BERMUDA | 98-0501001 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. The following exhibits are filed herewith: |
Exhibit No. | Description | ||||
99.1 | Press Release dated January 30, 2014 announcing the earnings of Validus Holdings, Ltd. for the three months and year ended December 31, 2013. |
VALIDUS HOLDINGS, LTD. (Registrant) | ||||
By: | /s/ Jeffrey D. Sangster | |||
Name: | Jeffrey D. Sangster | |||
Title: | Executive Vice President and Chief Financial Officer |
• | Talbot Underwriting, Ltd. reported record gross premiums written of $1.1 billion and record net operating income of $186.5 million as it continued to build on its track record of success in the Lloyd's market. |
• | Validus Reinsurance, Ltd. reported record gross premiums written of $1.2 billion and net operating income of $498.2 million, a reflection of its leadership position in the short tail reinsurance market. |
• | AlphaCat Managers wrote $147.0 million of gross premium and launched a fourth sidecar, AlphaCat 2014, Ltd. which was fully deployed with $204.0 million of available limit at January 1, 2014." |
Net Income Available to Validus | Net Operating Income Available to Validus | ||||||
(Expressed in millions of U.S. dollars, except per share information) | |||||||
Validus Re | $ | 88.8 | $ | 88.4 | |||
Talbot | 29.3 | 33.4 | |||||
PaCRe, Ltd. | 2.9 | 0.2 | |||||
Other AlphaCat Companies | 12.0 | 11.7 | |||||
Corporate & Eliminations | (37.7 | ) | (37.3 | ) | |||
Total | $ | 95.3 | $ | 96.4 | |||
Earnings per diluted share available to Validus | $ | 0.93 | |||||
Operating earnings per diluted share available to Validus | $ | 0.94 |
January 2014 Gross Premiums Written | ||||||||||||
Validus Re segment and AlphaCat segment premium (including intercompany eliminations) (c) | ||||||||||||
Catastrophe XOL | Per Risk | Proportional | Total | |||||||||
(Expressed in millions of U.S. dollars) | ||||||||||||
2014 | $ | 355.2 | $ | 72.2 | $ | 147.8 | $ | 575.2 | ||||
2013 | $ | 387.0 | $ | 74.9 | $ | 132.4 | $ | 594.3 | ||||
Increase (Decrease) | (8.2 | )% | (3.6 | )% | 11.6 | % | (3.2 | )% |
Validus Re segment premium (c) | |||||||||||||||
U.S. | International | ||||||||||||||
Property | Property | Marine | Specialty | Total | |||||||||||
(Expressed in millions of U.S. dollars) | |||||||||||||||
2014 | $ | 112.7 | $ | 143.1 | $ | 138.1 | $ | 108.0 | $ | 501.9 | |||||
2013 | $ | 150.5 | $ | 157.5 | $ | 142.6 | $ | 60.5 | $ | 511.1 | |||||
Increase (Decrease) | (25.1 | )% | (9.1 | )% | (3.2 | )% | 78.5 | % | (1.8 | )% | |||||
AlphaCat segment premium (a) | |||||||||||||||
U.S. | International | ||||||||||||||
Property | Property | Marine | Specialty | Total | |||||||||||
(Expressed in millions of U.S. dollars) | |||||||||||||||
2014 | $ | 44.6 | $ | 37.5 | $ | — | $ | 3.9 | $ | 86.0 | |||||
2013 | $ | 43.4 | $ | 49.6 | $ | — | $ | — | $ | 93.0 | |||||
Increase (Decrease) | 2.8 | % | (24.4 | )% | — | % | NM | (7.5 | )% | ||||||
Validus Re segment and AlphaCat segment premium (including intercompany eliminations) (c) | |||||||||||||||
U.S. | International | ||||||||||||||
Property | Property | Marine | Specialty | Total | |||||||||||
(Expressed in millions of U.S. dollars) | |||||||||||||||
2014 (b) | $ | 154.2 | $ | 174.9 | $ | 138.1 | $ | 108.0 | $ | 575.2 | |||||
2013 (b) | $ | 186.2 | $ | 205.0 | $ | 142.6 | $ | 60.5 | $ | 594.3 | |||||
Increase (Decrease) | (17.2 | )% | (14.7 | )% | (3.2 | )% | 78.5 | % | (3.2 | )% |
(a) | The renewal of AlphaCat premium in January 2014 is written through AlphaCat Reinsurance, Ltd. (“AlphaCat Re”), which is fully consolidated. AlphaCat Re writes business on behalf of AlphaCat 2013, Ltd., AlphaCat 2014, Ltd. and the AlphaCat ILS funds. Premium also includes PaCRe, Ltd. The renewal of AlphaCat premium in January 2013 includes AlphaCat Re 2011, Ltd. and AlphaCat Re 2012, Ltd. which are accounted for as investments in operating affiliates, under the equity method. Therefore, the 2013 renewal data above is considered ‘managed’ premium. |
(b) | An inter-segment elimination between AlphaCat and Validus Re totaling $12.7 million for 2014 (2013:$9.8 million) has been considered in calculating these totals. This elimination relates to business ceded by Validus Re to AlphaCat through a variable quota share arrangement. |
(c) | The renewal data above does not include intercompany eliminations between Validus Re and Talbot. |
• | Gross premiums written for the year ended December 31, 2013 were $2,401.1 million compared to $2,166.4 million for the year ended December 31, 2012, an increase of $234.7 million, or 10.8%. |
• | Net premiums earned for the year ended December 31, 2013 were $2,102.0 million compared to $1,873.2 million for the year ended December 31, 2012, an increase of $228.8 million, or 12.2%. |
