UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended: March 31, 2005

OR

For the transition period from                      to                     

Commission file number: 0-27662

IPC Holdings, Ltd.

(Exact name of registrant as specified in its charter)

American International Building, 29 Richmond Road, Pembroke, HM 08, Bermuda

(441) 298-5100
(Registrant’s telephone number,
including area code)

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

          The number of outstanding common shares par value U.S. $0.01 per share of IPC Holdings, Ltd., as of May 4, 2005, was 48,334,110.

Table of Contents

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)

The accompanying notes are an integral part of these consolidated financial statements

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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(Expressed in thousands of United States dollars, except for per share amounts)

The accompanying notes are an integral part of these consolidated financial statements

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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of United States dollars)

The accompanying notes are an integral part of these consolidated financial statements

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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Expressed in thousands of United States dollars, except per share amounts)

The accompanying notes are an integral part of these consolidated financial statements

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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of United States dollars)

The accompanying notes are an integral part of these consolidated financial statements

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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 accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of IPC Holdings, Ltd. (the “Company”) and its wholly-owned subsidiaries, IPCRe Limited (“IPCRe”) and IPCRe Underwriting Services Limited (“IPCUSL” 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 month periods ended March 31, 2005 and 2004, respectively, the balance sheet as of March 31, 2005 and the cash flows for the three month periods ended March 31, 2005 and 2004, respectively. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2004, in our report on Form 10-K. The results of operations for any interim period are not necessarily indicative of results for the full year.
2.	DIVIDENDS:
	On March 24, 2005 we paid a dividend of $0.24 per share to shareholders of record on March 8, 2005.
	On April 26, 2005 we declared a dividend of $0.24 per share to be paid on June 23, 2005, to shareholders of record on June 7, 2005.
3.	ACCOUNTING FOR STOCK-BASED COMPENSATION AND DISCLOSURE:
	Management has adopted the fair value method of accounting for stock-based employee compensation as prescribed by Financial Accounting Standards Board (“FASB”) issued Statement No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”) on a prospective basis for all awards granted, modified or settled after January 1, 2003. In December 2004, the FASB revised SFAS 123, replacing it with SFAS 123 (Revised 2004) “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires entities to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such services will be recognized over the period during which an employee is required to provide service in exchange for the award. Since 2003 the Company has expensed compensation costs for stock options on a prospective basis for all awards granted, modified or settled after January 1, 2003 in accordance with Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation and Disclosure”. SFAS 123R requires that the portion of all outstanding awards for which the requisite service has not yet been rendered, i.e. those awards granted prior to January 1, 2003 that have not yet had the requisite service rendered, be expensed. In our annual report on Form 10-K for the year ended December 31, 2004, we stated that the Company would adopt SFAS 123R effective January 1, 2005. On April 14, 2005 the effective date for SFAS 123R was delayed until the first quarter of 2006 and the Company will therefore now adopt SFAS 123R effective January 1, 2006. The amount of the charge recorded in the three months ended March 31, 2005 was $393. The application of SFAS 123R will not have a material effect on the Company’s financial statements.
	On June 13, 2003 the shareholders approved a new stock incentive plan. The plan allows for the issuance of up to one million shares as grants of restricted stock to selected employees to compensate them for their contributions to the long-term growth and profits of the Company. The charge recorded for the quarter ended March 31, 2005 was $345.

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The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period in accordance with SFAS 123.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

The following is a summary of the accounting policies for the three main components of our balance sheet and statement of income: premiums, losses (claims) including reserves and investments/investment income.

