amendments to
the Indenture governing the Senior Notes was obtained in connection with this
offering.

                                      F-26





<PAGE>
<PAGE>

                                                                     Schedule II

Parent Company Information
     PXRE Corporation's summarized financial information (parent company only)
is as follows:

                                                             December 31,
                                                         1996            1995
                                                    ------------    ------------
BALANCE SHEET
Assets
 Short-temm investments                             $ 18,499,162    $ 14,223,322
 Cash                                                    448,154          68,947
 Other receivables                                       167,656         100,600
 Receivable from TREX                                          0          55,630
 Receivable from subsidiaries                                  0       5,220,116
 Income tax recoverable                                3,420,931         862,112
 Equity in subsidiaries                              409,691,515     257,321,826
 Deferred income tax benefits                            940,912               0
 Other assets                                          7,411,113       6,133,635
                                                    ------------    ------------
   Total assets                                     $440,579,443    $283,986,188
                                                    ============    ============

Liabilities
 Note payable                                       $ 69,700,000    $ 69,700,000
 Payable to subsidiaries                                 293,977               0
 Excess of fair market value over cost                 7,942,374               0
 Other liabilities                                     4,965,314       3,124,012
                                                    ------------    ------------
  Total liabilities                                   82,901,665      72,824,012
                                                    ------------    ------------
Stockholders' equity                                 357,677,778     211,162,176
                                                    ------------    ------------
  Total liabilities and stockholders' equity        $440,579,443    $283,986,188
                                                    ============    ============


<TABLE>
<CAPTION>
INCOME STATEMENT                                                Years ended December 31,
                                                   -----------------------------------------------
                                                       1996              1995             1994
                                                       ----              ----             ----
<S>                                                <C>             <C>               <C>
 Interest earned                                   $    131,928     $  1,102,447     $    947,488
 Realized gain on investment                                  0                0           25,250
 Interest expense                                    (7,063,730)      (7,063,857)      (7,774,994)
 Other operating expenses                            (1,671,164)        (872,681)      (1,140,025)
                                                   ------------     ------------     ------------
 Loss before tax benefit                             (8,602,966)      (6,834,091)      (7,942,281)
 Income tax benefit                                   3,146,456        2,432,000        2,771,000
                                                   ------------     ------------     ------------
                                                     (5,456,510)      (4,402,091)      (5,171,281)
 Equity in earnings of subsidiary                    38,757,785       44,187,669       40,000,345
                                                   ------------     ------------     ------------
 Net income                                        $ 33,301,275     $ 39,785,578     $ 34,829,064
                                                   ============     ============     ============
CASH FLOW STATEMENT
Cash from operating activities:
 Net income                                        $ 33,301,275     $ 39,785,578     $ 34,829,064
 Adjustments to reconcile net income to cash
 provided by operating acitvities:
 Equity in earnings of subsidiaries                 (38,757,785)     (44,187,669)     (40,000,345)
 Cash dividends from subsidiaries                    21,000,000        6,000,000       12,000,000
 Receivable from TREX                                  (334,422)         (55,630)         364,996
 Investment income receivable                                 0                0          165,950
 Intercompany accounts                                5,421,549        2,214,333      (11,597,441)
 Deferred income taxes                                 (741,980)               0            4,608
 Income tax (recoverable) payable                    (3,218,458)      (2,566,935)      12,514,287
 Other                                                2,030,968       (2,024,244)        (121,526)
                                                   ------------     ------------     ------------
 Net cash provided (used) by operating activities    18,701,147         (834,567)       8,159,593
                                                   ------------     ------------     ------------
Cash flow from investing activities:
 Investment in equity of PXRE Trading Corporation             0       (2,500,000)               0
 Net change in short-term investments                   205,160       (8,202,595)       2,750,199
 Proceeds from sale of fixed maturity investments             0       17,626,750                0
 Cost of fixed maturity investments                           0                0       (2,961,029)
                                                   ------------     ------------     ------------
 Net cash provided (used) by investing activities       205,160        6,924,155         (210,830)
                                                   ------------     ------------     ------------
Cash flow from financing activities:
 Proceeds from issuance of common stock                 489,327          335,355        1,443,460
 Cash dividends paid to common stockholders          (6,478,852)      (5,237,664)      (2,475,211)
 Cash dividends paid to preferred stockholders                0         (933,061)      (2,004,800)
 Repurchase of debt                                           0                0       (5,274,750)
 Cost of treasury stock                             (12,537,575)               0                0
                                                   ------------     ------------     ------------
 Net cash used by financing activities              (18,527,100)      (5,835,370)      (8,311,301)
                                                   ------------     ------------     ------------
Net change in cash                                      379,207          254,218         (362,538)
Cash, beginning of period                                68,947         (185,271)         177,267
                                                   ------------     ------------     ------------
Cash, end of period                                $    448,154     $     68,947     $   (185,271)
                                                   ============     ============     ============
</TABLE>

