Validus Holdings, Ltd. | ||
Investor Financial Supplement – Fourth Quarter 2017 | ||
February 1, 2018 | ||
29 Richmond Road | ||
Pembroke, HM 08 Bermuda | ||
Telephone: (441) 278-9000 | ||
Facsimile: (441) 278-9090 | ||
Website: www.validusholdings.com | ||
Mailing address: Suite 1790 48 Par-la-Ville Road | ||
Hamilton, HM 11 Bermuda |
Validus Holdings, Ltd.
Table of Contents
Section | Page | |
Explanatory Notes | ||
Consolidated Financial Highlights | ||
Summary Consolidated Balance Sheets | ||
Computation of Book Value per Common Share, Book Value per Diluted Common Share and Tangible Book Value per Diluted Common Share | ||
Consolidated Statements of Cash Flows | ||
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income | ||
Consolidated Statements of Operations - Underwriting Income Format | ||
Computation of (Loss) Earnings per Share | ||
Underwriting Income Statement - Reinsurance Segment | ||
Underwriting Results by Class of Business - Three Months Ended - Reinsurance Segment | ||
Underwriting Results by Class of Business - Years Ended - Reinsurance Segment | ||
Underwriting Income Statement - Insurance Segment | ||
Underwriting Results by Class of Business - Three Months Ended - Insurance Segment | ||
Underwriting Results by Class of Business - Years Ended - Insurance Segment | ||
Asset Management Segment Information | ||
Assets Under Management | ||
Corporate and Investments | ||
Segment Reconciliation - Three Months Ended | ||
Segment Reconciliation - Years Ended | ||
Non-GAAP Financial Measure Reconciliation | ||
Gross Premiums Written by Segment by Class of Business | ||
Consolidated Analysis of Reserves for Losses and Loss Expenses | ||
Consolidated Losses and Loss Ratios by Segment | ||
Losses and Loss Ratios by Class of Business - Reinsurance Segment | ||
Losses and Loss Ratios by Class of Business - Insurance Segment | ||
Analysis of Loss Ratios by Segment | ||
Consolidated Reinsurance Recoverable Analysis | ||
Consolidated Investment Portfolio Composition and Net Investment Income | ||
Consolidated Fixed Maturity Portfolio Credit Quality and Maturity Profile | ||
Top Ten Exposures to Fixed Income Corporate Issuers | ||
Capitalization | ||
Estimated Exposures to Peak Zone Property Catastrophe Losses - As of January 1, 2018 | ||
Estimated Exposures to Specified Loss Scenarios - As of July 1, 2017 |
2
Validus Holdings, Ltd.
Explanatory Notes
Basis of Presentation
• | This document should be read in conjunction with other documents filed by Validus Holdings, Ltd. (“Validus” or the “Company”) with the U.S. Securities and Exchange Commission pursuant to the Exchange Act of 1934, as amended. |
• | All financial information contained herein is unaudited; however, certain information contained herein relating to the years ended December 31, 2016 and 2015 is derived from or agrees to audited financial statements. Unless otherwise noted, dollar amounts are in thousands of U.S. dollars, except for share and per share amounts. |
• | The general and administrative expense ratio includes share compensation expenses. |
• | In accordance with authoritative accounting guidance, the Company continually monitors and reviews its segment reporting structure to determine whether any changes have occurred that would impact its reportable segments. As a result of the evolution of the Company’s operations, the global nature of the industry and synergies obtained through the acquisition and integration of Talbot Holdings, Ltd., Western World Insurance Group, Inc. and Crop Risk Services, Inc. ("CRS"), the Company’s reportable segments had become progressively more integrated such that during the fourth quarter of 2017, the Company changed its reportable segments to “Reinsurance,” “Insurance,” and “Asset Management.” Furthermore, to better align the Company’s disclosures with its current strategy, the Company also changed its primary lines of business to “Property,” “Specialty - Short-tail” and “Specialty - Other.” |
• | The change in reportable segments and primary lines of business had no impact on the Company’s historical consolidated financial positions, results of operations or cash flows as previously reported. Where applicable, all prior periods presented have been reclassified to conform to this new presentation. |
• | On June 1, 2017, the Company redeemed its investment in one of the lower risk AlphaCat ILS funds. As a result, the Company was no longer deemed to be the primary beneficiary and therefore this fund was deconsolidated effective June 1, 2017. |
• | On May 1, 2017, the Company acquired all of the outstanding capital stock of CRS, a primary crop insurance managing general agent ("MGA"). For segmental reporting purposes, the results of CRS have been included in the results of the Insurance segment as of the date of acquisition. Transaction expenses incurred in relation to the acquisition of CRS are primarily comprised of legal, financial advisory and audit related services. |
Non-GAAP Financial Measures
• | In presenting the Company’s results, management has included and discussed certain non-GAAP financial measures. The Company believes that these non-GAAP measures, which may be defined and calculated differently by other companies, better explain and enhance the understanding of the Company’s results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. |
• | In addition to presenting book value per common share determined in accordance with U.S. GAAP, the Company believes that the following non-GAAP book value financial measures are key financial indicators for evaluating performance and measuring overall growth: book value per diluted common share, book value per diluted common share plus accumulated dividends and tangible book value per diluted common share. A reconciliation of book value per common share, a GAAP financial measure, to the non-GAAP book value financial measures has been included on page 6. |
• | In addition to presenting net (loss) income (attributable) available to Validus common shareholders determined in accordance with U.S. GAAP, the Company believes that showing net operating income (loss) available (attributable) to Validus common shareholders, a non-GAAP financial measure, provides investors with a valuable measure of profitability and enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the Company’s results in a manner similar to how management analyzes the Company’s underlying business performance. |
• | Net operating income (loss) available (attributable) to Validus common shareholders, a non-GAAP financial measure, is calculated by the addition or subtraction of certain Consolidated Statement of (Loss) Income line items from net (loss) income (attributable) available to Validus common shareholders, the most directly comparable GAAP financial measure, and measures the performance of the Company’s operations without the influence of gains or losses on investments and foreign currencies and other items as noted in the reconciliation on page 22. The Company excludes these items from its calculation of net operating (loss) income (attributable) available to Validus common shareholders because the amount of these gains and losses is heavily influenced by, and fluctuates in part, according to availability of investment market opportunities and other factors. The Company believes these amounts are largely independent of its core underwriting activities and including them distorts the analysis of trends in its operations. The Company believes the reporting of net operating (loss) income (attributable) available to Validus common shareholders enhances the understanding of results by highlighting the underlying profitability of the Company’s core (re)insurance operations. This profitability is influenced significantly by earned premium growth, adequacy of the Company’s pricing, as well as loss frequency and severity. Over time it is also influenced by the Company’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through its management of acquisition costs and other underwriting expenses. |
• | Return on average equity, a GAAP financial measure, and net operating return on average equity, a non-GAAP financial measure, represents the returns generated on common shareholders’ equity during the year and are presented on page 22. |
• | The Company also considers underwriting (loss) income to be a measure of profitability that takes into account net premiums earned and other insurance related income as revenue and losses and loss expenses, acquisition costs and underwriting related general and administrative and share compensation expenses as expenses. Underwriting (loss) income is the difference between revenues and expense items. A reconciliation of underwriting (loss) income to net (loss) income (attributable) available to Validus common shareholders, the most comparable U.S. GAAP financial measure, is presented on page 9. |
3
Validus Holdings, Ltd.
Consolidated Financial Highlights
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Highlights | Net (loss) income (attributable) available to Validus common shareholders | $ | (8,693 | ) | $ | (250,446 | ) | $ | 101,095 | $ | 94,561 | $ | 7,767 | $ | (63,483 | ) | $ | 359,384 | ||||||||||
Net operating income (loss) available (attributable) to Validus common shareholders (a) | 4,153 | (254,459 | ) | 88,466 | 76,834 | 58,460 | (85,006 | ) | 320,885 | |||||||||||||||||||
Gross premiums written | 443,323 | 523,856 | 792,902 | 1,190,857 | 339,454 | 2,950,938 | 2,648,705 | |||||||||||||||||||||
Net premiums earned | 651,477 | 723,208 | 631,027 | 575,376 | 540,399 | 2,581,088 | 2,249,165 | |||||||||||||||||||||
Total assets | 14,426,879 | 14,601,240 | 13,951,146 | 12,137,121 | 11,349,755 | 14,426,879 | 11,349,755 | |||||||||||||||||||||
Total shareholders' equity available to Validus common shareholders | 3,495,072 | 3,536,287 | 3,811,431 | 3,761,876 | 3,688,291 | 3,495,072 | 3,688,291 | |||||||||||||||||||||
Total shareholders' equity available to Validus | 3,895,072 | 3,936,287 | 4,211,431 | 3,911,876 | 3,838,291 | 3,895,072 | 3,838,291 | |||||||||||||||||||||
Per share | (Loss) earnings per basic common share | |||||||||||||||||||||||||||
Net (loss) income (attributable) available to Validus common shareholders | $ | (0.11 | ) | $ | (3.17 | ) | $ | 1.28 | $ | 1.19 | $ | 0.10 | $ | (0.80 | ) | $ | 4.43 | |||||||||||
Net operating income (loss) available (attributable) to Validus common shareholders (a) | 0.05 | (3.22 | ) | 1.12 | 0.97 | 0.74 | (1.07 | ) | 3.96 | |||||||||||||||||||
(Loss) earnings per diluted common share | ||||||||||||||||||||||||||||
Net (loss) income (attributable) available to Validus common shareholders | $ | (0.11 | ) | $ | (3.17 | ) | $ | 1.25 | $ | 1.17 | $ | 0.10 | $ | (0.80 | ) | $ | 4.36 | |||||||||||
Net operating income (loss) available (attributable) to Validus common shareholders (a) | 0.05 | (3.22 | ) | 1.09 | 0.95 | 0.73 | (1.07 | ) | 3.90 | |||||||||||||||||||
Book value per common share | $ | 44.06 | $ | 44.51 | $ | 47.93 | $ | 47.54 | $ | 46.61 | $ | 44.06 | $ | 46.61 | ||||||||||||||
Book value per diluted common share (a) | $ | 42.71 | $ | 43.13 | $ | 46.45 | $ | 45.88 | $ | 44.97 | $ | 42.71 | $ | 44.97 | ||||||||||||||
Change in book value per diluted common share inclusive of dividends (a) | (0.1 | )% | (6.3 | )% | 2.1 | % | 2.9 | % | 0.4 | % | (1.6 | )% | 9.5 | % | ||||||||||||||
Book value per diluted common share plus accumulated dividends (a) | $ | 55.79 | $ | 55.83 | $ | 58.77 | $ | 57.82 | $ | 56.53 | $ | 55.79 | $ | 56.53 | ||||||||||||||
Ratios | Losses and loss expense ratio | 73.7 | % | 173.5 | % | 46.9 | % | 46.9 | % | 50.9 | % | 89.1 | % | 47.4 | % | |||||||||||||
Policy acquisition cost ratio | 19.5 | % | 16.0 | % | 18.6 | % | 19.4 | % | 22.4 | % | 18.3 | % | 20.0 | % | ||||||||||||||
General and administration expense ratio | 16.5 | % | 11.0 | % | 17.0 | % | 16.9 | % | 16.3 | % | 15.2 | % | 16.8 | % | ||||||||||||||
Expense ratio | 36.0 | % | 27.0 | % | 35.6 | % | 36.3 | % | 38.7 | % | 33.5 | % | 36.8 | % | ||||||||||||||
Combined ratio | 109.7 | % | 200.5 | % | 82.5 | % | 83.2 | % | 89.6 | % | 122.6 | % | 84.2 | % | ||||||||||||||
Annualized return on average equity | (1.0 | )% | (27.3 | )% | 10.7 | % | 10.2 | % | 0.8 | % | (1.7 | )% | 9.7 | % | ||||||||||||||
Annualized net operating return on average equity (a) | 0.5 | % | (27.7 | )% | 9.3 | % | 8.3 | % | 6.3 | % | (2.3 | )% | 8.7 | % |
Notes:
(a) | Non-GAAP financial measure. Refer to the Explanatory Notes on page 3 for further information. |
4
Validus Holdings, Ltd.
