<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
IPC HOLDINGS, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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 0-12.
(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:
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(4) Date Filed:
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<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 12, 1998
April 24, 1998
TO THE SHAREHOLDERS OF IPC HOLDINGS, LTD.:
The 1998 Annual General Meeting of IPC Holdings, Ltd. (the "Company") will
be held at 9:30 a.m., local time, on Friday, June 12, 1998 at the Royal Bermuda
Yacht Club, Point Pleasant, Hamilton, 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, 1998; 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 15, 1998 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 24, 1998
PROXY STATEMENT
FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
JUNE 12, 1998
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 1998 Annual General Meeting of the
Company's shareholders (the "Annual General Meeting") to be held at 9:30 a.m.,
local time, on Friday June 12, 1998 at the Royal Bermuda Yacht Club, Point
Pleasant, Hamilton, 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 24,
1998. A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997 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 15, 1998 will be entitled to vote at the
Annual General Meeting. As of March 31, 1998 there were outstanding 25,033,932
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
Section 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 the date of this Proxy Statement, 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
<PAGE> 4
other shareholders or any 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. Your Board
of Directors 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 vote 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, 1998. See "Appointment of Independent
Accountants". Your Board of Directors 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 1997 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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<PAGE> 5
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. All of
the nominees except Messrs. Fisher and Pilling are currently members of your
Board of Directors. Messrs Bouris and Hiram, who are current members of your
Board of Directors, will retire at the Annual General Meeting. 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 your Board of
Directors shall recommend.
The name, age, principal occupation and certain other information
concerning each nominee is set out below.
JOSEPH C.H. JOHNSON (age 60) has been Chairman of the Board of Directors of
the Company and IPC Re since its 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.
JOHN P. DOWLING (age 53) 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.
RUSSELL S. FISHER (age 50) has been Senior Vice President and Manager,
Treaty Underwriting of General Reinsurance Corporation ("General Re") since
1985, having previously held other positions with General Re since 1977.
DR. THE HONOURABLE CLARENCE ELDRIDGE JAMES (age 66) has been a director of
the Company and IPC Re since February 1996. Dr. James has been Chairman,
Government Employees Health Insurance Committee, since 1990 and was Chief of
Staff of the Bermuda Hospitals Board from 1995 until March 1998, when he retired
from that position. From 1984 to 1989, Dr. James served as Minister of Finance
of Bermuda.
FRANK MUTCH (age 61) 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.
ANTHONY MACLEOD PILLING (age 59) has been President of One North (Bermuda)
Ltd, which provides management and advisory services to companies and
individuals, since 1991. From 1972-1991, Mr. Pilling practiced law with firms in
Toronto, Calgary, and Vancouver, Canada.
JOHN T. SCHMIDT (age 56) 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, 1997, there were four meetings of your
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 your Board of Directors of which they
were a member, except Mr. Bouris, who was absent for five Executive Committee
meetings, and Mr. Mutch, who was absent for two Board of Directors meetings, one
Compensation Committee meeting and one Stock Option and Stock Purchase Committee
meeting.
3
<PAGE> 6
Your 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.
AUDIT COMMITTEE. During 1997, the Audit Committee consisted of Messrs.
Johnson, Hiram and Schmidt. The Audit Committee 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 two meetings during the year ended December 31, 1997.
COMPENSATION COMMITTEE. During 1997, the Compensation Committee consisted
of Messrs. Johnson, James and Mutch. The Compensation Committee 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 one meeting during the year ended December 31, 1997.
EXECUTIVE COMMITTEE. During 1997, the Executive Committee consisted of
Messrs. Johnson, Dowling and Bouris. The Executive Committee 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 twelve meetings during
the year ended December 31, 1997.
INVESTMENT COMMITTEE. During 1997, the Investment Committee consisted of
Messrs. Johnson, Hiram and Schmidt. The Investment Committee 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 four meetings during the year ended December 31, 1997.