Premiums

Premiums are recorded as written at the beginning of each policy, based upon information received from ceding companies and their brokers, and are earned over the policy period. For excess of loss contracts, the amount of deposit premium is contractually documented at inception, and no management judgement is necessary in accounting for this. Premiums are earned on a pro rata basis over the policy period. For proportional treaties, the amount of premium is normally estimated at inception by the ceding company. We account for such premium using initial estimates, which are reviewed regularly with respect to the actual premium reported by the ceding company. At March 31, 2005 the amount of premium accrued resulting from managements’ estimates was approximately 10% of total gross premiums written for the quarter then ended. We also accrue for reinstatement premiums (premiums paid to reinstate reinsurance coverage following a claim). Such accruals are based upon actual contractual terms applied to the amount of loss reserves expected to be paid, and the only element of management judgement involved is with respect to the amount of loss reserves and associated rates on line (i.e. price), as described below. The amount accrued at March 31, 2005 for estimated reinstatement premiums on Reported But Not Enough losses (“RBNE”) and Incurred But Not Reported (“IBNR”) loss reserves was $7.8 million.

Loss Reserves

Under accounting principles generally accepted in the United States of America, we are not permitted to establish loss reserves until the occurrence of an event which may give rise to a claim. As a result, only loss reserves applicable to losses incurred up to the reporting date may be established, with no allowance for the provision of a contingency reserve to account for expected future losses. Claims arising from future catastrophic events can be expected to require the establishment of substantial reserves from time to time.

Estimating appropriate loss reserves for catastrophes is an inherently uncertain process. Loss reserves represent our estimates, at a given point in time, of ultimate settlement and administration costs of losses incurred (including IBNR and RBNE losses). We regularly review and update these estimates, using the most current information available to us. Consequently, the ultimate liability for a catastrophic loss is likely to differ from the original estimate. Whenever we determine that any existing loss reserves are inadequate, we are required to increase the loss reserves with a corresponding reduction, which could be material, in our operating results in the period in which the deficiency is identified. The establishment of new reserves, or the adjustment of reserves for reported claims, could result in significant upward or downward changes to our financial condition or results of operations in any particular period.

The reserve for losses and loss adjustment expenses is based upon reports from industry sources, individual case estimates received from ceding companies and/or their brokers, output from commercially available catastrophe loss models and management’s estimates. When a catastrophic event occurs, we first determine which treaties may be affected using our geographic database of exposures. We then contact the respective brokers and ceding companies involved with those treaties, to determine their estimate of involvement and the extent to which the reinsurance program is affected. We may also use computer modeling to measure and estimate loss exposure under the actual event scenario, if available. Since 1993, we have contracted AIR Worldwide Corporation for the use of their proprietary models — currently CATRADER ® — as part of our modeling approach. These computer-based loss modeling systems utilize A.M. Best’s data and direct exposure information obtained from our clients. Once an event occurs, we establish a specific reserve for that event, based upon estimates of total losses incurred by the ceding insurers as a result of the event and a specific estimate of the portion of such loss we have reinsured. Management’s estimates are used mostly for IBNR or RBNE loss amounts. For certain catastrophic events there is considerable uncertainty underlying the assumptions and associated estimated reserves for losses and loss adjustment expenses. Reserves are reviewed regularly and, as experience develops and additional information becomes known, the reserves are adjusted as necessary. However, complexity resulting from problems such as multiple events affecting one geographic area and the resulting impact on claims adjusting (including allocation of claims to event and the effect of demand surge on the cost of building materials and labour) by, and communications from, ceding companies, can cause delays to the timing with which we are notified of changes to loss estimates. Such adjustments, if necessary, are reflected in results of operations in the period in which they become known. For excess of loss business, which is generally over 90% of the premium we write, we are aided by the fact that each treaty has a defined limit of liability arising from one event. Once that limit has been reached, we have no further exposure to additional losses from that treaty for the same event. For proportional treaties, we generally use an initial estimated loss and loss expense ratio (the ratio of losses and loss adjustment expenses incurred to premiums earned), based upon

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information provided by the ceding company and/or their broker and our historical experience of that treaty, if any. The estimate is adjusted as actual experience becomes known.

At March 31, 2005 management’s estimates for IBNR/RBNE represented approximately 31% of total loss reserves. The majority of the estimate relates to reserves for claims from the four hurricanes which struck Florida and two of the typhoons which struck Japan, in August and September of 2004. If our estimate of IBNR/RBNE at March 31, 2005 was inaccurate by a factor of 10%, our results of operations would be impacted by a positive or negative movement of approximately $8 million. If our total reserve for losses at March 31, 2005 was inaccurate by a factor of 10%, our incurred losses would be impacted by approximately $26 million, which represents approximately 1.5% of shareholders’ equity. In accordance with IPCRe’s registration under the Bermuda Insurance Act 1978 and Related Regulations (the “Insurance Act”), the loss reserves are certified annually by an independent loss reserve specialist.

