BERMUDA | 98-0501001 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
Page | |
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
Assets | |||||||
Fixed maturities, at fair value (amortized cost: 2013—$5,322,882; 2012—$5,008,514) | $ | 5,318,993 | $ | 5,085,334 | |||
Short-term investments, at fair value (amortized cost: 2013—$611,708; 2012—$1,112,929) | 609,778 | 1,114,250 | |||||
Other investments, at fair value (cost: 2013—$604,092; 2012—$583,068) | 514,385 | 564,448 | |||||
Cash and cash equivalents | 1,317,061 | 1,219,379 | |||||
Total investments and cash | 7,760,217 | 7,983,411 | |||||
Investments in affiliates | 110,472 | 172,329 | |||||
Premiums receivable | 1,374,486 | 802,159 | |||||
Deferred acquisition costs | 206,623 | 146,588 | |||||
Prepaid reinsurance premiums | 224,886 | 99,593 | |||||
Securities lending collateral | 1,900 | 225 | |||||
Loss reserves recoverable | 418,693 | 439,967 | |||||
Paid losses recoverable | 22,356 | 46,435 | |||||
Income taxes recoverable | 1,725 | — | |||||
Intangible assets | 108,489 | 110,569 | |||||
Goodwill | 20,393 | 20,393 | |||||
Accrued investment income | 19,334 | 21,321 | |||||
Other assets | 318,805 | 177,274 | |||||
Total assets | $ | 10,588,379 | $ | 10,020,264 | |||
Liabilities | |||||||
Reserve for losses and loss expenses | $ | 3,283,450 | $ | 3,517,573 | |||
Unearned premiums | 1,439,597 | 894,362 | |||||
Reinsurance balances payable | 344,418 | 138,550 | |||||
Securities lending payable | 2,366 | 691 | |||||
Deferred income taxes | 22,600 | 20,259 | |||||
Net payable for investments purchased | 29,031 | 38,346 | |||||
Accounts payable and accrued expenses | 131,903 | 167,577 | |||||
Variable funding notes | 431,093 | — | |||||
Senior notes payable | 247,144 | 247,090 | |||||
Debentures payable | 540,476 | 540,709 | |||||
Total liabilities | $ | 6,472,078 | $ | 5,565,157 | |||
Commitments and contingent liabilities | |||||||
Shareholders’ equity | |||||||
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2013—154,225,781; 2012—152,698,191; Outstanding: 2013—99,737,461; 2012—107,921,259) | $ | 26,989 | $ | 26,722 | |||
Treasury shares (2013—54,488,320; 2012—44,776,932) | (9,535 | ) | (7,836 | ) | |||
Additional paid-in-capital | 1,813,461 | 2,160,478 | |||||
Accumulated other comprehensive (loss) | (8,262 | ) | (2,953 | ) | |||
Retained earnings | 1,795,203 | 1,844,416 | |||||
Total shareholders’ equity available to Validus | 3,617,856 | 4,020,827 | |||||
Noncontrolling interest | 498,445 | 434,280 | |||||
Total shareholders’ equity | $ | 4,116,301 | $ | 4,455,107 | |||
Total liabilities and shareholders’ equity | $ | 10,588,379 | $ | 10,020,264 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Revenues | |||||||||||||||
Gross premiums written | $ | 702,313 | $ | 627,089 | $ | 1,807,073 | $ | 1,464,378 | |||||||
Reinsurance premiums ceded | (121,396 | ) | (119,052 | ) | (308,612 | ) | (226,104 | ) | |||||||
Net premiums written | 580,917 | 508,037 | 1,498,461 | 1,238,274 | |||||||||||
Change in unearned premiums | (33,459 | ) | (60,410 | ) | (419,942 | ) | (339,448 | ) | |||||||
Net premiums earned | 547,458 | 447,627 | 1,078,519 | 898,826 | |||||||||||
Net investment income | 26,210 | 25,885 | 51,859 | 53,645 | |||||||||||
Net realized gains on investments | 3,409 | 6,154 | 5,130 | 13,686 | |||||||||||
Net unrealized (losses) on investments | (141,348 | ) | (53,574 | ) | (148,585 | ) | (32,903 | ) | |||||||
Income (loss) from investment affiliate | 1,753 | (398 | ) | 3,230 | (398 | ) | |||||||||
Other income | 4,418 | 5,994 | 7,103 | 14,885 | |||||||||||
Foreign exchange (losses) gains | (8,223 | ) | (652 | ) | (1,301 | ) | 2,514 | ||||||||
Total revenues | 433,677 | 431,036 | 995,955 | 950,255 | |||||||||||
Expenses | |||||||||||||||
Losses and loss expenses | 265,044 | 153,692 | 409,815 | 385,681 | |||||||||||
Policy acquisition costs | 87,152 | 76,129 | 180,763 | 154,261 | |||||||||||
General and administrative expenses | 70,967 | 61,635 | 151,246 | 128,010 | |||||||||||
Share compensation expenses | 6,638 | 6,800 | 8,956 | 12,238 | |||||||||||
Finance expenses | 37,830 | 13,706 | 62,276 | 29,985 | |||||||||||
Total expenses | 467,631 | 311,962 | 813,056 | 710,175 | |||||||||||
(Loss) income before taxes and income from operating affiliates | (33,954 | ) | 119,074 | 182,899 | 240,080 | ||||||||||
Tax (expense) benefit | (93 | ) | (404 | ) | 225 | (543 | ) | ||||||||
Income from operating affiliates | 3,793 | 3,592 | 7,316 | 6,959 | |||||||||||
Net (loss) income | $ | (30,254 | ) | $ | 122,262 | $ | 190,440 | $ | 246,496 | ||||||
Net loss attributable to noncontrolling interest | 60,976 | 45,360 | 63,525 | 45,360 | |||||||||||
Net income available to Validus | $ | 30,722 | $ | 167,622 | $ | 253,965 | $ | 291,856 | |||||||
Other comprehensive income (loss) | |||||||||||||||
Foreign currency translation adjustments | 186 | (757 | ) | (9,599 | ) | 636 | |||||||||
Other comprehensive income (loss) | $ | 186 | $ | (757 | ) | $ | (9,599 | ) | $ | 636 | |||||
Comprehensive income available to Validus | $ | 30,908 | $ | 166,865 | $ | 244,366 | $ | 292,492 | |||||||
Earnings per share | |||||||||||||||
Weighted average number of common shares and common share equivalents outstanding | |||||||||||||||
Basic | 103,133,188 | 98,254,186 | 105,259,813 | 98,839,663 | |||||||||||
Diluted | 104,734,643 | 103,667,967 | 107,393,822 | 104,382,030 | |||||||||||
Basic earnings per share available to common shareholders | $ | 0.28 | $ | 1.69 | $ | 2.26 | $ | 2.92 | |||||||
Diluted earnings per share available to common shareholders | $ | 0.28 | $ | 1.62 | $ | 2.21 | $ | 2.80 | |||||||
Cash dividends declared per share | $ | 0.30 | $ | 0.25 | $ | 2.60 | $ | 0.50 |
June 30, 2013 | June 30, 2012 | ||||||
(unaudited) | (unaudited) | ||||||
Common shares | |||||||
Balance - Beginning of period | $ | 26,722 | $ | 23,538 | |||
Common shares issued, net | 267 | 153 | |||||
Balance - End of period | $ | 26,989 | $ | 23,691 | |||
Treasury shares | |||||||
Balance - Beginning of period | $ | (7,836 | ) | $ | (6,131 | ) | |
Repurchase of common shares | (1,699 | ) | (1,212 | ) | |||
Balance - End of period | $ | (9,535 | ) | $ | (7,343 | ) | |
Additional paid-in capital | |||||||
Balance - Beginning of period | $ | 2,160,478 | $ | 1,893,890 | |||
Common shares (redeemed), net | (488 | ) | (1,307 | ) | |||
Repurchase of common shares | (355,485 | ) | (220,040 | ) | |||
Share compensation expenses | 8,956 | 12,238 | |||||
Balance - End of period | $ | 1,813,461 | $ | 1,684,781 | |||
Accumulated other comprehensive (loss) | |||||||
Balance - Beginning of period | $ | (2,953 | ) | $ | (6,601 | ) | |
Amounts reclassified to retained earnings | 4,290 | — | |||||
Other comprehensive (loss) income | (9,599 | ) | 636 | ||||
Balance - End of period | $ | (8,262 | ) | $ | (5,965 | ) | |
Retained earnings | |||||||
Balance - Beginning of period | $ | 1,844,416 | $ | 1,543,729 | |||
Dividends | (298,888 | ) | (52,915 | ) | |||
Net income | 190,440 | 246,496 | |||||
Net loss attributable to noncontrolling interest | 63,525 | 45,360 | |||||
Amounts reclassified from accumulated other comprehensive income | (4,290 | ) | — | ||||
Balance - End of period | $ | 1,795,203 | $ | 1,782,670 | |||
Total shareholders’ equity available to Validus | $ | 3,617,856 | $ | 3,477,834 | |||
Noncontrolling interest | $ | 498,445 | $ | 404,740 | |||
Total shareholders’ equity | $ | 4,116,301 | $ | 3,882,574 | |||
June 30, 2013 | June 30, 2012 | ||||||
(unaudited) | (unaudited) | ||||||
Cash flows provided by (used in) operating activities | |||||||
Net income | $ | 190,440 | $ | 246,496 | |||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||||||
Share compensation expenses | 8,956 | 12,238 | |||||
Amortization of discount on senior notes | 54 | 54 | |||||
(Income) loss from investment affiliate | (3,230 | ) | 398 | ||||
Net realized (gains) on investments | (5,130 | ) | (13,686 | ) | |||
Net unrealized losses on investments | 148,585 | 32,903 | |||||
Amortization of intangible assets | 2,080 | 2,080 | |||||
(Income) from operating affiliates | (7,316 | ) | (6,959 | ) | |||
Foreign exchange losses (gains) included in net income | 30,868 | (5,844 | ) | ||||
Amortization of premium on fixed maturities | 10,163 | 12,253 | |||||
Change in: | |||||||
Premiums receivable | (558,107 | ) | (330,214 | ) | |||
Deferred acquisition costs | (60,035 | ) | (54,667 | ) | |||
Prepaid reinsurance premiums | (125,293 | ) | (85,006 | ) | |||
Loss reserves recoverable | 20,000 | 1,475 | |||||
Paid losses recoverable | 23,840 | 58,149 | |||||
Income taxes recoverable | (852 | ) | (2,720 | ) | |||
Accrued investment income | 1,903 | 4,534 | |||||
Other assets | 22,009 | (11,777 | ) | ||||
Reserve for losses and loss expenses | (216,535 | ) | (43,198 | ) | |||
Unearned premiums | 545,235 | 424,454 | |||||
Reinsurance balances payable | 186,906 | 65,154 | |||||
Deferred income taxes | 2,081 | 2,565 | |||||
Accounts payable and accrued expenses | (42,917 | ) | (3,518 | ) | |||
Net cash provided by operating activities | 173,705 | 305,164 | |||||
Cash flows provided by (used in) investing activities | |||||||
Proceeds on sales of investments | 2,686,285 | 1,829,294 | |||||
Proceeds on maturities of investments | 316,860 | 295,192 | |||||
Purchases of fixed maturities | (3,318,638 | ) | (1,975,225 | ) | |||
Sales (purchases) of short-term investments, net | 500,191 | (31,629 | ) | ||||
(Purchases) of other investments | (23,674 | ) | (500,632 | ) | |||
(Increase) decrease in securities lending collateral | (1,675 | ) | 4,317 | ||||
Redemption from (purchase of) investment in operating affiliates | 79,307 | (26,500 | ) | ||||
Purchase of investment in investment affiliate | (6,904 | ) | (3,368 | ) | |||
Net cash provided by (used in) investing activities | 231,752 | (408,551 | ) | ||||
Cash flows provided by (used in) financing activities | |||||||
Net proceeds on issuance of variable funding notes | 262,037 | — | |||||
(Redemption) of common shares, net | (221 | ) | (1,154 | ) | |||
Purchases of common shares under share repurchase program | (357,184 | ) | (221,252 | ) | |||
Dividends paid | (297,539 | ) | (56,260 | ) | |||
Increase (decrease) in securities lending payable | 1,675 | (4,317 | ) | ||||
Third party investment in noncontrolling interest | 127,690 | 450,100 | |||||
Net cash (used in) provided by financing activities | (263,542 | ) | 167,117 | ||||
Effect of foreign currency rate changes on cash and cash equivalents | (44,233 | ) | 6,736 | ||||
Net increase in cash | 97,682 | 70,466 | |||||
Cash and cash equivalents - beginning of period | $ | 1,219,379 | $ | 832,844 | |||
Cash and cash equivalents - end of period | $ | 1,317,061 | $ | 903,310 | |||
Taxes paid during the period | $ | (1,326 | ) | $ | 3,764 | ||
Interest paid during the period | $ | 24,955 | $ | 20,117 |
Amortized Cost or Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
U.S. government and government agency | $ | 1,209,597 | $ | 2,430 | $ | (5,807 | ) | $ | 1,206,220 | ||||||
Non-U.S. government and government agency | 385,458 | 2,089 | (6,523 | ) | 381,024 | ||||||||||
States, municipalities, political subdivision | 44,230 | 485 | (422 | ) | 44,293 | ||||||||||
Agency residential mortgage-backed securities | 338,313 | 9,042 | (1,841 | ) | 345,514 | ||||||||||
Non-agency residential mortgage-backed securities | 25,584 | 121 | (1,069 | ) | 24,636 | ||||||||||
U.S. corporate | 1,378,522 | 9,232 | (14,224 | ) | 1,373,530 | ||||||||||
Non-U.S. corporate | 668,678 | 4,760 | (7,341 | ) | 666,097 | ||||||||||
Bank loans | 750,527 | 5,470 | (1,378 | ) | 754,619 | ||||||||||
Catastrophe bonds | 54,005 | 1,139 | (381 | ) | 54,763 | ||||||||||
Asset-backed securities | 467,968 | 1,670 | (1,341 | ) | 468,297 | ||||||||||
Total fixed maturities | 5,322,882 | 36,438 | (40,327 | ) | 5,318,993 | ||||||||||
Total short-term investments | 611,708 | 30 | (1,960 | ) | 609,778 | ||||||||||
Other investments | |||||||||||||||
Fund of hedge funds | 3,733 | 216 | (921 | ) | 3,028 | ||||||||||
Private equity investments | 12,771 | 984 | (67 | ) | 13,688 | ||||||||||
Hedge funds (a) | 581,389 | 22,718 | (115,665 | ) | 488,442 | ||||||||||
Mutual funds | 6,199 | 3,028 | — | 9,227 | |||||||||||
Total other investments | 604,092 | 26,946 | (116,653 | ) | 514,385 | ||||||||||
Total | $ | 6,538,682 | $ | 63,414 | $ | (158,940 | ) | $ | 6,443,156 | ||||||
Noncontrolling interest (a) | $ | (508,500 | ) | $ | (18,492 | ) | $ | 104,099 | $ | (422,893 | ) | ||||
Total investments excluding noncontrolling interest | $ | 6,030,182 | $ | 44,922 | $ | (54,841 | ) | $ | 6,020,263 |
(a) | Included in the Hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors. |
Amortized Cost or Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
U.S. government and government agency | $ | 1,091,357 | $ | 7,957 | $ | (84 | ) | $ | 1,099,230 | ||||||
Non-U.S. government and government agency | 295,602 | 6,904 | (227 | ) | 302,279 | ||||||||||
States, municipalities, political subdivision | 41,286 | 800 | (23 | ) | 42,063 | ||||||||||
Agency residential mortgage-backed securities | 375,368 | 13,708 | (202 | ) | 388,874 | ||||||||||
Non-agency residential mortgage-backed securities | 106,536 | 1,266 | (1,346 | ) | 106,456 | ||||||||||
U.S. corporate | 1,189,173 | 21,681 | (681 | ) | 1,210,173 | ||||||||||
Non-U.S. corporate | 582,115 | 11,373 | (223 | ) | 593,265 | ||||||||||
Bank loans | 663,217 | 10,593 | (427 | ) | 673,383 | ||||||||||
Catastrophe bonds | 56,757 | 481 | (291 | ) | 56,947 | ||||||||||
Asset-backed securities | 607,103 | 5,767 | (206 | ) | 612,664 | ||||||||||
Total fixed maturities | 5,008,514 | 80,530 | (3,710 | ) | 5,085,334 | ||||||||||
Total short-term investments | 1,112,929 | 1,349 | (28 | ) | 1,114,250 | ||||||||||
Other investments | |||||||||||||||
Fund of hedge funds | 4,677 | 299 | (219 | ) | 4,757 | ||||||||||
Private equity investments | 12,857 | 94 | — | 12,951 | |||||||||||
Hedge funds (a) | 559,335 | 21,814 | (42,623 | ) | 538,526 | ||||||||||
Mutual funds | 6,199 | 2,015 | — | 8,214 | |||||||||||
Total other investments | 583,068 | 24,222 | (42,842 | ) | 564,448 | ||||||||||
Total | $ | 6,704,511 | $ | 106,101 | $ | (46,580 | ) | $ | 6,764,032 | ||||||
Noncontrolling interest (a) | (450,000 | ) | (19,427 | ) | 36,690 | (432,737 | ) | ||||||||
Total investments excluding noncontrolling interest | $ | 6,254,511 | $ | 86,674 | $ | (9,890 | ) | $ | 6,331,295 |
(a) | Included in the Hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors. |
June 30, 2013 | December 31, 2012 | ||||||||||||
Estimated Fair Value | % of Total | Estimated Fair Value | % of Total | ||||||||||
AAA | $ | 768,907 | 14.4 | % | $ | 1,062,794 | 20.9 | % | |||||
AA | 2,127,840 | 40.0 | % | 1,862,322 | 36.6 | % | |||||||
A | 1,216,451 | 22.9 | % | 1,049,969 | 20.6 | % | |||||||
BBB | 408,034 | 7.7 | % | 374,447 | 7.4 | % | |||||||
Investment grade | 4,521,232 | 85.0 | % | 4,349,532 | 85.5 | % | |||||||
BB | 356,521 | 6.7 | % | 373,907 | 7.4 | % | |||||||
B | 409,962 | 7.7 | % | 330,416 | 6.5 | % | |||||||
CCC | 4,081 | 0.1 | % | 4,483 | 0.1 | % | |||||||
CC | 3,023 | — | % | 3,259 | 0.1 | % | |||||||
D/NR | 24,174 | 0.5 | % | 23,737 | 0.4 | % | |||||||
Non-Investment grade | 797,761 | 15.0 | % | 735,802 | 14.5 | % | |||||||
Total Fixed Maturities | $ | 5,318,993 | 100.0 | % | $ | 5,085,334 | 100.0 | % |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | ||||||||||||
Due in one year or less | $ | 818,318 | $ | 823,145 | $ | 526,529 | $ | 530,499 | |||||||
Due after one year through five years | 3,291,462 | 3,280,086 | 2,971,118 | 3,018,544 | |||||||||||
Due after five years through ten years | 368,207 | 364,246 | 418,377 | 424,304 | |||||||||||
Due after ten years | 13,030 | 13,069 | 3,483 | 3,993 | |||||||||||
4,491,017 | 4,480,546 | 3,919,507 | 3,977,340 | ||||||||||||
Asset-backed and mortgage-backed securities | 831,865 | 838,447 | 1,089,007 | 1,107,994 | |||||||||||
Total Fixed Maturities | $ | 5,322,882 | $ | 5,318,993 | $ | 5,008,514 | $ | 5,085,334 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Fixed maturities and short-term investments | $ | 26,151 | $ | 26,471 | $ | 53,682 | $ | 53,747 | |||||||
Cash and cash equivalents | 1,629 | 1,449 | 2,162 | 3,766 | |||||||||||
Securities lending income | — | 1 | — | 6 | |||||||||||
Total gross investment income | 27,780 | 27,921 | 55,844 | 57,519 | |||||||||||
Investment expenses | (1,570 | ) | (2,036 | ) | (3,985 | ) | (3,874 | ) | |||||||
Net investment income | $ | 26,210 | $ | 25,885 | $ | 51,859 | $ | 53,645 |
(c) | Net realized gains (losses) and change in net unrealized gains (losses) |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Fixed maturities, short-term and other investments and cash equivalents | |||||||||||||||
Gross realized gains | $ | 7,152 | $ | 9,415 | $ | 17,872 | $ | 19,423 | |||||||
Gross realized (losses) | (3,743 | ) | (3,261 | ) | (12,742 | ) | (5,737 | ) | |||||||
Net realized gains on investments | 3,409 | 6,154 | 5,130 | 13,686 | |||||||||||
Net unrealized gains on securities lending | — | — | — | 37 | |||||||||||
Change in net unrealized (losses) on investments | (141,348 | ) | (53,574 | ) | (148,585 | ) | (32,940 | ) | |||||||
Net change in unrealized (losses) on investments | $ | (141,348 | ) | $ | (53,574 | ) | $ | (148,585 | ) | $ | (32,903 | ) | |||
Total net realized gains and change in net unrealized (losses) on investments | $ | (137,939 | ) | $ | (47,420 | ) | $ | (143,455 | ) | $ | (19,217 | ) | |||
Noncontrolling interest (a) | 63,694 | 44,882 | 68,345 | 44,882 | |||||||||||
Total net realized gains and change in net unrealized (losses) on investments excluding noncontrolling interest | $ | (74,245 | ) | $ | (2,538 | ) | $ | (75,110 | ) | $ | 25,665 |
(a) | Includes change in net unrealized (losses) on investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors. |
June 30, 2013 | ||||||||||||
Description | Commitment | Issued and Outstanding | Investments pledged as collateral | |||||||||
$400,000 syndicated unsecured letter of credit facility | $ | 400,000 | $ | — | $ | — | ||||||
$525,000 syndicated secured letter of credit facility | 525,000 | 373,318 | 527,564 | |||||||||
$200,000 secured bi-lateral letter of credit facility | 200,000 | 73,523 | 129,590 | |||||||||
Talbot FAL Facility | 25,000 | 25,000 | 36,508 | |||||||||
PaCRe senior secured letter of credit facility | 10,000 | 258 | — | |||||||||
IPC bi-lateral facility | 40,000 | 24,788 | 97,735 | |||||||||
$375,000 Flagstone bi-lateral facility | 375,000 | 313,398 | 450,880 | |||||||||
$ | 1,575,000 | $ | 810,285 | $ | 1,242,277 |
December 31, 2012 | ||||||||||||
Description | Commitment | Issued and Outstanding | Investments pledged as collateral | |||||||||
$400,000 syndicated unsecured letter of credit facility | $ | 400,000 | $ | — | $ | — | ||||||
$525,000 syndicated secured letter of credit facility | 525,000 | 376,570 | 517,210 | |||||||||
$500,000 secured bi-lateral letter of credit facility | 500,000 | 92,402 | 125,991 | |||||||||
Talbot FAL Facility | 25,000 | 25,000 | 41,372 | |||||||||
PaCRe senior secured letter of credit facility | 10,000 | 219 | — | |||||||||
IPC bi-lateral facility | 80,000 | 40,613 | 98,593 | |||||||||
$550,000 Flagstone bi-lateral facility | 550,000 | 381,019 | 416,414 | |||||||||
$ | 2,090,000 | $ | 915,823 | $ | 1,199,580 |
(a) | Classification within the fair value hierarchy |
• | Level 1 - Fair values are measured based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. |
• | Level 2 - Fair values are measured based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. |
• | Level 3 - Fair values are measured based on inputs that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect our own judgments about assumptions where there is little, if any, market activity for that asset or liability that market participants might use. |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
U.S. government and government agency | $ | — | $ | 1,206,220 | $ | — | $ | 1,206,220 | |||||||
Non-U.S. government and government agency | — | 381,024 | — | 381,024 | |||||||||||
States, municipalities, political subdivision | — | 44,293 | — | 44,293 | |||||||||||
Agency residential mortgage-backed securities | — | 345,514 | — | 345,514 | |||||||||||
Non-agency residential mortgage-backed securities | — | 24,636 | — | 24,636 | |||||||||||
U.S. corporate | — | 1,373,530 | — | 1,373,530 | |||||||||||
Non-U.S. corporate | — | 666,097 | — | 666,097 | |||||||||||
Bank loans | — | 754,619 | — | 754,619 | |||||||||||
Catastrophe bonds | — | 54,763 | — | 54,763 | |||||||||||
Asset-backed securities | — | 468,297 | — | 468,297 | |||||||||||
Total fixed maturities | — | 5,318,993 | — | 5,318,993 | |||||||||||
Short-term investments | 583,518 | 26,260 | — | 609,778 | |||||||||||
Other investments | |||||||||||||||
Fund of hedge funds | — | — | 3,028 | 3,028 | |||||||||||
Private equity investments | — | — | 13,688 | 13,688 | |||||||||||
Hedge funds (a) | — | — | 488,442 | 488,442 | |||||||||||
Mutual funds | — | 9,227 | — | 9,227 | |||||||||||
Total other investments | — | 9,227 | 505,158 | 514,385 | |||||||||||
Total | $ | 583,518 | $ | 5,354,480 | $ | 505,158 | $ | 6,443,156 | |||||||
Noncontrolling interest (a) | — | — | (422,893 | ) | (422,893 | ) | |||||||||
Total investments excluding noncontrolling interest | $ | 583,518 | $ | 5,354,480 | $ | 82,265 | $ | 6,020,263 |
(a) | Included in the Hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors. |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
U.S. government and government agency | $ | — | $ | 1,099,230 | $ | — | $ | 1,099,230 | |||||||
Non-U.S. government and government agency | — | 302,279 | — | 302,279 | |||||||||||
States, municipalities, political subdivision | — | 42,063 | — | 42,063 | |||||||||||
Agency residential mortgage-backed securities | — | 388,874 | — | 388,874 | |||||||||||
Non-agency residential mortgage-backed securities | — | 106,456 | — | 106,456 | |||||||||||
U.S. corporate | — | 1,210,173 | — | 1,210,173 | |||||||||||
Non-U.S. corporate | — | 593,265 | — | 593,265 | |||||||||||
Bank loans | — | 673,383 | — | 673,383 | |||||||||||
Catastrophe bonds | — | 56,947 | — | 56,947 | |||||||||||
Asset-backed securities | — | 612,664 | — | 612,664 | |||||||||||
Total fixed maturities | — | 5,085,334 | — | 5,085,334 | |||||||||||
Short-term investments | 1,063,175 | 51,075 | — | 1,114,250 | |||||||||||
Other investments | |||||||||||||||
Fund of hedge funds | — | — | 4,757 | 4,757 | |||||||||||
Private equity investments | — | — | 12,951 | 12,951 | |||||||||||
Hedge funds (a) | — | — | 538,526 | 538,526 | |||||||||||
Mutual funds | — | 8,214 | — | 8,214 | |||||||||||
Total other investments | — | 8,214 | 556,234 | 564,448 | |||||||||||
Total | $ | 1,063,175 | $ | 5,144,623 | $ | 556,234 | $ | 6,764,032 | |||||||
Noncontrolling interest (a) | — | — | (432,737 | ) | (432,737 | ) | |||||||||
Total investments excluding noncontrolling interest | $ | 1,063,175 | $ | 5,144,623 | $ | 123,497 | $ | 6,331,295 |
(a) | Included in the Hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | |||||||
Total Fair Market Value | Total Fair Market Value | |||||||
Other Investments | Other Investments | |||||||
Level 3 investments - Beginning of period | $ | 523,693 | $ | 8,325 | ||||
Purchases | 65,056 | 500,000 | ||||||
Sales | (13,498 | ) | (277 | ) | ||||
Realized gains | 300 | 21 | ||||||
Unrealized (losses) | (70,393 | ) | (48,494 | ) | ||||
Transfers | — | (4,782 | ) | |||||
Level 3 investments - End of period | $ | 505,158 | $ | 454,793 | ||||
Noncontrolling interest (a) | (422,893 | ) | (405,118 | ) | ||||
Level 3 investments excluding noncontrolling interest | $ | 82,265 | $ | 49,675 |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||
Total Fair Market Value | Total Fair Market Value | |||||||
Other Investments | Other Investments | |||||||
Level 3 investments - Beginning of period | $ | 556,234 | $ | 8,880 | ||||
Purchases | 65,515 | 500,000 | ||||||
Sales | (44,831 | ) | (896 | ) | ||||
Realized gains | 340 | 48 | ||||||
Unrealized (losses) | (72,100 | ) | (49,986 | ) | ||||
Transfers | — | (3,253 | ) | |||||
Level 3 investments - End of period | $ | 505,158 | $ | 454,793 | ||||
Noncontrolling interest (a) | (422,893 | ) | (405,118 | ) | ||||
Level 3 investments excluding noncontrolling interest | $ | 82,265 | $ | 49,675 |
(a) | Includes Level 3 investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors. |
Three Months Ended June 30, 2013 | |||||||||||||||||||
Investment in operating affiliates | |||||||||||||||||||
AlphaCat Re 2011 | AlphaCat Re 2012 | AlphaCat 2013 | AlphaCat ILS funds | Total | |||||||||||||||
As at March 31, 2013 | $ | 16,805 | $ | 27,358 | $ | 46,100 | $ | 20,149 | $ | 110,412 | |||||||||
Return of investment | (5,678 | ) | (23,407 | ) | — | — | (29,085 | ) | |||||||||||
Income from operating affiliates | (73 | ) | 1,253 | 2,436 | 177 | 3,793 | |||||||||||||
As at June 30, 2013 | $ | 11,054 | $ | 5,204 | $ | 48,536 | $ | 20,326 | $ | 85,120 |
Three Months Ended June 30, 2012 | |||||||||||
Investment in operating affiliates | |||||||||||
AlphaCat Re 2011 | AlphaCat Re 2012 | Total | |||||||||
As at March 31, 2012 | $ | 56,398 | $ | — | $ | 56,398 | |||||
Purchase of shares | — | 26,500 | 26,500 | ||||||||
Income from operating affiliates | 2,840 | 752 | 3,592 | ||||||||
As at June 30, 2012 | $ | 59,238 | $ | 27,252 | $ | 86,490 |
Six Months Ended June 30, 2013 | |||||||||||||||||||
Investment in operating affiliates | |||||||||||||||||||
AlphaCat Re 2011 | AlphaCat Re 2012 | AlphaCat 2013 | AlphaCat ILS funds | Total | |||||||||||||||
As at December 31, 2012 | $ | 62,792 | $ | 29,319 | $ | 45,000 | $ | 20,000 | $ | 157,111 | |||||||||
Return of investment | (52,114 | ) | (27,193 | ) | — | — | (79,307 | ) | |||||||||||
Income from operating affiliates | 376 | 3,078 | 3,536 | 326 | 7,316 | ||||||||||||||
As at June 30, 2013 | $ | 11,054 | $ | 5,204 | $ | 48,536 | $ | 20,326 | $ | 85,120 |
Six Months Ended June 30, 2012 | |||||||||||
Investment in operating affiliates | |||||||||||
AlphaCat Re 2011 | AlphaCat Re 2012 | Total | |||||||||
As at December 31, 2011 | $ | 53,031 | $ | — | $ | 53,031 | |||||
Purchase of shares | — | 26,500 | 26,500 | ||||||||
Income from operating affiliates | 6,207 | 752 | 6,959 | ||||||||
As at June 30, 2012 | $ | 59,238 | $ | 27,252 | $ | 86,490 |
Investment in operating affiliates | |||||||||||||
Investment at cost | Voting ownership % | Equity ownership % | Carrying value | ||||||||||
AlphaCat Re 2011 | $ | 11,128 | 43.7 | % | 22.3 | % | $ | 11,054 | |||||
AlphaCat Re 2012 | 3,950 | 49.0 | % | 37.9 | % | 5,204 | |||||||
AlphaCat 2013 | 45,000 | 40.9 | % | 19.7 | % | 48,536 | |||||||
AlphaCat ILS Fund | 20,000 | — | % | 12.5 | % | 20,326 | |||||||
Total | $ | 80,078 | $ | 85,120 |
Investment in operating affiliates | |||||||||||||
Investment at cost | Voting ownership % | Equity ownership % | Carrying value | ||||||||||
AlphaCat Re 2011 | $ | 41,389 | 43.7 | % | 22.3 | % | $ | 62,792 | |||||
AlphaCat Re 2012 | 26,500 | 49.0 | % | 37.9 | % | 29,319 | |||||||
AlphaCat 2013 | 45,000 | 40.9 | % | 19.7 | % | 45,000 | |||||||
AlphaCat ILS Fund | $ | 20,000 | — | % | 11.8 | % | $ | 20,000 | |||||
Total | $ | 60,078 | $ | 157,111 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Investment affiliate, beginning of period | $ | 18,036 | $ | 3,347 | $ | 15,218 | $ | 3,253 | |||||||
Capital contributions | 5,563 | 3,368 | 6,904 | 4,898 | |||||||||||
Net unrealized (loss) on investments (a) | — | — | — | (1,436 | ) | ||||||||||
Income (loss) from investment affiliate | 1,753 | (398 | ) | 3,230 | (398 | ) | |||||||||
Investment affiliate, end of period | $ | 25,352 | $ | 6,317 | $ | 25,352 | $ | 6,317 |
(a) | As at March 31, 2012, this investment was included in " Other investments" as a level 3 investment in the fair value hierarchy, hence the change in fair value was included in net unrealized (losses) gains on investments. |
Investment in investment affiliate | |||||||||||||
Investment at cost | Voting ownership % | Equity Ownership | Carrying Value | ||||||||||
Aquiline Financial Services Fund II L.P | $ | 24,522 | — | % | 6.7 | % | $ | 25,352 |
Three Months Ended June 30, 2013 | |||||||||||
PaCRe | AlphaCat ILS funds | Total | |||||||||
As at March 31, 2013 | $ | 431,145 | $ | 56,276 | $ | 487,421 | |||||
Purchase of shares by noncontrolling interest | 58,500 | 13,500 | 72,000 | ||||||||
Net (loss) income attributable to noncontrolling interest | (61,890 | ) | 914 | (60,976 | ) | ||||||
As at June 30, 2013 | $ | 427,755 | $ | 70,690 | $ | 498,445 |
Three Months Ended June 30, 2012 | |||||||
PaCRe | Total | ||||||
As at March 31, 2012 | $ | — | $ | — | |||
Purchase of shares by noncontrolling interest | 450,100 | 450,100 | |||||
Net (loss) attributable to noncontrolling interest | (45,360 | ) | (45,360 | ) | |||
As at June 30, 2012 | $ | 404,740 | $ | 404,740 |
Six Months Ended June 30, 2013 | |||||||||||
PaCRe | AlphaCat ILS Funds | Total | |||||||||
As at December 31, 2012 | $ | 434,280 | $ | — | $ | 434,280 | |||||
Purchase of shares by noncontrolling interest | 58,500 | 69,190 | 127,690 | ||||||||
Net (loss) income attributable to noncontrolling interest | (65,025 | ) | 1,500 | (63,525 | ) | ||||||
As at June 30, 2013 | $ | 427,755 | $ | 70,690 | $ | 498,445 |
Six Months Ended June 30, 2012 | |||||||
PaCRe | Total | ||||||
As at December 31, 2011 | $ | — | $ | — | |||
Purchase of shares by noncontrolling interest | 450,100 | 450,100 | |||||
Net (loss) attributable to noncontrolling interest | (45,360 | ) | (45,360 | ) | |||
As at June 30, 2012 | $ | 404,740 | $ | 404,740 |
At June 30, 2013 | At December 31, 2012 | |||||||||||||||||||||||
Derivatives not designated as hedging instruments: | Net notional exposure | Asset Derivative at Fair Value | Liability Derivative at Fair Value | Net notional exposure | Asset Derivative at Fair Value | Liability Derivative at Fair Value | ||||||||||||||||||
Currency swaps | $ | — | $ | — | $ | — | $ | 17,153 | $ | — | $ | 772 | ||||||||||||
Foreign currency forward contracts | $ | 132,702 | $ | — | $ | 8,265 | $ | 310,541 | $ | — | $ | 394 |
At June 30, 2013 | At December 31, 2012 | |||||||||||||||||||||||
Derivatives designated as hedging instruments: | Net notional exposure | Asset Derivative at Fair Value | Liability Derivative at Fair Value | Net notional exposure | Asset Derivative at Fair Value | Liability Derivative at Fair Value | ||||||||||||||||||
Foreign currency forward contracts | $ | 55,541 | $ | 383 | $ | 1,243 | $ | 35,976 | $ | — | $ | 223 | ||||||||||||
Interest rate swap contracts | $ | 552,263 | $ | — | 787 | $ | 289,800 | $ | — | $ | 220 |
(a) | Classification within the fair value hierarchy |
(b) | Derivative instruments designated as a fair value hedge |
Foreign currency forward contracts | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
Amount of gain (loss) recognized in income on derivative | $ | (1,707 | ) | $ | 1,700 | $ | (445 | ) | $ | (1,618 | ) | |||||
Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged | $ | 1,707 | $ | (1,700 | ) | $ | 445 | $ | 1,618 | |||||||
Amount of gain (loss) recognized in income on derivative (ineffective portion) | $ | — | $ | — | $ | — | $ | — |
Interest rate swap contracts | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
Amount of effective portion recognized in other comprehensive income | $ | 2,962 | $ | — | $ | 4,570 | $ | — | ||||||||
Amount of effective portion subsequently reclassified to earnings | $ | (2,962 | ) | $ | — | $ | (4,570 | ) | $ | — | ||||||
