Bermuda-based IPC Holdings announced last night that flood losses in Australia and England will sink its second-quarter 2007 earnings 20 cents per share–a fraction of what it reported last year.
In a statement, the property-catastrophe reinsurer said second-quarter earnings will be negatively impacted by the storms and flooding that affected New South Wales, Australia in early June, and by the flooding in parts of northern England that started in mid-June.
The flooding in northern England continues to affect some areas, the IPC statement said.
As a result of these events, IPC said it currently believes that its net income and net operating earnings for the second quarter will be in the range of 20 cents to 40 cents per common share.
In the second quarter of last year IPC reported net income of $108.8 million, or $1.64 per share, and operating earnings of $104.3 million, or $1.44 per share, which exclude realized gains and losses from investments.
The company said the ultimate impact of losses from these events on the results of operations could differ substantially from current estimates, highlighting some complexity resulting from the ongoing floods in several areas of England.
The company said the effect of this flooding introduces additional uncertainty to the normally difficult process of estimating catastrophe losses.
“The resulting impact on claims adjusting (including allocation of claims to the multiple events because of the time periods covered and the effect of demand surge on the cost of building materials, labor and additional living expenses), is likely to cause delays to the timing with which we are notified of loss estimates by ceding companies,” the company said.
IPC expects to release its second-quarter 2007 results after market close on July 25 2007.
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