                                      F-27





<PAGE>
<PAGE>

                                                                    Schedule III

                        PXRE CORPORATION AND SUBSIDIARIES
                       SUPPLEMENTARY INSURANCE INFORMATION

<TABLE>
<CAPTION>
         Column A      Column B      Column C      Column D       Column E      Column F  
         --------      --------      --------      --------       --------      --------  
                                     Future
                                     policy
                                    benefits,                      Other
                                     losses,                       policy                 
         Segment-      Deferred     claims and                   claims and               
         property       policy         loss        Unearned       benefits                
           and        acquisition    expenses      premiums       payable        Premium  
         casualty        cost        (caption      (caption       (caption       revenue  
        insurance     (caption 7)     13-a-1)       13-a-2)       13-a-3)      (caption 1)
        ---------     -----------    --------      --------       -------      -----------
<C>                   <C>          <C>           <C>              <C>         <C>         
1996                  $1,449,000   $70,977,000   $11,042,000      $     0     $ 72,796,000
1995                   1,565,000    72,719,000    13,685,000      $     0       97,142,000
1994                     863,000    81,836,000    12,263,000      $     0      110,601,000


<CAPTION>
             Column G      Column H       Column I      Column J      Column K
             --------      --------       --------      --------      --------
                          Benefits,       Amortiza-
                           claims,         tion of
               Net        losses and      deferred
            investment    settlement       policy         Other
              income       expenses      acquisition    operating      Premiums
           (caption 2)   (caption 4)        costs        expense       written
           -----------    -----------       -----        -------       -------
<C>        <C>            <C>            <C>           <C>           <C>        
1996       $16,782,000    $18,564,000    $12,874,000   $12,262,000   $67,718,000
1995        14,730,000     34,716,000     13,251,000    11,237,000    97,636,000
1994        13,786,000     52,647,000     15,026,000     8,365,000   108,518,000
</TABLE>



                                                                     Schedule VI

                        PXRE CORPORATION AND SUBSIDIARIES
                      SUPPLEMENTARY INFORMATION CONCERNING
                     PROPERTY-CASUALTY INSURANCE OPERATIONS

<TABLE>
<CAPTION>
              Column A       Column B       Column C       Column D        Column E       Column F
              --------       --------       --------       --------        --------       --------
                                           Reserves for                                              
                                             unpaid                                                  
                             Deferred        claims         Discount,                                
             Affiliation      policy        and claim        if any                                  
                with        acquisition     adjustment    deducted in       Unearned        Earned   
             registrant        costs         expenses       Column C        premiums       premiums  
             ----------        -----         --------       --------        --------       --------  
<C>                         <C>            <C>               <C>          <C>            <C>         
            Consolidated
1996          Property      $1,449,000     $70,977,000       $    0       $11,042,000    $ 72,796,000
1995          Casualty       1,565,000      72,719,000            0        13,685,000      97,142,000
1994          Entities         863,000      81,836,000            0        12,263,000     110,601,000


<CAPTION>
               Column G           Column H                    Column I        Column J           Column K
               --------           --------                    --------        --------           --------
                                    Claims and Claim          Amortiza-                                 
                                  adjustment expenses         tion of           Paid                    
                                  incurred related to         deferred         claims                   
                Net               (1)             (2)          policy         and claim                 
             investment         Current          Prior         acquisi-       adjustment         Premiums
               income             year           years        tion costs       expenses          written 
               ------             ----           -----        ----------       --------          ------- 
<C>          <C>              <C>              <C>            <C>             <C>              <C>         
1996         $16,782,000      $15,315,000      $3,249,000     $12,874,000     $28,753,000      $ 67,718,000
1995          14,730,000       30,405,000       4,311,000      13,251,000      36,337,000        97,636,000
1994          13,786,000       49,385,000       3,262,000      15,026,000      50,061,000       108,518,000
</TABLE>


                                      F-28





<PAGE>
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS
                      ON THE FINANCIAL STATEMENT SCHEDULES

To the Board of Directors
    of PXRE Corporation

Our audits of the consolidated financial statements referred to in our report
dated February 13, 1997 appearing on page F-1 of PXRE Corporation's Annual
Report on Form 10-K for the year ended December 31, 1996, also included an audit
of the Financial Statement Schedules listed in Item 14(a) of this Form 10-K. In
our opinion, these Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.