Amount of ineffective portion excluded from effectiveness testing | $ | — | $ | — | $ | — | $ | — |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Reserve for losses and loss expenses, beginning of period | $ | 3,357,691 | $ | 2,649,610 | $ | 3,517,573 | $ | 2,631,143 | |||||||
Losses and loss expenses recoverable | (429,252 | ) | (351,292 | ) | (439,967 | ) | (372,485 | ) | |||||||
Net reserves for losses and loss expenses, beginning of period | 2,928,439 | 2,298,318 | 3,077,606 | 2,258,658 | |||||||||||
Net reserves acquired | 948 | — | 948 | — | |||||||||||
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in: | |||||||||||||||
Current year | 306,033 | 191,252 | 516,602 | 453,665 | |||||||||||
Prior years | (40,989 | ) | (37,560 | ) | (106,787 | ) | (67,984 | ) | |||||||
Total incurred losses and loss expenses | 265,044 | 153,692 | 409,815 | 385,681 | |||||||||||
Total net paid losses | (312,212 | ) | (220,529 | ) | (572,324 | ) | (424,752 | ) | |||||||
Foreign exchange | (17,462 | ) | (11,666 | ) | (51,288 | ) | 228 | ||||||||
Net reserve for losses and loss expenses, end of period | 2,864,757 | 2,219,815 | 2,864,757 | 2,219,815 | |||||||||||
Losses and loss expenses recoverable | 418,693 | 371,484 | 418,693 | 371,484 | |||||||||||
Reserve for losses and loss expenses, end of period | $ | 3,283,450 | $ | 2,591,299 | $ | 3,283,450 | $ | 2,591,299 |
June 30, 2013 | December 31, 2012 | ||||||||||||
Reinsurance Recoverable | % of Total | Reinsurance Recoverable | % of Total | ||||||||||
Top 10 reinsurers | $ | 335,954 | 76.2 | % | $ | 360,234 | 74.1 | % | |||||
Other reinsurers’ balances > $1 million | 102,523 | 23.2 | % | 115,262 | 23.7 | % | |||||||
Other reinsurers’ balances < $1 million | 2,572 | 0.6 | % | 10,906 | 2.2 | % | |||||||
Total | $ | 441,049 | 100.0 | % | $ | 486,402 | 100.0 | % |
June 30, 2013 | |||||||||
Top 10 Reinsurers | Rating | Reinsurance Recoverable | % of Total | ||||||
Lloyd’s Syndicates | A+ | $ | 68,745 | 20.5 | % | ||||
National Indemnity | AA+ | 59,667 | 17.8 | % | |||||
Everest Re | A+ | 54,832 | 16.3 | % | |||||
Hannover Re | AA- | 42,446 | 12.6 | % | |||||
Fully Collateralized | NR | 36,206 | 10.8 | % | |||||
Transatlantic Re | A+ | 18,922 | 5.6 | % | |||||
Swiss Re | AA- | 16,106 | 4.8 | % | |||||
XL Re | A | 13,517 | 4.0 | % | |||||
Third Point Re | A- | 13,254 | 3.9 | % | |||||
Munich Re | AA- | 12,259 | 3.7 | % | |||||
Total | $ | 335,954 | 100.0 | % |
December 31, 2012 | |||||||||
Top 10 Reinsurers | Rating | Reinsurance Recoverable | % of Total | ||||||
Lloyd’s Syndicates | A+ | $ | 71,469 | 19.9 | % | ||||
National Indemnity | AA+ | 59,941 | 16.6 | % | |||||
Everest Re | A+ | 51,340 | 14.3 | % | |||||
Fully Collateralized | NR | 47,445 | 13.2 | % | |||||
Hannover Re | AA- | 40,552 | 11.3 | % | |||||
Munich Re | AA- | 20,954 | 5.8 | % | |||||
Transatlantic Re | A+ | 20,320 | 5.6 | % | |||||
Swiss Re | AA- | 16,992 | 4.7 | % | |||||
Allianz | AA- | 16,367 | 4.5 | % | |||||
XL Re | A | 14,854 | 4.1 | % | |||||
Total | $ | 360,234 | 100.0 | % |
(a) | Authorized and issued |
Common Shares | ||
Common shares issued, December 31, 2012 | 152,698,191 | |
Restricted share awards vested, net of shares withheld | 734,910 | |
Restricted share units vested, net of shares withheld | 14,381 | |
Options exercised | 235,091 | |
Warrants exercised | 508,193 | |
Direct issuance of common stock | 183 | |
Performance share awards vested, net of shares withheld | 31,897 | |
Deferred share units vested, net of shares withheld | 2,935 | |
Common shares issued, June 30, 2013 | 154,225,781 | |
Shares repurchased, June 30, 2013 | (54,488,320 | ) |
Common shares outstanding, June 30, 2013 | 99,737,461 |
Common Shares | ||
Common shares issued, December 31, 2011 | 134,503,065 | |
Restricted share awards vested, net of shares withheld | 687,990 | |
Restricted share units vested, net of shares withheld | 12,336 | |
Options exercised | 171,100 | |
Common shares issued, June 30, 2012 | 135,374,491 | |
Shares repurchased, June 30, 2012 | (41,963,429 | ) |
Common shares outstanding, June 30, 2012 | 93,411,062 |
(b) | Warrants |
(c) | Deferred share units |
(d) | Dividends |
Options | Weighted Average Grant Date Fair Value | Weighted Average Grant Date Exercise Price | ||||||||
Options outstanding, December 31, 2012 | 1,823,947 | $ | 6.52 | $ | 20.69 | |||||
Options regranted (modified) | 1,833,414 | 6.76 | 19.02 | |||||||
Options exercised | (235,091 | ) | 4.86 | 24.78 | ||||||
Options cancelled (modified) | (1,733,139 | ) | 6.76 | 20.12 | ||||||
Options outstanding, June 30, 2013 | 1,689,131 | $ | 6.76 | $ | 18.89 | |||||
Options exercisable, June 30, 2013 | 1,689,131 | $ | 6.76 | $ | 18.89 |
Options | Weighted Average Grant Date Fair Value | Weighted Average Grant Date Exercise Price | ||||||||
Options outstanding, December 31, 2011 | 2,263,012 | $ | 6.69 | $ | 20.12 | |||||
Options exercised | (171,100 | ) | 7.52 | 17.99 | ||||||
Options outstanding, June 30, 2012 | 2,091,912 | $ | 6.63 | $ | 20.29 | |||||
Options exercisable, June 30, 2012 | 2,091,912 | $ | 6.63 | $ | 20.29 |
Restricted Share Awards | Weighted Average Grant Date Fair Value | |||||
Restricted share awards outstanding, December 31, 2012 | 2,170,547 | $ | 29.24 | |||
Restricted share awards granted | 1,491,967 | 36.10 | ||||
Restricted share awards vested | (890,600 | ) | 27.99 | |||
Restricted share awards forfeited | (107,221 | ) | 28.15 | |||
Restricted share awards outstanding, June 30, 2013 | 2,664,693 | $ | 33.54 |
Restricted Share Awards | Weighted Average Grant Date Fair Value | |||||
Restricted share awards outstanding, December 31, 2011 | 3,003,547 | $ | 25.77 | |||
Restricted share awards granted | 900,725 | 31.38 | ||||
Restricted share awards vested | (803,917 | ) | 25.93 | |||
Restricted share awards forfeited | (30,801 | ) | 28.10 | |||
Restricted share awards outstanding, June 30, 2012 | 3,069,554 | $ | 27.35 |
Restricted Share Units | Weighted Average Grant Date Fair Value | |||||
Restricted share units outstanding, December 31, 2012 | 47,238 | $ | 29.61 | |||
Restricted share units granted | 36,635 | 36.11 | ||||
Restricted share units vested | (21,814 | ) | 28.17 | |||
Restricted share units issued in lieu of cash dividends | 3,380 | 29.74 | ||||
Restricted share units outstanding, June 30, 2013 | 65,439 | $ | 33.74 |
Restricted Share Units | Weighted Average Grant Date Fair Value | |||||
Restricted share units outstanding, December 31, 2011 | 53,312 | $ | 27.60 | |||
Restricted share units granted | 13,625 | 31.38 | ||||
Restricted share units vested | (18,175 | ) | 26.58 | |||
Restricted share units issued in lieu of cash dividends | 789 | 28.01 | ||||
Restricted share units forfeited | (1,150 | ) | 30.07 | |||
Restricted share units outstanding, June 30, 2012 | 48,401 | $ | 29.00 |
Performance Share Awards | Weighted Average Grant Date Fair Value | |||||
Performance share awards outstanding, December 31, 2012 | 220,845 | $ | 31.81 | |||
Performance share awards granted | 38,386 | 36.11 | ||||
Performance share awards vested | (39,094 | ) | 28.70 | |||
Performance share awards forfeited | (18,701 | ) | 31.05 | |||
Performance share awards conversion adjustment | (99,616 | ) | $ | 33.05 | ||
Performance share awards outstanding, June 30, 2013 | 101,820 | $ | 33.56 |
Performance Share Awards | Weighted Average Grant Date Fair Value | |||||
Performance share awards outstanding, December 31, 2011 | 279,019 | $ | 30.77 | |||
Performance share awards granted | 41,128 | 31.38 | ||||
Performance share awards forfeited | (99,302 | ) | 28.70 | |||
Performance share awards outstanding, June 30, 2012 | 220,845 | $ | 31.81 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Options | $ | — | $ | 7 | $ | — | $ | 142 | |||||||
Restricted share awards | 5,933 | 6,176 | 9,994 | 12,116 | |||||||||||
Restricted share units | 130 | 111 | 251 | 231 | |||||||||||
Performance share awards | 575 | 506 | (1,289 | ) | (251 | ) | |||||||||
Total | $ | 6,638 | $ | 6,800 | $ | 8,956 | $ | 12,238 |
(a) | Financing structure and finance expenses |
Commitment | Outstanding (a) | Drawn | |||||||||
2006 Junior Subordinated Deferrable Debentures | $ | 150,000 | $ | 150,000 | $ | 150,000 | |||||
2007 Junior Subordinated Deferrable Debentures | 200,000 | 139,800 | 139,800 | ||||||||
2010 Senior Notes due 2040 | 250,000 | 250,000 | 247,144 | ||||||||
$400,000 syndicated unsecured letter of credit facility | 400,000 | — | — | ||||||||
$525,000 syndicated secured letter of credit facility | 525,000 | 373,318 | — | ||||||||
$200,000 bi-lateral secured letter of credit facility | 200,000 | 73,532 | — | ||||||||
Talbot FAL Facility (b) | 25,000 | 25,000 | — | ||||||||
PaCRe senior secured letter of credit facility | 10,000 | 258 | — | ||||||||
IPC bi-lateral facility | 40,000 | 24,788 | — | ||||||||
$375,000 Flagstone bi-lateral facility | 375,000 | 313,398 | — | ||||||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | 136,926 | 136,926 | 136,926 | ||||||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | 113,750 | 113,750 | 113,750 | ||||||||
Total | $ | 2,425,676 | $ | 1,600,770 | $ | 787,620 |
Commitment | Outstanding (a) | Drawn | |||||||||
2006 Junior Subordinated Deferrable Debentures | $ | 150,000 | $ | 150,000 | $ | 150,000 | |||||
2007 Junior Subordinated Deferrable Debentures | 200,000 | 139,800 | 139,800 | ||||||||
2010 Senior Notes due 2040 | 250,000 | 250,000 | 247,090 | ||||||||
$400,000 syndicated unsecured letter of credit facility | 400,000 | — | — | ||||||||
$525,000 syndicated secured letter of credit facility | 525,000 | 376,570 | — | ||||||||
$500,000 secured letter of credit facility | 500,000 | 92,402 | — | ||||||||
Talbot FAL Facility (b) | 25,000 | 25,000 | — | ||||||||
PaCRe senior secured letter of credit facility | 10,000 | 219 | — | ||||||||
IPC bi-lateral facility | 80,000 | 40,613 | — | ||||||||
$550,000 Flagstone bi-lateral facility | 550,000 | 381,019 | — | ||||||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | 137,159 | 137,159 | 137,159 | ||||||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | 113,750 | 113,750 | 113,750 | ||||||||
Total | $ | 2,940,909 | $ | 1,706,532 | $ | 787,799 |
(a) | Indicates utilization of commitment amount, not drawn borrowings. |
(b) | Talbot operates in the Lloyd’s market ("Lloyds") through a corporate member, Talbot 2002 Underwriting Capital Ltd (“T02”), which is the sole participant in Syndicate 1183. Lloyd’s sets T02’s required capital annually based on Syndicate 1183’s business plan, rating environment, reserving environment together with input arising from Lloyd’s discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd’s (“FAL”), comprises: cash, investments and undrawn letters of credit provided by various banks. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
2006 Junior Subordinated Deferrable Debentures | $ | 2,211 | $ | 1,552 | $ | 4,398 | $ | 3,101 | |||||||
2007 Junior Subordinated Deferrable Debentures | 1,835 | 2,832 | 3,644 | 5,861 | |||||||||||
2010 Senior Notes due 2040 | 5,598 | 5,598 | 11,195 | 11,195 | |||||||||||
Variable Funding Notes (a) | 21,478 | — | 32,669 | — | |||||||||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | 2,231 | — | 3,703 | — | |||||||||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | 1,547 | — | 2,619 | — | |||||||||||
Credit facilities | 2,799 | 3,566 | 3,753 | 9,582 | |||||||||||
Bank charges | 99 | 126 | 232 | 183 | |||||||||||
Talbot FAL Facility | 32 | 32 | 63 | 63 | |||||||||||
Total | $ | 37,830 | $ | 13,706 | $ | 62,276 | $ | 29,985 |
(a) | Includes Variable funding note expense and other AlphaCat related fees. Refer to Note 13: "Variable funding notes" for further details. |
(b) | $250,000 2010 Senior Notes due 2040 |
2013 | $ | — | |
2014 | — | ||
2015 | — | ||
2016 | — | ||
2017 and thereafter | 250,000 | ||
Total minimum future payments | $ | 250,000 |
(c) | Junior subordinated deferrable debentures and Junior subordinated deferrable interest notes |
2013 | $ | — | |
2014 | — | ||
2015 | — | ||
2016 | — | ||
2017 and thereafter | 540,709 | ||
Total minimum future payments | $ | 540,709 |
(d) | Credit facilities |
(i) | $400,000 syndicated unsecured letter of credit facility and $525,000 syndicated secured letter of credit facility |
(ii) | Talbot FAL Facility |
(iii) | IPC Syndicated Facility and IPC bi-lateral facility |
June 30, 2013 | |||
AlphaCat 2013 | $ | 208,958 | |
ILS Funds | 222,135 | ||
Total | $ | 431,093 |
Three months ended | |||
June 30, 2013 | |||
Foreign currency translation adjustments | |||
Beginning Balance - March 31, 2013 | (12,738 | ) | |
Amounts reclassified to retained earnings | 4,290 | ||
Current period foreign currency translation adjustments | 186 | ||
Ending balance - June 30, 2013 | (8,262 | ) | |
Six months ended | |||
June 30, 2013 | |||
Foreign currency translation adjustments | |||
Beginning Balance - December 31, 2012 | (2,953 | ) | |
Amounts reclassified to retained earnings | 4,290 | ||
Current period foreign currency translation adjustments | (9,599 | ) | |
Ending balance - June 30, 2013 | (8,262 | ) |
(a) | Concentrations of credit risk |
(b) | Funds at Lloyd's |
(c) | Lloyd's Central Fund |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Basic earnings per share | |||||||||||||||
Net (loss) income | $ | (30,254 | ) | $ | 122,262 | $ | 190,440 | $ | 246,496 | ||||||
Loss attributable to noncontrolling interest | 60,976 | 45,360 | 63,525 | 45,360 | |||||||||||
Net income available to Validus | 30,722 | 167,622 | 253,965 | 291,856 | |||||||||||
Less: Dividends and distributions declared on outstanding warrants | (1,646 | ) | (1,729 | ) | (16,110 | ) | (3,458 | ) | |||||||
Net income available to common shareholders | $ | 29,076 | $ | 165,893 | $ | 237,855 | $ | 288,398 | |||||||
Weighted average number of common shares outstanding | 103,133,188 | 98,254,186 | 105,259,813 | 98,839,663 | |||||||||||
Basic earnings per share available to common shareholders | $ | 0.28 | $ | 1.69 | $ | 2.26 | $ | 2.92 | |||||||
Diluted earnings per share | |||||||||||||||
Net (loss) income | $ | (30,254 | ) | $ | 122,262 | $ | 190,440 | $ | 246,496 | ||||||
Loss attributable to noncontrolling interest | 60,976 | 45,360 | 63,525 | 45,360 | |||||||||||
Net income available to Validus | 30,722 | 167,622 | 253,965 | 291,856 | |||||||||||
Less: Dividends and distributions declared on outstanding warrants | (1,646 | ) | — | (16,110 | ) | — | |||||||||
Net income available to common shareholders | $ | 29,076 | $ | 167,622 | $ | 237,855 | $ | 291,856 | |||||||
Weighted average number of common shares outstanding | 103,133,188 | 98,254,186 | 105,259,813 | 98,839,663 | |||||||||||
Share equivalents: | |||||||||||||||
Warrants | — | 3,077,136 | — | 3,050,054 | |||||||||||
Stock options | 857,179 | 801,180 | 1,244,368 | 807,522 | |||||||||||
Unvested restricted shares | 744,276 | 1,535,465 | 889,641 | 1,684,791 | |||||||||||
Weighted average number of diluted common shares outstanding | 104,734,643 | 103,667,967 | 107,393,822 | 104,382,030 | |||||||||||
Diluted earnings per share available to common shareholders | $ | 0.28 | $ | 1.62 | $ | 2.21 | $ | 2.80 |
Three Months Ended June 30, 2013 | Validus Re Segment | AlphaCat Segment | Talbot Segment | Corporate & Eliminations | Total | |||||||||||||||
Underwriting income | ||||||||||||||||||||
Gross premiums written | $ | 353,384 | $ | 46,760 | $ | 315,518 | $ | (13,349 | ) | $ | 702,313 | |||||||||
Reinsurance premiums ceded | (87,558 | ) | — | (47,187 | ) | 13,349 | (121,396 | ) | ||||||||||||
Net premiums written | 265,826 | 46,760 | 268,331 | — | 580,917 | |||||||||||||||
Change in unearned premiums | 38,925 | (11,770 | ) | (60,614 | ) | — | (33,459 | ) | ||||||||||||
Net premiums earned | 304,751 | 34,990 | 207,717 | — | 547,458 | |||||||||||||||
Underwriting deductions | ||||||||||||||||||||
Losses and loss expenses | 183,646 | 1,313 | 80,085 | — | 265,044 | |||||||||||||||
Policy acquisition costs | 42,789 | 3,586 | 41,667 | (890 | ) | 87,152 | ||||||||||||||
General and administrative expenses | 20,423 | 3,992 | 32,192 | 14,360 | 70,967 | |||||||||||||||
Share compensation expenses | 1,529 | 85 | 2,357 | 2,667 | 6,638 | |||||||||||||||
Total underwriting deductions | 248,387 | 8,976 | 156,301 | 16,137 | 429,801 | |||||||||||||||
Underwriting income (loss) | $ | 56,364 | $ | 26,014 | $ | 51,416 | $ | (16,137 | ) | $ | 117,657 | |||||||||
Net investment income | 22,949 | 973 | 4,383 | (2,095 | ) | 26,210 | ||||||||||||||
Other income | (361 | ) | 7,015 | 491 | (2,727 | ) | 4,418 | |||||||||||||
Finance expenses | (5,241 | ) | (23,209 | ) | (75 | ) | (9,305 | ) | (37,830 | ) | ||||||||||
Operating income (loss) before taxes and income from operating affiliates | 73,711 | 10,793 | 56,215 | (30,264 | ) | 110,455 | ||||||||||||||
Tax (expense) benefit | (145 | ) | — | 383 | (331 | ) | (93 | ) | ||||||||||||
Income from operating affiliates | — | 3,793 | — | — | 3,793 | |||||||||||||||
Net operating income (loss) | $ | 73,566 | $ | 14,586 | $ | 56,598 | $ | (30,595 | ) | $ | 114,155 | |||||||||
Net realized gains on investments | 2,754 | — | 655 | — | 3,409 | |||||||||||||||
Net unrealized (losses) on investments | (57,834 | ) | (70,386 | ) | (13,128 | ) | — | (141,348 | ) | |||||||||||
Income from investment affiliate | 1,753 | — | — | — | 1,753 | |||||||||||||||
Foreign exchange (losses) gains | (5,882 | ) | 136 | (2,197 | ) | (280 | ) | (8,223 | ) | |||||||||||
Net income (loss) | $ | 14,357 | $ | (55,664 | ) | $ | 41,928 | $ | (30,875 | ) | $ | (30,254 | ) | |||||||
Net loss attributable to noncontrolling interest | — | 60,976 | — | — | 60,976 | |||||||||||||||
Net income (loss) available (attributable) to Validus | $ | 14,357 | $ | 5,312 | $ | 41,928 | $ | (30,875 | ) | $ | 30,722 | |||||||||
Selected ratios: | ||||||||||||||||||||
Net premiums written / Gross premiums written | 75.2 | % | 100.0 | % | 85.0 | % | 82.7 | % | ||||||||||||
Losses and loss expenses (a) | 60.3 | % | 3.8 | % | 38.6 | % | 48.4 | % | ||||||||||||
Policy acquisition costs (a) | 14.0 | % | 10.2 | % | 20.1 | % | 15.9 | % | ||||||||||||
General and administrative expenses (a) (b) | 7.2 | % | 11.7 | % | 16.6 | % | 14.2 | % | ||||||||||||
Expense ratio (a) | 21.2 | % | 21.9 | % | 36.7 | % | 30.1 | % | ||||||||||||
Combined ratio (a) | 81.5 | % | 25.7 | % | 75.3 | % | 78.5 | % | ||||||||||||
Total assets | $ | 6,107,318 | $ | 1,379,452 | $ | 2,897,998 | $ | 203,611 | $ | 10,588,379 |
(a) | Ratios are based on net premiums earned. |
(b) | The general and administrative expense ratio includes share compensation expenses. |
Three Months Ended June 30, 2012 | Validus Re Segment | AlphaCat Segment | Talbot Segment | Corporate & Eliminations | Total | |||||||||||||||
Underwriting income | ||||||||||||||||||||
Gross premiums written | $ | 340,850 | $ | 15,155 | $ | 283,528 | $ | (12,444 | ) | $ | 627,089 | |||||||||
Reinsurance premiums ceded | (97,077 | ) | — | (34,419 | ) | 12,444 | (119,052 | ) | ||||||||||||
Net premiums written | 243,773 | 15,155 | 249,109 | — | 508,037 | |||||||||||||||
Change in unearned premiums | (1,087 | ) | (11,568 | ) | (47,755 | ) | — | (60,410 | ) | |||||||||||
Net premiums earned | 242,686 | 3,587 | 201,354 | — | 447,627 | |||||||||||||||
Underwriting deductions | ||||||||||||||||||||
Losses and loss expenses | 53,190 | — | 100,502 | — | 153,692 | |||||||||||||||
Policy acquisition costs | 37,084 | 382 | 41,803 | (3,140 | ) | 76,129 | ||||||||||||||
General and administrative expenses | 14,142 | 2,402 | 30,957 | 14,134 | 61,635 | |||||||||||||||
Share compensation expenses | 1,966 | 59 | 1,799 | 2,976 | 6,800 | |||||||||||||||
Total underwriting deductions | 106,382 | 2,843 | 175,061 | 13,970 | 298,256 | |||||||||||||||
Underwriting income (loss) | $ | 136,304 | $ | 744 | $ | 26,293 | $ | (13,970 | ) | $ | 149,371 | |||||||||
Net investment income | 21,694 | 820 | 5,425 | (2,054 | ) | 25,885 | ||||||||||||||
Other income | 467 | 6,589 | 327 | (1,389 | ) | 5,994 | ||||||||||||||
Finance expenses | (2,145 | ) | (437 | ) | (120 | ) | (11,004 | ) | (13,706 | ) | ||||||||||
Operating income (loss) before taxes and income from operating affiliates | 156,320 | 7,716 | 31,925 | (28,417 | ) | 167,544 | ||||||||||||||
Tax (expense) benefit | (2 | ) | — | (419 | ) | 17 | (404 | ) | ||||||||||||
Income from operating affiliates | — | 3,592 | — | — | 3,592 | |||||||||||||||
Net operating income (loss) | $ | 156,318 | $ | 11,308 | $ | 31,506 | $ | (28,400 | ) | $ | 170,732 | |||||||||
Net realized gains (losses) on investments | 4,823 | (84 | ) | 1,415 | — | 6,154 | ||||||||||||||
Net unrealized (losses) on investments | (3,697 | ) | (49,519 | ) | (358 | ) | — | (53,574 | ) | |||||||||||
(Loss) from investment affiliate | (398 | ) | — | — | — | (398 | ) | |||||||||||||
Foreign exchange gains (losses) | 2,715 | 26 | (3,435 | ) | 42 | (652 | ) | |||||||||||||
Net income (loss) | $ | 159,761 | $ | (38,269 | ) | $ | 29,128 | $ | (28,358 | ) | $ | 122,262 | ||||||||
Net loss attributable to noncontrolling interest | — | 45,360 | — | — | 45,360 | |||||||||||||||
Net income (loss) available (attributable) to Validus | $ | 159,761 | $ | 7,091 | $ | 29,128 | $ | (28,358 | ) | $ | 167,622 | |||||||||
Selected ratios: | ||||||||||||||||||||
Net premiums written / Gross premiums written | 71.5 | % | 100.0 | % | 87.9 | % | 81.0 | % | ||||||||||||
Losses and loss expenses (a) | 21.9 | % | 0.0 | % | 49.9 | % | 34.3 | % | ||||||||||||
Policy acquisition costs (a) | 15.3 | % | 10.6 | % | 20.8 | % | 17.0 | % | ||||||||||||
General and administrative expenses (a) (b) | 6.6 | % | 68.6 | % | 16.3 | % | 15.3 | % | ||||||||||||
Expense ratio (a) | 21.9 | % | 79.2 | % | 37.1 | % | 32.3 | % | ||||||||||||
Combined ratio (a) | 43.8 | % | 79.2 | % | 87.0 | % | 66.6 | % | ||||||||||||
Total assets | $ | 4,846,607 | $ | 696,236 | $ | 2,931,430 | $ | 25,295 | $ | 8,499,568 |
(a) | Ratios are based on net premiums earned. |
(b) | The general and administrative expense ratio includes share compensation expenses. |
Six Months Ended June 30, 2013 | Validus Re Segment | AlphaCat Segment | Talbot Segment | Corporate & Eliminations | Total | |||||||||||||||
Underwriting income | ||||||||||||||||||||
Gross premiums written | $ | 1,101,347 | $ | 143,276 | $ | 609,048 | $ | (46,598 | ) | $ | 1,807,073 | |||||||||
Reinsurance premiums ceded | (213,286 | ) | — | (141,924 | ) | 46,598 | (308,612 | ) | ||||||||||||
Net premiums written | 888,061 | 143,276 | 467,124 | — | 1,498,461 | |||||||||||||||
Change in unearned premiums | (280,176 | ) | (80,669 | ) | (59,097 | ) | — | (419,942 | ) | |||||||||||
Net premiums earned | 607,885 | 62,607 | 408,027 | — | 1,078,519 | |||||||||||||||
Underwriting deductions | ||||||||||||||||||||
Losses and loss expenses | 257,048 | 1,313 | 151,454 | — | 409,815 | |||||||||||||||
Policy acquisition costs | 94,533 | 6,224 | 82,193 | (2,187 | ) | 180,763 | ||||||||||||||
General and administrative expenses | 49,864 | 8,029 | 63,104 | 30,249 | 151,246 | |||||||||||||||
Share compensation expenses | 2,942 | 162 | 3,762 | 2,090 | 8,956 | |||||||||||||||
Total underwriting deductions | 404,387 | 15,728 | 300,513 | 30,152 | 750,780 | |||||||||||||||
Underwriting income (loss) | $ | 203,498 | $ | 46,879 | $ | 107,514 | $ | (30,152 | ) | $ | 327,739 | |||||||||
Net investment income | 46,142 | 1,854 | 9,101 | (5,238 | ) | 51,859 | ||||||||||||||
Other income | 13,129 | 13,648 | 491 | (20,165 | ) | 7,103 | ||||||||||||||
Finance expenses | (8,493 | ) | (34,534 | ) | (149 | ) | (19,100 | ) | (62,276 | ) | ||||||||||
Operating income (loss) before taxes and income from operating affiliates | 254,276 | 27,847 | 116,957 | (74,655 | ) | 324,425 | ||||||||||||||
Tax benefit (expense) | 1,612 | — | (671 | ) | (716 | ) | 225 | |||||||||||||
Income from operating affiliates | — | 7,316 | — | — | 7,316 | |||||||||||||||
Net operating income (loss) | $ | 255,888 | $ | 35,163 | $ | 116,286 | $ | (75,371 | ) | $ | 331,966 | |||||||||
Net realized gains on investments | 4,347 | — | 783 | — | 5,130 | |||||||||||||||
Net unrealized (losses) on investments | (60,027 | ) | (75,174 | ) | (13,384 | ) | — | (148,585 | ) | |||||||||||
Income from investment affiliate | 3,230 | — | — | — | 3,230 | |||||||||||||||
Foreign exchange gains (losses) | 5,280 | (1,051 | ) | (6,115 | ) | 585 | (1,301 | ) | ||||||||||||
Net income (loss) | $ | 208,718 | $ | (41,062 | ) | $ | 97,570 | $ | (74,786 | ) | $ | 190,440 | ||||||||
Net loss attributable to noncontrolling interest | — | 63,525 | — | — | 63,525 | |||||||||||||||
Net income (loss) available (attributable) to Validus | $ | 208,718 | $ | 22,463 | $ | 97,570 | $ | (74,786 | ) | $ | 253,965 | |||||||||
Selected ratios: | ||||||||||||||||||||
Net premiums written / Gross premiums written | 80.6 | % | 100.0 | % | 76.7 | % | 82.9 | % | ||||||||||||
Losses and loss expenses (a) | 42.3 | % | 2.1 | % | 37.1 | % | 38.0 | % | ||||||||||||
Policy acquisition costs (a) | 15.6 | % | 9.9 | % | 20.1 | % | 16.8 | % | ||||||||||||
General and administrative expenses (a) (b) | 8.7 | % | 13.1 | % | 16.4 | % | 14.9 | % | ||||||||||||
Expense ratio (a) | 24.3 | % | 23.0 | % | 36.5 | % | 31.7 | % | ||||||||||||
Combined ratio (a) | 66.6 | % | 25.1 | % | 73.6 | % | 69.7 | % | ||||||||||||
Total assets | $ | 6,107,318 | $ | 1,379,452 | $ | 2,897,998 | $ | 203,611 | $ | 10,588,379 |
(a) | Ratios are based on net premiums earned. |
(b) | The general and administrative expense ratio includes share compensation expenses. |
Six Months Ended June 30, 2012 | Validus Re Segment | AlphaCat Segment | Talbot Segment | Corporate & Eliminations | Total | |||||||||||||||
Underwriting income | ||||||||||||||||||||
Gross premiums written | $ | 907,716 | $ | 18,673 | $ | 576,781 | $ | (38,792 | ) | $ | 1,464,378 | |||||||||
Reinsurance premiums ceded | (127,078 | ) | — | (137,818 | ) | 38,792 | (226,104 | ) | ||||||||||||
Net premiums written | 780,638 | 18,673 | 438,963 | — | 1,238,274 | |||||||||||||||
Change in unearned premiums | (284,943 | ) | (12,423 | ) | (42,082 | ) | — | (339,448 | ) | |||||||||||
Net premiums earned | 495,695 | 6,250 | 396,881 | — | 898,826 | |||||||||||||||
Underwriting deductions | ||||||||||||||||||||
Losses and loss expenses | 177,396 | — | 208,285 | — | 385,681 | |||||||||||||||
Policy acquisition costs | 75,874 | 638 | 80,541 | (2,792 | ) | 154,261 | ||||||||||||||
General and administrative expenses | 31,394 | 3,434 | 64,305 | 28,877 | 128,010 | |||||||||||||||
Share compensation expenses | 3,838 | 111 | 3,147 | 5,142 | 12,238 | |||||||||||||||
Total underwriting deductions | 288,502 | 4,183 | 356,278 | 31,227 | 680,190 | |||||||||||||||
Underwriting income (loss) | $ | 207,193 | $ | 2,067 | $ | 40,603 | $ | (31,227 | ) | $ | 218,636 | |||||||||
Net investment income | 45,271 | 1,479 | 11,215 | (4,320 | ) | 53,645 | ||||||||||||||
Other income | 2,686 | 14,563 | 1,353 | (3,717 | ) | 14,885 | ||||||||||||||
Finance expenses | (5,839 | ) | (439 | ) | (151 | ) | (23,556 | ) | (29,985 | ) | ||||||||||
Operating income (loss) before taxes and income from operating affiliates | 249,311 | 17,670 | 53,020 | (62,820 | ) | 257,181 | ||||||||||||||
Tax (expense) benefit | (9 | ) | — | (551 | ) | 17 | (543 | ) | ||||||||||||
Income from operating affiliates | — | 6,959 | — | — | 6,959 | |||||||||||||||
Net operating income (loss) | $ | 249,302 | $ | 24,629 | $ | 52,469 | $ | (62,803 | ) | $ | 263,597 | |||||||||
Net realized gains (losses) on investments | 11,065 | (84 | ) | 2,705 | — | 13,686 | ||||||||||||||
Net unrealized gains (losses) on investments | 16,168 | (50,116 | ) | 1,045 | — | (32,903 | ) | |||||||||||||
(Loss) from investment affiliate | (398 | ) | — | — | — | (398 | ) | |||||||||||||
Foreign exchange gains (losses) | 2,453 | 17 | 188 | (144 | ) | 2,514 | ||||||||||||||
Net income (loss) | $ | 278,590 | $ | (25,554 | ) | $ | 56,407 | $ | (62,947 | ) | $ | 246,496 | ||||||||
Net loss attributable to noncontrolling interest | — | 45,360 | — | — | 45,360 | |||||||||||||||
Net income (loss) available (attributable) to Validus | $ | 278,590 | $ | 19,806 | $ | 56,407 | $ | (62,947 | ) | $ | 291,856 | |||||||||
Selected ratios: | ||||||||||||||||||||
Net premiums written / Gross premiums written | 86.0 | % | 100.0 | % | 76.1 | % | 84.6 | % | ||||||||||||
Losses and loss expenses (a) | 35.8 | % | 0.0 | % | 52.5 | % | 42.9 | % | ||||||||||||
Policy acquisition costs (a) | 15.3 | % | 10.2 | % | 20.3 | % | 17.2 | % | ||||||||||||
General and administrative expenses (a) (b) | 7.1 | % | 56.7 | % | 17.0 | % | 15.6 | % | ||||||||||||
Expense ratio (a) | 22.4 | % | 66.9 | % | 37.3 | % | 32.8 | % | ||||||||||||
Combined ratio (a) | 58.2 | % | 66.9 | % | 89.8 | % | 75.7 | % | ||||||||||||
Total assets | $ | 4,846,607 | $ | 696,236 | $ | 2,931,430 | $ | 25,295 | $ | 8,499,568 |
(a) | Ratios are based on net premiums earned. |
(b) | The general and administrative expense ratio includes share compensation expenses. |
Three Months Ended June 30, 2013 | ||||||||||||||||||||||
Gross Premiums Written | ||||||||||||||||||||||
Validus Re | AlphaCat | Talbot | Eliminations | Total | % | |||||||||||||||||
United States | $ | 194,631 | $ | 30,900 | $ | 35,516 | $ | (1,630 | ) | $ | 259,417 | 36.9 | % | |||||||||
Worldwide excluding United States (a) | 2,201 | 112 | 35,353 | (419 | ) | 37,247 | 5.2 | % | ||||||||||||||
Australia and New Zealand | 5,572 | — | 2,020 | (1 | ) | 7,591 | 1.1 | % | ||||||||||||||
Europe | 19,864 | 173 | 13,434 | (58 | ) | 33,413 | 4.8 | % | ||||||||||||||
Latin America and Caribbean | (8,435 | ) | — | 44,036 | (741 | ) | 34,860 | 5.0 | % | |||||||||||||
Japan | 43,839 | 653 | 3,538 | (796 | ) | 47,234 | 6.7 | % | ||||||||||||||
Canada | 392 | — | 3,335 | (71 | ) | 3,656 | 0.5 | % | ||||||||||||||
Rest of the world (b) | 4,491 | — | 22,322 | (467 | ) | 26,346 | 3.8 | % | ||||||||||||||
Sub-total, non United States | 67,924 | 938 | 124,038 | (2,553 | ) | 190,347 | 27.1 | % | ||||||||||||||
Worldwide including United States (a) | 50,470 | 14,922 | 26,596 | (4,860 | ) | 87,128 | 12.4 | % | ||||||||||||||
Other location non-specific (c) | 40,359 | — | 129,368 | (4,306 | ) | 165,421 | 23.6 | % | ||||||||||||||
Total | $ | 353,384 | $ | 46,760 | $ | 315,518 | $ | (13,349 | ) | $ | 702,313 | 100.0 | % |
Three Months Ended June 30, 2012 | ||||||||||||||||||||||
Gross Premiums Written | ||||||||||||||||||||||
Validus Re | AlphaCat | Talbot | Eliminations | Total | % | |||||||||||||||||
United States | $ | 187,418 | $ | 9,106 | $ | 23,473 | $ | (1,626 | ) | $ | 218,371 | 34.8 | % | |||||||||
Worldwide excluding United States (a) | 7,088 | (1 | ) | 79,009 | (4,041 | ) | 82,055 | 13.1 | % | |||||||||||||
Australia and New Zealand | 7,802 | — | 1,768 | (36 | ) | 9,534 | 1.5 | % | ||||||||||||||
Europe | 11,681 | 482 | 14,198 | (585 | ) | 25,776 | 4.1 | % | ||||||||||||||
Latin America and Caribbean | 1,368 | — | 34,934 | (1,368 | ) | 34,934 | 5.6 | % | ||||||||||||||
Japan | 32,127 | — | 3,427 | (212 | ) | 35,342 | 5.6 | % | ||||||||||||||
Canada | 63 | — | 2,148 | (58 | ) | 2,153 | 0.3 | % | ||||||||||||||
Rest of the world (b) | 157 | — | (20,482 | ) | 1,840 | (18,485 | ) | (2.9 | )% | |||||||||||||
Sub-total, non United States | 60,286 | 481 | 115,002 | (4,460 | ) | 171,309 | 27.3 | % | ||||||||||||||
Worldwide including United States (a) | 45,600 | 5,568 | 18,369 | (873 | ) | 68,664 | 10.9 | % | ||||||||||||||
Other location non-specific (c) | 47,546 | — | 126,684 | (5,485 | ) | 168,745 | 26.9 | % | ||||||||||||||
Total | $ | 340,850 | $ | 15,155 | $ | 283,528 | $ | (12,444 | ) | $ | 627,089 | 100.0 | % |
(a) | Represents risks in two or more geographic zones. |
(b) | Represents risks in one geographic zone. |
