Three Bermuda insurers reported higher first-quarter earnings as combined ratios improved thanks in part to lower catastrophe losses.

But lighter catastrophe losses did not tell the entire story. Ed Noonan, chairman and CEO of Pembroke, Bermuda-based Validus Holdings, Ltd. said in a conference call that non-catastrophe business also performed well for his company.

Validus reported 2013 Q1 net income available to the company of $223.2 million, compared to $124.2 million in 2012's first quarter.

Underwriting income was $210.1 million, up from $69.3 million a year ago. The combined ratio improved to 60.5 in 2013's first quarter, compared to 84.6 in 2012. Favorable development on prior-year accident years benefitted the loss ratio by 12.4 percentage points.

Net written premiums grew to $917.5 million from $730.2 million a year ago.

Net realized gains on investments were $1.7 million, down from $7.5 million in 2012's first quarter.

Noonan said in the conference call that the company's acquisition of Flagstone Re is going well, and Validus is keeping the business it likes and is well on its way to disposing of business it doesn't want. Flagstone, Noonan said, contributed $20 million to Validus' net income.

Noonan also said Validus recently closed its acquisition of Longhorn Re, a crop reinsurer, which will help Validus diversify its crop business.

Hamilton, Bermuda-based Aspen Insurance Holdings Limited reported 2013 first-quarter net income of $91.8 million, up from $78.7 million a year ago.

Underwriting income increased to $51 million compared to $30.5 million in 2012's first quarter. Operating income before taxes was $92.1 million in the quarter, up from $74.9 million.

The combined ratio improved to 90.1 in 2013 Q1 compared to 93.8 in 2012. Favorable prior year development shaved 5.1 points off of the combined ratio. In 2012's first quarter, favorable development reduced the combined ratio by 7.5 points.

Net written premiums were $597 million, down from $633.5 million a year ago.

Net realized investment gains after tax were $15.6 million, up from $5.2 million in 2012's first quarter.

In a conference call, Aspen CEO Chris O'Kane talked about the company's “three strategic pillars” — business portfolio optimization, effective capital management and enhancing investment returns — designed to increase return on equity by 10 percent by 2014.

O'Kane said the company has made progress in all three areas. For the first pillar, O'Kane discussed a strategy to reduce volatility in the company's book of business. “We previously identified wind and earthquake-exposed property in our insurance platform as an area of our portfolio which was too volatile,” O'Kane said. “Our views have not changed and we're working toward reducing this exposure which equals an approximate reduction of $140 million of capital within the next two years and ultimately a reduction of over $200 million.”

Axis Capital, based in Pembroke, Bermuda, reported 2013 Q1 net income available to common shareholders of $303 million, compared to $122 million in 2012's first quarter.

Underwriting income was $170.8 million in the quarter, up from $62.7 million. The combined ratio improved to 83 compared to 94.8 in 2012's first quarter.

Net premiums written were up to $1.6 billion in the quarter, compared to $1.4 billion in Q1 2012.

Net realized investment gains increased to $44.5 million in 2013's first quarter, up from $14.5 million a year ago.

Albert Benchimol, Axis president and CEO, says in a statement, “Axis had a very good first quarter, with solid contributions from both our insurance and reinsurance segments. Overall, gross premiums written were up 15 percent. Both segments contributed strong and diversified premium growth as well as solid underwriting profits.”

He adds, “We continue to find good risks in an improving marketplace and are very pleased with the progress of our newer initiatives in both insurance and reinsurance. We believe the combination of attractive opportunities and our strong capital position should allow us to both continue on a path of profitable growth and return to our shareholders the bulk of our earnings for this year, in the form of dividends and share repurchases.”

Special Reports /

Bermuda Insurers See Improved Q1 Combined Ratios, Higher Net Income

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