UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ................. TO ....................
COMMISSION FILE NUMBER: 0-27662
IPC HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
BERMUDA NOT APPLICABLE
- -------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
AMERICAN INTERNATIONAL BUILDING, 29 RICHMOND ROAD, PEMBROKE, HM 08, BERMUDA
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(441) 295-2121
----------------------------------------------------
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes . X/..No ........
The number of outstanding shares of IPC Holdings, Ltd. common stock, par value
U.S. $0.01 per share, as of August 7, 1997 was 25,017,307.
TOTAL PAGES 15
EXHIBIT INDEX LOCATED ON PAGE 13
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except for per share amounts)
As of As of
June 30, 1997 December 31, 1996
------------- -----------------
(unaudited) (audited)
<S> <C> <C>
ASSETS:
Fixed maturity investments:
Available for sale, at fair market value (Amortized
cost 1997: $432,612, 1996: $254,890) $428,926 $250,992
Held to maturity, at amortized cost (Fair market value
1997: $0; 1996: $229,464) 0 229,057
Equity investments, at fair market value (Cost 1997: $79,564;
1996: 0) 78,594 0
Cash and cash equivalents 11,586 23,797
Reinsurance balances receivable (Related party 1997:
$6,583; 1996: $3,799) 55,577 25,687
Accrued investment income 11,212 15,015
Deferred acquisition costs 5,592 2,354
Prepaid expenses and other assets 2,732 1,179
--------- ---------
TOTAL ASSETS $594,219 $548,081
========= =========
LIABILITIES:
Reserve for losses and loss adjustment expenses $28,082 $28,483
Unearned premiums 55,744 21,898
Accounts payable and accrued liabilities (Related party
1997: $1,243; 1996: $794) 2,616 1,565
--------- ---------
TOTAL LIABILITIES 86,442 51,946
--------- ---------
SHAREHOLDERS' EQUITY:
Share capital (1997: 25,017,103 shares, par value U.S. $0.01,
1996: 25,000,000 shares, par value U.S.$0.01, outstanding) 250 250
Additional paid in capital 299,525 299,267
Unrealized gain (loss) on investments (4,656) (3,898)
Retained earnings 212,658 200,516
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 507,777 496,135
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $594,219 $548,081
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
2
<PAGE>
<TABLE>
<CAPTION>
IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Expressed in thousands of United States dollars, except for per share amounts)
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Premiums written $18,159 $18,742 $89,574 $80,550
Change in unearned premiums 9,162 9,001 (33,846) (24,974)
-------------- ------------- ------------ -----------
Premiums earned 27,321 27,743 55,728 55,576
Net investment income 8,001 7,146 15,603 13,872
Realized capital gains (losses), net (1,854) (875) (2,176) 2,628
-------------- ------------- ------------ -----------
TOTAL REVENUES 33,468 34,014 69,155 72,076
- --------------
-------------- ------------- ------------ -----------
EXPENSES:
Losses and loss adjustment expenses 2,718 3,568 5,182 10,202
Acquisition costs 3,070 3,006 5,949 5,663
General and administrative expenses 1,990 3,437 4,046 5,639
Exchange (gain) loss, net 162 822 938 347
------------- ------------- ------------ -----------
TOTAL EXPENSES 7,940 10,833 16,115 21,851
------------- ------------- ------------ -----------
NET INCOME $25,528 $23,181 $53,040 $50,225
============= ============= ============ ===========
Net income per common share $0.96 $0.89 $2.01 $1.93
Weighted average number of common shares 26,489,514 26,061,236 26,418,045 26,028,363
Dividends declared per share $1.3175 $0.2875 $1.635 $0.2875
</TABLE>
See accompanying Notes to Consolidated Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of United States dollars)
Six Months Ended June 30,
-------------------------
1997 1996
---- ----
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $53,040 $50,225
Adjustments to reconcile net income to cash provided
by operating activities:
Amortization of investment premium, net 934 1,791
Realized capital (gains) losses, net 2,176 (2,628)
Changes in, net:
Reinsurance balances receivable (29,890) (22,035)
Accrued investment income 3,803 (229)
Deferred acquisition costs (3,238) (2,623)
Prepaid expenses and other assets (1,553) (636)
Reserve for losses and loss adjustment expenses (401) (134)
Unearned premiums 33,846 24,974
Accounts payable and accrued liabilities 1,051 73
-------------- --------------
59,768 48,778
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equity investments (79,564) 0
Purchases of fixed maturity investments:
Available for sale (117,912) (274,055)
Held to maturity (17,814) (27,761)
Proceeds from sales of fixed maturity investments:
Available for sale 143,601 241,542
Held to maturity 0 0
Proceeds from maturities of fixed maturity investments:
Available for sale 16,600 0
Held to maturity 23,750 13,000
-------------- --------------
(31,339) (47,274)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional share capital 258 0
Cash dividends paid to shareholders (40,898) (7,187)
-------------- --------------
(40,640) (7,187)
-------------- --------------
Net increase (decrease) in cash and cash equivalents (12,211) (5,683)
Cash and cash equivalents at beginning of period 23,797 18,109
-------------- --------------
Cash and cash equivalents at end of period $11,586 $12,426
============== ==============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
4
<PAGE>
IPC HOLDINGS, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of United States dollars, except for per share amounts)
(unaudited)
- --------------------------------------------------------------------------------
1. GENERAL:
The consolidated interim financial statements presented herein have been
prepared on the basis of United States generally accepted accounting
principles ("GAAP") and include the accounts of IPC Holdings, Ltd. (the
"Company") and its wholly owned subsidiary, International Property
Catastrophe Reinsurance Company, Ltd. ("IPC Re"), and IPC Re Services
Limited (together with the Company and IPC Re, "IPC"). In the opinion of
management, these financial statements reflect all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation of the
results of operations for the three and six month periods ended June 30,
1997 and 1996, the balance sheet at June 30, 1997 and the cash flows for the
six month periods ended June 30, 1997 and 1996. These interim consolidated
financial statements should be read in conjunction with the audited
consolidated financial statements for the year ended December 31, 1996. The
results of operations for any interim period are not necessarily indicative
of results for the full year.
2. INVESTMENTS:
In June, 1997, the Company purchased shares of stock in all of the companies
which comprise the Standard & Poor's 500 Index ("S. & P. 500").
The number of shares of stock purchased was such that their weighting within
the Company's portfolio would match the weighting of each stock within the
index. The total amount invested in this manner was approximately $80,000,
and this was financed with cash on hand and through the sale of certain
fixed income securities within the "available for sale" portfolio. Equity
investments are carried at market value, and unrealized gains and losses are
included as a separate component of shareholders' equity.
