Devastating losses from the floods in England and Australia during June have reduced IPC Holdings' second quarter profits by 75 percent.

The company, which is the sole owner of IPC Re, took a hefty financial hit during the second three months of the year as its combined ratio jumped from 31 percent a year ago to 105.7 percent, and profits dipped year-on-year from $108.8 million to $27.9m.

Relatively large overall exposure to flooding in England and a storm and flooding in New South Wales, both events in June, created losses of $62.6m and $50.1m respectively.

Those, and other smaller loss events, amounted to net losses and loss adjustment expenses of $87.2m - that figure would have been higher were it not for the positive offset from $26m of prior reserves that included a $16m reduction due to over estimate of losses for 2005's Hurricane Katrina.

For the first six months of this year the company's net losses and loss adjustment expenses were $140.2m, that includes $46m of losses as a result of January's European windstorm Kyrill.

Having already incurred $62.6m of losses from the June floods in England, IPC is uncertain what additional losses it will occur as a result of a second major flooding event in England which occurred last weekend.

IPC president and CEO Jim Bryce said: "Complexity resulting from the ongoing floods in several areas of England introduces additional uncertainty to the normally difficult process of estimating catastrophe losses. The resulting impact on claims adjusting (including allocation of claims to the multiple events because of the time periods covered and the effect of demand surge on the cost of building materials, labour and additional living expenses), is likely to cause delays to the timing with which we are notified of loss estimates by ceding companies."

For the quarter ended June 30 IPC's net operating income was $26.1m, or $0.41 per common share, compared to $104.3m, or $1.44 per common share for the second quarter of 2006.

Mr. Bryce said: "2007 continues to provide us with a number of challenges, including a growing number of medium severity catastrophe events around the globe. The most recent events in Australia and the UK are unusual inasmuch as flooding has not been a significant cause of loss in these territories for a very long time, and yet these events have resulted in some of the largest losses ever experienced there.

"The fact that the modelling tool is not generally available for the peril of flood has added difficulty to the loss estimation process. The silver lining to these clouds is that the size of these events should result in positive pressure being put on rates in the affected areas.

"However, since negotiations for July 1 renewals had been mostly concluded by the time these events took place, there will be little impact until the January 1, 2008 renewals. Terms and conditions for US business remained healthy through the July 1 renewal period, despite concerns regarding the impact of changes to legislation in Florida earlier this year. It remains to be seen what impact a windstorm making landfall in Florida might have on market conditions there.

"Outside of the US, the UK and Australia, we expect pricing to continue to be under pressure, with single digit / low double digit reductions the norm. Overall, market conditions are still healthy."

In the quarter IPC wrote gross premiums of $109.3 million, compared to $120.3 million in the second quarter of 2006.

In a statement IPC Holdings noted that business which was not renewed in the first six months totalled $59.5m, which was only partly offset by new business totalling $18m.

The company also announced the retirement of Dr. Clarence James from its board of directors yesterday. Two new directors appointed yesterday were Mark Bridges, currently president of Rosemont Re, and Anthony Joaquin, a former partner with Ernst & Young.