As has been the case with many of its peers, Bermuda-based Validus Holdings didn’t escape the loss events of 2010 unscathed, as both fourth quarter and full year earnings results were battered.
Validus reported net income of $102.7 million, or $0.92 per diluted common share for the three months ended December 31, 2010, compared with net income of $165.8 million, or $1.23 per diluted common share in Q4 2009.
Net income for the year ended December 31, 2010 was $402.6 million, or $3.34 per diluted common share compared with $897.4 million, or $9.24 per diluted common share, for the year ended December 31, 2009.
Net operating income, which excludes capital gains/losses, for the three months ended December 31, 2010 was $156.4 million, or $1.40 per diluted share, compared with net operating income of $176.9 million, or $1.31 per diluted common share in Q’ 2009.
Net operating income for the year ended December 31, 2010 was $322.8 million, or $2.68 per diluted common share, compared with net operating income of $533.3 million, or $5.49 per diluted common share, for the year ended December 31, 2009.
Chairman and CEO Ed Noonan commented: “Our fourth quarter net income of $102.7 million brings our full year 2010 net income to $402.6 million. The worldwide reinsurance market absorbed multiple significant loss events in 2010, including earthquakes in Chile and New Zealand, flooding and severe weather in Australia, and Deepwater Horizon, among others.
“With all of this, Validus increased book value per share plus dividends by 14.1 percent during 2010. After five full years of operations, Validus has grown diluted book value per share plus dividends at a compounded annual rate of 15.9 percent and generated cumulative net income of $1.94 billion.
“We have grown our Company into a global leader in short-tail lines of insurance and reinsurance while rewarding shareholders with $1.19 billion of dividends and share repurchases.”
The report also listed the following highlights for the fourth quarter:
• Gross premiums written for the three months ended December 31, 2010 were $258.7 million compared to $255.3 million for the three months ended December 31, 2009, an increase of $3.4 million, or 1.3 percent.
• Net premiums earned for the three months ended December 31, 2010 were $432.8 million compared to $427.9 million for the three months ended December 31, 2009, an increase of $4.9 million, or 1.1 percent.
• Underwriting income for the three months ended December 31, 2010 was $139.7 million compared to $153.6 million for the three months ended December 31, 2009, a decrease of $13.9 million, or 9.1 percent.
• Combined ratio of 67.7 percent for the three months ended December 31, 2010, which included $30.6 million of favorable prior year loss reserve development, benefiting the loss ratio by 7.1 percentage points, compared to a combined ratio of 64.1 percent for the three months ended December 31, 2009, which included $48.7 million of favorable prior year loss reserve development, benefiting the loss ratio by 11.4 percentage points.
• Net operating income for the three months ended December 31, 2010 of $156.4 million compared to net operating income of $176.9 million for the three months ended December 31, 2009, a decrease of $20.6 million, or 11.6 percent, reflecting decreased underwriting and investment income.
• Net income for the three months ended December 31, 2010 was $102.7 million compared to net income of $165.8 million for the three months ended December 31, 2009, a decrease of $63.1 million, or 38.1 percent, reflecting a decrease in net operating income and an increase in net realized and unrealized losses on investments.
• Annualized return on average equity of 11.3 percent and annualized net operating return on average equity of 17.2 percent.
Full year financial highlights were listed as follows:
• Gross premiums written for the year ended December 31, 2010 were $1,990.6 million compared to $1,621.2 million for the year ended December 31, 2009, an increase of $369.3 million, or 22.8 percent.
• Net premiums earned for the year ended December 31, 2010 were $1,761.1 million, compared to $1,449.6 million for the year ended December 31, 2009, an increase of $311.5 million, or 21.5 percent.
• Combined ratio of 86.2 percent for the year ended December 31, 2010, which included $156.6 million of favorable prior year loss reserve development, benefiting the loss ratio by 8.9 percentage points, compared to a combined ratio of 68.9 percent for the year ended December 31, 2009, which included $102.1 million of favorable prior year loss reserve development, benefiting the loss ratio by 7.0 percentage points.
• Net operating income for the year ended December 31, 2010 of $322.8 million compared to net operating income of $533.3 million for the year ended December 31, 2009, a decrease of $210.5 million, or 39.5 percent, reflecting decreased underwriting income.
• Net income for the year ended December 31, 2010 was $402.6 million compared to net income of $897.4 million for the year ended December 31, 2009, a decrease of $494.8 million, or 55.1 percent, due to the significant non-recurring gain on bargain purchase, net of expenses of $287.1 million relating to the IPC Acquisition in 2009.
Source: Validus Holdings
Topics Profit Loss
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