Validus Reports 3Q Profit After Prior Year Loss

NU Online News Service, Nov. 6, 12:12 p.m. EDT

Bermuda-based reinsurer Validus Holdings, Ltd. reported third quarter net income of $499 million after a prior year loss of $126 million with a combined ratio that is 55 points better than last year.

The results translated into earnings per share of $5.21 compared to negative $1.71 last year.

The benign catastrophe season spelled a 55.6 point improvement in the company's combined ratio to 66.7 for the third quarter.

Third quarter revenues for the company, which owns specialty insurer Talbot and recently completed a deal to acquire IPC Re Holdings, grew by 150 percent, or $455 million, to $759 million for the first three months of the year.

For the nine months, net income results improved from $16 million or 14-cents a share, last year to $732 million or $8.65 a share this year. Revenues increased 57 percent, or $538 million, to $1.48 billion. The combined ratio for the period improved by 22.2 points to 70.9.

The company also announced that it will buy back $400 million of its common stock.

Validus' Chairman and Chief Executive Officer, Ed Noonan said during a conference call with investment analysts that the company has "deliberately" avoided the price competition in the United States commercial insurance market. That strategy has allowed its specialty insurer, Talbot, to get rate for its product producing a range of results from flat rates for terror and war risk coverage to rate increases for the energy sector in the mid-teens, he said.

He said where other reinsurers are just now positioning themselves for some markets, such as property and marine, the company is already there.

"When the U.S. insurance market comes to its senses, we will be able to capitalize on [those lines] as well," he remarked.

About the company's future prospects and the current insurance market, he said, "I've never felt as comfortable or so in control of our destiny as I do in this point of time heading into a mixed environment."

That future includes the integration of IPC Re that he said will be a smooth transition without complication.

The deal, completed in the beginning of September, spelled the loss of 16 jobs for IPC employees including senior management and all underwriters. The company said it will keep all 30 staff members on until Dec. 31 to make them eligible for bonuses.

Validus acquired IPC for $1.6 billion after a bitter and extended battle in which management rejected several offers and sought other bidders.

In other insurance financial news, OdysseyRe, which is now privately owned by Fairfax Financial Holdings Ltd., reported its third quarter results of net income of $128.2 million on gross premium written of $630.9 million and a combined ratio of 96.9.

For the nine months, net income came in at $250.8 million with gross premiums written of $1.7 billion and a combined ratio of 96.7.

Montpelier Re said it increased it dividend payment by 20 percent to 9-cents a share payable on Jan. 15 to shareholders of record as of Dec. 31.