Bermuda-based Validus Holdings reported net income of $238.5 million, or $2.08 per diluted common share for the three months ended September 30, 2010, compared with net income of $499.2 million, or $5.21 per diluted common share, for the three months ended September 30, 2009.
Net income for the nine months ended September 30, 2010 was $299.9 million, or $2.42 per diluted common share compared with $731.6 million, or $8.65 per diluted common share, for the nine months ended September 30, 2009.
Net operating income, which excludes capital gains/losses and currency fluctuations, in the third quarter was $173.0 million, or $1.51 per diluted share, compared with net operating income of $145.6 million, or $1.52 per diluted common share, in Q3 2009.
Net operating income for the nine months ended September 30, 2010 was $166.4 million, or $1.34 per diluted common share, compared with net operating income of $356.4 million, or $4.21 per diluted common share, for the nine months ended September 30, 2009.
Validus listed the following third quarter highlights:
— Gross premiums written for the three months ended September 30, 2010 were $344.0 million compared to $331.0 million for the three months ended September 30, 2009, an increase of $13.0 million, or 3.9 percent, primarily due to new business and increased lines on renewing business.
— Net premiums earned for the three months ended September 30, 2010 were $432.7 million compared to $374.7 million for the three months ended September 30, 2009, an increase of $58.0 million, or 15.5 percent.
— Underwriting income for the three months ended September 30, 2010 was $150.2 million compared to $124.4 million for the three months ended September 30, 2009, an increase of $25.8 million, or 20.7 percent.
— Combined ratio of 65.2 percent which included $49.8 million of favorable prior year loss reserve development, benefiting the loss ratio by 11.5 percentage points.
— Net operating income for the three months ended September 30, 2010 of $173.0 million compared to net operating income of $145.6 million for the three months ended September 30, 2009, an increase of $27.4 million, or 18.8 percent, reflecting increased underwriting and investment income.
— Net income for the three months ended September 30, 2010 was $238.5 million compared to net income of $499.2 million for the three months ended September 30, 2009, a decrease of $260.7 million, or 52.2 percent, due to the significant non-recurring gain on bargain purchase, net of expenses of $303.0 million relating to the IPC acquisition.
Highlights for the year to date included the following:
— Gross premiums written for the nine months ended September 30, 2010 were $1.7318 billion compared to $1.366 billion for the nine months ended September 30, 2009, an increase of $365.9 million, or 26.8 percent, due primarily to the IPC acquisition.
— Net premiums earned for the nine months ended September 30, 2010 were $1.3283 billion, compared to $1.0217 billion for the nine months ended September 30, 2009, an increase of $306.6 million, or 30.0 percent.
— Combined ratio of 92.3 percent which included $126.0 million of favorable prior year loss reserve development, benefiting the loss ratio by 9.5 percentage points. — Net operating income for the nine months ended September 30, 2010 of $166.4 million compared to net operating income of $356.4 million for the nine months ended September 30, 2009, a decrease of $190.0 million, or 53.3 percent, primarily due to increased frequency and severity of significant worldwide loss events in the first nine months of 2010 compared to 2009.
— Net income for the nine months ended September 30, 2010 was $299.9 million compared to net income of $731.6 million for the nine months ended September 30, 2009, a decrease of $431.8 million, or 59.0 percent, due to the significant non-recurring gain on bargain purchase, net of expenses of $287.1 million relating to the IPC acquisition.
The report also listed a number of “notable loss events,” which included the earthquake in New Zealand, windstorms in Oklahoma, hurricane Karl and losses on political risk coverage. For the three months ended September 30, 2010, Validus said it had “incurred $47.7 million from notable loss events, which represented 11.0 percentage points of the loss ratio, excluding reserve for potential development on 2010 notable loss events.”
“Net of $0.6 million of reinstatement premiums, the effect of these events on net income was $47.1 million. For the three months ended September 30, 2009, the Company did not experience any notable loss events. The Company’s loss ratio, excluding prior year development and notable loss events for the three months ended September 30, 2010 and 2009 were 37.2 percent and 44.3 percent, respectively.
Chairman and CEO Ed Noonan stated: “I am very pleased with this quarter’s result which delivered an 18.8 percent operating return on average equity and 6.4 percent growth in diluted book value per share plus dividends to our shareholders.
“We formed Validus five years ago and at this time in 2005 we were preparing for our first January renewal season with $1 billion in capital. Five years later, our total capital resources are $4.3 billion; we operate worldwide from offices in Bermuda, London, Miami, New York, Singapore, Chile and Dubai and underwrite annual gross premium income of $2 billion.
The Company will host a conference call for analysts and investors today, November 5, 2010 at 9:00 AM (Eastern) to discuss the third quarter 2010 financial results and related matters. The conference call can be accessed via telephone by dialing 1-866-783-2144 (toll-free U.S.) or 1-857-350-1603 (international) and entering the pass code 24729846#. Those who intend to participate in the conference call should register at least ten minutes in advance to ensure access to the call. A telephone replay of the conference call will be available through November 19, 2010 by dialing 1-888-286-8010 (toll-free U.S) or 1-617-801-6888 (international) and entering the pass code 52740213#.
The complete earnings report, as well as details on accessing the replay of the conference call, are available on the Company’s web site.
Source: Validus Holdings
Was this article valuable?
Here are more articles you may enjoy.
Travelers Reverses Q2 Income Loss, Narrows Underwriting Loss 
Hard Market Conditions Expected to Ease in 2025 as Claims Inflation Softens: Swiss Re 
Project 2025 Plan to End NFIP Welcomed by Some, Rejected by Others in Insurance 
AIG Files Amended Suit Against Former Execs, Dellwood Insurance 
