##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedMarch 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number 0-27662
 IPC Holdings, Ltd.
  Bermuda
    
    Not ApplicableState or other jurisdiction of 
incorporation or organization
    
    (I.R.S. Employer
Identification No.)
 American International Building,       29 Richmond Road, Pembroke, Bermuda
    
    HM 08(Address of principal executive offices)
    
    (Zip Code)
 (441) 298-5100
 þ o
  þ o o
 o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal Proceedings.Item 1A. Risk Factors.Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.Item 3. Defaults upon Senior Securities.Item 4. Submission of Matters to a Vote of Security Holders.Item 5. Other Information.Item 6. Exhibits.SIGNATURESEXHIBIT INDEXEX-11.1: RECONCILIATION OF BASIC AND DILUTED NET INCOME PER COMMON SHAREEX-12.1: STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGESEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
  
 As of
    
    
    As ofMarch 31, 2007
    
    
    December 31, 2006(unaudited)ASSETS:Fixed maturity investments, at fair value
(amortized cost 2007: $1,861,053; 2006: $1,808,917)
    
    $
    1,876,547
    
    
    $
    1,819,561Equity investments, at fair value (cost 2007:
$468,588; 2006: $460,197)
    
    
    588,970
    
    
    
    577,549Cash and cash equivalents
    
    
    79,238
    
    
    
    88,415Reinsurance premiums receivable
    
    
    200,238
    
    
    
    113,811Deferred premiums ceded
    
    
    6,037
    
    
    
    2,823Losses and loss adjustment expenses recoverable
    
    
    1,580
    
    
    
    1,989Accrued investment income
    
    
    25,144
    
    
    
    28,469Deferred acquisition costs
    
    
    22,043
    
    
    
    9,551Prepaid expenses and other assets
    
    
    4,839
    
    
    
    3,261TOTAL ASSETS
    
    $
    2,804,636
    
    
    $
    2,645,429LIABILITIES:Reserve for losses and loss adjustment expenses
    
    $
    517,025
    
    
    $
    548,627Unearned premiums
    
    
    207,157
    
    
    
    80,043Reinsurance premiums payable
    
    
    7,856
    
    
    
    4,680Deferred fees and commissions
    
    
    1,305
    
    
    
    1,150Accounts payable and accrued liabilities
    
    
    17,472
    
    
    
    19,974TOTAL LIABILITIES
    
    
    750,815
    
    
    
    654,474SHAREHOLDERS EQUITY:Common shares outstanding, par value U.S.
$0.01: 2007: 63,848,158; 2006: 63,702,211
shares
    
    
    639
    
    
    
    637Preferred shares  Series A mandatory
convertible preferred shares outstanding, par
value U.S. $0.01: 2007: 9,000,000; 2006: 9,000,000
    
    
    90
    
    
    
    90Additional paid-in capital
    
    
    1,480,045
    
    
    
    1,475,533Deferred stock grant compensation
    
    
    (3,380
    )
    
    
    (1,441
    )Retained earnings
    
    
    577,113
    
    
    
    388,826Accumulated other comprehensive (loss) income
    
    
    (686
    )
    
    
    127,310TOTAL SHAREHOLDERS EQUITY
    
    
    2,053,821
    
    
    
    1,990,955TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,804,636
    
    
    $
    2,645,429
  2




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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
  
 Quarter ended March 31,2007
    
    
    2006(unaudited)
    
    
    (unaudited)REVENUES:Gross premiums written
    
    $
    236,243
    
    
    $
    235,593Change in unearned premiums
    
    
    (127,114
    )
    
    
    (144,026
    )Premiums earned
    
    
    109,129
    
    
    
    91,567Reinsurance premiums ceded
    
    
    (7,656
    )
    
    
    (8,425
    )Change in deferred premiums ceded
    
    
    3,214
    
    
    
    3,801Premiums ceded
    
    
    (4,442
    )
    
    
    (4,624
    )Net premiums earned
    
    
    104,687
    
    
    