STOCK OPTION AND STOCK PURCHASE COMMITTEE. During 1997, the Stock Option
and Stock Purchase Committee consisted of Messrs. James, Mutch and Schmidt. The
Stock Option and Stock Purchase Committee administers and grants awards under
any stock option plans and incentive compensation plans of the Company. The
Stock Option and Stock Purchase Committee held one meeting during the year ended
December 31, 1997.
DIRECTOR COMPENSATION
During the year ended December 31, 1997, the Company compensated directors
(other than Mr. Bouris and any director who was an employee of the Company or
IPC Re) in the amount of $12,000 per year and an additional $1,000 per meeting
of your Board of Directors or any committee thereof, other than the Executive
Committee, attended by such director. The Company also reimbursed expenses
incurred by directors in connection with their service on your Board of
Directors. Fees otherwise payable to Mr. Bouris were 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 paid $50,000
per year to AICL for Mr. Johnson's services as Chairman of your Board of
Directors in 1997.
4
<PAGE> 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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, 1997, 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 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 for the year ended December 31, 1997. In addition to such fees, IPC pays
$50,000 per year to AICL for Mr. Johnson's services as Chairman of your Board of
Directors.
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
$1,121,000 for the year ended December 31, 1997. The performance of AIGIC under
the Investment Advisory Agreement is reviewed periodically by your Board of
Directors. 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 $313,000 for the year ended
December 31, 1997.
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
5
<PAGE> 8
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 covering
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 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 Liability
Insurance Company, Ltd. ("Starr Excess"), were established in 1993 through the
sponsorship of AIG and General Re Corporation to write excess liability
insurance on a worldwide basis. Mr. Johnson, 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. AIG purchased all of the
outstanding shares of SELIC that it did not already own on January 29, 1998.
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 Corporation were approximately $9.1 million and $2.2
million, respectively, for the year ended December 31, 1997. In addition, during
the same period, the Company paid brokerage fees and commissions to Herbert
Clough, Inc. of approximately $0.8 million. Herbert Clough is a wholly-owned
subsidiary of General Re Corporation (which beneficially owned 1,250,000 Common
Shares during the year ended December 31, 1997). All brokerage transactions are
entered into on an arm's-length basis.
6
<PAGE> 9
BENEFICIAL OWNERSHIP OF COMMON SHARES
The table below sets forth certain information as of April 15, 1998 (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 nominee for director, 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) 6.5%
c/o Curacao Corporation Company N.V.
Kaya Flamboyan 9
Williamstad, Curacao
Netherlands, Antilles
Wellington Management Company, LLP.......................... 1,999,700(4) 8.0%
75 State Street
Boston, Massachusetts 02109
Vanguard/Windsor Fund, Inc. ................................ 1,689,700(5) 6.7%
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
Jurika & Voyles, L.P. ...................................... 1,324,240(6) 5.3%
1999 Harrison Street, Suite 700
Oakland, CA 94612
Boston Partners Asset Management, L.P....................... 1,315,120(7) 5.3%
One Financial Center,
43rd Floor Boston MA 02111
John P. Dowling............................................. 13,726(8) *
Joseph C.H. Johnson......................................... -- *
Michael L. Bouris........................................... --(9) *
Russell S. Fisher........................................... --(9) *
Ron Hiram................................................... -- *
Dr. the Honourable Clarence Eldridge James.................. -- *
Frank Mutch................................................. --
Anthony MacLeod Pilling..................................... -- *
John T. Schmidt............................................. 1,000 *
James P. Bryce.............................................. 16,923(10) *
Peter J.A. Cozens........................................... 9,431(11) *
Dennis J. Higginbottom...................................... 3,761(12) *
John R. Weale............................................... 2,150 *
All directors and executive officers as a group............. 46,891 *
</TABLE>
- ---------------
* Less than 1% of the outstanding Common Shares
(1) In accordance with the rules of the Securities and Exchange 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
7
<PAGE> 10
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 (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 current 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 January 18,
1998. 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 9,
1998.
(6) Reflects information reported in a Schedule 13G filing dated February 6
1998.
(7) Reflects information reported in a Schedule 13G filing dated February 9,
1998.
(8) Includes 7,703 Common Shares issuable upon the exercise of options.
