<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-27662
IPC HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
BERMUDA NOT APPLICABLE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
AMERICAN INTERNATIONAL BUILDING, 29 RICHMOND ROAD, PEMBROKE, HM 08, BERMUDA
(Address of principal executive offices)
(441) 298-5100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes . X..No ........
The number of outstanding common shares par value U.S. $0.01 per share of IPC
Holdings, Ltd., as of August 8, 2000, was 25,033,932.
TOTAL PAGES 16
EXHIBIT INDEX LOCATED ON PAGE 14
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except for per share amounts)
<TABLE>
<CAPTION>
As of As of
June 30, 2000 December 31, 1999
(unaudited) (audited)
------------- -----------------
<S> <C> <C>
ASSETS:
Fixed maturity investments:
Available for sale, at fair market value (Amortized
cost 2000: $496,486; 1999: $501,424) $ 483,102 $ 487,826
Equity investments, available for sale (Cost 2000:
$64,777; 1999: $70,699) 71,697 78,859
Cash and cash equivalents 22,419 28,069
Reinsurance balances receivable (Related party 2000:
$6,895; 1999: $3,886) 51,160 21,460
Deferred premiums ceded 2,012 384
Loss reserves recoverable (Related party 2000: $237;
1999: $459) 2,372 4,585
Accrued investment income 12,029 13,689
Deferred acquisition costs 5,302 1,980
Prepaid expenses and other assets 4,753 4,090
--------- ---------
$ 654,846 $ 640,942
========= =========
LIABILITIES:
Reserve for losses and loss adjustment expenses $ 79,094 $ 111,441
Unearned premiums 47,126 16,364
Reinsurance balances payable (Related party 2000: $329;
1999: $119) 3,294 1,190
Deferred commissions 332 33
Accounts payable and accrued liabilities (Related party
2000: $1,167; 1999: $567) 7,808 6,983
--------- ---------
137,654 136,011
--------- ---------
SHAREHOLDERS' INVESTMENT:
Share capital (Common shares outstanding, par value
U.S.$0.01: 2000: 25,033,932; 1999: 25,033,932 shares) 250 250
Additional paid-in capital 299,833 299,833
Retained earnings 223,574 210,286
Accumulated other comprehensive (loss) income (6,465) (5,438)
--------- ---------
517,192 504,931
--------- ---------
--------- ---------
$ 654,846 $ 640,942
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
2
<PAGE> 3
IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Expressed in thousands of United States dollars, except for per share amounts)
<TABLE>
<CAPTION>
Quarter ended June 30, Six Months ended June 30,
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Gross premiums written 20,200 $ 18,384 78,033 $ 83,699
Premiums ceded (1,298) (260) (2,653) (3,099)
------------ ------------ ------------ ------------
Net written premiums 18,902 18,124 75,380 80,600
Change in unearned premium reserve 4,617 8,808 (29,134) (29,890)
------------ ------------ ------------ ------------
Net premiums earned 23,519 26,932 46,246 50,710
Net investment income 7,823 7,651 15,410 15,064
Realized gains/(losses), net on investments 445 23,633 302 30,178
------------ ------------ ------------ ------------
31,787 58,216 61,958 95,952
============ ============ ============ ============
EXPENSES:
Losses and loss adjustment expenses, net 22,066 49,142 36,978 65,915
Acquisition costs, net 3,435 3,631 5,926 7,001
General and administrative expenses 2,263 2,460 4,943 4,736
Exchange loss / (gain) 547 70 824 171
------------ ------------ ------------ ------------
28,311 55,303 48,671 77,823
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET INCOME 3,476 $ 2,913 13,287 $ 18,129
============ ============ ============ ============
Basic net income per common share $ 0.14 $ 0.12 $ 0.53 $ 0.72
Diluted net income per common share $ 0.14 $ 0.11 $ 0.53 $ 0.70
Weighted average number of common shares - basic 25,033,932 25,033,932 25,033,932 25,033,932
Weighted average number of common shares - diluted 25,146,058 25,990,215 25,123,814 26,081,456
</TABLE>
See accompanying Notes to Consolidated Financial Statements
3
<PAGE> 4
IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in thousands of United States dollars)
<TABLE>
<CAPTION>
Quarter ended June 30, Six months ended June 30,
------------------------ -------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET INCOME $ 3,476 $ 2,913 $ 13,287 $ 18,129
-------- -------- -------- --------
OTHER COMPREHENSIVE (LOSS) INCOME:
