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+44 (0)20 7232 3090 Traded on

AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange Regulated and

LSE: IIR authorised by

IPC Holdings Limited 02 July 2008

Update Report – 1Q 08 Results

Declining premium rates may limit growth potential, going forward

NASDAQ BUY Fundamental research indicates a 23% upside in the NASDAQ common stock over the next 6–12

Common DirectWeaccess
months. to thethe
have calculated full report
target free onoffundamental
price based charge atfactors, using a weighted average
of target prices obtained through DCF and comparative valuation methodologies. We continue to value
the company over a 6–12 month investment horizon as the market in which it operates is highly
cyclical and therefore trends can be captured more accurately within a shorter investment horizon.
Ticker: IPCR
Target price: US$33.21 We reiterate the NASDAQ common stock a BUY, with a 6–12 month target price of US$33.21.
Current price: US$26.95

European BUY The European stock is expected to appreciate approximately 31% over the next 6-12 months, as the
23% fundamental upside and approximately 7 percentage points’ upside attributable purely to the
Stock1 anticipated appreciation of the US dollar against the euro, is further augmented by a 1 percentage
point upside attributable to the anticipated reduction in European stock discount2.
Ticker: IPCR.BE
Target price: €21.96
Current price: €16.70 We reiterate the European stock a BUY, with a 6–12 month target price of €21.96.

Supervisor: Somnath Banerjee

Analyst: Dewanshi Doshi Investment horizon - short term actionable trading strategies
Editor: Heloise Capon This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
Global Research Director: report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
Satish Betadpur, CFA readers with a shorter trading horizon. These are available online only at

Next news due:

2Q 08 results, 24 July 2008
Report summary
IPC Holdings Limited’s (IPCR) 1Q 08 net premiums earned, which declined 14.3% y-o-y, were lower
than our expectations but bottom-line exceeded our estimate supported by lower-than-expected loss
and loss adjusted expenses, with the loss ratio improving from 50.6% in 1Q 07 to 5.9% in 1Q 08.
Weakness in global financial markets resulted in net investment income declining by 27.9% y-o-y in 1Q
08. Going forward, we continue to expect a softening in premium pricing in both US and non-US
reinsurance markets to impact IPCR’s ability to write premiums. Moreover, we are also concerned that
the prospect of above average hurricane activity in 2008 could increase the company’s combined ratio
going forward. However, IPCR’s underwriting strategy, which has historically generated the best
combined ratio among its peer group in years of low catastrophic activity, continues to impress.
Although we have revised our estimates downwards we believe the NASDAQ common stock offers an
attractive investment opportunity at current levels.

Currency impact for US investors

The company reports in US dollars, which we assume is its major trading currency. Therefore, earnings
forecasts have also been expressed in US dollars. Although the company may have costs as well as
revenues in other currencies, we assume that the net risk is minimized through effective hedging
strategies. As a result, the impact of currency movements on the price of the NASDAQ common stock
is assumed to be neutral. Where specific currency risks are identified, these will be highlighted in the

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