<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
IPC HOLDINGS, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
IPC HOLDINGS, LTD.
AMERICAN INTERNATIONAL BUILDING
29 RICHMOND ROAD
PEMBROKE HM 08 BERMUDA
NOTICE OF ANNUAL GENERAL MEETING
TO BE HELD ON JUNE 6, 1997
April 15, 1997
TO THE SHAREHOLDERS OF IPC HOLDINGS, LTD. :
The 1997 Annual General Meeting of IPC Holdings, Ltd. (the "Company") will
be held at 9:30 a.m. on Friday, June 6, 1997 at the Princess Hotel, 76 Pitts Bay
Road, Pembroke, Bermuda, for the following purposes:
To elect seven directors to hold office until the Company's next Annual
General Meeting or until their successors are elected or appointed or
their office is otherwise vacated;
To act on a proposal to appoint Arthur Andersen & Co. as the Company's
independent accountants for the fiscal year ending December 31, 1997; and
To transact such other further business, if any, as lawfully may be
brought before the meeting.
Only shareholders of record, as shown by the transfer books of the Company,
at the close of business on April 9, 1997 are entitled to notice of, and to vote
at, the Annual General Meeting.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE, AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU
MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT. FOR FURTHER
INFORMATION CONCERNING THE INDIVIDUALS NOMINATED AS DIRECTORS, USE OF THE PROXY
AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE PROXY STATEMENT ON THE
FOLLOWING PAGES.
By Order of the Board of Directors,
Dennis J. Higginbottom
Vice President & Secretary
<PAGE> 3
IPC HOLDINGS, LTD.
AMERICAN INTERNATIONAL BUILDING
29 RICHMOND ROAD
PEMBROKE HM 08 BERMUDA
April 15, 1997
PROXY STATEMENT
FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
JUNE 6, 1997
GENERAL INFORMATION; VOTING AND REVOCATION OF PROXIES
The Board of Directors of IPC Holdings, Ltd. (the "Company") is soliciting
the enclosed proxy to be voted at the 1997 Annual General Meeting of the
Company's shareholders (the "Annual General Meeting") to be held at 9:30 a.m. on
Friday, June 6, 1997 at the Princess Hotel, 76 Pitts Bay Road, Pembroke,
Bermuda, and at any adjournments thereof. When the enclosed proxy card is
properly executed and returned, the common shares, par value $0.01 per share, of
the Company ("Common Shares") it represents will be voted, subject to any
direction to the contrary, at the Annual General Meeting FOR the matters
specified in the Notice of Annual General Meeting attached hereto and described
more fully herein.
This Proxy Statement, the attached Notice of Annual General Meeting and the
enclosed proxy card are first being mailed to shareholders on or about April 15,
1997. A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1996 accompanies this Proxy Statement.
Any shareholder giving a proxy may revoke it prior to its exercise by
providing the Secretary of the Company with written notice of revocation, by
voting in person at the Annual General Meeting or by executing a later-dated
proxy, provided, however, that the action is taken in sufficient time to permit
the necessary examination and tabulation of the subsequent proxy or revocation
before the vote is taken.
Shareholders of record, as shown by the transfer books of the Company, as
of the close of business on April 9, 1997 will be entitled to vote at the Annual
General Meeting. As of March 31, 1997, there were outstanding 25,000,000 Common
Shares entitled to vote at the Annual General Meeting, with each Common Share
entitling the holder of record on such date to one vote on a poll; provided,
however, if the number of "Controlled Shares" of any holder would constitute 10%
or more of the combined voting power of the issued Common Shares (such holder, a
"10% Shareholder"), such holder will have the voting rights attached to its
Common Shares reduced, in the manner provided in the Company's Bye-laws (the
"Bye-Laws"), so that it may not exercise more than approximately 9.9% of the
total voting rights attached to the outstanding Common Shares. "Controlled
Shares" of any person refers to all Common Shares owned by such person, whether
(i) directly, (ii) with respect to persons who are United States persons, by
application of the attribution and constructive ownership rules of Sections
958(a) and 958(b) of the U.S. Internal Revenue Code (the "Code") or (iii)
beneficially, directly or indirectly, within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder.
As of March 18, 1997, the Company is aware of only one shareholder,
American International Group, Inc. ("AIG"), which possesses Controlled Shares
requiring a reduction in its voting power to 9.9%. However, because the
applicability of the voting power reduction provisions to any particular
shareholder depends on facts and circumstances that may be known only to the
shareholder or related persons, the Company requests that any holder of Common
Shares (other than AIG) with reason to believe that it is a 10% Shareholder
within the meaning of the Bye-Laws please contact the Company promptly so that
the Company may determine whether the voting power of such holder's Common
Shares should be reduced. By submitting a proxy, a holder of Common Shares
(other than AIG) will be deemed to have confirmed that, to its knowledge, it is
not, and is not acting on behalf of, a 10% Shareholder. The directors of the
Company are empowered to require any shareholder to provide information as to
that shareholder's beneficial share ownership, the names of persons having
beneficial ownership of the shareholder's shares, relationships with other
shareholders or any
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<PAGE> 4
other facts the directors may deem relevant to a determination of the number of
Controlled Shares attributable to any person. The directors may disregard the
votes attached to shares of any holder failing to respond to such a request or
submitting incomplete or untrue information. The directors retain certain
discretion to make such final adjustments as to the aggregate number of votes
attaching to the Common Shares of any shareholder that they consider fair and
reasonable in all the circumstances to ensure that no person will be a 10%
Shareholder at any time.
The quorum required at the Annual General Meeting is two or more persons
present in person and representing in person or by proxy more than 50% of the
outstanding Common Shares (without giving effect to the limitation on voting
rights described above).
At the Annual General Meeting, shareholders will be asked to elect the
seven director nominees set forth herein under the caption "Election of
Directors" to serve as directors of the Company until the Company's next Annual
General Meeting or until their successors are elected and qualified. The Board
of Directors of the Company recommends, and if no instructions are provided in
an executed proxy it will constitute, a vote FOR the election of each such
nominee. The Common Shares are entitled to be voted cumulatively in the election
of directors (resulting in each shareholder, including a shareholder holding
Controlled Shares (as defined above), being entitled to the number of votes that
equals the number of votes which (except for this provision as to cumulative
voting) such shareholder would be entitled to cast for the election of directors
with respect to its Common Shares multiplied by the number of directors to be
elected, and all votes entitled to be cast may be cast for one or more of the
directors being elected). Shareholders may (but need not) indicate the
distribution of their votes among the nominees in the space provided on the
proxy card. Unless otherwise indicated on the proxy card, the proxies will
cumulate votes represented by such proxy in their discretion, except to the
extent that authority so to cumulate votes is expressly withheld as to any one
or more of the nominees. Directors will be elected by a plurality vote, and an
absolute majority of the votes cast is not a prerequisite to election.