(c) | The Other location non-specific category refers to business for which an analysis of exposure by geographic zone is not applicable such as marine and aerospace risks and can span multiple geographic areas and are not fixed locations in some instances. |
Six Months Ended June 30, 2013 | ||||||||||||||||||||||
Gross Premiums Written | ||||||||||||||||||||||
Validus Re | AlphaCat | Talbot | Eliminations | Total | % | |||||||||||||||||
United States | $ | 431,127 | $ | 48,389 | $ | 56,057 | $ | (8,494 | ) | $ | 527,079 | 29.1 | % | |||||||||
Worldwide excluding United States (a) | 52,509 | 14,801 | 74,811 | (4,927 | ) | 137,194 | 7.6 | % | ||||||||||||||
Australia and New Zealand | 30,598 | 2,183 | 5,025 | (231 | ) | 37,575 | 2.1 | % | ||||||||||||||
Europe | 60,734 | 2,137 | 31,745 | (2,906 | ) | 91,710 | 5.1 | % | ||||||||||||||
Latin America and Caribbean | (17 | ) | — | 86,036 | (3,959 | ) | 82,060 | 4.5 | % | |||||||||||||
Japan | 44,576 | 653 | 4,192 | (846 | ) | 48,575 | 2.7 | % | ||||||||||||||
Canada | 3,034 | 318 | 6,041 | (596 | ) | 8,797 | 0.5 | % | ||||||||||||||
Rest of the world (b) | 23,570 | — | 40,636 | (1,870 | ) | 62,336 | 3.4 | % | ||||||||||||||
Sub-total, non United States | 215,004 | 20,092 | 248,486 | (15,335 | ) | 468,247 | 25.9 | % | ||||||||||||||
Worldwide including United States (a) | 151,010 | 74,795 | 45,752 | (8,549 | ) | 263,008 | 14.6 | % | ||||||||||||||
Other location non-specific (c) | 304,206 | — | 258,753 | (14,220 | ) | 548,739 | 30.4 | % | ||||||||||||||
Total | $ | 1,101,347 | $ | 143,276 | $ | 609,048 | $ | (46,598 | ) | $ | 1,807,073 | 100.0 | % |
Six Months Ended June 30, 2012 | ||||||||||||||||||||||
Gross Premiums Written | ||||||||||||||||||||||
Validus Re | AlphaCat | Talbot | Eliminations | Total | % | |||||||||||||||||
United States | $ | 294,354 | $ | 10,432 | $ | 41,899 | $ | (3,282 | ) | $ | 343,403 | 23.5 | % | |||||||||
Worldwide excluding United States (a) | 44,204 | 278 | 130,326 | (8,652 | ) | 166,156 | 11.3 | % | ||||||||||||||
Australia and New Zealand | 32,587 | — | 5,302 | (352 | ) | 37,537 | 2.6 | % | ||||||||||||||
Europe | 56,955 | 820 | 29,445 | (1,955 | ) | 85,265 | 5.8 | % | ||||||||||||||
Latin America and Caribbean | 5,157 | — | 75,504 | (5,013 | ) | 75,648 | 5.2 | % | ||||||||||||||
Japan | 30,816 | — | 4,087 | (271 | ) | 34,632 | 2.3 | % | ||||||||||||||
Canada | 2,493 | — | 5,670 | (376 | ) | 7,787 | 0.5 | % | ||||||||||||||
Rest of the world (b) | 17,554 | — | — | — | 17,554 | 1.2 | % | |||||||||||||||
Sub-total, non United States | 189,766 | 1,098 | 250,334 | (16,619 | ) | 424,579 | 29.0 | % | ||||||||||||||
Worldwide including United States (a) | 149,175 | 7,143 | 33,166 | (2,202 | ) | 187,282 | 12.8 | % | ||||||||||||||
Other location non-specific (c) | 274,421 | — | 251,382 | (16,689 | ) | 509,114 | 34.8 | % | ||||||||||||||
Total | $ | 907,716 | $ | 18,673 | $ | 576,781 | $ | (38,792 | ) | $ | 1,464,378 | 100.0 | % |
(a) | Represents risks in two or more geographic zones. |
(b) | Represents risks in one geographic zone. |
(c) | The Other location non-specific category refers to business for which an analysis of exposure by geographic zone is not applicable such as marine and aerospace risks and can span multiple geographic areas and are not fixed locations in some instances. |
(a) | Quarterly Dividend |
• | An unfavorable movement of $87.8 million in net unrealized losses on investments; |
• | Decrease in underwriting income of $31.7 million primarily due to: |
• | An increase in underwriting deductions of $131.5 million which includes $77.6 million of losses from a notable loss event, offset by; |
• | An increase in net premiums earned of $99.8 million; and |
• | Increase of $24.1 million in finance expenses; and |
• | Unfavorable movement in foreign exchange of $7.6 million. |
Three Months Ended June 30, 2013 | ||||||||||||||||||||
Increase (Decrease) Over the Three Months Ended June 30, 2012 | ||||||||||||||||||||
(Dollars in thousands) | Validus Re | AlphaCat | Talbot | Corporate and Eliminations | Total | |||||||||||||||
Notable losses - (increase) in net loss and loss expenses (a) | $ | (69,895 | ) | $ | (975 | ) | $ | (6,717 | ) | — | $ | (77,587 | ) | |||||||
Less: Notable losses - increase in net reinstatement premiums (a) | 6,849 | — | 297 | — | 7,146 | |||||||||||||||
Other underwriting (loss) income | (16,894 | ) | 26,245 | 31,543 | (2,167 | ) | 38,727 | |||||||||||||
Underwriting income (b) | (79,940 | ) | 25,270 | 25,123 | (2,167 | ) | (31,714 | ) | ||||||||||||
Net investment income | 1,255 | 153 | (1,042 | ) | (41 | ) | 325 | |||||||||||||
Other income | (828 | ) | 426 | 164 | (1,338 | ) | (1,576 | ) | ||||||||||||
Finance expenses | (3,096 | ) | (22,772 | ) | 45 | 1,699 | (24,124 | ) | ||||||||||||
Operating (loss) income before taxes and income from operating affiliates | (82,609 | ) | 3,077 | 24,290 | (1,847 | ) | (57,089 | ) | ||||||||||||
Tax (expense) benefit | (143 | ) | — | 802 | (348 | ) | 311 | |||||||||||||
Income from operating affiliates | — | 201 | — | — | 201 | |||||||||||||||
Net operating (loss) income | (82,752 | ) | 3,278 | 25,092 | (2,195 | ) | (56,577 | ) | ||||||||||||
Net realized (losses) on investments | (2,069 | ) | 84 | (760 | ) | — | (2,745 | ) | ||||||||||||
Net unrealized (losses) on investments | (54,137 | ) | (20,867 | ) | (12,770 | ) | — | (87,774 | ) | |||||||||||
Income from investment affilate | 2,151 | — | — | — | 2,151 | |||||||||||||||
Foreign exchange (losses) gains | (8,597 | ) | 110 | 1,238 | (322 | ) | (7,571 | ) | ||||||||||||
Net (loss) income | (145,404 | ) | (17,395 | ) | 12,800 | (2,517 | ) | (152,516 | ) | |||||||||||
Net loss attributable to noncontrolling interest | — | 15,616 | — | — | 15,616 | |||||||||||||||
Net (loss) income (attributable) available to Validus | $ | (145,404 | ) | $ | (1,779 | ) | $ | 12,800 | $ | (2,517 | ) | $ | (136,900 | ) |
(a) | Notable losses for the three months ended June 30, 2013 were the European Floods. There were no notable losses for the three months ended June 30, 2012. Excludes the reserve for potential development on 2011 notable loss events. |
• | An unfavorable movement of $115.7 million in net unrealized (losses) on investments; |
• | An unfavorable movement in finance expenses of $32.3 million; |
• | The decrease was offset by an increase in underwriting income of $109.1 million primarily due to: |
• | An increase in net premiums earned of $179.7 million, partially offset by; |
• | An increase in underwriting deductions of $70.6 million which includes an increase in losses and loss expenses of $24.1 million. |
Six Months Ended June 30, 2013 | ||||||||||||||||||||
Increase (Decrease) Over the Six Months Ended June 30, 2012 | ||||||||||||||||||||
(Dollars in thousands) | Validus Re | AlphaCat | Talbot | Corporate and Eliminations | Total | |||||||||||||||
Notable losses — decrease (increase) in net loss and loss expenses (a) | $ | 14,822 | $ | (975 | ) | $ | 9,283 | $ | — | $ | 23,130 | |||||||||
Less: Notable losses - (decrease) increase in net reinstatement premiums (a) | (15,924 | ) | — | 4,632 | — | (11,292 | ) | |||||||||||||
Other underwriting (loss) income | (2,593 | ) | 45,787 | 52,996 | 1,075 | 97,265 | ||||||||||||||
Underwriting (loss) income (b) | (3,695 | ) | 44,812 | 66,911 | 1,075 | 109,103 | ||||||||||||||
Net investment income | 871 | 375 | (2,114 | ) | (918 | ) | (1,786 | ) | ||||||||||||
Other income | 10,443 | (915 | ) | (862 | ) | (16,448 | ) | (7,782 | ) | |||||||||||
Finance expenses | (2,654 | ) | (34,095 | ) | 2 | 4,456 | (32,291 | ) | ||||||||||||
Operating income (loss) before taxes and income from operating affiliates | 4,965 | 10,177 | 63,937 | (11,835 | ) | 67,244 | ||||||||||||||
Tax benefit (expense) | 1,621 | — | (120 | ) | (733 | ) | 768 | |||||||||||||
Income from operating affiliates | — | 357 | — | — | 357 | |||||||||||||||
Net operating income (loss) | 6,586 | 10,534 | 63,817 | (12,568 | ) | 68,369 | ||||||||||||||
Net realized (losses) gains on investments | (6,718 | ) | 84 | (1,922 | ) | — | (8,556 | ) | ||||||||||||
Net unrealized (losses) on investments | (76,195 | ) | (25,058 | ) | (14,429 | ) | — | (115,682 | ) | |||||||||||
Income from investment affiliate | 3,628 | — | — | — | 3,628 | |||||||||||||||
Foreign exchange gains (losses) | 2,827 | (1,068 | ) | (6,303 | ) | 729 | (3,815 | ) | ||||||||||||
Net (loss) income | (69,872 | ) | (15,508 | ) | 41,163 | (11,839 | ) | (56,056 | ) | |||||||||||
Net loss attributable to noncontrolling interest | — | 18,165 | — | — | 18,165 | |||||||||||||||
Net (loss) income (attributable) available to Validus | (69,872 | ) | 2,657 | 41,163 | (11,839 | ) | (37,891 | ) |
(a) | Notable losses for the six months ended June 30, 2013 were the European Floods. Notable losses for the six months ended June 30, 2012 included: Costa Concordia and Cat 67. Excludes the reserve for potential development on 2011 notable loss events. |
(b) | Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income (loss) and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. A reconciliation of this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income (Loss)." |
Three Months Ended June 30, | Six Months Ended June 30, | Year Ended December 31, | ||||||||||||
2013 | 2012 | 2013 | 2012 | 2012 | ||||||||||
Annualized return on average equity | 3.3 | % | 19.1 | % | 13.2 | % | 16.7 | % | 11.3 | % |
• | Reserve for losses and loss expenses; |
• | Premiums; |
• | Reinsurance premiums ceded and reinsurance recoverable; and |
• | Investment valuation. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Dollars in thousands) | 2013 | 2012 (a) | 2013 | 2012 (a) | ||||||||||||
Underwriting income | ||||||||||||||||
Gross premiums written | $ | 702,313 | $ | 627,089 | $ | 1,807,073 | $ | 1,464,378 | ||||||||
Reinsurance premiums ceded | (121,396 | ) | (119,052 | ) | (308,612 | ) | (226,104 | ) | ||||||||
Net premiums written | 580,917 | 508,037 | 1,498,461 | 1,238,274 | ||||||||||||
Change in unearned premiums | (33,459 | ) | (60,410 | ) | (419,942 | ) | (339,448 | ) | ||||||||
Net premiums earned | 547,458 | 447,627 | 1,078,519 | 898,826 | ||||||||||||
Underwriting deductions | ||||||||||||||||
Losses and loss expenses | 265,044 | 153,692 | 409,815 | 385,681 | ||||||||||||
Policy acquisition costs | 87,152 | 76,129 | 180,763 | 154,261 | ||||||||||||
General and administrative expenses | 70,967 | 61,635 | 151,246 | 128,010 | ||||||||||||
Share compensation expenses | 6,638 | 6,800 | 8,956 | 12,238 | ||||||||||||
Total underwriting deductions | 429,801 | 298,256 | 750,780 | 680,190 | ||||||||||||
Underwriting income (b) | 117,657 | 149,371 | 327,739 | 218,636 | ||||||||||||
Net investment income | 26,210 | 25,885 | 51,859 | 53,645 | ||||||||||||
Other income | 4,418 | 5,994 | 7,103 | 14,885 | ||||||||||||
Finance expenses | (37,830 | ) | (13,706 | ) | (62,276 | ) | (29,985 | ) | ||||||||
Operating income before taxes and income from operating affiliates (b) | 110,455 | 167,544 | 324,425 | 257,181 | ||||||||||||
Tax (expense) benefit | (93 | ) | (404 | ) | 225 | (543 | ) | |||||||||
Income from operating affiliates | 3,793 | 3,592 | 7,316 | 6,959 | ||||||||||||
Net operating income (b) | 114,155 | 170,732 | 331,966 | 263,597 | ||||||||||||
Net realized gains on investments | 3,409 | 6,154 | 5,130 | 13,686 | ||||||||||||
Net unrealized (losses) on investments | (141,348 | ) | (53,574 | ) | (148,585 | ) | (32,903 | ) | ||||||||
Income (loss) from investment affiliate | 1,753 | (398 | ) | 3,230 | (398 | ) | ||||||||||
Foreign exchange (losses) gains | (8,223 | ) | (652 | ) | (1,301 | ) | 2,514 | |||||||||
Net (loss) income | (30,254 | ) | 122,262 | 190,440 | 246,496 | |||||||||||
Net loss attributable to noncontrolling interest | 60,976 | 45,360 | 63,525 | 45,360 | ||||||||||||
Net income available to Validus | $ | 30,722 | $ | 167,622 | $ | 253,965 | $ | 291,856 | ||||||||
Selected ratios: | ||||||||||||||||
Net premiums written / Gross premiums written | 82.7 | % | 81.0 | % | 82.9 | % | 84.6 | % | ||||||||
Losses and loss expenses | 48.4 | % | 34.3 | % | 38.0 | % | 42.9 | % | ||||||||
Policy acquisition costs | 15.9 | % | 17.0 | % | 16.8 | % | 17.2 | % | ||||||||
General and administrative expenses (c) | 14.2 | % | 15.3 | % | 14.9 | % | 15.6 | % | ||||||||
Expense ratio | 30.1 | % | 32.3 | % | 31.7 | % | 32.8 | % | ||||||||
Combined ratio | 78.5 | % | 66.6 | % | 69.7 | % | 75.7 | % |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 (a) | 2013 | 2012 (a) | ||||||||||||
Validus Re | |||||||||||||||
Gross premiums written | $ | 353,384 | $ | 340,850 | $ | 1,101,347 | $ | 907,716 | |||||||
Reinsurance premiums ceded | (87,558 | ) | (97,077 | ) | (213,286 | ) | (127,078 | ) | |||||||
Net premiums written | 265,826 | 243,773 | 888,061 | 780,638 | |||||||||||
Change in unearned premiums | 38,925 | (1,087 | ) | (280,176 | ) | (284,943 | ) | ||||||||
Net premiums earned | 304,751 | 242,686 | 607,885 | 495,695 | |||||||||||
Losses and loss expenses | 183,646 | 53,190 | 257,048 | 177,396 | |||||||||||
Policy acquisition costs | 42,789 | 37,084 | 94,533 | 75,874 | |||||||||||
General and administrative expenses | 20,423 | 14,142 | 49,864 | 31,394 | |||||||||||
Share compensation expenses | 1,529 | 1,966 | 2,942 | 3,838 | |||||||||||
Total underwriting deductions | 248,387 | 106,382 | 404,387 | 288,502 | |||||||||||
Underwriting income (b) | $ | 56,364 | $ | 136,304 | $ | 203,498 | $ | 207,193 | |||||||
AlphaCat | |||||||||||||||
Gross premiums written | $ | 46,760 | $ | 15,155 | $ | 143,276 | $ | 18,673 | |||||||
Reinsurance premiums ceded | — | — | — | — | |||||||||||
Net premiums written | 46,760 | 15,155 | 143,276 | 18,673 | |||||||||||
Change in unearned premiums | (11,770 | ) | (11,568 | ) | (80,669 | ) | (12,423 | ) | |||||||
Net premiums earned | 34,990 | 3,587 | 62,607 | 6,250 | |||||||||||
Losses and loss expenses | 1,313 | — | 1,313 | — | |||||||||||
Policy acquisition costs | 3,586 | 382 | 6,224 | 638 | |||||||||||
General and administrative expenses | 3,992 | 2,402 | 8,029 | 3,434 | |||||||||||
Share compensation expenses | 85 | 59 | 162 | 111 | |||||||||||
Total underwriting deductions | 8,976 | 2,843 | 15,728 | 4,183 | |||||||||||
Underwriting income (b) | $ | 26,014 | $ | 744 | $ | 46,879 | $ | 2,067 | |||||||
Talbot | |||||||||||||||
Gross premiums written | $ | 315,518 | $ | 283,528 | $ | 609,048 | $ | 576,781 | |||||||
Reinsurance premiums ceded | (47,187 | ) | (34,419 | ) | (141,924 | ) | (137,818 | ) | |||||||
Net premiums written | 268,331 | 249,109 | 467,124 | 438,963 | |||||||||||
Change in unearned premiums | (60,614 | ) | (47,755 | ) | (59,097 | ) | (42,082 | ) | |||||||
Net premiums earned | 207,717 | 201,354 | 408,027 | 396,881 | |||||||||||
Losses and loss expenses | 80,085 | 100,502 | 151,454 | 208,285 | |||||||||||
Policy acquisition costs | 41,667 | 41,803 | 82,193 | 80,541 | |||||||||||
General and administrative expenses | 32,192 | 30,957 | 63,104 | 64,305 | |||||||||||
Share compensation expenses | 2,357 | 1,799 | 3,762 | 3,147 | |||||||||||
Total underwriting deductions | 156,301 | 175,061 | 300,513 | 356,278 | |||||||||||
Underwriting income (b) | $ | 51,416 | $ | 26,293 | $ | 107,514 | $ | 40,603 | |||||||
Corporate & Eliminations | |||||||||||||||
Gross premiums written | $ | (13,349 | ) | $ | (12,444 | ) | $ | (46,598 | ) | $ | (38,792 | ) | |||
Reinsurance premiums ceded | 13,349 | 12,444 | 46,598 | 38,792 | |||||||||||
Net premiums written | — | — | — | — | |||||||||||
Policy acquisition costs | (890 | ) | (3,140 | ) | (2,187 | ) | (2,792 | ) | |||||||
General and administrative expenses | 14,360 | 14,134 | 30,249 | 28,877 | |||||||||||
Share compensation expenses | 2,667 | 2,976 | 2,090 | 5,142 | |||||||||||
Total underwriting deductions | 16,137 | 13,970 | 30,152 | 31,227 | |||||||||||
Underwriting (loss) (b) | $ | (16,137 | ) | $ | (13,970 | ) | $ | (30,152 | ) | $ | (31,227 | ) | |||
Total underwriting income (b) | $ | 117,657 | $ | 149,371 | $ | 327,739 | $ | 218,636 |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
b) | Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. A reconciliation of this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income." |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premiums Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | ||||||||||||
Property | $ | 462,873 | 65.9 | % | $ | 392,218 | 62.5 | % | 18.0 | % | |||||||
Marine | 115,935 | 16.5 | % | 128,269 | 20.5 | % | (9.6 | )% | |||||||||
Specialty | 123,505 | 17.6 | % | 106,602 | 17.0 | % | 15.9 | % | |||||||||
Total | $ | 702,313 | 100.0 | % | $ | 627,089 | 100.0 | % | 12.0 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premium Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | ||||||||||||
Property | $ | 304,899 | 86.3 | % | $ | 292,264 | 85.8 | % | 4.3 | % | |||||||
Marine | 10,764 | 3.0 | % | 24,898 | 7.3 | % | (56.8 | )% | |||||||||
Specialty | 37,721 | 10.7 | % | 23,688 | 6.9 | % | 59.2 | % | |||||||||
Total | $ | 353,384 | 100.0 | % | $ | 340,850 | 100.0 | % | 3.7 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premiums Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | ||||||||||||
Property | $ | 46,760 | 100.0 | % | $ | 15,155 | 100.0 | % | 208.5 | % | |||||||
Total | $ | 46,760 | 100.0 | % | $ | 15,155 | 100.0 | % | 208.5 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premiums Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | ||||||||||||
Property | $ | 124,199 | 39.4 | % | $ | 96,797 | 34.1 | % | 28.3 | % | |||||||
Marine | 105,530 | 33.4 | % | 103,822 | 36.7 | % | 1.6 | % | |||||||||
Specialty | 85,789 | 27.2 | % | 82,909 | 29.2 | % | 3.5 | % | |||||||||
Total | $ | 315,518 | 100.0 | % | $ | 283,528 | 100.0 | % | 11.3 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | % Change | ||||||||||||
Property | $ | 110,631 | 91.1 | % | $ | 105,750 | 88.8 | % | 4.6 | % | |||||||
Marine | 7,980 | 6.6 | % | 13,752 | 11.6 | % | (42.0 | )% | |||||||||
Specialty | 2,785 | 2.3 | % | (450 | ) | (0.4 | )% | NM | |||||||||
Total | $ | 121,396 | 100.0 | % | $ | 119,052 | 100.0 | % | 2.0 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | % Change | ||||||||||||
Property | $ | 84,987 | 97.1 | % | $ | 83,746 | 86.3 | % | 1.5 | % | |||||||
Marine | 2,193 | 2.5 | % | 13,294 | 13.7 | % | (83.5 | )% | |||||||||
Specialty | 378 | 0.4 | % | 37 | — | % | NM | ||||||||||
Total | $ | 87,558 | 100.0 | % | $ | 97,077 | 100.0 | % | (9.8 | )% |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | % Change | ||||||||||||
Property | $ | 38,629 | 81.9 | % | $ | 34,002 | 98.8 | % | 13.6 | % | |||||||
Marine | 6,146 | 13.0 | % | 909 | 2.6 | % | NM | ||||||||||
Specialty | 2,412 | 5.1 | % | (492 | ) | (1.4 | )% | NM | |||||||||
Total | $ | 47,187 | 100.0 | % | $ | 34,419 | 100.0 | % | 37.1 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | ||||||||||||
Property | $ | 352,242 | 60.6 | % | $ | 286,468 | 56.4 | % | 23.0 | % | |||||||
Marine | 107,955 | 18.6 | % | 114,517 | 22.5 | % | (5.7 | )% | |||||||||
Specialty | 120,720 | 20.8 | % | 107,052 | 21.1 | % | 12.8 | % | |||||||||
Total | $ | 580,917 | 100.0 | % | $ | 508,037 | 100.0 | % | 14.3 | % |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | ||||||||||||
Property | $ | 219,912 | 82.8 | % | $ | 208,518 | 85.5 | % | 5.5 | % | |||||||
Marine | 8,571 | 3.2 | % | 11,604 | 4.8 | % | (26.1 | )% | |||||||||
Specialty | 37,343 | 14.0 | % | 23,651 | 9.7 | % | 57.9 | % | |||||||||
Total | $ | 265,826 | 100.0 | % | $ | 243,773 | 100.0 | % | 9.0 | % |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | ||||||||||||
Property | $ | 46,760 | 100.0 | % | $ | 15,155 | 100.0 | % | 208.5 | % | |||||||
Total | $ | 46,760 | 100.0 | % | $ | 15,155 | 100.0 | % | 208.5 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | ||||||||||||
Property | $ | 85,570 | 31.9 | % | $ | 62,795 | 25.2 | % | 36.3 | % | |||||||
Marine | 99,384 | 37.0 | % | 102,913 | 41.3 | % | (3.4 | )% | |||||||||
Specialty | 83,377 | 31.1 | % | 83,401 | 33.5 | % | — | % | |||||||||
Total | $ | 268,331 | 100.0 | % | $ | 249,109 | 100.0 | % | 7.7 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||
(Dollars in thousands) | Net Change in Unearned Premiums | Net Change in Unearned Premiums | % Change | ||||||||
Change in gross unearned premiums | $ | (57,768 | ) | $ | (111,390 | ) | 48.1 | % | |||
Change in prepaid reinsurance premiums | 24,309 | 50,980 | (52.3 | )% | |||||||
Net change in unearned premiums | $ | (33,459 | ) | $ | (60,410 | ) | 44.6 | % |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||
(Dollars in thousands) | Net Change in Unearned Premiums | Net Change in Unearned Premiums | % Change | ||||||||
Change in gross unearned premiums | $ | 5,771 | $ | (70,676 | ) | 108.2 | % | ||||
Change in prepaid reinsurance premiums | 33,154 | 69,589 | (52.4 | )% | |||||||
Net change in unearned premiums | $ | 38,925 | $ | (1,087 | ) | NM |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||
(Dollars in thousands) | Net Change in Unearned Premiums | Net Change in Unearned Premiums | % Change | ||||||||
Change in gross unearned premiums | $ | (11,770 | ) | $ | (11,568 | ) | (1.7 | )% | |||
Net change in unearned premiums | $ | (11,770 | ) | $ | (11,568 | ) | (1.7 | )% |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||
(Dollars in thousands) | Net Change in Unearned Premiums | Net Change in Unearned Premiums | % Change | ||||||||
Change in gross unearned premiums | $ | (51,769 | ) | $ | (29,146 | ) | (77.6 | )% | |||
Change in prepaid reinsurance premiums | (8,845 | ) | (18,609 | ) | 52.5 | % | |||||
Net change in unearned premiums | $ | (60,614 | ) | $ | (47,755 | ) | (26.9 | )% |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | ||||||||||||
Property | $ | 261,087 | 47.7 | % | $ | 202,692 | 45.3 | % | 28.8 | % | |||||||
Marine | 139,341 | 25.5 | % | 146,682 | 32.8 | % | (5.0 | )% | |||||||||
Specialty | 147,030 | 26.8 | % | 98,253 | 21.9 | % | 49.6 | % | |||||||||
Total | $ | 547,458 | 100.0 | % | $ | 447,627 | 100.0 | % | 22.3 | % |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | ||||||||||||
Property | $ | 176,640 | 58.0 | % | $ | 158,360 | 65.3 | % | 11.5 | % | |||||||
Marine | 52,378 | 17.2 | % | 61,185 | 25.2 | % | (14.4 | )% | |||||||||
Specialty | 75,733 | 24.8 | % | 23,141 | 9.5 | % | 227.3 | % | |||||||||
Total | $ | 304,751 | 100.0 | % | $ | 242,686 | 100.0 | % | 25.6 | % |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | |||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | |||||||||||
Property | $ | 34,990 | 100.0 | % | $ | 3,587 | 100.0 | % | NM | |||||||
Total | $ | 34,990 | 100.0 | % | $ | 3,587 | 100.0 | % | NM |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | ||||||||||||
Property | $ | 49,457 | 23.8 | % | $ | 40,745 | 20.2 | % | 21.4 | % | |||||||
Marine | 86,963 | 41.9 | % | 85,497 | 42.5 | % | 1.7 | % | |||||||||
Specialty | 71,297 | 34.3 | % | 75,112 | 37.3 | % | (5.1 | )% | |||||||||
Total | $ | 207,717 | 100.0 | % | $ | 201,354 | 100.0 | % | 3.2 | % |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | Percentage Point Change | ||||||
Property | 32.6 | % | 37.1 | % | (4.5 | ) | ||
Marine | 70.9 | % | 30.6 | % | 40.3 | |||
Specialty | 55.2 | % | 34.3 | % | 20.9 | |||
All lines | 48.4 | % | 34.3 | % | 14.1 |
a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||
Second Quarter 2013 Notable Loss Events (a) | Validus Re | AlphaCat (d) | Talbot | Total | ||||||||||||||||||||||||||
Description | Net Losses and Loss Expenses(b) | % of NPE(c) | Net Losses and Loss Expenses(b) | % of NPE(c) | Net Losses and Loss Expenses(b) | % of NPE(c) | Net Losses and Loss Expenses(b) | % of NPE(c) | ||||||||||||||||||||||
European floods | Floods | $ | 69,895 | 22.9 | % | $ | 975 | 2.8 | % | $ | 6,717 | 3.2 | % | $ | 77,587 | 14.2 | % | |||||||||||||
Total | $ | 69,895 | 22.9 | % | $ | 975 | 2.8 | % | $ | 6,717 | 3.2 | % | $ | 77,587 | 14.2 | % |
Three Months Ended June 30, 2012 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||
Second Quarter 2012 Notable Loss Events (a) | Validus Re | AlphaCat | Talbot | Total | ||||||||||||||||||||||||||
Description | Net Losses and Loss Expenses(b) | % of NPE(c) | Net Losses and Loss Expenses(b) | % of NPE(c) | Net Losses and Loss Expenses(b) | % of NPE(c) | Net Losses and Loss Expenses(b) | % of NPE(c) | ||||||||||||||||||||||
None | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | ||||||||||||||
Total | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % |
(a) | The notable loss event amounts were based on management's estimates following a review of the company's potential exposure and discussions with certain clients and brokers. Given the magnitude of this event, and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from this event and the Company's actual ultimate net losses from this event may vary materially from this estimate. |
(b) | Net of reinsurance but not net of reinstatement premiums. Total reinstatement premiums were $7.1 million for the three months ended June 30, 2013. |
(c) | NPE = net premiums earned. |
(d) | The AlphaCat segment incurred loss and loss expenses of $1.0 million. The Company's share of the loss was $0.1 million as a result of Validus' investment in an AlphaCat ILS fund. |
Three Months Ended June 30, | ||||||||
2013 | 2012 (a) | Percentage Point Change | ||||||
Property - current period - excluding items below | 31.4 | % | 35.5 | % | (4.1 | ) | ||
Property - current period - notable losses | 29.0 | % | 0.0 | % | 29.0 | |||
Property - change in prior accident years | (27.8 | )% | 1.6 | % | (29.4 | ) | ||
Property - loss ratio | 32.6 | % | 37.1 | % | (4.5 | ) | ||
Marine - current period - excluding items below | 38.2 | % | 50.5 | % | (12.3 | ) | ||
Marine - current period - notable losses | 1.4 | % | 0.0 | % | 1.4 | |||
Marine - change in prior accident years | 31.3 | % | (19.9 | )% | 51.2 | |||
Marine - loss ratio | 70.9 | % | 30.6 | % | 40.3 | |||
Specialty - current period - excluding items below | 63.4 | % | 46.1 | % | 17.3 | |||
Specialty - current period - notable losses | 0.0 | % | 0.0 | % | 0.0 | |||
Specialty - change in prior accident years | (8.2 | )% | (11.8 | )% | 3.6 | |||
Specialty – loss ratio | 55.2 | % | 34.3 | % | 20.9 | |||
All lines - current period - excluding items below | 41.7 | % | 42.7 | % | (1.0 | ) | ||
All lines - current period - notable losses | 14.2 | % | 0.0 | % | 14.2 | |||
All lines - change in prior accident years | (7.5 | )% | (8.4 | )% | 0.9 | |||
All lines - loss ratio | 48.4 | % | 34.3 | % | 14.1 |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, | ||||||||
2013 | 2012 (a) | Percentage Point Change | ||||||
Property - current period excluding items below | 28.4 | % | 26.9 | % | 1.5 | |||
Property - current period - notable losses | 39.6 | % | 0.0 | % | 39.6 | |||
Property - change in prior accident years | (27.8 | )% | 6.1 | % | (33.9 | ) | ||
Property - loss ratio | 40.2 | % | 33.0 | % | 7.2 | |||
Marine - current period excluding items below | 36.7 | % | 28.5 | % | 8.2 | |||
Marine - current period - notable losses | 0.0 | % | 0.0 | % | — | |||
Marine - change in prior accident years | 89.6 | % | (25.5 | )% | 115.1 | |||
Marine - loss ratio | 126.3 | % | 3.0 | % | 123.3 | |||
Specialty - current period excluding items below | 62.7 | % | 16.5 | % | 46.2 | |||
Specialty - current period - notable losses | 0.0 | % | 0.0 | % | 0.0 | |||
Specialty - change in prior accident years | (1.2 | )% | (20.6 | )% | 19.4 | |||
Specialty – loss ratio | 61.5 | % | (4.1 | )% | 65.6 | |||
All lines - current period excluding items below | 38.4 | % | 26.3 | % | 12.1 | |||
All lines - current period - notable losses | 22.9 | % | 0.0 | % | 22.9 | |||
All lines - change in prior accident years | (1.0 | )% | (4.4 | )% | 3.4 | |||
All lines - loss ratio | 60.3 | % | 21.9 | % | 38.4 |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, | ||||||||
2013 | 2012 | Percentage Point Change | ||||||
Property - current period excluding items below | 64.1 | % | 72.0 | % | (7.9 | ) | ||
Property - current period - notable losses | 9.5 | % | 0.0 | % | 9.5 | |||
Property - change in prior accident years | (47.7 | )% | (15.9 | )% | (31.8 | ) | ||
Property - loss ratio | 25.9 | % | 56.1 | % | (30.2 | ) | ||
Marine - current period excluding items below | 39.0 | % | 66.1 | % | (27.1 | ) | ||
Marine - current period - notable losses | 2.3 | % | 0.0 | % | 2.3 | |||
Marine - change in prior accident years | (3.8 | )% | (15.8 | )% | 12.0 | |||
Marine - loss ratio | 37.5 | % | 50.3 | % | (12.8 | ) | ||
Specialty - current period excluding items below | 64.2 | % | 55.3 | % | 8.9 | |||
Specialty - current period - notable losses | 0.0 | % | 0.0 | % | 0.0 | |||
Specialty - change in prior accident years | (15.6 | )% | (9.2 | )% | (6.4 | ) | ||
Specialty – loss ratio | 48.6 | % | 46.1 | % | 2.5 | |||
All lines - current period excluding items below | 53.7 | % | 63.3 | % | (9.6 | ) | ||
All lines - current period - notable losses | 3.2 | % | 0.0 | % | 3.2 | |||
All lines - change in prior accident years | (18.3 | )% | (13.4 | )% | (4.9 | ) | ||
All lines - loss ratio | 38.6 | % | 49.9 | % | (11.3 | ) |
As at June 30, 2013 | ||||||||||||
(Dollars in thousands) | Gross Case Reserves | Gross IBNR | Total Gross Reserve for Losses and Loss Expenses | |||||||||
Property | $ | 849,263 | $ | 719,469 | $ | 1,568,732 | ||||||
Marine | 495,962 | 512,589 | 1,008,551 | |||||||||
Specialty | 258,753 | 447,414 | 706,167 | |||||||||
Total | $ | 1,603,978 | $ | 1,679,472 | $ | 3,283,450 |
As at June 30, 2013 | ||||||||||||
(Dollars in thousands) | Net Case Reserves | Net IBNR | Total Net Reserve for Losses and Loss Expenses | |||||||||
Property | $ | 719,837 | $ | 624,998 | $ | 1,344,835 | ||||||
Marine | 445,383 | 459,949 | 905,332 | |||||||||
Specialty | 226,811 | 387,779 | 614,590 | |||||||||
Total | $ | 1,392,031 | $ | 1,472,726 | $ | 2,864,757 |
Three Months Ended June 30, 2013 | ||||||||||||||||||||
(Dollars in thousands) | Validus Re Segment | AlphaCat Segment | Talbot Segment | Eliminations | Total | |||||||||||||||
Gross reserves at period beginning | $ | 2,015,463 | $ | 5,000 | $ | 1,420,136 | $ | (82,908 | ) | $ | 3,357,691 | |||||||||
Losses recoverable | (142,828 | ) | — | (369,332 | ) | 82,908 | (429,252 | ) | ||||||||||||
Net reserves at period beginning | 1,872,635 | 5,000 | 1,050,804 | — | 2,928,439 | |||||||||||||||
Net reserves acquired | 948 | — | — | — | 948 | |||||||||||||||
Incurred losses - current year | 186,661 | 1,313 | 118,059 | — | 306,033 | |||||||||||||||
Change in prior accident years | (3,015 | ) | — | (37,974 | ) | — | (40,989 | ) | ||||||||||||
Incurred losses | 183,646 | 1,313 | 80,085 | — | 265,044 | |||||||||||||||
Foreign exchange | (17,179 | ) | — | (283 | ) | — | (17,462 | ) | ||||||||||||
Total net paid losses | (199,144 | ) | — | (113,068 | ) | — | (312,212 | ) | ||||||||||||
Net reserves at period end | 1,840,906 | 6,313 | 1,017,538 | — | 2,864,757 | |||||||||||||||
Losses recoverable | 138,976 | — | 350,075 | (70,358 | ) | 418,693 | ||||||||||||||
Gross reserves at period end | $ | 1,979,882 | $ | 6,313 | $ | 1,367,613 | $ | (70,358 | ) | $ | 3,283,450 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | ||||||||||||||||
Property | $ | 33,536 | 38.5 | % | 12.8 | % | $ | 22,355 | 29.3 | % | 11.0 | % | 50.0 | % | |||||||||
Marine | 28,921 | 33.2 | % | 20.8 | % | 31,482 | 41.4 | % | 21.5 | % | (8.1 | )% | |||||||||||
Specialty | 24,695 | 28.3 | % | 16.8 | % | 22,292 | 29.3 | % | 22.7 | % | 10.8 | % | |||||||||||
Total | $ | 87,152 | 100.0 | % | 15.9 | % | $ | 76,129 | 100.0 | % | 17.0 | % | 14.5 | % |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | ||||||||||||||||
Property | $ | 25,875 | 60.5 | % | 14.6 | % | $ | 21,389 | 57.7 | % | 13.5 | % | 21.0 | % | |||||||||
Marine | 9,150 | 21.4 | % | 17.5 | % | 11,783 | 31.8 | % | 19.3 | % | (22.3 | )% | |||||||||||