Investments

In accordance with our investment guidelines, our investments consist of certain equity securities and high-grade marketable fixed income securities. Investments are considered “Available for Sale” and are carried at fair value. Fixed maturity investments are stated at fair value as determined by the quoted market price of these securities as provided either by independent pricing services or, when such prices are not available, by reference to broker or underwriter bid indications. Equity securities and investments in mutual funds are stated at fair value as determined by either the most recently traded price or the net asset value as advised by the fund. Unrealized gains and losses are included within “Accumulated other comprehensive income” as a separate component of shareholders’ equity. Realized gains and losses on sales of investments are determined on a first-in, first-out basis. Investment income is recorded when earned and includes the amortization of premiums and discounts on investments.

We regularly monitor the difference between the cost and fair value of our investments, which involves uncertainty as to whether declines in value are temporary in nature. If we believe a decline in value of a particular investment is temporary, we record the decline as an unrealized loss as a separate component of our shareholders’ equity. If we believe the decline is other-than-temporary, we write down the cost basis of the investment to the market price as of the reporting date and record a realized loss in our statement of income. The determination that a security has incurred an other-than-temporary decline in value requires the judgement of IPC’s management, which includes the views of our investment managers and a regular review of our investments. Our assessment of a decline in value includes our current judgement as to the financial position and future prospects of the entity that issued the security. If that judgement changes in the future we may ultimately record a realized loss, after having originally concluded that the decline in value was temporary.

Generally, we review all securities that are trading at a significant discount to par, amortized cost (if lower) or cost for an extended period of time. We generally focus our attention on all securities whose market value is less than 75% of their cost. The specific factors we consider in evaluating potential impairment include the following:

	•	The extent of decline in value
	•	The length of time the security is below cost
	•	The future prospects of the issuer, or in the case of mutual funds, the future prospects of the fund
	•	Whether the decline appears to be related to general market or industry conditions, or is issuer-specific
	•	Our intent and ability to hold the security
	•	Other qualitative and quantitative factors

At March 31, 2005 our equity investments comprised investments in the following: a U.S. equity fund, a global equity fund, a fund of hedge funds and a fund with attributes similar to those of the S & P 500 Index. None of the funds have a significant concentration in any one business sector; accordingly, the value of our equity funds is principally influenced by macro economic factors rather than issuer-specific factors. Our equity investments are subject to the same analyses as described above for the determination of other-than-temporary declines in value. Since there is a portfolio of securities within each fund, the qualitative issues are usually broader than those for individual securities and therefore the assessment of impairment is inherently more difficult and requires more management judgement.

At March 31, 2005 we did not hold any fixed maturity securities that are not investment grade or not rated.

At March 31, 2005 we determined that there was no other-than-temporary impairment of securities.

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RESULTS OF OPERATIONS, QUARTERS ENDED MARCH 31, 2005 AND 2004

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 and IPCUSL. This discussion should be read in conjunction with our Consolidated Financial Statements and related notes for the quarter ended March 31, 2005.

Our net income for the three months ended March 31, 2005 was $44.0 million, compared to $73.6 million for the quarter ended March 31, 2004, a decrease of 40%. The results in the current quarter were impacted by an increase in losses incurred of $24.4 million, compared to the first quarter of 2004, with the most significant item being cyclone Erwin, which occurred in January of 2005, as well as other items, which are discussed below. Also, we made a net realized loss from the sale of investments of $3.2 million in the quarter ended March 31, 2005, compared to a net realized gain of $5.7 million in the first quarter of 2004.