At the Annual General Meeting, shareholders will be asked to approve the
appointment of Arthur Andersen & Co. as the Company's independent accountants
for the fiscal year ending December 31, 1997. See "Appointment of Independent
Accountants". The Board of Directors of the Company recommends, and if no
instructions are provided in an executed proxy it will constitute, a vote FOR
the appointment of Arthur Andersen & Co. to serve in such capacity. The
appointment of Arthur Andersen & Co. requires the affirmative vote of a majority
of the votes cast at the Annual General Meeting.
Abstentions and "broker non-votes" will be counted toward the presence of a
quorum at, but will not be considered votes cast on any proposal brought before,
the Annual General Meeting. Therefore, abstentions and "broker non-votes" will
have no effect on the outcome of any proposal.
A vote on a show of hands will be taken in the first instance on all
matters (other than the election of directors) properly brought before the
Annual General Meeting, unless a poll is requested in accordance with the
Bye-Laws. On a vote on a show of hands, every shareholder present in person and
every person holding a valid proxy will be entitled to one vote.
Other than the approval of the minutes of the 1996 Annual General Meeting,
the Company knows of no specific matter to be brought before the Annual General
Meeting which is not referred to in the attached Notice of Annual General
Meeting. If any such matter comes before the meeting, including any shareholder
proposal properly made, the proxies named on the enclosed proxy card will vote
proxies on such matters in their discretion.
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ELECTION OF DIRECTORS
(ITEM A ON PROXY CARD)
Seven directors are to be elected at the Annual General Meeting to hold
office until the next Annual General Meeting or until their respective
successors are elected or appointed or their office is otherwise vacated. YOUR
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED ON THE
ENCLOSED PROXY CARD. It is not expected that any of the nominees will become
unavailable for election as a director but, if any nominee should become
unavailable prior to the meeting, proxies will be voted for such persons as the
Company's Board of Directors shall recommend.
The name, age, principal occupation and certain other information
concerning each nominee, each of whom is currently a director, is set forth
below.
JOHN P. DOWLING (age 52) has been President and Chief Executive Officer of
the Company and its wholly-owned subsidiary, International Property Catastrophe
Reinsurance Company, Ltd. ("IPC Re" and, together with the Company, "IPC"),
since February 1994, and a director of the Company and IPC Re since February 15,
1996. From December 1990 to February 1994, Mr. Dowling was a director of Eagle
Star Insurance Co. Ltd.
JOSEPH C.H. JOHNSON (age 59) has been Chairman of the Board of Directors of
the Company and IPC Re since their inception and has been President and Chief
Executive Officer of American International Company Limited ("AICL") in Bermuda
since 1978. AICL is a wholly-owned subsidiary of AIG. Mr. Johnson is also an
officer and director of various other subsidiaries and affiliates of AIG.
MICHAEL L. BOURIS (age 54) has been the Deputy Chairman of the Board of
Directors of the Company and IPC Re since July 1995. Since January 1990, Mr.
Bouris has been a Vice President of General Re Corporation ("General Re") and
also serves as Senior Vice President and Chief Underwriting Officer of Starr
Excess Liability Insurance Company, Ltd. ("Starr Excess") in Bermuda.
RON HIRAM (age 44) has been a director of the Company and IPC Re and
Director of Strategic Investments for Soros Fund Management since February 1995.
From June 1990 to February 1995, he was Managing Director, Diversified Asset
Group, at Lehman Brothers.
DR. THE HONOURABLE CLARENCE ELDRIDGE JAMES (age 65) has been a director of
the Company and IPC Re since February 1996. Dr. James has been Chief of Staff of
the Bermuda Hospitals Board since 1995 and Chairman, Government Employees Health
Insurance Committee, since 1990. From 1984 to 1989, Dr. James served as Minister
of Finance of Bermuda.
FRANK MUTCH (age 60) has been a director of the Company and IPC Re since
February 1996 and since March 1994 has been a consultant with the law firm of
Conyers, Dill & Pearman. From 1981 to 1994, Mr. Mutch served as a partner of
Conyers, Dill & Pearman.
JOHN T. SCHMIDT (age 55) has been a director of the Company and IPC Re in
1993, from July 1994 to July 1995 and from February 1996 to the present. Mr.
Schmidt is of counsel to the law firm of Shearman & Sterling in New York, having
retired as a partner of the firm in 1993.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1996, there were six meetings of the
Company's Board of Directors (including regularly scheduled and special
meetings). All incumbent directors attended at least 75% of the aggregate of
such meetings and of the meetings held by all committees of the Board of
Directors of which they were a member (or of such meetings during such
directors' tenure on the Board of Directors), except Mr. Bouris, who was absent
for three Executive Committee meetings.
The Board of Directors has established five standing committees: the Audit
Committee, the Compensation Committee, the Executive Committee, the Investment
Committee and the Stock Option and Stock Purchase Committee.
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AUDIT COMMITTEE. The Audit Committee consists of Messrs. Johnson, Hiram
and Schmidt, and is responsible for meeting with the Company's independent
accountants regarding, among other issues, audits and adequacy of the Company's
accounting and control systems. The Audit Committee held one meeting during the
year ended December 31, 1996.
COMPENSATION COMMITTEE. The Compensation Committee consists of Messrs.
Johnson, James and Mutch, and has the authority to establish compensation
policies and recommend compensation programs to the Board of Directors other
than those programs that are within the province of the Stock Option and Stock
Purchase Committee. The Compensation Committee held two meetings during the year
ended December 31, 1996.
EXECUTIVE COMMITTEE. The Executive Committee consists of Messrs. Johnson,
Dowling and Bouris, and has the authority to oversee the general business and
affairs of the Company to the fullest extent permitted by Bermuda law. The
Executive Committee held ten meetings during the year ended December 31, 1996.
INVESTMENT COMMITTEE. The Investment Committee consists of Messrs.
Johnson, Hiram and Schmidt, and is responsible for recommending asset
allocations to the Board of Directors, approving the guidelines which provide
standards to ensure portfolio liquidity and safety, and approving investment
managers and custodians for portfolio assets. The Investment Committee held one
meeting during the year ended December 31, 1996.
STOCK OPTION AND STOCK PURCHASE COMMITTEE. The Stock Option and Stock
Purchase Committee consists of Messrs. James, Mutch and Schmidt, and administers
and grants awards under any stock option plans and incentive compensation plans
of the Company. The Stock Option and Stock Purchase Committee held three
meetings during the year ended December 31, 1996.
DIRECTOR COMPENSATION
The Company compensates directors (other than Mr. Bouris and any director
who is an employee of the Company or IPC Re) in the amount of $12,000 per year
and an additional $1,000 per meeting of the Board of Directors or any committee
thereof, other than the Executive Committee, attended by such director. The
Company also reimburses expenses incurred by directors in connection with their
service on the Board of Directors. Fees otherwise payable to Mr. Bouris are paid
to General Re for Mr. Bouris' services as a director. In addition to the fees
otherwise paid under the Administrative Services Agreement (as defined herein),
the Company pays $50,000 per year to AICL for Mr. Johnson's services as Chairman
of the Board of Directors.