Holding (losses ) gains, net on
investments during period (741) (3,798) (725) (5,811)
Reclassification adjustment for (gains)
losses included in net income (445) (23,633) (302) (30,178)
-------- -------- -------- --------
(1,186) (27,431) (1,027) (35,989)
-------- -------- -------- --------
COMPREHENSIVE INCOME (LOSS) $ 2,290 $(24,518) $ 12,260 $(17,860)
======== ======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
4
<PAGE> 5
IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of United States dollars)
<TABLE>
<CAPTION>
Six months ended June 30,
--------------------------
2000 1999
--------- ---------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,287 $ 18,129
Adjustments to reconcile net income to cash provided
by operating activities:
Amortization of investment premium, net (145) 38
Realized (gains) losses, net on investments (302) (30,178)
Changes in, net:
Reinsurance balances receivable (29,700) (31,948)
Funds held by reinsured companies 0 2,434
Deferred premiums ceded (1,628) (1,381)
Loss reserves recoverable 2,213 (3,740)
Accrued investment income 1,660 4,987
Deferred acquisition costs (3,322) (3,605)
Prepaid expenses and other assets (663) (973)
Reserve for losses and loss adjustment expenses (32,347) 39,268
Unearned premiums 30,762 31,271
Reinsurance balances payable 2,104 1,669
Deferred commissions 299 89
Accounts payable and accrued liabilities 825 (451)
--------- ---------
(16,957) 25,609
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed maturity investments (93,836) (195,566)
Proceeds from sale of fixed maturity investments 90,599 147,438
Proceeds from maturities of fixed maturity investments 8,000 29,500
Purchases of equity investments (2,708) (79,141)
Proceeds from sale of equity investments 9,251 100,912
--------- ---------
11,306 3,143
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional share capital 0 0
Cash dividends paid to shareholders 0 (15,896)
--------- ---------
0 (15,896)
--------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,651) 12,856
CASH AND CASH EQUIVALENTS, beginning of period 28,069 20,966
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 22,418 $ 33,822
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
5
<PAGE> 6
IPC HOLDINGS, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of United States dollars, except for per share amounts)
(unaudited)
1. GENERAL:
The consolidated interim financial statements presented herein have been
prepared on the basis of United States generally accepted accounting
principles ("GAAP") and include the accounts of IPC Holdings, Ltd. (the
"Company"), and its wholly owned subsidiaries, IPCRe Limited ("IPCRe") and
IPCRe Services Limited ("Services" and, together with the Company and IPCRe,
"IPC") and IPCRe Europe Limited, which is a wholly-owned subsidiary of
IPCRe. In the opinion of management, these financial statements reflect all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of the results of operations for the three and six month
periods ended June 30, 2000 and 1999, respectively, the balance sheet at
June 30, 2000 and the cash flows for the six month periods ended June 30,
2000 and 1999, respectively. These interim consolidated financial statements
should be read in conjunction with the audited consolidated financial
statements for the year ended December 31, 1999. The results of operations
for any interim period are not necessarily indicative of results for the
full year.
2. DIVIDENDS:
No dividends have been declared or paid in 2000 to date.
3. NET INCOME PER SHARE:
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", which requires dual presentation of basic and diluted
earnings per share. Diluted net income per common share is computed by
dividing net income by the weighted average number of shares of common stock
and common stock equivalents outstanding during the year. Stock options held
by a shareholder of the Company were considered common stock equivalents and
were included in the number of weighted average shares outstanding using the
treasury stock method. Stock options granted to employees on February 15,
1996, July 25, 1996, January 2, 1997, January 2, 1998, January 4, 1999 and
January 3, 2000 were also considered common stock equivalents for the
purpose of calculating diluted net income per common share.