Specialty | 7,764 | 18.1 | % | 10.3 | % | 3,912 | 10.5 | % | 16.9 | % | 98.5 | % | |||||||||||
Total | $ | 42,789 | 100.0 | % | 14.0 | % | $ | 37,084 | 100.0 | % | 15.3 | % | 15.4 | % |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | |||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | |||||||||||||||
Property | $ | 3,586 | 100.0 | % | 10.2 | % | $ | 382 | 100.0 | % | 10.6 | % | NM | |||||||||
Total | $ | 3,586 | 100.0 | % | 10.2 | % | $ | 382 | 100.0 | % | 10.6 | % | NM |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | ||||||||||||||||
Property | $ | 4,903 | 11.8 | % | 9.9 | % | $ | 3,718 | 8.9 | % | 9.1 | % | 31.9 | % | |||||||||
Marine | 19,808 | 47.5 | % | 22.8 | % | 19,646 | 47.0 | % | 23.0 | % | 0.8 | % | |||||||||||
Specialty | 16,956 | 40.7 | % | 23.8 | % | 18,439 | 44.1 | % | 24.5 | % | (8.0 | )% | |||||||||||
Total | $ | 41,667 | 100.0 | % | 20.1 | % | $ | 41,803 | 100.0 | % | 20.8 | % | (0.3 | )% |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | General and Administrative Expenses | General and Administrative Expenses (%) | General and Administrative Expenses | General and Administrative Expenses (%) | % Change | ||||||||||||
Validus Re (a) | $ | 20,423 | 28.8 | % | $ | 14,142 | 23.0 | % | 44.4 | % | |||||||
AlphaCat | 3,992 | 5.6 | % | 2,402 | 3.9 | % | 66.2 | % | |||||||||
Talbot | 32,192 | 45.4 | % | 30,957 | 50.2 | % | 4.0 | % | |||||||||
Corporate & Eliminations | 14,360 | 20.2 | % | 14,134 | 22.9 | % | 1.6 | % | |||||||||
Total | $ | 70,967 | 100.0 | % | $ | 61,635 | 100.0 | % | 15.1 | % |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Share Compensation Expenses | Share Compensation Expenses (%) | Share Compensation Expenses | Share Compensation Expenses (%) | % Change | ||||||||||||
Validus Re (a) | $ | 1,529 | 23.0 | % | $ | 1,966 | 28.8 | % | (22.2 | )% | |||||||
AlphaCat | 85 | 1.3 | % | 59 | 0.9 | % | 44.1 | % | |||||||||
Talbot | 2,357 | 35.5 | % | 1,799 | 26.5 | % | 31.0 | % | |||||||||
Corporate & Eliminations | 2,667 | 40.2 | % | 2,976 | 43.8 | % | (10.4 | )% | |||||||||
Total | $ | 6,638 | 100.0 | % | $ | 6,800 | 100.0 | % | (2.4 | )% |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Consolidated | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | Percentage Point Change | ||||||
Losses and loss expense ratio | 48.4 | % | 34.3 | % | 14.1 | ||||
Policy acquisition cost ratio | 15.9 | % | 17.0 | % | (1.1 | ) | |||
General and administrative expense ratio (b) | 14.2 | % | 15.3 | % | (1.1 | ) | |||
Expense ratio | 30.1 | % | 32.3 | % | (2.2 | ) | |||
Combined ratio | 78.5 | % | 66.6 | % | 11.9 |
Validus Re | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | Percentage Point Change | ||||||
Losses and loss expense ratio | 60.3 | % | 21.9 | % | 38.4 | ||||
Policy acquisition cost ratio | 14.0 | % | 15.3 | % | (1.3 | ) | |||
General and administrative expense ratio (b) | 7.2 | % | 6.6 | % | 0.6 | ||||
Expense ratio | 21.2 | % | 21.9 | % | (0.7 | ) | |||
Combined ratio | 81.5 | % | 43.8 | % | 37.7 |
AlphaCat | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Percentage Point Change | ||||||
Losses and loss expense ratio | 3.8 | % | 0.0 | % | 3.8 | ||||
Policy acquisition cost ratio | 10.2 | % | 10.6 | % | (0.4 | ) | |||
General and administrative expense ratio (b) | 11.7 | % | 68.6 | % | (56.9 | ) | |||
Expense ratio | 21.9 | % | 79.2 | % | (57.3 | ) | |||
Combined ratio | 25.7 | % | 79.2 | % | (53.5 | ) |
Talbot | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Percentage Point Change | ||||||
Losses and loss expense ratio | 38.6 | % | 49.9 | % | (11.3 | ) | |||
Policy acquisition cost ratio | 20.1 | % | 20.8 | % | (0.7 | ) | |||
General and administrative expense ratio (b) | 16.6 | % | 16.3 | % | 0.3 | ||||
Expense ratio | 36.7 | % | 37.1 | % | (0.4 | ) | |||
Combined ratio | 75.3 | % | 87.0 | % | (11.7 | ) |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
(b) | Includes general and administrative expenses and share compensation expenses. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | |||||||||||||
(Dollars in thousands) | Expenses | Expenses as % of Net Earned Premiums | Expenses | Expenses as % of Net Earned Premiums | ||||||||||
General and administrative expenses | $ | 70,967 | 13.0 | % | $ | 61,635 | 13.8 | % | ||||||
Share compensation expenses | 6,638 | 1.2 | % | 6,800 | 1.5 | % | ||||||||
Total | $ | 77,605 | 14.2 | % | $ | 68,435 | 15.3 | % |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
(Dollars in thousands) | Three Months Ended June 30, 2013 | % of sub-total | Three Months Ended June 30, 2012 (a) | % of sub-total | % Change | ||||||||||||
Validus Re | $ | 56,364 | 42.2 | % | $ | 136,304 | 83.4 | % | (58.6 | )% | |||||||
AlphaCat | 26,014 | 19.4 | % | 744 | 0.5 | % | NM | ||||||||||
Talbot | 51,416 | 38.4 | % | 26,293 | 16.1 | % | 95.6 | % | |||||||||
Sub-total | 133,794 | 100.0 | % | 163,341 | 100.0 | % | (18.1 | )% | |||||||||
Corporate & Eliminations | (16,137 | ) | (13,970 | ) | (15.5 | )% | |||||||||||
Total | $ | 117,657 | $ | 149,371 | (21.2 | )% |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
(Dollars in thousands) | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | ||||||
Underwriting income | $ | 117,657 | $ | 149,371 | ||||
Net investment income | 26,210 | 25,885 | ||||||
Other income | 4,418 | 5,994 | ||||||
Finance expenses | (37,830 | ) | (13,706 | ) | ||||
Net realized gains on investments | 3,409 | 6,154 | ||||||
Net unrealized (losses) on investments | (141,348 | ) | (53,574 | ) | ||||
Income (loss) from investment affiliate | 1,753 | (398 | ) | |||||
Foreign exchange (losses) | (8,223 | ) | (652 | ) | ||||
Tax (expense) | (93 | ) | (404 | ) | ||||
Income from operating affiliates | 3,793 | 3,592 | ||||||
Net (loss) income | $ | (30,254 | ) | $ | 122,262 |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
(Dollars in thousands) | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 (a) | % Change | ||||||||
Fixed maturities and short-term investments | $ | 26,151 | $ | 26,471 | (1.2 | )% | |||||
Cash and cash equivalents | 1,629 | 1,449 | 12.4 | % | |||||||
Securities lending income | — | 1 | NM | ||||||||
Total gross investment income | 27,780 | 27,921 | (0.5 | )% | |||||||
Investment expenses | (1,570 | ) | (2,036 | ) | 22.9 | % | |||||
Net investment income | $ | 26,210 | $ | 25,885 | 1.3 | % |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Three Months Ended June 30, | |||||||||||
(Dollars in thousands) | 2013 | 2012 (a) | % Change | ||||||||
2006 Junior Subordinated Deferrable Debentures | $ | 2,211 | $ | 1,552 | 42.5 | % | |||||
2007 Junior Subordinated Deferrable Debentures | 1,835 | 2,832 | (35.2 | )% | |||||||
2010 Senior Notes due 2040 | 5,598 | 5,598 | 0.0 | % | |||||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | 2,231 | — | NM | ||||||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | 1,547 | — | NM | ||||||||
Credit facilities | 2,799 | 3,566 | (21.5 | )% | |||||||
Bank charges | 99 | 126 | (21.4 | )% | |||||||
Variable Funding Notes (b) | 21,478 | — | NM | ||||||||
Talbot FAL Facility | 32 | 32 | 0.0 | % | |||||||
Finance expenses | $ | 37,830 | $ | 13,706 | 176.0 | % |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
(b) | Includes Variable funding note expense and other AlphaCat related fees. Please refer to Note 13 "Variable funding notes" in the unaudited Consolidated Financial Statements contained herein for further details. |
U.S. dollar strengthened (weakened) against: | Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||
British Pound sterling | (0.2 | )% | 1.9 | % | ||
Euro | (1.9 | )% | 5.4 | % | ||
Canadian Dollar | 3.3 | % | 1.8 | % | ||
Swiss Franc | (0.8 | )% | 5.1 | % | ||
Singapore Dollar | 2.1 | % | 0.6 | % | ||
Australian Dollar | 13.3 | % | 1.1 | % | ||
New Zealand Dollar | 7.5 | % | 2.1 | % | ||
Japanese Yen | 5.6 | % | (3.7 | )% |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Dollars in thousands) | 2013 | 2012 (a) | 2013 | 2012 (a) | ||||||||||||
Underwriting income | ||||||||||||||||
Gross premiums written | $ | 702,313 | $ | 627,089 | $ | 1,807,073 | $ | 1,464,378 | ||||||||
Reinsurance premiums ceded | (121,396 | ) | (119,052 | ) | (308,612 | ) | (226,104 | ) | ||||||||
Net premiums written | 580,917 | 508,037 | 1,498,461 | 1,238,274 | ||||||||||||
Change in unearned premiums | (33,459 | ) | (60,410 | ) | (419,942 | ) | (339,448 | ) | ||||||||
Net premiums earned | 547,458 | 447,627 | 1,078,519 | 898,826 | ||||||||||||
Underwriting deductions | ||||||||||||||||
Losses and loss expenses | 265,044 | 153,692 | 409,815 | 385,681 | ||||||||||||
Policy acquisition costs | 87,152 | 76,129 | 180,763 | 154,261 | ||||||||||||
General and administrative expenses | 70,967 | 61,635 | 151,246 | 128,010 | ||||||||||||
Share compensation expenses | 6,638 | 6,800 | 8,956 | 12,238 | ||||||||||||
Total underwriting deductions | 429,801 | 298,256 | 750,780 | 680,190 | ||||||||||||
Underwriting income (b) | 117,657 | 149,371 | 327,739 | 218,636 | ||||||||||||
Net investment income | 26,210 | 25,885 | 51,859 | 53,645 | ||||||||||||
Other income | 4,418 | 5,994 | 7,103 | 14,885 | ||||||||||||
Finance expenses | (37,830 | ) | (13,706 | ) | (62,276 | ) | (29,985 | ) | ||||||||
Operating income before taxes and income from operating affiliates | 110,455 | 167,544 | 324,425 | 257,181 | ||||||||||||
Tax (expense) benefit | (93 | ) | (404 | ) | 225 | (543 | ) | |||||||||
Income from operating affiliates | 3,793 | 3,592 | 7,316 | 6,959 | ||||||||||||
Net operating income (b) | 114,155 | 170,732 | 331,966 | 263,597 | ||||||||||||
Net realized gains on investments | 3,409 | 6,154 | 5,130 | 13,686 | ||||||||||||
Net unrealized (losses) on investments | (141,348 | ) | (53,574 | ) | (148,585 | ) | (32,903 | ) | ||||||||
Income (loss) from investment affiliate | 1,753 | (398 | ) | 3,230 | (398 | ) | ||||||||||
Foreign exchange (losses) gains | (8,223 | ) | (652 | ) | (1,301 | ) | 2,514 | |||||||||
Net (loss) income | (30,254 | ) | 122,262 | 190,440 | 246,496 | |||||||||||
Net loss attributable to noncontrolling interest | 60,976 | 45,360 | 63,525 | 45,360 | ||||||||||||
Net income available to Validus | $ | 30,722 | $ | 167,622 | $ | 253,965 | $ | 291,856 | ||||||||
Selected ratios: | ||||||||||||||||
Net premiums written / Gross premiums written | 82.7 | % | 81.0 | % | 82.9 | % | 84.6 | % | ||||||||
Losses and loss expenses | 48.4 | % | 34.3 | % | 38.0 | % | 42.9 | % | ||||||||
Policy acquisition costs | 15.9 | % | 17.0 | % | 16.8 | % | 17.2 | % | ||||||||
General and administrative expenses (c) | 14.2 | % | 15.3 | % | 14.9 | % | 15.6 | % | ||||||||
Expense ratio | 30.1 | % | 32.3 | % | 31.7 | % | 32.8 | % | ||||||||
Combined ratio | 78.5 | % | 66.6 | % | 69.7 | % | 75.7 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 (a) | 2013 | 2012 (a) | ||||||||||||
Validus Re | |||||||||||||||
Gross premiums written | $ | 353,384 | $ | 340,850 | $ | 1,101,347 | $ | 907,716 | |||||||
Reinsurance premiums ceded | (87,558 | ) | (97,077 | ) | (213,286 | ) | (127,078 | ) | |||||||
Net premiums written | 265,826 | 243,773 | 888,061 | 780,638 | |||||||||||
Change in unearned premiums | 38,925 | (1,087 | ) | (280,176 | ) | (284,943 | ) | ||||||||
Net premiums earned | 304,751 | 242,686 | 607,885 | 495,695 | |||||||||||
Losses and loss expenses | 183,646 | 53,190 | 257,048 | 177,396 | |||||||||||
Policy acquisition costs | 42,789 | 37,084 | 94,533 | 75,874 | |||||||||||
General and administrative expenses | 20,423 | 14,142 | 49,864 | 31,394 | |||||||||||
Share compensation expenses | 1,529 | 1,966 | 2,942 | 3,838 | |||||||||||
Total underwriting deductions | 248,387 | 106,382 | 404,387 | 288,502 | |||||||||||
Underwriting income (a) | $ | 56,364 | $ | 136,304 | $ | 203,498 | $ | 207,193 | |||||||
AlphaCat | |||||||||||||||
Gross premiums written | $ | 46,760 | $ | 15,155 | $ | 143,276 | $ | 18,673 | |||||||
Reinsurance premiums ceded | — | — | — | — | |||||||||||
Net premiums written | 46,760 | 15,155 | 143,276 | 18,673 | |||||||||||
Change in unearned premiums | (11,770 | ) | (11,568 | ) | (80,669 | ) | (12,423 | ) | |||||||
Net premiums earned | 34,990 | 3,587 | 62,607 | 6,250 | |||||||||||
Losses and loss expenses | 1,313 | — | 1,313 | — | |||||||||||
Policy acquisition costs | 3,586 | 382 | 6,224 | 638 | |||||||||||
General and administrative expenses | 3,992 | 2,402 | 8,029 | 3,434 | |||||||||||
Share compensation expenses | 85 | 59 | 162 | 111 | |||||||||||
Total underwriting deductions | 8,976 | 2,843 | 15,728 | 4,183 | |||||||||||
Underwriting income (a) | $ | 26,014 | $ | 744 | $ | 46,879 | $ | 2,067 | |||||||
Talbot | |||||||||||||||
Gross premiums written | $ | 315,518 | $ | 283,528 | $ | 609,048 | $ | 576,781 | |||||||
Reinsurance premiums ceded | (47,187 | ) | (34,419 | ) | (141,924 | ) | (137,818 | ) | |||||||
Net premiums written | 268,331 | 249,109 | 467,124 | 438,963 | |||||||||||
Change in unearned premiums | (60,614 | ) | (47,755 | ) | (59,097 | ) | (42,082 | ) | |||||||
Net premiums earned | 207,717 | 201,354 | 408,027 | 396,881 | |||||||||||
Losses and loss expenses | 80,085 | 100,502 | 151,454 | 208,285 | |||||||||||
Policy acquisition costs | 41,667 | 41,803 | 82,193 | 80,541 | |||||||||||
General and administrative expenses | 32,192 | 30,957 | 63,104 | 64,305 | |||||||||||
Share compensation expenses | 2,357 | 1,799 | 3,762 | 3,147 | |||||||||||
Total underwriting deductions | 156,301 | 175,061 | 300,513 | 356,278 | |||||||||||
Underwriting income (a) | $ | 51,416 | $ | 26,293 | $ | 107,514 | $ | 40,603 | |||||||
Corporate & Eliminations | |||||||||||||||
Gross premiums written | $ | (13,349 | ) | $ | (12,444 | ) | $ | (46,598 | ) | $ | (38,792 | ) | |||
Reinsurance premiums ceded | 13,349 | 12,444 | 46,598 | 38,792 | |||||||||||
Net premiums written | — | — | — | — | |||||||||||
Policy acquisition costs | (890 | ) | (3,140 | ) | (2,187 | ) | (2,792 | ) | |||||||
General and administrative expenses | 14,360 | 14,134 | 30,249 | 28,877 | |||||||||||
Share compensation expenses | 2,667 | 2,976 | 2,090 | 5,142 | |||||||||||
Total underwriting deductions | 16,137 | 13,970 | 30,152 | 31,227 | |||||||||||
Underwriting (loss) (a) | $ | (16,137 | ) | $ | (13,970 | ) | $ | (30,152 | ) | $ | (31,227 | ) | |||
Total underwriting income (a) | $ | 117,657 | $ | 149,371 | $ | 327,739 | $ | 218,636 |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premiums Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | ||||||||||||
Property | $ | 934,399 | 51.7 | % | $ | 773,599 | 52.8 | % | 20.8 | % | |||||||
Marine | 399,757 | 22.1 | % | 434,504 | 29.7 | % | (8.0 | )% | |||||||||
Specialty | 472,917 | 26.2 | % | 256,275 | 17.5 | % | 84.5 | % | |||||||||
Total | $ | 1,807,073 | 100.0 | % | $ | 1,464,378 | 100.0 | % | 23.4 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premiums Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | ||||||||||||
Property | $ | 630,923 | 57.3 | % | $ | 610,749 | 67.3 | % | 3.3 | % | |||||||
Marine | 172,196 | 15.6 | % | 223,325 | 24.6 | % | (22.9 | )% | |||||||||
Specialty | 298,228 | 27.1 | % | 73,642 | 8.1 | % | NM | ||||||||||
Total | $ | 1,101,347 | 100.0 | % | $ | 907,716 | 100.0 | % | 21.3 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premiums Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | |||||||||
Property | 143,276 | 100.0 | % | 18,673 | 100.0 | % | NM | |||||||
Total | 143,276 | 100.0 | % | 18,673 | 100.0 | % | NM |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Gross Premiums Written | Gross Premiums Written (%) | Gross Premiums Written | Gross Premiums Written (%) | % Change | ||||||||||||
Property | $ | 202,174 | 33.2 | % | $ | 178,331 | 30.9 | % | 13.4 | % | |||||||
Marine | 230,256 | 37.8 | % | 213,820 | 37.1 | % | 7.7 | % | |||||||||
Specialty | 176,618 | 29.0 | % | 184,630 | 32.0 | % | (4.3 | )% | |||||||||
Total | $ | 609,048 | 100.0 | % | $ | 576,781 | 100.0 | % | 5.6 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | % Change | ||||||||||||
Property | $ | 214,109 | 69.3 | % | $ | 162,355 | 71.8 | % | 31.9 | % | |||||||
Marine | 23,972 | 7.8 | % | 33,861 | 15.0 | % | (29.2 | )% | |||||||||
Specialty | 70,531 | 22.9 | % | 29,888 | 13.2 | % | 136.0 | % | |||||||||
Total | $ | 308,612 | 100.0 | % | $ | 226,104 | 100.0 | % | 36.5 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | % Change | ||||||||||||
Property | $ | 169,045 | 79.3 | % | $ | 113,090 | 89.0 | % | 49.5 | % | |||||||
Marine | 5,165 | 2.4 | % | 13,419 | 10.6 | % | (61.5 | )% | |||||||||
Specialty | 39,076 | 18.3 | % | 569 | 0.4 | % | NM | ||||||||||
Total | $ | 213,286 | 100.0 | % | $ | 127,078 | 100.0 | % | 67.8 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | Reinsurance Premiums Ceded | Reinsurance Premiums Ceded (%) | % Change | ||||||||||||
Property | $ | 87,038 | 61.3 | % | $ | 83,419 | 60.5 | % | 4.3 | % | |||||||
Marine | 21,502 | 15.2 | % | 23,083 | 16.8 | % | (6.8 | )% | |||||||||
Specialty | 33,384 | 23.5 | % | 31,316 | 22.7 | % | 6.6 | % | |||||||||
Total | $ | 141,924 | 100.0 | % | $ | 137,818 | 100.0 | % | 3.0 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | ||||||||||||
Property | $ | 720,290 | 48.0 | % | $ | 611,244 | 49.4 | % | 17.8 | % | |||||||
Marine | 375,785 | 25.1 | % | 400,643 | 32.3 | % | (6.2 | )% | |||||||||
Specialty | 402,386 | 26.9 | % | 226,387 | 18.3 | % | 77.7 | % | |||||||||
Total | $ | 1,498,461 | 100.0 | % | $ | 1,238,274 | 100.0 | % | 21.0 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | ||||||||||||
Property | $ | 461,878 | 52.0 | % | $ | 497,659 | 63.7 | % | (7.2 | )% | |||||||
Marine | 167,031 | 18.8 | % | 209,906 | 26.9 | % | (20.4 | )% | |||||||||
Specialty | 259,152 | 29.2 | % | 73,073 | 9.4 | % | 254.6 | % | |||||||||
Total | $ | 888,061 | 100.0 | % | $ | 780,638 | 100.0 | % | 13.8 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | |||||||||||
Property | $ | 143,276 | 100.0 | % | $ | 18,673 | 100.0 | % | NM | |||||||
Total | $ | 143,276 | 100.0 | % | $ | 18,673 | 100.0 | % | NM |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Net Premiums Written | Net Premiums Written (%) | Net Premiums Written | Net Premiums Written (%) | % Change | ||||||||||||
Property | $ | 115,136 | 24.6 | % | $ | 94,912 | 21.6 | % | 21.3 | % | |||||||
Marine | 208,754 | 44.7 | % | 190,737 | 43.5 | % | 9.4 | % | |||||||||
Specialty | 143,234 | 30.7 | % | 153,314 | 34.9 | % | (6.6 | )% | |||||||||
Total | $ | 467,124 | 100.0 | % | $ | 438,963 | 100.0 | % | 6.4 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||
(Dollars in thousands) | Net Change in Unearned Premiums | Net Change in Unearned Premiums | % Change | ||||||||
Change in gross unearned premiums | $ | (545,235 | ) | $ | (424,454 | ) | (28.5 | )% | |||
Change in prepaid reinsurance premiums | 125,293 | 85,006 | 47.4 | % | |||||||
Net change in unearned premiums | $ | (419,942 | ) | $ | (339,448 | ) | (23.7 | )% |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||
(Dollars in thousands) | Net Change in Unearned Premiums | Net Change in Unearned Premiums | % Change | ||||||||
Change in gross unearned premiums | $ | (367,169 | ) | $ | (350,258 | ) | (4.8 | )% | |||
Change in prepaid reinsurance premiums | 86,993 | 65,315 | 33.2 | % | |||||||
Net change in unearned premiums | $ | (280,176 | ) | $ | (284,943 | ) | 1.7 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||||
(Dollars in thousands) | Net Change in Unearned Premiums | Net Change in Unearned Premiums | % Change | |||||||
Change in gross unearned premiums | $ | (80,669 | ) | $ | (12,423 | ) | NM | |||
Net change in unearned premiums | $ | (80,669 | ) | $ | (12,423 | ) | NM |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||
(Dollars in thousands) | Change in Unearned Premiums | Change in Unearned Premiums | % Change | ||||||||
Change in gross unearned premiums | $ | (97,397 | ) | $ | (61,773 | ) | (57.7 | )% | |||
Change in prepaid reinsurance premiums | 38,300 | 19,691 | 94.5 | % | |||||||
Net change in unearned premiums | $ | (59,097 | ) | $ | (42,082 | ) | (40.4 | )% |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | ||||||||||||
Property | $ | 516,734 | 48.0 | % | $ | 410,025 | 45.7 | % | 26.0 | % | |||||||
Marine | 280,920 | 26.0 | % | 292,423 | 32.5 | % | (3.9 | )% | |||||||||
Specialty | 280,865 | 26.0 | % | 196,378 | 21.8 | % | 43.0 | % | |||||||||
Total | $ | 1,078,519 | 100.0 | % | $ | 898,826 | 100.0 | % | 20.0 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | ||||||||||||
Property | $ | 361,122 | 59.4 | % | $ | 318,408 | 64.3 | % | 13.4 | % | |||||||
Marine | 108,979 | 17.9 | % | 133,062 | 26.8 | % | (18.1 | )% | |||||||||
Specialty | 137,784 | 22.7 | % | 44,225 | 8.9 | % | 211.6 | % | |||||||||
Total | $ | 607,885 | 100.0 | % | $ | 495,695 | 100.0 | % | 22.6 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | |||||||||||
Property | $ | 62,607 | 100.0 | % | $ | 6,250 | 100.0 | % | NM | |||||||
Total | $ | 62,607 | 100.0 | % | $ | 6,250 | 100.0 | % | NM |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||||||
(Dollars in thousands) | Net Premiums Earned | Net Premiums Earned (%) | Net Premiums Earned | Net Premiums Earned (%) | % Change | ||||||||||||
Property | $ | 93,005 | 22.8 | % | $ | 85,367 | 21.5 | % | 8.9 | % | |||||||
Marine | 171,941 | 42.1 | % | 159,361 | 40.2 | % | 7.9 | % | |||||||||
Specialty | 143,081 | 35.1 | % | 152,153 | 38.3 | % | (6.0 | )% | |||||||||
Total | $ | 408,027 | 100.0 | % | $ | 396,881 | 100.0 | % | 2.8 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | Percentage Point Change | ||||||
Property | 19.2 | % | 32.2 | % | (13.0 | )% | ||
Marine | 52.6 | % | 59.7 | % | (7.1 | )% | ||
Specialty | 58.0 | % | 40.2 | % | 17.8 | % | ||
All lines | 38.0 | % | 42.9 | % | (4.9 | )% |
Six Months Ended June 30, | ||||||||
2013 | 2012 (a) | Percentage Point Change | ||||||
Property - current period - excluding items below | 26.8 | % | 27.0 | % | (0.2 | ) | ||
Property - current period - notable losses | 14.6 | % | 6.9 | % | 7.7 | |||
Property - change in prior accident years | (22.2 | )% | (1.7 | )% | (20.5 | ) | ||
Property - loss ratio | 19.2 | % | 32.2 | % | (13.0 | ) | ||
Marine - current period - excluding notable losses | 42.7 | % | 48.6 | % | (5.9 | ) | ||
Marine - current period - notable losses | 0.7 | % | 24.8 | % | (24.1 | ) | ||
Marine - change in prior accident years | 9.2 | % | (13.7 | )% | 22.9 | |||
Marine - loss ratio | 52.6 | % | 59.7 | % | (7.1 | ) | ||
Specialty - current period - excluding notable losses | 64.4 | % | 50.9 | % | 13.5 | |||
Specialty - current period - notable losses | 0.0 | % | 0.0 | % | — | |||
Specialty - change in prior accident years | (6.4 | )% | (10.7 | )% | 4.3 | |||
Specialty — loss ratio | 58.0 | % | 40.2 | % | 17.8 | |||
All lines - current period - excluding notable losses | 40.7 | % | 39.3 | % | 1.4 | |||
All lines - current period - notable losses | 7.2 | % | 11.2 | % | (4.0 | ) | ||
All lines - change in prior accident years | (9.9 | )% | (7.6 | )% | (2.3 | ) | ||
All lines - loss ratio | 38.0 | % | 42.9 | % | (4.9 | ) |
Six Months Ended June 30, | ||||||||
2013 | 2012 (a) | Percentage Point Change | ||||||
Property - current period excluding notable losses | 23.2 | % | 18.2 | % | 5.0 | |||
Property - current period - notable losses | 19.4 | % | 8.7 | % | 10.7 | |||
Property - change in prior accident years | (22.6 | )% | (0.5 | )% | (22.1 | ) | ||
Property - loss ratio | 20.0 | % | 26.4 | % | (6.4 | ) | ||
Marine - current period excluding notable losses | 36.8 | % | 38.8 | % | (2.0 | ) | ||
Marine - current period - notable losses | 0.0 | % | 42.9 | % | (42.9 | ) | ||
Marine - change in prior accident years | 43.8 | % | (15.8 | )% | 59.6 | |||
Marine - loss ratio | 80.6 | % | 65.9 | % | 14.7 | |||
Specialty - current period excluding notable losses | 69.0 | % | 26.6 | % | 42.4 | |||
Specialty - current period - notable losses | 0.0 | % | 0.0 | % | 0.0 | % | ||
Specialty - change in prior accident years | 1.5 | % | (14.0 | )% | 15.5 | |||
Specialty — loss ratio | 70.5 | % | 12.6 | % | 57.9 | |||
All lines - current period excluding notable losses | 36.0 | % | 24.6 | % | 11.4 | |||
All lines - current period - notable losses | 11.5 | % | 17.1 | % | (5.6 | ) | ||
All lines - change in prior accident years | (5.2 | )% | (5.9 | )% | 0.7 | |||
All lines - loss ratio | 42.3 | % | 35.8 | % | 6.5 |
Six Months Ended June 30, | ||||||||
2013 | 2012 | Percentage Point Change | ||||||
Property - current period excluding items below | 58.0 | % | 62.0 | % | (4.0 | ) | ||
Property - current period - notable losses | 5.1 | % | 0.6 | % | 4.5 | |||
Property - change in prior accident years | (35.6 | )% | (6.2 | )% | (29.4 | ) | ||
Property - loss ratio | 27.5 | % | 56.4 | % | (28.9 | ) | ||
Marine - current period excluding items below | 46.4 | % | 56.7 | % | (10.3 | ) | ||
Marine - current period - notable losses | 1.2 | % | 9.7 | % | (8.5 | ) | ||
Marine - change in prior accident years | (12.7 | )% | (11.9 | )% | (0.8 | ) | ||
Marine - loss ratio | 34.9 | % | 54.5 | % | (19.6 | ) | ||
Specialty - current period excluding items below | 60.0 | % | 57.9 | % | 2.1 | |||
Specialty - current period - notable losses | 0.0 | % | 0.0 | % | — | |||
Specialty - change in prior accident years | (14.0 | )% | (9.7 | )% | (4.3 | ) | ||
Specialty — loss ratio | 46.0 | % | 48.2 | % | (2.2 | ) | ||
All lines - current period excluding items below | 53.9 | % | 58.3 | % | (4.4 | ) | ||
All lines - current period - notable losses | 1.6 | % | 4.0 | % | (2.4 | ) | ||
All lines - change in prior accident years | (18.4 | )% | (9.8 | )% | (8.6 | ) | ||
All lines - loss ratio | 37.1 | % | 52.5 | % | (15.4 | ) |
As at June 30, 2013 | ||||||||||||
(Dollars in thousands) | Gross Case Reserves | Gross IBNR | Total Gross Reserve for Losses and Loss Expenses | |||||||||
Property | $ | 849,263 | $ | 719,469 | $ | 1,568,732 | ||||||
Marine | 495,962 | 512,589 | 1,008,551 | |||||||||
Specialty | 258,753 | 447,414 | 706,167 | |||||||||
Total | $ | 1,603,978 | $ | 1,679,472 | $ | 3,283,450 |
As at June 30, 2013 | ||||||||||||
(Dollars in thousands) | Net Case Reserves | Net IBNR | Total Net Reserve for Losses and Loss Expenses | |||||||||
Property | $ | 719,837 | $ | 624,998 | $ | 1,344,835 | ||||||
Marine | 445,383 | 459,949 | 905,332 | |||||||||
Specialty | 226,811 | 387,779 | 614,590 | |||||||||
Total | $ | 1,392,031 | $ | 1,472,726 | $ | 2,864,757 |
Six Months Ended June 30, 2013 | ||||||||||||||||||||
(Dollars in thousands) | Validus Re Segment | AlphaCat Segment | Talbot Segment | Eliminations | Total | |||||||||||||||
Gross reserves at period beginning | $ | 2,122,895 | $ | 5,000 | $ | 1,480,307 | $ | (90,629 | ) | $ | 3,517,573 | |||||||||
Losses recoverable | (148,646 | ) | — | (381,950 | ) | 90,629 | (439,967 | ) | ||||||||||||
Net reserves at period beginning | 1,974,249 | 5,000 | 1,098,357 | — | 3,077,606 | |||||||||||||||
Net reserves acquired | 948 | — | — | — | 948 | |||||||||||||||
Incurred losses- current year | 288,845 | 1,313 | 226,444 | — | 516,602 | |||||||||||||||
Change in prior accident years | (31,797 | ) | — | (74,990 | ) | — | (106,787 | ) | ||||||||||||
Incurred losses | 257,048 | 1,313 | 151,454 | — | 409,815 | |||||||||||||||
Foreign exchange | (34,069 | ) | — | (17,219 | ) | — | (51,288 | ) | ||||||||||||
Paid losses | (357,270 | ) | — | (215,054 | ) | — | (572,324 | ) | ||||||||||||
Net reserves at period end | 1,840,906 | 6,313 | 1,017,538 | — | 2,864,757 | |||||||||||||||
Losses recoverable | 138,976 | — | 350,075 | (70,358 | ) | 418,693 | ||||||||||||||
Gross reserves at period end | $ | 1,979,882 | $ | 6,313 | $ | 1,367,613 | $ | (70,358 | ) | $ | 3,283,450 |
RESERVES FOR NOTABLE LOSS EVENTS - USD (000's) | ||||||||||||||||||||||||||||||||||||||||||||||
2011 NOTABLE LOSS EVENTS | Year Ended December 31, 2011 | Year Ended December 31, 2012 | Six Months Ended June 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||
Development | Closing | Development | Closing | Development | Closing | |||||||||||||||||||||||||||||||||||||||||
Initial | (Favorable) / | Allocations | Estimate (c) | (Favorable) / | Allocations | Estimate (c) | (Favorable) / | Allocations | Estimate (c) | |||||||||||||||||||||||||||||||||||||
Notable Loss | Estimate (a) | Unfavorable (b) | of RDE | 31-Dec-11 | Unfavorable (b) | of RDE | 31-Dec-12 | Unfavorable (b) | of RDE | 30-Jun-13 | ||||||||||||||||||||||||||||||||||||
Tohoku earthquake | $ | 148,926 | $ | 37,963 | $ | 29,788 | $ | 216,677 | $ | (6,652 | ) | $ | 16,342 | $ | 226,367 | $ | (7,703 | ) | $ | — | $ | 218,664 | ||||||||||||||||||||||||
Thailand floods | 54,148 | — | — | 54,148 | 10,704 | 14,262 | 79,114 | (4,374 | ) | — | 74,740 | |||||||||||||||||||||||||||||||||||
Gryphon Alpha (f) | 52,434 | 9,151 | — | 61,585 | 874 | 5,356 | 67,815 | (240 | ) | 1,970 | 69,545 | |||||||||||||||||||||||||||||||||||
Cat 46 (f) | 43,806 | 18,553 | — | 62,359 | 118 | — | 62,477 | (2,994 | ) | — | 59,483 | |||||||||||||||||||||||||||||||||||
Christchurch earthquake | 41,881 | 16,854 | 20,212 | 78,947 | (495 | ) | 20,121 | 98,573 | 40 | 6,031 | 104,644 | |||||||||||||||||||||||||||||||||||
Hurricane Irene (e) | 32,451 | 3 | — | 32,454 | (10,788 | ) | — | 21,666 | (2,419 | ) | — | 19,247 | ||||||||||||||||||||||||||||||||||
Cat 48 (f) | 31,481 | 9,190 | — | 40,671 | 5,612 | — | 46,283 | (4,562 | ) | — | 41,721 | |||||||||||||||||||||||||||||||||||
Brisbane floods | 31,023 | 4,848 | — | 35,871 | (1,394 | ) | — | 34,477 | (1,757 | ) | — | 32,720 | ||||||||||||||||||||||||||||||||||
CNRL Horizon | 19,500 | (8,706 | ) | — | 10,794 | 558 | — | 11,352 | 2 | — | 11,354 | |||||||||||||||||||||||||||||||||||
Danish flood | 19,429 | 5,987 | — | 25,416 | 2,566 | 7,665 | 35,647 | — | — | 35,647 | ||||||||||||||||||||||||||||||||||||
Jupiter 1 | 15,008 | (73 | ) | — | 14,935 | (166 | ) | — | 14,769 | 6 | — | 14,775 | ||||||||||||||||||||||||||||||||||
Total 2011 Notable Loss Events | $ | 490,087 | $ | 93,770 | $ | 50,000 | $ | 633,857 | $ | 937 | $ | 63,746 | $ | 698,540 | $ | (24,001 | ) | $ | 8,001 | $ | 682,540 | |||||||||||||||||||||||||
Closing | Closing | Closing | ||||||||||||||||||||||||||||||||||||||||||||
Paid Loss (Recovery) | Reserve (d) | Paid Loss (Recovery) | Reserve (d) | Paid Loss (Recovery) | Reserve (d) | |||||||||||||||||||||||||||||||||||||||||
Notable Loss | 31-Dec-11 | 31-Dec-12 | 30-Jun-13 | |||||||||||||||||||||||||||||||||||||||||||
Tohoku earthquake | $ | 59,100 | $ | 157,577 | $ | 94,011 | $ | 73,256 | $ | 11,538 | $ | 54,015 | ||||||||||||||||||||||||||||||||||
Thailand floods | 1,748 | 52,400 | 13,017 | 64,349 | 17,348 | 42,627 | ||||||||||||||||||||||||||||||||||||||||
Gryphon Alpha (f) | 8,686 | 52,899 | 19,487 | 39,641 | 18,523 | 22,849 | ||||||||||||||||||||||||||||||||||||||||
Cat 46 (f) | 51,429 | 10,930 | 1,700 | 9,348 | 2,658 | 3,696 | ||||||||||||||||||||||||||||||||||||||||
Christchurch earthquake | (42 | ) | 78,989 | 5,708 | 92,907 | 30,384 | 68,594 | |||||||||||||||||||||||||||||||||||||||
Hurricane Irene (e) | 8,669 | 23,785 | 3,743 | 9,254 | 481 | 6,354 | ||||||||||||||||||||||||||||||||||||||||
Cat 48 (f) | 19,934 | 20,737 | 14,032 | 12,317 | 1,063 | 6,692 | ||||||||||||||||||||||||||||||||||||||||
Brisbane floods | 16,151 | 19,720 | 10,998 | 7,328 | 1,382 | 4,189 | ||||||||||||||||||||||||||||||||||||||||
CNRL Horizon | 5,600 | 5,194 | 5,746 | 6 | 5 | 3 | ||||||||||||||||||||||||||||||||||||||||
Danish flood | 7,872 | 17,544 | 15,099 | 12,676 | 2,100 | 10,576 | ||||||||||||||||||||||||||||||||||||||||
Jupiter 1 | 14,342 | 593 | 245 | 182 | 1 | 187 | ||||||||||||||||||||||||||||||||||||||||
Total 2011 Notable Loss Events | $ | 193,489 | $ | 440,368 | $ | 183,786 | $ | 321,264 | $ | 85,483 | $ | 219,782 | ||||||||||||||||||||||||||||||||||