Summary Consolidated Balance Sheets
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||
Fixed maturity investments trading, at fair value | $ | 5,858,348 | $ | 5,419,966 | $ | 5,418,643 | $ | 5,365,216 | $ | 5,543,030 | $ | 5,576,341 | $ | 5,551,586 | $ | 5,481,304 | $ | 5,510,331 | ||||||||||||||||||
Short-term investments trading, at fair value | 3,381,757 | 2,993,246 | 2,871,353 | 2,785,226 | 2,796,170 | 2,481,406 | 2,369,654 | 2,108,199 | 1,941,635 | |||||||||||||||||||||||||||
Other investments, at fair value | 355,218 | 471,300 | 448,618 | 443,004 | 405,712 | 394,695 | 359,526 | 344,151 | 336,856 | |||||||||||||||||||||||||||
Investments in investment affiliates, equity method | 100,137 | 92,079 | 103,377 | 94,697 | 100,431 | 99,731 | 99,278 | 84,135 | 87,673 | |||||||||||||||||||||||||||
Cash and cash equivalents | 754,990 | 965,630 | 800,405 | 623,937 | 419,976 | 443,992 | 568,798 | 569,774 | 723,109 | |||||||||||||||||||||||||||
Restricted cash | 394,663 | 89,403 | 195,039 | 92,547 | 70,956 | 113,048 | 96,022 | 108,395 | 73,270 | |||||||||||||||||||||||||||
Total investments and cash | 10,845,113 | 10,031,624 | 9,837,435 | 9,404,627 | 9,336,275 | 9,109,213 | 9,044,864 | 8,695,958 | 8,672,874 | |||||||||||||||||||||||||||
Investments in operating affiliate, equity method | — | — | — | — | — | — | — | 369 | 392 | |||||||||||||||||||||||||||
Premiums receivable | 939,487 | 1,569,374 | 1,940,637 | 1,214,745 | 725,390 | 939,127 | 1,372,000 | 1,176,684 | 658,682 | |||||||||||||||||||||||||||
Deferred acquisition costs | 213,816 | 258,078 | 302,857 | 292,180 | 209,227 | 249,922 | 283,213 | 262,675 | 181,002 | |||||||||||||||||||||||||||
Prepaid reinsurance premiums | 132,938 | 207,618 | 335,837 | 199,046 | 77,996 | 119,805 | 145,567 | 181,255 | 77,992 | |||||||||||||||||||||||||||
Securities lending collateral | 2,717 | 2,115 | 2,514 | 10,386 | 9,779 | 10,629 | 10,224 | 9,721 | 4,863 | |||||||||||||||||||||||||||
Loss reserves recoverable | 1,233,997 | 1,335,016 | 600,207 | 451,856 | 430,421 | 444,609 | 442,987 | 370,689 | 350,586 | |||||||||||||||||||||||||||
Paid losses recoverable | 46,873 | 77,730 | 35,675 | 37,837 | 35,247 | 36,069 | 27,648 | 25,001 | 23,071 | |||||||||||||||||||||||||||
Income taxes recoverable | 9,044 | 9,704 | 4,763 | 6,757 | 4,870 | 6,879 | 8,526 | 7,146 | 16,228 | |||||||||||||||||||||||||||
Deferred tax asset | 52,467 | 52,228 | 52,655 | 45,995 | 43,529 | 26,015 | 23,745 | 27,771 | 21,661 | |||||||||||||||||||||||||||
Receivable for investments sold | 12,182 | 37,493 | 20,519 | 9,302 | 3,901 | 21,854 | 13,736 | 16,278 | 39,766 | |||||||||||||||||||||||||||
Intangible assets | 171,411 | 173,398 | 175,518 | 114,176 | 115,592 | 117,010 | 118,426 | 119,842 | 121,258 | |||||||||||||||||||||||||||
Goodwill | 229,573 | 227,701 | 227,701 | 196,758 | 196,758 | 196,758 | 196,758 | 196,758 | 196,758 | |||||||||||||||||||||||||||
Accrued investment income | 29,096 | 27,976 | 26,968 | 25,962 | 26,488 | 24,906 | 24,925 | 22,298 | 23,897 | |||||||||||||||||||||||||||
Other assets | 508,165 | 591,185 | 387,860 | 127,494 | 134,282 | 183,357 | 105,625 | 92,076 | 126,782 | |||||||||||||||||||||||||||
Total assets | $ | 14,426,879 | $ | 14,601,240 | $ | 13,951,146 | $ | 12,137,121 | $ | 11,349,755 | $ | 11,486,153 | $ | 11,818,244 | $ | 11,204,521 | $ | 10,515,812 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||
Reserve for losses and loss expenses | $ | 4,831,390 | $ | 4,935,637 | $ | 3,305,191 | $ | 3,052,745 | $ | 2,995,195 | $ | 3,035,987 | $ | 3,122,717 | $ | 2,980,300 | $ | 2,996,567 | ||||||||||||||||||
Unearned premiums | 1,147,186 | 1,526,465 | 1,970,896 | 1,612,474 | 1,076,049 | 1,359,438 | 1,621,563 | 1,503,161 | 966,210 | |||||||||||||||||||||||||||
Reinsurance balances payable | 331,645 | 527,881 | 461,261 | 118,119 | 54,781 | 76,429 | 92,488 | 96,685 | 75,380 | |||||||||||||||||||||||||||
Securities lending payable | 2,717 | 2,581 | 2,980 | 10,852 | 10,245 | 11,095 | 10,690 | 10,187 | 5,329 | |||||||||||||||||||||||||||
Deferred tax liability | 4,600 | 4,198 | 4,012 | 3,818 | 3,331 | 3,278 | 3,552 | 3,618 | 3,847 | |||||||||||||||||||||||||||
Payable for investments purchased | 74,496 | 84,431 | 92,077 | 38,486 | 29,447 | 49,435 | 52,718 | 76,116 | 77,475 | |||||||||||||||||||||||||||
Accounts payable and accrued expenses | 1,225,875 | 478,892 | 385,958 | 171,134 | 587,648 | 144,086 | 149,593 | 136,712 | 627,331 | |||||||||||||||||||||||||||
Notes payable to AlphaCat investors | 1,108,364 | 1,107,618 | 1,066,159 | 446,576 | 278,202 | 372,730 | 370,982 | 323,510 | 75,493 | |||||||||||||||||||||||||||
Senior notes payable | 245,564 | 245,513 | 245,463 | 245,412 | 245,362 | 245,311 | 245,261 | 245,211 | 245,161 | |||||||||||||||||||||||||||
Debentures payable | 539,158 | 538,910 | 538,400 | 537,402 | 537,226 | 538,168 | 537,987 | 538,335 | 537,668 | |||||||||||||||||||||||||||
Total liabilities | 9,510,995 | 9,452,126 | 8,072,397 | 6,237,018 | 5,817,486 | 5,835,957 | 6,207,551 | 5,913,835 | 5,610,461 | |||||||||||||||||||||||||||
Redeemable noncontrolling interests | 1,004,094 | 1,133,880 | 1,251,660 | 1,657,630 | 1,528,001 | 1,559,580 | 1,532,283 | 1,409,037 | 1,111,714 | |||||||||||||||||||||||||||
Shareholders' equity | ||||||||||||||||||||||||||||||||||||
Preferred shares | $ | 400,000 | $ | 400,000 | $ | 400,000 | $ | 150,000 | $ | 150,000 | $ | 150,000 | $ | 150,000 | $ | — | $ | — | ||||||||||||||||||
Common shares | 28,349 | 28,342 | 28,339 | 28,225 | 28,224 | 28,223 | 28,219 | 28,102 | 28,100 | |||||||||||||||||||||||||||
Treasury shares | (14,468 | ) | (14,437 | ) | (14,423 | ) | (14,376 | ) | (14,376 | ) | (14,320 | ) | (14,084 | ) | (13,830 | ) | (13,592 | ) | ||||||||||||||||||
Additional paid-in capital | 814,641 | 812,266 | 807,321 | 830,346 | 821,023 | 827,256 | 883,701 | 954,485 | 1,002,980 | |||||||||||||||||||||||||||
Accumulated other comprehensive loss | (22,192 | ) | (18,430 | ) | (19,924 | ) | (22,453 | ) | (23,216 | ) | (21,092 | ) | (18,182 | ) | (15,438 | ) | (12,569 | ) | ||||||||||||||||||
Retained earnings | 2,688,742 | 2,728,546 | 3,010,118 | 2,940,134 | 2,876,636 | 2,897,553 | 2,836,602 | 2,771,107 | 2,634,056 | |||||||||||||||||||||||||||
Total shareholders' equity available to Validus | 3,895,072 | 3,936,287 | 4,211,431 | 3,911,876 | 3,838,291 | 3,867,620 | 3,866,256 | 3,724,426 | 3,638,975 | |||||||||||||||||||||||||||
Noncontrolling interests | 16,718 | 78,947 | 415,658 | 330,597 | 165,977 | 222,996 | 212,154 | 157,223 | 154,662 | |||||||||||||||||||||||||||
Total shareholders' equity | 3,911,790 | 4,015,234 | 4,627,089 | 4,242,473 | 4,004,268 | 4,090,616 | 4,078,410 | 3,881,649 | 3,793,637 | |||||||||||||||||||||||||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 14,426,879 | $ | 14,601,240 | $ | 13,951,146 | $ | 12,137,121 | $ | 11,349,755 | $ | 11,486,153 | $ | 11,818,244 | $ | 11,204,521 | $ | 10,515,812 | ||||||||||||||||||
Book value per common share | $ | 44.06 | $ | 44.51 | $ | 47.93 | $ | 47.54 | $ | 46.61 | $ | 46.80 | $ | 46.01 | $ | 45.67 | $ | 43.90 | ||||||||||||||||||
Book value per diluted common share (a) | $ | 42.71 | $ | 43.13 | $ | 46.45 | $ | 45.88 | $ | 44.97 | $ | 45.16 | $ | 44.41 | $ | 44.00 | $ | 42.33 | ||||||||||||||||||
Book value per diluted common share plus accumulated dividends (a) | $ | 55.79 | $ | 55.83 | $ | 58.77 | $ | 57.82 | $ | 56.53 | $ | 56.37 | $ | 55.27 | $ | 54.51 | $ | 52.49 |
Notes:
(a) | Non-GAAP financial measure. Refer to the Explanatory Notes on page 3 for further information. |
5
Validus Holdings, Ltd.
Computation of Book Value per Common Share, Book Value per Diluted Common Share and Tangible Book Value per Diluted Common Share
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||
Equity Amount | Common Shares | Per Share Amount (a) | Equity Amount | Common Shares | Per Share Amount (a) | ||||||||||||||||
Book value per common share (b) | $ | 3,495,072 | 79,319,550 | $ | 44.06 | $ | 3,688,291 | 79,132,252 | $ | 46.61 | |||||||||||
Non-GAAP Adjustments: | |||||||||||||||||||||
Assumed exercise of outstanding stock options (c)(d) | — | — | 614 | 26,136 | |||||||||||||||||
Unvested restricted shares | — | 2,503,859 | — | 2,868,610 | |||||||||||||||||
Book value per diluted common share (e) | 3,495,072 | 81,823,409 | $ | 42.71 | 3,688,905 | 82,026,998 | $ | 44.97 | |||||||||||||
Goodwill | (229,573 | ) | — | (196,758 | ) | — | |||||||||||||||
Intangible assets | (171,411 | ) | — | (115,592 | ) | — | |||||||||||||||
Tangible book value per diluted common share (e) | $ | 3,094,088 | 81,823,409 | $ | 37.81 | $ | 3,376,555 | 82,026,998 | $ | 41.16 | |||||||||||
Book value per diluted common share (e) | $ | 42.71 | $ | 44.97 | |||||||||||||||||
Accumulated dividends | 13.08 | 11.56 | |||||||||||||||||||
Book value per diluted common share plus accumulated dividends (e) | $ | 55.79 | $ | 56.53 |
Notes:
(a) | Per share amounts are calculated by dividing the equity amount by the common shares. |
(b) | The equity amount used in the calculation of book value per common share represents total shareholders' equity available to Validus excluding the liquidation value of the preferred shares. |
(c) | Using the "as-if-converted" method, assuming all proceeds received upon exercise of stock options will be retained by the Company and the resulting common shares from exercise remain outstanding. |
(d) | At December 31, 2017, the weighted average exercise price for those stock options that had an exercise price lower than book value per share was $nil (December 31, 2016: $23.48). |
(e) | Non-GAAP financial measure. Refer to the Explanatory Notes on page 3 for further information. |
6
Validus Holdings, Ltd.
