Background
IPC Re was incorporated in Bermuda on May 20, 1993. American International and General Re were the chief contributors to its $300 million original capital. IPC was one of the eight companies that formed the “Class of ’93”, the wave of Bermuda companies that were formed in the wake of Hurricane Andrew.

Today, parent company IPC Holdings, through its operating company, IPCRe, specialises in property catastrophe reinsurance on a worldwide basis, and, to a limited extent, marine, aviation, property-per-risk excess and other short-tail reinsurance worldwide. Substantially all IPC’s cover is written on an excess-of-loss basis, coming into force when retentions and lower layers have been exhausted.

IPC has its headquarters in Bermuda and an office in Dublin. A London representative office was consolidated into Bermuda in 2000. Nearly 90 percent of the company’s revenue comes from its original line of business, and IPC has grown consistently since its foundation, under essentially the same management team.

Chief executive officer Jim Bryce has led the company since 1993, when Tom Tizzio, then president of AIG, asked him to act as the underwriting leader of a new company, to be called International Property Catastrophe Reinsurance. The company’s purpose was to satisfy a market in need of property catastrophe cover. AIG provided the hardware and software, including office space in Bermuda, and Mr. Bryce hired the underwriting staff.
After September 11, 2001, IPC reloaded and increased its capital in response to clients’ needs. The company maintained its A+ ratings and was not placed on negative CreditWatch throughout the period following 9/11.

Among the largest of the new companies organised in Bermuda after 9/11 was Allied World Assurance Company (q.v.) IPCRe entered into a three-year agency agreement with AWAC to provide fee-based underwriting services.

Spotlight – A focused strategy
Since IPC was formed, it has focused largely on writing property catastrophe business on an excess of loss basis. This has proved to be a successful strategy: even with the volatile nature of the catastrophe business, the company has only reported three quarterly losses since going public in the first quarter of 1996.

Management continues to believe that by writing property catastrophe business on a predominantly excess of loss basis, it is able to accurately track its aggregate liability in each geographic zone and therefore know and control its maximum loss from any one event.

The company constantly reviews its zonal aggregates and capital utilisation to ensure that it is properly employing its shareholders’ funds.

IPC has built its underwriting strategy on five basic principles: selecting brokers who believe in a three-way partnership for success; choosing clients that manage for long-term success; achieving geographical spread of risk; limiting maximum liability per programme and maximum liability per risk zone; and managing aggregate liability appropriately in relation to the company’s capital.

Analysis (250 to 300)
For the year ended December 31, 2004, IPC wrote gross premiums in the following geographic regions: United States, $148 million; Europe, $110 million; worldwide, $70 million; Japan, $28 million; Australia/New Zealand, $20 million; and other, $2 million.

For 2004, gross premiums were written in the following classes: catastrophe excess of Loss, $328 million; risk excess of loss, $11 million; retrocessional reinsurance, $16 million; aviation, $15 million; and other, $8 million.

For the six months ended June 30, 2005, net operating income was $110.2 million, compared to $140.1 million in the corresponding period of 2004.

For the first half of 2005, IPC wrote gross premiums of $292.8 million, compared to $283.1 million a year earlier, an increase of four percent. New business in the period totalled $20.5 million, offsetting business not renewed totalling $15.4 million. Reinstatement premiums for the six months to June 30, 2005, totalled $10.7 million, compared to $3.1 million in the corresponding period of 2004. Similarly, adjustment premiums in the period were $3.0 million, compared to $7.6 million for the corresponding period in 2004.
           
For the six months ended June 30, 2005, the company ceded $18.5 million to its retrocessional facilities, compared to $16.6 million of ceded premium in the corresponding period of 2004. The actual contracts ceded are at IPC underwriters' judgement in optimising the risk profile of the portfolio, which can cause premiums ceded to vary as a proportion of gross writings, from quarter to quarter.

IPC perennially boasts one of the lowest combined ratios in the industry. For the full year 2005, however, Hurricane Katrina will probably push that number up over 100 percent for IPC and much of the reinsurance industry.

Senior management
Chairman: Joseph Johnson
President and CEO: James Bryce
CFO: John Weale

Financial data
(half-year to June 30, 2005)
Gross premiums written: $293 million, up 4 percent
Net premiums earned: $169 million, up 5 percent
Net income: $108.0 million, down 27 percent
Shareholders’ equity: $1.743 billion, up 4 percent

Website
www.ipcre.bm