In the quarter ended March 31, 2005, we wrote premiums of $205.8 million, compared to $210.2 million in the first quarter of 2004, a decrease of 2%. In the first quarter of 2005 we wrote new business of $16.2 million, which more than offset business which was not renewed because of unsatisfactory terms and conditions, or because the cedant did not purchase the protection, which totalled $12.7 million. Premiums from existing business were approximately $5.0 million less in the first quarter of 2005 in comparison to the first quarter of 2004, due to program re-structuring, pricing and foreign exchange rate differences. Adjustment premiums, which are adjustments generally arising from differences between cedants’ actual premium income and the original estimates thereof, were $2.0 million in the first quarter of 2005 compared to $4.8 million in the first quarter of 2004. Reinstatement premiums were $3.2 million in the first quarter of 2005, compared to $3.3 million in the first quarter of 2004. Although the level of losses incurred in the first quarter of 2005 was much higher than in the corresponding period of 2004, the pricing of the contracts impacted was generally much lower. We retroceded premiums of $9.0 million in the quarter ended March 31, 2005, compared to $10.2 million ceded in the first quarter of 2004. The actual contracts ceded in any quarter are at IPC’s underwriters’ judgement in optimizing the risk profile of the portfolio, which can cause premiums ceded to vary as a proportion of our gross writings, from quarter to quarter. Net premiums earned in the quarter ended March 31, 2005 were $82.0 million, compared to $83.6 million in the first quarter of 2004, a decrease of 2%, which is proportionate with the decrease in written premiums and a result of the decrease in adjustment premiums, which are fully earned when written.

Net investment income was $17.5 million in the quarter ended March 31, 2005, compared to $11.6 million in the first quarter of 2004, an increase of 51%. In the first quarter of 2005 we benefitted from a dividend of $4.5 million from the fund of hedge funds in which we invest. Such dividends will be declared periodically, provided the performance of the fund is positive. We also benefitted from a small but positive increase in the average yield of our fixed income investment portfolio.

There was a net realized loss from investments in the quarter ended March 31, 2005 of $3.2 million, compared to a net realized gain of $5.7 million in the first quarter of 2004. Generally, net realized gains and losses fluctuate from period to period, depending on the individual securities sold.

In the quarter ended March 31, 2005, we incurred net losses and loss adjustment expenses of $37.9 million, compared to $13.5 million for the first quarter of 2004. Our losses in the first quarter of 2005 included $20.0 million as a result of cyclone Erwin which struck northern Europe, especially Scandinavia, in January of this year, and an $8.0 million increase to the estimate of our loss from the Tsunami which affected south-east Asia in late December. The increase to our estimate has arisen primarily as a result of the increase in the overall industry loss estimated in Swiss Re’s Sigma publication, which now indicates industry losses totaling $5 billion, an increase of 100-150%. Other losses include minor development from other prior year events, including $5.3 million for last year’s third quarter windstorms, as well as reserves established for pro rata treaty business.

Acquisition costs incurred, which consist primarily of commissions and brokerage fees paid to intermediaries for the production of business, were $8.1 million for the quarter ended March 31, 2005, compared to $9.7 million in the first quarter of 2004, a decrease of 17%. The decrease in these costs is primarily due to more contracts written where the fee or brokerage is being paid by the ceding company. These terms were specific to the small number of contracts involved, and based on renewals seen in the second quarter of 2005 to date, we do not expect this trend to continue during the remainder of 2005. General and administrative expenses were $6.0 million in the quarter ended March 31, 2005, compared to $5.1 million in the first quarter of 2004. The major areas of increase were professional fees related to our compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the audit thereof, and compensation expense as a result of expensing stock grants and options.

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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 IPCUSL by way of loans or dividends. The dividends that IPCRe may pay are limited under Bermuda legislation and IPCRe’s revolving credit facility. The Insurance Act 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 March 31, 2005 was approximately $412.9 million. The maximum amount IPCRe could have paid in the first quarter under the terms of the revolving credit facility was $584.1 million.

IPCRe’s sources of funds consist of premiums written, investment income, paid losses recovered from retrocessionaires, underwriting agency commissions 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, and therefore our cash flows may fluctuate significantly from period to period.