Consolidated Statements of Cash Flows
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Cash flows provided by (used in) operating activities | ||||||||||||||||||||||||||||
Net (loss) income | $ | (70,001 | ) | $ | (621,185 | ) | $ | 146,948 | $ | 139,336 | $ | 37,170 | $ | (404,902 | ) | $ | 487,202 | |||||||||||
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities: | ||||||||||||||||||||||||||||
Share compensation expenses | 10,031 | 9,443 | 11,146 | 9,491 | 10,442 | 40,111 | 42,907 | |||||||||||||||||||||
Loss on deconsolidation of AlphaCat ILS fund | — | — | 402 | — | — | 402 | — | |||||||||||||||||||||
Amortization of discount on senior notes | 27 | 27 | 27 | 27 | 27 | 108 | 108 | |||||||||||||||||||||
(Income) loss from investment and operating affiliates | (6,345 | ) | (1,011 | ) | (9,466 | ) | (5,188 | ) | (2,166 | ) | (22,010 | ) | 2,106 | |||||||||||||||
Net realized and change in net unrealized losses (gains) on investments | 15,650 | 4,291 | (18,595 | ) | (12,184 | ) | 58,240 | (10,838 | ) | (32,628 | ) | |||||||||||||||||
Amortization of intangible assets | 2,146 | 2,120 | 2,579 | 1,416 | 1,418 | 8,261 | 5,666 | |||||||||||||||||||||
Foreign exchange (gains) losses included in net income | (540 | ) | (4,493 | ) | (4,748 | ) | (4,938 | ) | 7,628 | (14,719 | ) | 3,043 | ||||||||||||||||
Amortization of premium on fixed maturities | 4,732 | 4,166 | 3,476 | 3,536 | 4,580 | 15,910 | 17,961 | |||||||||||||||||||||
Change in operational balance sheet items, net | 336,152 | 857,839 | (96,883 | ) | (113,697 | ) | 38,268 | 983,411 | (116,162 | ) | ||||||||||||||||||
Net cash provided by operating activities | $ | 291,852 | $ | 251,197 | $ | 34,886 | $ | 17,799 | $ | 155,607 | $ | 595,734 | $ | 410,203 | ||||||||||||||
Cash flows provided by (used in) investing activities | ||||||||||||||||||||||||||||
(Purchases) sales of investments | $ | (717,157 | ) | $ | (174,373 | ) | $ | (92,623 | ) | $ | 167,286 | $ | (366,894 | ) | $ | (816,867 | ) | $ | (974,719 | ) | ||||||||
(Increase) decrease in securities lending collateral | (602 | ) | 399 | 7,872 | (607 | ) | 850 | 7,062 | (4,916 | ) | ||||||||||||||||||
(Contributions) distributions in investment & operating affiliates, net | (1,713 | ) | 12,309 | 786 | 10,922 | 1,466 | 22,304 | (14,472 | ) | |||||||||||||||||||
Purchase of subsidiary, net of cash acquired | — | — | (183,923 | ) | — | — | (183,923 | ) | — | |||||||||||||||||||
Net cash (used in) provided by investing activities | $ | (719,472 | ) | $ | (161,665 | ) | $ | (267,888 | ) | $ | 177,601 | $ | (364,578 | ) | $ | (971,424 | ) | $ | (994,107 | ) | ||||||||
Cash flows provided by (used in) financing activities | ||||||||||||||||||||||||||||
Issuance of notes payable to AlphaCat investors, net | $ | 506 | $ | 40,903 | $ | 196,597 | $ | 73,048 | $ | (202 | ) | $ | 311,054 | $ | 296,325 | |||||||||||||
Issuance of preferred shares, net | — | — | 241,686 | — | — | 241,686 | 144,852 | |||||||||||||||||||||
Issuance of common shares, net | 545 | (162 | ) | (11,794 | ) | (167 | ) | (70 | ) | (11,578 | ) | (7,701 | ) | |||||||||||||||
Purchases of common shares under share repurchase program | (8,225 | ) | (4,347 | ) | (13,996 | ) | — | (16,660 | ) | (26,568 | ) | (212,675 | ) | |||||||||||||||
Dividends paid on common and preferred shares | (36,072 | ) | (35,956 | ) | (35,397 | ) | (32,295 | ) | (29,927 | ) | (139,720 | ) | (120,080 | ) | ||||||||||||||
Increase (decrease) in securities lending payable | 136 | (399 | ) | (7,872 | ) | 607 | (850 | ) | (7,528 | ) | 4,916 | |||||||||||||||||
Third party investment (redemption) in redeemable noncontrolling interest, net | 58,665 | (51,201 | ) | 95,463 | 35,403 | 11,499 | 138,330 | 376,165 | ||||||||||||||||||||
Third party (redemption) investment in noncontrolling interest, net | (3,440 | ) | (101,125 | ) | 69,965 | 92,210 | — | 57,610 | 44,571 | |||||||||||||||||||
Third party subscriptions received (deployed) in AlphaCat Funds and Sidecars, net | 516,333 | 114,500 | (27,500 | ) | (144,452 | ) | 187,452 | 458,881 | (225,284 | ) | ||||||||||||||||||
Net cash provided by (used in) financing activities | $ | 528,448 | $ | (37,787 | ) | $ | 507,152 | $ | 24,354 | $ | 151,242 | $ | 1,022,167 | $ | 301,089 | |||||||||||||
Effect of foreign currency rate changes on cash and cash equivalents and restricted cash | (6,208 | ) | 7,844 | 4,810 | 5,798 | (8,379 | ) | 12,244 | (22,632 | ) | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 94,620 | 59,589 | 278,960 | 225,552 | (66,108 | ) | 658,721 | (305,447 | ) | |||||||||||||||||||
Cash and cash equivalents and restricted cash - beginning of period | 1,055,033 | 995,444 | 716,484 | 490,932 | 557,040 | 490,932 | 796,379 | |||||||||||||||||||||
Cash and cash equivalents and restricted cash - end of period | $ | 1,149,653 | $ | 1,055,033 | $ | 995,444 | $ | 716,484 | $ | 490,932 | $ | 1,149,653 | $ | 490,932 | ||||||||||||||
Supplemental information: | ||||||||||||||||||||||||||||
Taxes paid during the period | $ | 1,511 | $ | 2,242 | $ | 552 | $ | 16 | $ | 120 | $ | 4,321 | $ | 6,034 | ||||||||||||||
Interest paid during the period | $ | 8,045 | $ | 19,202 | $ | 8,113 | $ | 19,073 | $ | 8,566 | $ | 54,433 | $ | 54,638 | ||||||||||||||
Losses paid during the period | $ | 485,913 | $ | 372,706 | $ | 236,023 | $ | 245,787 | $ | 277,422 | $ | 1,340,429 | $ | 1,114,402 |
7
Validus Holdings, Ltd.
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Gross premiums written | $ | 443,323 | $ | 523,856 | $ | 792,902 | $ | 1,190,857 | $ | 339,454 | $ | 2,950,938 | $ | 2,648,705 | ||||||||||||||
Reinsurance premiums ceded | (96,445 | ) | (116,860 | ) | (56,222 | ) | (200,106 | ) | (40,635 | ) | (469,633 | ) | (289,705 | ) | ||||||||||||||
Net premiums written | 346,878 | 406,996 | 736,680 | 990,751 | 298,819 | 2,481,305 | 2,359,000 | |||||||||||||||||||||
Change in unearned premiums | 304,599 | 316,212 | (105,653 | ) | (415,375 | ) | 241,580 | 99,783 | (109,835 | ) | ||||||||||||||||||
Net premiums earned | 651,477 | 723,208 | 631,027 | 575,376 | 540,399 | 2,581,088 | 2,249,165 | |||||||||||||||||||||
Net investment income | 48,960 | 44,458 | 44,241 | 40,214 | 38,153 | 177,873 | 150,385 | |||||||||||||||||||||
Net realized gains (losses) on investments | 5,607 | 906 | 2,274 | (1,164 | ) | 9,220 | 7,623 | 15,757 | ||||||||||||||||||||
Change in net unrealized (losses) gains on investments | (21,257 | ) | (5,197 | ) | 16,321 | 13,348 | (67,460 | ) | 3,215 | 16,871 | ||||||||||||||||||
Income (loss) from investment affiliates | 6,345 | 1,011 | 9,466 | 5,188 | 2,166 | 22,010 | (2,083 | ) | ||||||||||||||||||||
Other insurance related income and other income (loss) | 6,939 | 3,571 | 1,339 | 1,330 | 568 | 13,179 | 2,195 | |||||||||||||||||||||
Foreign exchange (losses) gains | (283 | ) | (1,404 | ) | (7,329 | ) | 1,569 | (901 | ) | (7,447 | ) | 10,864 | ||||||||||||||||
Total revenues | 697,788 | 766,553 | 697,339 | 635,861 | 522,145 | 2,797,541 | 2,443,154 | |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Losses and loss expenses | 479,842 | 1,254,602 | 296,149 | 269,585 | 275,126 | 2,300,178 | 1,065,097 | |||||||||||||||||||||
Policy acquisition costs | 127,067 | 115,590 | 117,268 | 111,628 | 120,889 | 471,553 | 449,482 | |||||||||||||||||||||
General and administrative expenses | 97,522 | 70,342 | 96,349 | 87,924 | 77,955 | 352,137 | 336,294 | |||||||||||||||||||||
Share compensation expenses | 10,031 | 9,443 | 11,146 | 9,491 | 10,442 | 40,111 | 42,907 | |||||||||||||||||||||
Finance expenses | 15,871 | 14,523 | 14,209 | 13,943 | 14,630 | 58,546 | 58,520 | |||||||||||||||||||||
Transaction expenses | — | — | 4,427 | — | — | 4,427 | — | |||||||||||||||||||||
Total expenses | 730,333 | 1,464,500 | 539,548 | 492,571 | 499,042 | 3,226,952 | 1,952,300 | |||||||||||||||||||||
(Loss) income before taxes, (loss) from operating affiliate and (income) loss attributable to AlphaCat investors | (32,545 | ) | (697,947 | ) | 157,791 | 143,290 | 23,103 | (429,411 | ) | 490,854 | ||||||||||||||||||
Tax benefit | 412 | 2,632 | 987 | 3,549 | 21,147 | 7,580 | 19,729 | |||||||||||||||||||||
Loss from operating affiliate | — | — | — | — | — | — | (23 | ) | ||||||||||||||||||||
(Income) loss attributable to AlphaCat investors | (37,868 | ) | 74,130 | (11,830 | ) | (7,503 | ) | (7,080 | ) | 16,929 | (23,358 | ) | ||||||||||||||||
Net (loss) income | (70,001 | ) | (621,185 | ) | 146,948 | 139,336 | 37,170 | (404,902 | ) | 487,202 | ||||||||||||||||||
Net loss (income) attributable to noncontrolling interests | 67,136 | 376,366 | (43,650 | ) | (42,572 | ) | (27,200 | ) | 357,280 | (123,363 | ) | |||||||||||||||||
Net (loss) income (attributable) available to Validus | (2,865 | ) | (244,819 | ) | 103,298 | 96,764 | 9,970 | (47,622 | ) | 363,839 | ||||||||||||||||||
Dividends on preferred shares | (5,828 | ) | (5,627 | ) | (2,203 | ) | (2,203 | ) | (2,203 | ) | (15,861 | ) | (4,455 | ) | ||||||||||||||
Net (loss) income (attributable) available to Validus common shareholders | $ | (8,693 | ) | $ | (250,446 | ) | $ | 101,095 | $ | 94,561 | $ | 7,767 | $ | (63,483 | ) | $ | 359,384 | |||||||||||
Comprehensive (loss) income | ||||||||||||||||||||||||||||
Net (loss) income | $ | (70,001 | ) | $ | (621,185 | ) | $ | 146,948 | $ | 139,336 | $ | 37,170 | $ | (404,902 | ) | $ | 487,202 | |||||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||||||||||||||
Change in foreign currency translation adjustments | 490 | 1,481 | 1,489 | 597 | (3,755 | ) | 4,057 | (10,440 | ) | |||||||||||||||||||
Change in minimum pension liability | 1,617 | — | 1,184 | 68 | 221 | 2,869 | (484 | ) | ||||||||||||||||||||
Change in fair value of cash flow hedges | (6,319 | ) | 13 | (144 | ) | 98 | 1,410 | (6,352 | ) | 277 | ||||||||||||||||||
Other comprehensive (loss) income, net of tax | $ | (4,212 | ) | $ | 1,494 | $ | 2,529 | $ | 763 | $ | (2,124 | ) | $ | 574 | $ | (10,647 | ) | |||||||||||
Comprehensive loss (income) attributable to noncontrolling interests | 67,136 | 376,366 | (43,650 | ) | (42,572 | ) | (27,200 | ) | 357,280 | (123,363 | ) | |||||||||||||||||
Comprehensive (loss) income (attributable) available to Validus | $ | (7,077 | ) | $ | (243,325 | ) | $ | 105,827 | $ | 97,527 | $ | 7,846 | $ | (47,048 | ) | $ | 353,192 | |||||||||||
(Loss) earnings per share | ||||||||||||||||||||||||||||
Weighted average number of common shares and common share equivalents outstanding | ||||||||||||||||||||||||||||
Basic | 78,966,938 | 78,994,335 | 79,270,561 | 79,133,671 | 79,261,409 | 79,091,376 | 81,041,974 | |||||||||||||||||||||
Diluted | 78,966,938 | 78,994,335 | 80,872,451 | 80,739,142 | 80,621,967 | 79,091,376 | 82,359,460 | |||||||||||||||||||||
Basic (loss) earnings per share (attributable) available to Validus common shareholders | $ | (0.11 | ) | $ | (3.17 | ) | $ | 1.28 | $ | 1.19 | $ | 0.10 | $ | (0.80 | ) | $ | 4.43 | |||||||||||
(Loss) earnings per diluted share (attributable) available to Validus common shareholders | $ | (0.11 | ) | $ | (3.17 | ) | $ | 1.25 | $ | 1.17 | $ | 0.10 | $ | (0.80 | ) | $ | 4.36 | |||||||||||
Cash dividends declared per common share | $ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.35 | $ | 1.52 | $ | 1.40 |
8
Validus Holdings, Ltd.