(9) Mr. Bouris and Mr. Fisher are a Vice President and Senior Vice President,
respectively, of General Re. The parent of General Re, General Re
Corporation, owns 1,250,000 Common Shares (5.0%).
(10) Includes 100 Common Shares that are held by the IRA trustee for Mr. Bryce's
wife, for which Mr. Bryce disclaims beneficial ownership.
(11) Includes 2,400 Common Shares that are held by Mr. Cozens' wife in her name,
for which Mr. Cozens disclaims beneficial ownership.
(12) Includes 1,781 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 your 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, 1997 were as follows:
JOHN P. DOWLING (age 53) 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 34 years of
insurance experience in 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 49) 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, Mr. Bryce was Far East Regional Manager for
Transatlantic Reinsurance Company (Tokyo), and from July 1985 to July 1993, Mr.
Bryce served as a Director of AIG Reinsurance Services Limited (Hong Kong).
PETER J.A. COZENS (age 50) has been Vice President -- Underwriting of IPC
Re since March 1995. From June 1993 to March 1995 Mr. Cozens was the London
representative of IPC. Mr. Cozens previously served from September 1981 to May
1993 as Group Non-Marine Underwriter of the English & American Group, and from
August 1963 to August 1981 with the Sir Philip D'Ambrumenil Syndicate at
Lloyd's, where his responsibilities were those of Deputy Treaty Underwriter.
STEPHEN F. FALLON (age 41) has been Vice President -- Underwriting of IPC
Re since October 1997. From June 1996 through October 1997 Mr. Fallon was a
Senior Vice President of Folksamerica Reinsurance Company, and from November
1985 to June 1996 Mr. Fallon was a Senior Vice President and Director of
Christiana General Insurance Corporation of New York.
DENNIS J. HIGGINBOTTOM (age 49) was appointed Vice President and Secretary
of the Company and IPC Re in December 1995. From October 1983 to December 1990,
Mr. Higginbottom was Vice President and Director of AICL, and from December 1990
to December 1995, Mr. Higginbottom was Senior Vice President and Director of
AICL.
JOHN R. WEALE (age 39) 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, 1997 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 COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------------------------
------------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION(1) OPTIONS PAYOUTS(2) COMPENSATION
NAMES AND PRINCIPAL POSITION YEAR $ $ $ # $ $
- ---------------------------- ------ ------- ------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John P. Dowling............. 1997 375,000 260,000(3) 88,816 10,000 18,750(5)
President & Chief 1996 325,000 125,000 77,998 20,812 16,250(5)
Executive Officer 1995 275,000 100,000(4) 88,148 -- 0
James P. Bryce.............. 1997 240,000 170,000(3) 158,837 8,000 9,500(7)
Senior Vice President & 1996 225,000 75,000 104,022 16,187 9,500(7)
Senior Vice President -- 1995 185,000 50,000(6) 59,156 -- $163,125 9,240(8)
Underwriting of IPC Re
Peter J.A. Cozens........... 1997 180,000 120,000(3) 176,295 5,000 0
Vice President -- 1996 170,000 45,000 168,820 11,562 0
Underwriting of IPC Re 1995 140,154 35,000(9) 211,267 -- 0
Dennis J. Higginbottom...... 1997 120,000 60,000(3) 56,515 2,500 0
Vice President & Secretary 1996 113,000 20,000 40,849 4,625 0
1995 88,500(10) 3,000(10) 54,754 -- $163,125 0
John R. Weale(11)........... 1997 106,000 53,000(3) 42,434 2,000 5,300(5)
Vice President & Chief 1996 50,000 12,500 19,074 2,000 2,500(5)
Financial Officer
</TABLE>
- ---------------
(1) Other annual compensation for the year ended December 31, 1997 includes
amounts in respect of reimbursement for certain travel expenses, property
management, utilities, club dues, cost of living allowances, education
expenses (with respect to Messrs. Cozens and Higginbottom only), and also
includes housing expenses of $43,125, $84,996, $103,500, $19,800 and
$17,950 for Messrs. Dowling, Bryce, Cozens, Higginbottom and Weale,
respectively.