PRICE WATERHOUSE LLP

New York, New York
February 13, 1997

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8/S-3 (Nos. 33-35521
and 33-63768), Form S-8 (No. 33-82908) and Form S-8(No. 333-4897) of PXRE
Corporation of our report dated February 13, 1997 appearing on page F-1 of this
Form 10-K. We also consent to the incorporation by reference of our report on
the Financial Statement Schedules which appears above.

PRICE WATERHOUSE LLP

New York, New York
March 26, 1997

                                      F-29





<PAGE>
<PAGE>


                                INDEX TO EXHIBITS


                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE



   3        Restated  Certificate of Incorporation and By-laws of
            PXRE  Corporation  (Exhibits  3.1 and  3.2 to  PXRE's
            Registration  Statement  on Form S-1 dated August 29,
            1986,  as amended by  Amendment  No. 1 thereto  dated
            February  19,  1987 and by  Amendment  No. 2  thereto
            dated   March  25,  1987  (File  No.   33-8406)   and
            incorporated  herein by  reference);  Certificate  of
            Designations  designating  the  Series  A  Cumulative
            Convertible   Preferred  Stock  of  PXRE  Corporation
            (Exhibit 4.5 to PXRE's Registration Statement on Form
            S-2 dated  February 21, 1992, as amended by Amendment
            No. 1 thereto  dated  April 1, 1992 and by  Amendment
            No. 2 thereto  dated April 13, 1992 and by  Amendment
            No.  3  thereto   dated  April  23,  1992  (File  No.
            33-45893)  and  incorporated  herein  by  reference);
            Certificate of Amendment dated May 20, 1993 to PXRE's
            Restated Certificate of Incorporation (Exhibit 4.3 to
            PXRE's  Registration  Statement  on Forms S-8 and S-3
            dated   June  3,  1993   (File  No.   33-63768)   and
            incorporated  herein by  reference);  Certificate  of
            Amendment  dated  May  19,  1994 to  PXRE's  Restated
            Certificate of Incorporation (Exhibit 3 to the Annual
            Report on Form 10-K of PXRE for the fiscal year ended
            December 31, 1994 (File No. 0-15428) and incorporated
            herein by reference;  Certificate of Amendment  dated
            December 9, 1996 to PXRE's  Restated  Certificate  of
            Incorporation   (Exhibit  4.5  to  PXRE  Registration
            Statement on Form S-3 dated January 3, 1997 (File No.
            333-19207),  and  incorporated  herein by reference);
            Article  IV,   Section  1  of  the  By-laws  of  PXRE
            Corporation,  as amended on June 8, 1995,  (Exhibit 3
            to the  Annual  Report  on Form  10-K of PXRE for the
            fiscal  year  ended   December  31,  1995  (File  No.
            0-15428),  and incorporated herein by reference.  The
            Certificate of Merger of

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.





<PAGE>
<PAGE>

                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

             Transnational Re Corporation  into PXRE Corporation,
             dated December 11, 1996. *

   4.1      Trust Indenture, dated as of August 31, 1993, between
            PXRE,  as  issuer,  and The  First  National  Bank of
            Boston, as trustee, relating to $75,000,000 principal
            amount  of  9.75%  Senior  Notes  of  PXRE  due  2003
            (Exhibit 4.1 to PXRE's  Quarterly Report on Form 10-Q
            for the quarter  ended  September  30, 1993 (File No.
            0-15428), and incorporated herein by reference).

