Bermuda-based IPC Holdings, Ltd. reported a net loss for the quarter ended September 30, 2004, of $17.8 million, or 37 cents per share, compared to net income of $62.1 million, or $1.29 per share, for the third quarter of 2003.
For the nine months ended September 30, 2004, the company reported net income of $130.million, or $2.69 per share, compared to $195.2 million, or $4.04 per share, for the corresponding period in 2003. The company’s net operating loss for the period was $17.4 million, or 36 cents per share, compared to net operating income of $61.8 million, or $1.28 per share for the third quarter of 2003. For the nine months ended September 30, 2004, net operating income was $122.7 million, or $2.54 per share, compared to $188.8 million, or $3.91 per share, for the corresponding nine months of 2003.
President and CEO Jim Bryce commented: “Our loss in the quarter, which is only the third quarterly loss in the Company’s eleven year history, resulted from the unprecedented combination of events that took place in the quarter. This exceptional series of windstorms is another reminder that nature is far from predictable, and that while catastrophe modeling is unquestionably a useful tool in the pricing and management of risk, it should never outweigh sound underwriting skills and judgment.”
He added that “the recent high frequency of windstorms that made landfall in the United States will likely cause many reinsureds to review their catastrophe reinsurance programs. Given the number of significant events that occurred, we believe that IPC benefited from our underwriting and risk management approach. This includes our focus on writing excess of loss catastrophe reinsurance treaties, and the size of the geographic zones in which we measure aggregated exposures in terms of sums insured. We believe that this conservative approach will continue to serve the Company and its shareholders very well.”
Bryce also reacted to the current turmoil in the industry caused by New York Attorney General Eliot Spitzer’s investigation. “We would also like to note,” he stated, “that we do not currently pay, and have not previously paid, any commissions or fees in respect of PSAs or MSAs with any brokers who place business with us.”
Bryce also noted: “Gross premiums were $60.7 million in the third quarter of 2004, compared to $45.8 million in the third quarter of 2003, an increase of 32 percent. As a result of the significant losses incurred in the quarter, reinstatement premiums were $16.7 million in the third quarter of 2004, compared to $2.1 million in the third quarter of 2003. In the third quarter of 2004 we wrote new business and additional or restructured business for existing clients, which totaled $5.1 million, which more than offset business that we did not renew ($1.8 million).
“For the nine months ended September 30, 2004, we wrote gross premiums of $343.8 million, which is a 14% increase compared to $302.3 million written in the corresponding period of 2003. In the third quarter of 2004, we ceded $1.4 million of premiums to our retrocessional facilities, bringing the total ceded for the nine months ended September 30, 2004, to $18.0 million. This compares with $1.0 million and $14.7 million for the corresponding quarter and nine-month period of 2003, respectively. Ceded premiums have increased because our gross writings have increased, as well as increases in retrocessionaires’ participation in our Surplus treaty, and increased capacity in our excess of loss retrocessional facility. In addition, we entered a new, short-term, aviation retrocessional contract at the end of September 2004.”
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