##### 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 ended:June 30, 2006
 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 Applicable(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 29 Richmond Road, Pembroke, HM 08, Bermuda
 
  (441) 298-5100
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer 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 ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sale of Equity Securities and Use of ProceedsItem 3. Defaults upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESEXHIBIT INDEXEX-11.1: RECONCILIATION OF BASIC AND DILUTED NET LOSS 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 ofJune 30, 2006
    
    
    December 31, 2005(unaudited)ASSETS:Fixed maturity investments:Available for sale, at fair value
(amortized cost 2006: $1,870,891;
2005: $2,014,735)
    
    $
    1,854,202
    
    
    $
    1,998,606Equity investments, available for sale at fair
value (cost 2006: $458,831; 2005: $420,910)
    
    
    549,406
    
    
    
    530,127Cash and cash equivalents
    
    
    44,879
    
    
    
    31,113Reinsurance premiums receivable
    
    
    272,141
    
    
    
    180,798Deferred premiums ceded
    
    
    9,944
    
    
    
    4,120Loss and loss adjustment expenses recoverable
    
    
    1,400
    
    
    
    1,054Accrued investment income
    
    
    23,038
    
    
    
    19,885Deferred acquisition costs
    
    
    24,371
    
    
    
    7,843Prepaid expenses and other assets
    
    
    8,535
    
    
    
    4,735TOTAL ASSETS
    
    $
    2,787,916
    
    
    $
    2,778,281LIABILITIES:Reserve for losses and loss adjustment expenses
    
    $
    787,449
    
    
    $
    1,072,056Unearned premiums
    
    
    224,951
    
    
    
    66,311Reinsurance premiums payable
    
    
    11,289
    
    
    
    4,991Deferred fees and commissions
    
    
    3,389
    
    
    
    1,363Accounts payable and accrued liabilities
    
    
    19,376
    
    
    
    17,160TOTAL LIABILITIES
    
    
    1,046,454
    
    
    
    1,161,881SHAREHOLDERS EQUITY:Common shares outstanding, par value U.S.
$0.01: 2006: 63,703,567; 2005: 63,666,368
shares
    
    
    637
    
    
    
    637Preferred shares  Series A mandatory
convertible preferred shares outstanding, par
value $0.01: 2006: 9,000,000; 2005: 9,000,000
    
    
    90
    
    
    
    90Additional paid-in capital
    
    
    1,474,661
    
    
    
    1,473,257Deferred stock grant compensation
    
    
    (2,135
    )
    
    
    (2,492
    )Retained earnings
    
    
    194,629
    
    
    
    52,126Accumulated other comprehensive income
    
    
    73,580
    
    
    
    92,782TOTAL SHAREHOLDERS EQUITY
    
    
    1,741,462
    
    
    
    1,616,400TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,787,916
    
    
    $
    2,778,281
  2




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##### Table of Contents



IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
  Quarter ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)REVENUES:Gross premiums written
    
    $
    120,325
    
    
    $
    86,994
    
    
    $
    355,918
    
    
    $
    292,835Change in unearned premiums
    
    
    (14,614
    )
    
    
    5,853
    
    
    
    (158,640
    )
    
    
    (113,266
    )Premiums earned
    
    
    105,711
    
    
    
    92,847
    
    
    
    197,278
    
    
    
    179,569Reinsurance premiums ceded
    
    
    (6,964
    )
    
    
    (9,433
    )
    
    
    (15,389
    )
    
    
    (18,456
    )Change in deferred premiums ceded
    
    
    2,023
    
    
    
    3,715
    
    
    
    5,824
    
    
    
    8,054Premiums ceded
    
    
    (4,941
    )
    
    
    (5,718
    )
    
    
    (9,565
    )
    
    
    (10,402
    )Net premiums earned
    
    
    100,770
    
    
    
    87,129
    
    
    
    187,713
    
    
    
    169,167Net investment income
    
    
    31,064
    
    
    
    14,857
    
    
    
    55,668
    
    
    
    32,372Net realized gains (losses) on investments
    
    
    4,521
    
    
    
    1,032
    
    
    
