IPC Holdings Ltd. swung to a fourth-quarter profit of $108.2 million compared with a loss of $74.8 million for the same period last year to top off what chief executive officer Jim Bryce described as ?great year? for the Bermuda reinsurer.

But Mr. Bryce also warned that the industry, which has enjoyed bumper profits in the absence of hurricanes making landfall in the US last year, was coming to ?something of a crossroads?.

In its statement after the markets closed last night, IPC reported net income of $394.6 million, or $5.54 per share, compared to a net loss of $623.4 million, or $12.30 per share, for 2005.

?As a result of the excellent earnings generated in 2006, the reinsurance market has more capacity to offer, at the same time that demand for capacity is being impacted by a number of external factors, including recent legislative developments in Florida which among other things provide for significantly greater reinsurance capacity being offered by the state hurricane catastrophe fund,? Mr. Bryce said.

?Important decisions will have to be made regarding the need to maintain underwriting discipline, which might require companies to undertake capital management actions to sustain adequate returns to shareholders.

?The alternative is for the industry to forget or ignore the size of losses that were incurred in 2004 and 2005, and allow market forces to put downward pressure on pricing.

?Hopefully, recent winter storm Kyrill will have served as a reminder that catastrophic events can occur at any time, anywhere in the world, and pricing levels that will enable us to pay for such events occurring with increased frequency, need to be maintained.?

In the fourth quarter, IPC wrote gross premiums of $17.6 million, compared to $13.6 million in the same period in 2005. This increase was primarily due to the impact of accrued estimated reinstatement premiums, which were $5.5 million more in the fourth quarter of 2006, compared to the fourth quarter of 2005.

Mr. Bryce added: ?2006 was clearly a great year in terms of underwriting results, for the industry in general, and IPC specifically, as a result of unusually little catastrophe activity in the year.

?This has been followed by a relatively orderly renewal season for business renewing at January 1, 2007. The majority of renewals were generally in line with our expectations, in both the US and elsewhere.

?With respect to the developments in Florida, IPC?s coverage for Florida risks generally does not arise from Florida-based insurance companies who only operate in that state, but mostly results from the reinsurance of the larger US-based insurance companies, who operate throughout the United States and elsewhere.

?Currently, such companies buy catastrophe reinsurance protection for their entire US nation-wide portfolio, for all perils, rather than for specific perils in single states or zones. It remains to be seen whether the new legislation will result in changes in the buying habits of our clients, and if so, whether it will result in a reduction in the amount of premium IPC receives from these clients.?

IPC?s net investment income of $28.6 million in the quarter also outperformed its 2005 yield of $23.7 million.