CERTAIN RELATIONSHIPS WITH AIG AND OTHER ORIGINAL SHAREHOLDERS
The following descriptions summarize certain relationships and the terms of
certain agreements of IPC. Such summaries of agreements do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the relevant agreements. A copy of each such
agreement has been previously filed with the Securities and Exchange Commission
(the "Commission") and is listed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, a copy of which will be provided
upon request. See "Additional Information".
OVERVIEW
In response to a severe imbalance between the global supply of and demand
for property catastrophe reinsurance that developed in the period from 1989
through 1993, IPC commenced operations in July 1993 through the sponsorship of
AIG, a holding company incorporated in Delaware which through its subsidiaries
is primarily engaged in a broad range of insurance and insurance-related
activities and financial services in the United States and abroad. AIG purchased
24.4% of the initial share capital of the Company and an option (exercisable in
specified circumstances) to obtain up to an additional 10% (on a fully diluted
basis, excluding employee stock options) of the share capital of the Company
(the "AIG Option"). Since IPC's formation, subsidiaries of AIG have provided
administrative, investment management and custodial services to IPC, and certain
of IPC's officers are also officers of subsidiaries and affiliates of AIG. AIG
has informed the Company
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that AIG presently intends to continue its share ownership in the Company for
the foreseeable future. For a description of AIG's direct Common Share ownership
and of the AIG Option, see "Beneficial Ownership of Common Shares".
CERTAIN BUSINESS RELATIONSHIPS
ADMINISTRATIVE SERVICES. IPC's day-to-day administrative services are
performed by AICL, a wholly-owned subsidiary of AIG, pursuant to an
administrative services agreement (the "Administrative Services Agreement").
Services and facilities provided pursuant to the Administrative Services
Agreement include tax, legal and accounting services, office space in Bermuda,
electronic data services and other services required by IPC in the ordinary
course of business. Fees payable for such administrative services totalled $2.8
million and $2.6 million for the years ended December 31, 1996 and 1995,
respectively. In addition to such fees, IPC pays $50,000 per year to AICL for
Mr. Johnson's services as Chairman of the Board of Directors. Effective February
15, 1996, AICL transferred to IPC legal title and ownership to certain
databases, software and other intellectual property developed by AICL for IPC.
In consideration for such transfers, IPC paid $100,000 to AICL.
INVESTMENT ADVISORY SERVICES. AIG Global Investment Corp. (Ireland) Ltd.
("AIGIC"), an indirect wholly-owned subsidiary of AIG, provides investment
advisory services to IPC. AIGIC manages IPC's entire investment portfolio,
subject to IPC's investment guidelines, pursuant to an investment advisory
agreement (the "Investment Advisory Agreement"). The advisory fee totalled
$1,017,000 and $989,000 for the years ended December 31, 1996 and 1995,
respectively. The performance of AIGIC under the Investment Advisory Agreement
is reviewed periodically by the Board of Directors of the Company. AIGIC has
entered into a Sub-Advisory Agreement with AIG Global Investment Corp. Ltd.
(Europe) ("AIGIC (Europe)"), an indirect wholly-owned subsidiary of AIG,
pursuant to which AIGIC (Europe) advises AIGIC on the management of IPC's
investment portfolio.
CUSTODIAL SERVICES. AIG Global Investment Trust Services Limited, an
indirect wholly-owned subsidiary of AIG based in Ireland, provides custodial
services to IPC pursuant to a custodial agreement (the "Custodial Agreement").
Fees incurred under the Custodial Agreement were $240,000 and $237,000 for the
years ended December 31, 1996 and 1995, respectively.
REGISTRATION RIGHTS
Pursuant to an agreement executed prior to the closing of the Company's
initial public offering in March 1996 (the "Offering"), the Company has agreed
to provide each continuing original shareholder and AIG as holder of the AIG
Option (each a "Rightholder") with registration rights for Common Shares held by
them and certain of their affiliates at the time of the Offering and not sold
pursuant to a registration statement or Rule 144 under the Securities Act of
1933, as amended (the "Securities Act") (or obtainable pursuant to the AIG
Option). Under this agreement, any Rightholder or group of Rightholders has the
right to require the Company, on one occasion (and, with respect to AIG, on two
occasions), to register Common Shares under the Securities Act for sale in the
public market, in an underwritten offering, block trades from time to time or
otherwise; provided, however, that the total number of Common Shares requested
to be registered pursuant to any such demand must equal or exceed 2,500,000 and
any other Rightholder not making the demand will have the right to participate
in such registration on a second-priority basis subject to a customary
underwriter's reduction. The Company may include other Common Shares in any such
demand registration on a third-priority basis subject to a customary
underwriter's reduction. In addition, shareholders that sold Common Shares in
the Offering are entitled, in aggregate, to one demand right with respect to
shares which were subject to an over-allotment option granted in connection with
the Offering, which option was not exercised by the underwriters of the
Offering. If the Company proposes to file a registration statement relating to
Common Shares at any time, each Rightholder will have one right to include
Common Shares held by it (or obtainable pursuant to the AIG Option) in the
registration, in each case on a first-priority basis with any shareholders and
on a second-priority basis with the Company, pro-rata according to the relevant
respective holdings and subject to a customary underwriter's reduction. The
Company has agreed to indemnify each Rightholder in
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respect of certain liabilities, including civil liabilities under the Securities
Act, and to pay certain expenses relating to such registrations. Each
Rightholder's rights under the agreement terminate on June 29, 2003.
SELIC HOLDINGS, LTD.
SELIC Holdings, Ltd. ("SELIC") and its subsidiary, Starr Excess, were
established in 1993 through the sponsorship of AIG and General Re to write
excess liability insurance on a worldwide basis. The Chairman of the Board of
Directors of the Company and IPC Re also serves as Chairman of the Board and
Chief Executive Officer of SELIC and Starr Excess.
TRANSACTIONS IN ORDINARY COURSE OF BUSINESS WITH SHAREHOLDERS
IPC has assumed premiums from, and paid brokerage fees to, companies
affiliated with shareholders of the Company. Premiums assumed from subsidiaries
of AIG and of General Re were approximately $7.8 million and $1.8 million,
respectively, for the year ended December 31, 1996. In addition, during the same
period, the Company paid brokerage fees and commissions to Herbert Clough, Aon
Reinsurance Agency, Inc. and Alexander Howden of approximately $.6 million, $.6
million and $1.3 million, respectively. Herbert Clough is a wholly-owned
subsidiary of General Re (which beneficially owns 1,250,000 Common Shares), and
Aon Reinsurance Agency, Inc. is an affiliate of The Life Insurance Company of
Virginia, a shareholder of the Company that beneficially owned 1,250,000 Common
Shares prior to, and 163,043 Common Shares immediately after, the Offering (in
which it sold 1,086,957 Common Shares). Alexander Howden is a subsidiary of
Alexander and Alexander Services, Inc., a company which was not an affiliate or
subsidiary of AIG, but in which AIG held an interest represented by shares of
non-voting preferred stock (which was convertible in certain circumstances into
voting stock with voting rights limited to 9.9% of the total voting rights).