4. ACCOUNTING FOR DERIVATIVES:
The Financial Accounting Standards Board has also recently issued Statement
of Financial Accounting Standard No. 137 ("SFAS 137"), which is an amendment
to Statement of Financial Accounting Standard No. 133, "Accounting for
Derivative Instruments and Hedging Activities," ("SFAS 133"), deferring the
effective date thereof to periods beginning after June 15, 2000. Management
does not expect the impact of the adoption of SFAS 137/133 on the Company's
financial position or results to be material.
5. DEPOSIT ACCOUNTING:
In October, 1998 the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-7, "Accounting for Insurance and
Reinsurance Contracts that do not Transfer Insurance Risk", which is
effective for fiscal years beginning after June 15, 1999. IPCRe does not
currently write or cede business which would be affected by this Statement.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS, QUARTERS ENDED JUNE 30, 2000 AND 1999
The following is a discussion of the results of operations and financial
position of IPC Holdings, Ltd. References to "we", "our" or "IPC" mean IPC
Holdings together with its wholly-owned subsidiaries, IPCRe Limited
("IPCRe"), and IPCRe Services Limited. This discussion should be read in
conjunction with our Consolidated Financial Statements and related notes,
for the quarter and six months ended June 30, 2000.
In the quarters ended June 30, 2000 and 1999, we wrote premiums of $20.2
million and $18.4 million, respectively, an increase of 9.9%. Written
premiums in the quarter were higher due to some programs being written on
January 1, 1999 for periods of fifteen months, as our clients sought to
renew for periods extending past January 1, 2000. We also wrote business for
new clients and additional business for existing clients. In addition,
written premium volume benefitted from increases in premium rates, which
were in the range of 5 to 10% for loss-free contracts, and approximately 10
to 20% for loss-impacted contracts. Written premiums also included
reinstatement premiums of $0.1 million in the second quarter of 2000,
compared to $4.1 million of reinstatement premiums recorded in the same
period in 1999. We ceded premiums of $1.3 million to IPCRe's proportional
reinsurance facility in the second quarter of 2000, compared to $0.3 million
ceded in the second quarter of 1999. This increase is also due, in part, to
those contracts which were written last year for policy periods extending
beyond January 1, 2000. Net premiums earned in the three months ended June
30, 2000 were $23.5 million, compared to $26.9 million in the same period in
1999, a decrease of 12.7%. Earned premiums were lower primarily because of
the amount of reinstatement premiums written in the second quarter of 1999,
which are fully earned when written.
Net investment income was $7.8 million in the quarter ended June 30, 2000,
compared to $7.7 million for the quarter ended June 30, 1999, an increase of
2.3%. This increase is a result of an increase in the net yield of the
portfolio.
There was a net realized gain from the sale of investments in the quarter
ended June 30, 2000 of $0.4 million, compared to a gain of $23.6 million in
the second quarter of 1999. Net realized gains and losses fluctuate from
period to period, depending on the individual securities sold, as
recommended by IPCRe's investment advisor. In May 1999, we sold and
subsequently repurchased all of the securities in our equity portfolio,
realizing the gains which had been accumulating since the original
purchases.
In the three months ended June 30, 2000, incurred losses were $22.1 million,
compared to $49.1 million in the second quarter of 1999. Incurred losses in
the second quarter were primarily the result of the further development of
claims from events which occurred in 1999, including the cyclonic storms
that struck Europe in December ($12.1 million) and from Typhoon Bart, which
struck Japan in late September 1999 ($3.5 million). In the second quarter of
1999, incurred losses included the Sydney hailstorm of April, and the
tornadoes that struck Oklahoma, Tennessee and Texas in May. Those events
accounted for approximately $45 million in the second quarter of 1999. Our
loss and loss expense ratio (the ratio of losses and loss adjustment
expenses to premiums earned) was 93.8% in the second quarter of 2000,
compared to 182.5% in the second quarter of 1999.