RESERVES FOR NOTABLE LOSS EVENTS - USD (000's) CONTINUED | ||||||||||||||||||||||||||||||||||
2012 NOTABLE LOSS EVENTS | Year Ended December 31, 2012 | Six Months Ended June 30, 2013 | ||||||||||||||||||||||||||||||||
Development | Closing | Development | Closing | |||||||||||||||||||||||||||||||
Initial | (Favorable) / | Allocations | Estimate (c) | (Favorable) / | Allocations | Estimate (c) | ||||||||||||||||||||||||||||
Notable Loss | Estimate (a) | Unfavorable (b) | of RDE | 31-Dec-12 | Unfavorable (b) | of RDE | 30-Jun-13 | |||||||||||||||||||||||||||
Hurricane Sandy | $ | 361,036 | — | — | $ | 361,036 | $ | (961 | ) | — | $ | 360,075 | ||||||||||||||||||||||
Costa Concordia | 76,197 | (2,061 | ) | — | 74,136 | 40,906 | — | 115,042 | ||||||||||||||||||||||||||
Cat 67 | 22,713 | 5,377 | — | 28,090 | (6,807 | ) | — | 21,283 | ||||||||||||||||||||||||||
U.S. Drought | 22,021 | — | — | 22,021 | 5,707 | — | 27,728 | |||||||||||||||||||||||||||
Hurricane Isaac | 15,209 | 67 | — | 15,276 | (9,579 | ) | — | 5,697 | ||||||||||||||||||||||||||
Total 2012 Notable Loss Events | $ | 497,176 | $ | 3,383 | $ | — | $ | 500,559 | $ | 29,266 | $ | — | $ | 529,825 | ||||||||||||||||||||
Closing | Closing | |||||||||||||||||||||||||||||||||
Paid Loss (Recovery) | Reserve (d) | Paid Loss (Recovery) | Reserve (d) | |||||||||||||||||||||||||||||||
Notable Loss | 31-Dec-12 | 30-Jun-13 | ||||||||||||||||||||||||||||||||
Hurricane Sandy | $ | 38,515 | $ | 322,521 | $ | 85,524 | $ | 236,036 | ||||||||||||||||||||||||||
Costa Concordia | 13,040 | 61,096 | 9,431 | 92,571 | ||||||||||||||||||||||||||||||
Cat 67 | 13,432 | 14,658 | 1,784 | 6,067 | ||||||||||||||||||||||||||||||
U.S. Drought | 12,346 | 9,675 | 14,112 | 1,270 | ||||||||||||||||||||||||||||||
Hurricane Isaac | 313 | 14,963 | 1,691 | 3,693 | ||||||||||||||||||||||||||||||
Total 2012 Notable Loss Events | $ | 77,646 | $ | 422,913 | $ | 112,542 | $ | 339,637 | ||||||||||||||||||||||||||
2013 NOTABLE LOSS EVENTS | Six Months Ended June 30, 2013 | |||||||||||||||||||||||||||||||||
Development | Closing | |||||||||||||||||||||||||||||||||
Initial | (Favorable) / | Allocations | Estimate (c) | |||||||||||||||||||||||||||||||
Notable Loss | Estimate (a) | Unfavorable (b) | of RDE | 30-Jun-13 | ||||||||||||||||||||||||||||||
European Floods | $ | 77,587 | $ | — | — | $ | 77,587 | |||||||||||||||||||||||||||
Total 2013 Notable Loss Events | $ | 77,587 | $ | — | $ | — | $ | 77,587 | ||||||||||||||||||||||||||
Closing | ||||||||||||||||||||||||||||||||||
Paid Loss (Recovery) | Reserve (d) | |||||||||||||||||||||||||||||||||
Notable Loss | 30-Jun-13 | |||||||||||||||||||||||||||||||||
European Floods | $ | — | $ | 77,587 | ||||||||||||||||||||||||||||||
Total 2013 Notable Loss Events | $ | — | $ | 77,587 |
(f) | During Q2 2013, the Company concluded that Cat 46, Cat 48 and Gryphon Alpha no longer remain eligible for potential allocations from the 2011 RDE. |
Reserve for Potential Development on Notable Loss Events | |||||||||||||||||||
2010 | 2011 | 2012 | 2013 | Total | |||||||||||||||
($ in 000's) | ($ in 000's) | ($ in 000's) | ($ in 000's) | ($ in 000's) | |||||||||||||||
As at December 31, 2009 | $ | — | $ | — | |||||||||||||||
Reserve for potential development additions | 69,242 | — | — | — | 69,242 | ||||||||||||||
Reserve for potential development allocations (a) | (35,856 | ) | — | — | — | (35,856 | ) | ||||||||||||
Reserve for potential development releases | — | — | — | — | — | ||||||||||||||
As at December 31, 2010 (b) | $ | 33,386 | $ | — | $ | — | $ | — | $ | 33,386 | |||||||||
Reserve for potential development additions | — | 128,000 | — | — | 128,000 | ||||||||||||||
Reserve for potential development allocations (a) | (14,769 | ) | (50,000 | ) | — | — | (64,769 | ) | |||||||||||
Reserve for potential development releases | — | — | — | — | — | ||||||||||||||
As at December 31, 2011 (b) | $ | 18,617 | $ | 78,000 | $ | — | $ | — | $ | 96,617 | |||||||||
Reserve for potential development additions (c) | — | 27,926 | — | — | 27,926 | ||||||||||||||
Reserve for potential development allocations (a) | (18,617 | ) | (63,746 | ) | — | — | (82,363 | ) | |||||||||||
Reserve for potential development releases | — | — | — | — | — | ||||||||||||||
As at December 31, 2012 (b) | $ | — | $ | 42,180 | $ | — | $ | — | $ | 42,180 | |||||||||
Reserve for potential development additions | — | — | — | — | — | ||||||||||||||
Reserve for potential development allocations (a) | — | (8,001 | ) | — | — | (8,001 | ) | ||||||||||||
Reserve for potential development releases | — | — | — | — | — | ||||||||||||||
As at June 30, 2013 (b) | $ | — | $ | 34,179 | $ | — | $ | — | $ | 34,179 | |||||||||
(a) | During the year ended December 31, 2010, $19,242 was allocated to the Chilean earthquake and $16,614 was allocated to the New Zealand earthquake from the 2010 reserve for potential development on notable loss events. |
(b) | Notable losses for the year ended December 31, 2010 included Chilean earthquake, Melbourne hailstorm, Windstorm Xynthia, Deepwater Horizon, Aban Pearl, Bangkok riots, Perth hailstorm, New Zealand earthquake, Oklahoma windstorm, Political risk loss, Hurricane Karl, Queensland floods, Political violence loss, Satellite failure and Financial institution loss. |
(c) | Contract complexity, the nature and number of perils arising from these events, limits and sub limits exposed, the quality, flow and timing of information received by the Company, information regarding retrocessional covers, assumptions, both explicit and implicit, regarding future paid and reported loss development patterns, frequency and severity trends, claims settlement practices and potential changes in the legal environment continue to lead to complexity and volatility in the ultimate loss estimates for these events. Given the potential that one or some of the 2011 notable loss events eligible for potential allocation from the 2011 RDE may experience adverse development, rather than all deteriorating proportionately, an addition to the 2011 RDE of $27,926 was made during the year ended December 31, 2012. |
(d) | The reserve for potential development on notable loss events (or “RDE”) is included as part of the Company's overall reserve requirement as defined and disclosed in the Critical Accounting Policies and Estimates section of the Company's Annual Report on Form 10-K/A. |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | ||||||||||||||||
Property | $ | 68,476 | 37.9 | % | 13.3 | % | $ | 50,252 | 32.6 | % | 12.3 | % | 36.3 | % | |||||||||
Marine | 58,598 | 32.4 | % | 20.9 | % | 61,271 | 39.7 | % | 21.0 | % | (4.4 | )% | |||||||||||
Specialty | 53,689 | 29.7 | % | 19.1 | % | 42,738 | 27.7 | % | 21.8 | % | 25.6 | % | |||||||||||
Total | $ | 180,763 | 100.0 | % | 16.8 | % | $ | 154,261 | 100.0 | % | 17.2 | % | 17.2 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | ||||||||||||||||
Property | $ | 54,407 | 57.5 | % | 15.1 | % | $ | 45,303 | 59.7 | % | 14.2 | % | 20.1 | % | |||||||||
Marine | 20,754 | 22.0 | % | 19.0 | % | 23,304 | 30.7 | % | 17.5 | % | (10.9 | )% | |||||||||||
Specialty | 19,372 | 20.5 | % | 14.1 | % | 7,267 | 9.6 | % | 16.4 | % | 166.6 | % | |||||||||||
Total | $ | 94,533 | 100.0 | % | 15.6 | % | $ | 75,874 | 100.0 | % | 15.3 | % | 24.6 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | |||||||||||||||
Property | $ | 6,224 | 100.0 | % | 9.9 | % | $ | 638 | 100.0 | % | 10.2 | % | NM | |||||||||
Total | $ | 6,224 | 100.0 | % | 9.9 | % | $ | 638 | 100.0 | % | 10.2 | % | NM |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||||||||||||
(Dollars in thousands) | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | Policy Acquisition Costs | Policy Acquisition Costs (%) | Acquisition Cost Ratio | % Change | ||||||||||||||||
Property | $ | 9,927 | 12.1 | % | 10.7 | % | $ | 7,090 | 8.8 | % | 8.3 | % | 40.0 | % | |||||||||
Marine | 37,903 | 46.1 | % | 22.0 | % | 37,931 | 47.1 | % | 23.8 | % | (0.1 | )% | |||||||||||
Specialty | 34,363 | 41.8 | % | 24.0 | % | 35,520 | 44.1 | % | 23.3 | % | (3.3 | )% | |||||||||||
Total | $ | 82,193 | 100.0 | % | 20.1 | % | $ | 80,541 | 100.0 | % | 20.3 | % | 2.1 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | General and Administrative Expenses | General and Administrative Expenses (%) | General and Administrative Expenses | General and Administrative Expenses (%) | % Change | ||||||||||||
Validus Re | $ | 49,864 | 33.0 | % | $ | 31,394 | 24.5 | % | 58.8 | % | |||||||
AlphaCat | 8,029 | 5.3 | % | 3,434 | 2.7 | % | 133.8 | % | |||||||||
Talbot | 63,104 | 41.7 | % | 64,305 | 50.2 | % | (1.9 | )% | |||||||||
Corporate & Eliminations | 30,249 | 20.0 | % | 28,877 | 22.6 | % | 4.8 | % | |||||||||
Total | $ | 151,246 | 100.0 | % | $ | 128,010 | 100.0 | % | 18.2 | % |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||||||||||||
(Dollars in thousands) | Share Compensation Expenses | Share Compensation Expenses (%) | Share Compensation Expenses | Share Compensation Expenses (%) | % Change | ||||||||||||
Validus Re | $ | 2,942 | 32.8 | % | $ | 3,838 | 31.4 | % | (23.3 | )% | |||||||
AlphaCat | 162 | 1.8 | % | 111 | 0.9 | % | 45.9 | % | |||||||||
Talbot | 3,762 | 42.0 | % | 3,147 | 25.7 | % | 19.5 | % | |||||||||
Corporate & Eliminations | 2,090 | 23.4 | % | 5,142 | 42.0 | % | (59.4 | )% | |||||||||
Total | $ | 8,956 | 100.0 | % | $ | 12,238 | 100.0 | % | (26.8 | )% |
Consolidated | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | Percentage point change | ||||||
Losses and loss expenses ratio | 38.0 | % | 42.9 | % | (4.9 | ) | |||
Policy acquisition costs ratio | 16.8 | % | 17.2 | % | (0.4 | ) | |||
General and administrative expenses ratio (b) | 14.9 | % | 15.6 | % | (0.7 | ) | |||
Expense ratio | 31.7 | % | 32.8 | % | (1.1 | ) | |||
Combined ratio | 69.7 | % | 75.7 | % | (6.0 | ) |
Validus Re | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | Percentage point change | |||||
Losses and loss expenses ratio | 42.3 | % | 35.8 | % | 6.5 | |||
Policy acquisition costs ratio | 15.6 | % | 15.3 | % | 0.3 | |||
General and administrative expenses ratio (b) | 8.7 | % | 7.1 | % | 1.6 | |||
Expense ratio | 24.3 | % | 22.4 | % | 1.9 | |||
Combined ratio | 66.6 | % | 58.2 | % | 8.4 |
AlphaCat | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | Percentage point change | ||||||
Losses and loss expenses ratio | 2.1 | % | 0.0 | % | 2.1 | ||||
Policy acquisition costs ratio | 9.9 | % | 10.2 | % | (0.3 | ) | |||
General and administrative expenses ratio (b) | 13.1 | % | 56.7 | % | (43.6 | ) | |||
Expense ratio | 23.0 | % | 66.9 | % | (43.9 | ) | |||
Combined ratio | 25.1 | % | 66.9 | % | (41.8 | ) |
Talbot | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | Percentage point change | ||||||
Losses and loss expenses ratio | 37.1 | % | 52.5 | % | (15.4 | ) | |||
Policy acquisition costs ratio | 20.1 | % | 20.3 | % | (0.2 | ) | |||
General and administrative expenses ratio (b) | 16.4 | % | 17.0 | % | (0.6 | ) | |||
Expense ratio | 36.5 | % | 37.3 | % | (0.8 | ) | |||
Combined ratio | 73.6 | % | 89.8 | % | (16.2 | ) |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||||||||
(Dollars in thousands) | Expenses | Expenses as % of Net Earned Premiums | Expenses | Expenses as % of Net Earned Premiums | ||||||||||
General and administrative expenses | $ | 151,246 | 14.1 | % | $ | 128,010 | 14.2 | % | ||||||
Share compensation expenses | 8,956 | 0.8 | % | 12,238 | 1.4 | % | ||||||||
Total | $ | 160,202 | 14.9 | % | $ | 140,248 | 15.6 | % |
(Dollars in thousands) | Six Months Ended June 30, 2013 | % of Sub-total | Six Months Ended June 30, 2012 (a) | % of Sub-total | % Change | ||||||||||||
Validus Re | $ | 203,498 | 56.9 | % | $ | 207,193 | 82.9 | % | (1.8 | )% | |||||||
AlphaCat | 46,879 | 13.1 | % | 2,067 | 0.8 | % | NM | ||||||||||
Talbot | 107,514 | 30.0 | % | 40,603 | 16.3 | % | 164.8 | % | |||||||||
Sub total | 357,891 | 100.0 | % | 249,863 | 100.0 | % | 43.2 | % | |||||||||
Corporate & Eliminations | (30,152 | ) | (31,227 | ) | 3.4 | % | |||||||||||
Total | $ | 327,739 | $ | 218,636 | 49.9 | % |
(Dollars in thousands) | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | ||||||
Underwriting income | $ | 327,739 | $ | 218,636 | ||||
Net investment income | 51,859 | 53,645 | ||||||
Other income | 7,103 | 14,885 | ||||||
Finance expenses | (62,276 | ) | (29,985 | ) | ||||
Net realized gains on investments | 5,130 | 13,686 | ||||||
Net unrealized (losses) on investments | (148,585 | ) | (32,903 | ) | ||||
Income (loss) from investment affiliate | 3,230 | (398 | ) | |||||
Foreign exchange (losses) gains | (1,301 | ) | 2,514 | |||||
Tax benefit (expense) | 225 | (543 | ) | |||||
Income from operating affiliates | 7,316 | 6,959 | ||||||
Net income | $ | 190,440 | $ | 246,496 |
(Dollars in thousands) | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 (a) | % Change | ||||||||
Fixed maturities and short-term investments | $ | 53,682 | $ | 53,747 | (0.1 | )% | |||||
Cash and cash equivalents | 2,162 | 3,766 | (42.6 | )% | |||||||
Securities lending income | — | 6 | (100.0 | )% | |||||||
Total gross investment income | 55,844 | 57,519 | (2.9 | )% | |||||||
Investment expenses | (3,985 | ) | (3,874 | ) | (2.9 | )% | |||||
Net investment income | $ | 51,859 | $ | 53,645 | (3.3 | )% |
Six Months Ended June 30, | |||||||||||
(Dollars in thousands) | 2013 | 2012 (a) | % Change | ||||||||
2006 Junior Subordinated Deferrable Debentures | $ | 4,398 | $ | 3,101 | 41.8 | % | |||||
2007 Junior Subordinated Deferrable Debentures | 3,644 | 5,861 | (37.8 | )% | |||||||
2010 Senior Notes due 2040 | 11,195 | 11,195 | 0.0 | % | |||||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | 3,703 | — | NM | ||||||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | 2,619 | — | NM | ||||||||
Credit facilities | 3,753 | 9,582 | (60.8 | )% | |||||||
Bank charges | 232 | 183 | NM | ||||||||
Variable Funding Notes (b) | 32,669 | — | NM | ||||||||
Talbot FAL Facility | 63 | 63 | 0.0 | % | |||||||
Finance expenses | $ | 62,276 | $ | 29,985 | 107.7 | % |
U.S. dollar strengthened (weakened) against: | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||
British Pound sterling | 6.7 | % | (1.2 | )% | ||
Euro | 1.3 | % | 2.3 | % | ||
Canadian Dollar | 5.7 | % | (0.5 | )% | ||
Swiss Franc | 3.2 | % | 1.0 | % | ||
Singapore Dollar | 3.8 | % | (2.4 | )% | ||
Australian Dollar | 13.3 | % | (0.3 | )% | ||
New Zealand Dollar | 6.4 | % | (3.0 | )% | ||
Japanese Yen | 14.5 | % | 3.5 | % |
As at June 30, 2013 | ||||||||||||||
Equity Amount | Shares | Exercise Price | Book Value Per Share | |||||||||||
Book value per common share | ||||||||||||||
Total shareholders' equity available to Validus | $ | 3,617,856 | 99,737,461 | $ | 36.27 | |||||||||
Diluted book value per common share | ||||||||||||||
Total shareholders' equity available to Validus | 3,617,856 | 99,737,461 | ||||||||||||
Assumed exercise of outstanding warrants | 101,379 | 5,459,829 | $ | 18.57 | ||||||||||
Assumed exercise of outstanding stock options | 31,914 | 1,689,131 | $ | 18.89 | ||||||||||
Unvested restricted shares | — | 2,831,952 | ||||||||||||
Diluted book value per common share | $ | 3,751,149 | 109,718,373 | $ | 34.19 |
As at December 31, 2012 | ||||||||||||||
Equity Amount | Shares | Exercise Price | Book Value Per Share | |||||||||||
Book value per common share | ||||||||||||||
Total shareholders' equity available to Validus | $ | 4,020,827 | 107,921,259 | $ | 37.26 | |||||||||
Diluted book value per common share | ||||||||||||||
Total shareholders' equity available to Validus | 4,020,827 | 107,921,259 | ||||||||||||
Assumed exercise of outstanding warrants | 118,015 | 6,410,472 | $ | 18.41 | ||||||||||
Assumed exercise of outstanding stock options | 37,745 | 1,823,947 | $ | 20.69 | ||||||||||
Unvested restricted shares | — | 2,443,631 | ||||||||||||
Diluted book value per common share | $ | 4,176,587 | 118,599,309 | $ | 35.22 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||
2013 | 2012 (a) | 2013 | 2012(a) | ||||||||||||
Total gross premiums written | $ | 702,313 | $ | 627,089 | $ | 1,807,073 | $ | 1,464,378 | |||||||
Adjustments for: | |||||||||||||||
Gross premiums written on behalf of AlphaCat Re 2011 | (403 | ) | 12,830 | (513 | ) | 86,705 | |||||||||
Gross premiums written on behalf of AlphaCat Re 2012 | (67 | ) | 30,558 | (465 | ) | 30,558 | |||||||||
Total managed gross premiums written | $ | 701,843 | $ | 670,477 | $ | 1,806,095 | $ | 1,581,641 |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Six Months Ended June 30, | |||||||||||
(Dollars in thousands) | 2013 | 2012 (a) | % Change | ||||||||
Net cash provided by operating activities | $ | 173,705 | $ | 305,164 | (43.1 | )% | |||||
Net cash provided by (used in) investing activities | 231,752 | (408,551 | ) | 156.7 | % | ||||||
Net cash (used in) provided by financing activities | (263,542 | ) | 167,117 | (257.7 | )% | ||||||
Effect of foreign currency rate changes on cash and cash equivalents | (44,233 | ) | 6,736 | NM | |||||||
Net increase in cash | $ | 97,682 | $ | 70,466 | 38.6 | % |
(a) | The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition. |
Six Months Ended June 30, | ||||||||
Net cash provided by (used in): | 2013 | 2012 | ||||||
Investments in operating affiliates, net | $ | 79,307 | $ | (26,500 | ) | |||
Investments in investment affiliates, net | (6,904 | ) | (3,368 | ) |
(Dollars in thousands) | Maturity Date / Term | In Use/Outstanding | ||||
2006 Junior Subordinated Deferrable Debentures | June 15, 2036 | $ | 150,000 | |||
2007 Junior Subordinated Deferrable Debentures | June 15, 2037 | 139,800 | ||||
2010 Senior Notes due 2040 | January 26, 2040 | 250,000 | ||||
$400,000 syndicated unsecured letter of credit facility | March 9, 2016 | — | ||||
$525,000 syndicated secured letter of credit facility | March 9, 2016 | 373,318 | ||||
$200,000 bi-lateral secured letter of credit facility | Evergreen | 73,532 | ||||
Talbot FAL Facility | December 31, 2015 | 25,000 | ||||
PaCRe senior secured letter of credit facility | May 9, 2014 | 258 | ||||
IPC bi-lateral facility | Evergreen | 24,788 | ||||
$375,000 Flagstone bi-lateral facility | Evergreen | 313,398 | ||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | September 15, 2037 | 136,926 | ||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | September 15, 2036 | 113,750 | ||||
Total | $ | 1,600,770 |
Six Months Ended June 30, | ||||||||
Net cash used in: | 2013 | 2012 | ||||||
Share repurchases | $ | (357,184 | ) | $ | (221,252 | ) | ||
Dividends paid to shareholders | (297,539 | ) | (56,260 | ) |
Capital at | ||||
(Dollars in thousands) | June 30, 2013 | |||
Validus Reinsurance, Ltd. (consolidated), excluding IPCRe Limited and Validus UPS, Ltd. | $ | 2,484,644 | ||
IPCRe Limited (formerly Validus Re Americas, Ltd.) | 126,386 | |||
Validus UPS, Ltd. (formerly Flagstone) | 1,018,185 | |||
Total Validus Reinsurance, Ltd. (consolidated) | 3,629,215 | |||
Noncontrolling interest in PacRe, Ltd. | 427,755 | |||
Noncontrolling interest in AlphaCat ILS Funds | 70,690 | |||
Talbot Holdings, Ltd. (consolidated) | 680,814 | |||
Other subsidiaries, net | 53,386 | |||
Other, net | 42,061 | |||
Total consolidated capitalization | 4,903,921 | |||
Senior notes payable | (247,144 | ) | ||
Debentures payable | (540,476 | ) | ||
Total shareholders' equity | $ | 4,116,301 |
A.M. Best (a) | S&P (b) | Moody’s (c) | Fitch (d) | ||||
Validus Holdings, Ltd. | |||||||
Issuer credit rating | bbb | BBB+ | Baa2 | A- | |||
Senior debt | bbb | BBB+ | Baa2 | BBB+ | |||
Subordinated debt | bbb- | BBB- | Baa3 | BBB- | |||
Preferred stock | bb+ | BBB- | Ba1 | — | |||
Outlook on ratings | Stable | Stable | Stable | Stable | |||
Validus Reinsurance, Ltd. | |||||||
Financial strength rating | A | A | A3 | A | |||
Issuer credit rating | a | — | — | — | |||
Outlook on ratings | Stable | Stable | Stable | Stable | |||
Talbot | |||||||
Financial strength rating applicable to all Lloyds syndicates | A | A+ | — | A+ | |||
Flagstone Reassurance Suisse, SA | |||||||
Financial strength rating | A- | ||||||
Issuer credit rating | a- | ||||||
Outlook on ratings | Stable |
(a) | The A.M. Best ratings were most recently affirmed on February 7, 2013 |
(b) | The S&P ratings were most recently affirmed on August 30, 2012 |
(c) | All Moody’s ratings were most recently affirmed on August 31, 2012 |
(d) | All Fitch ratings were most recently affirmed on February 21, 2013 |
(Dollars in thousands) | Commitments (a) | In Use/Outstanding | ||||||
2006 Junior Subordinated Deferrable Debentures | $ | 150,000 | $ | 150,000 | ||||
2007 Junior Subordinated Deferrable Debentures | 200,000 | 139,800 | ||||||
2010 Senior Notes due 2040 | 250,000 | 250,000 | ||||||
$400,000 syndicated unsecured letter of credit facility | 400,000 | — | ||||||
$525,000 syndicated secured letter of credit facility | 525,000 | 373,318 | ||||||
$200,000 bi-lateral secured letter of credit facility | 200,000 | 73,532 | ||||||
Talbot FAL Facility (b) | 25,000 | 25,000 | ||||||
PaCRe senior secured letter of credit facility | 10,000 | 258 | ||||||
IPC bi-lateral facility | 40,000 | 24,788 | ||||||
$375,000 Flagstone bi-lateral facility | 375,000 | 313,398 | ||||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | 136,926 | 136,926 | ||||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | 113,750 | 113,750 | ||||||
Total | $ | 2,425,676 | $ | 1,600,770 |
(a) | Indicates utilization of commitment amount, not drawn borrowings. |
(b) | Talbot operates in Lloyd’s through a corporate member, Talbot 2002 Underwriting Capital Ltd (“T02”), which is the sole participant in Syndicate 1183. Lloyd’s sets T02’s required capital annually based on Syndicate 1183’s business plan, rating environment, reserving environment together with input arising from Lloyd’s discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd’s (“FAL”), comprises: cash, investments and undrawn letters of credit provided by various banks. |
• | unpredictability and severity of catastrophic events; |
• | our ability to obtain and maintain ratings, which may affect our ability to raise additional equity or debt financings; |
• | adequacy of the Company’s risk management and loss limitation methods; |
• | cyclicality of demand and pricing in the insurance and reinsurance markets; |
• | the Company’s ability to implement its business strategy during “soft” as well as “hard” markets; |
• | adequacy of the Company’s loss reserves; |
• | continued availability of capital and financing; |
• | the Company’s ability to identify, hire and retain, on a timely and unimpeded basis and on anticipated economic and other terms, experienced and capable senior management, as well as underwriters, claims professionals and support staff; |
• | acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and (re)insureds; |
• | competition, including increased competition, on the basis of pricing, capacity, coverage terms or other factors; |
• | potential loss of business from one or more major insurance or reinsurance brokers; |
• | the Company’s ability to implement, successfully and on a timely basis, complex infrastructure, distribution capabilities, systems, procedures and internal controls, and to develop accurate actuarial data to support the business and regulatory and reporting requirements; |
• | general economic and market conditions (including inflation, volatility in the credit and capital markets, interest rates and foreign currency exchange rates) and conditions specific to the insurance and reinsurance markets in which we operate; |
• | the integration of businesses we may acquire or new business ventures, including overseas offices, we may start; |
• | accuracy of estimates and judgments used in the preparation of the Company's financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, taxes, contingencies, litigation and any determination to use the deposit method of accounting, which, for a relatively new insurance and reinsurance company like the Company, are even more difficult to make than those made in a mature company because of limited historical information; |
• | the effect on the Company’s investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and the possible downgrade of U.S. securities by credit rating agencies and the resulting effect on the value of securities in the Company’s investment portfolio, as well as other factors; |
• | acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events; |
• | availability and cost of reinsurance and retrocession coverage; |
• | the failure of reinsurers, retrocessionaires, producers or others to meet their obligations to us; |
• | the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us; |
• | changes in domestic or foreign laws or regulations, or their interpretations; |
• | changes in accounting principles or the application of such principles by regulators; |
• | statutory or regulatory or rating agency developments, including as to tax policy and reinsurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers; and |
• | the other factors set forth under Part I Item 1A "Risk Factors" and under Part II Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the other sections of the Company's Annual Report on Form 10-K/A for the year ended December 31, 2012, as well as the risk and other factors set forth in the Company's other filings with the SEC, as well as management's response to any of the aforementioned factors. |
• | interest rate risk; |
• | foreign currency risk; |
• | credit risk; |
• | liquidity risk; and |
• | effects of inflation. |
(Dollars in thousands) | Maturity Date / Term | In Use / Outstanding | |||
2006 Junior Subordinated Deferrable Debentures | June 15, 2036 | $ | 150,000 | ||
2007 Junior Subordinated Deferrable Debentures | June 15, 2037 | 139,800 | |||
2010 Senior Notes due 2040 | January 26, 2040 | 250,000 | |||
$400,000 syndicated unsecured letter of credit facility | March 9, 2016 | — | |||
$525,000 syndicated secured letter of credit facility | March 9, 2016 | 373,318 | |||
$200,000 bi-lateral secured letter of credit facility | Evergreen | 73,532 | |||
Talbot FAL Facility | December 31, 2015 | 25,000 | |||
PaCRe senior secured letter of credit facility | May 9, 2014 | 258 | |||
IPC bi-lateral facility | Evergreen | 24,788 | |||
$375,000 Flagstone bi-lateral facility | Evergreen | 313,398 | |||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes | September 15, 2037 | 136,926 | |||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes | September 15, 2036 | 113,750 | |||
Total | $ | 1,600,770 |
Share Repurchase Activity (Expressed in thousands of U.S. dollars except for share and per share information) | ||||||||||||||||||||
As at March 31, 2013 | Quarter ended | |||||||||||||||||||
Effect of share repurchases: | (cumulative) | April | May | June | June 30, 2013 | |||||||||||||||
Aggregate purchase price (a) | $ | 1,276,536 | $ | 71,058 | $ | 112,291 | $ | 104,144 | $ | 287,493 | ||||||||||
Shares repurchased | 45,042,446 | $ | 1,883,310 | $ | 3,048,599 | $ | 2,875,090 | $ | 7,806,999 | |||||||||||
Average price (a) | $ | 28.34 | $ | 37.73 | $ | 36.83 | $ | 36.22 | $ | 36.83 | ||||||||||
Estimated cumulative net accretive (dilutive) impact on: | ||||||||||||||||||||
Diluted BV per common share (b) | $ | 1.49 | ||||||||||||||||||
Diluted EPS - Quarter (c) | $ | 0.08 |
Share Repurchase Activity (Expressed in thousands of U.S. dollars except for share and per share information) | ||||||||||||||||
Effect of share repurchases: | As at June 30, 2013 (cumulative) | July | As at August 6, 2013 | Cumulative to Date Effect | ||||||||||||
Aggregate purchase price (a) | $ | 1,564,029 | $ | — | $ | — | $ | 1,564,029 | ||||||||
Shares repurchased | 52,849,445 | — | — | 52,849,445 | ||||||||||||
Average price (a) | $ | 29.59 | $ | — | $ | — | $ | 29.59 |
Exhibit | Description |
Exhibit 10.1 | Separation Agreement, dated as of May 31, 2013, between Validus Holdings, Ltd. and Stuart W. Mercer. (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on June 4, 2013) |
Exhibit 10.2 | Employment Agreement dated as of June 19, 2013, between Validus Holdings, Ltd. and Michael Moore. (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on June 24, 2013) |
Exhibit 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. |
Exhibit 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. |
Exhibit 32* | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002. |
Exhibit 101.1 INS* | XBRL Instance Document |
Exhibit 101.SCH* | XBRL Taxonomy Extension Schema Document |
Exhibit 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
Exhibit 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document |
Exhibit 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
Exhibit 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
VALIDUS HOLDINGS, LTD. | ||
(Registrant) | ||
Date: | August 8, 2013 | /s/ Edward J. Noonan |
Edward J. Noonan | ||
Chief Executive Officer | ||
Date: | August 8, 2013 | /s/ Jeffrey D. Sangster |
Jeffrey D. Sangster | ||
Executive Vice President and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Validus Holdings, Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ EDWARD J. NOONAN | ||
Edward J. Noonan Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Validus Holdings, Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ JEFFREY D. SANGSTER | ||
Jeffrey D. Sangster Executive Vice President and Chief Financial Officer |
/s/ EDWARD J. NOONAN | ||
Edward J. Noonan Chief Executive Officer Validus Holdings, Ltd. |
/s/ JEFFREY D. SANGSTER | ||
Jeffrey D. Sangster Executive Vice President and Chief Financial Officer Validus Holdings, Ltd. |
Stock plans
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock plans | Stock plans Long Term Incentive Plan and Short Term Incentive Plan The Company’s Amended and Restated 2005 Long Term Incentive Plan (“LTIP”) provides for grants to employees of options, stock appreciation rights (“SARs”), restricted shares, restricted share units, performance shares, dividend equivalents or other share-based awards. In addition, the Company may issue restricted share awards or restricted share units in connection with awards issued under its annual Short Term Incentive Plan (“STIP”). The total number of shares reserved for issuance under the LTIP and STIP are 13,126,896 shares of which 1,868,465 shares are remaining. The LTIP and STIP are administered by the Compensation Committee of the Board of Directors. No SARs have been granted to date. Grant prices are established at the fair market value of the Company’s common shares at the date of grant. i.Options Options may be exercised for voting common shares upon vesting. Options have a life of 10 years and vest either ratably or at the end of the required service period from the date of grant. Fair value of the option awards at the date of grant is determined using the Black-Scholes option-pricing model. Expected volatility is based on stock price volatility of comparable publicly-traded companies. The Company used the simplified method consistent with U.S. GAAP authoritative guidance on stock compensation expenses to estimate expected lives for options granted during the period as historical exercise data was not available and the options met the requirement as set out in the guidance. The Company has not granted any stock options since September 4, 2009. Share compensation expenses in respect of options of $nil were recorded for the three months ended June 30, 2013 (2012: $7). Share compensation expenses in respect of options of $nil were recorded for the six months ended June 30, 2013 (2012: $142). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period. A modification event was triggered as a result of the 2013 Special Dividend. In accordance with the terms of the LTIP under which the options were issued, an adjustment was required to protect the holders of such stock options from changes in the value of the stock options following the declaration of the 2013 Special Dividend. The modification of the options included a decrease in the exercise price of each stock option and an increase in the number of shares underlying each stock option. The fair value of the options before and after the modification was unchanged. Activity with respect to options for the six months ended June 30, 2013 was as follows:
Activity with respect to options for the six months ended June 30, 2012 was as follows:
At June 30, 2013, there were $nil (December 31, 2012: $nil) of total unrecognized share compensation expenses in respect of options that are expected to be recognized over a weighted-average period of 0.0 years (December 31, 2012: 0.0 years). ii.Restricted share awards Restricted shares granted under the LTIP and STIP vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment and transferability. Share compensation expenses of $5,933 were recorded for the three months ended June 30, 2013 (2012: $6,176). Share compensation expenses of $9,994 were recorded for the six months ended June 30, 2013 (2012: $12,116). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period. Activity with respect to unvested restricted share awards for the six months ended June 30, 2013 was as follows:
Activity with respect to unvested restricted share awards for the six months ended June 30, 2012 was as follows:
At June 30, 2013, there were $82,867 (December 31, 2012: $43,952) of total unrecognized share compensation expenses in respect of restricted share awards that are expected to be recognized over a weighted-average period of 3.5 years (December 31, 2012: 2.6 years ). iii.Restricted share units Restricted share units under the LTIP and STIP vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment and transferability. Share compensation expenses of $130 were recorded for the three months ended June 30, 2013 (2012: $111). Share compensation expenses of $251 were recorded for the six months ended June 30, 2013 (2012: $231). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period. Activity with respect to unvested restricted share units for the six months ended June 30, 2013 was as follows:
Activity with respect to unvested restricted share units for the six months ended June 30, 2012 was as follows:
At June 30, 2013, there were $2,000 (December 31, 2012: $978) of total unrecognized share compensation expenses in respect of restricted share units that are expected to be recognized over a weighted-average period of 3.7 years (December 31, 2012: 2.6 years). iv.Performance share awards The performance share awards contain a performance based component. The performance component relates to the compounded growth in the Dividend Adjusted Diluted Book Value per Share over a three year period. For performance share awards granted during the period, the grant date Diluted Book Value per Share (“DBVPS”) is based on the DBVPS at the end of the most recent financial reporting year. The Dividend Adjusted Performance Period End DBVPS will be the DBVPS three years after the grant date DBVPS. The fair value estimate earns over the requisite attribution period and the estimate will be reassessed at the end of each performance period which will reflect any adjustments in the consolidated statements of comprehensive income in the period in which they are determined. Share compensation expenses of $575 were recorded for the three months ended June 30, 2013 (2012: $506). Share compensation expenses of ($1,289) were recorded for the six months ended June 30, 2013 (2012: ($251)). The negative expense is due to a reversal of expenses on unvested performance share awards based on a review of current and projected performance criteria. Activity with respect to unvested performance share awards for the six months ended June 30, 2013 was as follows:
Activity with respect to unvested performance share awards for the six months ended June 30, 2012 was as follows:
At June 30, 2013, there were $2,195 (December 31, 2012: $3,328) of total unrecognized share compensation expenses in respect of performance share awards that are expected to be recognized over a weighted-average period of 2.4 years (December 31, 2012: 1.7 years). Total share compensation expenses The breakdown of share compensation expenses by award type was as follows:
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Investments in affiliates (Investment affiliate) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Investment in Aquiline - other details | ||||
Income (loss) from investment affiliate | $ 1,753 | $ (398) | $ 3,230 | $ (398) |
Aquiline Financial Services Fund LP
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Schedule of Equity Method Investments [Line Items] | ||||
Investment in limited partnership (Aquiline Financial Services Fund II L.P.), beginning of period | 18,036 | 3,347 | 15,218 | 3,253 |
Capital contributions | 5,563 | 3,368 | 6,904 | 4,898 |
Net unrealized (loss) on investments | 0 | 0 | 0 | (1,436) |
Investment in limited partnership (Aquiline Financial Services Fund II L.P.), end of period | 25,352 | 6,317 | 25,352 | 6,317 |
Investment in Aquiline - other details | ||||
Investment at cost | 24,522 | 24,522 | ||
Equity ownership % | 6.70% | 6.70% | ||
Carrying value | 25,352 | 6,317 | 25,352 | 6,317 |
Income (loss) from investment affiliate | $ 1,753 | $ (398) | $ 3,230 | $ (398) |
Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Revenues | ||||
Gross premiums written | $ 702,313 | $ 627,089 | $ 1,807,073 | $ 1,464,378 |
Reinsurance premiums ceded | (121,396) | (119,052) | (308,612) | (226,104) |
Net premiums written | 580,917 | 508,037 | 1,498,461 | 1,238,274 |
Change in unearned premiums | 33,459 | 60,410 | 419,942 | 339,448 |
Net premiums earned | 547,458 | 447,627 | 1,078,519 | 898,826 |
Net investment income | 26,210 | 25,885 | 51,859 | 53,645 |
Net realized gains on investments | 3,409 | 6,154 | 5,130 | 13,686 |
Net unrealized (losses) on investments | (141,348) | (53,574) | (148,585) | (32,903) |
Income (loss) from investment affiliate | 1,753 | (398) | 3,230 | (398) |
Other income | 4,418 | 5,994 | 7,103 | 14,885 |
Foreign exchange (losses) gains | (8,223) | (652) | (1,301) | 2,514 |
Total revenues | 433,677 | 431,036 | 995,955 | 950,255 |
Expenses | ||||
Losses and loss expenses | 265,044 | 153,692 | 409,815 | 385,681 |
Policy acquisition costs | 87,152 | 76,129 | 180,763 | 154,261 |
General and administrative expenses | 70,967 | 61,635 | 151,246 | 128,010 |
Share compensation expenses | 6,638 | 6,800 | 8,956 | 12,238 |
Finance expenses | 37,830 | 13,706 | 62,276 | 29,985 |
Total expenses | 467,631 | 311,962 | 813,056 | 710,175 |
(Loss) income before taxes and income from operating affiliates | (33,954) | 119,074 | 182,899 | 240,080 |
Tax (expense) benefit | (93) | (404) | 225 | (543) |
Income from operating affiliates | 3,793 | 3,592 | 7,316 | 6,959 |
Net (loss) income | (30,254) | 122,262 | 190,440 | 246,496 |
Loss attributable to noncontrolling interest | 60,976 | 45,360 | 63,525 | 45,360 |
Net income available to Validus | 30,722 | 167,622 | 253,965 | 291,856 |
Other comprehensive (loss) income | ||||
Foreign currency translation adjustments | 186 | (757) | (9,599) | 636 |
Other comprehensive income (loss) | 186 | (757) | (9,599) | 636 |
Comprehensive income available to Validus | $ 30,908 | $ 166,865 | $ 244,366 | $ 292,492 |
Weighted average number of common shares and common share equivalents outstanding | ||||
Basic | 103,133,188 | 98,254,186 | 105,259,813 | 98,839,663 |
Diluted | 104,734,643 | 103,667,967 | 107,393,822 | 104,382,030 |
Basic earnings per share available to common shareholders | $ 0.28 | $ 1.69 | $ 2.26 | $ 2.92 |
Diluted earnings per share available to common shareholders | $ 0.28 | $ 1.62 | $ 2.21 | $ 2.80 |
Cash dividends declared per share | $ 0.3 | $ 0.25000 | $ 2.6 | $ 0.50 |
Fair value measurements
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair Value Measurements The Company has adopted all authoritative guidance in effect as of the balance sheet date regarding certain market conditions that allow for fair value measurements that incorporate unobservable inputs where active market transaction based measurements are unavailable.
Under U.S. GAAP, a company must determine the appropriate level in the fair value hierarchy for each fair value measurement. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or liability, into three levels. It gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are described below:
The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety of factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This may lead us to change the selection of our valuation technique (from market to cash flow approach) or may cause us to use multiple valuation techniques to estimate the fair value of a financial instrument. This circumstance could cause an instrument to be reclassified between levels within the fair value hierarchy. There have been no material changes in the Company's valuation techniques during the period represented by these consolidated financial statements. The following methods and assumptions were used in estimating the fair value of each class of financial instrument recorded in the Consolidated Balance Sheets. (b) Level 1 and Level 2 assets measured at fair value Fixed maturity investments Fixed maturity investments included in Level 2 are U.S. government and government agency, non-U.S. government and government agency, states, municipalities, political subdivision, agency residential mortgage-backed, non-agency residential mortgage-backed, U.S. corporate, non-U.S. corporate, bank loans, catastrophe bonds and asset backed securities. In general, the Company's fixed maturity investment portfolios are priced using pricing services, such as index providers and pricing vendors, as well as broker quotations. The pricing vendors provide pricing for a high volume of liquid securities that are actively traded. For securities that do not trade on an exchange, the pricing services generally utilize market data and other observable inputs in matrix pricing models to determine month end prices. Prices are generally verified using third party data. Securities which are priced by an index provider are generally included in the index. In general, broker-dealers value securities through their trading desks based on observable inputs. The methodologies include mapping securities based on trade data, bids or offers, observed spreads, and performance on newly issued securities. Broker-dealers also determine valuations by observing secondary trading of similar securities. Prices obtained from broker quotations are considered non-binding, however they are based on observable inputs and by observing secondary trading of similar securities obtained from active, non-distressed markets. The Company considers these Level 2 inputs as they are corroborated with other market observable inputs. The techniques generally used to determine the fair value of the Company's fixed maturity investments are detailed below by asset class. U.S. government and government agency Level 2 - U.S. government and agency securities consist primarily of debt securities issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. Fixed maturity investments included in U.S. government and government agency securities are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources and integrate other observations from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The fair value of each security is individually computed using analytical models which incorporate option adjusted spreads and other daily interest rate data. Non-U.S. government and government agency Level 2 - Non-U.S. government and government agency securities consist of debt securities issued by non-U.S. governments and their agencies along with supranational organizations (also known as sovereign debt securities). Securities held in these sectors are primarily priced by pricing services who employ proprietary discounted cash flow models to value the securities. Key quantitative inputs for these models are daily observed benchmark curves for treasury, swap and high issuance credits. The pricing services then apply a credit spread for each security which is developed by in-depth and real time market analysis. For securities in which trade volume is low, the pricing services utilize data from more frequently traded securities with similar attributes. These models may also be supplemented by daily market and credit research for international markets. States, municipalities, political subdivision Level 2 - The Company's states, municipal and political subdivision portfolio contains debt securities issued by U.S. domiciled state and municipal entities. These securities are generally priced by independent pricing services using the techniques described for U.S. government and government agency securities described above. Agency residential mortgage-backed securities Level 2 - The Company's agency residential mortgage-backed investments are primarily priced by pricing services using a mortgage pool specific model which utilizes daily inputs from the active to be announced ("TBA") market which is very liquid, as well as the U.S. treasury market. The model also utilizes additional information, such as the weighted average maturity, weighted average coupon and other available pool level data which is provided by the sponsoring agency. Valuations are also corroborated with daily active market quotes. Non-agency residential mortgage-backed securities Level 2 - The Company's non-agency mortgage-backed investments include non-agency prime residential mortgage-backed fixed maturity investments. The Company has no fixed maturity investments classified as sub-prime held in its fixed maturity investments portfolio. Securities held in these sectors are primarily priced by pricing services using an option adjusted spread ("OAS") model or other relevant models, which principally utilize inputs including benchmark yields, available trade information or broker quotes, and issuer spreads. The pricing services also review collateral prepayment speeds, loss severity and delinquencies among other collateral performance indicators for the securities valuation, when applicable. U.S. corporate Level 2 - Corporate debt securities consist primarily of investment-grade debt of a wide variety of corporate issuers and industries. The Company's corporate fixed maturity investments are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources regarding the issuer of the security and obtain credit data, as well as other observations, from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The pricing services also consider the specific terms and conditions of the securities, including any specific features which may influence risk. In certain instances, securities are individually evaluated using a spread which is added to the U.S. treasury curve or a security specific swap curve as appropriate. Non - U.S. corporate Level 2 - Non - U.S. corporate debt securities consist primarily of investment-grade debt of a wide variety of non-U.S. corporate issuers and industries. The Company's non - U.S. corporate fixed maturity investments are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources regarding the issuer of the security and obtain credit data, as well as other observations, from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The pricing services also consider the specific terms and conditions of the securities, including any specific features which may influence risk. Bank loans Level 2 - The Company's bank loan investments consist primarily of below-investment-grade debt of a wide variety of corporate issuers and industries. The Company's bank loans are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources regarding the issuer of the security and obtain credit data, as well as other observations, from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The pricing services also consider the specific terms and conditions of the securities, including any specific features which may influence risk. Catastrophe bonds Level 2 - Catastrophe bonds are recorded at fair value and are based on broker or underwriter bid indications. Asset-backed securities Level 2 - Asset backed securities include mostly investment-grade debt securities backed by pools of loans with a variety of underlying collateral, including automobile loan receivables, student loans, credit card receivables, and CLO debt originated by a variety of financial institutions. Securities held in these sectors are primarily priced by pricing services. The pricing services apply dealer quotes and other available trade information such as bids and offers, prepayment speeds which may be adjusted for the underlying collateral or current price data, the U.S. treasury curve and swap curve as well as cash settlement. The pricing services determine the expected cash flows for each security held in this sector using historical prepayment and default projections for the underlying collateral and current market data. In addition, a spread is applied to the relevant benchmark and used to discount the cash flows noted above to determine the fair value of the securities held in this sector. Short term investments Level 1 & Level 2 - Short term investments consist primarily of highly liquid securities with maturities less than one year from the date of purchase. The fair value of the Company's portfolio of short term investments are generally determined using amortized cost which approximates fair value. These securities are classified within Level 2 because these securities are typically not actively traded due to their approaching maturity and, as such, their amortized cost approximates fair value. The Company determined that certain of its short-term investments held in highly liquid money market-type funds would be included in Level 1 as their fair values are based on quoted market prices in active markets. Mutual funds Level 2 -Mutual funds consist of two investment funds which are invested in various quoted investments. The fair value of units in the mutual funds is based on the net asset value of the fund as reported by the fund manager. (c) Level 3 assets measured at fair value Other investments Level 3 includes financial instruments that are valued using market approach and income approach valuation techniques. These models incorporate both observable and unobservable inputs. The Company's hedge funds, a fund of hedge funds and private equity investments are the only financial instruments in this category as at June 30, 2013. For each respective hedge fund investment, the Company obtains and reviews the valuation methodology used by the fund administrators and investment managers to ensure that the hedge fund investments are following fair value principles consistent with U.S. GAAP in determining the net asset value (“NAV”). Within the hedge fund industry, there is a general lack of transparency necessary to facilitate a detailed independent assessment of the values placed on the securities underlying the NAV provided by the fund manager or fund administrator. To address this, on a quarterly basis, we perform a number of monitoring procedures designed to assist us in the assessment of the quality of the information provided by managers and administrators. These procedures include, but are not limited to, regular review and discussion of each fund's performance with its manager and regular evaluation of fund performance against applicable benchmarks. Hedge funds The hedge funds were valued at $488,442 at June 30, 2013. The hedge funds consist of an investment in four Paulson & Co. managed funds (the "Paulson hedge funds") and three investment funds assumed from the Flagstone Acquisition (the "Flagstone investment funds"). The Paulson hedge funds' administrator provides monthly reported NAVs with a one-month delay in its valuation. As a result, the funds' administrator's May 31, 2013 NAV was used as a partial basis for fair value measurement in the Company's June 30, 2013 balance sheet. The fund manager provides an estimate of the NAV at June 30, 2013 based on estimated performance. The Company adjusts fair value to the fund manager's estimated NAV that incorporates relevant valuation sources on a timely basis. To determine the reasonableness of the estimated NAV, the Company assesses the variance between the fund manager's estimated NAV and the fund administrator's NAV. Material variances are recorded in the current reporting period while immaterial variances are recorded in the following reporting period. Historically, our valuation estimates have not materially differed from the subsequent NAVs. The Flagstone investment fund administrators provide either monthly or quarterly reported NAVs with a one-month or one-quarter delay in valuation, respectively. As a result, the May 31, 2013 NAV or the March 31, 2013 NAV was used as a basis for fair value measurement in the Company's June 30, 2013 balance sheet. As these valuation techniques incorporate both observable and significant unobservable inputs, both the Paulson hedge funds and the Flagstone investment funds are classified as Level 3 assets. The Paulson hedge funds are subject to quarterly liquidity. Private equity investments Private equity investments consist of an investment in three private equity funds assumed from the Flagstone Acquisition. The private equity investments respective fund administrator provides either monthly or quarterly NAVs with a one-month or one-quarter delay in valuation, respectively. As a result, the May 31, 2013 NAV or the March 31, 2013 NAV was used as a basis for fair value measurement in the Company's June 30, 2013 balance sheet. As this valuation technique incorporates both observable and significant unobservable inputs, the private equity investments are classified as Level 3 assets. Fund of hedge funds The fund of hedge funds includes a side pocket. While a redemption request has been submitted, the timing of receipt of proceeds on the side pocket is unknown. The fund's administrator provides a monthly reported NAV with a one-month delay in its valuation. As a result, the fund administrator's May 31, 2013 NAV was used as a basis for fair value measurement in the Company's June 30, 2013 balance sheet. The fund manager provides an estimate of the fund NAV at June 30, 2013 based on the estimated performance provided from the underlying third-party funds. To determine the reasonableness of the NAV, the Company compares the one-month delayed fund administrator's NAV to the fund manager's estimated NAV that incorporates relevant valuation sources on a timely basis. Material variances are recorded in the current reporting period while immaterial variances are recorded in the following reporting period. As this valuation technique incorporates both observable and significant unobservable inputs, the fund of hedge funds is classified as a Level 3 asset. At June 30, 2013, the Company’s investments were allocated between Levels 1, 2 and 3 as follows:
At December 31, 2012, the Company’s investments were allocated between Levels 1, 2 and 3 as follows:
At June 30, 2013, Level 3 investments excluding the noncontrolling interest totaled $82,265 (December 31, 2012: $123,497), representing 1.4% (December 31, 2012: 2.0%) of total investments, excluding noncontrolling interest, measured at fair value on a recurring basis. The following tables present a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs during the three and six months ended June 30, 2013 and 2012:
There have not been any transfers between Levels 1 and 2 during the three and six months ended June 30, 2013 or 2012. There have not been any transfers into or out of Level 3 during the three and six months ended June 30, 2013. During the three months ended June 30, 2012, there was a transfer of the private equity investment out of Level 3 "Other investments" to "Investment in affiliates." Refer to Note 5: "Investments in affiliates." |
Segment information
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment information | Segment information The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. and Talbot Holdings Ltd. from which three operating segments have been determined under U.S. GAAP segment reporting. During the first quarter of 2012, to better align the Company's operating and reporting structure with its current strategy, there was a change in the segment structure. This change included the AlphaCat group of companies as a separate operating segment. "AlphaCat segment" was included as an additional segment and includes the Company's investments in AlphaCat Re 2011, AlphaCat Re 2012, AlphaCat 2013, PaCRe and the AlphaCat ILS funds. The Company's operating segments are strategic business units that offer different products and services. They are managed and have capital allocated separately because each business requires different strategies. Validus Re Segment The Validus Re segment is focused on short-tail lines of reinsurance. The primary lines in which the segment conducts business are property, marine and specialty which includes agriculture, aerospace and aviation, financial lines of business, nuclear, terrorism, life, accident & health, workers' compensation, crisis management, contingency, motor, technical lines and composite. AlphaCat Segment The AlphaCat segment manages strategic relationships that leverage the Company's underwriting and investment expertise and earns management, performance and underwriting fees primarily from the Company's operating affiliates, AlphaCat Re 2011, AlphaCat Re 2012 and AlphaCat 2013 as well as investments in PaCRe and the AlphaCat ILS funds. Talbot Segment The Talbot segment focuses on a wide range of marine and energy, war, political violence, commercial property, financial institutions, contingency, accident & health and aviation classes of business on an insurance or facultative reinsurance basis and principally property, aerospace and marine classes of business on a treaty reinsurance basis. Corporate and other reconciling items The Company has a "Corporate" function, which includes the activities of the parent company, and which carries out certain functions for the group. "Corporate" includes non-core underwriting expenses, predominantly general and administrative and stock compensation expenses. "Corporate" also denotes the activities of certain key executives such as the Chief Executive Officer and Chief Financial Officer. For internal reporting purposes, "Corporate" is reflected separately, however "Corporate" is not considered an operating segment under these circumstances. Other reconciling items include, but are not limited to, the elimination of intersegment revenues and expenses and unusual items that are not allocated to segments. The following tables summarize the results of our operating segments and "Corporate":
The Company’s exposures are generally diversified across geographic zones. The following tables set forth the gross premiums written allocated to the territory of coverage exposure for the periods indicated:
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Debt and financing Arrangements (Components of finance expenses) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Components of financial expenses | ||||||||
Finance expenses | $ 37,830 | $ 13,706 | $ 62,276 | $ 29,985 | ||||
AlphaCat Variable Funding Notes
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Components of financial expenses | ||||||||
Finance expenses | 21,478 | [1] | 0 | 32,669 | [1] | 0 | ||
Credit Facilities
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Components of financial expenses | ||||||||
Finance expenses | 2,799 | 3,566 | 3,753 | 9,582 | ||||
Bank charges
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Components of financial expenses | ||||||||
Finance expenses | 99 | 126 | 232 | 183 | ||||
Talbot FAL Facility
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Components of financial expenses | ||||||||
Finance expenses | 32 | 32 | 63 | 63 | ||||
2006 Junior Subordinated Deferrable Debentures
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Components of financial expenses | ||||||||
Finance expenses | 2,211 | 1,552 | 4,398 | 3,101 | ||||
2007 Junior Subordinated Deferrable Debentures
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Components of financial expenses | ||||||||
Finance expenses | 1,835 | 2,832 | 3,644 | 5,861 | ||||
2010 Senior Notes Due 2040
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Components of financial expenses | ||||||||
Finance expenses | 5,598 | 5,598 | 11,195 | 11,195 | ||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
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Components of financial expenses | ||||||||
Finance expenses | 2,231 | 0 | 3,703 | 0 | ||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
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Components of financial expenses | ||||||||
Finance expenses | $ 1,547 | $ 0 | $ 2,619 | $ 0 | ||||
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Derivative instruments Derivative instruments not designated as hedging instruments (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Currency swap | Not Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, Notional Amount | $ 0 | $ 17,153 |
Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Number of derivative instruments held | 9 | |
Derivative, Notional Amount | 132,702 | 310,541 |
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, Notional Amount | 55,541 | 35,976 |
Accounts Payable and Accrued Liabilities [Member] | Currency swap | Not Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 0 | 772 |
Accounts Payable and Accrued Liabilities [Member] | Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 8,265 | 394 |
Accounts Payable and Accrued Liabilities [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 1,243 | 223 |
Other Assets [Member] | Currency swap | Not Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Other Assets [Member] | Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Other Assets [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member]
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | $ 383 | $ 0 |
Debt and financing arrangements
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and financing arrangements | Debt and financing arrangements
The financing structure at June 30, 2013 was:
The financing structure at December 31, 2012 was:
Finance expenses consist of interest on our junior subordinated deferrable debentures, junior subordinated deferrable interest notes, senior notes, variable funding notes, the amortization of debt offering costs, fees relating to our credit facilities, bank charges and the costs of FAL as follows:
