Validus Reports $153.4 Million Q2 Net Income; $315.8 Million 1st Six Months

July 25, 2014

Bermuda-based Validus Holdings, Ltd. reported net income available to Validus of $153.4 million, or $1.61 per diluted common share, for the three months ended June 30, 2014, compared to $30.7 million, or $0.28 per diluted common share, for the three months ended June 30, 2013.

Net income available to Validus was $315.8 million, or $3.27 per diluted common share, for the six months ended June 30, 2014, compared to $254.0 million, or $2.21 per diluted common share, for the six months ended June 30, 2013.

Net operating income available to Validus was $132.6 million, or $1.39 per diluted common share, for the three months ended June 30, 2014, compared to $111.4 million, or $1.03 per diluted common share, for the three months ended June 30, 2013.

Net operating income available to Validus was $278.7 million, or $2.89 per diluted common share, for the six months ended June 30, 2014, compared to $327.1 million, or $2.90 per diluted common share, for the six months ended June 30, 2013.

Book value per diluted common share stands at $38.55, reflecting quarterly growth of 3.4 percent inclusive of dividends.

Validus’ Chairman and CEO Ed Noonan commented: “Validus reported another solid quarter delivering $153.4 million of net income and a 16.5 percent annualized return on average equity. Strong underwriting and good diversification between insurance and reinsurance continued to drive our results as Validus posted an overall combined ratio of 68.6 percent. Despite competitive pressures in the marketplace and more loss activity than the market may have appreciated; all three of our segments – Validus Re, Talbot and AlphaCat – performed well.

“Earlier in the quarter Validus announced an important strategic development, an agreement to acquire Western World Insurance Group. Western World is a leader in the U.S. excess and surplus lines market and adds a key pillar to our existing global platform for the distribution of short tail insurance and reinsurance.”

Highlights for the second quarter include the following:
– Gross premiums written for the three months ended June 30, 2014 were $655.7 million compared to $702.3 million for the three months ended June 30, 2013, a decrease of $46.6 million, or 6.6 percent.
– Net premiums earned for the three months ended June 30, 2014 were $466.0 million compared to $547.5 million for the three months ended June 30, 2013, a decrease of $81.5 million, or 14.9 percent.
– Underwriting income for the three months ended June 30, 2014 was $146.1 million compared to $117.7 million for the three months ended June 30, 2013, an increase of $28.5 million, or 24.2 percent.
– Combined ratio for the three months ended June 30, 2014 of 68.6 percent which included $72.7 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 15.6 percentage points compared to a combined ratio for the three months ended June 30, 2013 of 78.5 percent which included $41.0 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 7.5 percentage points. The favorable loss reserve development was primarily due to lower than expected development on attritional losses. Netted in the loss development for the quarter is adverse movement on Validus’ estimate of losses from Costa Concordia, which increased by $15.9 million.
– Net operating income available to Validus for the three months ended June 30, 2014 was $132.6 million compared to $111.4 million for the three months ended June 30, 2013, an increase of $21.2 million, or 19.0 percent.
– Net income available to Validus for the three months ended June 30, 2014 was $153.4 million compared to $30.7 million for the three months ended June 30, 2013, an increase of $122.6 million.
– Annualized return on average equity of 16.5 percent and annualized net operating return on average equity of 14.3 percent.

Highlights for the year to date include the following:
– Gross premiums written for the six months ended June 30, 2014 were $1,667.7 million compared to $1,807.1 million for the six months ended June 30, 2013, a decrease of $139.4 million, or 7.7 percent.
– Net premiums earned for the six months ended June 30, 2014 were $949.0 million compared to $1,078.5 million for the six months ended June 30, 2013, a decrease of $129.6 million, or 12.0 percent.
– Underwriting income for the six months ended June 30, 2014 was $299.2 million compared to $327.7 million for the six months ended June 30, 2013, a decrease of $28.6 million, or 8.7 percent.
– Combined ratio for the six months ended June 30, 2014 of 68.5 percent which included $112.1 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 11.8 percentage points compared to a combined ratio for the six months ended June 30, 2013 of 69.7 percent which included $106.8 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.9 percentage points.
– Net operating income available to Validus for the six months ended June 30, 2014 was $278.7 million compared to $327.1 million for the six months ended June 30, 2013, a decrease of $48.4 million, or 14.8 percent.
– Net income available to Validus for the six months ended June 30, 2014 was $315.8 million compared to $254.0 million for the six months ended June 30, 2013, an increase of $61.8 million, or 24.3 percent.
– Annualized return on average equity of 17.0 percent and annualized net operating return on average equity of 15.0 percent.

Source: Validus Holdings

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