Acquisition costs incurred, which consist primarily of commissions and
brokerage fees paid to intermediaries for the production of business, were
$3.4 million for the quarter ended June 30, 2000, compared to $3.6 million
in the same period of 1999, a decrease of 5.4%. This reduction is due in
part to the decrease in earned premiums, but not proportionately so, because
of the level of reinstatement premiums written in the second quarter of
1999, on which brokerage fees ranged from 0 to 5%. General and
administrative expenses were $2.3 million in the quarter ended June 30,
2000, compared to the $2.5 million incurred in the corresponding period in
1999. This decrease is due primarily to reductions in administrative fees
which are based on earned premiums, as well as general reductions in various
operating expense categories. IPC's expense ratio (the ratio of acquisition
costs plus general and administrative expenses to premiums earned) was 24.2%
for the quarter ended June 30, 2000 compared to 22.6% for the corresponding
period in 1999.
The following table summarizes the loss and loss expense ratio, expense
ratio and combined ratio (sum of loss and loss expense ratio, plus expense
ratio) for the quarters ended June 30, 2000 and 1999, respectively:
<TABLE>
<CAPTION>
Quarter ended June 30,
----------------------
2000 1999
---- ----
<S> <C> <C>
Loss & loss expense ratio 93.8% 182.5%
Expense ratio 24.2% 22.6%
Combined ratio 118.0% 205.1%
</TABLE>
Our net income for the quarter ended June 30, 2000 was $3.5 million,
compared to $2.9 million for the corresponding period in 1999, an increase
of 19.3%. Excluding the effects of net realized gains and losses arising
from the sale of investments, net operating income for the second quarter of
2000 was $3.0 million, compared to a net operating loss of
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<PAGE> 8
$(20.7) million for the second quarter of 1999, an increase of 114.6%. This
increase is primarily the result of lower losses and lower expenses, as
discussed above.
RESULTS OF OPERATIONS, SIX MONTHS ENDED JUNE 30, 2000 AND 1999
For the six months ended June 30, 2000 and 1999, we wrote premiums of $78.0
million and $83.7 million, respectively, a decrease of 6.8%. Written
premiums were impacted by a number of treaties written effective January 1,
1999, which had policy periods greater than twelve months because of
clients' concerns regarding Year 2000 issues. The reductions in written
premiums resulting from this, which totaled approximately $5.6 million, were
partially offset by new business and additional business written for
existing clients. We also benefitted from increases in premium rates, which
were in the range of 3 to 10% for loss-free contracts, and approximately 10%
to 20% for loss-impacted contracts. Our written premiums also included
reinstatement premiums of $1.5 million in the six months to June 30, 2000,
compared to $5.5 million of reinstatement premiums written in the
corresponding period of 1999. We ceded premiums of $2.7 million to IPCRe's
proportional reinsurance facility in the six months ended June 30, 2000,
compared to $3.1 million ceded in the corresponding period of 1999. This
reduction is primarily due to the fact that some of the treaties ceded in
2000 were also those which had policy periods greater than twelve months.
Net premiums earned in the six months ended June 30, 2000 were $46.2
million, compared to $50.7 million in the same period in 1999, a decrease of
8.8%. Earned premiums were lower primarily because net written premiums were
lower, and because reinstatement premiums are fully earned when written.
Net investment income was $15.4 million in the six months ended June 30,
2000, compared to $15.1 million for the six months ended June 30, 1999, an
increase of 2.3%. This increase is a result of an increase in the net yield
of the portfolio.
There was a net realized gain from the sale of investments in the six months
ended June 30, 2000 of $0.3 million, compared to a gain of $30.2 million in
the corresponding period of 1999. Net realized gains and losses fluctuate
from period to period, depending on the individual securities sold, as
recommended by IPCRe's investment advisor. In February 1999, there was a
reallocation within the portfolio, whereby the equity element was reduced
from approximately 15% to 12%. In May 1999, we sold and subsequently
repurchased all of the equity securities in our portfolio, realizing the
gains which had been accumulating since their original purchase which also
resulted in significant gains.