As of June 30, 1997, the Company reclassified the portion of its fixed
income investment portfolio previously classified as "held to maturity" as
"available for sale", as defined in Statement of Financial Accounting
Standard No. 115. All fixed income investments classified as Available for
sale are carried at market value. Unrealized gains and losses are included
as a separate component of shareholders' equity. As a result of the
reclassification, both total assets and shareholders' equity were reduced by
approximately $500, representing the net unrealized loss on the securities
at the date of the transfer.
3. DIVIDENDS:
On February 28, 1997, the Directors approved the payment of a dividend of
$0.3175 per share on March 27, 1997, to shareholders of record on March 11,
1997.
On April 25, 1997, the Directors approved the payment of an extraordinary
dividend of $1.00 per share, in addition to a quarterly dividend of $0.3175
per share on June 26, 1997, to shareholders of record on June 10, 1997.
On July 28, 1997, the Directors declared a quarterly dividend of $0.3175,
payable on September 25, 1997, to shareholders of record on September 9,
1997.
4. NET INCOME PER SHARE:
Net income per share is computed by dividing net income by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period. Stock options held by a shareholder of the
Company were considered common stock equivalents and were included in the
weighted average shares outstanding using the
5
<PAGE>
treasury stock method. Stock options granted to employees on February 15,
1996, July 25, 1996 and January 2 , 1997 were also considered common stock
equivalents for the purpose of computing net income per share.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 128, "Earnings per Share" (SFAS 128)
which is effective for financial statements issued for periods ending after
December 15, 1997. SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS and requires dual presentation of basic and
diluted EPS on the face of the income statement. SFAS 128 requires
restatement of all prior-period EPS data presented.
The Company will comply with the requirements of SFAS 128 beginning with its
annual financial statements for the year ending December 31, 1997. For the
quarters and six month periods ended June 30, 1997 and 1996, respectively,
under SFAS 128 the Company would have reported earnings per share as
follows:
Quarter Ended June 30, Six Months ended June 30,
1997 1996 1997 1996
---- ---- ---- ----
Basic EPS $1.02 $0.93 $2.12 $2.01
Diluted EPS $0.96 $0.89 $2.01 $1.93
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS, QUARTERS ENDED JUNE 30, 1997 AND 1996
In the quarters ended June 30, 1997 and 1996, IPC wrote premiums of $18.2
million and $18.7 million, respectively, a decrease of 3.1%. IPC Re had
better signings from existing clients and selectively wrote business for new
clients, although these increases were more than offset by rate reductions,
generally in the region of 15%, but as high as 20% in some cases where
retentions were higher. There were also some declinatures of marine business
where premium rates had fallen to unacceptable levels, as well as some
reductions as a result of changing exchange rates. Premiums earned in the
three months ended June 30, 1997 were $27.3 million, compared to $27.7
million in the same period in 1996, a decrease of 1.5%.
Investment income was $8.0 million in the quarter ended June 30, 1997,
compared to $7.1 million for the quarter ended June 30, 1996, an increase of
12.0%. This increase was due to the increased average investment base, which
was 11.8% larger.
There was a net realized loss from the sale of investments in the quarter
ended June 30, 1997 of $1.9 million, compared to a net loss in the same
period of 1996 of $0.9 million. Net realized gains and losses fluctuate from
period to period, depending on the individual securities sold, as
recommended by IPC's investment advisor.
In the three months ended June 30, 1997, incurred losses were $2.7 million,
compared to $3.6 million in the corresponding period last year. There was
very little claim activity in the three months ended June 30, 1997, with the
majority of the incurred losses related to reserves established for current
year property, marine and aviation business, offset by reductions from prior
year claims. Accordingly, IPC's loss and loss expense ratio (the ratio of
losses and loss adjustment expenses to premiums earned) was 10.0%, compared
to 12.9% in the corresponding period of 1996.
Acquisition costs incurred, which consist primarily of commissions and
brokerage fees paid to intermediaries for the production of business, were
$3.1 million for the quarter ended June 30, 1997, compared to $3.0 million
in the same period of 1996. Certain contracts have been written with profit
commission clauses, which return a portion of the net underwriting profits
generated from those contracts as a commission to the insureds. This has
resulted in an increase in the level of acquisition cost as a percentage of
premiums earned. General and administrative expenses were $2.0 million in
the quarter ended June 30, 1997, in comparison to $3.4 million in the
corresponding period in 1996. In 1996, general and administrative expenses
included $1.6 million incurred in connection with the Company's bid for
Tempest Reinsurance Company Limited. IPC's expense ratio (the ratio of
acquisition costs plus general and administrative expenses to premiums
earned) was 18.5% for the quarter ended June 30, 1997 compared to 23.2% for
the corresponding period in 1996.
The following table summarizes the loss and loss expense ratio, expense
ratio and combined ratio (sum of loss and loss expense ratio, plus expense
ratio) for the three months ended June 30, 1997 and 1996, respectively:
Quarter ended June 30,
----------------------
1997 1996
---- ----
Loss & Loss Expense Ratio 10.0% 12.9%
Expense Ratio 18.5% 23.2%
Combined Ratio 28.5% 36.1%
Net income for the three months ended June 30, 1997 was $25.5 million,
compared to $23.2 million for the corresponding period in 1996, an increase
of 10.1%. Excluding the effects of realized gains and losses arising from
the sale of investments, net operating income for the second quarter of 1997
was $27.4 million, compared to $24.1 million for the second quarter of 1996,
an increase of 13.8%.
7
<PAGE>
RESULTS OF OPERATIONS, SIX MONTHS ENDED JUNE 30, 1997 AND 1996
In the six months ended June 30, 1997 and 1996, IPC wrote premiums of $89.6
million and $80.6 million, respectively, an increase of 11.2%. IPC Re wrote
business for new clients and had better signings from existing clients,
although the increase was partly offset by rate reductions, typically of 10%
to 15% but as high as 20%, in some cases. New business included $4.1 million
of written premiums from the California Earthquake Authority. Premiums
earned in the six months ended June 30, 1997 were $55.7 million, compared to
$55.6 million in the same period in 1996, an increase of 0.3%. Premiums
earned did not grow proportionately to written premiums, because some
programs were written which had policy periods greater than twelve months.
Investment income was $15.6 million in the six months ended June 30, 1997,
compared to $13.9 million for the six months ended June 30, 1996, an
increase of 12.5%. This increase was primarily due to the increased average
investment base, which was 11.7% larger.
There was a net realized loss from the sale of investments in the six months
ended June 30, 1997 of $2.2 million, compared to a net gain in the same
period of 1996 of $2.6 million. Net realized gains and losses fluctuate from
period to period, depending on the individual securities sold, as
recommended by IPC's investment advisor.