On January 21, 2010, the Company offered and sold $250,000 of Senior Notes due 2040 (the “2010 Senior Notes”) in a registered public offering. The 2010 Senior Notes mature on January 26, 2040, and are redeemable at the Company’s option in whole any time or in part from time to time at a make-whole redemption price. The Company may redeem the notes in whole, but not in part, at any time upon the occurrence of certain tax events as described in the prospectus supplement of the 2010 Senior Notes. The 2010 Senior Notes bear interest at the rate of 8.875% per annum from January 26, 2010 to maturity or early redemption. Interest on the 2010 Senior Notes is payable semi-annually in arrears on January 26 and July 26 of each year, commencing on July 26, 2010. The net proceeds of $243,967 from the sale of the 2010 Senior Notes, after the deduction of commissions paid to the underwriters in the transaction and other expenses, was used by the Company for general corporate purposes, which included the repurchase of its outstanding capital stock and payment of dividends to shareholders. Debt issuance costs of $2,808 were deferred as an asset and amortized over the life of the 2010 Senior Notes. There were no redemptions made during the six months ended June 30, 2013 and 2012. The 2010 Senior Notes are unsecured and unsubordinated obligations of the Company and rank equally in right of payment with all of the Company’s existing and future unsecured and unsubordinated indebtedness. The 2010 Senior Notes will be effectively junior to all of the Company’s future secured debt, to the extent of the value of the collateral securing such debt, and will rank senior to all our existing and future subordinated debt. The 2010 Senior Notes are structurally subordinated to all obligations of the Company’s subsidiaries. Future expected payments of principal on the 2010 Senior Notes are as follows:
On June 15, 2006, the Company participated in a private placement of $150,000 of junior subordinated deferrable interest debentures due 2036 (the “2006 Junior Subordinated Deferrable Debentures”). The 2006 Junior Subordinated Deferrable Debentures mature on June 15, 2036, are redeemable at the Company’s option at par as of June 15, 2011, and require quarterly interest payments by the Company to the holders of the 2006 Junior Subordinated Deferrable Debentures. Interest was payable at 9.069% per annum through June 15, 2011, and thereafter at a floating rate of three-month LIBOR plus 355 basis points, reset quarterly. The proceeds of $150,000 from the sale of the 2006 Junior Subordinated Deferrable Debentures, after the deduction of commissions paid to the placement agents in the transaction and other expenses, were used by the Company to fund Validus Re segment operations and for general working capital purposes. Debt issuance costs of $3,750 were deferred as an asset and were amortized to income over the five year optional redemption period. There were no redemptions made during the six months ended June 30, 2013 and 2012. On June 21, 2007, the Company participated in a private placement of $200,000 of junior subordinated deferrable interest debentures due 2037 (the “2007 Junior Subordinated Deferrable Debentures”). The 2007 Junior Subordinated Deferrable Debentures mature on June 15, 2037, are redeemable at the Company’s option at par as of June 15, 2012, and require quarterly interest payments by the Company to the holders of the 2007 Junior Subordinated Deferrable Debentures. Interest was payable at 8.480% per annum through June 15, 2012, and thereafter at a floating rate of three-month LIBOR plus 295 basis points, reset quarterly. The proceeds of $200,000 from the sale of the 2007 Junior Subordinated Deferrable Debentures, after the deduction of commissions paid to the placement agents in the transaction and other expenses, were used by the Company to fund the purchase of Talbot Holdings Ltd. Debt issuance costs of $2,000 were deferred as an asset and were amortized to income over the five year optional redemption period. There were no redemptions made during the six months ended June 30, 2013 and 2012. As part of the Flagstone Acquisition, the Company assumed $136,926 of junior subordinated deferrable interest notes due 2036 (the “Flagstone 2006 Junior Subordinated Deferrable Interest Notes”). The Flagstone 2006 Junior Subordinated Deferrable Interest Notes mature on September 15, 2036, are redeemable at the Company's option at par beginning as of September 15, 2011, and require quarterly interest payments by the Company to the holders of the Flagstone 2006 Junior Subordinated Deferrable Interest Notes. Interest is payable at a floating rate of three-month LIBOR plus 354 basis points, reset quarterly. There were no redemptions made during the six months ended June 30, 2013 and 2012. As part of the Flagstone Acquisition, the Company assumed $113,750 of junior subordinated deferrable interest notes due 2037 (the “Flagstone 2007 Junior Subordinated Deferrable Interest Notes”). Of these, $88,750 of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes mature on July 30, 2037, are redeemable at the Company's option at par as of July 30, 2012, and require quarterly interest payments by the Company to the holders of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes. Interest is payable at a floating rate of three-month LIBOR plus 300 basis points, reset quarterly. The remaining $25,000 of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes mature on September 15, 2037, are redeemable at the Company's option at par as of September 15, 2012, and require quarterly interest payments by the Company to the holders of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes. Interest is payable at a floating rate of three-month LIBOR plus 310 basis points, reset quarterly. There were no redemptions made during the six months ended June 30, 2013 and 2012. Future expected payments of principal on the 2006 and 2007 Junior Subordinated Deferrable Debentures and Flagstone 2006 and 2007 Junior Subordinated Deferrable Interest Notes are as follows:
On March 9, 2012, the Company, Validus Re Americas, Ltd. ("Validus Re Americas"), PaCRe and Validus Re entered into a $400,000 four year unsecured credit facility with Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, N.A. as administrative agent, Lloyds Securities Inc. and Suntrust Bank, as co-documentation agents and the lenders party thereto, which provides for letter of credit availability for the Company and certain designated subsidiaries of the Company and revolving credit availability for the Company (the "Four Year Unsecured Facility") (the full $400,000 of which is available for letters of credit and/or revolving loans). The Four Year Unsecured Facility was provided by a syndicate of commercial banks arranged by J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Lloyds Securities Inc. and SunTrust Robinson Humphrey, Inc. Letters of credit under the Four Year Unsecured Facility are available to support obligations in connection with the insurance business of the Company and its subsidiaries. Loans under the Four Year Unsecured Facility are available for the general corporate and working capital purposes of the Company. The Company may request that existing lenders under the Four Year Unsecured Facility or prospective additional lenders agree to make available additional commitments from time to time so long as the aggregate commitments under the Four Year Unsecured Facility do not exceed $500,000. Letter of credit fees are payable on account of each letter of credit issued under the Four Year Unsecured Facility at a rate per annum equal to an applicable rate. Borrowings under the Four Year Unsecured Facility bear interest, at the option of the Company, at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, N.A., the federal funds effective rate plus 0.5%, and the adjusted LIBOR rate plus 1.0%) or the adjusted LIBOR rate applicable to such loans, plus an applicable rate. Also on March 9, 2012, the Company, Validus Re Americas and Validus Re entered into a $525,000 four-year secured credit facility with Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, N.A. as administrative agent, Lloyds Securities Inc. and Suntrust Bank, as co-documentation agents and the lenders party thereto, which provides for letter of credit availability for the Company and certain designated subsidiaries of the Company (the "Four Year Secured Facility" and together with the Four Year Unsecured Facility, the "Credit Facilities"). The Four Year Secured Facility was provided by a syndicate of commercial banks arranged by J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Lloyds Securities Inc. and SunTrust Robinson Humphrey, Inc. Letters of credit under the Four Year Secured Facility will be available to support obligations in connection with the insurance business of the Company and its subsidiaries. The Company may request that existing lenders under the Four Year Secured Facility or prospective additional lenders agree to make available additional commitments from time to time so long as the aggregate commitments under the Four Year Secured Facility do not exceed $700,000. The obligations of the Company and its designated subsidiaries under the Four Year Secured Facility are secured by cash and securities deposited into cash collateral accounts from time to time with The Bank of New York Mellon. Letter of credit fees are payable on account of each letter of credit issued under the Four Year Secured Facility at a rate per annum equal to an applicable rate. Borrowings under the Four Year Secured Facility bear interest at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, N.A., the federal funds effective rate plus 0.5%, and the adjusted LIBOR rate plus 1.0%). The Credit Facilities contain covenants that include, among other things (i) the requirement that the Company initially maintain a minimum level of consolidated net worth of at least $2,600,000 and, commencing with the end of the fiscal quarter ending March 31, 2012, to be increased quarterly by an amount equal to 50.0% of the Company's consolidated net income (if positive) for such quarter plus 50.0% of the aggregate increases in the consolidated shareholders' equity of the Company during such fiscal quarter by reason of the issuance and sale of common equity interests of the Company, including upon any conversion of debt securities of the Company into such equity interests, (ii) the requirement that the Company maintain at all times a consolidated total debt to consolidated total capital ratio not greater than 0.35:1.00, and (iii) the requirement that Validus Re and any other material insurance subsidiaries maintain a financial strength rating by A.M. Best of not less than "B++" (Fair). In addition, the Credit Facilities contain customary negative covenants applicable to the Company and its subsidiaries, including limitations on the ability to pay dividends and other payments in respect of equity interests at any time that the Company is otherwise in default with respect to certain provisions under the respective Credit Facilities, limitations on the ability to incur liens, sell assets, merge or consolidate with others, enter into transactions with affiliates, and limitations on the ability of its subsidiaries to incur indebtedness. The Credit Facilities also contain customary affirmative covenants, representations and warranties and events of default for credit facilities of its type. As of June 30, 2013, there was $373,318 in outstanding letters of credit under the Four Year Secured Facility (December 31, 2012: $376,570) and $nil outstanding under the Four Year Unsecured Facility (December 31, 2012: $nil). As of June 30, 2013, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Credit Facilities. On March 9, 2012, upon entering into the Credit Facilities, the Company terminated its (a) three-year bi-lateral $60,000 unsecured revolving credit facility, dated March 12, 2010 with Lloyds TSB Bank plc, (b) $340,000 three-year unsecured credit facility, dated March 12, 2010 with Deutsche Bank Securities Inc., as syndication agent and JPMorgan Chase Bank, N.A. as administrative agent and (c) $500,000 five-year secured credit facility, dated March 12, 2007 with Deutsche Bank Securities Inc., as syndication agent and JPMorgan Chase Bank, N.A. as administrative agent. No early termination penalties were incurred.
On November 28, 2007, Talbot entered into a $100,000 standby Letter of Credit facility (the “Talbot FAL Facility”) to provide Funds at Lloyd’s for the 2008 and 2009 underwriting years of account; this facility is guaranteed by the Company and is secured against the assets of Validus Re. The Talbot FAL Facility was provided by a syndicate of commercial banks arranged by Lloyds TSB Bank plc and ING Bank N.V., London Branch. On November 19, 2009, the Company entered into an Amendment and Restatement of the Talbot FAL Facility to reduce the commitment from $100,000 to $25,000, and to extend the support to the 2010 and 2011 underwriting years of account. On November 18, 2011, the Company entered into an Amendment and Restatement of the Talbot FAL Facility to extend the support to the 2012 and 2013 underwriting years of account. As amended, the Talbot FAL Facility contains affirmative covenants that include, among other things, (i) the requirement that the Company initially maintain a minimum level of consolidated net worth of at least $2,589,615, and commencing with the end of the fiscal quarter ended December 31, 2011 to be increased quarterly by an amount equal to 50% of our consolidated net income (if positive) for such quarter plus 50% of any net proceeds received from any issuance of common shares during such quarter, and (ii) the requirement that we maintain at all times a consolidated total debt to consolidated total capitalization ratio not greater than 0.35:1.00. The Talbot FAL Facility also contains restrictions on our ability to incur debt at our subsidiaries, incur liens, sell assets and merge or consolidate with others. Other than in respect of existing and future preferred and hybrid securities, the payment of dividends and other payments in respect of equity interests are not permitted at any time that we are in default with respect to certain provisions under the Talbot FAL Facility. As of June 30, 2013, the Company had $25,000 (December 31, 2012: $25,000) in outstanding letters of credit under this facility. As of June 30, 2013, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Talbot FAL Facility.
IPC obtained letters of credit through the IPC Syndicated Facility and the IPC Bi-Lateral Facility. In July 2009, certain terms of these facilities were amended including suspending IPC’s ability to increase existing letters of credit or to issue new letters of credit. Effective March 31, 2010, the IPC Syndicated Facility was closed. During the three months ended June 30, 2013, the commitment of the facility was reduced from $80,000 to $40,000. As of June 30, 2013, $24,788 of outstanding letters of credit were issued under the IPC bi-lateral facility (December 31, 2012: $40,613). As of June 30, 2013, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the IPC bi-lateral facility. (iv) $200,000 secured bi-lateral letter of credit facility On August 10, 2009, Validus Re entered into an uncommitted secured bi-lateral letter of credit facility with Citibank Europe plc (the “secured bi-lateral letter of credit facility”). Letters of credit were first issued under the Secured Bi-Lateral Letter of Credit Facility during the first quarter of 2012. During the three months ended June 30, 2013, the commitment of the facility was reduced from $500,000 to $200,000. As of June 30, 2013, $73,532 of letters of credit were outstanding under the Secured Bi-Lateral Letter of Credit Facility (December 31, 2012: $92,402). The secured bi-lateral letter of credit facility has no fixed termination date and as of June 30, 2013, Validus Re was in compliance with all terms and covenants thereof. (v) $10,000 PaCRe Senior secured letter of credit facility On May 11, 2012, PaCRe (as Borrower) and its subsidiary, PaCRe Investments, Ltd. (as Guarantor) entered into a 364-Day secured revolving credit and letter of credit facility with JPMorgan Chase Bank, N.A. This facility provides for revolving borrowings by the Borrower and for letters of credit issued by the Borrower to be used to support its reinsurance obligations in aggregate amount of $10,000. As of June 30, 2013, $258 of letters of credit were outstanding under this facility (December 31, 2012: $219). As of June 30, 2013, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the PaCRe Senior secured letter of credit facility. (vi) $375,000 Flagstone bi-lateral facility As part of the Flagstone Acquisition, the Company assumed a Letters of Credit Master Agreement between Citibank Europe Plc and Flagstone Reassurance Suisse, S.A. (the “Flagstone bi-lateral facility”). During the three months ended June 30, 2013, the commitment of the facility was reduced from $550,000 to $375,000. At June 30, 2013, the Flagstone bi-lateral facility had $313,398 letters of credit issued and outstanding (December 31, 2012: $381,019). As of June 30, 2013, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Flagstone bi-lateral facility. |
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Schedule of Debt and Financing Arrangements [Table Text Block] | The financing structure at June 30, 2013 was:
The financing structure at December 31, 2012 was:
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Fair value measurements (Fair value hierarchy) (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | $ 5,318,993 | $ 5,085,334 | ||||
Short-term investments, at fair value | 609,778 | 1,114,250 | ||||
Other investments, at fair value | 514,385 | 564,448 | ||||
Total | 6,443,156 | 6,764,032 | ||||
Noncontrolling interest | (422,893) | (432,737) | [1] | |||
Total investments excluding noncontrolling interest | 6,020,263 | 6,331,295 | ||||
U.S. government and government agency
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 1,206,220 | 1,099,230 | ||||
Non-US government and government agency
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 381,024 | 302,279 | ||||
States, municipalities, political subdivision
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||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 44,293 | 42,063 | ||||
Agency residential mortgage-backed securities
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 345,514 | 388,874 | ||||
Non-Agency residential mortgage-backed securities
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 24,636 | 106,456 | ||||
U.S. corporate
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 1,373,530 | 1,210,173 | ||||
Non-U.S. corporate
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 666,097 | 593,265 | ||||
Bank loans
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 754,619 | 673,383 | ||||
Catastrophe bonds
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 54,763 | 56,947 | ||||
Asset-backed securities
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 468,297 | 612,664 | ||||
Fund of hedge funds
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 3,028 | 4,757 | ||||
Private equity investments
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 13,688 | 12,951 | ||||
Hedge funds
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 488,442 | 538,526 | ||||
Mutual funds
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 9,227 | 8,214 | ||||
PaCRe funds
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Noncontrolling Interest, Ownership Percentage by Parent | 10.00% | |||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 90.00% | |||||
Fair Value, Measurements, Recurring [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 5,318,993 | 5,085,334 | ||||
Short-term investments, at fair value | 609,778 | 1,114,250 | ||||
Other investments, at fair value | 514,385 | 564,448 | ||||
Total | 6,443,156 | 6,764,032 | ||||
Noncontrolling interest | (422,893) | [1] | (432,737) | |||
Total investments excluding noncontrolling interest | 6,020,263 | 6,331,295 | ||||
Fair Value, Measurements, Recurring [Member] | U.S. government and government agency
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 1,206,220 | 1,099,230 | ||||
Fair Value, Measurements, Recurring [Member] | Non-US government and government agency
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 381,024 | 302,279 | ||||
Fair Value, Measurements, Recurring [Member] | States, municipalities, political subdivision
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 44,293 | 42,063 | ||||
Fair Value, Measurements, Recurring [Member] | Agency residential mortgage-backed securities
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 345,514 | 388,874 | ||||
Fair Value, Measurements, Recurring [Member] | Non-Agency residential mortgage-backed securities
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 24,636 | 106,456 | ||||
Fair Value, Measurements, Recurring [Member] | U.S. corporate
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 1,373,530 | 1,210,173 | ||||
Fair Value, Measurements, Recurring [Member] | Non-U.S. corporate
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 666,097 | 593,265 | ||||
Fair Value, Measurements, Recurring [Member] | Bank loans
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 754,619 | 673,383 | ||||
Fair Value, Measurements, Recurring [Member] | Catastrophe bonds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 54,763 | 56,947 | ||||
Fair Value, Measurements, Recurring [Member] | Asset-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 468,297 | 612,664 | ||||
Fair Value, Measurements, Recurring [Member] | Fund of hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 3,028 | 4,757 | ||||
Fair Value, Measurements, Recurring [Member] | Private equity investments
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 13,688 | 12,951 | ||||
Fair Value, Measurements, Recurring [Member] | Hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 488,442 | [1] | 538,526 | |||
Fair Value, Measurements, Recurring [Member] | Mutual funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 9,227 | 8,214 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Short-term investments, at fair value | 583,518 | 1,063,175 | ||||
Other investments, at fair value | 0 | 0 | ||||
Total | 583,518 | 1,063,175 | ||||
Noncontrolling interest | 0 | [1] | 0 | |||
Total investments excluding noncontrolling interest | 583,518 | 1,063,175 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | U.S. government and government agency
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Non-US government and government agency
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | States, municipalities, political subdivision
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Agency residential mortgage-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Non-Agency residential mortgage-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | U.S. corporate
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Non-U.S. corporate
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Bank loans
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Catastrophe bonds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Asset-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Fund of hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Private equity investments
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 1 | Hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 0 | [1] | 0 | |||
Fair Value, Measurements, Recurring [Member] | Level 1 | Mutual funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 5,318,993 | 5,085,334 | ||||
Short-term investments, at fair value | 26,260 | 51,075 | ||||
Other investments, at fair value | 9,227 | 8,214 | ||||
Total | 5,354,480 | 5,144,623 | ||||
Noncontrolling interest | 0 | [1] | 0 | |||
Total investments excluding noncontrolling interest | 5,354,480 | 5,144,623 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | U.S. government and government agency
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 1,206,220 | 1,099,230 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Non-US government and government agency
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 381,024 | 302,279 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | States, municipalities, political subdivision
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 44,293 | 42,063 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Agency residential mortgage-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 345,514 | 388,874 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Non-Agency residential mortgage-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 24,636 | 106,456 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | U.S. corporate
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 1,373,530 | 1,210,173 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Non-U.S. corporate
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 666,097 | 593,265 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Bank loans
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 754,619 | 673,383 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Catastrophe bonds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 54,763 | 56,947 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Asset-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 468,297 | 612,664 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Fund of hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Private equity investments
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 2 | Hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 0 | [1] | 0 | |||
Fair Value, Measurements, Recurring [Member] | Level 2 | Mutual funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 9,227 | 8,214 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Short-term investments, at fair value | 0 | 0 | ||||
Other investments, at fair value | 505,158 | 556,234 | ||||
Total | 505,158 | 556,234 | ||||
Noncontrolling interest | (422,893) | [1] | (432,737) | |||
Total investments excluding noncontrolling interest | 82,265 | 123,497 | ||||
Percentage Of Fair Value Assets Measured On Recurring Basis | 1.40% | 2.00% | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | U.S. government and government agency
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Non-US government and government agency
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | States, municipalities, political subdivision
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Agency residential mortgage-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Non-Agency residential mortgage-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | U.S. corporate
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Non-U.S. corporate
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Bank loans
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Catastrophe bonds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Asset-backed securities
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fixed maturities, at fair value | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Fund of hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 3,028 | 4,757 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Private equity investments
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 13,688 | 12,951 | ||||
Fair Value, Measurements, Recurring [Member] | Level 3 | Hedge funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | 488,442 | [1] | 538,526 | |||
Fair Value, Measurements, Recurring [Member] | Level 3 | Mutual funds
|
||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Other investments, at fair value | $ 0 | $ 0 | ||||
|
Derivative instruments used in hedging activities (Amount and balance sheet location) (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
derivatives
|
Dec. 31, 2012
|
---|---|---|
Not Designated as Hedging Instrument [Member] | Foreign exchange contracts
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Notional amount | $ 132,702 | $ 310,541 |
Number of instruments held: | ||
Number of derivative instruments held | 9 | |
Not Designated as Hedging Instrument [Member] | Foreign exchange contracts | Other assets
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Not Designated as Hedging Instrument [Member] | Foreign exchange contracts | Accounts Payable and Accrued Liabilities [Member]
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Fair value, derivative liabilities | 8,265 | 394 |
Not Designated as Hedging Instrument [Member] | Currency swap
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Notional amount | 0 | 17,153 |
Not Designated as Hedging Instrument [Member] | Currency swap | Other assets
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Not Designated as Hedging Instrument [Member] | Currency swap | Accounts Payable and Accrued Liabilities [Member]
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Fair value, derivative liabilities | 0 | 772 |
Designated as hedging instruments | Interest rate swap contracts
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Notional amount | 552,263 | 289,800 |
Designated as hedging instruments | Interest rate swap contracts | Other assets
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Designated as hedging instruments | Interest rate swap contracts | Accounts Payable and Accrued Liabilities [Member]
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Fair value, derivative liabilities | 787 | 220 |
Designated as hedging instruments | Foreign exchange contracts
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Notional amount | 55,541 | 35,976 |
Designated as hedging instruments | Foreign exchange contracts | Other assets
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Derivative Asset, Fair Value, Gross Asset | 383 | 0 |
Designated as hedging instruments | Foreign exchange contracts | Accounts Payable and Accrued Liabilities [Member]
|
||
Summary of amount of derivatives designated as hedging instruments | ||
Fair value, derivative liabilities | $ 1,243 | $ 223 |
Junior subordinated deferrable debentures | Interest rate swap contracts
|
||
Number of instruments held: | ||
Number of derivative instruments held | 2 | |
Flagstone Junior subordinated deferrable debentures | Interest rate swap contracts
|
||
Number of instruments held: | ||
Number of derivative instruments held | 3 | |
Flagstone Junior subordinated deferrable debentures | Cross currency interest rate swap
|
||
Number of instruments held: | ||
Number of derivative instruments held | 1 |
Accumulated Other Comprehensive Income (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The changes in accumulated other comprehensive income ("AOCI"), by component for the three and six months ended June 30, 2013 are as follows:
|
Investments (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments | The amortized cost (or cost), gross unrealized gains and (losses) and estimated fair value of investments at June 30, 2013 were as follows:
The amortized cost (or cost), gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2012 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment ratings on fixed maturities |
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Fixed maturities investments by contractual maturity |
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Net investment income | Net investment income was derived from the following sources:
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Analysis of net realized gains and change in unrealized (losses) gains on investments | The following represents an analysis of net realized gains (losses) and the change in net unrealized (losses) on investments:
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Investments pledged as collateral under credit facilities | The following tables outline investments pledged as collateral under the Company's credit facilities. For further details of the credit facilities, please refer to Note 12: “Debt and financing arrangements.”