Net cash flows from operating activities in the quarter ended March 31, 2005 were $50.5 million compared to $90.6 million in the first quarter of 2004. The decrease is primarily the result of the increase in net claims paid during the period, which were $55.0 million in the quarter ended March 31, 2005, compared to $10.9 million in the corresponding period of 2004. This trend is expected to continue in the remainder of 2005, as we anticipate paying further claims associated with the windstorms that took place in the third quarter of 2004, as well as claims from events that took place in this quarter.

Net cash outflows from investing activities in the quarter ended March 31, 2005 were $36.3 million (2004 – outflows of $152.4 million). Cash and cash equivalents increased by $2.8 million in the quarter ended March 31, 2005, resulting in a balance of $30.7 million at March 31, 2005. At March 31, 2005, 52% of IPC’s fixed maturity investment portfolio (based on fair value) was held in securities rated AAA, and 26% was held in securities rated AA. At December 31, 2004 the proportions of securities so rated were 53% and 26%, respectively. At March 31, 2005 the average modified duration of IPC’s fixed maturity portfolio was 2.6 years, compared to 2.3 years at December 31, 2004. We renewed our revolving credit facility on July 1, 2003 in the amount of $200 million, provided by a syndicate of lenders led jointly by Bank One N.A. and Citibank N.A. To date we have not drawn upon this facility. We believe that this facility, together with the relatively short duration and high quality of IPC’s investment portfolio, will provide sufficient liquidity to meet IPC’s cash demands.

IPCRe is not a licensed insurer in the United States and therefore, under the terms of most of its contracts with U.S.-based companies, must provide security to reinsureds to cover unpaid liabilities in a form acceptable to state insurance commissioners. Typically, this type of security takes the form of a letter of credit issued by an acceptable bank, the establishment of a trust, or a cash advance. Currently IPCRe obtains letters of credit through one commercial bank pursuant to a $150.0 million facility. In turn, IPCRe provides the bank security by giving the bank a lien over certain of IPCRe’s investments in an amount not to exceed 118% of the aggregate letters of credit outstanding, up to a maximum of $175.0 million. At March 31, 2005, there were outstanding letters of credit of $119.5 million. If we were unable to obtain the necessary credit, IPCRe could be limited in its ability to write business for our clients in the United States.

Our investment portfolio does not currently include direct investments in options, warrants, swaps, collars or similar derivative instruments. Our investment policy guidelines provide that financial futures and options and foreign exchange contracts may not be used in a speculative manner, but may be used, subject to certain numerical limits, only as part of a defensive strategy to protect the market value of the portfolio. Also, our portfolio does not contain any investments in real estate or mortgage loans.

Neither the Company, IPCRe nor IPCUSL have any material commitments for capital expenditures.

Off Balance Sheet Arrangements

Neither the Company nor any of its subsidiaries have any forms of off-balance sheet arrangements, or cash obligations and commitments, as defined by Item 303(a)(4) of Regulation S-K.

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Transactions with Non-Independent Parties

The following is a summary of amounts in respect of significant non-independent party transactions during the three month periods ended March 31, 2005 and 2004, respectively (expressed in thousands of U.S. dollars):

Underwriting services fee income is a percentage of the premiums written on behalf of one client, which is related to a shareholder of the Company. Fees are accrued and taken into income based on the premiums earned each quarter.

For a discussion of certain of our contractual relationships with non-independent parties, please see “Certain Relationships and Related Transactions” in our definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on April 28, 2005 and incorporated by reference into our Form 10-K for the year ended December 31, 2004.

All transactions with related parties are conducted at arm’s length, with normal terms and conditions applicable. Neither the Company nor any of its subsidiaries have entered into any other significant transactions with non-independent parties.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The investment portfolio of IPCRe is exposed to market risk. Market risk is the risk of loss of fair value resulting from adverse fluctuations in interest rates, foreign currency exchange rates and equity prices.

Measuring potential losses in fair values has become the focus of risk management efforts by many companies. Such measurements are performed through the application of various statistical techniques. One such technique is Value at Risk (“VaR”). 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.