    (8,093
    )
    
    
    (2,178
    )Other income
    
    
    925
    
    
    
    1,027
    
    
    
    1,762
    
    
    
    2,136137,280
    
    
    
    104,045
    
    
    
    237,050
    
    
    
    201,497EXPENSES:Net losses and loss adjustment expenses
    
    
    13,387
    
    
    
    24,434
    
    
    
    35,483
    
    
    
    62,370Net acquisition costs
    
    
    9,043
    
    
    
    8,440
    
    
    
    17,832
    
    
    
    16,562General and administrative expenses
    
    
    8,772
    
    
    
    5,778
    
    
    
    15,121
    
    
    
    11,794Net exchange (gain) loss
    
    
    (2,744
    )
    
    
    1,343
    
    
    
    (2,855
    )
    
    
    2,76628,458
    
    
    
    39,995
    
    
    
    65,581
    
    
    
    93,492NET INCOME
    
    
    108,822
    
    
    
    64,050
    
    
    
    171,469
    
    
    
    108,005Dividends on preferred shares
    
    
    4,378
    
    
    
    
    
    
    
    8,612
    
    
    
    Net income available to common shareholders
    
    $
    104,444
    
    
    $
    64,050
    
    
    $
    162,857
    
    
    $
    108,005Basic net income per common share
    
    $
    1.64
    
    
    $
    1.32
    
    
    $
    2.56
    
    
    $
    2.23Diluted net income per common share
    
    $
    1.50
    
    
    $
    1.32
    
    
    $
    2.36
    
    
    $
    2.23Weighted average number of common shares -
basic
    
    
    63,630,224
    
    
    
    48,348,475
    
    
    
    63,621,492
    
    
    
    48,339,643Weighted average number of common shares -
diluted
    
    
    72,635,057
    
    
    
    48,426,669
    
    
    
    72,626,599
    
    
    
    48,427,886
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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Quarter ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)NET INCOME
    
    $
    108,822
    
    
    $
    64,050
    
    
    $
    171,469
    
    
    $
    108,005Other comprehensive income (loss):Net holding (losses) gains on
investments during period
    
    
    (28,567
    )
    
    
    13,875
    
    
    
    (27,295
    )
    
    
    (14,461
    )Reclassification adjustment
for (gains) losses included in
net income
    
    
    (4,521
    )
    
    
    (1,032
    )
    
    
    8,093
    
    
    
    2,178(33,088
    )
    
    
    12,843
    
    
    
    (19,202
    )
    
    
    (12,283
    )COMPREHENSIVE INCOME
    
    $
    75,734
    
    
    $
    76,893
    
    
    $
    152,267
    
    
    $
    95,722
  4




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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
  As of
    
    
    As ofJune 30, 2006
    
    
    December 31, 2005(unaudited)COMMON SHARES PAR VALUE $0.01:Balance, beginning of year
    
    $
    637
    
    
    $
    484Additional shares issued
    
    
    
    
    
    
    153Balance, end of period
    
    $
    637
    
    
    $
    637PREFERRED SHARES PAR VALUE $0.01Balance beginning of year
    
    $
    90
    
    
    $
    Additional shares issued
    
    
    
    
    
    
    90Balance, end of period
    
    $
    90
    
    
    $
    90ADDITIONAL PAID-IN CAPITAL:Balance, beginning of year
    
    $
    1,473,257
    
    
    $
    854,797Shares issued
    
    
    
    
    
    
    617,561Shares repurchased
    
    
    
    
    
    
    (1,334
    )Stock options and grants awarded
    
    
    1,404
    
    
    
    2,233Balance, end of period
    
    $
    1,474,661
    
    
    $
    1,473,257DEFERRED STOCK GRANT
COMPENSATION:Balance, beginning of year
    
    $
    (2,492
    )
    
    $
    (2,899
    )Stock grants awarded
    
    
    (682
    )
    
    
    (1,316
    )Stock grants forfeited
    
    
    
    
    
    
    454Amortization
    
    
    1,039
    
    
    
    1,269Balance, end of period
    
    $
    (2,135
    )
    
