Validus Reports $22 Million Hike in 3rd Quarter Net Income to $66.7 Million

October 30, 2015

Validus Holdings Ltd. reported net income of $66.7 million, or $0.78 per diluted common share, for the third quarter ended Sept. 30, 2015, compared to $39.7 million, or $0.41 per diluted common share, for the same period last year. For the first nine months, net income was $304.1 million, or $3.50 per diluted common share, compared to $355.4 million, or $3.70 per diluted common share, for the same period last year.

Third quarter net operating income was $73.6 million, or $0.86 per diluted common share, compared to $84.9 million, or $0.90 per diluted common share, for the same period last year. Net operating income during the first nine months was $304.8 million, or $3.51 per diluted common share, compared to $357.4 million, or $3.73 per diluted common share. .

“Validus delivered 1.9 percent growth in book value per diluted share inclusive of dividends during the quarter, a meaningful accomplishment given the significant investment market volatility and loss activity including the Tianjin, China industrial explosion and earthquake in Chile,” said Validus’ Chairman and CEO Ed Noonan.

The August 12 explosion in the Port of Tianjin, China, resulted in an estimated loss to the company of $47.8 million or 8.6 percentage points of the loss ratio. Net of $3.9 million of reinstatement premiums, the net loss was $43.9 million, the company said.

In addition, the company reported an estimated loss from the Chilean earthquake of $22.2 million, or 4.0 percentage points of the loss ratio. Net of $2.2 million of reinstatement premiums, the net loss was $20.0 million.

The company’s loss ratio, excluding prior year development, notable loss events, and non-notable loss events for the three months ended September 30, 2015 and 2014 was 50.2 percent for both periods.

Highlights for the third quarter and first nine months include:

  • Gross premiums written for the third quarter were $401.7 million, compared to $359.0 million for the same period in 2014, an increase of $42.7 million, or 11.9 percent. The increase was primarily due to the contribution from Western World and an increase in AlphaCat gross written premium, the company said, noting that this increase was offset by decreases at both Validus Re and Talbot.
  • The combined ratio for the third quarter was 84.5 percent, which included $91.5 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 16.5 percentage points. This compares to 2014’s third quarter combined ratio of 81.4 percent, which included $55.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 11.2 percentage points.
  • Combined ratio for the first nine months was 80.0 percent which included $245.8 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 14.4 percentage points. This compares to a combined ratio for the first nine months of 2014 of 72.9 percent, which included $167.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 11.6 percentage points.
  • For the third quarter, annualized return on average equity was 7.3 percent and annualized net operating return on average equity was 8.1 percent, compared with to 4.2 percent and 9.1 percent, respectively, for the third quarter last year. Annualized return on average equity for the first nine months was 11.1 percent and annualized net operating return on average equity was 11.2 percent, compared with 12.8 percent and 12.9 percent, respectively, for the nine months in 2014.

Source: Validus Holdings

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