• | Underwriting income for the year ended December 31, 2013 was $604.9 million compared to $248.7 million for the year ended December 31, 2012, an increase of $356.2 million, or 143.2%. |
• | Combined ratio for the year ended December 31, 2013 of 71.2% which included $205.4 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.8 percentage points. Combined ratio for the year ended December 31, 2012 of 86.8% which included $175.0 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.3 percentage points. |
• | Net operating income available to Validus for the year ended December 31, 2013 was $578.7 million compared to $333.8 million for the year ended December 31, 2012, an increase of $244.8 million, or 73.3%. |
• | Net income available to Validus for the year ended December 31, 2013 was $532.7 million compared to $408.4 million for the year ended December 31, 2012, an increase of $124.2 million, or 30.4%. |
• | Return on average equity of 14.0% and net operating return on average equity of 15.2%. |
• | Gross premiums written for the three months ended December 31, 2013 were $237.3 million compared to $311.8 million for the three months ended December 31, 2012, a decrease of $74.6 million, or 23.9%. |
• | Net premiums earned for the three months ended December 31, 2013 were $492.2 million compared to $499.3 million for the three months ended December 31, 2012, a decrease of $7.0 million, or 1.4%. |
• | Underwriting income for the three months ended December 31, 2013 was $110.4 million compared to underwriting loss of ($113.1) million for the three months ended December 31, 2012, an increase of $223.4 million, or 197.6%. |
• | Combined ratio for the three months ended December 31, 2013 of 77.6% which included $33.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 6.8 percentage points compared to a combined ratio for the three months ended December 31, 2012 of 122.7% which included $57.2 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 11.5 percentage points. |
• | Net operating income available to Validus for the three months ended December 31, 2013 was $96.4 million compared to net operating loss attributable to Validus of ($100.8) million for the three months ended December 31, 2012, an increase of $197.2 million, or 195.6%. |
• | Net income available to Validus for the three months ended December 31, 2013 was $95.3 million compared to a net loss attributable to Validus of ($90.7) million for the three months ended December 31, 2012, an increase of $186.0 million. |
• | Annualized return on average equity of 10.2% and annualized net operating return on average equity of 10.3%. |
Three Months Ended December 31, 2013 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||
Fourth Quarter 2013 Notable Loss Events (a) (e) | Validus Re | AlphaCat | Talbot | Total | ||||||||||||||||||||||||||
Description | Net Losses and Loss Expenses | % of NPE (c) | Net Losses and Loss Expenses | % of NPE (c) | Net Losses and Loss Expenses | % of NPE (c) | Net Losses and Loss Expenses | % of NPE (c) | ||||||||||||||||||||||
None | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | ||||||||||||||
Total | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % |
Three Months Ended December 31, 2012 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||
Fourth 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) | ||||||||||||||||||||||
Hurricane Sandy (d) | Windstorm | $ | 282,603 | 99.1 | % | $ | — | — | % | $ | 78,433 | 37.7 | % | $ | 361,036 | 72.3 | % | |||||||||||||
Total | $ | 282,603 | 99.1 | % | $ | — | — | % | $ | 78,433 | 37.7 | % | $ | 361,036 | 72.3 | % |
(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 these events, and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events and the Company's actual ultimate net losses from these events may vary materially from these estimates. |
(b) | Net of reinsurance but not net of reinstatement premiums. Total reinstatement premiums for the three months ended December 31, 2013 and 2012 were $nil and $36.4 million, respectively. |
(c) | NPE = Net premiums earned. |
(d) | The AlphaCat segment's non-consolidated affiliates incurred net losses and loss expenses of $8.4 million related to Hurricane Sandy for the three months ended December 31, 2012. These losses are not included in the table above as the entities are accounted for as investments in operating affiliates. |
(e) | The Company increased the threshold for disclosure of notable losses effective January 1, 2013 from $15.0 million to $30.0 million. |
• | Gross premiums written for the year ended December 31, 2013 were $1,242.5 million compared to $1,132.0 million for the year ended December 31, 2012, an increase of $110.6 million, or 9.8%. Gross premiums written for the year ended December 31, 2013 included $744.6 million of property premiums, $194.0 million of marine premiums and $303.9 million of specialty premiums compared to $771.6 million of property premiums, $257.5 million of marine premiums and $102.9 million of specialty premiums for the year ended December 31, 2012. |