In the six months ended June 30, 2000, incurred losses were $37.0 million,
compared to $65.9 million in the corresponding period of 1999. Incurred
losses in the first half of 2000 were primarily the result of the
development of claims from the European storms that occurred in December
1999 ($21.4 million) and from Typhoon Bart, which struck Japan in late
September 1999 ($5.3 million). In 1999, incurred losses included $6.3
million from the Rouge Industries steel mill explosion, $38.2 million from
the Sydney hailstorm in April, and the tornadoes which struck various parts
of the mid-West United States in May ($10.0 million). Our loss and loss
expense ratio was 80.0% in the first half of 2000, compared to 130.0% in the
first half of 1999.
Acquisition costs incurred were $5.9 million for the six months ended June
30, 2000, compared to $7.0 million in the same period of 1999, a decrease of
15.4%. The reduction is due to the decrease in earned premiums, as well as
reductions in the accruals of profit commissions and no-claims bonuses,
because of losses on those contracts. General and administrative expenses
were $4.9 million in the six months ended June 30, 2000, compared to the
$4.7 million incurred in the corresponding period in 1999. This increase is
due primarily to increases in various expense categories, including salaries
and benefits, data processing and legal fees. IPC's expense ratio was 23.5%
for the six months ended June 30, 2000 compared to 23.1% for the
corresponding period in 1999.
The following table summarizes the loss and loss expense ratio, expense
ratio and combined ratio for the six months ended June 30, 2000 and 1999,
respectively:
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
2000 1999
---- ----
<S> <C> <C>
Loss & loss expense ratio 80.0% 130.0%
Expense ratio 23.5% 23.1%
Combined ratio 103.5% 153.1%
</TABLE>
Our net income for the six months ended June 30, 2000 was $13.3 million,
compared to $18.1 million for the corresponding period in 1999, a decrease
of 26.7%. Excluding the effects of net realized gains and losses arising
from the sale of investments, net operating income for the first six months
of 2000 was $13.0 million, compared to an operating loss of $(12.0) million
for the first six months of 1999, an increase of 207.8%. This increase is
primarily the result of lower losses and lower acquisition costs, as
discussed above.
8
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LIQUIDITY AND CAPITAL RESOURCES
IPC Holdings is a holding company that conducts no reinsurance operations of
its own. Its cash flows are limited to distributions from IPCRe and Services
by way of loans or dividends. The dividends that IPCRe may pay are limited
under Bermuda legislation and IPCRe's revolving credit facility. The Bermuda
Insurance Act of 1978, and subsequent amendments thereto, require IPCRe to
maintain a minimum solvency margin and a minimum liquidity ratio. The
maximum dividend payable by IPCRe in accordance with Bermuda regulations as
of January 1, 2000 was approximately $126 million.
IPCRe's sources of funds consist of premiums written, investment income and
proceeds from sales and redemptions of investments. Cash is used primarily
to pay losses and loss adjustment expenses, premiums retroceded, brokerage
commissions, excise taxes, general and administrative expenses and
dividends. The potential for a large catastrophe means that unpredictable
and substantial payments may need to be made within relatively short periods
of time. Hence our cash flows fluctuate significantly from period to period.
Net cash outflows from operating activities in the six months ended June 30,
2000 were $(17.0) million compared to a net cash inflow from operations of
$25.6 million in the corresponding period in 1999, which represents a
decrease of 166.2%. The decrease is primarily the result of the significant
amount of net claim payments in the first half of 2000, which totaled $64.8
million, compared to $29.8 million in the first half of 1999.