    86,943Net investment income
    
    
    33,110
    
    
    
    24,604Net gains (losses) on investments
    
    
    8,677
    
    
    
    (12,614
    )Other income
    
    
    626
    
    
    
    837147,100
    
    
    
    99,770EXPENSES:Net losses and loss adjustment expenses
    
    
    52,953
    
    
    
    22,096Net acquisition costs
    
    
    10,148
    
    
    
    8,789General and administrative expenses
    
    
    7,159
    
    
    
    6,349Net exchange gain
    
    
    (367
    )
    
    
    (111
    )69,893
    
    
    
    37,123NET INCOME
    
    
    77,207
    
    
    
    62,647Dividends on preferred shares
    
    
    4,186
    
    
    
    4,234Net income available to common shareholders
    
    $
    73,021
    
    
    $
    58,413Basic net income per common share
    
    $
    1.15
    
    
    $
    0.92Diluted net income per common share
    
    $
    1.07
    
    
    $
    0.86Weighted average number of common shares  basic
    
    
    63,697,354
    
    
    
    63,612,760Weighted average number of common shares  diluted
    
    
    72,076,514
    
    
    
    72,618,979
  3




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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  
 Quarter ended March 31,2007
    
    
    2006(unaudited)
    
    
    (unaudited)NET INCOME
    
    $
    77,207
    
    
    $
    62,647Other comprehensive incomeNet holding gains on investments
during period
    
    
    
    
    
    
    1,272Reclassification adjustment for
losses included in net income
    
    
    
    
    
    
    12,614
    
    
    
    13,886COMPREHENSIVE INCOME
    
    $
    77,207
    
    
    $
    76,533
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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
  
 As of
    
    
    As ofMarch 31, 2007
    
    
    December 31, 2006(unaudited)COMMON SHARES PAR VALUE $0.01:Balance, beginning of year
    
    $
    637
    
    
    $
    637Additional shares issued
    
    
    2
    
    
    
    Balance, end of period
    
    $
    639
    
    
    $
    637PREFERRED SHARES PAR VALUE $0.01:Balance beginning of year
    
    $
    90
    
    
    $
    90Additional shares issued
    
    
    
    
    
    
    Balance, end of period
    
    $
    90
    
    
    $
    90ADDITIONAL PAID-IN CAPITAL:Balance, beginning of year
    
    $
    1,475,533
    
    
    $
    1,473,257Shares issued
    
    
    
    
    
    
    59Shares repurchased
    
    
    
    
    
    
    Stock options and grants awarded
    
    
    4,512
    
    
    
    2,217Balance, end of period
    
    $
    1,480,045
    
    
    $
    1,475,533DEFERRED STOCK GRANT COMPENSATION:Balance, beginning of year
    
    $
    (1,441
    )
    
    $
    (2,492
    )Stock grants awarded
    
    
    (4,170
    )
    
    
    (682
    )Stock grants forfeited
    
    
    
    
    
    
    Amortization
    
    
    2,231
    
    
    
    1,733Balance, end of period
    
    $
    (3,380
    )
    
    $
    (1,441
    )RETAINED EARNINGS:Balance, beginning of year
    
    $
    388,826
    
    
    $
    52,126Cumulative-effect adjustment of adopting SFAS 159
    
    
    127,996
    
    
    
    Net income
    
    
    77,207
    
    
    
    394,585Reduction on share repurchase
    
    
    
    
    
    
    Dividends paid and accrued
    
    
    (16,916
    )
    
    
    (57,885
    )Balance, end of period
    
    $
    577,113
    
    
    $
    388,826ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME:Balance, beginning of year
    
    $
    127,310
    
    
    $
    92,782Cumulative-effect adjustment of adopting SFAS 159
    
    
    (127,996
    )
    
    
    Other comprehensive income
    
    
    
    
    
    
    34,528Balance, end of period
    
    $
    (686
    )
    
    $
    127,310TOTAL SHAREHOLDERS EQUITY
    
    $
    2,053,821
    
    
    $
    1,990,955
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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
 Three months ended March 31,2007
    