   4.2      Supplemental Indenture, dated as of January 24, 1997,
            between PXRE and State Street Bank and Trust Company,
            as  Successor   Trustee,   relating  to   $75,000,000
            original  principal  amount of 9.75%  Senior Notes of
            PXRE due 2003.*

   4.3      Indenture, dated as of January 29, 1997, between PXRE
            and First Union National Bank, as Trustee.*

   4.4      First Supplemental Indenture, dated as of January 29,
            1997,  between PXRE and First Union National Bank, as
            Trustee,   in   respect   of  PXRE's   8.85%   Junior
            Subordinated   Deferrable   Interest  Debentures  due
            2027.*

   4.5      Amended  and  Restated  Declaration  of Trust of PXRE
            Capital Trust I, dated as of January 29, 1997,  among
            PXRE, as sponsor, the Administrators  thereof,  First
            Union Bank of Delaware,  as Delaware  Trustee,  First
            Union National Bank, as  Institutional  Trustee,  and
            the holders from time to time of undivided  interests
            in the assets of PXRE Capital Trust I.*

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 2 -





<PAGE>
<PAGE>


                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

   4.6      Capital Securities Guarantee  Agreement,  dated as of
            January  29,  1997,  between  PXRE  and  First  Union
            National Bank, as Guarantee Trustee.*

   4.7      Common Securities  Guarantee  Agreement,  dated as of
            January 29, 1997, executed by PXRE.*

   10.1     Registration  Rights  Agreement,  dated  January  29,
            1997,  among PXRE,  PXRE Capital  Trust I and Salomon
            Brothers  Inc,  as   Representative  of  the  Initial
            Purchasers.*

   10.2     Purchase  Agreement  among PXRE, PXRE Capital Trust I
            and Salomon  Brothers Inc, as  Representative  of the
            Initial Purchasers, dated January 24, 1997.*

   10.3     PXRE Reinsurance  Company Management  Agreement among
            PXRE Reinsurance and, among others,  Merrimack Mutual
            Fire Insurance  Company  ("Merrimack"),  Pennsylvania
            Lumbermens  Mutual Insurance  Company  ("Pennsylvania
            Lumbermens"),  and NRMA  Insurance  Limited  ("NRMA")
            (Exhibit  10.1 to PXRE's  Annual  Report on Form 10-K
            for the fiscal year ended December 31, 1991 (File No.
            0-15428),  and  incorporated  herein  by  reference);
            letter  dated  November  28,  1990 from  Pennsylvania
            Lumbermens confirming reduced participation  (Exhibit
            10.7 to PXRE's Form S-2 Registration  Statement dated
            February  21,  1992,  as amended by  Amendment  No. 1
            thereto  dated April 1, 1992 and by  Amendment  No. 2
            thereto  dated April 13, 1992 and by Amendment  No. 3
            thereto dated April 23, 1992 (File No. 33-45893), and
            incorporated   herein  by  reference).   Cover  notes
            respecting   January  1997   renewals  by  Merrimack,
            Pennsylvania

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 3 -




<PAGE>
<PAGE>


                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

            Lumbermens  and  NRMA   and   cover  note  respecting
            participation  commencing January 1,  1997  by  Auto-
            Owners Insurance Company.*

   10.4     Tax Settlement  Agreement dated June 21, 1991 between
            PXRE  Corporation,  PXRE  Reinsurance  Company and PM
            Holdings,  Inc. (Exhibit 10.2 to the Annual Report on
            Form 10-K of PXRE for the fiscal year ended  December
            3, 1991 (File No. 0-15428),  and incorporated  herein
            by reference).

   10.5     Investment    Advisory    Agreement    between   PXRE
            Reinsurance  Company and Phoenix Investment  Counsel,
            Inc.,  dated  February  25, 1987 and  effective as of
            January 1, 1987  (Exhibit  10.10 to  Amendment  No. 1
            dated   February   19,   1987  to  PXRE's   Form  S-1
            Registration  Statement  dated  August 29,  1986,  as
            subsequently amended by Amendment No. 2 thereto dated
            March 25, 1987 (File No.  33-8406),  and incorporated
            herein by reference).

   10.6     Amendment to Investment  Advisory  Agreement  between
            PXRE  Reinsurance   Company  and  Phoenix  Investment
            Counsel, Inc., effective  retroactively as of January
            1, 1987  (Exhibit  10.3 to the Annual  Report on Form
            10-K of PXRE for the fiscal year ended  December  31,
            1991 (File No. 0-15428),  and incorporated  herein by
            reference).

   10.7     Amendment  No.  2 to  Investment  Advisory  Agreement
            between   PXRE   Reinsurance   Company   and  Phoenix
            Investment Counsel, Inc., effective as of November 1,
            1989. (Exhibit 10.4 to the Annual Report on Form 10-K
            of PXRE for the fiscal year ended

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 4 -





<PAGE>
<PAGE>


                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

            December   31,   1991   (File   No.   0-15428),   and
            incorporated  herein  by reference).