(2) Represents the value, based on the closing sale price of AIG Common Stock
on the New York Stock Exchange on December 31, 1997 ($108.75) of 1,500
shares (after the effect of a 50% stock dividend effective July 27, 1997)
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 for services previously rendered. SICO is a private holding company
affiliated with AIG. The SICO Plan provides that shares may be set aside
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) 50% of the amount shown is deferred and vests at a rate of 25% on December
31st of each of the first through fourth years following the year of the
grant. Portions of the grant not vested may be subject to forfeiture under
certain conditions.
(4) Includes a 1994 bonus amount of $25,000 paid in 1995 and a 1995 bonus
amount of $20,000 paid in 1996.
(5) Represents Company contributions to the IPC Re Defined Contribution
Retirement Plan. See "Executive Compensation -- Pension Benefits".
(6) Includes a 1995 bonus amount of $25,000 paid in 1996.
(7) Represents contributions by the Company pursuant to a deferred compensation
agreement. See "Executive Compensation -- Pension Benefits".
(8) Represents contributions by the Company to a plan established under Section
401(k) of the Internal Revenue Code.
(9) Includes a 1994 bonus amount of $10,000 paid in 1995 and a 1995 bonus
amount of $7,500 paid in 1996.
(10) During the year ended December 31, 1995 Mr. Higginbottom performed certain
services to IPC Re in compensation for which IPC Re reimbursed AICL one
third of these amounts.
(11) Mr. Weale joined IPC Re as Chief Financial Officer of the Company and IPC
Re on July 1, 1996 and was appointed Vice President of the Company and IPC
Re on July 25, 1996. Prior to joining IPC Re, Mr. Weale was employed by
AICL.
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, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATE OF
COMMON PERCENT OF COMMON SHARE PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING AWARDED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED FISCAL 1997 PER SHARE DATE(1) 5% 10%
---- ---------- ------------- ----------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John P. Dowling............. 10,000 26.0% $22.50 January 2, 2007 141,501 358,592
James P. Bryce.............. 8,000 20.8% $22.50 January 2, 2007 113,201 286,874
Peter J.A. Cozens........... 5,000 13.0% $22.50 January 2, 2007 70,751 179,296
Dennis J. Higginbottom...... 2,500 6.5% $22.50 January 2, 2007 35,375 89,648
John R. Weale............... 2,000 5.2% $22.50 January 2, 2007 28,300 71,718
</TABLE>
- ---------------
(1) The options listed above were granted on January 2, 1997. 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.
All options become exercisable once vested.
The following table sets forth information concerning the number of
unexpired stock options outstanding at December 31, 1997 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, 1997
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS(1)
(UNEXERCISABLE AT (UNEXERCISABLE AT
NAME DECEMBER 31, 1997) DECEMBER 31, 1997)
---- ------------------- ------------------------
<S> <C> <C>
John P. Dowling....................................... 25,609 341,117
James P. Bryce........................................ 20,141 267,476
Peter J.A. Cozens..................................... 13,672 184,133
Dennis J. Higginbottom................................ 5,969 78,500
John R. Weale......................................... 3,500 42,846
</TABLE>
- ---------------
(1) Aggregate market value based on the closing sale price of Common Shares of
$32.1875 on December 31, 1997 less the aggregate exercise price.
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, 1997, Mr. Bryce's covered
compensation was $65,400. 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 12.75 years of credited service at December 31,
1997.
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 also 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............................ $ 21,814 $ 29,085 $ 36,357 $ 43,628 $ 50,899
150,000............................ 27,157 36,210 45,263 54,316 63,367
175,000............................ 31,501 43,335 54,169 65,003 75,836
200,000............................ 37,845 50,460 63,075 75,691 88,305
225,000............................ 43,189 57,585 71,982 86,378 100,744
250,000............................ 48,532 64,710 80,888 97,066 113,242
300,000............................ 59,220 78,960 98,700 118,441 138,180
400,000............................ 80,595 107,460 134,325 161,191 188,055
450,000............................ 91,282 121,710 152,138 182,566 212,992
500,000............................ 101,970 135,960 169,950 203,941 237,930
</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
2.75 years of credited service at December 31, 1997.