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Significant accounting policies (Policies)
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6 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
Basis of preparation | These unaudited consolidated financial statements include Validus Holdings, Ltd. and its subsidiaries (together, the "Company") and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 in Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In addition, the year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. This Quarterly Report should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2012, as filed with the U.S. Securities and Exchange Commission (the "SEC"). In the opinion of management, these unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position and results of operations as at the end of and for the periods presented. Certain amounts in prior periods have been reclassified to conform to current period presentation. All intercompany accounts and transactions have been eliminated. |
Use of estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The significant estimates reflected in the Company's consolidated financial statements include the reserve for losses and loss expenses, premium estimates for business written on a line slip or proportional basis, the valuation of goodwill and intangible assets, reinsurance premiums ceded and reinsurance recoverable balances including the provision for unrecoverable reinsurance recoverable balances and investment valuation. Actual results could differ materially from those estimates. |
Reserves for losses and loss expenses | Reserves for losses and loss expenses are based in part upon the estimation of case reserves reported from brokers, insureds and ceding companies. The Company also uses statistical and actuarial methods to estimate ultimate expected losses and loss expenses. The period of time from the occurrence of a loss, the reporting of a loss to the Company and the settlement of the Company's liability may be several months or years. During this period, additional facts and trends may be revealed. As these factors become apparent, case reserves will be adjusted, sometimes requiring an increase or decrease in the overall reserves of the Company, and at other times requiring a reallocation of incurred but not reported reserves to specific case reserves. These estimates are reviewed and adjusted regularly, and such adjustments, if any, are reflected in earnings in the period in which they become known. While management believes that it has made a reasonable estimate of ultimate losses, there can be no assurances that ultimate losses and loss expenses will not exceed the total reserves. |
Reinsurance | The Company enters into reinsurance and retrocession agreements in order to mitigate its accumulation of loss, reduce its liability on individual risks, enable it to underwrite policies with higher limits and increase its aggregate capacity. The cession of insurance and reinsurance does not legally discharge the Company from its primary liability for the full amount of the policies, and the Company is required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance or retrocession agreement. Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying liabilities. The Company uses a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are reinsurance recoverable balances by reinsurer and default factors used to determine the portion of a reinsurer's balance deemed to be uncollectible. Default factors require considerable judgment and are determined using the current rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions. To estimate the provision for uncollectible reinsurance recoverable, the reinsurance recoverable is first allocated to applicable reinsurers. This determination is based on a process rather than an estimate, although an element of judgment is applied. |
Investments (Realized and unrealized gains) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
|
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Fixed maturities, short-term and other investments and cash equivalents | ||||
Gross realized gains | $ 7,152 | $ 9,415 | $ 17,872 | $ 19,423 |
Gross realized (losses) | (3,743) | (3,261) | (12,742) | (5,737) |
Net realized gains on investments | 3,409 | 6,154 | 5,130 | 13,686 |
Change in net unrealized gains (losses) on investments | (141,348) | (53,574) | (148,585) | (32,903) |
Total net realized gains and change in net unrealized gains (losses) on investments | (137,939) | (47,420) | (143,455) | (19,217) |
Noncontrolling interest | 63,694 | 44,882 | 68,345 | 44,882 |
Total net realized gains and change in net unrealized gains (losses) on investments excluding noncontrolling interest | (74,245) | (2,538) | (75,110) | 25,665 |
Securities lending
|
||||
Fixed maturities, short-term and other investments and cash equivalents | ||||
Change in net unrealized gains (losses) on investments | 0 | 0 | 0 | 37 |
Investments excluding securities lending
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||||
Fixed maturities, short-term and other investments and cash equivalents | ||||
Change in net unrealized gains (losses) on investments | $ (141,348) | $ (53,574) | $ (148,585) | $ (32,940) |
Share capital (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of common shares issued and outstanding | The following table is a summary of the common shares issued and outstanding:
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Segment information (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of results of operating segments and corporate | The following tables summarize the results of our operating segments and "Corporate":
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Gross premiums written allocated to the territory of coverage exposure | The following tables set forth the gross premiums written allocated to the territory of coverage exposure for the periods indicated:
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Fair value measurements (Level 3 rollforward) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
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Dec. 31, 2012
|
Jun. 30, 2013
Other Investments
|
Jun. 30, 2012
Other Investments
|
Jun. 30, 2013
Other Investments
|
Jun. 30, 2012
Other Investments
|
Jun. 30, 2013
Fair Value, Measurements, Recurring [Member]
|
Dec. 31, 2012
Fair Value, Measurements, Recurring [Member]
|
Jun. 30, 2013
Level 3
Fair Value, Measurements, Recurring [Member]
|
Dec. 31, 2012
Level 3
Fair Value, Measurements, Recurring [Member]
|
Jun. 30, 2013
Level 3
Fair Value, Measurements, Recurring [Member]
Other Investments
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Jun. 30, 2012
Level 3
Fair Value, Measurements, Recurring [Member]
Other Investments
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Jun. 30, 2013
Level 3
Fair Value, Measurements, Recurring [Member]
Other Investments
|
Jun. 30, 2012
Level 3
Fair Value, Measurements, Recurring [Member]
Other Investments
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Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis | |||||||||||||||||||
Level 3 investments - beginning of period | $ 523,693 | $ 8,325 | $ 556,234 | $ 8,880 | |||||||||||||||
Purchases | 65,056 | 500,000 | 65,515 | 500,000 | |||||||||||||||
Sales | (13,498) | (277) | (44,831) | (896) | |||||||||||||||
Realized gains | 300 | 21 | 340 | 48 | |||||||||||||||
Unrealized losses | (70,393) | (48,494) | (72,100) | (49,986) | |||||||||||||||
Transfers | 0 | (4,782) | 0 | (3,253) | |||||||||||||||
Level 3 investments - end of period | 505,158 | 454,793 | 505,158 | 454,793 | |||||||||||||||
Noncontrolling interest | (422,893) | (432,737) | [1] | (422,893) | [1] | (432,737) | (422,893) | [1] | (432,737) | (422,893) | (405,118) | (422,893) | (405,118) | ||||||
Investments excluding noncontrolling interest level three rollforward | $ 82,265 | $ 49,675 | $ 82,265 | $ 49,675 | |||||||||||||||
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Derivative instruments used in hedging activities (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Location and fair value amount of derivative instruments reported on the balance sheet | The following table summarizes information on the location and amount of the fair value of derivatives not designated as hedging instruments on the consolidated balance sheet at June 30, 2013 and December 31, 2012:
Asset and liability derivatives are classified within other assets and accounts payable and accrued expenses on the Consolidated Balance Sheets. The following table summarizes information on the location and amount of the fair value of derivatives designated as hedging instruments on the consolidated balance sheet at June 30, 2013 and December 31, 2012:
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Location and amount of gains and losses related to derivative instruments reported on in the income statement | The following table provides the total impact on earnings relating to the derivative instruments formally designated as fair value hedges along with the impact of the related hedged items for the three and six months ended June 30, 2013 and 2012:
The gain (loss) is recognized in income within foreign exchange gains (losses). The following table provides the total impact on other comprehensive income and earnings relating to the derivative instruments formally designated as cash flow hedges along with the impact of the related hedged items for the three and six months ended June 30, 2013:
The above balances relate to interest paid and have been classified as finance expenses in the consolidated statements of comprehensive income. There was no interest rate swap contract activity for the three and six months ended June 30, 2012 |
Stock plans (Components of share compensation expenses) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Total share compensation expenses | ||||
Share compensation expenses | $ 6,638 | $ 6,800 | $ 8,956 | $ 12,238 |
Options
|
||||
Total share compensation expenses | ||||
Share compensation expenses | 0 | 7 | 0 | 142 |
Restricted share awards
|
||||
Total share compensation expenses | ||||
Share compensation expenses | 5,933 | 6,176 | 9,994 | 12,116 |
Restricted share units
|
||||
Total share compensation expenses | ||||
Share compensation expenses | 130 | 111 | 251 | 231 |
Performance shares
|
||||
Total share compensation expenses | ||||
Share compensation expenses | $ 575 | $ 506 | $ (1,289) | $ (251) |
Commitments and contingencies (Investment portfolio) (Details) (Concentrations of credit risk)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Investment portfolio excluding government and agency securities
|
|
Concentrations Of Credit Risk [Abstract] | |
Maximum aggregate exposure to single issuer, allowed | 3.00% |
Aggregate exposure to single issuer, actual | 1.10% |
Investment portfolio excluding bank loans
|
|
Concentrations Of Credit Risk [Abstract] | |
Holding in aggregate market value permitted with written pre-authorization | 10.00% |
Minimum credit rating of any security purchased | Baa3/BBB- |
Allowable percentage holding in downgraded investments | 2.00% |
Percent of investment portfolio with a credit rating below the minimum required credit rating of Baa3/BBB- | 1.30% |
Total investment portfolio | Bank loans
|
|
Concentrations Of Credit Risk [Abstract] | |
Total investment portfolio, fair value | 11.70% |
Stock plans (Other awards activity) (Details) (USD $)
|
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Restricted share awards
|
||
Activities | ||
Beginning balance | 2,170,547 | 3,003,547 |
Granted | 1,491,967 | 900,725 |
Vested | (890,600) | (803,917) |
Forfeited | (107,221) | (30,801) |
Ending balance | 2,664,693 | 3,069,554 |
Weighted average grant date fair value | ||
Weighted average grant date fair value, beginning balance | $ 29.24 | $ 25.77 |
Weighted average grant date fair value, granted | $ 36.10 | $ 31.38 |
Weighted average grant date fair value, vested | $ 27.99 | $ 25.93 |
Weighted average grant date fair value, forfeited | $ 28.15 | $ 28.10 |
Weighted average grant date fair value, ending balance | $ 33.54 | $ 27.35 |
Restricted share units
|
||
Activities | ||
Beginning balance | 47,238 | 53,312 |
Granted | 36,635 | 13,625 |
Vested | (21,814) | (18,175) |
Issued in lieu of cash dividends | 3,380 | 789 |
Forfeited | (1,150) | |
Ending balance | 65,439 | 48,401 |
Weighted average grant date fair value | ||
Weighted average grant date fair value, beginning balance | $ 29.61 | $ 27.60 |
Weighted average grant date fair value, granted | $ 36.11 | $ 31.38 |
Weighted average grant date fair value, vested | $ 28.17 | $ 26.58 |
Weighted average grant date fair value, issued in lieu of cash dividends | $ 29.74 | $ 28.01 |
Weighted average grant date fair value, forfeited | $ 30.07 | |
Weighted average grant date fair value, ending balance | $ 33.74 | $ 29.00 |
Performance shares
|
||
Activities | ||
Beginning balance | 220,845 | 279,019 |
Granted | 38,386 | 41,128 |
Vested | (39,094) | |
Forfeited | (18,701) | (99,302) |
Conversion adjustment | (99,616) | |
Ending balance | 101,820 | 220,845 |
Weighted average grant date fair value | ||
Weighted average grant date fair value, beginning balance | $ 31.81 | $ 30.77 |
Weighted average grant date fair value, granted | $ 36.11 | $ 31.38 |
Weighted average grant date fair value, vested | $ 28.70 | |
Weighted average grant date fair value, forfeited | $ 31.05 | $ 28.70 |
Weighted average grant date fair value, conversion adjustment | $ 33.05 | |
Weighted average grant date fair value, ending balance | $ 33.56 | $ 31.81 |
Investments (Fixed maturities by investment rating) (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Fixed Maturities | ||
Estimated fair value | $ 5,318,993 | $ 5,085,334 |
Percentage of total | 100.00% | 100.00% |
AAA
|
||
Fixed Maturities | ||
Estimated fair value | 768,907 | 1,062,794 |
Percentage of total | 14.40% | 20.90% |
AA
|
||
Fixed Maturities | ||
Estimated fair value | 2,127,840 | 1,862,322 |
Percentage of total | 40.00% | 36.60% |
A
|
||
Fixed Maturities | ||
Estimated fair value | 1,216,451 | 1,049,969 |
Percentage of total | 22.90% | 20.60% |
BBB
|
||
Fixed Maturities | ||
Estimated fair value | 408,034 | 374,447 |
Percentage of total | 7.70% | 7.40% |
Investment Grade
|
||
Fixed Maturities | ||
Estimated fair value | 4,521,232 | 4,349,532 |
Percentage of total | 85.00% | 85.50% |
BB
|
||
Fixed Maturities | ||
Estimated fair value | 356,521 | 373,907 |
Percentage of total | 6.70% | 7.40% |
B
|
||
Fixed Maturities | ||
Estimated fair value | 409,962 | 330,416 |
Percentage of total | 7.70% | 6.50% |
CCC
|
||
Fixed Maturities | ||
Estimated fair value | 4,081 | 4,483 |
Percentage of total | 0.10% | 0.10% |
CC
|
||
Fixed Maturities | ||
Estimated fair value | 3,023 | 3,259 |
Percentage of total | 0.00% | 0.10% |
D/NR
|
||
Fixed Maturities | ||
Estimated fair value | 24,174 | 23,737 |
Percentage of total | 0.50% | 0.40% |
Non Investment Grade
|
||
Fixed Maturities | ||
Estimated fair value | $ 797,761 | $ 735,802 |
Percentage of total | 15.00% | 14.50% |
Debt and financing Arrangements (Text) (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Mar. 31, 2013
|
Dec. 31, 2012
|
||||||||
Senior Notes and Junior Debentures | ||||||||||
Long-term debt, drawn | $ 787,620 | $ 787,799 | ||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 1,575,000 | 2,090,000 | ||||||||
Credit Facilities
|
||||||||||
Credit Facilities | ||||||||||
Minimum level of consolidated net worth | 2,600,000 | |||||||||
Percent of consolidated net income quarterly increase under covenant | 50.00% | |||||||||
Percent of any net proceeds from issuance of common shares | 50.00% | |||||||||
Ratio consolidated total debt to net worth under covenant | 0.35:1.00 | |||||||||
Four-year syndicated unsecured credit facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 400,000 | 400,000 | ||||||||
Letter of credit facility period | 4 years | |||||||||
Letter of credit facility amount issued and outstanding | 0 | [1] | 0 | [1] | ||||||
Line of credit facility initiation date | Mar. 09, 2012 | |||||||||
Description of interest rate basis | The borrowings bear interest, at the option of the Company, at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, the federal funds effective rate plus 0.50%, and the adjusted LIBOR rate plus 1.0%) or the adjusted LIBOR rate applicable to such loans, plus an applicable rate. | |||||||||
Four-year syndicated secured credit facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 525,000 | 525,000 | ||||||||
Letter of credit facility period | 4 years | |||||||||
Aggregate commitments, maximum | 700,000 | |||||||||
Letter of credit facility amount issued and outstanding | 373,318 | [1] | 376,570 | [1] | ||||||
Line of credit facility initiation date | Mar. 09, 2012 | |||||||||
Description of interest rate basis | The borrowings bear interest at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, NA, the federal funds effective rate plus 0,50%, and the adjusted LIBOR rate plus 1.0%). | |||||||||
Four-year syndicated secured credit facility | Maximum
|
||||||||||
Credit Facilities | ||||||||||
Basis spread on variable rate | 0.010 | |||||||||
Four-year syndicated secured credit facility | Minimum
|
||||||||||
Credit Facilities | ||||||||||
Basis spread on variable rate | 0.005 | |||||||||
Syndicated unsecured letter of credit facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 400,000 | 400,000 | ||||||||
Aggregate commitments, maximum | 500,000 | |||||||||
Syndicated unsecured letter of credit facility | Maximum
|
||||||||||
Credit Facilities | ||||||||||
Basis spread on variable rate | 0.010 | |||||||||
Syndicated unsecured letter of credit facility | Minimum
|
||||||||||
Credit Facilities | ||||||||||
Basis spread on variable rate | 0.005 | |||||||||
Bilateral unsecured letter of credit facility | Terminated Credit Facilities [Member]
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 60,000 | |||||||||
Letter of credit facility period | 3 years | |||||||||
Three year unsecured letter of credit facility | Terminated Credit Facilities [Member]
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 340,000 | |||||||||
Letter of credit facility period | 3 years | |||||||||
Five year secured letter of credit facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 525,000 | 525,000 | ||||||||
Five year secured letter of credit facility | Terminated Credit Facilities [Member]
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 500,000 | |||||||||
Letter of credit facility period | 5 years | |||||||||
Talbot FAL Facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 25,000 | [2] | 25,000 | [2] | ||||||
Letter of credit facility amount issued and outstanding | 25,000 | [1],[2] | 25,000 | [1],[2] | ||||||
Letter of credit facility, original commitment amount | 100,000 | |||||||||
Line of credit facility initiation date | Nov. 28, 2007 | |||||||||
Minimum level of consolidated net worth | 2,589,615 | |||||||||
Percent of consolidated net income quarterly increase under covenant | 50.00% | |||||||||
Percent of any net proceeds from issuance of common shares | 50.00% | |||||||||
Ratio consolidated total debt to net worth under covenant | 0.35:1.00 | |||||||||
IPC Bi Lateral Facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 40,000 | [1] | 80,000 | [1] | 80,000 | |||||
Letter of credit facility amount issued and outstanding | 24,788 | [1] | 40,613 | [1] | ||||||
Bi-lateral secured facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 200,000 | 500,000 | 500,000 | |||||||
Letter of credit facility amount issued and outstanding | 73,532 | [1] | 92,402 | [1] | ||||||
Line of credit facility initiation date | Aug. 10, 2009 | |||||||||
PaCRe Senior secured letter of credit facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 10,000 | 10,000 | ||||||||
Letter of credit facility period | 364 days | |||||||||
Letter of credit facility amount issued and outstanding | 258 | [1] | 219 | [1] | ||||||
Line of credit facility initiation date | May 11, 2012 | |||||||||
Flagstone BiLateral Facility
|
||||||||||
Credit Facilities | ||||||||||
Credit facility, commitment | 375,000 | 550,000 | 550,000 | |||||||
Letter of credit facility amount issued and outstanding | 313,398 | [1] | 381,019 | [1] | ||||||
2006 Junior Subordinated Deferrable Debentures
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Debt instrument issuance date | Jun. 15, 2006 | |||||||||
Debt instrument maturity date | Jun. 15, 2036 | |||||||||
Frequency of required payments | quarterly | |||||||||
Debt issuance cost | 3,750 | |||||||||
Length of optional redemption period | 5 years | |||||||||
Debt instrument, outstanding | 150,000 | [1] | 150,000 | [1] | ||||||
Debt instrument, commitment | 150,000 | 150,000 | ||||||||
Long-term debt, drawn | 150,000 | 150,000 | ||||||||
Start of optional redemption period | Jun. 15, 2011 | |||||||||
Gross proceeds on issuance of junior subordinated deferrable debentures | 150,000 | |||||||||
2007 Junior Subordinated Deferrable Debentures
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Debt instrument issuance date | Jun. 21, 2007 | |||||||||
Debt instrument maturity date | Jun. 15, 2037 | |||||||||
Frequency of required payments | quarterly | |||||||||
Debt issuance cost | 2,000 | |||||||||
Length of optional redemption period | 5 years | |||||||||
Debt instrument, outstanding | 139,800 | [1] | 139,800 | [1] | ||||||
Debt instrument, commitment | 200,000 | 200,000 | ||||||||
Long-term debt, drawn | 139,800 | 139,800 | ||||||||
Start of optional redemption period | Jun. 15, 2012 | |||||||||
Gross proceeds on issuance of junior subordinated deferrable debentures | 200,000 | |||||||||
2010 Senior Notes Due 2040
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Debt instrument issuance date | Jan. 21, 2010 | |||||||||
Debt instrument maturity date | Jan. 26, 2040 | |||||||||
Interest rate | 8.875% | |||||||||
Frequency of required payments | semi-annually | |||||||||
Net proceeds on issuance of senior notes | 243,967 | |||||||||
Debt issuance cost | 2,808 | |||||||||
Debt instrument, outstanding | 250,000 | [1] | 250,000 | [1] | ||||||
Date of first required payment | Jul. 26, 2010 | |||||||||
Debt instrument, commitment | 250,000 | 250,000 | ||||||||
Long-term debt, drawn | 247,144 | 247,090 | ||||||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Debt instrument maturity date | Sep. 15, 2036 | |||||||||
Frequency of required payments | quarterly | |||||||||
Description of variable rate basis | three-month LIBOR | |||||||||
Basis spread on variable rate | 3.54% | |||||||||
Debt instrument, outstanding | 136,926 | [1] | 137,159 | [1] | ||||||
Debt instrument, commitment | 136,926 | 137,159 | ||||||||
Long-term debt, drawn | 136,926 | 137,159 | ||||||||
Start of optional redemption period | Sep. 15, 2011 | |||||||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Debt instrument, outstanding | 113,750 | [1] | 113,750 | [1] | ||||||
Debt instrument, commitment | 113,750 | 113,750 | ||||||||
Long-term debt, drawn | 113,750 | 113,750 | ||||||||
Jun 15 2006 - Jun 15 2011 | 2006 Junior Subordinated Deferrable Debentures
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Interest rate | 9.069% | |||||||||
Jun 21 2007 - Jun 15 2012 | 2007 Junior Subordinated Deferrable Debentures
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Interest rate | 8.48% | |||||||||
Jun 15 2011 - Jun 15 2036 | 2006 Junior Subordinated Deferrable Debentures
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Description of variable rate basis | three-month LIBOR | |||||||||
Basis spread on variable rate | 3.55% | |||||||||
Jun 15 2012 - Jun 15 2037 | 2007 Junior Subordinated Deferrable Debentures
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Description of variable rate basis | three-month LIBOR | |||||||||
Basis spread on variable rate | 2.95% | |||||||||
Flagstone 2007 Due July 30 2037 | Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Frequency of required payments | quarterly | |||||||||
Description of variable rate basis | three-month LIBOR | |||||||||
Basis spread on variable rate | 3.00% | |||||||||
Debt instrument, commitment | 88,750 | |||||||||
Debt Instrument, September 15, 2037 Maturity Date | Jul. 30, 2037 | |||||||||
Start of optional redemption period | Jul. 30, 2012 | |||||||||
Flagstone 2007 Debt Due September 15 2037 | Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
||||||||||
Senior Notes and Junior Debentures | ||||||||||
Frequency of required payments | quarterly | |||||||||
Description of variable rate basis | three-month LIBOR | |||||||||
Basis spread on variable rate | 3.10% | |||||||||
Debt instrument, commitment | $ 25,000 | |||||||||
Start of optional redemption period | Sep. 15, 2012 | |||||||||
Debt Instrument, July 30, 2037 Maturity Date | Sep. 15, 2037 | |||||||||
|
Subsequent events
|
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2013
|
|||||
Subsequent Events [Abstract] | |||||
Subsequent events | Subsequent events
On July 30, 2013, the Company announced a quarterly cash dividend of $0.30 per each common share and $0.30 per common share equivalent for which each outstanding warrant is exercisable, payable on September 30, 2013 to holders of record on September 13, 2013. |
Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Cash flows provided by (used in) operating activities | ||
Net income | $ 190,440 | $ 246,496 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Share compensation expenses | 8,956 | 12,238 |
Amortization of discount on senior notes | 54 | 54 |
Income (loss) from investment affiliate | 3,230 | (398) |
Net realized (gains) on investments | (5,130) | (13,686) |
Net unrealized losses on investments | 148,585 | 32,903 |
Amortization of intangible assets | 2,080 | 2,080 |
Income from operating affiliates | 7,316 | 6,959 |
Foreign exchange losses (gains) included in net income | 30,868 | (5,844) |
Amortization of premium on fixed maturities | 10,163 | 12,253 |
Change in: | ||
Premiums receivable | (558,107) | (330,214) |
Deferred acquisition costs | (60,035) | (54,667) |
Prepaid reinsurance premiums | (125,293) | (85,006) |
Loss reserves recoverable | 20,000 | 1,475 |
Paid losses recoverable | 23,840 | 58,149 |
Income taxes recoverable | (852) | (2,720) |
Accrued investment income | 1,903 | 4,534 |
Other assets | 22,009 | (11,777) |
Reserve for losses and loss expenses | (216,535) | (43,198) |
Unearned premiums | 545,235 | 424,454 |
Reinsurance balances payable | 186,906 | 65,154 |
Deferred income taxes | 2,081 | 2,565 |
Accounts payable and accrued expenses | (42,917) | (3,518) |
Net cash provided by operating activities | 173,705 | 305,164 |
Cash flows provided by (used in) investing activities | ||
Proceeds on sales of investments | 2,686,285 | 1,829,294 |
Proceeds on maturities of investments | 316,860 | 295,192 |
Purchases of fixed maturities | (3,318,638) | (1,975,225) |
Sales (purchases) of short-term investments, net | 500,191 | (31,629) |
(Purchases) of other investments | (23,674) | (500,632) |
(Increase) decrease in securities lending collateral | (1,675) | 4,317 |
Redemption from (purchase of) investment in operating affiliates | 79,307 | |
Purchase of investment in operating affiliates | 26,500 | |
Purchase of investment in investment affiliate | (6,904) | (3,368) |
Net cash provided by (used in) investing activities | 231,752 | (408,551) |
Cash flows provided by (used in) financing activities | ||
Net proceeds on issuance of variable funding notes | 262,037 | 0 |
(Redemption) of common shares, net | (221) | (1,154) |
Purchases of common shares under share repurchase program | (357,184) | (221,252) |
Dividends paid | (297,539) | (56,260) |
Increase (decrease) in securities lending payable | 1,675 | (4,317) |
Third party investment in noncontrolling interest | 127,690 | 450,100 |
Net cash (used in) provided by financing activities | (263,542) | 167,117 |
Effect of foreign currency rate changes on cash and cash equivalents | (44,233) | 6,736 |
Net increase in cash | 97,682 | 70,466 |
Cash and cash equivalents - beginning of period | 1,219,379 | 832,844 |
Cash and cash equivalents - end of period | 1,317,061 | 903,310 |
Taxes paid during the period | (1,326) | 3,764 |
Interest paid during the period | $ 24,955 | $ 20,117 |
Recent accounting pronouncements
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent accounting pronouncements | Recent accounting pronouncements (a) Adoption of new accounting standards Disclosures about Offsetting Assets and Liabilities In December 2011, the FASB issued Accounting Standards Update No. 2011-11, "Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"). The objective of ASU 2011-11 is to enhance disclosures by requiring improved information about financial instruments and derivative instruments in relation to netting arrangements. In January 2013, the FASB issued Accounting Standards Update No. 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”). The objective of ASU 2013-01 is to address implementation issues about the scope of ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. The amendments clarify that the scope of ASU 2011-11 applies to derivatives, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either or subject to an enforceable master netting arrangement or similar agreement. Entities with other types of financial assets and financial liabilities subject to a master netting arrangement or similar agreement also are affected because these amendments make them no longer subject to the disclosure requirements in ASU 2011-11. ASU 2011-11 and 2013-01 became effective for fiscal periods beginning on or after January 1, 2013, and as a result, the Company adopted ASU 2011-11 and 2013-01 effective January 1, 2013. The adoption of these new accounting standards impacts disclosures only; therefore they did not have an impact on the Company's consolidated financial statements. Please refer to Note 7: "Derivative instruments". Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income In February 2013, the FASB issued Accounting Standard Update No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). The objective of this update is to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. The amendments became effective for reporting periods beginning after December 15, 2012, and as a result, the Company adopted ASU 2013-02 effective January 1, 2013. Please refer to Note 14 "Accumulated other comprehensive income (loss)." (b) Recently issued accounting standards not yet adopted In March 2013, the FASB issued Accounting Standard Update No. 2013-05, “Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity” (“ASU 2013-05”). The objective of this update is to resolve the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, Foreign Currency Matters-Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary within a foreign entity. The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. Early adoption is permitted. The Company is currently evaluating the impact of this guidance; however it is not expected to have a material impact on the Company's consolidated financial statements. In June 2013, the FASB issued Accounting Standard Update No. 2013-08, “Financial Services - Investment Companies - Amendments to the Scope, Measurement, and Disclosure Requirements” (“ASU 2013-08”). The amendments in this Update change the assessment of whether an entity is an investment company by developing a new two-tiered approach for that assessment, which requires an entity to possess certain fundamental characteristics while allowing judgment in assessing other typical characteristics. The new approach requires an entity to assess all of the characteristics of an investment company and consider its purpose and design to determine whether it is an investment company. The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. Early adoption is prohibited. The Company is currently evaluating the impact of this guidance; however it is not expected to have a material impact on the Company's consolidated financial statements. In July 2013, the FASB issued Accounting Standard Update No. 2013-10, “Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes” (“ASU 2013-10”). The amendments in this Update permit the Fed Funds Effective Swap Rate also referred to as the overnight index swap rate (“OIS”) to be used as a U.S. benchmark interest rate for hedge accounting purposes in addition to U.S. Treasury rate and LIBOR. The amendments also remove the restriction on using different benchmark rates for similar hedges. Before the amendments in this Update, only the U.S. Treasury rate and the LIBOR swap rate were considered benchmark interest rates in the United States. The amendments are effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The Company is currently evaluating the impact of this guidance; however it is not expected to have a material impact on the Company's consolidated financial statements. In July 2013, the FASB issued Accounting Standard Update No. 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-10”). This Update applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward is not available to settle any additional income taxes that would result from the disallowance of a tax position at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this Update are effective for fiscal years beginning after December 15, 2013. The Company is currently evaluating the impact of this guidance; however it is not expected to have a material impact on the Company's consolidated financial statements. |
Investments in affilates
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Jun. 30, 2013
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in AlphaCat Re 2011, Ltd. | Investments in affiliates (a) Operating affiliates AlphaCat Re 2011, Ltd. On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, Ltd. ("AlphaCat Re 2011"), a special purpose reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. At the time of formation, Validus Reinsurance, Ltd. ("Validus Re"), a wholly owned subsidiary of the Company, had a majority voting equity interest in AlphaCat Re 2011 and as a result, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company. On December 23, 2011, AlphaCat Re 2011 completed a secondary offering of its common shares to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors. As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re 2011, however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%. As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 were derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 has been treated as an equity method investment effective December 31, 2011. AlphaCat Re 2011 is now considered "off-risk" as all reinsurance contracts written by the company have expired. As a result, on January 4, 2013, January 23, 2013, May 1, 2013 and May 28, 2013 partial returns of investment were made to the investors of AlphaCat Re 2011. Validus Re's corresponding portion of the return of investment was $52,114. AlphaCat Re 2012, Ltd. On May 29, 2012, the Company joined with other investors in capitalizing AlphaCat Re 2012, Ltd. ("AlphaCat Re 2012"), a special purpose reinsurer formed for the purpose of writing collateralized reinsurance with a particular focus on windstorm risks for Florida domiciled insurance companies. The Company holds an equity interest of 37.9% and a voting interest of 49.0% in AlphaCat Re 2012, therefore the investment has been treated as an equity method investment as at June 30, 2013. AlphaCat Re 2012 is now considered "off-risk" as all reinsurance contracts written by the company have expired. As a result, on February 22, 2013 and June 20, 2013, partial returns of investment were made to the investors of AlphaCat Re 2012. Validus Re's corresponding portion of the return of investment was $27,193. AlphaCat 2013, Ltd. On December 17, 2012, the Company joined with other investors in capitalizing AlphaCat 2013, Ltd. ("AlphaCat 2013"), a special purpose vehicle formed for the purpose of investing in collateralized reinsurance. The Company holds an equity interest of 19.7% and a voting interest of 40.9% in AlphaCat 2013, therefore the investment has been treated as an equity method investment as at June 30, 2013. Investment in Insurance Linked Securities ("ILS") The Company received $219,400 of third party subscriptions in three of the AlphaCat ILS funds as of December 31, 2012. During the three and six months ended June 30, 2013, the Company received $13,500 and $69,190 in additional third party subscriptions, respectively. The AlphaCat ILS funds invest in instruments with returns linked to property catastrophe reinsurance, retrocession and ILS contracts. Two of the funds are variable interest entities and are consolidated by the Company as Validus Re is deemed to be the primary beneficiary. The third fund is also a variable interest entity, however, it is not consolidated by the Company as Validus Re is not deemed to be the primary beneficiary. As a result, the investment in this fund is included in "Investments in affiliates" as at June 30, 2013. Income from this fund was $177 and $326 for the three and six months ended June 30, 2013. The Company's carrying value of this fund amounted to $20,326 and $20,000 as at June 30, 2013 and December 31, 2012, respectively. The Company's maximum exposure to loss with respect to this investment is limited to the investment carrying value reported in the Company's Consolidated Balance Sheets. The following table presents a reconciliation of the beginning and ending investment in operating affiliates balances for the three and six months ended June 30, 2013 and 2012:
The following table presents the Company's investments in operating affiliates as at June 30, 2013:
The following table presents the Company's investments in operating affiliates as at December 31, 2012:
(b) Investment affiliate Aquiline Financial Services Fund II L.P. On December 20, 2011, Validus Re entered into an Assignment and Assumption Agreement (the "Agreement") with Aquiline Capital Partners LLC, a Delaware limited liability company (the "Assignor") and Aquiline Capital Partners II GP (Offshore) Ltd., a Cayman Islands company limited by shares (the "General Partner") pursuant to which Validus Re has assumed 100% of the Assignor's interest in Aquiline Financial Services Fund II L.P. (the "Partnership") representing a total capital commitment of $50,000 (the "Commitment"), as a limited partner in the Partnership (the "Transferred Interest"). The Transferred Interest is governed by the terms of an Amended and Restated Exempted Limited Partnership Agreement dated as of July 2, 2010 (the "Limited Partnership Agreement"). Pursuant to the terms of the Limited Partnership Agreement, the Commitment will expire on July 2, 2015. The private equity limited partnership provides quarterly capital account statements with a three-month delay in its valuation. As a result, the limited partnership's March 31, 2013 capital account statement was used as the basis for calculating the Company's share of partnership income for the period. The following table presents a reconciliation of the beginning and ending investment in the Company's investment affiliate balance for the three and six months ended June 30, 2013 and 2012:
The following table presents the Company's investment in the Aquiline Financial Services Fund II L.P. as at June 30, 2013:
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Commitments and contingencies (Lloyd's syndicate) (Details)
In Thousands, unless otherwise specified |
6 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
USD ($)
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Dec. 31, 2012
USD ($)
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Jun. 30, 2013
Lloyd's Syndicate 1183
USD ($)
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Jun. 30, 2013
Lloyd's Syndicate 1183
GBP (£)
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Dec. 31, 2012
Lloyd's Syndicate 1183
USD ($)
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Jun. 30, 2013
Talbot FAL Facility
USD ($)
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Dec. 31, 2012
Talbot FAL Facility
USD ($)
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Jun. 30, 2013
Talbot FAL Facility
Lloyd's Syndicate 1183
Minimum
USD ($)
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Jun. 30, 2013
Talbot FAL Facility
Lloyd's Syndicate 1183
Maximum
USD ($)
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Components Of Required Capital [Abstract] | |||||||||||||
Loss contingency, loss level amount | $ 403,700 | $ 428,700 | |||||||||||
Cash, investments and letters of credit amount | 428,700 | 428,700 | |||||||||||
Credit facility, commitment | 1,575,000 | 2,090,000 | 25,000 | [1] | 25,000 | [1] | |||||||
Funds at Lloyd's and Lloyd's Central Fund | |||||||||||||
Maximum premium levies assessable, percent | 3.00% | 3.00% | |||||||||||
Estimated underwriting capacity | 620,000 | ||||||||||||
Exchange rate | £1 equals $1.5216 | £1 equals $1.5216 | |||||||||||
Maximum premium levies assessable, amount | $ 28,302 | ||||||||||||
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Investments
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Jun. 30, 2013
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments (a) Trading Securities The Company's investments in fixed maturities, short-term investments and other investments are classified as trading and carried at fair value, with related net unrealized gains or losses included in earnings. The amortized cost (or cost), gross unrealized gains and (losses) and estimated fair value of investments at June 30, 2013 were as follows:
The amortized cost (or cost), gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2012 were as follows:
The following table sets forth certain information regarding the investment ratings of the Company’s fixed maturities portfolio as at June 30, 2013 and December 31, 2012. Investment ratings are the lower of Moody’s or Standard & Poor’s rating for each investment security, presented in Standard & Poor’s equivalent rating. For investments where Moody’s and Standard & Poor’s ratings are not available, Fitch ratings are used and presented in Standard & Poor’s equivalent rating.
The amortized cost and estimated fair value amounts for fixed maturity securities held at June 30, 2013 and December 31, 2012 are shown below by contractual maturity. Actual maturity may differ from contractual maturity because certain borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.
(b) Net investment income Net investment income was derived from the following sources:
The following represents an analysis of net realized gains (losses) and the change in net unrealized (losses) on investments:
(d) Pledged investments The following tables outline investments pledged as collateral under the Company's credit facilities. For further details of the credit facilities, please refer to Note 12: “Debt and financing arrangements.”
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Basis of preparation and consolidation Basis of preparation and consolidation (Details) (Flagstone Reinsurance Holdings Sa [Member], USD $)
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0 Months Ended |
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Nov. 30, 2012
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Flagstone Reinsurance Holdings Sa [Member]
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Business Acquisition [Line Items] | |
Exchange Ratio | 0.1935 |
Per share price paid by Company to acquire FSR common shares | $ 2.00 |
Fair value measurements (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value hierarchy - allocation of investments | At June 30, 2013, the Company’s investments were allocated between Levels 1, 2 and 3 as follows:
At December 31, 2012, the Company’s investments were allocated between Levels 1, 2 and 3 as follows:
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Reconciliation of beginning and ending balances for all Level 3 investments measured at fair value on recurring basis | The following tables present a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs during the three and six months ended June 30, 2013 and 2012:
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Reserve for losses and loss expenses (Tables)
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Jun. 30, 2013
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Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve for losses and loss expenses | The following table represents an analysis of paid and unpaid losses and loss expenses incurred and a reconciliation of the beginning and ending unpaid losses and loss expenses for the three and six months ended June 30, 2013 and 2012:
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Accumulated Other Comprehensive Income (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Jun. 30, 2013
Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Translation Adjustment [Member]
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Jun. 30, 2013
Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Translation Adjustment [Member]
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Mar. 31, 2013
Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Translation Adjustment [Member]
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Dec. 31, 2012
Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Translation Adjustment [Member]
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Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (8,262) | $ (8,262) | $ (2,953) | $ (8,262) | $ (8,262) | $ (12,738) | $ (2,953) | ||
Amounts reclassified from accumulated other compreshensive income | 4,290 | 4,290 | |||||||
Foreign currency translation adjustments | $ 186 | $ (757) | $ (9,599) | $ 636 | $ 186 | $ (9,599) |
Variable funding notes (Tables)
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6 Months Ended | ||||||||||||||||||||||||
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Jun. 30, 2013
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Variable Funding Notes Disclosure [Abstract] | |||||||||||||||||||||||||
Summary of variable funding notes | The following table presents a summary of the VFNs on the balance sheet as at June 30, 2013:
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Variable funding notes (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | ||
Variable funding notes | $ 431,093 | $ 0 |
Variable interest entity, not primary beneficiary
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Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | ||
Variable funding notes | 431,093 | |
Variable interest entity, not primary beneficiary | AlphaCat 2013 Ltd
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Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | ||
Variable funding notes | 208,958 | |
Variable interest entity, not primary beneficiary | AlphaCat ILS Funds
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Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | ||
Variable funding notes | $ 222,135 |
Noncontrolling interest (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
PaCRe, Ltd
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Jun. 30, 2012
PaCRe, Ltd
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Jun. 30, 2013
PaCRe, Ltd
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Jun. 30, 2012
PaCRe, Ltd
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Jun. 30, 2013
AlphaCat ILS Funds
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Jun. 30, 2013
AlphaCat ILS Funds
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Dec. 31, 2012
Investment in ILS Funds
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Jun. 30, 2013
PaCRe funds
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Noncontrolling Interest [Line Items] | ||||||||||||
Additional capital contributions from Validus Re to PaCRe | $ 6,500 | |||||||||||
Noncontrolling Interest, Ownership Percentage by Parent | 10.00% | |||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 90.00% | |||||||||||
Third party subscriptions | 219,400 | |||||||||||
Activity in net income attributable to noncontrolling interest | ||||||||||||
Balance - Beginning of Period | 487,421 | 0 | 434,280 | 0 | 431,145 | 0 | 434,280 | 0 | 56,276 | 0 | ||
Purchase of shares by noncontrolling interest | 72,000 | 450,100 | 127,690 | 450,100 | 58,500 | 450,100 | 58,500 | 450,100 | 13,500 | 69,190 | ||
Loss attributable to noncontrolling interest | 60,976 | 45,360 | 63,525 | 45,360 | 61,890 | 45,360 | 65,025 | 45,360 | (914) | (1,500) | ||
Balance - End of Period | $ 498,445 | $ 404,740 | $ 498,445 | $ 404,740 | $ 427,755 | $ 404,740 | $ 427,755 | $ 404,740 | $ 70,690 | $ 70,690 |