Consolidated Statements of Operations - Underwriting Income Format
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Underwriting revenues | ||||||||||||||||||||||||||||
Gross premiums written | $ | 443,323 | $ | 523,856 | $ | 792,902 | $ | 1,190,857 | $ | 339,454 | $ | 2,950,938 | $ | 2,648,705 | ||||||||||||||
Reinsurance premiums ceded | (96,445 | ) | (116,860 | ) | (56,222 | ) | (200,106 | ) | (40,635 | ) | (469,633 | ) | (289,705 | ) | ||||||||||||||
Net premiums written | 346,878 | 406,996 | 736,680 | 990,751 | 298,819 | 2,481,305 | 2,359,000 | |||||||||||||||||||||
Change in unearned premiums | 304,599 | 316,212 | (105,653 | ) | (415,375 | ) | 241,580 | 99,783 | (109,835 | ) | ||||||||||||||||||
Net premiums earned | 651,477 | 723,208 | 631,027 | 575,376 | 540,399 | 2,581,088 | 2,249,165 | |||||||||||||||||||||
Other insurance related income | 6,939 | 3,536 | 1,165 | 1,236 | 561 | 12,876 | 2,961 | |||||||||||||||||||||
Total underwriting revenues | 658,416 | 726,744 | 632,192 | 576,612 | 540,960 | 2,593,964 | 2,252,126 | |||||||||||||||||||||
Underwriting deductions | ||||||||||||||||||||||||||||
Losses and loss expenses | 479,842 | 1,254,602 | 296,149 | 269,585 | 275,126 | 2,300,178 | 1,065,097 | |||||||||||||||||||||
Policy acquisition costs | 127,067 | 115,590 | 117,268 | 111,628 | 120,889 | 471,553 | 449,482 | |||||||||||||||||||||
General and administrative expenses | 97,522 | 70,342 | 96,349 | 87,924 | 77,955 | 352,137 | 336,294 | |||||||||||||||||||||
Share compensation expenses | 10,031 | 9,443 | 11,146 | 9,491 | 10,442 | 40,111 | 42,907 | |||||||||||||||||||||
Total underwriting deductions | 714,462 | 1,449,977 | 520,912 | 478,628 | 484,412 | 3,163,979 | 1,893,780 | |||||||||||||||||||||
Underwriting (loss) income (a) | $ | (56,046 | ) | $ | (723,233 | ) | $ | 111,280 | $ | 97,984 | $ | 56,548 | $ | (570,015 | ) | $ | 358,346 | |||||||||||
Net investment income | 48,960 | 44,458 | 44,241 | 40,214 | 38,153 | 177,873 | 150,385 | |||||||||||||||||||||
Finance expenses | (15,871 | ) | (14,523 | ) | (14,209 | ) | (13,943 | ) | (14,630 | ) | (58,546 | ) | (58,520 | ) | ||||||||||||||
Dividends on preferred shares | (5,828 | ) | (5,627 | ) | (2,203 | ) | (2,203 | ) | (2,203 | ) | (15,861 | ) | (4,455 | ) | ||||||||||||||
Tax (expense) benefit | (927 | ) | 2,164 | 2,735 | 4,129 | 15,284 | 8,101 | 21,416 | ||||||||||||||||||||
(Loss) from operating affiliate | — | — | — | — | — | — | (23 | ) | ||||||||||||||||||||
(Income) loss attributable to AlphaCat investors | (37,868 | ) | 74,130 | (11,830 | ) | (7,503 | ) | (7,080 | ) | 16,929 | (23,358 | ) | ||||||||||||||||
Net operating loss (income) attributable to noncontrolling interests | 71,733 | 368,172 | (41,548 | ) | (41,844 | ) | (27,612 | ) | 356,513 | (122,906 | ) | |||||||||||||||||
Net operating income (loss) available (attributable) to Validus common shareholders (a) | $ | 4,153 | $ | (254,459 | ) | $ | 88,466 | $ | 76,834 | $ | 58,460 | $ | (85,006 | ) | $ | 320,885 | ||||||||||||
Net realized gains (losses) on investments | 5,607 | 906 | 2,274 | (1,164 | ) | 9,220 | 7,623 | 15,757 | ||||||||||||||||||||
Change in net unrealized (losses) gains on investments | (21,257 | ) | (5,197 | ) | 16,321 | 13,348 | (67,460 | ) | 3,215 | 16,871 | ||||||||||||||||||
Income (loss) from investment affiliates | 6,345 | 1,011 | 9,466 | 5,188 | 2,166 | 22,010 | (2,083 | ) | ||||||||||||||||||||
Foreign exchange (losses) gains | (283 | ) | (1,404 | ) | (7,329 | ) | 1,569 | (901 | ) | (7,447 | ) | 10,864 | ||||||||||||||||
Other income (loss) | — | 35 | 174 | 94 | 7 | 303 | (766 | ) | ||||||||||||||||||||
Transaction expenses | — | — | (4,427 | ) | — | — | (4,427 | ) | — | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (4,597 | ) | 8,194 | (2,102 | ) | (728 | ) | 412 | 767 | (457 | ) | |||||||||||||||||
Tax benefit (expense) | 1,339 | 468 | (1,748 | ) | (580 | ) | 5,863 | (521 | ) | (1,687 | ) | |||||||||||||||||
Net (loss) income (attributable) available to Validus common shareholders | $ | (8,693 | ) | $ | (250,446 | ) | $ | 101,095 | $ | 94,561 | $ | 7,767 | $ | (63,483 | ) | $ | 359,384 | |||||||||||
Selected ratios: | ||||||||||||||||||||||||||||
Ratio of net to gross premiums written | 78.2 | % | 77.7 | % | 92.9 | % | 83.2 | % | 88.0 | % | 84.1 | % | 89.1 | % | ||||||||||||||
Losses and loss expense ratio | 73.7 | % | 173.5 | % | 46.9 | % | 46.9 | % | 50.9 | % | 89.1 | % | 47.4 | % | ||||||||||||||
Policy acquisition cost ratio | 19.5 | % | 16.0 | % | 18.6 | % | 19.4 | % | 22.4 | % | 18.3 | % | 20.0 | % | ||||||||||||||
General and administrative expense ratio | 16.5 | % | 11.0 | % | 17.0 | % | 16.9 | % | 16.3 | % | 15.2 | % | 16.8 | % | ||||||||||||||
Expense ratio | 36.0 | % | 27.0 | % | 35.6 | % | 36.3 | % | 38.7 | % | 33.5 | % | 36.8 | % | ||||||||||||||
Combined ratio | 109.7 | % | 200.5 | % | 82.5 | % | 83.2 | % | 89.6 | % | 122.6 | % | 84.2 | % |
Notes:
(a) | Non-GAAP financial measure. Refer to the Explanatory Notes on page 3 for further information. |
9
Validus Holdings, Ltd.
