IPC Re says it will likely take a $60 million hit on its fourth quarter earnings, as a result of catastrophe losses last year.

In a Press release the company said its last quarter results ? with the company due to release its earnings report for the quarter and year after market close on February 22 ? will be adversely impacted because of revised estimates from the third quarter Florida hurricanes and Pacific typhoons.

?Based upon our analysis which has been revised using updated information provided by ceding companies, IPC expects the aggregate net impact on fourth quarter 2004 earnings from these events to be approximately $60 million, after taking into account reinstatement premium and reinsurance recoveries,? the release said.

The revised estimate of these losses will be partly offset by favourable development from prior year events, and on a preliminary basis, IPC expects fourth quarter net claims incurred to be approximately $50 million. The company said it could again revise estimates, as information became available.

Separately, IPC Re president and CEO James Bryce shared some of his views on how the heavy storm season last year could affect the industry, in the first 2005 edition of the Bermuda Insurance Update.

Mr. Bryce wrote that the ?highly unusual multi-storm activity in the Atlantic? as well as unprecedented typhoon activity in the Pacific would likely accelerate further evolution in the development of ?cat risk? models. The change in the face of risk will also force insurers and reinsurers to re-evaluate whether they look at the severity or frequency of events, according to Mr. Bryce.

He estimated that the cumulative effect of the 2004 storm season to the Bermuda market would be in the region of $2.5 billion to $3 billion in gross losses.

Mr. Bryce said his ?guesstimate? bore in mind that the local market has probably the largest single segment of catastrophe business on a global basis, as well as large involvement in other types of reinsurance. ?The fact that this market could absorb a magnitude of losses this large, and still keep its financial integrity, is a testimony to the strength of the balance sheets present here in Bermuda.?

?It is clear that insurers will seek some restructuring during the renewal process to take multiple events into account,? with Mr. Bryce adding that one way reinsurers may do this is to seek to introduce aggregate caps on policies. This would effectively put a limit on what insurers can claim for an individual event of for the entire period of insurance.