   10.8     Amended and Restated  Agreement  Concerning Filing of
            Consolidated  Federal  Income Tax Returns dated as of
            August 23,  1993  between  PXRE and PXRE  Reinsurance
            (Exhibit  10.8 to the  Annual  Report on Form 10-K of
            PXRE for the fiscal  year  ended  December  31,  1993
            (File  No.  0-15428),   and  incorporated  herein  by
            reference).

   10.9     Employee Stock Purchase Plan, as amended  (Appendix A
            to PXRE's Proxy  Statement  dated April 23, 1993, and
            incorporated herein by reference).(M)

   10.10    Executive  Long-Term  Bonus  Plan  (Exhibit  10.6  to
            PXRE's Annual Report on Form 10-K for the fiscal year
            ended  December  31,  1991  (File No.  0-15428),  and
            incorporated   herein  by  reference)  and  Amendment
            thereto made as of August 22, 1991 (Exhibit  10.14 to
            PXRE's Form S-2 Registration Statement dated February
            21, 1992, as amended by Amendment No. 1 thereto dated
            April 1, 1992 and by  Amendment  No. 2 thereto  dated
            April 13, 1992 and by Amendment  No. 3 thereto  dated
            April 23, 1992 (File No. 33-45893),  and incorporated
            herein by reference).(M)

   10.11    Executive  Severance Plan (Exhibit 10.1 to the Annual
            Report on Form 10-K of PXRE for the fiscal year ended
            December   31,   1989   (File   No.   0-15428),   and
            incorporated herein by reference).

   10.12    1988 Stock Option Plan, as amended  (Exhibit A to the
            first Prospectus  forming part of PXRE's Form S-8 and
            S-3 Registration

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 5 -





<PAGE>
<PAGE>

                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

            Statement dated June 21, 1990  (File  No.  33-35521),
            and incorporated herein by reference).(M)

   10.13    1987 Stock  Option  Plan,  as amended  (Appendix B to
            PXRE's  Proxy  Statement  dated April 13,  1990,  and
            incorporated herein by reference).(M)

   10.14    Non-Employee Director Deferred Stock Plan (Appendix A
            to PXRE's Proxy  Statement  dated April 12, 1991, and
            incorporated herein by reference).(M)

   10.15    Restated  Employee  Annual  Incentive  Bonus Plan, as
            amended  (Appendix A to PXRE's Proxy  Statement dated
            April   22,   1994,   and   incorporated   herein  by
            reference).(M)

   10.16    1992 Officer  Incentive Plan, as amended  (Appendix B
            to PXRE's  Proxy  Statement  dated April 22, 1994 and
            incorporated herein by reference).(M)

   10.17    Quota Share  Retrocessional  Agreement  between  PXRE
            Reinsurance   and   Trenwick   America    Reinsurance
            Corporation  (Exhibit  10.21 to the Annual  Report on
            Form 10-K of PXRE for the fiscal year ended  December
            31, 1993 (File No. 0-15428),  and incorporated herein
            by reference).

   10.18    Management  Agreement  dated as of  November  8, 1993
            among PXRE Reinsurance,  Transnational Re Corporation
            and Transnational  Reinsurance Company (Exhibit 10.22
            to the  Annual  Report  on Form  10-K of PXRE for the
            fiscal  year  ended   December  31,  1993  (File  No.
            0-15428), and incorporated herein by

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 6 -





<PAGE>
<PAGE>

                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

            reference),  as amended by  Amendment  No. 1 thereto,
            dated  December 1, 1994 (Exhibit  10.21 to the Annual
            Report on Form 10-K of PXRE for the fiscal year ended
            December   31,   1994   (File   No.   0-15428),   and
            incorporated herein by reference).

   10.19    Aggregate Excess of Loss Reinsurance  Agreement dated
            as of November 8, 1993 between PXRE  Reinsurance,  as
            reinsurer, and Transnational  Reinsurance Company, as
            reinsured (Exhibit 10.23 to the Annual Report on Form
            10-K of PXRE for the fiscal year ended  December  31,
            1993 (File No. 0-15428),  and incorporated  herein by
            reference).

