Four senior underwriters and the interim chief executive officer of IPC Re have been told they will lose their jobs at the end of this year following the company's takeover by Validus Holdings Ltd., The Royal Gazette has learned.

A decision is still to be made on the future of IPC's remaining 25 staff.

Validus completed its $1.77 billion purchase of fellow Bermuda reinsurer IPC Holdings Ltd. last week after shareholders of both companies backed the move. IPC ceased trading on the Nasdaq Stock Exchange last Friday.

IPC Re continues to exist as a unit of Validus, but has effectively gone into run-off, writing no new business but continuing to exist to comply with its existing obligations.

IPC Re interim CEO John Weale said yesterday: "IPC's four main underwriters were given termination notices, effective December 31, and have been put on garden leave."

Mr. Weale, who was chief financial officer of IPC for 13 years before he took over as interim CEO on July 1, has also been told his employment with the company will cease at the end of this year.

A decision will be made in the near future on the remaining 25 staff, Mr. Weale added. These employees include underwriting support staff, the claims team, the accounting and finance team and IT support staff.

Reuters yesterday quoted Validus chief financial officer Joseph Consolino as saying that a long-term decision on IPC staff had not yet been made.

Mr. Consolino, who was in New York to meet with investors at a meeting held by Keefe, Bruyette & Woods, said Validus had agreed to keep IPC's staff on its payroll through the end of the year.

Mr. Weale succeeded long-time CEO Jim Bryce, who retired on June 30 and who continues to serve as a consultant for the company until year's end.

IPC was formed in 2003 and created urgently needed reinsurance capacity in the wake of Hurricane Andrew, which struck the year before.

Over the years, the company stuck with a business plan that was heavily focused on property-catastrophe reinsurance. Its financial success — its only significant loss year came after hurricanes Katrina, Rita and Wilma in 2005 — was testament to the quality of its underwriting.

"We built the company up from $300 million of initial capital to one that was worth $2.1 billion at the end of August," Mr. Weale said. "Having also paid out something like $800 million in dividends and share repurchases, we certainly generated a lot of value in that time."

There was significant overlap between the business of Validus, which was founded after the devastating hurricane season of 2005, and IPC, which meant some loss of jobs was widely expected as a result of the merger.

Mr. Weale said he believed the merger process had been "as fair as it could have been in the circumstances".

Validus emerged the winner in a months-long bidding war for IPC, having first succeeded in derailing a planned amalgamation between IPC and Max Capital Group Ltd.

Validus then won approval from IPC's board over an opposing bid from Bermuda rival Flagstone Reinsurance Holdings Ltd., and shareholders approved the takeover last Friday.

Yesterday, ratings agency AM Best removed Validus and IPC Re from being under review with negative implications and affirmed their financial strength ratings of A- (excellent). The outlook assigned to the above ratings is stable.

AM Best said all IPC Re's renewal business would now be written by Validus. "Management has indicated its intention to move capital from IPCRe to Validus commensurate with the movement of risk as business renews," AM Best said in its commentary yesterday.

"The ratings contemplate the prospective benefits that will be realised through the acquisition due to the larger capital base and market profile.

"However, it will take time to truly gauge these prospective benefits' impact on the Validus franchise.

"Partially offsetting these strengths is Validus' susceptibility to low frequency, high severity events as a property catastrophe focused reinsurer and the increased uncertainty over the short term due to the business that was previously underwritten by IPCRe."