That interest was sold effective January 15, 1997 to Aon Corp. All brokerage
transactions are entered into on an arm's-length basis.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive officers and directors of the Company are subject to the
reporting requirements of Section 16 of the Exchange Act. During the year ended
December 31, 1996, John P. Dowling, James P. Bryce, Peter J.A. Cozens, Robert E.
Dickson and Dennis J. Higginbottom were each late filing a Form 4 in connection
with one acquisition of Common Shares. All such transactions have now been
reported.
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BENEFICIAL OWNERSHIP OF COMMON SHARES
The table below sets forth certain information as of February 28,
1997(unless otherwise specified) with respect to the beneficial ownership of
Common Shares by each person who is known to the Company to own beneficially
more than 5% of the outstanding Common Shares, each person currently serving as
a director of the Company, each of the four most highly compensated officers of
the Company other than the Chief Executive Officer (the "Named Executive
Officers") and all directors and executive officers as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
--------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- --------------------------------------------------------------- -------- -------
<S> <C> <C>
American International Group, Inc.............................. 6,100,000(2) 24.4%
70 Pine Street
New York, New York 10270
Quantum Industrial Partners LDC................................ 1,638,045(3) 6.6%
c/o Curacao Corporation Company N.V.
Kaya Flamboyan 9
Williamstad, Curacao
Netherlands, Antilles
Wellington Management Company, LLP............................. 2,475,000(4) 9.9%
75 State Street
Boston, Massachusetts 02109
Vanguard/Windsor Fund, Inc..................................... 1,489,700(5) 6.0%
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
The Equitable Companies Incorporated........................... 1,484,813(6) 5.9%
787 Seventh Avenue
New York, New York 10019
John P. Dowling................................................ 6,023(7) *
Joseph C.H. Johnson............................................ --
Michael L. Bouris.............................................. --(8) *
Ron Hiram...................................................... --
Dr. the Honourable Clarence Eldridge James..................... -- *
Frank Mutch.................................................... --
John T. Schmidt................................................ 1,000 *
James P. Bryce................................................. 8,372(9) *
Peter J.A. Cozens.............................................. 5,291(10) *
Robert E. Dickson.............................................. 2,755(11) *
Dennis J. Higginbottom......................................... 1,980(12) *
All directors and executive officers as a group................ 26,571 *
</TABLE>
- ---------------
* Less than 1% of the outstanding Common Shares.
(1) In accordance with the rules of the Commission, a person is deemed to have
"beneficial ownership" of Common Shares which such person has the rights to
acquire within 60 days. For purposes of calculating percent ownership, each
person's holdings have been calculated assuming full exercise of
outstanding options exercisable by such person within 60 days, but not the
exercise of options held by any other person.
(2) Reflects information reported in Amendment No. 2 to a Schedule 13D, dated
June 4, 1996, and excludes Common Shares subject to the AIG Option. The AIG
Option entitles AIG to purchase up to 2,775,000 Common Shares at an
exercise price of $12.7746 per share. The option is exercisable once in
whole or in part only on the earlier of (A) on or about June 29, 2003 (as
provided in the next sentence) or any of June 29, 2001, December 29, 2001,
June 29, 2002 or December 29, 2002, provided, however, that the option is
exercisable on any such date only if the book value per share on such date
is at least 175% of the exercise price per share on such date; or (B) (i) a
subsequent registration of Common Shares under the Securities Act in
connection with a primary or secondary distribution (other than at the sole
request of AIG) or (ii) an amalgamation or merger of the Company (in which
the Company is not the surviving entity) or the sale, transfer or lease of
substantially all the assets of the Company (other than in connection with
a reincorporation). In the event the AIG Option is exercised pursuant to
clause (A) of the preceding sentence and the closing of the resale of the
Common Shares to be delivered upon exercise thereof (pursuant to a
registration statement prepared in accordance with the Registration Rights
Agreement described above) is not effected precisely on the applicable date
specified in
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(A) above, exercise of the AIG Option shall be effective only immediately
prior to, and contingent upon, the closing of the public offering to which
the requested registration relates. If notice of exercise is not made on or
prior to June 29, 2003, the option expires. The option has customary
antidilution provisions. AIG has agreed with the Company that it will
dispose of any shares obtained pursuant to exercise of the AIG Option that
results in AIG becoming a "United States 25% Shareholder" within 29 days of
exercise of the AIG Option. The AIG Option provides that it may be
transferred by AIG (i) in the event of an amalgamation of the Company with
or merger of the Company into another person, or a sale, transfer or lease
of all or substantially all the assets of the Company to another person,
provided, that such transfer is to a person which is a shareholder, partner
or other affiliated person of the person entering into such transaction
with the Company or (ii) at any time on or after March 13, 1998 to up to
three institutional investors, subject to certain conditions set forth
therein. Any Common Shares obtained by AIG pursuant to exercise of the AIG
Option would be subject (like other Common Shares held by AIG) to reduction
of voting power as described under the caption "General Information; Voting
and Revocation of Proxies". Mr. Johnson, the Chairman of the Board of
Directors of the Company and IPC Re, is the President and Chief Executive
Officer of AICL and an officer and director of various other AIG
subsidiaries and affiliates.
(3) Reflects information reported in a Schedule 13D filing dated January 1,
1997 pursuant to a joint filing agreement among Quantum Industrial Partners
LDC ("Quantum") and certain related entities (the "Quantum Schedule 13D").
The Quantum Schedule 13D reported that Tivadar Charitable Lead Trust,
created by Mr. George Soros, as grantor, on September 30, 1982 may be
deemed the beneficial owner of an additional 751,088 Common Shares. The
Quantum Schedule 13D does not expressly affirm the existence of a group.
Ron Hiram, a director of the Company and IPC Re, is Director of Strategic
Investments for Soros Fund Management, which is affiliated with Mr. Soros
and Quantum.
(4) Reflects information reported in a Schedule 13G filing dated February 13,
1997. Wellington Management Company, LLP is an investment adviser; one of
its clients is Vanguard/Windsor Fund, Inc.
(5) Reflects information reported in a Schedule 13G filing dated February 7,
1997.
(6) Reflects information reported in Amendment No. 1 to a Schedule 13G, dated
February 12, 1997, filed by the Equitable Companies Incorporated and
certain related entities.
(7) Includes 5,203 Common Shares issuable upon the exercise of options.
(8) Mr. Bouris is a Vice President of General Re, which owns 1,250,000 Common
Shares (5.0%).