Computation of (Loss) Earnings per Share
Three Months Ended (a) | |||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Net (Loss) | Net Operating Income | Comprehensive (Loss) | Net Income | Net Operating Income | Comprehensive Income | ||||||||||||||||||
Basic (loss) earnings per share (b) | |||||||||||||||||||||||
(Loss) Income (attributable) available to Validus common shareholders | $ | (8,693 | ) | $ | 4,153 | $ | (12,905 | ) | $ | 7,767 | $ | 58,460 | $ | 5,643 | |||||||||
Weighted average number of common shares outstanding | 78,966,938 | 78,966,938 | 78,966,938 | 79,261,409 | 79,261,409 | 79,261,409 | |||||||||||||||||
Basic (loss) earnings per share (attributable) available to Validus common shareholders | $ | (0.11 | ) | $ | 0.05 | $ | (0.16 | ) | $ | 0.10 | $ | 0.74 | $ | 0.07 | |||||||||
(Loss) earnings per diluted share (c) | |||||||||||||||||||||||
(Loss) Income (attributable) available to Validus common shareholders | $ | (8,693 | ) | $ | 4,153 | $ | (12,905 | ) | $ | 7,767 | $ | 58,460 | $ | 5,643 | |||||||||
Weighted average number of common shares outstanding | 78,966,938 | 78,966,938 | 78,966,938 | 79,261,409 | 79,261,409 | 79,261,409 | |||||||||||||||||
Share equivalents: | |||||||||||||||||||||||
Stock options | — | 5,466 | — | 16,403 | 16,403 | 16,403 | |||||||||||||||||
Unvested restricted shares | — | 1,199,013 | — | 1,344,155 | 1,344,155 | 1,344,155 | |||||||||||||||||
Weighted average number of diluted common shares outstanding | 78,966,938 | 80,171,417 | 78,966,938 | 80,621,967 | 80,621,967 | 80,621,967 | |||||||||||||||||
(Loss) earnings per diluted share (attributable) available to Validus common shareholders | $ | (0.11 | ) | $ | 0.05 | $ | (0.16 | ) | $ | 0.10 | $ | 0.73 | $ | 0.07 | |||||||||
Years Ended (a) | |||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Net (Loss) | Net Operating (Loss) | Comprehensive (Loss) | Net Income | Net Operating income | Comprehensive income | ||||||||||||||||||
Basic (loss) earnings per share (b) | |||||||||||||||||||||||
(Loss) income (attributable) available to Validus common shareholders | $ | (63,483 | ) | $ | (85,006 | ) | $ | (62,909 | ) | $ | 359,384 | $ | 320,885 | $ | 348,737 | ||||||||
Weighted average number of common shares outstanding | 79,091,376 | 79,091,376 | 79,091,376 | 81,041,974 | 81,041,974 | 81,041,974 | |||||||||||||||||
Basic (loss) earnings per share (attributable) available to Validus common shareholders | $ | (0.80 | ) | $ | (1.07 | ) | $ | (0.80 | ) | $ | 4.43 | $ | 3.96 | $ | 4.30 | ||||||||
(Loss) earnings per diluted share (c) | |||||||||||||||||||||||
(Loss) income (attributable) available to Validus common shareholders | $ | (63,483 | ) | $ | (85,006 | ) | $ | (62,909 | ) | $ | 359,384 | $ | 320,885 | $ | 348,737 | ||||||||
Weighted average number of common shares outstanding | 79,091,376 | 79,091,376 | 79,091,376 | 81,041,974 | 81,041,974 | 81,041,974 | |||||||||||||||||
Share equivalents: | |||||||||||||||||||||||
Stock options | — | — | — | 28,196 | 28,196 | 28,196 | |||||||||||||||||
Unvested restricted shares | — | — | — | 1,289,290 | 1,289,290 | 1,289,290 | |||||||||||||||||
Weighted average number of diluted common shares outstanding | 79,091,376 | 79,091,376 | 79,091,376 | 82,359,460 | 82,359,460 | 82,359,460 | |||||||||||||||||
(Loss) earnings per diluted share (attributable) available to Validus common shareholders | $ | (0.80 | ) | $ | (1.07 | ) | $ | (0.80 | ) | $ | 4.36 | $ | 3.90 | $ | 4.23 |
Notes:
(a) | ASC 718 requires that any unrecognized stock based compensation expense that will be recorded in future periods be included as proceeds for purposes of treasury stock repurchases, which is applied against the unvested restricted shares balance. |
(b) | (Loss) earnings per basic common share is based on weighted average common shares and excludes any dilutive effects of options and restricted stock. |
(c) | (Loss) earnings per diluted common share assumes the exercise of all dilutive stock options and restricted stock grants. Due to the net (loss) incurred during the three months and year ended December 31, 2017, share equivalents were not included in the computation of (loss) per diluted common share due to their anti-dilutive effect. |
10
Validus Holdings, Ltd.
Underwriting Income Statement - Reinsurance Segment
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Underwriting revenues | ||||||||||||||||||||||||||||
Gross premiums written | $ | 51,960 | $ | 169,572 | $ | 330,534 | $ | 643,141 | $ | 41,813 | $ | 1,195,207 | $ | 1,184,912 | ||||||||||||||
Reinsurance premiums ceded | (40,716 | ) | (43,849 | ) | (10,278 | ) | (114,446 | ) | (7,773 | ) | (209,289 | ) | (121,331 | ) | ||||||||||||||
Net premiums written | 11,244 | 125,723 | 320,256 | 528,695 | 34,040 | 985,918 | 1,063,581 | |||||||||||||||||||||
Change in unearned premiums | 239,320 | 156,754 | (61,948 | ) | (297,040 | ) | 200,129 | 37,086 | (67,432 | ) | ||||||||||||||||||
Net premiums earned | 250,564 | 282,477 | 258,308 | 231,655 | 234,169 | 1,023,004 | 996,149 | |||||||||||||||||||||
Other insurance related income | 15 | 49 | 1 | 2 | 9 | 67 | 25 | |||||||||||||||||||||
Total underwriting revenues | 250,579 | 282,526 | 258,309 | 231,657 | 234,178 | 1,023,071 | 996,174 | |||||||||||||||||||||
Underwriting deductions | ||||||||||||||||||||||||||||
Losses and loss expenses | 135,804 | 361,693 | 114,341 | 80,881 | 93,503 | 692,719 | 415,505 | |||||||||||||||||||||
Policy acquisition costs | 58,107 | 47,822 | 49,966 | 43,535 | 55,352 | 199,430 | 189,797 | |||||||||||||||||||||
General and administrative expenses | 23,604 | 14,400 | 22,204 | 19,969 | 21,248 | 80,177 | 85,000 | |||||||||||||||||||||
Share compensation expenses | 2,331 | 3,083 | 2,725 | 2,623 | 2,811 | 10,762 | 11,668 | |||||||||||||||||||||
Total underwriting deductions | 219,846 | 426,998 | 189,236 | 147,008 | 172,914 | 983,088 | 701,970 | |||||||||||||||||||||
Underwriting income (loss) | $ | 30,733 | $ | (144,472 | ) | $ | 69,073 | $ | 84,649 | $ | 61,264 | $ | 39,983 | $ | 294,204 | |||||||||||||
Supplemental information: | ||||||||||||||||||||||||||||
Losses and loss expenses: | ||||||||||||||||||||||||||||
Current period excluding items below | $ | 132,919 | $ | 123,095 | $ | 124,268 | $ | 106,932 | $ | 109,775 | $ | 487,214 | $ | 459,249 | ||||||||||||||
Current period—notable loss events | 14,738 | 283,027 | — | — | 18,599 | 297,765 | 45,164 | |||||||||||||||||||||
Current period—non-notable loss events | 9,392 | 796 | 5,781 | 5,073 | 1 | 21,042 | 46,718 | |||||||||||||||||||||
Change in prior accident years | (21,245 | ) | (45,225 | ) | (15,708 | ) | (31,124 | ) | (34,872 | ) | (113,302 | ) | (135,626 | ) | ||||||||||||||
Total losses and loss expenses | $ | 135,804 | $ | 361,693 | $ | 114,341 | $ | 80,881 | $ | 93,503 | $ | 692,719 | $ | 415,505 | ||||||||||||||
Selected ratios: | ||||||||||||||||||||||||||||
Ratio of net to gross premiums written | 21.6 | % | 74.1 | % | 96.9 | % | 82.2 | % | 81.4 | % | 82.5 | % | 89.8 | % | ||||||||||||||
Losses and loss expense ratio: | ||||||||||||||||||||||||||||
Current period excluding items below | 53.1 | % | 43.5 | % | 48.2 | % | 46.1 | % | 46.9 | % | 47.6 | % | 46.1 | % | ||||||||||||||
Current period—notable loss events | 5.9 | % | 100.2 | % | — | % | — | % | 7.9 | % | 29.1 | % | 4.5 | % | ||||||||||||||
Current period—non-notable loss events | 3.7 | % | 0.3 | % | 2.2 | % | 2.2 | % | — | % | 2.1 | % | 4.7 | % | ||||||||||||||
Change in prior accident years | (8.5 | )% | (16.0 | )% | (6.1 | )% | (13.4 | )% | (14.9 | )% | (11.1 | )% | (13.6 | )% | ||||||||||||||
Losses and loss expense ratio | 54.2 | % | 128.0 | % | 44.3 | % | 34.9 | % | 39.9 | % | 67.7 | % | 41.7 | % | ||||||||||||||
Policy acquisition cost ratio | 23.2 | % | 16.9 | % | 19.3 | % | 18.8 | % | 23.6 | % | 19.5 | % | 19.1 | % | ||||||||||||||
General and administrative expense ratio | 10.4 | % | 6.2 | % | 9.7 | % | 9.8 | % | 10.3 | % | 8.9 | % | 9.7 | % | ||||||||||||||
Expense ratio | 33.6 | % | 23.1 | % | 29.0 | % | 28.6 | % | 33.9 | % | 28.4 | % | 28.8 | % | ||||||||||||||
Combined ratio | 87.8 | % | 151.1 | % | 73.3 | % | 63.5 | % | 73.8 | % | 96.1 | % | 70.5 | % |
11
Validus Holdings, Ltd.
Underwriting Results by Class of Business - Three Months Ended - Reinsurance Segment
Three Months Ended December 31, 2017 | Three Months Ended December 31, 2016 | ||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | ||||||||||||||||||||||||
Underwriting revenues | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 18,126 | $ | 12,997 | $ | 20,837 | $ | 51,960 | $ | 8,479 | $ | (8,763 | ) | $ | 42,097 | $ | 41,813 | ||||||||||||||
Reinsurance premiums ceded | (32,778 | ) | (8,059 | ) | 121 | (40,716 | ) | 706 | (8,447 | ) | (32 | ) | (7,773 | ) | |||||||||||||||||
Net premiums written | (14,652 | ) | 4,938 | 20,958 | 11,244 | 9,185 | (17,210 | ) | 42,065 | 34,040 | |||||||||||||||||||||
Change in unearned premiums | 113,643 | 111,487 | 14,190 | 239,320 | 92,397 | 130,100 | (22,368 | ) | 200,129 | ||||||||||||||||||||||
Net premiums earned | 98,991 | 116,425 | 35,148 | 250,564 | 101,582 | 112,890 | 19,697 | 234,169 | |||||||||||||||||||||||
Other insurance related income | 15 | 9 | |||||||||||||||||||||||||||||
Total underwriting revenues | 250,579 | 234,178 | |||||||||||||||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||||||||||
Losses and loss expenses | 60,644 | 54,494 | 20,666 | 135,804 | 38,381 | 46,098 | 9,024 | 93,503 | |||||||||||||||||||||||
Policy acquisition costs | 17,976 | 27,508 | 12,623 | 58,107 | 17,611 | 30,840 | 6,901 | 55,352 | |||||||||||||||||||||||
Total underwriting deductions before G&A | 78,620 | 82,002 | 33,289 | 193,911 | 55,992 | 76,938 | 15,925 | 148,855 | |||||||||||||||||||||||
Underwriting income before G&A | $ | 20,371 | $ | 34,423 | $ | 1,859 | $ | 56,668 | $ | 45,590 | $ | 35,952 | $ | 3,772 | $ | 85,323 | |||||||||||||||
General and administrative expenses | 23,604 | 21,248 | |||||||||||||||||||||||||||||
Share compensation expenses | 2,331 | 2,811 | |||||||||||||||||||||||||||||
Total underwriting deductions | 219,846 | 172,914 | |||||||||||||||||||||||||||||
Underwriting income | $ | 30,733 | $ | 61,264 | |||||||||||||||||||||||||||
Supplemental information: | |||||||||||||||||||||||||||||||
Losses and loss expenses: | |||||||||||||||||||||||||||||||
Current period excluding items below | $ | 38,881 | $ | 70,334 | $ | 23,704 | $ | 132,919 | $ | 26,918 | $ | 72,065 | $ | 10,792 | $ | 109,775 | |||||||||||||||
Current period—notable loss events | 14,900 | (162 | ) | — | 14,738 | 16,679 | 1,920 | — | 18,599 | ||||||||||||||||||||||
Current period—non-notable loss events | 8,818 | 574 | — | 9,392 | (1 | ) | 2 | — | 1 | ||||||||||||||||||||||
Change in prior accident years | (1,955 | ) | (16,252 | ) | (3,038 | ) | (21,245 | ) | (5,215 | ) | (27,889 | ) | (1,768 | ) | (34,872 | ) | |||||||||||||||
Total losses and loss expenses | $ | 60,644 | $ | 54,494 | $ | 20,666 | $ | 135,804 | $ | 38,381 | $ | 46,098 | $ | 9,024 | $ | 93,503 | |||||||||||||||
Selected ratios: | |||||||||||||||||||||||||||||||
Ratio of net to gross premiums written | (80.8 | )% | 38.0 | % | 100.6 | % | 21.6 | % | 108.3 | % | 196.4 | % | 99.9 | % | 81.4 | % | |||||||||||||||
Losses and loss expense ratio: | |||||||||||||||||||||||||||||||
Current period excluding items below | 39.2 | % | 60.4 | % | 67.4 | % | 53.1 | % | 26.5 | % | 63.8 | % | 54.8 | % | 46.9 | % | |||||||||||||||
Current period—notable loss events | 15.1 | % | (0.1 | )% | — | % | 5.9 | % | 16.4 | % | 1.7 | % | — | % | 7.9 | % | |||||||||||||||
Current period—non-notable loss events | 8.9 | % | 0.5 | % | — | % | 3.7 | % | — | % | — | % | — | % | — | % | |||||||||||||||
Change in prior accident years | (2.0 | )% | (14.0 | )% | (8.6 | )% | (8.5 | )% | (5.1 | )% | (24.7 | )% | (9.0 | )% | (14.9 | )% | |||||||||||||||
Losses and loss expense ratio | 61.2 | % | 46.8 | % | 58.8 | % | 54.2 | % | 37.8 | % | 40.8 | % | 45.8 | % | 39.9 | % | |||||||||||||||
Policy acquisition cost ratio | 18.2 | % | 23.6 | % | 35.9 | % | 23.2 | % | 17.3 | % | 27.3 | % | 35.0 | % | 23.6 | % | |||||||||||||||
General and administrative expense ratio | 10.4 | % | 10.3 | % | |||||||||||||||||||||||||||
Expense ratio | 33.6 | % | 33.9 | % | |||||||||||||||||||||||||||
Combined ratio | 87.8 | % | 73.8 | % |
12
Validus Holdings, Ltd.
