Validus Holdings Reports Net Income of $481.3 Million for 2014

January 30, 2015

Bermuda-based Validus Holdings Ltd. reported net income available to Validus of $125.9 million, or $1.38 per diluted common share, for the three months ended December 31, 2014, compared to $95.3 million, or $0.93 per diluted common share, for the three months ended December 31, 2013.

Net income available to Validus was $481.3 million, or $5.08 per diluted common share, for the year ended December 31, 2014, compared to $532.7 million, or $4.94 per diluted common share, for the year ended December 31, 2013.

Net operating income available to Validus was $129.0 million, or $1.42 per diluted common share, for the three months ended December 31, 2014, compared to $100.1 million, or $0.97 per diluted common share, for the three months ended December 31, 2013. Net operating income available to Validus was $486.5 million, or $5.14 per diluted common share, for the year ended December 31, 2014, compared to $589.4 million, or $5.48 per diluted common share, for the year ended December 31, 2013.

Book value per diluted common share stands at $39.66, reflecting quarterly growth of 3.3 percent inclusive of dividends.

Commenting on the financial results for the full year ended December 31, 2014, Validus’ Chairman and CEO Ed Noonan stated:

“During 2014, Validus delivered an impressive 13.2 percent operating return on average equity and 12.8 percent growth in book value per diluted share inclusive of dividends. We also completed an important strategic objective by acquiring Western World Insurance Group, a leading specialty lines insurance company. The addition of Western World provides Validus with a top notch underwriting and distribution platform in the United States, the world’s largest insurance market, to complement our Bermuda, London and other global operations.”

On October 2, 2014, the company acquired all of the outstanding capital stock of Western World Insurance Group Inc., a specialty lines insurance company. The three-month results of Western World have been included in the company’s results for the first time.

January 2015 Renewals

During the January 2015 renewal season, the Validus Re and AlphaCat segments underwrote $540.9 million in gross premiums written, a decrease of 6.0 percent from the prior year renewal period. This renewal data does not include: Talbot and Western World’s operations as the business of each of these segments is distributed relatively evenly throughout the year and U.S. agriculture premiums, Validus said in a statement.

Highlights for Q4 2014

Highlights for the fourth quarter, including the three-month results of Western World, include the following:

  • Gross premiums written for the three months ended December 31, 2014 were $336.6 million compared to $237.3 million for the three months ended December 31, 2013, an increase of $99.4 million, or 41.9 percent.
  • Net premiums earned for the three months ended December 31, 2014 were $558.7 million compared to $492.2 million for the three months ended December 31, 2013, an increase of $66.5 million, or 13.5 percent.
  • Underwriting income for the three months ended December 31, 2014 was $135.7 million compared to $110.4 million for the three months ended December 31, 2013, an increase of $25.3 million, or 22.9 percent.
  • Combined ratio for the three months ended December 31, 2014 was 75.7 percent which included $84.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 15.1 percentage points compared to a combined ratio for the three months ended December 31, 2013 of 77.6 percent, which included $33.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 6.8 percentage points. The favorable loss reserve development was primarily due to lower than expected development on attritional losses.
  • Net operating income available to Validus for the three months ended December 31, 2014 was $129.0 million compared to $100.1 million for the three months ended December 31, 2013, an increase of $29.0 million, or 29.0 percent.
  • Net income available to Validus for the three months ended December 31, 2014 was $125.9 million compared to $95.3 million for the three months ended December 31, 2013, an increase of $30.6 million, or 32.1 percent.
  • Annualized return on average equity of 13.8 percent and annualized net operating return on average equity of 14.2 percent for the three months ended December 31, 2014 compared to 10.2 percent and 10.7 percent, respectively, for the three months ended December 31, 2013.
Full-Year Highlights

Highlights for the full year ended December 31, 2014 include the following:

  • Gross premiums written for the year ended December 31, 2014 were $2,363.3 million compared to $2,401.1 million for the year ended December 31, 2013, a decrease of $37.8 million, or 1.6 percent.
  • Net premiums earned for the year ended December 31, 2014 were $2,002.4 million compared to $2,102.0 million for the year ended December 31, 2013, a decrease of $99.6 million, or 4.7 percent.
  • Underwriting income for the year ended December 31, 2014 was $526.9 million compared to $604.9 million for the year ended December 31, 2013, a decrease of $78.0 million, or 12.9 percent.
  • Combined ratio for the year ended December 31, 2014 was 73.7% which included $252.2 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 12.6 percentage points compared to a combined ratio for the year ended December 31, 2013 of 71.2 percent which included $205.4 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.8 percentage points.
  • Net operating income available to Validus for the year ended December 31, 2014 was $486.5 million compared to $589.4 million for the year ended December 31, 2013, a decrease of $103.0 million, or 17.5 percent.
  • Net income available to Validus for the year ended December 31, 2014 was $481.3 million compared to $532.7 million for the year ended December 31, 2013, a decrease of $51.3 million, or 9.6 percent.
  • Return on average equity of 13.1 percent and net operating return on average equity of 13.2 percent for the year ended December 31, 2014 compared to 14.0 percent and 15.5 percent, respectively, for the year ended December 31, 2013.

Source: Validus Holdings Ltd.

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