Press release: IPC Holdings, Ltd. Reports Second Quarter 2002 Results; Operating Income $55.3 Million ($1.15 per share) vs. $20.2 Million ($0.77 per share)

PEMBROKE, Bermuda, July 23 /PRNewswire-FirstCall/ -- IPC Holdings, Ltd. (Nasdaq: IPCR) today reported operating income, which excludes net realized gains and losses, of $55.3 million or $1.15 per share, for the quarter ended June 30, 2002, compared to $20.2 million, or $0.77 per share, for the second quarter of 2001.

President and Chief Executive Officer Jim Bryce commented: "As noted in our last earnings release, we were gratified by the way April 1 renewals proceeded, which generally met or exceeded our expectations. We continue to achieve the objectives that we established prior to our raising additional capital in December 2001, of meeting anticipated increased demand and benefiting from improved market terms and conditions. This is reflected in our premium volume, which has increased significantly, without reduction in the quality of the business written, or any change to our adherence to strict risk management guidelines. In addition, we have continued to benefit from a relatively low incidence of catastrophic events, which has resulted in significant growth in net income. We are now in the North Atlantic windstorm season, which typically makes the third quarter the most active in terms of catastrophic events each year. However, we believe that our outlook for 2002 continues to be positive, in part due to our continued A+ ratings from both Standard & Poor's and A.M. Best."

We wrote gross premiums of $60.1 million in the second quarter of 2002, an increase of 122.9% over the $27.0 million we wrote in the second quarter of 2001. Premiums were higher because we used our increased capacity to satisfy the increased requirements of our existing clients, and we wrote business for new clients, which more than offset business which we did not renew because of unsatisfactory terms and conditions. In addition, we benefitted from rate increases, generally in the range of 10% to 15% for loss free contracts, with greater increases on loss impacted contracts. This brought our total written premiums for the six months ended June 30, 2002 to $207.2 million, an increase of 123.7% in comparison to the $92.6 million of premiums written in the first six months of 2001. We ceded $2.0 million of retrocessional premiums in the quarter ended June 30, 2002, compared to $2.5 million in the second quarter of 2001. This brought the total ceded premiums to $5.1 million for the six months ended June 30, 2002, compared to $3.4 million for the corresponding period in 2001.

Our net premiums earned in the quarter ended June 30, 2002 were $56.5 million, compared to $24.8 million earned in the quarter ended June 30, 2001, an increase of 127.3%. The increase in our earned premiums is primarily due to the increase in written premiums over the past twelve months, and in particular the first six months of 2002. This brought earned premiums for the six months ended June 30, 2002 to $102.9 million, an 108.6% increase over premiums earned in the first six months of 2001.

Our net investment income was $13.1 million in the quarter ended June 30 2002, compared to $7.6 million in the second quarter of 2001. This increase is primarily due to the significant increase in our invested assets following the raising of approximately $546 million of additional capital in December of last year. This increase more than offset the decline in the average yield of our investment portfolio. We recorded net realized losses of $(6.7) million on our investments in the quarter ended June 30, 2002, primarily because of a write-down in the cost basis of equity investments in certain S&P 500 stocks, where we believe the decline in value to be other than temporary. In accordance with FAS 115, such a write-down is recognized as a realized loss in the income statement, even though there were no sales of the securities. This write-down was significantly in excess of realized gains of U.S.$0.4 million from the actual sale of investments during the quarter. In the second quarter of 2001, we realized net gains of $0.6 million from the sale of investments. Net realized losses in the first six months of 2002 totaled $(7.4) million, compared to a net realized gain of $4.5 million in the corresponding period of 2001.

We incurred net loss and loss adjustment expenses of $7.8 million in the quarter ended June 30, 2002, bringing the total for the first six months of 2002 to $15.4 million. This compares to $7.2 million and $14.2 million, respectively, for the corresponding periods in 2001. Losses in the second quarter include reserves for Cats.# 58-65, which were various storms that affected the United States in April and May, together with some reserves for proportional treaties. The largest of the cat. losses in the second quarter was Cat.# 61, a storm which affected a wide area of the United States in late April/early May, for which our estimated loss is $2.0 million. The loss ratio in the second quarter of 2002 was 13.7%, compared to 29.0% for the second quarter of 2001. For the six months ended June 30, 2002, our loss ratio was 14.9%, compared to 28.7% for the corresponding period of 2001.

Our acquisition costs and general and administrative expenses totaled $10.0 million for the quarter ended June 30, 2002, compared to $4.9 million in the second quarter of 2001. For the six months ended June 30, 2002 total acquisition costs and operating expenses were $17.9 million, compared to $10.1 million in the first six months of 2001. For both the quarter and six-month periods of 2002, these costs and expenses have increased primarily due to the increase in earned premiums, together with some minor increases in certain operating expenses.

Our net income for the three months ended June 30, 2002, which includes net realized gains and losses from investments, was $48.7 million, or $1.01 per share, compared to $20.8 million, or $0.79 per share, for the quarter ended June 30, 2001. For the six months ended June 30, 2002, net income was $92.2 million, compared to $44.7 for the corresponding period of 2001.

Total assets at June 30, 2002 were $1,453.4 million, an increase of 11.7% over total assets at December 31, 2001. At June 30, 2002 total shareholders' investment was $1,183.9 million, compared to $1,105.8 million at December 31, 2001.

IPC's management will be holding a conference call to discuss these second quarter results at 8.30 a.m. Eastern time tomorrow, July 24, 2002. This conference call will be broadcast simultaneously on the internet at www.videonewswire.com, and a replay of the call will also be available at this site from 10.30 a.m. Eastern time until 12.00 midnight Eastern time on Saturday, July 27, 2002.

IPC Holdings, Ltd., through its wholly-owned subsidiary IPCRe Limited, provides property catastrophe reinsurance and, to a limited extent, marine, aviation, property-per-risk excess and other short-tail property reinsurance on a worldwide basis.