`A-plus' financial strength and counterparty credit rating but says the property catastrophe reinsurer's outlook is negative.

"The outlook reflects a notable decline in capital adequacy caused by the growth in IPC Re's property catastrophe exposures since its initial rating,'' S&P stated. "Since January 1, 1997, the company has disbursed approximately $110 million in the past five consecutive quarters ending March 31, 1998...The combined impact of IPC Re's increased exposure limits and dividend outlay on Standard & poor's catastrophe model, indicate that the company's capital adequacy was not consistent with the current rating category assigned.'' However S&P decided to affirm its current rating on the expectation of an improvement in the company's current risk and capital management strategies.

S&P also considered the company's strong operating performance, its strong relationship with American International Group Inc., its diversified risk exposure, and management's strategy.

In 1997 IPC posted a net premium growth rate of about five percent, better than a peer market average. The company's profit margin has averaged 66 percent over the last five years.

IPC's position is also strengthened by its close relationship with American International which owns 24 percent of the IPC's holding company.

"Barring a significant catastrophic event, S&P's believes that IPC Re's capital adequacy will improve to a range more consistent with its assigned rating in the near term,'' the report concluded.