(9) Includes 4,047 Common Shares issuable upon the exercise of options. In
addition, 100 Common Shares have been included that are held by the IRA
trustee for Mr. Bryce's wife, for which Mr. Bryce disclaims beneficial
ownership.
(10) Includes 2,891 Common Shares issuable upon the exercise of options. In
addition, 2,400 Common Shares have been included that are held by Mr.
Cozens' wife in her name, for which Mr. Cozens disclaims beneficial
ownership.
(11) Includes 1,734 Common Shares issuable upon the exercise of options.
(12) Includes 1,156 Common Shares issuable upon the exercise of options.
8
<PAGE> 11
EXECUTIVE OFFICERS
The executive officers of the Company and IPC Re are elected by and serve
at the discretion of the Board of Directors. The name, age, principal occupation
and certain other information regarding the executive officers of the Company
and IPC Re as of December 31, 1996 were as follows:
JOHN P. DOWLING (age 52) has been President and Chief Executive
Officer of the Company and IPC Re since February 1994 and a Director of the
Company and IPC Re since February 15, 1996. From December 1990 to February
1994, Mr. Dowling was a Director of Eagle Star Insurance Co. Ltd. Mr.
Dowling has 33 years of insurance experience in Bermuda, the United
Kingdom, the United States and Ireland, with 10 years as chief executive
for Eagle Star Reinsurance Company Limited (and predecessor operations) of
the United Kingdom.
JAMES P. BRYCE (age 48) has been Senior Vice President of the Company
since July 1996 and has been Senior Vice President -- Underwriting (Chief
Underwriting Officer) of IPC Re since its inception. Between November 1992
and June 1993, Mr. Bryce was a Vice President in the Reinsurance Division
of AIG Europe (UK) Limited in London; between December 1990 and November
1992, Mr. Bryce was Far East Regional Manager for Transatlantic Reinsurance
Company (Hong Kong). From July 1985 to November 1990 he was Far East
Regional Manager for Transatlantic Reinsurance Company (Tokyo), in the
parent company of which AIG holds a 49% interest. From July 1985 to July
1993, Mr. Bryce served as a Director of AIG Reinsurance Services Limited
(Hong Kong).
PETER J.A. COZENS (age 49) has been Vice President -- Underwriting of
IPC Re since March 1995. From June 1993 to March 1995 he was the London
representative of IPC. He previously served from September 1981 to May 1993
as Group Non-Marine Underwriter of the English & American Group. He served
with the Sir Philip D'Ambrumenil Syndicate at Lloyd's from August 1963 to
August 1981 where his responsibilities were those of Deputy Treaty
Underwriter.
ROBERT E. DICKSON (age 39) has been Vice President -- Underwriting of
IPC Re since August 1993. Prior to joining IPC Re, Mr. Dickson was
Assistant Vice President Underwriting Officer for Tokio Re Corporation from
November 1986 to July 1993.
DENNIS J. HIGGINBOTTOM (age 48) was appointed Vice President and
Secretary of the Company and IPC Re in December 1995. From October 1983 to
December 1990, he was Vice President and Director of AICL. From December
1990 to December 1995, he was Senior Vice President and Director of AICL.
JOHN R. WEALE (age 38) was appointed Vice President & Chief Financial
Officer of the Company and IPC Re in July 1996. Prior to joining IPC Re,
Mr. Weale spent over 13 years with AICL in Bermuda, serving in a variety of
positions, the most recent being Vice President -- Offshore Management
Services.
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth, in summary form, compensation for all
services rendered in all capacities to the Company and IPC Re for the year ended
December 31, 1996 by the Chief Executive Officer of the Company and IPC Re and
by the Named Executive Officers. Unless otherwise indicated, positions listed in
the table set forth below are held with both the Company and IPC Re.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------------- -----------------------
OTHER SECURITIES
ANNUAL UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION(1) OPTIONS PAYOUTS(2) COMPENSATION
NAMES AND PRINCIPAL POSITION YEAR $ $ $ # $ $
- ----------------------------------------- ---- ------- ------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John P. Dowling,......................... 1996 325,000 125,000 77,998 20,812 -- 16,250(4)
President & Chief 1995 275,000 100,000(3) 88,148 -- -- 0
Executive Officer
James P. Bryce,.......................... 1996 225,000 75,000 104,022 16,187 -- 9,500(6)
Senior Vice President & 1995 185,000 50,000(5) 59,156 -- $108,250 9,240(7)
Senior Vice President -
Underwriting of IPC Re
Peter J.A. Cozens,....................... 1996 170,000 45,000 168,820 11,562 -- 0
Vice President - 1995 140,154 35,000(8) 211,267 -- -- 0
Underwriting of IPC Re
Dennis J. Higginbottom,.................. 1996 113,000 20,000 40,849 4,625 -- 0
Vice President & 1995 88,500(9) 3,000(9) 54,754(9) -- $108,250 0
Secretary
Robert E. Dickson,....................... 1996 109,180 25,000 45,098 6,938 -- 2,184(4)
Vice President - 1995 103,000 19,250(10) 48,302 -- -- 1,888(7)
Underwriting of IPC Re
</TABLE>
- ---------------
(1) Other annual compensation for the year ended December 31, 1996 includes
amounts in respect of reimbursement for certain travel expenses, utilities,
club dues, education expenses (with respect to Messrs. Cozens and
Higginbottom only), and also includes housing expenses of $49,375, $65,542,
$104,750, $20,675 and $27,796 for Messrs. Dowling, Bryce, Cozens,
Higginbottom and Dickson, respectively. For the year ended December 31,
1995, it also includes amounts in respect of reimbursement for certain
travel expenses, property management, utilities, relocation expenses, club
dues, education expenses (with respect to Messrs. Cozens and Higginbottom
only), and also includes housing expenses of $55,625, $31,875, $111,417,
$11,869 and $17,125 for Messrs. Dowling, Bryce, Cozens, Higginbottom and
Dickson, respectively. For the year ended December 31, 1995, supplemental
payments of $16,000 were made to each of Messrs. Bryce and Higginbottom by
AICL.
(2) Represents the value, based on the closing sale price of AIG Common Stock on
the New York Stock Exchange on December 31, 1996 ($108.25) of 1,000 shares
of AIG Common Stock allocated in early 1997 but not distributed under the
Starr International Company Inc. ("SICO") Deferred Compensation Profit
Participation Plan (the "SICO Plan"). These units were awarded in 1994 to
each of
Messrs. Bryce and Higginbottom for 1995 participation in the SICO Plan. SICO
is a private holding company affiliated with AIG. The SICO Plan provides
that shares may be set aside by SICO for the benefit of the participant and
distributed upon retirement. Prior to pay out, the participant is not
entitled to vote, dispose of or receive dividends with respect to such
shares, and shares are subject to forfeiture under certain conditions. In
addition, SICO's Board of Directors may elect to pay a participant cash in
lieu of shares of AIG Common Stock. After December, 1995, Messrs. Bryce and
Higginbottom had no further participation in the SICO Plan. During the year
ended December 31, 1995, Mr. Higginbottom also performed certain services
for AICL and Starr Excess.