• | Net premiums earned for the year ended December 31, 2013 were $1,133.9 million compared to $1,023.3 million for the year ended December 31, 2012, an increase of $110.7 million, or 10.8%. |
• | The combined ratio for the year ended December 31, 2013 was 62.6% compared to 78.2% for the year ended December 31, 2012, a decrease of 15.6 percentage points. |
• | The loss ratio for the year ended December 31, 2013 was 37.9% compared to 56.2% for the year ended December 31, 2012, a decrease of 18.3 percentage points. The loss ratio for the year ended December 31, 2013 included favorable loss |
• | Net operating income available to Validus Re for the year ended December 31, 2013 was $498.2 million compared to $307.4 million, for the year ended December 31, 2012, an increase of $190.8 million, or 62.1%. |
• | General and administrative expenses for the year ended December 31, 2013 were $91.3 million compared to $63.0 million for the year ended December 31, 2012, an increase of $28.2 million, or 44.7%. General and administrative expenses associated with the run-off from the Flagstone acquisition were $23.5 million for the year ended December 31, 2013. |
• | Gross premiums written for the three months ended December 31, 2013 were $10.3 million compared to $79.2 million for the three months ended December 31, 2012, a decrease of $69.0 million, or 87.1%. Gross premiums written for the three months ended December 31, 2013 included $17.2 million of property premiums and $nil of marine premiums, offset by ($6.9) million of specialty premiums, compared to $54.9 million of property premiums, $8.6 million of marine premiums and $15.7 million of specialty premiums for the three months ended December 31, 2012. |
• | Net premiums earned for the three months ended December 31, 2013 were $250.3 million compared to $285.3 million for the three months ended December 31, 2012, a decrease of $35.0 million, or 12.3%. |
• | The combined ratio for the three months ended December 31, 2013 was 69.1% compared to 136.2% for the three months ended December 31, 2012, a decrease of 67.1 percentage points. |
• | The loss ratio for the three months ended December 31, 2013 was 44.2% compared to 116.1% for the three months ended December 31, 2012, a decrease of 71.9 percentage points. The loss ratio for the three months ended December 31, 2013 included unfavorable loss reserve development on prior accident years of $3.4 million, increasing the loss ratio by 1.3 percentage points. The loss ratio for the three months ended December 31, 2012 included favorable loss reserve development on prior accident years of $19.8 million, benefiting the loss ratio by 6.9 percentage points. |
• | Net operating income available to Validus Re for the three months ended December 31, 2013 was $88.4 million compared to a loss of ($80.9) million, for the three months ended December 31, 2012, an increase of $169.4 million. |
• | General and administrative expenses for the three months ended December 31, 2013 were $21.6 million compared to $14.7 million for the three months ended December 31, 2012, an increase of $6.9 million, or 46.9%. General and administrative expenses associated with the run-off from the Flagstone acquisition were $3.7 million for the three months ended December 31, 2013. |
• | Gross premiums written from our consolidated entities, including PaCRe, for the year ended December 31, 2013 were $147.0 million compared to $21.6 million for the year ended December 31, 2012, an increase of $125.4 million. |
• | Managed gross premiums written, including our non-consolidated affiliates, for the year ended December 31, 2013 were $143.1 million compared to $148.1 million for the year ended December 31, 2012, a decrease of $4.9 million, or 3.3%. |
• | Net premiums earned for the year ended December 31, 2013 were $137.4 million compared to $17.7 million for the year ended December 31, 2012, an increase of $119.7 million. |
• | Income from operating affiliates for the year ended December 31, 2013 was $14.3 million compared to $12.6 million for the year ended December 31, 2012, an increase of $1.7 million. |
• | Income attributable to operating affiliate investors for the year ended December 31, 2013 was $68.8 million compared to $nil for the year ended December 31, 2012, an increase of $68.8 million. |
• | The combined ratio for the year ended December 31, 2013 was 36.9% compared to 54.2% for the year ended December 31, 2012, a decrease of 17.3 percentage points. |
