Bermuda catastrophe reinsurance company IPC Holdings Ltd.'s fourth quarter earnings.

IPC suffered a 73 percent plunge in profits in the three months to December 31, 1998 as net income was $5.7 million or $0.22 per share. Net income for the quarter ended December 31, 1997 was $21.7 million, or $0.82 per share.

For the year ended December 31, 1998 net income was $67.7 million, or $2.55 per share, compared to $100.3 million or $3.79 per share for the twelve months of 1997, a drop of more than 32 percent.

In the fourth quarter, President and chief executive John Dowling commented: "1998 was a very challenging year. Competitive market conditions have resulted in further downward pressure on premium rates, and at the same time, we saw a marked increase in claims activity.

"Catastrophic events occurred in many parts of the world, resulting in an estimated total of US $15 billion in insured losses. In the fourth quarter of 1998, the full impact of events that occurred earlier in the year became clearer, in particular estimates of claims for Cat.51, which was a severe storm which struck Minnesota and other states on May 15, as well as for Hurricane Georges which occurred in late September.

"In addition, there was Typhoon Vicki, which struck Japan in September. Given the frequency and severity of some of these events, it is gratifying for me to report that our combined ratio for the year was 74 percent.

"In other words, we made an underwriting profit of 26 cents for every dollar of premium written, and IPC's earnings were further bolstered by the performance of our investment portfolio.'' Premiums written in the quarter ended December 31, 1998 were $5 million, compared to $5.8 million written in the quarter ended December 31, 1997. This brought premiums written for the year ended December 31, 1998 to $111.3 million, compared to $117.1 million written in the year to December 31, 1997.

Written premiums were down because of rate reductions, rate of exchange differences and program restructuring, which more than offset some new business and reinstatement premiums arising from increased claims activity, the company said.

Premiums earned in the three months ended December 31, 1998 were $30.5 million, compared to $28.2 million earned in the fourth quarter of 1997. For the year ended December 31, 1998, premiums earned were $120.1 million, compared to $112.5 million in 1997. Net investment income was $7.6 million in the fourth quarter of 1998, compared to $7.2 million in the fourth quarter of 1997. For the year ended December 31, 1998 investment income was $30.1 million compared to $29.9 million in 1997.

Losses incurred were $28.1 million in the three months ended December 31, 1998, bringing the total for the year to December 31, 1998 to $61.5 million, or 51.2% of earned premiums. This compares to $14.7 million, or 13.1 percent of earned premiums, for the year ended December 31, 1997.

Operating income, which excludes net realised gains and losses from the sale of investments, was $2.7 million, or $0.10 per share for the three months ended December 31, 1998, compared to $21.9 million, or $0.82 per share, for the three months ended December 31, 1997. For the year ended December 31, 1998 operating income was $60.7 million or $2.29 per share, compared to $103.9 million, or $3.92 per share for the year of 1997.

Total assets at December 31, 1998 were $643.1 million, an increase of 9.9% over total assets at December 31, 1997. At December 31, 1998 total shareholders' equity was $566.0 million, compared to $528.3 million at December 31, 1997. Book value per share has risen to $21.32, and has benefited from the increase in unrealised gains on investments, including equities, which stood at $30.9 million at December 31, 1998.

John Dowling