    $
    (2,492
    )RETAINED EARNINGS:Balance, beginning of year
    
    $
    52,126
    
    
    $
    724,907Net income (loss)
    
    
    171,469
    
    
    
    (623,399
    )Reduction on share repurchase
    
    
    
    
    
    
    (1,738
    )Dividends paid and accrued
    
    
    (28,966
    )
    
    
    (47,644
    )Balance, end of period
    
    $
    194,629
    
    
    $
    52,126ACCUMULATED OTHER COMPREHENSIVE
INCOME:Balance, beginning of year
    
    $
    92,782
    
    
    $
    91,150Other
comprehensive (loss) income
    
    
    (19,202
    )
    
    
    1,632Balance, end of period
    
    $
    73,580
    
    
    $
    92,782TOTAL SHAREHOLDERS EQUITY
    
    $
    1,741,462
    
    
    $
    1,616,400
  5




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IPC HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six months ended June 30,2006
    
    
    2005(unaudited)
    
    
    (unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    171,469
    
    
    $
    108,005Adjustments to reconcile net income to cash provided
by operating activities:Amortization of fixed maturity (discounts)
premiums, net
    
    
    (5,385
    )
    
    
    6,396Net realized losses on investments
    
    
    8,093
    
    
    
    2,178Stock compensation
    
    
    1,787
    
    
    
    1,476Changes in:Reinsurance premiums receivable
    
    
    (91,343
    )
    
    
    (95,163
    )Deferred premiums ceded
    
    
    (5,824
    )
    
    
    (8,054
    )Loss and loss adjustment expenses recoverable
    
    
    (346
    )
    
    
    621Accrued investment income
    
    
    (3,153
    )
    
    
    3,679Deferred acquisition costs
    
    
    (16,528
    )
    
    
    (11,218
    )Prepaid expenses and other assets
    
    
    (3,800
    )
    
    
    (2,541
    )Reserve for losses and loss adjustment expenses
    
    
    (284,607
    )
    
    
    (41,927
    )Unearned premiums
    
    
    158,640
    
    
    
    113,266Reinsurance premiums payable
    
    
    6,298
    
    
    
    9,213Deferred fees and commissions
    
    
    2,026
    
    
    
    2,526Accounts payable and accrued liabilities
    
    
    2,691
    
    
    
    1,737Cash (used in) provided by operating activities
    
    
    (59,982
    )
    
    
    90,194CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of fixed maturity investments
    
    
    (759,948
    )
    
    
    (887,147
    )Proceeds from sale of fixed maturity investments
    
    
    596,866
    
    
    
    762,271Proceeds from maturities of fixed maturity investments
    
    
    276,450
    
    
    
    71,850Purchases of equity investments
    
    
    (103,832
    )
    
    
    (14,519
    )Proceeds from sale of equity investments
    
    
    93,681
    
    
    
    8,500Cash provided by (used in) investing activities
    
    
    103,217
    
    
    
    (59,045
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from share issuance
    
    
    (28
    )
    
    
    105Cash dividends paid to shareholders
    
    
    (29,441
    )
    
    
    (23,199
    )Cash used by financing activities
    
    
    (29,469
    )
    
    
    (23,094
    )Net increase in cash and cash equivalents
    
    
    13,766
    
    
    
    8,055Cash and cash equivalents, beginning of period
    
    
    31,113
    
    
    
    27,898Cash and cash equivalents, end of period
    
    $
    44,879
    
    
    $
    35,953
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IPC HOLDINGS, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 1.
    
    GENERAL:The consolidated interim financial statements presented herein have been prepared on the
basis of accounting principles generally accepted in the United States of America and
include the accounts of IPC Holdings, Ltd. (the Company) and its wholly-owned
subsidiaries, IPCRe Limited (IPCRe) and IPCRe Underwriting Services Limited (IPCUSL and,
together with the Company and IPCRe, IPC) and IPCRe Europe Limited, which is a
wholly-owned subsidiary of IPCRe. In the opinion of management, these financial statements
reflect all adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of the results of operations for the six month periods ended June 30, 2006 and
2005, respectively, the balance sheet as of June 30, 2006 and the cash flows for the six
months ended June 30, 2006 and 2005, respectively. These interim consolidated financial
statements should be read in conjunction with the audited consolidated financial statements
for the year ended December 31, 2005, in our report on Form 10-K. The results of operations
for any interim period are not necessarily indicative of results for the full year.2.
    