Underwriting Results by Class of Business - Years Ended - Reinsurance Segment
Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | ||||||||||||||||||||||||
Underwriting revenues | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 548,977 | $ | 505,111 | $ | 141,119 | $ | 1,195,207 | $ | 497,263 | $ | 555,504 | $ | 132,145 | $ | 1,184,912 | |||||||||||||||
Reinsurance premiums ceded | (147,547 | ) | (45,071 | ) | (16,671 | ) | (209,289 | ) | (88,342 | ) | (32,623 | ) | (366 | ) | (121,331 | ) | |||||||||||||||
Net premiums written | 401,430 | 460,040 | 124,448 | 985,918 | 408,921 | 522,881 | 131,779 | 1,063,581 | |||||||||||||||||||||||
Change in unearned premiums | 45,946 | (7,020 | ) | (1,840 | ) | 37,086 | 10,214 | (265 | ) | (77,381 | ) | (67,432 | ) | ||||||||||||||||||
Net premiums earned | 447,376 | 453,020 | 122,608 | 1,023,004 | 419,135 | 522,616 | 54,398 | 996,149 | |||||||||||||||||||||||
Other insurance related income | 67 | 25 | |||||||||||||||||||||||||||||
Total underwriting revenues | 1,023,071 | 996,174 | |||||||||||||||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||||||||||
Losses and loss expenses | 364,112 | 256,941 | 71,666 | 692,719 | 102,334 | 281,216 | 31,955 | 415,505 | |||||||||||||||||||||||
Policy acquisition costs | 73,777 | 86,714 | 38,939 | 199,430 | 75,417 | 94,685 | 19,695 | 189,797 | |||||||||||||||||||||||
Total underwriting deductions before G&A | 437,889 | 343,655 | 110,605 | 892,149 | 177,751 | 375,901 | 51,650 | 605,302 | |||||||||||||||||||||||
Underwriting income before G&A | $ | 9,487 | $ | 109,365 | $ | 12,003 | $ | 130,922 | $ | 241,384 | $ | 146,715 | $ | 2,748 | $ | 390,872 | |||||||||||||||
General and administrative expenses | 80,177 | 85,000 | |||||||||||||||||||||||||||||
Share compensation expenses | 10,762 | 11,668 | |||||||||||||||||||||||||||||
Total underwriting deductions | 983,088 | 701,970 | |||||||||||||||||||||||||||||
Underwriting income | $ | 39,983 | $ | 294,204 | |||||||||||||||||||||||||||
Supplemental information: | |||||||||||||||||||||||||||||||
Losses and loss expenses: | |||||||||||||||||||||||||||||||
Current period excluding items below | $ | 125,560 | $ | 287,369 | $ | 74,285 | $ | 487,214 | $ | 97,783 | $ | 325,426 | $ | 36,040 | $ | 459,249 | |||||||||||||||
Current period—notable loss events | 258,798 | 38,967 | — | 297,765 | 43,244 | 1,920 | — | 45,164 | |||||||||||||||||||||||
Current period—non-notable loss events | 13,817 | 7,225 | — | 21,042 | 22,409 | 24,309 | — | 46,718 | |||||||||||||||||||||||
Change in prior accident years | (34,063 | ) | (76,620 | ) | (2,619 | ) | (113,302 | ) | (61,102 | ) | (70,439 | ) | (4,085 | ) | (135,626 | ) | |||||||||||||||
Total losses and loss expenses | $ | 364,112 | $ | 256,941 | $ | 71,666 | $ | 692,719 | $ | 102,334 | $ | 281,216 | $ | 31,955 | $ | 415,505 | |||||||||||||||
Selected ratios: | |||||||||||||||||||||||||||||||
Ratio of net to gross premiums written | 73.1 | % | 91.1 | % | 88.2 | % | 82.5 | % | 82.2 | % | 94.1 | % | 99.7 | % | 89.8 | % | |||||||||||||||
Losses and loss expense ratio: | |||||||||||||||||||||||||||||||
Current period excluding items below | 28.1 | % | 63.4 | % | 60.6 | % | 47.6 | % | 23.4 | % | 62.2 | % | 66.2 | % | 46.1 | % | |||||||||||||||
Current period—notable loss events | 57.8 | % | 8.6 | % | — | % | 29.1 | % | 10.3 | % | 0.4 | % | — | % | 4.5 | % | |||||||||||||||
Current period—non-notable loss events | 3.1 | % | 1.6 | % | — | % | 2.1 | % | 5.3 | % | 4.7 | % | — | % | 4.7 | % | |||||||||||||||
Change in prior accident years | (7.6 | )% | (16.9 | )% | (2.1 | )% | (11.1 | )% | (14.6 | )% | (13.5 | )% | (7.5 | )% | (13.6 | )% | |||||||||||||||
Losses and loss expense ratio | 81.4 | % | 56.7 | % | 58.5 | % | 67.7 | % | 24.4 | % | 53.8 | % | 58.7 | % | 41.7 | % | |||||||||||||||
Policy acquisition cost ratio | 16.5 | % | 19.1 | % | 31.8 | % | 19.5 | % | 18.0 | % | 18.1 | % | 36.2 | % | 19.1 | % | |||||||||||||||
General and administrative expense ratio | 8.9 | % | 9.7 | % | |||||||||||||||||||||||||||
Expense ratio | 28.4 | % | 28.8 | % | |||||||||||||||||||||||||||
Combined ratio | 96.1 | % | 70.5 | % |
13
Validus Holdings, Ltd.
Underwriting Income Statement - Insurance Segment
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Underwriting revenues | ||||||||||||||||||||||||||||
Gross premiums written | $ | 377,014 | $ | 333,272 | $ | 360,057 | $ | 382,790 | $ | 297,905 | $ | 1,453,133 | $ | 1,194,137 | ||||||||||||||
Reinsurance premiums ceded | (56,378 | ) | (76,362 | ) | (49,315 | ) | (79,000 | ) | (32,862 | ) | (261,055 | ) | (162,669 | ) | ||||||||||||||
Net premiums written | 320,636 | 256,910 | 310,742 | 303,790 | 265,043 | 1,192,078 | 1,031,468 | |||||||||||||||||||||
Change in unearned premiums | 12,393 | 82,185 | (5,875 | ) | (24,696 | ) | (24,900 | ) | 64,007 | (28,524 | ) | |||||||||||||||||
Net premiums earned | 333,029 | 339,095 | 304,867 | 279,094 | 240,143 | 1,256,085 | 1,002,944 | |||||||||||||||||||||
Other insurance related income | 3,957 | 1,354 | 728 | 996 | 284 | 7,035 | 1,367 | |||||||||||||||||||||
Total underwriting revenues | 336,986 | 340,449 | 305,595 | 280,090 | 240,427 | 1,263,120 | 1,004,311 | |||||||||||||||||||||
Underwriting deductions | ||||||||||||||||||||||||||||
Losses and loss expenses | 244,908 | 321,940 | 180,741 | 186,610 | 164,417 | 934,199 | 604,741 | |||||||||||||||||||||
Policy acquisition costs | 60,403 | 59,454 | 60,137 | 61,192 | 58,394 | 241,186 | 232,780 | |||||||||||||||||||||
General and administrative expenses | 64,945 | 43,369 | 53,596 | 45,276 | 33,069 | 207,186 | 165,529 | |||||||||||||||||||||
Share compensation expenses | 3,512 | 2,187 | 3,702 | 3,373 | 3,693 | 12,774 | 14,987 | |||||||||||||||||||||
Total underwriting deductions | 373,768 | 426,950 | 298,176 | 296,451 | 259,573 | 1,395,345 | 1,018,037 | |||||||||||||||||||||
Underwriting (loss) income | $ | (36,782 | ) | $ | (86,501 | ) | $ | 7,419 | $ | (16,361 | ) | $ | (19,146 | ) | $ | (132,225 | ) | $ | (13,726 | ) | ||||||||
Supplemental information: | ||||||||||||||||||||||||||||
Losses and loss expenses: | ||||||||||||||||||||||||||||
Current period excluding items below | $ | 245,952 | $ | 255,425 | $ | 202,684 | $ | 198,610 | $ | 157,284 | $ | 902,671 | $ | 644,512 | ||||||||||||||
Current period—notable loss events | 20,917 | 82,111 | — | — | 17,730 | 103,028 | 20,752 | |||||||||||||||||||||
Current period—non-notable loss events | (2,276 | ) | 10,992 | 1,787 | 14,689 | 189 | 25,192 | 17,306 | ||||||||||||||||||||
Change in prior accident years | (19,685 | ) | (26,588 | ) | (23,730 | ) | (26,689 | ) | (10,786 | ) | (96,692 | ) | (77,829 | ) | ||||||||||||||
Total losses and loss expenses | $ | 244,908 | $ | 321,940 | $ | 180,741 | $ | 186,610 | $ | 164,417 | $ | 934,199 | $ | 604,741 | ||||||||||||||
Selected ratios: | ||||||||||||||||||||||||||||
Ratio of net to gross premiums written | 85.0 | % | 77.1 | % | 86.3 | % | 79.4 | % | 89.0 | % | 82.0 | % | 86.4 | % | ||||||||||||||
Losses and loss expense ratio: | ||||||||||||||||||||||||||||
Current period excluding items below | 73.8 | % | 75.3 | % | 66.5 | % | 71.2 | % | 65.5 | % | 71.9 | % | 64.3 | % | ||||||||||||||
Current period—notable loss events | 6.3 | % | 24.2 | % | — | % | — | % | 7.4 | % | 8.2 | % | 2.1 | % | ||||||||||||||
Current period—non-notable loss events | (0.7 | )% | 3.2 | % | 0.6 | % | 5.3 | % | 0.1 | % | 2.0 | % | 1.7 | % | ||||||||||||||
Change in prior accident years | (5.9 | )% | (7.8 | )% | (7.8 | )% | (9.6 | )% | (4.5 | )% | (7.7 | )% | (7.8 | )% | ||||||||||||||
Losses and loss expense ratio | 73.5 | % | 94.9 | % | 59.3 | % | 66.9 | % | 68.5 | % | 74.4 | % | 60.3 | % | ||||||||||||||
Policy acquisition cost ratio | 18.1 | % | 17.5 | % | 19.7 | % | 21.9 | % | 24.3 | % | 19.2 | % | 23.2 | % | ||||||||||||||
General and administrative expense ratio | 20.6 | % | 13.4 | % | 18.8 | % | 17.4 | % | 15.3 | % | 17.5 | % | 18.0 | % | ||||||||||||||
Expense ratio | 38.7 | % | 30.9 | % | 38.5 | % | 39.3 | % | 39.6 | % | 36.7 | % | 41.2 | % | ||||||||||||||
Combined ratio | 112.2 | % | 125.8 | % | 97.8 | % | 106.2 | % | 108.1 | % | 111.1 | % | 101.5 | % |
14
Validus Holdings, Ltd.