(3) Includes a 1994 bonus amount of $25,000 paid in 1995 and a 1995 bonus amount
of $20,000 paid in 1996.
(4) Represents contributions by IPC Re to the IPC Re Defined Contribution
Retirement Plan. See "Executive Compensation -- Pension Benefits".
(5) Includes a 1995 bonus amount of $25,000 paid in 1996.
(6) Represents contributions by IPC Re pursuant to a deferred compensation
agreement. See "Executive Compensation -- Pension Benefits".
(7) Represents contributions by IPC Re to the American International Group, Inc.
Incentive Savings Plan.
(8) Includes a 1994 bonus amount of $10,000 paid in 1995 and a 1995 bonus amount
of $7,500 paid in 1996.
(9) One third of such amount was paid by each of IPC Re, AICL and Starr Excess.
During the year ended December 31, 1995, Mr. Higginbottom also performed
certain services for AICL and Starr Excess.
(10) Includes a 1994 bonus amount of $6,750 paid in 1995.
10
<PAGE> 13
STOCK OPTION PLAN
The following table sets forth information concerning awards of stock
options under the Company's Stock Option Plan made to the Company's Chief
Executive Officer and to the Named Executive Officers during the year ended
December 31, 1996.
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS
---------------------------------------------------------------------- REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATE
COMMON PERCENT OF TOTAL OF COMMON SHARE
SHARES OPTIONS PRICE APPRECIATION
UNDERLYING AWARDED EXERCISE OR FOR OPTION TERM
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED FISCAL 1996 PER SHARE DATE (1) 5% 10%
- ----------------------------- --------- ----------------- ----------- ------------------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
John P. Dowling.............. 20,812 25.8% $ 16.54 February 15, 2006 435,482 897,332
James P. Bryce............... 16,187 20.1% $ 16.54 February 15, 2006 338,706 697,920
Peter J.A. Cozens............ 11,562 14.3% $ 16.54 February 15, 2006 241,930 498,508
Dennis J. Higginbottom....... 4,625 5.7% $ 16.54 February 15, 2006 96,776 199,412
Robert E. Dickson............ 6,938 8.6% $ 16.54 February 15, 2006 145,175 299,139
</TABLE>
- ---------------
(1) The options listed above were granted on February 15, 1996. All options vest
at a rate of 25% on each of the first through fourth anniversaries of the
date of grant for as long as the employee remains employed by the Company.
The vested portion of the options granted on February 15, 1996 became
exercisable on March 7, 1997 and subsequent vested portions of such options
will become exercisable on March 7, 1998, 1999 and 2000. Other options that
may be granted under the plan become exercisable once vested.
The following table sets forth information concerning the number of
unexpired stock options outstanding at December 31, 1996 and the value of any
unexercised in-the-money stock options at such time held by the Chief Executive
Officer of the Company and by the Named Executive Officers.
OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS (1)
NAME (UNEXERCISABLE AT DECEMBER 31, 1996) (UNEXERCISABLE AT DECEMBER 31, 1996)
- ------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
John P. Dowling.... 20,812 121,438
James P. Bryce..... 16,187 94,451
Peter J.A.
Cozens........... 11,562 67,464
Dennis J.
Higginbottom..... 4,625 26,987
Robert E.
Dickson.......... 6,938 40,483
</TABLE>
- ---------------
(1) Aggregate market value based on the closing sale price of Common Shares of
$22.375 on December 31, 1996 less the aggregate exercise price of $16.54.
PENSION BENEFITS
MR. BRYCE. Pursuant to an individual pension arrangement with IPC Re, Mr.
Bryce is entitled to a lifetime annual supplemental benefit, payable monthly,
commencing upon his attaining age 65, equal to 0.925% of covered compensation
plus 1.425% of average final compensation in excess of covered compensation
multiplied by his years of credited service from April 1, 1985 (the date from
which Mr. Bryce's credited service had previously been calculated under the AIG
Retirement Plan in which he participated until December 1, 1995). Covered
compensation is equal to 150% of the average of the Social Security taxable wage
bases in effect for each calendar year during the 35 year period ending with the
last day of the calendar year in which Mr. Bryce will attain Social Security
retirement age (currently age 65). At December 31, 1996, Mr. Bryce's covered
compensation was $62,700. Covered compensation pursuant to Mr. Bryce's pension
arrangement with IPC Re increases each year as Social Security taxable wage
bases increase. Average final compensation is defined as his highest average
base pay for any three consecutive years in the 10 year period prior to his
attaining age 65. Mr. Bryce had 11.75 years of credited service at December 31,
1996.
11
<PAGE> 14
The following table shows the estimated annual retirement benefits that
would be payable to Mr. Bryce assuming normal retirement (age 65). Benefits
under this plan will be reduced by $17,941 of annual benefits Mr. Bryce will
receive under the AIG Retirement Plan referred to above (but not by amounts
received under the deferred compensation arrangement described in the next
paragraph).
BRYCE PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
-------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000............ $ 22,016 $ 29,355 $ 36,694 $ 44,033 $ 51,371
150,000............ 27,360 36,480 45,600 54,720 63,840
175,000............ 32,704 43,605 54,506 65,408 76,309
200,000............ 38,048 50,730 63,413 76,095 88,778
225,000............ 43,391 57,885 72,319 86,783 101,246
250,000............ 48,735 64,980 81,225 97,470 113,715
300,000............ 59,423 79,230 99,038 118,845 138,653
400,000............ 80,798 107,730 134,663 161,595 188,528
450,000............ 91,485 121,980 152,475 182,970 213,465
500,000............ 102,173 136,230 170,288 204,345 238,403
</TABLE>
Mr. Bryce has also entered into a deferred compensation arrangement with
IPC Re pursuant to which Mr. Bryce may defer a portion of his salary and IPC Re
will contribute a matching amount equal to the lesser of 5% of his salary or the
maximum allowable deferral permitted by Section 402(g) of the Code with respect
to plans established under Section 401(k).
MR. COZENS. Pursuant to an individual pension arrangement with IPC Re, Mr.
Cozens is entitled to a lifetime annual benefit, payable monthly, commencing
upon his attaining age 65. The annual amount of such benefit will equal 1.67% of
Mr. Cozens' base pay for the twelve months prior to his attaining age 65
multiplied by his years of credited service from March 1, 1995. Compensation
under Mr. Cozens' pension arrangement only includes base pay. Mr. Cozens had
1.75 years of credited service at December 31, 1996.
The following table shows the estimated annual retirement benefits that
would be payable to Mr. Cozens assuming normal retirement (age 65). There will
be no offset applied against the benefit amount.