    DIVIDENDS:On February 15, 2006 we paid a preference dividend of $0.533932 per Series A Mandatory
Convertible preferred share, to shareholders of record on January 31, 2006.On March 23, 2006 we paid a common stock dividend of $0.16 per share to shareholders of record on
March 7, 2006.On May 15, 2006 we paid a preference dividend of $0.475781 per Series A Mandatory Convertible
preferred share, to shareholders of record on May 1, 2006.On June 22, 2006 we paid a common stock dividend of $0.16 per common share, to shareholders of
record on June 6, 2006.On July 25, 2006 we declared a preference dividend of $0.475781 per Series A Mandatory
Convertible preferred share, to be paid on August 15, 2006 to shareholders of record on August 1,
2006.On July 25, 2006 we declared a common stock dividend of $0.16 per common share, to be paid on
September 21, 2006 to shareholders of record on
September 5, 2006.3.
    
    ACCOUNTING FOR STOCK-BASED COMPENSATION AND DISCLOSURE:Effective January 1, 2006, management adopted the fair value method of accounting for stock-based
employee compensation as prescribed by Financial Accounting Standards Board (FASB) Statement
No. 123 (Revised 2004) Share-Based Payment (SFAS 123R). SFAS 123R requires entities to
measure the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. The cost of such services will be recognized
over the period during which an employee is required to provide service in exchange for the
award. Since 2003 the Company has expensed compensation costs for stock options on a prospective
basis for all awards granted, modified or settled after January 1, 2003 in accordance with
Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation and
Disclosure.SFAS 123R requires expected forfeitures to be included in determining share-based employee
compensation expense. Prior to the adoption of SFAS 123R, forfeiture benefits were recorded
as a reduction to compensation expense when an employee left the Company and forfeited the
award. The transition impact of adopting SFAS 123R as of January 1, 2006, including the
effect of accruing for expected forfeitures on outstanding share-based awards, was not
material to our results of operations for the six months ended June 30, 2006. In addition,
SFAS 123R requires the immediate expensing of share-based
awards granted to
retirement-eligible employees. Share-based awards granted to retirement-eligible employees
prior to the adoption of SFAS 123R must continue to be amortized over the stated service
period of the award (and accelerated if the employee actually retires). Consequently, our
compensation and benefits expenses in the year ending December 31, 2006 (and, to a lesser
extent, in the years ending December 31, 2007 and 2008) will include both the amortization
(and acceleration, if any) of awards granted to retirement-eligible employees prior to the
adoption of SFAS 123R as well as the full grant-date fair value of new awards granted to
such employees under SFAS 123R. The estimated annual non-cash expense in the year ending
December 31, 2006 associated with the continued amortization of share-based
 7




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awards granted to retirement-eligible employees prior to the adoption of SFAS 123R is
approximately $676, of which $338 was recognized in the six months ended June 30, 2006.On June 13, 2003 the shareholders approved a new stock incentive plan. The plan allows for the
issuance of up to five hundred thousand common shares, $0.01 par value, as grants of restricted
stock to selected employees to compensate them for their contributions to the long-term growth
and profits of the Company. Pursuant to SFAS 123R, compensation expense is recorded ratably
based on the fair value of the grants at the date of grant (i) over the vesting period (ii)
immediately for grants awarded to retirement-eligible employees or (iii) over the period from the
grant date until the date when retirement-eligibility is achieved if
earlier than the vesting date.
Such units vest at a rate of 25% annually and are expensed on the straight line basis, but are
recorded as outstanding upon issuance (regardless of the vesting period). The charge recorded
for the six months ended June 30, 2006 for grants of restricted stock was $1,038 (2005: $690).The activity related to these restricted stock units is set forth below:
 Weighted average grant-date fairRestricted stock units
    
    value of restricted stock unitsoutstanding
    
    outstandingFuture
    
    No future
    
    Future
    
    No futureservice
    
    service
    
    service
    
    servicerequired
    
    required(2)
    
    required
    
    required(2)Outstanding, beginning of period
    
    
    49,984
    
    
    