In the six months ended June 30, 1997, incurred losses were $5.2 million,
compared to $10.2 million in the corresponding period last year. There was
comparatively little claim activity in the six months ended June 30, 1997,
with the majority of the incurred losses related to reserves established for
current year property, marine and aviation business, offset by reductions
from prior year claims. Accordingly, IPC's loss and loss expense ratio (the
ratio of losses and loss adjustment expenses to premiums earned) was 9.3%,
compared to 18.4% in the corresponding period of 1996.
Acquisition costs incurred, which consist primarily of commissions and
brokerage fees paid to intermediaries for the production of business, were
$5.9 million for the six months ended June 30, 1997, compared to $5.7
million in the same period of 1996. Certain contracts have been written with
profit commission clauses, which return a portion of the net underwriting
profits generated from those contracts as a commission to the insureds. This
has resulted in an increase in the level of acquisition cost as a percentage
of premiums earned. General and administrative expenses were $4.0 million in
the six months ended June 30, 1997, in comparison to $5.6 million in the
corresponding period in 1996. In 1996, general and administrative expenses
included $0.4 million in respect of the Company's initial public offering,
and $1.6 million incurred in connection with the Company's bid for Tempest
Reinsurance Company Limited. IPC's expense ratio (the ratio of acquisition
costs plus general and administrative expenses to premiums earned) was 17.9%
for the six months ended June 30, 1997 compared to 20.3% for the
corresponding period in 1996.
The following table summarizes the loss and loss expense ratio, expense
ratio and combined ratio for the six months ended June 30, 1997 and 1996,
respectively:
Six months ended June 30,
-------------------------
1997 1996
---- ----
Loss & Loss Expense Ratio 9.3% 18.4%
Expense Ratio 17.9% 20.3%
Combined Ratio 27.2% 38.7%
Net income for the six months ended June 30, 1997 was $53.0 million,
compared to $50.2 million for the corresponding period in 1996, an increase
of 5.6%. Excluding the effects of realized gains and losses arising from the
sale of investments, net operating income for the first half of 1997 was
$55.2 million, compared to $47.6 million for the first half of 1996, an
increase of 16.0%.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows will continue to rely primarily on cash dividends
and reimbursement of expenses from IPC Re. The dividends that IPC Re may pay
are limited under Bermuda legislation. The Bermuda Insurance Act of 1978 and
subsequent amendments thereto require IPC Re to maintain a minimum solvency
margin and a minimum liquidity ratio. The maximum dividend payable by IPC Re
in accordance with these restrictions as of January 1, 1997 was
approximately $123.5 million.
IPC Re's sources of funds consist of premiums written, investment income and
proceeds from sales and redemptions of investments. Cash is used primarily
to pay losses and loss adjustment expenses, brokerage commissions, excise
taxes, general and administrative expenses and dividends. The potential for
a large catastrophe means that unpredictable and substantial payments may
need to be made within relatively short periods of time. Hence the Company's
cash flows may fluctuate significantly from period to period.
Cash flows from operating activities in the first six months of 1997 were
$59.8 million compared to $48.8 million in the first six months of 1996,
which represents an increase of 22.5%.
Net cash flows used in investing activities in the first six months of 1997
were $31.3 million. In addition, dividends totalling $40.9 million were paid
to shareholders on March 27, 1997 and June 26, 1997. Cash and cash
equivalents decreased by $12.2 million in the six months, resulting in a
balance of $11.6 million at June 30, 1997. At June 30, 1997, 60.0% of IPC's
fixed income portfolio (based on market value) was held in United States
Treasury notes and in securities rated AAA. The average modified duration of
IPC's fixed income portfolio was 3.4 years. As of June 30, 1997, the Company
reclassified the portion of its fixed income investment portfolio previously
classified as "held to maturity" as "available for sale", as defined in
Statement of Financial Accounting Standard No. 115. In June, 1997, the
Company purchased shares of stock in all of the companies which comprise the
S. & P. 500. The number of shares of stock purchased was such that their
weighting within the Company's portfolio would match the weighting of each
stock within the index. The total cost of such investment was approximately
$80 million, and this was financed with cash on hand and through the sale of
certain fixed income securities within the "available for sale" portfolio.
The Company's portfolio does not contain any investments in real estate or
mortgage loans. Management believes that, given the relatively high quality
of its portfolio, adequate market liquidity exists to meet IPC's cash
demands.
Neither the Company nor IPC Re has any material commitment for capital
expenditures.
NOTE ON FORWARD-LOOKING STATEMENTS
This Report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Exchange Act. Forward-looking statements are statements other than
historical information or statements of current condition. Some
forward-looking statements may be identified by use of terms such as
"believes", "anticipates", "intends", or "expects". These forward-looking
statements relate to the plans and objectives of the Company, for future
operations. In light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this report
should not be considered as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved.
Numerous factors could cause the Company's actual results to differ
materially from those in the forward-looking statements, including the
following: (i) the occurrence of catastrophic events with a frequency or
severity exceeding the Company's estimates; (ii) a decrease in the level of
demand for property catastrophe reinsurance, or increased competition owing
to increased capacity of property catastrophe reinsurers; (iii) any lowering
or loss of one of the financial ratings of IPC Re, or the Company's
non-admitted status in United States jurisdictions; (iv) loss of services of
any one of the Company's executive officers; (v) the passage of federal or
state legislation subjecting the Company to supervision or regulation in the
United States; (vi) challenges by insurance regulators in the United States
or the United Kingdom to the Company's claim of exemption from insurance
regulation under current laws; or (vii) a contention by the United States
Internal Revenue Service that the Company or IPC Re is engaged in the
conduct of a trade or business within
9
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the U.S. The foregoing review of important factors should not be construed
as exhaustive; the Company undertakes no obligation to release publicly the
results of any future revisions it may make to forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
10
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On June 6, 1997, the Annual General Meeting of Shareholders of
the Company was held. At the meeting, shareholders were asked to
vote upon the resolutions set forth below. The following
tabulation indicates the number of shares present in person or
by proxy at such meeting and the number of such shares for or
against, or withheld or abstaining, with respect to each
resolution, after giving effect to the voting limitations
contained in the Company's Bye-Laws:
i) electing the following persons as directors of the Company
to serve until the 1998 Annual General Meeting -
FOR AGAINST WITHHELD
--- ------- --------
Joseph C.H. Johnson 16,070,820 -- 31,997
Michael L. Bouris 16,067,373 -- 31,997
John P. Dowling 16,079,920 -- 31,997
Ron Hiram 16,070,120 -- 31,997
Dr. the Honourable Clarence James 16,069,123 -- 31,997
Frank Mutch 16,069,123 -- 31,997
John T. Schmidt 16,079,360 -- 31,997
ii) appointing Arthur Andersen & Co. as auditors of the Company
for its fiscal year ending December 31, 1997
FOR AGAINST ABSTENTIONS
--- ------- -----------
16,088,434 3,975 11,800
Both resolutions were passed by show of hands. No other business
was transacted.
