Validus Reports $173.4M Q1 Net Income, Up From $162.4M in Q1 2014

May 1, 2015

Bermuda-based Validus Holdings Ltd. reported net income available to Validus of $173.4 million, or $1.98 per diluted common share, for the three months ended March 31, 2015, compared to $162.4 million, or $1.66 per diluted common share, for the three months ended March 31, 2014.

Net operating income available to Validus was $132.8 million, or $1.52 per diluted common share, for the three months ended March 31, 2015, compared to $140.3 million, or $1.43 per diluted common share, for the three months ended March 31, 2014.

“I am very pleased with the company’s strong performance during the first quarter of 2015. Validus earned $173.4 million in net income, equal to a 19.1 percent annualized return on average equity, and had 4.9 percent growth in book value per diluted common share inclusive of dividends,” said Validus’ Chairman and CEO Ed Noonan.

“As an underwriting company first and foremost, I applaud our underwriters for having the discipline to reduce exposure where the pricing was insufficient for the risk. Validus’ goal is to remain a preferred partner for our customers and intermediaries over the long haul, and that starts with maintaining the integrity of our underwriting. In challenging market conditions, that’s what disciplined underwriting companies do,” he added.

Other highlights for Validus’ first quarter include the following:

  • Gross premiums written for the first three months ended March 31, 2015 were $1.1 billion, compared to $1.0 billion for the three months ended March 31, 2014, an increase of $107.5 million, or 10.6 percent.
  • Net premiums earned for the quarter were $577.8 million, compared to $483.0 million for the same period in 2014, an increase of $94.8 million, or 19.6 percent.
  • Underwriting income for the quarter was $144.1 million, compared to $153.0 million for the same quarter in 2014, a decrease of $8.9 million, or 5.8 percent.
  • Combined ratio for the first quarter was 75.1 percent, which included $83.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 14.5 percentage points. This compares to a combined ratio for the same period last year of 68.3 percent, which included $39.4 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 8.2 percentage points. The favorable loss reserve development was primarily due to lower than expected development on attritional losses.
  • Annualized return on average equity of 19.1 percent and annualized net operating return on average equity of 14.6 percent for the first quarter, compared to 17.7 percent and 15.3 percent, respectively, for the same quarter in 2014.
Validus Re

Highlights for Validus Reinsurance Ltd.’s first quarter results include the following:

  • Gross premiums written for the three months ended March 31, 2015 were $711.2 million, compared to $666.2 million for the same quarter in 2014, an increase of $45.0 million, or 6.8 percent. Gross premiums written for the first quarter of 2015 included $219.3 million of property premiums, $133.4 million of marine premiums and $358.5 million of specialty premiums, compared to $261.7 million of property premiums, $153.0 million of marine premiums and $251.5 million of specialty premiums for the first three months of 2014. The increase in gross premiums written in specialty lines is primarily due to increased agricultural business written in the quarter.
  • Net premiums earned for the first quarter were $253.1 million, compared to $238.4 million for the same period in 2014, an increase of $14.7 million, or 6.2 percent.
  • The combined ratio for the first three months of 2015 was 70.1 percent, compared to 53.6 percent for the same period in 2014, an increase of 16.5 percentage points.
  • The loss ratio for the first three months was 44.7 percent, compared to 28.6 percent for Q1 2014, an increase of 16.1 percentage points. The loss ratio for the first three months of 2015 included favorable loss reserve development on prior accident years of $24.7 million, benefiting the loss ratio by 9.8 percentage points. The favorable loss reserve development was primarily due to lower than expected development on attritional losses. The loss ratio for the three months ended March 31, 2014 included favorable loss reserve development on prior accident years of $10.0 million, benefiting the loss ratio by 4.2 percentage points.
  • General and administrative expenses for the first quarter of 2015 were $19.5 million, compared to $18.2 million for the same period in 2014, an increase of $1.3 million, or 7.2 percent.
  • Net operating income available to Validus Re for the first quarter 2015 was $92.9 million, compared to $127.1 million for the first quarter in 2014, a decrease of $34.2 million, or 26.9 percent.
  • Net income available to Validus Re in the first quarter 2015 was $112.2 million, compared to $146.4 million, for the same quarter in 2014, a decrease of $34.2 million, or 23.4 percent.
Talbot Segment

Highlights for the Talbot Holdings Ltd.’s first quarter results include the following:

  • Gross premiums written for the first three months of 2015 were $270.1 million, compared to $290.7 million for the same period in 2014, a decrease of $20.6 million, or 7.1 percent. Gross premiums written for the first quarter of 2015 included $71.7 million of property premiums, $110.4 million of marine premiums and $88.0 million of specialty premiums, compared to $78.1 million of property premiums, $119.6 million of marine premiums and $93.0 million of specialty premiums for the first quarter 2014. The decrease in gross premiums written for the property and marine lines is primarily due to general rate declines and participation reductions on certain lines.
  • Net premiums earned for the first quarter were $222.6 million, compared to $213.9 million for the same quarter in 2014, an increase of $8.7 million, or 4.1 percent.
  • The combined ratio for the three months ended March 31, 2015 was 74.9 percent, compared to 86.5 percent for the three months ended March 31, 2014, a decrease of 11.6 percentage points.
  • The loss ratio for the first quarter was 35.1 percent, compared to 47.9 percent for the first quarter of 2014, a decrease of 12.8 percentage points. The loss ratio for the three months ended March 31, 2015 included favorable loss reserve development on prior accident years of $51.7 million, benefiting the loss ratio by 23.2 percentage points. The favorable loss reserve development was primarily due to lower than expected development on attritional losses. The loss ratio for the first quarter of 2014 included favorable loss reserve development on prior accident years of $21.5 million, benefiting the loss ratio by 10.0 percentage points.
  • General and administrative expenses for the first three months of 2015 were $36.5 million, compared to $35.1 million for the first quarter of 2014, an increase of $1.3 million, or 3.8 percent.
  • Net operating income available to Talbot for the first quarter of 2015 was $61.3 million, compared to $33.7 million for the first quarter ended March 31, 2014, an increase of $27.6 million, or 82.1 percent.
  • Net income available to Talbot for the first quarter was $69.6 million, compared to $36.2 million, for the first quarter in 2014, an increase of $33.4 million, or 92.5 percent.

Source: Validus Holdings Ltd.

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