    54,375
    
    
    
    36.44
    
    
    
    36.04Granted (1)
    
    
    15,477
    
    
    
    12,224
    
    
    
    23.10
    
    
    
    26.55Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    16,356
    
    
    
    17,344
    
    
    
    36.29
    
    
    
    35.74Outstanding, end of period
    
    
    49,105
    
    
    
    49,255
    
    
    
    32.29
    
    
    
    33.79
 
 (1)
    
    The weighted average grant-date fair value of restricted stock units granted for
the six months ended June 30, 2006 was $24.62 per unit, compared with $40.56 per unit for
the corresponding period of 2005.(2)
    
    Restricted stock units are deemed to vest immediately for retirement-eligible
employees.   8




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Quarter ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Net income, as reported
    
    $
    108,822
    
    
    $
    64,050
    
    
    $
    171,469
    
    
    $
    108,005Add: Stock-based employee expense
    
    
    1,077
    
    
    
    394
    
    
    
    1,787
    
    
    
    787Deduct: Total stock-based employee expense
determined under fair value based method
for all awards.
    
    
    (969
    )
    
    
    (478
    )
    
    
    (1,787
    )
    
    
    (957
    )Pro forma net income
    
    
    108,930
    
    
    
    63,966
    
    
    
    171,469
    
    
    
    107,835Dividends on preferred shares
    
    
    4,378
    
    
    
    
    
    
    
    8,612
    
    
    
    Net income available to common shareholders
    
    $
    104,552
    
    
    $
    63,966
    
    
    $
    162,857
    
    
    $
    107,835Earnings per share:Basic  as reported
    
    $
    1.64
    
    
    $
    1.32
    
    
    $
    2.56
    
    
    $
    2.23Basic  pro forma
    
    $
    1.64
    
    
    $
    1.32
    
    
    $
    2.56
    
    
    $
    2.23Diluted  as reported
    
    $
    1.50
    
    
    $
    1.32
    
    
    $
    2.36
    
    
    $
    2.23Diluted  pro forma
    
    $
    1.50
    
    
    $
    1.32
    
    
    $
    2.36
    
    
    $
    2.22
  Six months ended June 30, 20062006
    
    
    2005Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageNumber of
    
    
    exercise
    
    
    Number of
    
    
    exerciseshares
    
    
    price
    
    
    shares
    
    
    priceOutstanding, beginning of period
    
    
    452,125
    
    
    $
    36.47
    
    
    
    474,625
    
    
    $
    31.43Granted
    
    
    162,500
    
    
    $
    28.00
    
    
    
    169,000
    
    
    $
    43.03Exercised
    
    
    
    
    
    $
    
    
    
    
    21,500
    
    
    $
    25.63Forfeited
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Outstanding, end of period
    
    
    614,625
    
    
    $
    34.23
    
    
    
    622,125
    
    
    $
    34.78Exercisable, end of period
    
    
    235,250
    
    
    $
    26.64
    
    
    
    239,000
    
    
    $
    28.46Weighted average fair value of
options granted (per share)
    
    
    
    
    
    $
    8.99
    
    
    
    
    
    
    $
    15.07
    9




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##### Table of Contents



Weightedaverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedOutstanding at
    
    
    contractual
    
    
    average
    
    
    Exercisable at
    
    
    averageRange of
    
    June 30,
    
    
    period in
    
    
    exercise
    
    
    June 30,
    
    
    exerciseexercise price
    
    2006
    
    
    years
    
    
    price
    
    
    2006
    
    
    price$13-19
    
    
    7,500
    
    
    
    2.80
    
    
    
    15.61
    
    
    
    7,500
    
    
    
    15.61$19-25
    
    
    11,500
    
    
    
    3.28
    
    
    
    21.83
    
    
    
    11,500
    
    
    
