Catastrophe reinsurance specialist IPC Holdings Ltd. passed a stern test of its business model by making net income of $90.4 million last year.

The 15-year-old Bermuda company's net income for the year was down by more than three quarters compared to 2007, and it was a similar story with the fourth-quarter profit, which totalled $43.7 million, or 79 cents per common share.

But after a high level of catastrophe claims during the year in addition to a treacherous investment environment, chief executive officer Jim Bryce appeared satisfied with the results.

"2008 was a year of unprecedented turmoil, not only in view of the high level of loss activity, but especially in the capital and credit markets, and the impact of this on global economies generally," Mr. Bryce said in IPC's earnings statement, released last night.

"Our underwriting results in 2008 highlighted our disciplined underwriting approach, demonstrated by our 40.2 percent loss ratio, in what is considered to have been the second worst year on record in terms of insured losses."

IPC accounts for unrealised changes in the values of investments held in its net income column. It recognised a net loss of $2.75 million on its investments for the quarter and $168.2 million for the year — a bigger negative impact on the company than hurricanes Ike and Gustav put together.

"As we have seen in the past, out of turmoil can come opportunities," Mr. Bryce said. "We have been gratified by renewals and new business opportunities during the January 1 renewal season. It is noticeable that clients and brokers are entertaining a larger selection of financially strong reinsurers with tried and tested track records of prompt claims payment and continuity of service and support.

"We are hopeful that the remainder of 2009 will bring continued opportunities to grow and consolidate our position in the insurance and reinsurance market."

IPC's fourth-quarter results were impacted by an increase in its loss estimate of $54 million for Ike and $3.9 million for Gustav. The year-total impact of the two storms on IPC was $167.6 million.

Other catastrophe claims during the year resulted from the Alon Refinery explosion in Texas, a storm that hit Queensland, Australia and windstorm Emma that swept through Europe. June's Iowa floods and mid-west tornadoes in May added to IPC's payouts.

Those losses were partly offset by reductions to estimates of losses from previous years, including $11 million for Hurricane Katrina, $22.8 million for UK floods and $18.6 million for an Australian storm.

Gross premiums for the year totalled $403.4 million, just $0.7 million less than 2007, and $40.5 million for the quarter compared to $15.2 million for the same period in 2007.