   10.20    Services  Agreement  dated as of  December  11,  1996
            between PXRE  Reinsurance  Company and  Transnational
            Reinsurance Company.*

   10.21    Addendum  No. 2 dated  November  10, 1994 to the PXRE
            Group  Amended  and  Restated  Agreement   Concerning
            Filing of  Consolidated  Federal  Income Tax  Returns
            (Exhibit  10.22 to the Annual  Report on Form 10-K of
            PXRE for the fiscal  year  ended  December  31,  1994
            (File  No.  0-15428),   and  incorporated  herein  by
            reference).

   10.22    Addendum  No. 3 dated as of December  11, 1996 to the
            PXRE Group Amended and Restated Agreement  Concerning
            Filing of Consolidated Federal Income Tax Returns.*

   10.23    Amendment dated August 1994 to the Severance Plan for
            Certain Executives of PXRE Corporation (Exhibit 10.23
            to the  Annual  Report  on Form  10-K of PXRE for the
            fiscal year ended

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 7 -





<PAGE>
<PAGE>


                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

            December   31,   1994   (File   No.   0-15428),   and
            incorporated herein by reference).(M)

   10.24    Lease dated May 9, 1994 between  Thornall  Associates
            and PXRE  Corporation  (Exhibit  10.24 to the  Annual
            Report on Form 10-K of PXRE for the fiscal year ended
            December   31,   1994   (File   No.   0-15428),   and
            incorporated herein by reference).

   10.25    Director  Stock  Option  Plan  (Appendix  A to PXRE's
            Proxy Statement  dated May 3, 1995, and  incorporated
            herein by reference).(M)

   10.26    Amendment  No.  3 to  Investment  Advisory  Agreement
            between   PXRE   Reinsurance   Company   and  Phoenix
            Investment Counsel, Inc. (predecessor of Phoenix Duff
            & Phelps)  effective  June 1, 1995 (Exhibit  10.26 to
            the Annual Report on Form 10-K of PXRE for the fiscal
            year ended December 31, 1995 (File No. 0-15428),  and
            incorporated herein by reference).

   10.27    Agreement  and Plan of Merger  dated as of August 22,
            1996 between PXRE and  Transnational  Re Corporation,
            as amended by  Amendment  No. 1 dated as of September
            27, 1996 and  Amendment No. 2 dated as of October 24,
            1996  (Annex  A  to  PXRE's  Form  S-4   Registration
            Statement   dated   October   30,   1996   (File  No.
            333-15087), and incorporated herein by reference).

   10.28    Amended and Restated  Investment  Advisory  Agreement
            between Transnational Reinsurance Company and Phoenix
            Investment  Counsel,  Inc.  dated  November  8,  1993
            (Exhibit  10.4 to the  Annual  Report on Form 10-K of
            Transnational Re Corporation for the fiscal

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 8 -





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<PAGE>

                                                                    SEQUENTIALLY
EXHIBIT                                                               NUMBERED
NUMBER                           EXHIBIT                                PAGE

            year ended December  31, 1993 (File No.  0-22376) and
            incorporated  herein by  reference) as amended by the
            Amendment  thereto,  effecive  June 1, 1995  (Exhibit
            10.11  to  the   Annual   Report   on  Form  10-K  of
            Transnational  Re  Corporation  for the  fiscal  year
            ended  Decembr  31,  1995  (File  No.  0-22376),  and
            incorporated herein by reference).

   10.29    Investment  Management  Agreement,  effective January
            29,  1977  between  PXRE   Corporation   and  Phoenix
            Investment Counsel, Inc.*

   11       Statement re computation of earnings per share.*

   12       Statement re computation of ratios.*

   21       List of  Subsidiaries  of PXRE.  (Included as part of
            Item 14(a)(3) of this Form 10-K.)

   23       Consent   of  Price   Waterhouse   LLP,   independent
            accountants  to  PXRE.  (Included  as  part  of  Item
            14(a)(2) of this Form 10-K.)

   24       Powers of Attorney.*

   27       Financial Data Schedule (electronic filing only).*

   28       Information from reports furnished to state insurance
            regulatory authorities.
            (Filed in paper under cover of Form SE.)

------------------------------
*              Filed herewith.

(M)            Indicates a management contract or compensatory plan or
               arrangement in which the directors and/or executive officers of
               PXRE participate.

                                      - 9 -


                                  STATEMENT OF DIFFERENCES

 The British pound sterling sign shall be expressed as ............'L'
 The service mark symbol shall be expressed as ....................'sm'


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