    21.83$25-31
    
    
    230,625
    
    
    
    8.32
    
    
    
    27.96
    
    
    
    55,000
    
    
    
    27.85$31-37
    
    
    83,750
    
    
    
    5.68
    
    
    
    31.65
    
    
    
    61,875
    
    
    
    31.68$37-43
    
    
    128,750
    
    
    
    7.50
    
    
    
    38.90
    
    
    
    61,250
    
    
    
    38.90$43-49
    
    
    152,500
    
    
    
    8.50
    
    
    
    43.03
    
    
    
    38,125
    
    
    
    43.03Total
    
    
    614,625
    
    
    
    
    
    
    
    
    
    
    
    235,250
  NEW ACCOUNTING PRONOUNCEMENTS
  10




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




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Investments
  12




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
    
    The extent of decline in value
    
    The length of time the security is below cost
    
    The future prospects of the issuer, or in the case of mutual funds, the future prospects of the fund
    
    Whether the decline appears to be related to general market or industry conditions, or is issuer-specific
    
    Our intent and ability to hold the security
    
    Other qualitative and quantitative factors
    13




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##### Table of Contents



RESULTS OF OPERATIONS, QUARTERS ENDED JUNE 30, 2006 AND 2005
 The following is a discussion of the results of operations and financial position of IPC
Holdings, Ltd. References to we, our or IPC 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 June 30,
2006.
        14




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RESULTS OF OPERATIONS, SIX MONTHS ENDED JUNE 30, 2006 AND 2005
        15




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LIQUIDITY AND CAPITAL RESOURCES
      rd th
  16




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##### Table of Contents



Off Balance Sheet Arrangements
  Transactions with Non-Independent Parties
  June 30, 2006
    
    June 30, 2005Administrative services fees (included in General & Admin.
expenses)
    
    $
    4,928
    
    
    $
    4,494Investment fees netted against investment income:
    
    $
    1,979
    
    
    $
    1,540Underwriting services fee income (included in Other income)
    
    $
    1,762
    
    
    $
    2,136Premiums written
    
    $
    23,712
    
    
    $
    28,173Premiums ceded
    
    $
    1,246
    
    
    $
    1,310
     17




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
      Market Risk
 Average for sixJune 30,
    
    March 31,
    
    December 31,
    
    months ended2006
    
    2006
    
    2005
    
    June 30, 2006Currency
    
    $
    3,097
    
    
    $
    3,188
    
    
    $
    2,445
    
    
    $
    2,910Interest Rate
    
    
    35,593
    
    
    
    37,363
    
    
    
    36,626
    
    
    
    36,527Equity (incl. hedge fund)
    
    
    17,879
    
    
    
    18,786
    
    
    
    19,821
    
    
    
    18,829Sum of Risk
    
    
    56,569
    
    
    
    59,337
    
    
    
    58,892
    
    
    
    58,266Diversification Benefit
    
    
    (18,690
    )
    
    
    (19,657
    )
    
    
    (21,188
    )
    
    
    (19,845
    )Total Net Risk
    
    
    37,879
    
    
    $
    39,680
    
    
    $
    37,704
    
    
    $
    38,421
  
 Item 4. Controls and Procedures
  18




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Note on Forward-Looking Statements
  19




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 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
   FOR
    
    WITHHELDFrank Mutch
    
    
    46,249,024
    
    
    
    143,058James P. Bryce
    
    
    46,287,475
    
    
    
    104,607Dr. the Honourable Clarence James
    
    
    46,247,557
    
    
    
    144,525S. George Cubbon
    
    
    46,136,749
    
    
    
    255,333Peter Christie
    
    
    46,165,560
    
    
    
    226,522Kenneth Hammond
    
    
    46,249,939
    
    
    
    142,143Antony Lancaster
    
    
    46,288,292
    
    
    
    103,790
  FOR
    
    AGAINST
    
    ABSTAIN46,050,489
    
    
    328,265
    
    
    
    13,328
  FOR
    
    AGAINST
    
    ABSTAIN45,732,928
    
    
    635,745
    
    
    
