Florida homeowners? relief at the decision of the state to take on much of the catastrophe loss risk reminds one Bermuda reinsurance boss of people ?drinking champagne on the stern of the ?.

IPC Holdings Ltd. president and chief executive officer Jim Bryce expressed his doubts about the Florida policy during his company?s fourth-quarter earnings conference call yesterday.

The ?Sunshine State? signed in a law last month that doubled the capacity of the state catastrophe fund to $32 billion and is to offer subsidised rates in the reinsurance market to cut premiums for homeowners.

?The Florida issue has been overblown,? Mr. Bryce said yesterday. ?The Florida homeowners are happy now. But it reminds me of people cracking open the champagne on the stern of the .?

The state had decided to offer reinsurance ?at a fraction of the rate? that the industry could, Mr Bryce added. And IPC had little to lose from the move as it had written only $500,000 of business there last year and it would be clear by June whether that business would be renewed.

?Florida has come up with a political solution and it may or may not work,? Mr Bryce said. ?I would hate to see all those people on the stern of the going underwater.?

He cited the California catastrophe fund, designed to help the state with insurance against earthquake losses, as another example of governmental involvement in the industry.

?The state solution, taking business out of the market, seems to work when you don?t have losses,? Mr. Bryce said.

?The commercial market realises that risk is an ongoing concern. The capacity is there, in fair and foul weather alike. Political solutions don?t always work when tested.?

He predicted that some industry clients would share his doubts about the Florida scheme. ?The more sophisticated buyers of reinsurance are not going to be relying on Florida as a long-term solution,? he said.

The important thing for the industry to do was to maintain underwriting discipline, after the widespread bumper profits following a 2006 during which no hurricanes made landfall in the US, Mr. Bryce said.

?In 2005 we had 27 named storms, 15 hurricanes, the first season with three category fives and the strongest hurricane on record. What a difference a 12-month period can produce.

?We had the largest loss on record just 18 months ago and we are still replenishing our balance sheets from 2005.?

IPC, which announced profits of $394.6 million for 2006 on Tuesday night, declared a 25 percent increase in its quarterly dividend, from 16 cents a share to 20 cents, to be paid on March 22 to shareholders of record as of March 6.