COZENS PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
-------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000............ $ 31,250 $ 41,667 $ 52,083 $ 62,500 $ 72,917
150,000............ 37,500 50,000 62,500 75,000 87,500
175,000............ 43,750 58,333 72,917 87,500 102,083
200,000............ 50,000 66,667 83,333 100,000 116,667
225,000............ 56,250 75,000 93,750 112,500 131,250
250,000............ 62,500 83,333 104,167 125,000 145,833
300,000............ 75,000 100,000 125,000 150,000 175,000
400,000............ 100,000 133,333 166,667 200,000 233,333
450,000............ 112,500 150,000 187,500 225,000 262,500
500,000............ 125,000 166,667 208,333 250,000 291,667
</TABLE>
MR. HIGGINBOTTOM. Pursuant to an individual pension arrangement with IPC
Re, Mr. Higginbottom is entitled to a lifetime annual supplemental benefit,
payable monthly and commencing upon his attaining age 65, equal to 1.75% of
average base pay (defined as his highest average base pay for any three
consecutive years in the 10 year period prior to his attaining age 65)
multiplied by his years of credited service from April 1, 1980 (the date from
which Mr. Higginbottom's years of credited service had previously been
calculated under the American International Overseas Pension Plan (the "AIO
Plan") in which Mr. Higginbottom participated until December 31, 1995).
Compensation under Mr. Higginbottom's pension arrangement only includes base
pay. Mr. Higginbottom had 16.75 years of credited service at December 31, 1996.
The following table shows the estimated annual retirement benefits that would be
payable to Mr. Higginbottom assuming normal retirement (age 65). There will be
no offset applied against the benefit amount unless Mr. Higginbottom becomes
entitled to benefits under a governmental system (which, at present, he is not),
except that benefits
12
<PAGE> 15
under this plan will be reduced by $22,365 of annual benefits that Mr.
Higginbottom will receive under the AIO Plan referred to above.
HIGGINBOTTOM PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
-------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000............ $ 32,820 $ 43,760 $ 54,700 $ 65,640 $ 76,580
150,000............ 39,375 52,500 65,625 78,750 91,875
175,000............ 45,945 61,260 76,575 91,890 107,205
200,000............ 52,500 70,000 87,500 105,000 122,500
225,000............ 59,070 78,760 98,450 118,140 137,830
250,000............ 65,265 87,500 109,375 131,250 153,125
300,000............ 78,750 105,000 131,250 157,500 183,750
400,000............ 105,000 140,000 175,000 210,000 243,000
450,000............ 118,125 157,500 196,875 236,250 275,625
500,000............ 131,250 175,000 218,750 262,500 306,250
</TABLE>
MR. DICKSON. In order to compensate Mr. Dickson for the loss of
contributions to an AICL plan established under Section 401(k) of the Code, IPC
Re will contribute 2% of his base salary into the IPC Re Defined Contribution
Retirement Plan (described below) for Mr. Dickson's benefit. After 5 years and
up to 10 years of employment, IPC Re will contribute 4% of base salary. After 10
years of employment, IPC Re will contribute 6% of base salary. All of the above
percentages are subject to the federal limit permitted by Section 402(g) of the
Code with respect to plans established under Section 401(k).
DEFINED CONTRIBUTION RETIREMENT PLAN. From December 1, 1995, Messrs.
Dowling and Dickson have been eligible to participate in the IPC Re Defined
Contribution Retirement Plan. Pursuant to this plan, which is not intended to
qualify for tax-favored treatment under the Code, each participant defers 5% of
their salary (as determined each year) and IPC Re contributes a matching amount.
Amounts contributed pursuant to the plan are invested, among the investment
options available thereunder, at the discretion of the employee.
EMPLOYMENT CONTRACTS
It is the policy of the Company not to enter into employment agreements
with its employees, except as required by applicable law. The Company has not
entered into an employment agreement with any of its executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors has
responsibility for determining the compensation of the Company's officers. None
of the members of the Compensation Committee was an employee of the Company. Mr.
Johnson is President and Chief Executive Officer of AICL. Pursuant to the
Administrative Services Agreement, IPC paid fees to AICL of $2.8 million and
$2.6 million for the years ended December 31, 1996 and 1995, respectively, for
administrative and other services as described herein. In addition to such fees,
the Company pays $50,000 per year to AICL for Mr. Johnson's services as Chairman
of the Board of Directors.
13
<PAGE> 16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised solely of
non-employee directors. The Compensation Committee has responsibility for
developing and implementing the Company's compensation policy for senior
management, and for determining the compensation for the executive officers of
the Company.
The Company's compensation program is structured to support the human
resources requirements of its business. The Company seeks to attract and retain
qualified executives who are creative, motivated and dedicated. With respect to
its executive officers, the Company competes with reinsurance companies world-
wide, although primarily with companies based in North America and the United
Kingdom.
Each executive's total compensation is generally comprised of four
components: base salary, certain expense allowances, annual bonus awards and
stock option awards. The objectives of the Compensation Committee in determining
the amount of cash compensation for each executive officer are to provide a
level of base salary which will allow the Company to attract and retain
experienced and talented personnel, and to align the executive officers'
interest with the success of the Company through the payment of a bonus based on
individual performance and the performance of the Company. The Compensation
Committee also takes into account the awards, if any, made by the Stock Option
and Stock Purchase Committee.
The Compensation Committee did not apply any specific formula but
considered generally the compensation practices of other reinsurers through a
review of public information and surveys. The Compensation Committee's
deliberations were made in light of the Company's financial performance, the
successful completion of the Offering, the achievement of the A+ (Superior)
initial rating from A.M. Best Company, and the level of competitive activity for
the services of experienced and talented people in the reinsurance industry.
The Compensation Committee believes that the continued financial success of
the Company has been largely attributable to the performance and leadership of
senior management. Accordingly, the Company's President and Chief Executive
Officer, John P. Dowling, was granted an increase in base salary from $275,000
in 1995 to $325,000 for 1996, together with a cash bonus for 1996 of $125,000.
In determining Mr. Dowling's total compensation for 1996, including the cash
bonus, the Compensation Committee considered the financial performance of the
Company. Mr. Dowling was also granted options to purchase 20,812 Common Shares
of the Company effective February 15, 1996, 25% of which became exercisable on
March 7, 1997 and 25% of which will become exercisable on each of March 7, 1998,
1999 and 2000.
Joseph C.H. Johnson
Dr. the Honourable Clarence Eldridge
James
Frank Mutch
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph shows the cumulative total return, including
reinvestment of dividends, on the Common Shares compared to such return for
Standard & Poor's Property-Casualty Industry Group Stock Price Index ("S&P
Property and Casualty") and Standard & Poor's 500 Composite Stock Price Index
("S&P 500") for the period beginning on March 7, 1996 (the first day of public
trading for the Common Shares) and ending on December 31, 1996, assuming $100
was invested on March 7, 1996. Each measurement point on the graph represents
the cumulative total return as measured by the last reported sale price at the
end of each quarter during the relevant period. As depicted in the graph below,
during this period the cumulative total return on the Common Shares was 6.1%,
the cumulative total return for the S&P Property and Casualty index was 16.9%
and the cumulative total return for the S&P 500 index was 15.3%.