Net cash flows from investing activities in the six months ended June 30,
2000 were $11.3 million. Cash and cash equivalents decreased by $5.7 million
in the six months ended June 30, 2000, resulting in a balance of $22.4
million at June 30, 2000. At June 30, 2000, 54.8% of IPC's fixed maturity
portfolio (based on market value) was held in cash, United States Treasury
notes and in securities rated AAA, and 31.3% was held in securities rated
AA. The average modified duration of IPC's fixed maturity portfolio was 2.5
years. IPC's portfolio does not contain any investments in real estate or
mortgage loans. We believe that IPCRe's $300 million revolving credit
facility, and the relatively high quality of its investment portfolio,
provide sufficient liquidity to meet IPC's cash demands.
Neither the Company, IPCRe nor Services have any material commitments for
capital expenditures.
YEAR 2000 DISCLOSURE STATEMENT
IPCRe is principally an excess of loss property catastrophe reinsurer.
IPCRe's reinsurance policies did not specifically include Y2K as a covered
event and IPCRe did not intend to provide specific coverage for losses
arising from Y2K events. We carefully monitored the terms of policy renewals
with respect to the extent that they oblige us to provide such coverage and,
with respect to renewals in 1999, we declined certain business.
Although no significant property damage has been reported with Y2K as its
primary cause, a limited number of commercial policyholders have sought a
response from their property insurers for compensation for remedial costs.
These cases involve a creative interpretation of the sue and labour clause
in policies, which is designed to compensate policyholders for costs
involved in efforts to mitigate losses from insured events. The outcome of
these cases is uncertain but, given the limited number of cases, we
currently believe that such cases are unlikely to have a significant impact,
if any, on IPCRe's operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Our investment managers performed a Value at Risk ("VaR") analysis, to
estimate the maximum potential loss of fair value for each segment of market
risk, as of June 30, 2000. VaR is a summary statistical measure that uses
historical interest and foreign currency exchange rates and equity prices
and estimates of the volatility and correlation of each of these rates and
prices to calculate the maximum loss that could occur within a given
statistical confidence level and time horizon. The analysis calculated the
VaR with respect to the net fair value of our financial instrument assets as
of June 30, 2000 using historical simulation methodology. Previous analyses
performed as of December 31, 1998 and 1999, respectively, used the variance
covariance (delta normal) methodology. At June 30, 2000 the VaR of IPCRe's
investment portfolio was approximately $8.2 million, which represents a 95th
percentile value change over a one-month time horizon. This result was
obtained through historical simulation using approximately 750 days (3
years) of historical interest rate and equity market data.
For certain non-U.S. dollar currencies, exchange rate movements have shown
more volatility, especially the Euro, which had fallen 13% between late
February and early May, but recovered almost 50% of that fall by June 30,
2000. To reduce the potential impact of exchange rate movements between the
U.S. dollar, Australian dollar and the Euro, on the liabilities arising out
of the Sydney hailstorm of April 1999 and the European storms of December
1999, Australian Dollars and Euros were purchased in February 2000 for
future delivery to match anticipated pay-out patterns of the liabilities.
Such transactions were designed to provide a potential offset of the impact
of exchange rate
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<PAGE> 10
movements through asset/liability matching. From a risk perspective, we do
not believe that the impact of such transactions on our overall VaR to be
material. At June 30, 2000 we held U.S.$8.4 million in Australian dollar
time deposits, and U.S.$4.0 million in Euro time deposits, and the following
forward purchase agreements were outstanding:
<TABLE>
<CAPTION>
Buy Sell Date
--- ---- ----
<S> <C> <C>
(euro) 3.16 million U.S.$3.50 million Aug.25/00 (net transactions)
U.S.$0.00 million (euro) 0.43 million Nov.24/00 (net transactions)
</TABLE>
There were no forward purchase/sale contracts in effect during 1999.
SUBSEQUENT EVENT
On July 25, 2000 John P. Dowling retired as Director, President and Chief
Executive Officer of IPC Holdings, Ltd., IPCRe Limited, and as Director of
IPCRe Services Ltd., and IPCRe Europe Limited. James P. Bryce, formerly
Senior Vice President of IPC Holdings, Ltd. and IPCRe Limited, was appointed
President and Chief Executive Officer of IPC Holdings, Ltd. and IPCRe
Limited, and Director of IPCRe Services Limited. On August 2, 2000, Mr.