ITEM 5. OTHER INFORMATION
On June 27, 1997, the Company incorporated a subsidiary in the
United Kingdom called IPC Re Services Limited. The new
subsidiary's purpose is to perform the same functions that were
previously performed by the Company's representative office in
London.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Unless otherwise indicated, exhibits are incorporated by reference to the
corresponding numbered exhibits to the Company's Registration Statement on Form
S-1 (Registration No. 333-00088).
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Memorandum of Association of the Company
3.2 Amended and Restated Bye-laws of the Company
3.3 Form of Memorandum of Increase of Share Capital
10.1 * Investment Management Agreement between IPC Re and AIG Global
Investment Corp., (Ireland) Ltd., effective June 23, 1997
11.1 * Statement regarding Computation of Per Share Earnings
27.1 * Financial Data Schedule
* Filed herewith
(b) Reports on Form 8-K
NONE
11
<PAGE>
IPC HOLDINGS, LTD.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
IPC HOLDINGS, LTD.
(REGISTRANT)
DATE AUGUST 7, 1997 /s/ John P. Dowling
-------------- ------------------------------------------
JOHN P. DOWLING
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DATE AUGUST 7, 1997 /s/ John R. Weale
-------------- ------------------------------------------
JOHN R. WEALE
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
12
<PAGE>
EXHIBIT INDEX
Unless otherwise indicated, exhibits are incorporated by reference to the
corresponding numbered exhibits to the Company's Registration Statement on Form
S-1 (Registration No. 333-00088).
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Memorandum of Association of the Company
3.2 Amended and Restated Bye-laws of the Company
3.3 Form of Memorandum of Increase of Share Capital
10.1 * Investment Management Agreement between IPC Re and AIG Global
Investment Corp., (Ireland) Ltd., effective June 23, 1997
11.1 * Statement regarding Computation of Per Share Earnings
27.1 * Financial Data Schedule
* Filed herewith
13
INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY, LTD.
AND
AIG GLOBAL INVESTMENT CORP. (IRELAND) LTD.
INVESTMENT MANAGEMENT AGREEMENT
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made on the 23rd day of June, 1997
BETWEEN:
(1) INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY, LTD., having its
registered office at 29 Richmond Road, Pembroke, Bermuda, HM08, (the
"Client") of the one part; and
(2) AIG GLOBAL INVESTMENT CORP. (IRELAND) LTD., having its registered office
at AIG House, Merrion Road, Dublin 4, Ireland (the "Company") of the other
part.
WHEREAS:
The Client wishes to obtain investment management services in respect of
certain assets and the Company is willing to provide such services subject
to the terms and conditions set out in this Agreement, which Agreement
both parties wish to supersede any prior Investment Management Agreement
and any amendments thereto entered into between the parties hereto.
IT IS HEREBY AGREED by and between the parties hereto as follows:
1. From and after the date hereof, this Agreement shall supersede any prior
Investment Management Agreement and any amendments thereto entered into
between the parties hereto.
2. APPOINTMENT
2.1. The Client hereby appoints the Company, and the Company hereby accepts the
appointment, as investment manager for the Client of such cash, securities
or other property as shall from time to time be comprised in the portfolio
described in the Schedule hereto (the "Portfolio"). The Portfolio shall be
held in the custody of a custodian agreeable to the Company, which shall
be the custodian named in Schedule I hereto (the "Custodian") or such
other custodian as the parties shall agree in writing (the "Additional
Custodian").
2.2. Any cash, securities or other property transferred to the Custodian by the
Client shall in the absence of express instructions to the contrary form
part of the Portfolio. Any income derived from the Portfolio, any monies
resulting from disposal or redemption of securities or other property
forming part of the Portfolio, and any securities or other property
purchased out of any such proceeds, shall be added to the Portfolio.
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2.3. Subject as hereinafter provided, the Client warrants that it is and shall
during the continuance of this Agreement remain the beneficial owner of
the Portfolio free of all liens, charges, options and third party rights
whatsoever.
3. CUSTODY
3.1. Subject to 3.2. below, all funds and assets transferred to the Company by
the Client or otherwise acquired pursuant hereto plus securities or other
property purchased or acquired pursuant hereto shall be deposited with the
Custodian for safekeeping.
3.2. Notwithstanding the foregoing, subject to all necessary or desirable
consents of any relevant authorities, the Company or the Custodian may
give effect to their obligations hereunder by depositing securities or
other investments held or acquired pursuant hereto with any Additional
Custodian or with Euroclear, CEDEL or other securities clearing houses or
by employing sub-custodians or other agents.
3.3 As the Client shall request, registered securities will be registered in
the name of the Client, the Custodian or any trustee or nominee company
specified in the Schedule hereto or notified by the Client to the Company
from time to time, which trustee or nominee company will hold them as
nominee for the Client.
4. SCOPE OF AUTHORIZATION
4.1. The Client hereby authorizes the Company on the Client's behalf to invest
and re-invest, and vary the investment of, the Portfolio and any part
thereof, in accordance with the guidelines specified in the Schedule
hereto and as the Client may communicate by written instructions to the
Company from one or more persons authorized by the Board of Directors of
the Client from time to time but otherwise at the complete and absolute
discretion of the Company; provided however that the disposition of the
Client's property shall at all times be and remain within the Client's
control. The Client shall furnish the Company with a certified copy of any
resolution of the Board of Directors of the Client authorizing any person
to give instructions to the Company on the Client's behalf, and the
Company shall be entitled to accept such resolution as conclusive evidence
of that persons authority to give such instructions to the Company.
4.2. The Company shall make all decisions concerning any purchases, sales,
conversion privileges, subscription rights or other options appertaining
to the Portfolio of which the Company has written notice, in each case in
accordance with the Company's understanding of any investment policy
and/or investment guidelines set out in the Schedule hereto or
communicated by the Client in writing to the Company.
4.3. The Custodian shall deliver securities or other property, make payments or
otherwise move any part of the Portfolio on the Client's behalf on the
express instructions of the Client in writing or by tested telex or
facsimile.
4.4 The Company shall not (a) vote, tender or convert any securities in the
Portfolio, (b) execute waivers, consents and other instruments with
respect to such securities, and (c) endorse, transfer or deliver such
securities or consent to any class action, plan of
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reorganization, merger, combination, consolidation, liquidation,
liquidation or similar plan with respect to such securities; provided,
however, that the Company shall deliver to the Client any notice
solicitation, plan, or other documentation relating to any of the
foregoing which is provided to the Company in its capacity as the
representative of the Client. The Company shall not incur any liability to
the Client by reason of any such failure to perform any such services
other than by reason of its failure to deliver as described in the
provision above. If the Company shall receive prior written notice of the
Client, in each case in accordance with the Investment Policy Guideline
set out in Schedule I hereto, in sufficient time, as determined by the
Company in its sole discretion, to perform any of the above-described
services, the Company, in the exercise of its best efforts, shall perform
such service on behalf of the Client.