We believe that statistical models alone do not provide a reliable method of monitoring and controlling market risk. While VaR models are relatively sophisticated, the quantitative market risk information is limited by the assumptions and parameters established in creating the related models. Therefore, such models are tools and do not substitute for the experience or judgement of senior management.

Our investment managers performed a VaR analysis to estimate the maximum potential loss of fair value for each segment of market risk for our investment portfolio, as of March 31, 2005 and December 31, 2004. The analysis calculated the VaR with respect to the net fair value of our financial instrument assets, which includes cash and cash equivalents, certain equity and high grade fixed maturity securities, as of March 31, 2005 using historical simulation methodology. As of March 31, 2005 the VaR of IPCRe’s investment portfolio was approximately $35.3 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, foreign exchange rate and equity market data.

The following table presents the VaR of each component of market risk of IPCRe’s investment portfolio as of March 31, 2005 and December 31, 2004, respectively, and the average for the quarter ended March 31, 2005 calculated using the beginning, quarterly and ending points (expressed in thousands of U.S. dollars):

Market Risk

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The increase in the overall VaR is primarily a result of an increase in interest rate value at risk, which was due to the impact of the increase in U.S. bond yields in the quarter, as well as the increase in overall duration of our fixed income portfolio. IPCRe’s premiums receivable and liabilities for losses from reinsurance contracts it has written, are also exposed to the risk of changes in value resulting from fluctuations in foreign currency exchange rates. To an extent, the impact on loss reserves of a movement in an exchange rate, will be partly offset by the impact on assets (receivables and cash/investments) denominated in the same currency, or vice versa. As of March 31, 2005 an estimated 34% or $60 million (March 31, 2004 – 40% or $62 million) of reinsurance premiums receivable, and an estimated $51 million (March 31, 2004 – $30 million) of loss reserves, were denominated in non-U.S. currencies. Accordingly, we do not believe that the impact of exchange rate movements in respect of receivables or loss reserves on our overall VaR as of March 31, 2005 to be material.

Item 4. Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the design and operation of these disclosure controls and procedures were effective. No significant changes were made in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

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 Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition, including, but not limited to, expectations regarding market cycles, renewals and our ability to increase written premium volume and improve profit margins, market conditions, the impact of current market conditions and trends on future periods, the impact of our business strategy on our results, trends in pricing and claims and the insurance and reinsurance market response to catastrophic events. Some forward-looking statements may be identified by our use of terms such as “believes,” “anticipates,” “intends,” or “expects” and relate to our plans and objectives for future operations. 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 us or any other person that our objectives or plans will be achieved. We do not intend, and are under no obligation, to update any forward-looking statement contained in this report. The largest single factor in our results has been and will continue to be the severity or frequency of catastrophic events, which is inherently unpredictable. Numerous factors could cause our actual results to differ materially from those in the forward-looking statements, including, but not limited to, the following: (i) the occurrence of natural or man-made catastrophic events with a frequency or severity exceeding our estimates; (ii) any lowering or loss of one of the financial ratings of IPCRe; (iii) a decrease in the level of demand for property catastrophe reinsurance, or increased competition owing to increased capacity of property catastrophe reinsurers; (iv) the effect of competition on market trends and pricing; (v) the adequacy of our loss reserves; (vi) loss of our non-admitted status in United States jurisdictions or the passage of federal or state legislation subjecting us to supervision or regulation in the United States; (vii) challenges by insurance regulators in the United States to our claim of exemption from insurance regulation under current laws; (viii) a contention by the United States Internal Revenue Service that we are engaged in the conduct of a trade or business within the U.S.; (ix) loss of services of any one of our executive officers; (x) changes in interest rates and/or equity values in the United States of America and elsewhere; or (xi) changes in exchange rates and greater than expected currency exposure.

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PART II. OTHER INFORMATION

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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 May 5, 2005	/s/ James P. Bryce
	James P. Bryce
	President and Chief Executive Officer
Date May 5, 2005	/s/ John R. Weale
	John R. Weale
	Senior Vice President and Chief Financial Officer

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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).

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