• | The loss ratio for the year ended December 31, 2013 was 12.8% compared to 0.0% for the year ended December 31, 2012, an increase of 12.8 percentage points. |
• | Net operating income available to AlphaCat for the year ended December 31, 2013 was $45.2 million compared to $43.1 million, for the year ended December 31, 2012, an increase of $2.1 million, or 4.8%. |
• | Gross premiums written from our consolidated entities, including PaCRe, for the three months ended December 31, 2013 were $0.3 million compared to $nil for the three months ended December 31, 2012, an increase of $0.3 million. |
• | Managed gross premiums written, including our non-consolidated affiliates, for the three months ended December 31, 2013 were ($1.0) million compared to $nil for the three months ended December 31, 2012, a decrease of $1.0 million. |
• | Net premiums earned for the three months ended December 31, 2013 were $37.6 million compared to $5.9 million for the three months ended December 31, 2012, an increase of $31.8 million. |
• | Income from operating affiliates for the three months ended December 31, 2013 was $5.5 million compared to a loss from operating affiliates of ($0.6) million for the three months ended December 31, 2012, an increase of $6.1 million. |
• | Income attributable to operating affiliate investors for the three months ended December 31, 2013 was $26.6 million compared to $nil for the three months ended December 31, 2012, an increase of $26.6 million. |
• | The combined ratio for the three months ended December 31, 2013 was 25.6% compared to 45.6% for the three months ended December 31, 2012, a decrease of 20.0 percentage points. |
• | The loss ratio for the three months ended December 31, 2013 was 1.7% compared to 0.0% for the three months ended December 31, 2012, an increase of 1.7 percentage points. |
• | Net operating income available to AlphaCat for the three months ended December 31, 2013 was $11.8 million compared to $1.1 million, for the three months ended December 31, 2012, an increase of $10.7 million. |
• | Gross premiums written for the year ended December 31, 2013 were $1,091.9 million compared to $1,078.6 million for the year ended December 31, 2012, an increase of $13.3 million, or 1.2%. Gross premiums written for the year ended December 31, 2013 included $345.8 million of property premiums, $381.2 million of marine premiums and $364.8 million of specialty premiums compared to $324.9 million of property premiums, $396.2 million of marine premiums and $357.5 million of specialty premiums for the year ended December 31, 2012. |
• | Net premiums earned for the year ended December 31, 2013 were $830.7 million compared to $832.3 million for the year ended December 31, 2012, a decrease of $1.6 million, or 0.2%. |
• | The combined ratio for the year ended December 31, 2013 was 79.8% compared to 89.9% for the year ended December 31, 2012, a decrease of 10.1 percentage points. |
• | The loss ratio for the year ended December 31, 2013 was 41.7% compared to 50.9% for the year ended December 31, 2012, a decrease of 9.2 percentage points. The loss ratio for the year ended December 31, 2013 included favorable loss |
• | Net operating income available to Talbot for the year ended December 31, 2013 was $186.5 million compared to $104.2 million, for the year ended December 31, 2012, an increase of $82.3 million, or 79.0%. |
• | Gross premiums written for the three months ended December 31, 2013 were $236.4 million compared to $241.1 million for the three months ended December 31, 2012, a decrease of $4.7 million, or 2.0%. Gross premiums written for the three months ended December 31, 2013 included $60.9 million of property premiums, $75.1 million of marine premiums and $100.4 million of specialty premiums compared to $62.3 million of property premiums, $81.5 million of marine premiums and $97.3 million of specialty premiums for the three months ended December 31, 2012. |
• | Net premiums earned for the three months ended December 31, 2013 were $204.3 million compared to $208.1 million for the three months ended December 31, 2012, a decrease of $3.8 million, or 1.8%. |
• | The combined ratio for the three months ended December 31, 2013 was 86.8% compared to 97.9% for the three months ended December 31, 2012, a decrease of 11.1 percentage points. |
• | The loss ratio for the three months ended December 31, 2013 was 46.4% compared to 61.1% for the three months ended December 31, 2012, a decrease of 14.7 percentage points. The loss ratio for the three months ended December 31, 2013 included favorable loss reserve development on prior accident years of $37.0 million, benefiting the loss ratio by 18.1 percentage points. The loss ratio for the three months ended December 31, 2012 included favorable loss reserve development on prior accident years of $37.4 million, benefiting the loss ratio by 18.0 percentage points. |