4.5. The Company may appoint brokers, clearing organizations, agents or other
parties or intermediaries as the Client may agree from time to time for
the performance of any of its duties relating to the investment and
management of the Portfolio hereunder. Fees of brokers and such other
intermediaries and of the Custodian shall be paid by the Custodian out of
the Portfolio and all such payments shall be reported directly to the
Client.
4.6. The authorities herein contained are continuing ones and shall remain in
full force and effect until revoked by termination of this Agreement,
which termination will not affect any transaction entered into prior to
the date on which such termination took effect.
4.7. In this Agreement "Affiliate" means any holding company or subsidiary of
the relevant party or any other subsidiary of such a holding company
("subsidiary" and "holding company" having the meanings given to them by
section 155 of the Companies Act 1963).
4.8. The Company may sell or purchase investments which are included in, or
intended to become part of, the Portfolio as part of a larger transaction
or series of transactions in which other persons are interested PROVIDED
THAT the terms of such purchase or sale are in the Company's reasonable
opinion fair and equitable and, where the Company deals on behalf of the
Client and other persons as part of a larger transaction, or in a
transaction not specifically allocated to the Client at the time of
dealing, the transaction is to be identified in the Company's records on
the day of dealing as being expressly, wholly or to a specified extent for
the benefit of the Client and is to be accordingly allocated to the Client
and the price paid or received being that price agreed in the original
transaction should also be recorded in the Company's records on the day of
dealing.
4.9. Nothing contained in this Agreement shall prevent the Company or any of
its Affiliates from engaging in other businesses or rendering services of
any kind to any other person or entity. In connection therewith, the
Company and its Affiliates may, without limitation:
(a) receive fees for services rendered to any of the issuers of
securities held in the Portfolio;
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(b) be retained to provide services to the Client or any of its
Affiliates in addition to the services the subject of this Agreement;
(c) hold the capital stock of the Client or any of its Affiliates; and
(d) hold the capital stock of any of the issuers of securities held in
the Portfolio.
4.10. Portfolio investments and reinvestments may differ from those made or
recommended with respect to other clients, including investment companies,
even though the investment objectives may be the same or similar. The
Company shall not be liable for such differences as exist between
Portfolio investments or reinvestments and investments or reinvestments
made or recommended with respect to other clients of the Company.
4.11. Movements in currency exchange rates may have a separate effect,
unfavorable as well as favorable, on the gain or loss otherwise
experienced on a Portfolio investment. The Company shall not be liable for
any losses experienced on a Portfolio investment due to movements in
currency rates.
4.12. The Company may appoint any person, firm or corporation to act as
sub-investment adviser and/or sub-investment manager to assist the Company
in the performance of its obligations under this Agreement. The Company
shall notify the Client of any such appointment. Fees of any such
sub-investment adviser or sub-investment manager shall be paid by the
Company and shall not be paid by the Client.
5. REPORTING
The Company shall at least once a month provide the Client with statements
containing information which may be set out in a Schedule hereto and such
other reports or data as may be reasonably requested. The Company shall
maintain appropriate records of all its activities hereunder and shall
make such records available to the Client or its agents as the Client
shall reasonably request.
6. FEES
As remuneration for the services provided under this Agreement the Client
shall pay to the Company the fees set out in Schedule I hereto. The fees
shall be paid each month in arrears. It is agreed between the Client and
the Company that the fees as set out in the Schedule hereto are subject to
revision by the Company after one year from the date of this Agreement on
at least 45 days notice to the Client.
7. REPRESENTATIONS AND WARRANTIES
7.1. The Client hereby represents and warrants to the Company as follows:
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(a) the Client is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and has the corporate power and corporate authority to own its
assets and to transact the business in which it is now engaged;
(b) the Client has the corporate power and corporate authority to execute
and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by
the Client and constitutes a legal, valid and binding obligation of
the Client enforceable against the Client in accordance with its
terms.
No consent of any person, including without limit the stockholders or
creditors of the Client, and no license, permit, approval or
authorization of, or exemption by any governmental authority is
required by the Client in connection with this Agreement;
(c) the execution, delivery and performance of this Agreement will not
violate any provision of any existing law or regulation binding on
the Client, or any order, judgment, award or decree of any court,
arbitrator or government authority binding on the Client, or the
Memorandum of Association or bye-laws, both as amended, of the
Client, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Client is a party
or by which the Client or any of its assets may be bound, or require
the creation or imposition of any lien on any property, assets or
revenues of the Client pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument
or undertaking;
(d) the Client shall deliver to the Company such information, papers and
documents required or reasonably requested by the Company in
connection with the performance of its duties for the Portfolio;
(e) the Client shall promptly notify the Company of any facts or
circumstances or any change therein which may, directly or
indirectly, affect the management of the Portfolio by the Company;
(f) the list of signatures provided as part of Schedule II constitutes
the valid signatures of all officers, employees or agents of the
Client authorized to take action with respect to the Portfolio and
the Company shall be entitled to rely conclusively on any document
executed by any one of them;
(g) subject as herein provided, the Client is and shall during the term
of this Agreement remain as the beneficial owner of the Portfolio,
free and clear of any and all liens, charges, options and
encumbrances or other third party rights whatsoever.
8. LIMITS ON COMPANY RESPONSIBILITY
8.1. The duties and obligations of the Company shall be determined solely by
the express provisions of this Agreement and the Company shall be
responsible only for the good
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faith performance of its duties and obligations as are specifically set
out in this Agreement. The Company shall not be bound in any way by any
agreement or contract between the Client and any third party (whether or
not the Company has knowledge thereof).
8.2. The Company shall not be responsible in any manner whatsoever for any
failure or inability of the Client to honour any of the provisions of this
Agreement.
8.3. The Company shall not be responsible for the solvency of or the due and
proper performance of the obligations of any third party bank, clearing
organization, broker, intermediary, nominee or agent appointed or employed
by the Company in good faith for the performance of its duties but the
Company shall make available to the Client such rights (if any) as the
Company may have against such person or institution in the event of the
insolvency of the said persons or institutions or its failure properly to
perform such obligations and shall give such assistance as the Client may
reasonably require to exercise such rights.
8.4. The Company shall be fully protected in acting on and relying upon any
written advice, certificate, notice, direction, instruction, request or
other paper or document which the Company in good faith believes to be
genuine and to have been signed or presented by the proper party or
parties, and may assume that any person purporting to give such advice,
certificate, notice, direction, instruction or request or other paper or
document has been duly authorized to do so.