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............................. 125,000 166,667 206,333 250,000 291,667
</TABLE>
12
<PAGE> 15
MR. HIGGINBOTTOM. Pursuant to an individual pension arrangement with IPC
Re, Mr. Higginbottom is entitled to a lifetime annual supplemental benefit,
payable monthly, 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 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
17.75 years of credited service at December 31, 1997. 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 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............................. 105,000 140,000 175,000 210,000 245,000
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>
DEFINED CONTRIBUTION RETIREMENT PLAN. From December 1, 1995, Mr. Dowling
has 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. Mr. Weale has been
eligible to participate in this plan since January 1, 1997.
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 your 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 for each of the years
ended December 31, 1997 and 1996 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 your Board of Directors.
13
<PAGE> 16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of your 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
maintenance of the A+ (Superior) rating from A.M. Best Company, the achievement
of the A+ initial rating from Standard and Poor's, 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 $325,000
in 1996 to $375,000 for 1997, together with a cash bonus for 1997 of $260,000.
In determining Mr. Dowling's total compensation for 1997, including the cash
bonus, the Compensation Committee considered the financial performance of the
Company. Mr. Dowling was also granted options to purchase 10,000 Common Shares
of the Company effective January 2, 1997, 25% of which will become exercisable
on January 2, 1998 and 25% of which will become exercisable on each of January
2, 1999, January 2, 2000 and January 2, 2001.
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, 1997, assuming $100
was invested on March 7, 1996. Each measurement point on the graph represents
the cumulative shareholder return as measured by the last reported sale price at
the end of each quarter during the relevant period.
CUMULATIVE TOTAL RETURN PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD 'IPC HOLDINGS, S&P PROPERTY AND
(FISCAL YEAR COVERED) LTD.' CASUALTY S&P 500
<S> <C> <C> <C>
3/7/96 100.00 100.00 100.00
3/31/96 94.89 94.35 98.86
6/30/96 92.84 99.94 103.28
9/30/96 92.39 101.20 106.48
12/31/96 106.13 116.87 115.27
3/31/97 117.05 118.04 118.36
6/30/97 136.36 142.03 139.02
9/30/97 150.59 155.98 149.43
12/31/97 171.50 166.64 153.74
</TABLE>
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.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ARTHUR
ANDERSEN & CO. AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL GENERAL MEETING
If you wish to submit a proposal to be considered for inclusion in the
proxy materials for the 1999 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 24, 1998 to be eligible for inclusion in the
1999 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. Proxy cards 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
15
<PAGE> 18
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 $3,000, plus
out-of-pocket expenses.
OTHER MATTERS
Other than the approval of the minutes from the 1997 Annual General
Meeting, your 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.
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. Mr. Bryce
inadvertently filed one late report with respect to a small purchase of shares.
The Company believes that during 1997 all other filing requirements applicable
to its officers and directors were complied with.
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, 1997, 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 15, 1998, 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
ANNEX
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 12, 1998 (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 15, 1998 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.)
-- FOLD AND DETACH HERE --
<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
1. Item A - Election of Nominees: to elect Directors of the Company to serve
until the Company's next Annual General Meeting of Shareholders or until their
successors are elected or appointed or their office is otherwise revoked.
For Withheld For All
All All Except
/ / / / / /
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 election of directors and may (but need not) indicate the distribution of
their votes among the nominees in the space below.
Joseph C.H. Johnson John P. Dowling Russell S. Fisher
Dr. the Honourable Clarence Eldridge James Frank Mutch
Anthony MacLeod Pilling John T. Schmidt
2. Item B - Appointment of Independent Accountants: to reappoint the firm of
Arthur Andersen & Co. as the Company's independent accountants for the fiscal
year ending December 31, 1998.
For Against Abstain
/ / / / / /
PLEASE VOTE, DATE AND SIGN THIS PROXY BELOW AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated:____________________________, 1998
________________________________________
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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