Underwriting Results by Class of Business - Three Months Ended - Insurance Segment
Three Months Ended December 31, 2017 | Three Months Ended December 31, 2016 | ||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | ||||||||||||||||||||||||
Underwriting revenues | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 105,005 | $ | 155,233 | $ | 116,776 | $ | 377,014 | $ | 96,225 | $ | 86,568 | $ | 115,112 | $ | 297,905 | |||||||||||||||
Reinsurance premiums ceded | (30,954 | ) | (14,924 | ) | (10,500 | ) | (56,378 | ) | (18,065 | ) | (6,350 | ) | (8,447 | ) | (32,862 | ) | |||||||||||||||
Net premiums written | 74,051 | 140,309 | 106,276 | 320,636 | 78,160 | 80,218 | 106,665 | 265,043 | |||||||||||||||||||||||
Change in unearned premiums | (8,986 | ) | 23,026 | (1,647 | ) | 12,393 | (7,184 | ) | (2,585 | ) | (15,131 | ) | (24,900 | ) | |||||||||||||||||
Net premiums earned | 65,065 | 163,335 | 104,629 | 333,029 | 70,976 | 77,633 | 91,534 | 240,143 | |||||||||||||||||||||||
Other insurance related income | 3,957 | 284 | |||||||||||||||||||||||||||||
Total underwriting revenues | 336,986 | 240,427 | |||||||||||||||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||||||||||
Losses and loss expenses | 80,935 | 98,083 | 65,890 | 244,908 | 63,502 | 42,274 | 58,641 | 164,417 | |||||||||||||||||||||||
Policy acquisition costs | 16,008 | 22,010 | 22,385 | 60,403 | 13,836 | 23,401 | 21,157 | 58,394 | |||||||||||||||||||||||
Total underwriting deductions before G&A | 96,943 | 120,093 | 88,275 | 305,311 | 77,338 | 65,675 | 79,798 | 222,811 | |||||||||||||||||||||||
Underwriting (loss) income before G&A | $ | (31,878 | ) | $ | 43,242 | $ | 16,354 | $ | 31,675 | $ | (6,362 | ) | $ | 11,958 | $ | 11,736 | $ | 17,616 | |||||||||||||
General and administrative expenses | 64,945 | 33,069 | |||||||||||||||||||||||||||||
Share compensation expenses | 3,512 | 3,693 | |||||||||||||||||||||||||||||
Total underwriting deductions | 373,768 | 259,573 | |||||||||||||||||||||||||||||
Underwriting (loss) | $ | (36,782 | ) | $ | (19,146 | ) | |||||||||||||||||||||||||
Supplemental information: | |||||||||||||||||||||||||||||||
Losses and loss expenses: | |||||||||||||||||||||||||||||||
Current period excluding items below | $ | 66,150 | $ | 102,135 | $ | 77,667 | $ | 245,952 | $ | 57,262 | $ | 39,791 | $ | 60,231 | $ | 157,284 | |||||||||||||||
Current period—notable loss events | 21,189 | 62 | (334 | ) | 20,917 | 14,208 | 3,358 | 164 | 17,730 | ||||||||||||||||||||||
Current period—non-notable loss events | (1,526 | ) | (750 | ) | — | (2,276 | ) | 193 | (4 | ) | — | 189 | |||||||||||||||||||
Change in prior accident years | (4,878 | ) | (3,364 | ) | (11,443 | ) | (19,685 | ) | (8,161 | ) | (871 | ) | (1,754 | ) | (10,786 | ) | |||||||||||||||
Total losses and loss expenses | $ | 80,935 | $ | 98,083 | $ | 65,890 | $ | 244,908 | $ | 63,502 | $ | 42,274 | $ | 58,641 | $ | 164,417 | |||||||||||||||
Selected ratios: | |||||||||||||||||||||||||||||||
Ratio of net to gross premiums written | 70.5 | % | 90.4 | % | 91.0 | % | 85.0 | % | 81.2 | % | 92.7 | % | 92.7 | % | 89.0 | % | |||||||||||||||
Losses and loss expense ratio: | |||||||||||||||||||||||||||||||
Current period excluding items below | 101.6 | % | 62.6 | % | 74.2 | % | 73.8 | % | 80.7 | % | 51.3 | % | 65.8 | % | 65.5 | % | |||||||||||||||
Current period—notable loss events | 32.6 | % | — | % | (0.3 | )% | 6.3 | % | 20.0 | % | 4.3 | % | 0.2 | % | 7.4 | % | |||||||||||||||
Current period—non-notable loss events | (2.3 | )% | (0.5 | )% | — | % | (0.7 | )% | 0.3 | % | — | % | — | % | 0.1 | % | |||||||||||||||
Change in prior accident years | (7.5 | )% | (2.1 | )% | (10.9 | )% | (5.9 | )% | (11.5 | )% | (1.1 | )% | (1.9 | )% | (4.5 | )% | |||||||||||||||
Losses and loss expense ratio | 124.4 | % | 60.0 | % | 63.0 | % | 73.5 | % | 89.5 | % | 54.5 | % | 64.1 | % | 68.5 | % | |||||||||||||||
Policy acquisition cost ratio | 24.6 | % | 13.5 | % | 21.4 | % | 18.1 | % | 19.5 | % | 30.1 | % | 23.1 | % | 24.3 | % | |||||||||||||||
General and administrative expense ratio | 20.6 | % | 15.3 | % | |||||||||||||||||||||||||||
Expense ratio | 38.7 | % | 39.6 | % | |||||||||||||||||||||||||||
Combined ratio | 112.2 | % | 108.1 | % |
15
Validus Holdings, Ltd.
Underwriting Results by Class of Business - Years Ended - Insurance Segment
Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | ||||||||||||||||||||||||
Underwriting revenues | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 397,292 | $ | 580,952 | $ | 474,889 | $ | 1,453,133 | $ | 371,221 | $ | 397,602 | $ | 425,314 | $ | 1,194,137 | |||||||||||||||
Reinsurance premiums ceded | (130,554 | ) | (90,489 | ) | (40,012 | ) | (261,055 | ) | (78,676 | ) | (45,693 | ) | (38,300 | ) | (162,669 | ) | |||||||||||||||
Net premiums written | 266,738 | 490,463 | 434,877 | 1,192,078 | 292,545 | 351,909 | 387,014 | 1,031,468 | |||||||||||||||||||||||
Change in unearned premiums | (6,066 | ) | 96,319 | (26,246 | ) | 64,007 | (21,854 | ) | 17,191 | (23,861 | ) | (28,524 | ) | ||||||||||||||||||
Net premiums earned | 260,672 | 586,782 | 408,631 | 1,256,085 | 270,691 | 369,100 | 363,153 | 1,002,944 | |||||||||||||||||||||||
Other insurance related income | 7,035 | 1,367 | |||||||||||||||||||||||||||||
Total underwriting revenues | 1,263,120 | 1,004,311 | |||||||||||||||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||||||||||
Losses and loss expenses | 315,443 | 368,990 | 249,766 | 934,199 | 183,663 | 199,848 | 221,230 | 604,741 | |||||||||||||||||||||||
Policy acquisition costs | 61,034 | 94,997 | 85,155 | 241,186 | 50,019 | 105,189 | 77,572 | 232,780 | |||||||||||||||||||||||
Total underwriting deductions before G&A | 376,477 | 463,987 | 334,921 | 1,175,385 | 233,682 | 305,037 | 298,802 | 837,521 | |||||||||||||||||||||||
Underwriting (loss) income before G&A | $ | (115,805 | ) | $ | 122,795 | $ | 73,710 | $ | 87,735 | $ | 37,009 | $ | 64,063 | $ | 64,351 | $ | 166,790 | ||||||||||||||
General and administrative expenses | 207,186 | 165,529 | |||||||||||||||||||||||||||||
Share compensation expenses | 12,774 | 14,987 | |||||||||||||||||||||||||||||
Total underwriting deductions | 1,395,345 | 1,018,037 | |||||||||||||||||||||||||||||
Underwriting (loss) | $ | (132,225 | ) | $ | (13,726 | ) | |||||||||||||||||||||||||
Supplemental information: | |||||||||||||||||||||||||||||||
Losses and loss expenses: | |||||||||||||||||||||||||||||||
Current period excluding items below | $ | 239,511 | $ | 374,345 | $ | 288,815 | $ | 902,671 | $ | 198,128 | $ | 179,544 | $ | 266,840 | $ | 644,512 | |||||||||||||||
Current period—notable loss events | 77,192 | 24,116 | 1,720 | 103,028 | 17,230 | 3,358 | 164 | 20,752 | |||||||||||||||||||||||
Current period—non-notable loss events | 24,942 | 250 | — | 25,192 | 6,160 | 11,145 | 1 | 17,306 | |||||||||||||||||||||||
Change in prior accident years | (26,202 | ) | (29,721 | ) | (40,769 | ) | (96,692 | ) | (37,855 | ) | 5,801 | (45,775 | ) | (77,829 | ) | ||||||||||||||||
Total losses and loss expenses | $ | 315,443 | $ | 368,990 | $ | 249,766 | $ | 934,199 | $ | 183,663 | $ | 199,848 | $ | 221,230 | $ | 604,741 | |||||||||||||||
Selected ratios: | |||||||||||||||||||||||||||||||
Ratio of net to gross premiums written | 67.1 | % | 84.4 | % | 91.6 | % | 82.0 | % | 78.8 | % | 88.5 | % | 91.0 | % | 86.4 | % | |||||||||||||||
Losses and loss expense ratio: | |||||||||||||||||||||||||||||||
Current period excluding items below | 91.9 | % | 63.8 | % | 70.7 | % | 71.9 | % | 73.1 | % | 48.6 | % | 73.5 | % | 64.3 | % | |||||||||||||||
Current period—notable loss events | 29.6 | % | 4.1 | % | 0.4 | % | 8.2 | % | 6.4 | % | 0.9 | % | — | % | 2.1 | % | |||||||||||||||
Current period—non-notable loss events | 9.6 | % | — | % | — | % | 2.0 | % | 2.3 | % | 3.0 | % | — | % | 1.7 | % | |||||||||||||||
Change in prior accident years | (10.1 | )% | (5.1 | )% | (10.0 | )% | (7.7 | )% | (14.0 | )% | 1.6 | % | (12.6 | )% | (7.8 | )% | |||||||||||||||
Losses and loss expense ratio | 121.0 | % | 62.8 | % | 61.1 | % | 74.4 | % | 67.8 | % | 54.1 | % | 60.9 | % | 60.3 | % | |||||||||||||||
Policy acquisition cost ratio | 23.4 | % | 16.2 | % | 20.8 | % | 19.2 | % | 18.5 | % | 28.5 | % | 21.4 | % | 23.2 | % | |||||||||||||||
General and administrative expense ratio | 17.5 | % | 18.0 | % | |||||||||||||||||||||||||||
Expense ratio | 36.7 | % | 41.2 | % | |||||||||||||||||||||||||||
Combined ratio | 111.1 | % | 101.5 | % |
16
Validus Holdings, Ltd.