    
    2006(unaudited)
    
    
    (unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    77,207
    
    
    $
    62,647Adjustments to reconcile net income to cash provided by
operating activities:Amortization of fixed maturity discounts, net
    
    
    (1,014
    )
    
    
    (2,261
    )Net (gains) losses on investments
    
    
    (8,677
    )
    
    
    12,614Stock compensation
    
    
    2,575
    
    
    
    710Changes in:Reinsurance premiums receivable
    
    
    (86,427
    )
    
    
    (77,931
    )Deferred premiums ceded
    
    
    (3,214
    )
    
    
    (3,801
    )Loss and loss adjustment expenses recoverable
    
    
    409
    
    
    
    339Accrued investment income
    
    
    3,325
    
    
    
    (1,571
    )Deferred acquisition costs
    
    
    (12,492
    )
    
    
    (13,502
    )Prepaid expenses and other assets
    
    
    (1,578
    )
    
    
    (3,389
    )Reserve for losses and loss adjustment expenses
    
    
    (31,602
    )
    
    
    (121,912
    )Unearned premiums
    
    
    127,114
    
    
    
    144,026Reinsurance premiums payable
    
    
    3,176
    
    
    
    3,022Deferred fees and commissions
    
    
    155
    
    
    
    1,095Accounts payable and accrued liabilities
    
    
    (2,406
    )
    
    
    2,747Cash provided by operating activities
    
    
    66,551
    
    
    
    2,833CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of fixed maturity investments
    
    
    (350,436
    )
    
    
    (398,327
    )Proceeds from sale of fixed maturity investments
    
    
    280,109
    
    
    
    340,840Proceeds from maturities of fixed maturity investments
    
    
    20,000
    
    
    
    66,000Purchases of equity investments
    
    
    (8,390
    )
    
    
    (2,325
    )Proceeds from sale of equity investments
    
    
    
    
    
    
    Cash (used in) provided by investing activities
    
    
    (58,717
    )
    
    
    6,188CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from share issuance
    
    
    
    
    
    
    Cash dividends paid to shareholders
    
    
    (17,011
    )
    
    
    (14,982
    )Cash used in financing activities
    
    
    (17,011
    )
    
    
    (14,982
    )Net decrease in cash and cash equivalents
    
    
    (9,177
    )
    
    
    (5,961
    )Cash and cash equivalents, beginning of period
    
    
    88,415
    
    
    
    31,113Cash and cash equivalents, end of period
    
    $
    79,238
    
    
    $
    25,152
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IPC HOLDINGS, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 1. GENERAL:
  2. DIVIDENDS:
     3. ACCOUNTING FOR STOCK-BASED COMPENSATION AND DISCLOSURE:
   7




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Quarter ended March 31,2007
    
    
    2006Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageNumber of
    
    
    exercise
    
    
    Number of
    
    
    exerciseshares
    
    
    price
    
    
    shares
    
    
    priceOutstanding, beginning of period
    
    
    611,625
    
    
    $
    34.30
    
    
    
    452,125
    
    
    $
    36.47Granted
    
    
    
    
    
    $
    
    
    
    
    162,500
    
    
    $
    28.00Exercised
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Forfeited
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Outstanding, end of period
    
    
    611,625
    
    
    $
    34.30
    
    
    
    614,625
    
    
    $
    34.23Exercisable, end of period
    
    
    379,750
    
    
    $
    34.16
    
    
    
    220,250
    
    
    $
    25.99Weighted average fair value of
options granted (per share)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    8.99
    8




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Weightedaverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedOutstanding at
    
    
    contractual
    
    
    average
    
    
    Exercisable at
    
    
    averageRange of
    
    March 31,
    
    
    period in
    
    
    exercise
    
    
    March 31,
    
    
    exerciseexercise price
    
    2007
    
    
    years
    
    
    price /$
    
    
    2007
    
    
    price $$13-19
    
    
    6,000
    
    
    
    2.75
    
    
    