• | Net operating income available to Talbot for the three months ended December 31, 2013 was $33.4 million compared to $7.6 million, for the three months ended December 31, 2012, an increase of $25.8 million. |
Share Repurchase Activity (Expressed in thousands of U.S. dollars except for share and per share information) | ||||||||||||||||||||
As at September 30, 2013 | Quarter ended | |||||||||||||||||||
Effect of share repurchases: | (cumulative) | October | November | December | December 31, 2013 | |||||||||||||||
Aggregate purchase price (a) | $ | 1,564,029 | $ | 6,714 | $ | 79,081 | $ | 70,525 | $ | 156,320 | ||||||||||
Shares repurchased | 52,849,445 | 170,001 | 1,999,551 | 1,786,313 | 3,955,865 | |||||||||||||||
Average price (a) | $ | 29.59 | $ | 39.49 | $ | 39.55 | $ | 39.48 | $ | 39.52 | ||||||||||
Estimated cumulative net accretive (dilutive) impact on: | ||||||||||||||||||||
Book value per diluted common share (b) | 2.07 | |||||||||||||||||||
Earnings per diluted share - Quarter (c) | 0.30 |
Share Repurchase Activity (Expressed in thousands of U.S. dollars except for share and per share information) | ||||||||||||||||
Effect of share repurchases: | As at December 31, 2013 | January | As at January 29, 2014 | Cumulative to Date Effect | ||||||||||||
Aggregate purchase price (a) | $ | 1,720,349 | $ | 38,541 | $ | 38,541 | $ | 1,758,890 | ||||||||
Shares repurchased | 56,805,310 | 1,031,436 | 1,031,436 | 57,836,746 | ||||||||||||
Average price (a) | $ | 30.29 | $ | 37.37 | $ | 37.37 | $ | 30.41 |
Investors: | Media: |
Validus Holdings, Ltd. | Brunswick Group |
Investor.Relations@validusholdings.com | Radina Russell / Allison Gunther |
+1-441-278-9000 | +1-212-333-3810 |
December 31, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Fixed maturities, at fair value (amortized cost: 2013—$5,522,853; 2012—$5,008,514) | $ | 5,542,258 | $ | 5,085,334 | |||
Short-term investments at fair value (amortized cost: 2013—$751,734; 2012—$1,112,929) | 751,778 | 1,114,250 | |||||
Other investments at fair value (cost: 2013—$637,728; 2012—$583,068) | 618,316 | 564,448 | |||||
Cash and cash equivalents | 1,056,346 | 1,219,379 | |||||
Total investments and cash | 7,968,698 | 7,983,411 | |||||
Investments in affiliates | 141,243 | 172,329 | |||||
Premiums receivable | 697,233 | 802,159 | |||||
Deferred acquisition costs | 134,269 | 146,588 | |||||
Prepaid reinsurance premiums | 103,251 | 99,593 | |||||
Securities lending collateral | 3,392 | 225 | |||||
Loss reserves recoverable | 370,154 | 439,967 | |||||
Paid losses recoverable | 80,080 | 46,435 | |||||
Intangible assets | 106,407 | 110,569 | |||||
Goodwill | 20,393 | 20,393 | |||||
Accrued investment income | 18,876 | 21,321 | |||||
Other assets | 202,436 | 177,274 | |||||
Total assets | $ | 9,846,432 | $ | 10,020,264 | |||
Liabilities | |||||||
Reserve for losses and loss expenses | $ | 3,030,399 | $ | 3,517,573 | |||
Unearned premiums | 824,496 | 894,362 | |||||
Reinsurance balances payable | 154,874 | 138,550 | |||||
Securities lending payable | 3,858 | 691 | |||||
Deferred income taxes | 19,086 | 20,259 | |||||
Net payable for investments purchased | 19,383 | 38,346 | |||||
Accounts payable and accrued expenses | 278,187 | 167,577 | |||||
Notes payable to operating affiliates | 439,272 | — | |||||
Senior notes payable | 247,198 | 247,090 | |||||
Debentures payable | 541,416 | 540,709 | |||||
Total liabilities | 5,558,169 | 5,565,157 | |||||
Commitments and contingent liabilities | |||||||
Redeemable noncontrolling interest | 86,512 | — | |||||
Shareholders' equity | |||||||
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2013—154,488,497; 2012—152,698,191; Outstanding: 2013—96,044,312; 2012—107,921,259) | 27,036 | 26,722 | |||||
Treasury shares (2013—58,444,185; 2012—44,776,932) | (10,228 | ) | (7,836 | ) | |||
Additional paid-in-capital | 1,677,894 | 2,160,478 | |||||
Accumulated other comprehensive (loss) | (617 | ) | (2,953 | ) | |||
Retained earnings | 2,010,009 | 1,844,416 | |||||
Total shareholders' equity available to Validus | 3,704,094 | 4,020,827 | |||||
Noncontrolling interest | 497,657 | 434,280 | |||||
Total shareholders' equity | 4,201,751 | 4,455,107 | |||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 9,846,432 | $ | 10,020,264 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Underwriting income | |||||||||||||||
Gross premiums written | $ | 237,273 | $ | 311,847 | $ | 2,401,106 | $ | 2,166,440 | |||||||
Reinsurance premiums ceded | (24,558 | ) | (35,659 | ) | (372,585 | ) | (307,506 | ) | |||||||
Net premiums written | 212,715 | 276,188 | 2,028,521 | 1,858,934 | |||||||||||
Change in unearned premiums | 279,523 | 223,098 | 73,524 | 14,282 | |||||||||||