Bryce was appointed as a Director of IPCRe Europe Limited.
NOTE ON FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Exchange Act. Forward-looking statements are statements other than
historical information or statements of current condition. Some
forward-looking statements may be identified by use of terms such as
"believes", "anticipates", "intends", or "expects". These forward-looking
statements include but are not limited to expectations regarding market
conditions, trends in pricing, and claims activity, and are based on a
number of assumptions that are subject to risk and uncertainty, including
potential market response and the effects on terms of renewals to recent and
historic catastrophic events. In light of the risks and uncertainties
inherent in all forward-looking statements, the inclusion of such statements
in this report should not be considered as a representation by the Company
or any other person that the objectives or plans of the Company will be
achieved. Numerous factors could cause the Company's actual results to
differ materially from those in the forward-looking statements, including:
greater than expected severity or frequency of catastrophic events,
reductions in pricing, or a decrease in demand for property catastrophe
reinsurance.
10
<PAGE> 11
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 16, 2000, the Annual General Meeting of Shareholders of
the Company was held. At the meeting, shareholders were asked to
vote upon resolutions set forth below. The following tabulation
indicates the number of shares present in person or by proxy at
such meeting and the number of such shares for or against, or
withheld, or abstaining, with respect to each resolution, after
giving effect to the voting limitations contained in the Company's
Bye-Laws:
i). electing the following persons as directors of the Company to
serve until the 2000 Annual General Meeting -
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
--- ------- --------
<S> <C> <C> <C>
Joseph C.H. Johnson 14,425,842 - 93,193
Russell S. Fisher 14,427,197 - 91,838
John P. Dowling 14,426,497 - 92,538
Anthony M. Pilling 14,430,555 - 88,480
Dr. the Honourable Clarence James 14,432,335 - 86,700
Frank Mutch 14,432,087 - 86,948
James P. Bryce 14,431,105 - 87,930
</TABLE>
ii). appointing Arthur Andersen as auditors of the Company for its
fiscal year ending December 31, 2000 -
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
--- ------- --------
<S> <C> <C> <C>
13,871,103 11,758 636,174
</TABLE>
All resolutions were passed by show of hands. No other business of
substance was transacted.
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Unless otherwise indicated, exhibits are incorporated by reference
to the corresponding numbered exhibits to the Company's
Registration Statement on Form S-1 (Registration No. 333-00088).
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 Memorandum of Association of the Company
3.2 Amended and Restated Bye-laws of the Company
3.3 Form of Memorandum of Increase of Share Capital
11.1 * Reconciliation of basic and diluted net income per common share ("EPS").
27.1 * Financial Data Schedule
</TABLE>
* Filed herewith
(b) Reports on Form 8-K
11
<PAGE> 12
A report on Form 8-K was filed on July 11, 2000 reporting our
issuance of a press release on July 10, 2000 which announced the
retirement of our Chief Executive Officer, John P. Dowling, and
the appointment of James P. Bryce as his successor, effective July
25, 2000.
12
<PAGE> 13
IPC HOLDINGS, LTD.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
IPC HOLDINGS, LTD.
------------------
(REGISTRANT)
DATE AUGUST 10, 2000 /s/ James P. Bryce
--------------- ----------------------------------
JAMES P. BRYCE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DATE AUGUST 10, 2000 /s/ John R. Weale
--------------- ----------------------------------
JOHN R. WEALE
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
13
<PAGE> 14
EXHIBIT INDEX
Unless otherwise indicated, exhibits are incorporated by reference to the
corresponding numbered exhibits to the Company's Registration Statement on
Form S-1 (Registration No. 333-00088).
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 Memorandum of Association of the Company
3.2 Amended and Restated Bye-laws of the Company
3.3 Form of Memorandum of Increase of Share Capital
11.1 * Reconciliation of the basic and diluted net income per common share ("EPS")
27.1 * Financial Data Schedule
</TABLE>
* Filed herewith
14