8.5. The Company may seek legal advice in the event of any dispute or question
as to the construction of any of the provisions of this Agreement or its
duties hereunder, and it shall incur no liability and shall be fully
protected in respect of any action taken, omitted or suffered by it in
good faith in reliance upon and in accordance with the opinion of such
legal advice.
8.6. The Company shall not be liable to the Client for any acts or omissions by
the Company, its employees and agents under and in connection with this
Agreement, except by reason of acts or omissions constituting bad faith,
gross negligence or willful misconduct.
8.7. The Client shall reimburse and indemnify the Company for, and hold it
harmless against, any loss, liability or expense, including without limit
legal fees, incurred without bad faith, willful misconduct or gross
negligence on the part of the Company arising out of or in connection with
its acceptance of, or the performance of its duties and obligations under,
this Agreement as well as the costs and expenses of defending against any
claim or liability arising out of or relating to this Agreement.
8.8. While the Company will endeavour to obtain the best price in any
transaction effected for the Client in accordance with the terms of this
Agreement, neither the Company nor any sub-investment manager or
sub-investment adviser appointed pursuant to clause 4.11 of this
Agreement, will owe the Client the duty of "Best Execution" as defined in
the IMRO Rules or elsewhere, other than as may be agreed in writing
between the Client and the Company from time to time.
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8.9. Any complaints by the Client should be addressed in the first instance to
any Director of the Company.
9. LIABILITY FOR LOSSES
9.1. The Company shall not be liable for loss caused directly or indirectly by
government restrictions, exchange or market rulings, suspension of
trading, war, strikes or other conditions beyond the Company's control.
10. CONFIDENTIALITY
Except as required by the provisions of any applicable laws, rules, and
regulations or by any court order, neither of the parties hereto shall
during the continuance of this Agreement or after its termination disclose
any information relating to the business, investments, finances or other
matters of a confidential nature to any third party of which it may in the
course of the performance of the Agreement have become possessed.
11. TERMINATION AND AMENDMENT
11.1. This Agreement may be terminated by either party at any time from one year
after the date of this Agreement upon giving at least 30 days' written
notice to the other party.
11.2. Subject to any commitments made prior to the date of notice of termination
pursuant to sub-clause 11.1. above to purchase or dispose of securities or
other property (which shall be executed or completed even after such
date), the Company shall not after the date of said notice of termination
execute any further transactions on the Client's behalf. Upon termination,
neither of the parties shall have any obligation to the other except for
the parties' obligations under Clauses 8.7 and 10 and the Company's
obligation to return to the Client (as promptly as practicable in such
forms as it may then exist) the Portfolio, after deduction of management
fees and other sums properly due to the Company under this Agreement to
the date of termination, together with a full account of all transactions
effected up to such date.
12. WITHDRAWAL
12.1. The Client may withdraw any part of the Portfolio from management by the
Company at any time by giving 30 days' notice to the Company in writing.
Any assets withdrawn will be delivered to the Client as soon as
practicable thereafter.
12.2. A notice to withdraw the whole of the Portfolio will terminate this
Agreement as if it were a notice given under Clause 11, provided that such
notice may only be given in accordance with Clause 11.
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13. GOVERNING LAW
13.1. This Agreement shall be governed by and construed in accordance with the
laws of the Republic of Ireland.
13.2. If any suit or arbitration is instituted by any of the parties hereto to
enforce any of the terms or conditions of this Agreement, each of the
parties hereto hereby submits to the jurisdiction of the courts of the
Republic of Ireland.
14. ARBITRATION
14.1. In the event of any dispute arising out of or in relation to this
Agreement the same shall be decided by Arbitration in accordance with the
provisions of the Arbitration Act 1954, or any statutory modification or
re-enactment thereof for the time being in force.
14.2. For the purposes of this Agreement the Arbitrator shall be chosen by the
President for the time being of the Incorporated Law Society of Ireland.
15. NOTICES
15.1. Notices to the Company may be delivered or dispatched by registered mail,
or may be faxed or telexed to the Company's address in Dublin, and to such
other addresses (and in the case of telex or fax to such telex or fax
addresses) as the Company may have designated in writing to the Client.
Such notices shall be deemed to have been properly delivered or given
hereunder and shall be effective on the date of delivery if delivered,
telexed or faxed or, if dispatched by registered mail, on the day on which
the same have been tendered for delivery by post.
15.2. Notices to the Client may be delivered or dispatched by registered mail,
or may be telexed or faxed to the Client's registered office or to such
other address as may be notified in writing by the Client to the Company.
Such notices shall be deemed to have been properly delivered or given
hereunder and shall be effective on the date of delivery if delivered,
telexed or faxed or, if dispatched by registered mail, on the day on which
the same have been tendered for delivery by post.
16. RULES
16.1. Where at any time compliance with any provision in this Agreement would be
contrary to any bye-law, rule, regulation or code of conduct or practice
in force from time to time and applying to either party, then the parties
shall meet to discuss in good faith a method of amending this Agreement in
light of such circumstances. If the parties cannot agree on a satisfactory
amendment within 45 days of the parties becoming aware of such potential
conflict, then either party may by notice to the other terminate this
Agreement forthwith. Sub-clause 11.2. shall apply to such termination.
16.2. If any provision or condition of this Agreement shall be held to be
invalid or unenforceable by any court, or regulatory agency or body, such
invalidity or unenforceability shall attach only to such provision or
condition. The validity of the remaining provisions shall not be affected
thereby and this Agreement shall be carried out as if such invalid or
unenforceable provision or conditions were not contained herein.
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17. ENTIRE AGREEMENT AND AMENDMENTS
17.1. This Agreement, together with the Schedules hereto, constitutes the entire
agreement between the parties with respect to the management of the
Portfolio and matters ancillary thereto, including all accounts which the
Client may open or re-open with the Company, and supersedes and
extinguishes any arrangement, representations and/or warranties previously
given or made other than those expressly set out in this Agreement.
17.2. The express terms hereof control and supersede any course of performance
and/or usage of the trade.
17.3. This Agreement may not be amended except by a notice in writing signed by
both of the parties hereto.
18. NO WAIVER
Neither the failure nor delay on the part of any party in exercising any
right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise of the
same or any other right, remedy, power or privilege nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with
respect to any other occurrence. No waiver hereunder shall be effective
unless it is in writing and is signed by the party asserted to have
granted such waiver.
19. NO JOINT VENTURE
The Company and the Client are not partners or joint venturers together
and nothing herein shall be construed to make them such partners or joint
venturers or impose liability as such by reason thereof.