Net premiums earned | 492,238 | 499,286 | 2,102,045 | 1,873,216 | |||||||||||
Underwriting deductions | |||||||||||||||
Losses and loss expenses | 206,152 | 458,310 | 793,932 | 999,446 | |||||||||||
Policy acquisition costs | 84,647 | 81,814 | 360,310 | 334,698 | |||||||||||
General and administrative expenses | 82,930 | 65,095 | 315,265 | 263,652 | |||||||||||
Share compensation expenses | 8,147 | 7,126 | 27,630 | 26,709 | |||||||||||
Total underwriting deductions | 381,876 | 612,345 | 1,497,137 | 1,624,505 | |||||||||||
Underwriting income (loss) | $ | 110,362 | $ | (113,059 | ) | $ | 604,908 | $ | 248,711 | ||||||
Net investment income | 24,204 | 28,802 | 96,072 | 107,936 | |||||||||||
Other income | 4,046 | 187 | 8,343 | 22,396 | |||||||||||
Finance expenses | (16,925 | ) | (14,510 | ) | (64,177 | ) | (53,857 | ) | |||||||
Operating income (loss) before taxes, income (loss) from operating affiliates and (income) attributable to operating affiliate investors | $ | 121,687 | $ | (98,580 | ) | $ | 645,146 | $ | 325,186 | ||||||
Tax (expense) | (603 | ) | (615 | ) | (383 | ) | (2,501 | ) | |||||||
Income (loss) from operating affiliates | 5,510 | (614 | ) | 14,289 | 12,580 | ||||||||||
(Income) attributable to operating affiliate investors | (26,607 | ) | — | (68,763 | ) | — | |||||||||
Net operating income (loss) | $ | 99,987 | $ | (99,809 | ) | $ | 590,289 | $ | 335,265 | ||||||
Net realized gains (losses) on investments | 4,448 | (4,516 | ) | 3,258 | 18,233 | ||||||||||
Net unrealized gains (losses) on investments | 20,137 | (35,857 | ) | (58,481 | ) | 17,585 | |||||||||
Income (loss) from investment affiliate | 516 | (406 | ) | 4,790 | (964 | ) | |||||||||
Foreign exchange (losses) gains | (2,230 | ) | 1,181 | 2,505 | 4,798 | ||||||||||
Gain on bargain purchase, net of expenses (a) | — | 21,485 | — | 17,701 | |||||||||||
Net income (loss) | $ | 122,858 | $ | (117,922 | ) | $ | 542,361 | $ | 392,618 | ||||||
Net (income) loss attributable to noncontrolling interest | (27,526 | ) | 27,206 | (9,695 | ) | 15,820 | |||||||||
Net income (loss) available (attributable) to Validus | $ | 95,332 | $ | (90,716 | ) | $ | 532,666 | $ | 408,438 | ||||||
Selected ratios: | |||||||||||||||
Net premiums written / Gross premiums written | 89.6 | % | 88.6 | % | 84.5 | % | 85.8 | % | |||||||
Losses and loss expenses | 41.9 | % | 91.8 | % | 37.8 | % | 53.4 | % | |||||||
Policy acquisition costs | 17.2 | % | 16.4 | % | 17.1 | % | 17.9 | % | |||||||
General and administrative expenses (b) | 18.5 | % | 14.5 | % | 16.3 | % | 15.5 | % | |||||||
Expense ratio | 35.7 | % | 30.9 | % | 33.4 | % | 33.4 | % | |||||||
Combined ratio | 77.6 | % | 122.7 | % | 71.2 | % | 86.8 | % |
Three Months Ended December 31, 2013 | Three Months Ended December 31, 2012 | ||||||||||||||||||||||||||||
Validus Re | AlphaCat | Talbot | Corporate and Eliminations | Total | Validus Re | AlphaCat | Talbot | Corporate and Eliminations | Total | ||||||||||||||||||||
Underwriting income | |||||||||||||||||||||||||||||
Gross premiums written | 10,250 | 252 | 236,374 | (9,603 | ) | 237,273 | 79,233 | (4 | ) | 241,100 | (8,482 | ) | 311,847 | ||||||||||||||||
Reinsurance premiums ceded | 28 | — | (34,189 | ) | 9,603 | (24,558 | ) | (7,074 | ) | — | (37,067 | ) | 8,482 | (35,659 | ) | ||||||||||||||
Net premiums written | 10,278 | 252 | 202,185 | — | 212,715 | 72,159 | (4 | ) | 204,033 | — | 276,188 | ||||||||||||||||||
Change in unearned premiums | 239,982 | 37,389 | 2,152 | — | 279,523 | 213,105 | 5,895 | 4,098 | — | 223,098 | |||||||||||||||||||
Net premiums earned | 250,260 | 37,641 | 204,337 | — | 492,238 | 285,264 | 5,891 | 208,131 | — | 499,286 | |||||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||||||||
Losses and loss expenses | 110,728 | 641 | 94,783 | — | 206,152 | 331,130 | — | 127,180 | — | 458,310 | |||||||||||||||||||
Policy acquisition costs | 38,584 | 3,842 | 43,646 | (1,425 | ) | 84,647 | 40,703 | 589 | 41,745 | (1,223 | ) | 81,814 | |||||||||||||||||
General and administrative expenses | 21,611 | 5,008 | 35,952 | 20,359 | 82,930 | 14,716 | 2,011 | 32,371 | 15,997 | 65,095 | |||||||||||||||||||
Share compensation expenses | 2,247 | 154 | 2,859 | 2,887 | 8,147 | 1,849 | 84 | 2,442 | 2,751 | 7,126 | |||||||||||||||||||
Total underwriting deductions | 173,170 | 9,645 | 177,240 | 21,821 | 381,876 | 388,398 | 2,684 | 203,738 | 17,525 | 612,345 | |||||||||||||||||||
Underwriting income (loss) | 77,090 | 27,996 | 27,097 | (21,821 | ) | 110,362 | (103,134 | ) | 3,207 | 4,393 | (17,525 | ) | (113,059 | ) | |||||||||||||||
Net investment income | 19,576 | 1,044 | 4,565 | (981 | ) | 24,204 | 23,812 | 1,076 | 4,835 | (921 | ) | 28,802 | |||||||||||||||||
Other (loss) income | (2,792 | ) | 8,985 | 1,255 | (3,402 | ) | 4,046 | 856 | 992 | — | (1,661 | ) | 187 | ||||||||||||||||