    15.38
    
    
    
    6,000
    
    
    
    15.38$19-25
    
    
    10,000
    
    
    
    2.95
    
    
    
    21.73
    
    
    
    10,000
    
    
    
    21.73$25-31
    
    
    230,625
    
    
    
    7.57
    
    
    
    27.96
    
    
    
    108,750
    
    
    
    27.91$31-37
    
    
    83,750
    
    
    
    4.93
    
    
    
    31.65
    
    
    
    83,750
    
    
    
    31.65$37-43
    
    
    128,750
    
    
    
    6.75
    
    
    
    38.90
    
    
    
    95,000
    
    
    
    38.90$43-49
    
    
    152,500
    
    
    
    7.75
    
    
    
    43.03
    
    
    
    76,250
    
    
    
    43.03Total
    
    
    611,625
    
    
    
    
    
    
    
    
    
    
    
    379,750
  4. NEW ACCOUNTING PRONOUNCEMENTS
   9




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Critical Accounting Policies
  Premiums
  Loss Reserves
     ® ®
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11




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TotalDevelopmentCumulative percentage increase of development from initial report
    
    initial reportAfter 6
    
    After 1
    
    After 2
    
    After 3
    
    Latest /
    
    to latestmonths
    
    year
    
    years
    
    years
    
    Final %
    
    $(000)Cyclones Lothar /
Martin
    
    
    61
    %
    
    
    66
    %
    
    
    71
    %
    
    
    73
    %
    
    
    69
    %
    
    
    24,100Cat # 48 (WTC)
    
    
    6
    %
    
    
    7
    %
    
    
    9
    %
    
    
    9
    %
    
    
    4
    %
    
    
    4,5002004 Florida
hurricanes
    
    
    113
    %
    
    
    137
    %
    
    
    145
    %
    
    
    
    
    
    
    143
    %
    
    
    116,250Hurricane Katrina
    
    
    1
    %
    
    
    2
    %
    
    
    
    
    
    
    
    
    
    
    2
    %
    
    
    13,000
     Business
  Investments
  12




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($ in thousands)
    
    Fair Value Measurement at March 31, 2007, using:Fair Value
    
    Quoted Prices in
    
    Significant OtherMeasurements
    
    Active Markets
    
    Observable InputsDescription
    
    3/31/07
    
    (Level 1)
    
    (Level 2)Fixed maturity investments
    
    
    1,876,547
    
    
    
    1,876,547Equity investments
    
    
    588,970
    
    
    
    407,627
    
    
    
    181,343
   13




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RESULTS OF OPERATIONS, QUARTERS ENDED MARCH 31, 2007 AND 2006
 The following is a discussion of the results of operations and financial position of IPC
Holdings, Ltd. References to we, our, IPC, or the Company 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, 2007.
        14




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LIQUIDITY AND CAPITAL RESOURCES
      rd th .
  15




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Share Repurchase Program
  Off Balance Sheet Arrangements
  Relationships with American International Group, Inc.
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
     16




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At
    
    At
    
    At
    
    At
    
    At
    
    Average for 12March 31,
    
    December 31,
    
    September 30,
    
    June 30,
    
    March 31,
    
    months ended MarchMarket Risk
    
    2007
    
    2006
    
    2006
    
    2006
    
    2006
    
    31, 2007Currency
    
    $
    2,703
    
    
    $
    2,628
    
    
    $
    2,749
    
    
    $
    3,097
    
    
    $
    3,188
    
    
    $
    2,873Interest Rate
    
    
    25,444
    
    
    
    27,270
    
    
    
    31,210
    
    
    
    35,593
    
    
    
    37,363
    
    
    
    31,376Equity (incl. hedge
fund)
    
    
    18,814
    
    
    
    18,963
    
    
    
    17,793
    
    
    
    17,879
    
    
    
    18,786
    
    
    
    18,447Sum of Risk
    
    
    46,961
    
    
    
    48,861
    
    
    
    51,752
    
    
    
    56,569
    
    
    
    59,337
    
    
    