20. SUCCESSORS AND ASSIGNS
No assignment of this Agreement may be made by any party to this Agreement
without the consent of the other parties hereto, and any such assignment
made without such consent shall be null and void for all purposes. Subject
to the foregoing, the provisions of this Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by each of the
parties hereto and their respective successors and assigns.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument, and such counterparts
together shall constitute one and the same instrument.
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22. GENERAL
22.1. The Company may whether for its own account or that of any other person
acquire, hold or deal in any investments of any kind, nature or
description whatsoever, and nothing in this Agreement shall prevent the
Company from contracting or entering into or being interested in any
financial, banking, commercial, advisory or other transaction with any
other person.
22.2. The Company shall at all times maintain and keep in full force and effect
such insurance against such risks as is customary and appropriate for
investment management activities similar to those of the Company.
23. EFFECTIVE DATE AND SCHEDULES
This Agreement shall take effect from the 23rd of June 1997 subject to any
matter specified in the Schedules.
24. HEADINGS
The section headings contained herein are for convenience only and shall
not alter or limit or define the provisions hereof.
IN WITNESS whereof the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
SIGNED BY: ____________________________________
FOR AND ON BEHALF OF
INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY, LTD.
SIGNED BY: _____________________________________
FOR AND ON BEHALF OF
AIG GLOBAL INVESTMENT CORP. (IRELAND) LTD.
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SCHEDULE I
INVESTMENT POLICY GUIDELINE
I. PORTFOLIO
1. The Client is INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY
LTD. The Portfolio shall be called PROP (the "Portfolio").
a. The Portfolio represents capital for solvency purposes of the
Client.
b. The primary objective of the Portfolio is preservation of capital.
A secondary objective is returns commensurate with the Benchmark as
hereinafter defined.
2. The Portfolio is to be invested only in the asset class(es) detailed
below; together with all subsequent additions thereto of which the
Company is given notice, and all other property acquired therefrom,
proceeds therefrom, or in substitution therefor, less authorized
payment by the Custodian.
Asset Class Min% Max%
-----------------------------------------------------
[x] Fixed Income Securities 0 100
----- -----
[x] Money Market Instruments 0 100
----- -----
[x] Equity Securities 0 20
----- -----
[ ] Convertible Bonds _____ _____
[ ] Equity Derivatives _____ _____
[ ] Financial Derivatives _____ _____
[x] Foreign Exchange Contracts 0 20
----- -----
[ ] Foreign Exchange Derivatives _____ _____
[x] Money Market Funds 0 100
----- -----
[x] Repurchase Agreements 0 100
----- -----
[ ] _____ _____
[ ] _____ _____
Other asset classes shall not be permitted without the express written
approval of the Client.
[ ] Additional detail is attached as Asset Class Schedule.
a. The Portfolio shall be denominated in US dollars, hereinafter
referred to as the Base Currency.
3. Counterparty Risk
a. Wherever possible, all securities transactions shall be executed
"delivery versus payment."
b. All securities transactions shall be executed with commercial
banks, investment banks, brokers and trading firms
("Counterparties") of recognized standing in the financial markets.
c. To the extent that OTC Options and other derivatives, Foreign
Exchange Contracts and Repurchase Agreements are permitted in
Section I.2, they shall be executed with Counterparties of
recognized standing in the financial markets. Further, such
Counterparties shall carry Investment Grade Ratings, as defined by
Moody's or Standard & Poor's.
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II. BENCHMARK
The Portfolio performance shall be measured with regard to the following
composite index which shall be considered the base asset allocation of the
Client:
Salomon Eurodollar 1-3 year Index 42.5
--------
Salomon Eurodollar 3-5 year Index 42.5
--------
US S & P 500 Index 15.0
--------
III. CUSTODIAN
1. The main Custodian is AIG Global Investment Trust Services, Ltd.,
although additional Custodian accounts may be opened with the approval
of the Client.
IV. GENERAL FIXED INCOME GUIDELINES
1. Currency
The Fixed Income Portfolio is a [ ] Single Currency Account
[ ] Hedged Currency Account
[X] Multi-Currency Account
as hereinafter defined.
a. A Single Currency Account shall be invested 100% in the Base
Currency as defined in Section I.2.a. Securities denominated in
or linked to other currencies are permitted only at the direction
of the Client.
b. A Hedged Currency Account shall be invested in securities
denominated in or linked to any currency provided, however, that
foreign exchange contracts, futures and/or options are executed
to reduce the net non-Base Currency exposure to less than 5% of
the Portfolio Market Value.
c. A Multi-Currency Account shall be invested in securities
denominated in or linked to any currency. Whether or not foreign
exchange contracts, futures and or options are permitted in
Section I.2., the non-Base Currency exposure of the Portfolio
shall not exceed 20.0% of the Portfolio Market Value. The net
non-Base Currency exposure shall not exceed 20.0% of the
Portfolio Market Value.
Unless permitted in Section I.2., Foreign Exchange Contracts
shall not be executed for a Multi-Currency Account except for the
acquisition or disposition of securities or for the conversion of
coupon/dividend receipts to the Portfolio Base Currency; no
hedging or speculative currency transactions are permitted.
2. Country Risk
The Portfolio is a [X] Diversified Country Risk Account
[ ] Targeted Country Risk Account as hereinafter
defined.
All country limits are percent of Portfolio Market Value on date of
purchase and refer to the country of issuer or guarantor. In the case
of banking institutions, the country of a full branch shall be deemed
to be the domicile of the head office. Country exposures shall not
exceed the greater of the country limit or U.S. $5,000,000 equivalent
at the time of purchase.
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A Diversified Country Risk Account permits the following per country
limits.
a. United States 100%
b. Canada Switzerland 75%
Germany United Kingdom
Japan
c. EEC, EIB, ECSC, World Bank (IBRD), Other Supranationals 50%
d. Australia Finland Luxembourg Portugal 25%
Austria France Netherlands Spain
Belgium Ireland New Zealand Sweden
Denmark Italy Norway
e. Other (Total value of all securities not covered under
IV.2.a.-d. above) 10%
A Targeted Country Risk Account specifically targets the
investment opportunities in one or more particular countries as
detailed below:
------------------------ -----------%
------------------------ -----------%
------------------------ -----------%
[ ] Additional detail attached as Country Risk Schedule.
3. Issuer Limits
a. Except in the case of Supranational, Sovereign, and Sovereign -
supported issues, where the limits under IV.2 above apply, the
securities of one issuer should not exceed the greater of 10.0%
of the Portfolio Market Value or U.S. $5,000,000 at time of
purchase.
4. Issue Limits
a. In the case of fixed income securities, no holding should exceed
the greater of 10% of the amount outstanding or U.S. $5,000,000
nominal at the time of purchase.