Finance expenses | (3,978 | ) | (1,461 | ) | (3 | ) | (11,483 | ) | (16,925 | ) | (2,315 | ) | (2,566 | ) | 62 | (9,691 | ) | (14,510 | ) | ||||||||||
Operating income (loss) before taxes, income (loss) from operating affiliates and (income) attributable to operating affiliate investors | 89,896 | 36,564 | 32,914 | (37,687 | ) | 121,687 | (80,781 | ) | 2,709 | 9,290 | (29,798 | ) | (98,580 | ) | |||||||||||||||
Tax (expense) benefit | (1,483 | ) | — | 513 | 367 | (603 | ) | (157 | ) | — | (1,667 | ) | 1,209 | (615 | ) | ||||||||||||||
Income (loss) from operating affiliates | — | 5,510 | — | — | 5,510 | — | (614 | ) | — | — | (614 | ) | |||||||||||||||||
(Income) attributable to operating affiliate investors | — | (26,607 | ) | — | — | (26,607 | ) | — | — | — | — | — | |||||||||||||||||
Net operating income (loss) (a) | 88,413 | 15,467 | 33,427 | (37,320 | ) | 99,987 | (80,938 | ) | 2,095 | 7,623 | (28,589 | ) | (99,809 | ) | |||||||||||||||
Net operating (income) attributable to noncontrolling interest | — | (3,618 | ) | — | — | (3,618 | ) | — | (987 | ) | — | — | (987 | ) | |||||||||||||||
Net operating income (loss) available (attributable) to Validus | 88,413 | 11,849 | 33,427 | (37,320 | ) | 96,369 | (80,938 | ) | 1,108 | 7,623 | (28,589 | ) | (100,796 | ) |
Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||||||||||||||||||||||
Validus Re | AlphaCat | Talbot | Corporate and Eliminations | Total | Validus Re | AlphaCat | Talbot | Corporate and Eliminations | Total | ||||||||||||||||||||
Underwriting income | |||||||||||||||||||||||||||||
Gross premiums written | 1,242,522 | 147,009 | 1,091,890 | (80,315 | ) | 2,401,106 | 1,131,959 | 21,603 | 1,078,636 | (65,758 | ) | 2,166,440 | |||||||||||||||||
Reinsurance premiums ceded | (226,264 | ) | (525 | ) | (226,111 | ) | 80,315 | (372,585 | ) | (144,578 | ) | — | (228,686 | ) | 65,758 | (307,506 | ) | ||||||||||||
Net premiums written | 1,016,258 | 146,484 | 865,779 | — | 2,028,521 | 987,381 | 21,603 | 849,950 | — | 1,858,934 | |||||||||||||||||||
Change in unearned premiums | 117,679 | (9,070 | ) | (35,085 | ) | — | 73,524 | 35,890 | (3,937 | ) | (17,671 | ) | — | 14,282 | |||||||||||||||
Net premiums earned | 1,133,937 | 137,414 | 830,694 | — | 2,102,045 | 1,023,271 | 17,666 | 832,279 | — | 1,873,216 | |||||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||||||||
Losses and loss expenses | 430,026 | 17,569 | 346,337 | — | 793,932 | 575,416 | — | 424,030 | — | 999,446 | |||||||||||||||||||
Policy acquisition costs | 180,779 | 13,853 | 170,738 | (5,060 | ) | 360,310 | 154,362 | 1,774 | 183,926 | (5,364 | ) | 334,698 | |||||||||||||||||
General and administrative expenses | 91,260 | 18,765 | 136,458 | 68,782 | 315,265 | 63,048 | 7,532 | 133,281 | 59,791 | 263,652 | |||||||||||||||||||
Share compensation expenses | 7,668 | 468 | 9,613 | 9,881 | 27,630 | 7,763 | 279 | 7,789 | 10,878 | 26,709 | |||||||||||||||||||
Total underwriting deductions | 709,733 | 50,655 | 663,146 | 73,603 | 1,497,137 | 800,589 | 9,585 | 749,026 | 65,305 | 1,624,505 | |||||||||||||||||||
Underwriting income (loss) | 424,204 | 86,759 | 167,548 | (73,603 | ) | 604,908 | 222,682 | 8,081 | 83,253 | (65,305 | ) | 248,711 | |||||||||||||||||
Net investment income | 81,346 | 3,865 | 18,061 | (7,200 | ) | 96,072 | 88,727 | 3,748 | 21,310 | (5,849 | ) | 107,936 | |||||||||||||||||
Other income (loss) | 8,445 | 26,424 | 1,819 | (28,345 | ) | 8,343 | 5,085 | 23,229 | 2,033 | (7,951 | ) | 22,396 | |||||||||||||||||
Finance expenses | (16,111 | ) | (5,734 | ) | (259 | ) | (42,073 | ) | (64,177 | ) | (8,943 | ) | (3,061 | ) | (162 | ) | (41,691 | ) | (53,857 | ) | |||||||||
Operating income (loss) before taxes, income (loss) from operating affiliates and (income) attributable to operating affiliate investors | 497,884 | 111,314 | 187,169 | (151,221 | ) | 645,146 | 307,551 | 31,997 | 106,434 | (120,796 | ) | 325,186 | |||||||||||||||||
Tax benefit (expense) | 272 | — | (671 | ) | 16 | (383 | ) | (168 | ) | — | (2,229 | ) | (104 | ) | (2,501 | ) | |||||||||||||
Income from operating affiliates | — | 14,289 | — | — | 14,289 | — | 12,580 | — | — | 12,580 | |||||||||||||||||||
(Income) attributable to operating affiliate investors | — | (68,763 | ) | — | — | (68,763 | ) | — | — | — | — | — | |||||||||||||||||
Net operating income (loss) (a) | 498,156 | 56,840 | 186,498 | (151,205 | ) | 590,289 | 307,383 | 44,577 | 104,205 | (120,900 | ) | 335,265 | |||||||||||||||||
Net operating (income) attributable to noncontrolling interest | — | (11,617 | ) | — | — | (11,617 | ) | — | (1,433 | ) | — | — | (1,433 | ) | |||||||||||||||
Net operating income (loss) available (attributable) to Validus | 498,156 | 45,223 | 186,498 | (151,205 | ) | 578,672 | 307,383 | 43,144 | 104,205 | (120,900 | ) | 333,832 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Total gross premiums written | $ | 237,273 | $ | 311,847 | $ | 2,401,106 | $ | 2,166,440 | |||||||