    23,409
  
 Item 5. Other Information
  20




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##### Table of Contents



Item 6. Exhibits
 Exhibits
  ExhibitNumber
    
    Description3.1 
    
    Memorandum of Association of the Company.3.2 +
    
    Amended and Restated Bye-laws of the Company.3.3 
    
    Form of Memorandum of Increase of Share Capital.10.20 o
    
    Amendments to Letter of Credit Agreements between IPCRe and Barclays Bank PLC,
and between IPCRe and Bayerische Hypo-und Vereinsbank10.22 D
    
    Credit Agreement between IPC Holdings, Ltd., Wachovia Bank and other Lenders named therein.11.1 V
    
    Reconciliation of basic and diluted net loss per common share (EPS).12.1 V
    
    Statement of Computation of Ratios
of Earnings to Fixed Charges.31.1 V
    
    Certification by Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of
2002.31.2 V
    
    Certification by Chief Financial Officer, as required by Section 302 of the
Sarbanes-Oxley Act of
2002.32.1 **
    
    Certification by Chief Executive Officer, as required by Section 906 of the
Sarbanes-Oxley Act of
2002.32.2 **
    
    Certification by Chief Financial Officer, as required by Section 906 of the
Sarbanes-Oxley Act of
2002.V
    
    Filed herewith
    
    Incorporated by reference to the
corresponding exhibit in our Registration Statement on
Form S-1 (No. 333-00088).+
    
    Incorporated by reference to Exhibit 4.2 to our Registration Statement on
Form S-3 filed on April 27, 2006 (Registration No. 333-133605).o
    
    Incorporated by reference to Exhibits 99.1 and 99.2 to our Current Report
on Form 8-K filed on April 6, 2006 and Exhibit 99.1 to our Current Report on Form 8-K
filed on April 24, 2006, respectively (File No. 0-27662).D
    
    Incorporated by reference to Exhibit 10.22 to our Current Report on Form
8-K filed on April 20, 2006 (File No. 0-27662).**
    
    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.
 21




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##### Table of Contents



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)Date July 28th 2006
    
    /s/ James P. BryceJames P. BrycePresident and Chief Executive OfficerDate July 28th 2006
    
    /s/ John R. WealeJohn R. WealeSenior Vice President and Chief Financial Officer
 22




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber
    
    Description3.1 
    
    Memorandum of Association of the Company.3.2 +
    
    Amended and Restated Bye-laws of the Company.3.3 
    
    Form of Memorandum of Increase of Share Capital.10.20 o
    
    Amendments to Letter of Credit Agreements between IPCRe and Barclays Bank PLC,
and between IPCRe and Bayerische Hypo-und Vereinsbank.10.22 D
    
    Credit Agreement between IPC Holdings, Ltd., Wachovia Bank and other Lenders named therein.11.1 V
    
    Reconciliation of basic and diluted net loss per common share (EPS).12.1 V
    
    Statement of Computation of Ratios
of Earnings to Fixed Charges.31.1 V
    
    Certification by Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of
2002.31.2 V
    
    Certification by Chief Financial Officer, as required by Section 302 of the
Sarbanes-Oxley Act of
2002.32.1 **
    
    Certification by Chief Executive Officer, as required by Section 906 of the
Sarbanes-Oxley Act of
2002.32.2 **
    
    Certification by Chief Financial Officer, as required by Section 906 of the
Sarbanes-Oxley Act of
2002.V
    
    Filed herewith.
    
    Incorporated by reference to the
corresponding exhibit in our Registration Statement on
Form S-1 (No. 333-00088).+
    
    Incorporated by reference to Exhibit 4.2 to our Registration Statement on
Form S-3 filed on April 27, 2006 (Registration No. 333-133605).o
    
    Incorporated by reference to Exhibits 99.1 and 99.2 to our Current Report
on Form 8-K filed on April 6, 2006 and Exhibit 99.1 to our Current Report on Form 8-K
filed on April 24, 2006, respectively (File No. 0-27662).D
    
    Incorporated by reference to Exhibit 10.22 to our Current Report on Form
8-K filed on April 20, 2006 (File No. 0-27662).**
    
    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.
 23