IPC Re boss Jim Bryce this week predicted healthy business in the coming year, as significant catastrophic activity in the last quarter, along with changes to catastrophe models, paved the way for increased demand for cover from insurers.

Mr. Bryce made his predictions at the same time as delivering news that IPC - the primarily property cat reinsurer that recently celebrated its first decade in business - had posted strong results in the third quarter with net income of $62.1 million, a 26 percent gain over the same period in 2002.

Mr. Bryce cited a "selective and disciplined underwriting approach" as being behind the quarter's profits.

The company did, however, see a drop in its investment income in the third quarter compared to last year, with a return of $11.7 million compared to to $12.4 million in 2002.

Mr. Bryce said: "This decrease is primarily due to the decline in the average yield of our investment portfolio because of lower interest rates and their impact on the reinvestment of maturing fixed income securities, offset in part by the increase in our invested assets, due to our positive operating cash flow in the period."

Looking at catastrophes during the quarter, Mr. Bryce said: "The third quarter was very active in terms of catastrophic events. In the United States, Property Claim Service (PCS) have estimated total insured losses of $2.9 billion from seven catastrophe events, including $1.2 billion for Hurricane Isabel, which impacted several mid-Atlantic states in September. The $2.9 billion estimate, which we anticipate will increase as time allows for more claims to be reported, makes this quarter of 2003 the third most costly third quarter since PCS have tracked such events.

"In Bermuda we suffered first-hand the effects of Hurricane Fabian in early September, although thanks to the strength of the infrastructure and the determination of our staff, this had a very minor impact on the operations of the company. Applied Insurance Research have estimated insured losses from Fabian to be in the region of $350 million.

"In Asia, there was a super typhoon, Maemi, which struck Korea and there was also the 8.2 Richter scale earthquake which affected the Hokkaido region of Japan."

Mr. Bryce added: "All of these events, together with changes to catastrophe models, which are used by reinsurance buyers to determine probable maximum losses, have served to heighten the awareness of exposures, and insurance companies' needs to purchase greater amounts of catastrophe protection."Predicting increased business during the key January 1 renewal period, Mr. Bryce said: "This in turn is helping the continuation of the healthy market in which we operate, and is being reflected in increased demand for capacity for the January 1, 2004 renewals that we have seen to date. We remain optimistic in our outlook on the industry for the coming year."