Adjustments for: | |||||||||||||||
Gross premiums written on behalf of AlphaCat Re 2011, Ltd. | (1,291 | ) | 8 | (3,468 | ) | 94,317 | |||||||||
Gross premiums written on behalf of AlphaCat Re 2012, Ltd. | — | (45 | ) | (395 | ) | 32,171 | |||||||||
Total managed gross premiums written | $ | 235,982 | $ | 311,810 | $ | 2,397,243 | $ | 2,292,928 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Total gross premiums written | $ | 252 | $ | (4 | ) | $ | 147,009 | $ | 21,603 | ||||||
Adjustments for: | |||||||||||||||
Gross premiums written on behalf of AlphaCat Re 2011, Ltd. | (1,291 | ) | 8 | (3,468 | ) | 94,317 | |||||||||
Gross premiums written on behalf of AlphaCat Re 2012, Ltd. | — | (45 | ) | (395 | ) | 32,171 | |||||||||
Total managed gross premiums written | $ | (1,039 | ) | $ | (41 | ) | $ | 143,146 | $ | 148,091 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | December 31, | December 31, | ||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (loss) available (attributable) to Validus | $ | 95,332 | $ | (90,716 | ) | $ | 532,666 | $ | 408,438 | ||||||
Adjustments for: | |||||||||||||||
Gain on bargain purchase, net of expenses (a) | — | (21,485 | ) | — | (17,701 | ) | |||||||||
Net realized (gains) losses on investments | (4,448 | ) | 4,516 | (3,258 | ) | (18,233 | ) | ||||||||
Net unrealized (gains) losses on investments | (20,137 | ) | 35,857 | 58,481 | (17,585 | ) | |||||||||
(Income) loss from investment affiliate | (516 | ) | 406 | (4,790 | ) | 964 | |||||||||
Foreign exchange losses (gains) | 2,230 | (1,181 | ) | (2,505 | ) | (4,798 | ) | ||||||||
Net income (loss) attributable to noncontrolling interest | 23,908 | (28,193 | ) | (1,922 | ) | (17,253 | ) | ||||||||
Net operating income (loss) available (attributable) to Validus | 96,369 | (100,796 | ) | 578,672 | 333,832 | ||||||||||
Less: Dividends and distributions declared on outstanding warrants | (1,552 | ) | (1,572 | ) | (19,214 | ) | (6,693 | ) | |||||||
Net operating income (loss) available (attributable) to Validus, adjusted | $ | 94,817 | $ | (102,368 | ) | $ | 559,458 | $ | 327,139 | ||||||
Net income (loss) per share available (attributable) to Validus - diluted | $ | 0.93 | $ | (0.94 | ) | $ | 4.94 | $ | 3.99 | ||||||
Adjustments for: | |||||||||||||||
Gain on bargain purchase, net of expenses (a) | — | (0.23 | ) | — | (0.17 | ) | |||||||||
Net realized (gains) losses on investments | (0.04 | ) | 0.05 | (0.03 | ) | (0.18 | ) | ||||||||
Net unrealized (gains) losses on investments | (0.20 | ) | 0.37 | 0.57 | (0.17 | ) | |||||||||
(Income) loss from investment affiliate | — | — | (0.06 | ) | 0.01 | ||||||||||
Foreign exchange losses (gains) | 0.02 | (0.01 | ) | (0.02 | ) | (0.05 | ) | ||||||||
Net income (loss) attributable to noncontrolling interest | 0.23 | (0.29 | ) | (0.02 | ) | (0.17 | ) | ||||||||
Net operating income (loss) per share available (attributable) to Validus - diluted | $ | 0.94 | $ | (1.05 | ) | $ | 5.38 | $ | 3.26 | ||||||
Weighted average number of common shares and common share equivalents | 102,928,482 | 97,688,338 | 103,970,289 | 102,384,923 | |||||||||||
Average shareholders' equity available to Validus | $ | 3,744,128 | $ | 3,827,340 | $ | 3,806,166 | $ | 3,624,090 | |||||||
Annualized net operating return on average equity | 10.3 | % | (10.5 | )% | 15.2 | % | 9.2 | % |
As at December 31, 2013 | ||||||||||||||||
Equity Amount | Shares | Exercise Price | Book Value Per Share | |||||||||||||
Book value per common share | ||||||||||||||||
Total shareholders' equity available to Validus | $ | 3,704,094 | 96,044,312 | $ | 38.57 | |||||||||||
Book value per diluted common share | ||||||||||||||||
Total shareholders' equity available to Validus | 3,704,094 | 96,044,312 | ||||||||||||||
Assumed exercise of outstanding warrants | 98,513 | 5,296,056 | $ | 18.60 | ||||||||||||
Assumed exercise of outstanding stock options | 29,688 | 1,572,713 | $ | 18.88 | ||||||||||||
Unvested restricted shares | — | 2,853,083 | ||||||||||||||
Book value per diluted common share | $ | 3,832,295 | 105,766,164 | $ | 36.23 | |||||||||||
Adjustment for accumulated dividends | 7.68 | |||||||||||||||
Book value per diluted common share plus accumulated dividends | $ | 43.91 | ||||||||||||||
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 | |||||||||||
Book value per diluted 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 | ||||||||||||||
Book value per diluted common share | $ | 4,176,587 | 118,599,309 | $ | 35.22 | |||||||||||
Adjustment for accumulated dividends | 4.48 | |||||||||||||||
Book value per diluted common share plus accumulated dividends | $ | 39.70 |
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