    52,696Diversification
Benefit
    
    
    (17,254
    )
    
    
    (15,885
    )
    
    
    (18,757
    )
    
    
    (18,690
    )
    
    
    (19,657
    )
    
    
    (18,049
    )Total Net Risk
    
    $
    29,707
    
    
    $
    32,976
    
    
    $
    32,995
    
    
    $
    37,879
    
    
    $
    39,680
    
    
    $
    34,647
  
 Item 4. Controls and Procedures
  Note on Forward-Looking Statements
  17




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
 We are rated by A.M. Best and S & P,
and a decline in these ratings could affect our standing
among customers and cause our sales and earnings to decrease
 We are rated by A.M. Best and S & P, and a decline in these ratings could affect our
standing among customers and cause our sales and earnings to decrease.
  
 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
 Exhibits
 19




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Exhibit
    
    Method ofNumber
    
    Filing
    
    Description3.1
    
    
    (2
    )
    
    Memorandum of Association of the Company3.2
    
    
    (3
    )
    
    Amended and Restated Bye-Laws of the Company3.3
    
    
    (2
    )
    
    Form of Memorandum of Increase of Share Capital11.1
    
    
    (1
    )
    
    Reconciliation of basic and diluted net income per common share (EPS)12.1
    
    
    (1
    )
    
    Statement of Computation of Ratios of Earnings to Fixed Charges31.1
    
    
    (1
    )
    
    Certification by Chief Executive Officer, as required by Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    
    (1
    )
    
    Certification by Chief Financial Officer, as required by Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    
    (4
    )
    
    Certification by Chief Executive Officer, as required by Section 906
of the Sarbanes-Oxley Act of 200232.2
    
    
    (4
    )
    
    Certification by Chief Financial Officer, as required by Section 906
of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Filed herewith(2)
    
    Incorporated by reference to the corresponding exhibit on our Registration
Statement on Form S-1 (No. 333-00088).(3)
    
    Incorporated by reference to Exhibit 4.2 to our Registration Statement on
Form S-3 filed on April 27, 2006 (Registration No. 333-133605).(4)
    
    These certifications are being furnished solely pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (sub-sections (a) and (b) of Section 1350, Chapter 63
of Title 18, United States Code), and are not being filed as exhibits to this report. 20




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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)DateApril 27, 2007
    /s/           James P. BryceJames P. BrycePresident and Chief Executive OfficerDateApril 27,  2007
    /s/ John R. WealeJohn R. WealeSenior Vice President and Chief Financial Officer 21




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EXHIBIT INDEX
 Exhibit
    
    Method ofNumber
    
    Filing
    
    Description3.1
    
    
    (2
    )
    
    Memorandum of Association of the Company3.2
    
    
    (3
    )
    
    Amended and Restated Bye-Laws of the Company3.3
    
    
    (2
    )
    
    Form of Memorandum of Increase of Share Capital11.1
    
    
    (1
    )
    
    Reconciliation of basic and diluted net income per common share (EPS)12.1
    
    
    (1
    )
    
    Statement of Computation of Ratios of Earnings to Fixed Charges31.1
    
    
    (1
    )
    
    Certification by Chief Executive Officer, as required by Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    
    (1
    )
    
    Certification by Chief Financial Officer, as required by Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    
    (4
    )
    
    Certification by Chief Executive Officer, as required by Section 906
of the Sarbanes-Oxley Act of 200232.2
    
    
    (4
    )
    
    Certification by Chief Financial Officer, as required by Section 906
of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Filed herewith.(2)
    
    Incorporated by reference to the corresponding exhibit on our Registration
Statement on Form S-1 (No. 333-00088).(3)
    
    Incorporated by reference to Exhibit 4.2 to our Registration Statement on
Form S-3 filed on April 27, 2006 (Registration No. 333-133605).(4)
    
    These certifications are being furnished solely pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (sub-sections (a) and (b) of Section 1350, Chapter 63
of Title 18, United States Code), and are not being filed as exhibits to this report. 22