IPC Re last night reported $44 million in profit for the first quarter of the year.

The result is a 40 percent decline on where earnings stood a year ago, with $73.6 million in net income posted during the same period of 2004.

IPC president and CEO Jim Bryce said the quarter's results had been impacted by storm activity in Europe as well as an increase in estimates of damage for last December's devastating Asian tsunami.

However the level of catastrophic activity in the last three quarters had served to stabilise property catastrophe rates, he said. "Cyclone Erwin in Europe and the Suncor energy loss in Canada were the two most significant events to impact the industry in the first quarter of 2005, and we believe that both have had a stabilising impact on pricing for catastrophe reinsurance during the quarter.

"These events compounded the effect of having new records established in the third quarter of 2004, in terms of hurricanes and typhoons making landfall in Florida and Japan, respectively. Interestingly, Erwin is the second 'one-in-a-hundred-year' event to have struck Scandinavia over the past six years, although it also did some damage in other parts of northern Europe. "While these events are tragic in terms of injury and loss of life, and also have a short-term negative impact on earnings, reinsuring such events is our business, in terms of bringing financial relief and rebuilding, and is beneficial to terms and conditions of reinsurance in the longer term," Mr. Bryce said in an earnings statement released last night.

He said IPC's results during the first quarter were impacted by both Erwin and by the significant increase in the estimated industry loss for the tragedy of last December's Tsunami.

"Swiss Re's [research unit Sigma publication now estimates industry losses totalling $5 billion, an increase of 100 to 150 percent.

"As far as current market conditions are concerned, although April 1 renewals got off to a turbulent start, we are gratified to report that common sense prevailed, and were generally in line with our expectations, especially with respect to loss-impacted contracts in Japan," he said.

Although IPC saw business in the first quarter decline (see report card), management said IPC had attracted new business of $16.2 million which "more than offset business that we did not renew, which totalled $12.7 million".

The company's investment income improved in the quarter, with IPC saying it benefited from a dividend of $4.5 million from the fund of hedge funds it is invested in.

"We also benefited from a small but positive increase in the average yield of our fixed income investment portfolio," the company revealed.

Yesterday IPC's board declared a quarterly dividend of 24 cents per share, payable on June 23, 2005, to shareholders of record on June 7, 2005.

IPC Q1 earnings conference call: This morning at 9.30 a.m. (Bermuda).

Details of how to access the call can be found on the IPC website at www.ipcre.bm.