[Cumulative Total Return Performance Graph]
- -------------------------------------------------------------------------------
| 3/7/96 | 3/31/96 | 6/30/96 | 9/30/96 | 12/31/96 |
- -------------------------------------------------------------------------------
IPC HOLDINGS, LTD. | $100.00 | 94.89 | 92.84 | 92.39 | 106.13 |
- -------------------------------------------------------------------------------
S&P PROPERTY AND CASUALTY | $100.00 | 94.35 | 99.97 | 100.01 | 116.92 |
- -------------------------------------------------------------------------------
S&P 500 | $100.00 | 98.86 | 103.28 | 106.48 | 115.27 |
- -------------------------------------------------------------------------------
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(ITEM B ON PROXY CARD)
The appointment of independent accountants is subject to approval annually
by the Company's shareholders. Representatives of Arthur Andersen & Co. will
attend the Annual General Meeting and will have an opportunity to make a
statement if they wish. They will also be available to answer questions at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ARTHUR
ANDERSEN & CO. AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL GENERAL MEETING
If you wish to submit a proposal to be considered for inclusion in the
Company's proxy materials for the 1998 Annual General Meeting, please send it to
the Secretary, IPC Holdings, Ltd., American International Building, 29 Richmond
Road, Pembroke HM 08 Bermuda. Under the rules of the Commission, proposals must
be received no later than December 15, 1997 to be eligible for inclusion in the
1998 Annual General Meeting proxy statement.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company.
Solicitation will be made by mail, and may be made by directors, officers and
employees, personally or by telephone or telegram. Proxies and materials also
will be distributed to beneficial owners of Common Shares through brokers,
custodians, nominees and other parties, and the Company expects to reimburse
such parties for their charges and expenses. W.F. Doring & Co., Inc. has been
retained to assist the Company in the solicitation of proxies at a fee not
expected to exceed $2,000, plus out-of-pocket expenses.
15
<PAGE> 18
OTHER MATTERS
Other than the approval of the minutes from the 1996 Annual General
Meeting, the Board of Directors of the Company does not know of any matters
which may be presented at the Annual General Meeting other than those
specifically set forth in the Notice of Annual General Meeting attached hereto.
If matters other than those set forth in the Notice of Annual General Meeting
come before the meeting or any adjournment thereof, the persons named in the
accompanying form of proxy and acting thereunder will vote in their discretion
with respect to such matters.
ADDITIONAL INFORMATION
THE COMPANY WILL FURNISH, WITHOUT CHARGE TO ANY SHAREHOLDER, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND
FINANCIAL SCHEDULES INCORPORATED THEREIN BY REFERENCE TO THE COMPANY'S ANNUAL
REPORT TO SHAREHOLDERS) FOR THE YEAR ENDED DECEMBER 31, 1996, FILED WITH THE
COMMISSION. A COPY OF SUCH REPORT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
COMPANY AT AMERICAN INTERNATIONAL BUILDING, 29 RICHMOND ROAD, PEMBROKE HM 08,
BERMUDA, ATTENTION DENNIS J. HIGGINBOTTOM, SECRETARY. Each such request must
include a representation that, as of April 9, 1997, the person making the
request was a beneficial owner of Common Shares entitled to vote at the Annual
General Meeting. As permitted by the Commission's rules, the Company will not
furnish any exhibits to its Annual Report on Form 10-K without charge, but will
provide with such report a list of such exhibits and information about its
charges for providing them.
16
<PAGE> 19
PROXY PROXY
IPC HOLDINGS, LTD.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF IPC HOLDINGS, LTD.
(THE "COMPANY") IN CONNECTION WITH THE COMPANY'S ANNUAL GENERAL MEETING
OF SHAREHOLDERS TO BE HELD ON JUNE 6, 1997 (THE "ANNUAL GENERAL MEETING").
The undersigned shareholder of the Company hereby appoints Joseph C.H.
Johnson or, failing him, John P. Dowling, as proxy, each with the power to
appoint his substitute, and authorizes them to represent and vote as designated
herein, all of the common shares, par value $0.01 per share, of the Company
("Common Shares") held of record on April 9, 1997 by the undersigned
shareholder of the Company at the Annual General Meeting, and at any
adjournment or postponement thereof, with respect to the matters listed on this
Proxy. In their discretion, the proxies are authorized to vote such Common
Shares upon such other business as may properly come before the Annual General
Meeting.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
THE SUBMISSION OF THIS PROXY, IF PROPERLY EXECUTED, REVOKES ALL PRIOR PROXIES.
IF THIS PROXY IS EXECUTED AND RETURNED BUT NO INDICATION IS MADE AS TO WHAT
ACTION IS TO BE TAKEN, IT WILL BE DEEMED TO CONSTITUTE A VOTE FOR EACH OF THE
NOMINEES AND THE PROPOSAL SET FORTH ON THE REVERSE OF THIS PROXY.
(Continued and to be signed on reverse side.)
<PAGE> 20
IPC HOLDINGS, LTD.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES AND THE PROPOSAL
LISTED BELOW.
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1. ITEM A - ELECTION OF NOMINEES: For All 2. ITEM B - APPOINTMENT OF INDEPENDENT
to elect Directors of the For Withheld Except ACCOUNTANTS: to reappoint the firm For Against Abstain
Company to serve until the [ ] [ ] [ ] of Arthur Andersen & Co. as the [ ] [ ] [ ]
Company's next Annual General Company's independent accountants
Meeting of Shareholders or until for the fiscal year ending
their successors are elected December 31, 1997.
or appointed or their office
is otherwise vacated.
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If you do not wish your shares voted FOR a particular nominee,
mark the FOR ALL EXCEPT box and strike a line through the
nominee(s) name. Your shares will be voted for the remaining
nominees. Shareholders are entitled to vote cumulatively in the PLEASE VOTE, DATE AND SIGN THIS
election of directors and may (but need not) indicate the PROXY BELOW AND RETURN PROMPTLY IN
distribution of their votes among the nominees in the space THE ENCLOSED ENVELOPE.
provided below.
John P. Dowling Dr. the Honourable Clarence Eldridge James Dated:______________________, 1997
Joseph C.H. Johnson Frank Mutch
Michael L. Bouris John T. Schmidt
Ron Hiram __________________________________
Signature
__________________________________
Signature if held jointly
Please sign your name or names
exactly as it appears on your
share certificate(s). When
signing as attorney, executor,
administrator, trustee, guardian
or corporate executor, please
give your full title as such. For
joint accounts, all co-owners
should sign.
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