5. Maturity Limits
a. In the case of fixed income securities, no individual security
shall have a remaining modified duration greater than EIGHT YEARS.
b. In the case of money market securities, no individual security
shall have a remaining maturity greater than ten years,
notwithstanding the frequency of any rate reset provision of the
security.
c. The Portfolio shall maintain a target weighted average modified
duration of between approximately 1.25 and 3.75 years. For
purposes of this calculation only, the maturity of a floating rate
security is deemed to be its next succeeding reset date.
6. US Securities
The purchase of US securities is permitted.
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7. Credit Risk
a. All securities purchased for the Portfolio which carry a long term
rating by either Standard & Poor's or Moody's shall have a rating
of AA- or AA3 or better at the time of purchase. Notwithstanding
the foregoing, securities may be purchased for the Portfolio which
have ratings of A- or A3 or better provided that, in aggregate,
they do not constitute more than 25% of the Portfolio Market
Value. (Securities which are not so rated at the time of intended
purchase shall not be permitted except on a case by case approval
of the Client.)
All securities purchased for the Portfolio which carry a short
term rating by either Standard & Poor's or Moody's shall have a
rating of A-1 or P-1 or better at the time of purchase. Notwith-
standing the foregoing, securities may be purchased for the
Portfolio which have ratings of A-2 or P-2 or better provided
that, in aggregate, they do not constitute more than 25% of the
Portfolio Market Value. (Securities which are not so rated at the
time of intended purchase shall not be permitted except on a case
by case approval of the Client.)
b. Unrated securities are permitted. The unrated securities shall
have credit quality at the time of purchase, as determined in good
faith by the Company, equivalent to other permitted securities
which are rated as in IV.7.a. The Client shall be notified at
least quarterly as to the composition and status of the unrated
securities held in the Portfolio.
c. A security purchased either in accordance with Section IV.7.a.
which receives a downwardly revised rating or in accordance with
Section IV.7.b. which receives a newly established rating that in
either case would make such security ineligible for further
purchase remains a permitted security to the extent of the then
current holdings.
d. Private placements are permitted. Any private placements
purchased for the Portfolio shall be marketable securities. This
permission is specifically intended to allow the purchase of
unlisted securities.
[ ] Additional detail is attached as Credit Risk Schedule.
8. Realized Gains/Losses
Net realized capital gains and losses should be minimized. (For
example: To the extent fixed income assets are permitted, bond switch
activity to enhance returns is encouraged, but should not become
excessive and should be undertaken within the context of minimizing
net gains and losses).
V. GENERAL EQUITY GUIDELINES
The Equity portion of the portfolio seeks to replicate the aggregate price
and yield performance of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"), an index which emphasizes large capitalization
companies in the United States.
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VI. FEES
The fee schedule will be calculated as follows: 0.35% per annum on the
first $100 million U.S. dollars, or equivalent of Portfolio Market value;
0.25% per annum on the next $100 million; and 0.15% per annum on any amount
exceeding $200 million.
The fees will be calculated based on the previous month end Market value of
the portfolio (including accrued interest) and are payable monthly in
arrears. The fees shall be reduced proportionally for any part of a period
in which this Agreement is not in full effect.
[ ] Additional detail is attached as Supplementary Fee Schedule
Signed by:_________________________________________
for and on behalf of
INTERNATIONAL PROPERTY CATASTROPHE REINSURANCE COMPANY LIMITED
Signed by: _________________________________________
for and on behalf of
AIG GLOBAL INVESTMENT CORPORATION (IRELAND) LIMITED
5
<PAGE>
SCHEDULE II
AUTHORIZED PERSONS
Name(s) and address(es) of persons authorized to give and receive notices,
consents or other communications.
Name Address
-------------------- ------------------------------------------
Niall C. Sommerville AIG Global Investment Corp. (Ireland) Ltd.
Iwan R. Datwiler AIG House
Merrion Road
Dublin 4,
Ireland
PHN: 353-1-283-7766
FAX: 353-1-283-7820
TLX: 91965
- -------------------------------------------------
- -------------------------------------------------
Name Address
-------------------- ------------------------------------------
John P. Dowling International Property Catastrophe
John R. Weale Reinsurance Co. Ltd.
Dennis J. Higginbottom P.O. Box HM 152
Hamilton HM AX
Bermuda
PHN: 441-295-2121
FAX: 441-292-8085
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
______________________
1 Version: 25 June 1997.
6
EXHIBIT 11.1
IPC HOLDINGS, LTD. AND SUBSIDIARIES
COMPARISON OF NET INCOME PER COMMON SHARE
(Expressed in thousands of United States dollars, except for per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months ended June 30,
-------------------------
1997 1996
---- ----
(unaudited) (unaudited)
<S> <C> <C>
PRIMARY
Net income $53,040 $50,225
Common shares outstanding at January 1, 1997 25,000,000 25,000,000
Common shares outstanding at June 30, 1997 25,017,103 25,000,000
Weighted average common shares outstanding 25,002,851 25,000,000
Dilutive effect of share options 1,351,488 1,028,363
---------------- ----------------
Total 26,354,339 26,028,363
---------------- ----------------
Net income per common share $2.01 $1.93
</TABLE>
<TABLE>
<CAPTION>
FULLY DILUTED Six Months ended June 30,
- ------------- -------------------------
1997 1996
---- ----
(unaudited) (unaudited)
<S> <C> <C>
Net income $53,040 $50,225
Common shares outstanding at January 1, 1997 25,000,000 25,000,000
Common shares outstanding at June 30, 1997 25,017,103 25,000,000
Weighted average common shares outstanding 25,002,851 25,000,000
Dilutive effect of share options 1,415,194 1,028,363
---------------------------------------------------
Total 26,418,045 26,028,363
---------------------------------------------------
Net income per common share $2.01 $1.93
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27.1
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REPORT ON FORM 10-Q OF IPC HOLDINGS, LTD. FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS (AND
THE NOTES THERETO) CONTAINED IN SUCH REPORT.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<DEBT-HELD-FOR-SALE> 428,926
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 78,594
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 507,520
<CASH> 11,586
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 5,592
<TOTAL-ASSETS> 594,219
<POLICY-LOSSES> 28,082
<UNEARNED-PREMIUMS> 55,744
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 250
0
0
<OTHER-SE> 507,527
<TOTAL-LIABILITY-AND-EQUITY> 594,219
55,728
<INVESTMENT-INCOME> 15,603
<INVESTMENT-GAINS> (2,176)
<OTHER-INCOME> 0
<BENEFITS> 5,182
<UNDERWRITING-AMORTIZATION> 5,949
<UNDERWRITING-OTHER> 4,046
<INCOME-PRETAX> 53,040
<INCOME-TAX> 0
<INCOME-CONTINUING> 53,040
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,040
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 2.01
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
