Bermuda reinsurer IPC Holdings yesterday reported net income of $86.8 million for the first quarter, up 13 percent on the same period last year.

The catastrophe coverage specialists' losses in the first three months of the year included a $14.5-million pay-out in connection with the Alon Refinery explosion in Texas.

But results compared favourably with prior year first quarter, when IPC's incurred losses included a $50 million reserve established for windstorm Kyrill, which caused devastation through a large swathe of western and central Europe.

Earnings for the quarter amounted to $1.31 per share, compared with $77.2 million, or $1.07 per share in 2007.

Combined ratio was 23.5 percent compared to 67.1 percent last year. The ratio reflects the proportion of each premium dollar paid out in claims and expenses.

Gross premiums written fell to $197.9 million, compared to $236.2 million in 2007.

Although the company managed to write $22.6 million of premiums relating to new business, premiums from existing business fell by $38.9 million, due to factors including higher risk retention by ceding insurers and, to a lesser extent, lower pricing, IPC said in its earnings statement.

IPC president and chief executive officer Jim Bryce said the first quarter had been active in terms of catastrophe losses including windstorm Emma in Europe, cyclones in Australia, and tornado and freeze losses in the US.

"However, despite this increase in frequency, it has still been relatively quiet for IPC, because most of the catastrophe events were contained within our clients' retentions, and our main per-risk exposure is energy related," Mr. Bryce said.

"To varying degrees, underwriting discipline is prevailing within the market. Pricing is generally in line with our expectations, although we have been impacted by some significant increases in our US clients' retentions, which has reduced the amount of premiums they are paying.

"In addition, there was some modest weakening of rates in Europe. However, April renewals in Japan benefited from recent loss activity, which helped maintain the level of pricing in that territory."

In the absence of major catastrophic events and continued strong earnings, Mr. Bryce said capital management was a critical issue.

"In February 2008, the board of directors authorised a $300 million share repurchase, and I am pleased to advise that to date we have completed one third of that authorisation.

"This was in addition to the $200 million authorisation that was mostly utilised in 2007, and completed during the first quarter of 2008."

IPC's net investment income fell to $23.9 million in the first quarter, compared to $33.1 million in the same period last year.

IPC said it received no dividends from its investment in a fund of hedge funds during the first quarter, compared to the $7.9 million received last year.

Also the overall yield from the fixed income portfolio fell by approximately 20 basis points during the first quarter of 2008, compared to the first quarter of 2007.