Asset Management Segment Information
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Fee revenues | ||||||||||||||||||||||||||||
Third party | $ | 5,061 | $ | 5,095 | $ | 5,549 | $ | 4,644 | $ | 3,928 | $ | 20,349 | $ | 18,771 | ||||||||||||||
Related party | 418 | 457 | 644 | 631 | 737 | 2,150 | 3,329 | |||||||||||||||||||||
Total fee revenues | 5,479 | 5,552 | 6,193 | 5,275 | 4,665 | 22,499 | 22,100 | |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||
General and administrative expenses | 2,582 | 2,929 | 3,549 | 3,844 | 2,676 | 12,904 | 10,233 | |||||||||||||||||||||
Share compensation expenses | 41 | 183 | 83 | 82 | 82 | 389 | 249 | |||||||||||||||||||||
Finance expenses | 30 | 32 | 44 | 31 | 33 | 137 | 947 | |||||||||||||||||||||
Tax (benefit) expense | (61 | ) | (65 | ) | 135 | (1 | ) | 90 | 8 | 90 | ||||||||||||||||||
Foreign exchange losses (gains) | — | 7 | 1 | (1 | ) | 2 | 7 | 19 | ||||||||||||||||||||
Total expenses | 2,592 | 3,086 | 3,812 | 3,955 | 2,883 | 13,445 | 11,538 | |||||||||||||||||||||
Income before investment (loss) income from AlphaCat Funds and Sidecars | 2,887 | 2,466 | 2,381 | 1,320 | 1,782 | 9,054 | 10,562 | |||||||||||||||||||||
Investment (loss) income from AlphaCat Funds and Sidecars (a) | ||||||||||||||||||||||||||||
AlphaCat Sidecars | 11 | 201 | (21 | ) | (112 | ) | 14 | 79 | 607 | |||||||||||||||||||
AlphaCat ILS Funds - Lower Risk (b) | 961 | (7,553 | ) | 1,301 | 2,189 | 1,998 | (3,102 | ) | 8,901 | |||||||||||||||||||
AlphaCat ILS Funds - Higher Risk (b) | (5,813 | ) | (21,816 | ) | 2,600 | 2,367 | 1,864 | (22,662 | ) | 7,471 | ||||||||||||||||||
BetaCat ILS Funds | 827 | (922 | ) | 263 | 368 | 644 | 536 | 3,623 | ||||||||||||||||||||
PaCRe | — | — | — | — | — | — | (23 | ) | ||||||||||||||||||||
Validus' share of investment (loss) income from AlphaCat Funds and Sidecars | (4,014 | ) | (30,090 | ) | 4,143 | 4,812 | 4,520 | (25,149 | ) | 20,579 | ||||||||||||||||||
Asset Management segment (loss) income | $ | (1,127 | ) | $ | (27,624 | ) | $ | 6,524 | $ | 6,132 | $ | 6,302 | $ | (16,095 | ) | $ | 31,141 | |||||||||||
Gross premiums written | ||||||||||||||||||||||||||||
AlphaCat Sidecars | $ | (247 | ) | $ | — | $ | — | $ | 66 | $ | (163 | ) | $ | (181 | ) | $ | (341 | ) | ||||||||||
AlphaCat ILS Funds - Lower Risk (b) | 10,776 | 10,979 | 53,632 | 52,908 | (19 | ) | 128,295 | 112,222 | ||||||||||||||||||||
AlphaCat ILS Funds - Higher Risk (b) | 4,493 | 16,275 | 43,672 | 93,536 | (105 | ) | 157,976 | 140,022 | ||||||||||||||||||||
AlphaCat Direct (c) | (24 | ) | (41 | ) | 8,378 | 18,416 | 23 | 26,729 | 18,499 | |||||||||||||||||||
Total | $ | 14,998 | $ | 27,213 | $ | 105,682 | $ | 164,926 | $ | (264 | ) | $ | 312,819 | $ | 270,402 |
Notes:
(a) | The investment income (loss) from AlphaCat funds and sidecars is based on equity accounting. |
(b) | Lower risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of less than 7%, whereas higher risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of greater than 7%. Expected loss represents the average annual loss over the set of simulation scenarios divided by the total limit. |
(c) | AlphaCat Direct includes direct investments from a third party investor in AlphaCat Reinsurance Ltd. |
17
Validus Holdings, Ltd.
Assets Under Management
As at | |||||||||||||||||||||
January 1, 2018 | October 1, 2017 | July 1, 2017 | April 1, 2017 | January 1, 2017 | |||||||||||||||||
Assets Under Management - Related Party (a) | |||||||||||||||||||||
AlphaCat Sidecars | $ | 5,631 | $ | 5,608 | $ | 5,686 | $ | 5,656 | $ | 7,729 | |||||||||||
AlphaCat ILS Funds - Lower Risk (b) | 75,898 | 75,492 | 79,808 | 125,098 | 124,297 | ||||||||||||||||
AlphaCat ILS Funds - Higher Risk (b) | 68,290 | 62,566 | 84,663 | 86,679 | 83,881 | ||||||||||||||||
AlphaCat Direct (c) | — | — | — | — | — | ||||||||||||||||
BetaCat ILS Funds | 24,914 | 24,084 | 25,000 | 27,062 | 26,808 | ||||||||||||||||
Total | $ | 174,733 | $ | 167,750 | $ | 195,157 | $ | 244,495 | $ | 242,715 | |||||||||||
Assets Under Management - Third Party (a) | |||||||||||||||||||||
AlphaCat Sidecars | $ | 20,565 | $ | 20,459 | $ | 20,590 | $ | 20,422 | $ | 28,829 | |||||||||||
AlphaCat ILS Funds - Lower Risk (b) | 1,663,606 | 1,317,417 | 1,309,377 | 1,302,337 | 1,257,287 | ||||||||||||||||
AlphaCat ILS Funds - Higher Risk (b) | 1,029,224 | 687,674 | 896,639 | 790,734 | 738,813 | ||||||||||||||||
AlphaCat Direct (c) | 443,730 | 546,226 | 534,555 | 457,744 | 444,668 | ||||||||||||||||
BetaCat ILS Funds | 67,046 | 120,391 | 118,493 | 87,375 | 29,000 | ||||||||||||||||
Total | $ | 3,224,171 | $ | 2,692,167 | $ | 2,879,654 | $ | 2,658,612 | $ | 2,498,597 | |||||||||||
Total Assets Under Management (a) | $ | 3,398,904 | $ | 2,859,917 | $ | 3,074,811 | $ | 2,903,107 | $ | 2,741,312 |
Notes:
(a) | The Company’s assets under management are based on NAV and are represented by investments made by related parties and third parties in the feeder funds and on a direct basis. |
(b) | Lower risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of less than 7%, whereas higher risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of greater than 7%. Expected loss represents the average annual loss over the set of simulation scenarios divided by the total limit. |
(c) | AlphaCat Direct includes direct investments from a third party investor in AlphaCat Reinsurance Ltd. |
18
Validus Holdings, Ltd.
Corporate and Investments
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Managed investments | ||||||||||||||||||||||||||||
Managed net investment income (a) | $ | 41,609 | $ | 37,091 | $ | 38,063 | $ | 36,192 | $ | 35,875 | $ | 152,955 | $ | 141,718 | ||||||||||||||
Net realized gains (losses) on managed investments (a) | 7,157 | 903 | 2,269 | (2,892 | ) | 9,166 | 7,437 | 14,680 | ||||||||||||||||||||
Change in net unrealized (losses) gains on managed investments (a) | (24,861 | ) | 941 | 15,942 | 14,349 | (67,676 | ) | 6,371 | 14,106 | |||||||||||||||||||
Income (loss) from investment affiliates | 6,345 | 1,011 | 9,466 | 5,188 | 2,166 | 22,010 | (2,083 | ) | ||||||||||||||||||||
Total managed investment return | $ | 30,250 | $ | 39,946 | $ | 65,740 | $ | 52,837 | $ | (20,469 | ) | $ | 188,773 | $ | 168,421 | |||||||||||||
Corporate expenses | ||||||||||||||||||||||||||||
General and administrative expenses | $ | 5,582 | $ | 8,836 | $ | 16,219 | $ | 17,961 | $ | 19,973 | $ | 48,598 | $ | 72,249 | ||||||||||||||
Share compensation expenses | 4,147 | 3,990 | 4,636 | 3,413 | 3,856 | 16,186 | 16,003 | |||||||||||||||||||||
Finance expenses (a) | 15,732 | 14,449 | 14,149 | 13,864 | 14,546 | 58,194 | 57,183 | |||||||||||||||||||||
Dividends on preferred shares | 5,828 | 5,627 | 2,203 | 2,203 | 2,203 | 15,861 | 4,455 | |||||||||||||||||||||
Tax (benefit) (a) | (351 | ) | (2,567 | ) | (1,122 | ) | (3,548 | ) | (21,237 | ) | (7,588 | ) | (19,819 | ) | ||||||||||||||
Total Corporate expenses | $ | 30,938 | $ | 30,335 | $ | 36,085 | $ | 33,893 | $ | 19,341 | $ | 131,251 | $ | 130,071 | ||||||||||||||
Other items | ||||||||||||||||||||||||||||
Foreign exchange (losses) gains (a) | (829 | ) | (1,495 | ) | (7,323 | ) | 1,103 | (850 | ) | (8,544 | ) | 10,778 | ||||||||||||||||
Other income (loss) | — | 35 | 174 | 94 | 7 | 303 | (766 | ) | ||||||||||||||||||||
Transaction expenses | — | — | (4,427 | ) | — | — | (4,427 | ) | — | |||||||||||||||||||
Total other items | $ | (829 | ) | $ | (1,460 | ) | $ | (11,576 | ) | $ | 1,197 | $ | (843 | ) | $ | (12,668 | ) | $ | 10,012 | |||||||||
Total Corporate and Investments | $ | (1,517 | ) | $ | 8,151 | $ | 18,079 | $ | 20,141 | $ | (40,653 | ) | $ | 44,854 | $ | 48,362 |
Notes:
(a) | These items exclude the components which are included in the Asset Management segment income (loss) and amounts which are consolidated from variable interest entities. |
19
Validus Holdings, Ltd.
Segment Reconciliation - Three Months Ended
Three Months Ended December 31, 2017 | |||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | Asset Management Segment and Consolidated VIEs | Corporate & Investments | Eliminations | Total | ||||||||||||||||||
Underwriting revenues | |||||||||||||||||||||||
Gross premiums written | $ | 51,960 | $ | 377,014 | $ | 14,998 | $ | — | $ | (649 | ) | $ | 443,323 | ||||||||||
Reinsurance premiums ceded | (40,716 | ) | (56,378 | ) | — | — | 649 | (96,445 | ) | ||||||||||||||
Net premiums written | 11,244 | 320,636 | 14,998 | — | — | 346,878 | |||||||||||||||||
Change in unearned premiums | 239,320 | 12,393 | 52,886 | — | — | 304,599 | |||||||||||||||||
Net premiums earned | 250,564 | 333,029 | 67,884 | — | — | 651,477 | |||||||||||||||||
Other insurance related income | 15 | 3,957 | 6,778 | — | (3,811 | ) | 6,939 | ||||||||||||||||
Total underwriting revenues | 250,579 | 336,986 | 74,662 | — | (3,811 | ) | 658,416 | ||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||
Losses and loss expenses | 135,804 | 244,908 | 99,130 | — | — | 479,842 | |||||||||||||||||
Policy acquisition costs | 58,107 | 60,403 | 8,557 | — | — | 127,067 | |||||||||||||||||
General and administrative expenses | 23,604 | 64,945 | 7,202 | 5,582 | (3,811 | ) | 97,522 | ||||||||||||||||
Share compensation expenses | 2,331 | 3,512 | 41 | 4,147 | — | 10,031 | |||||||||||||||||
Total underwriting deductions | 219,846 | 373,768 | 114,930 | 9,729 | (3,811 | ) | 714,462 | ||||||||||||||||
Underwriting income (loss) | $ | 30,733 | $ | (36,782 | ) | $ | (40,268 | ) | $ | (9,729 | ) | $ | — | $ | (56,046 | ) | |||||||
Net investment return (a) | — | — | 9,405 | 30,250 | — | 39,655 | |||||||||||||||||
Other items (b) | — | — | 468 | (22,038 | ) | — | (21,570 | ) | |||||||||||||||
(Income) attributable to AlphaCat investors | — | — | (37,868 | ) | — | — | (37,868 | ) | |||||||||||||||
Net loss attributable to noncontrolling interests | — | — | 67,136 | — | — | 67,136 | |||||||||||||||||
Net income (loss) available (attributable) to Validus common shareholders | $ | 30,733 | $ | (36,782 | ) | $ | (1,127 | ) | $ | (1,517 | ) | $ | — | $ | (8,693 | ) | |||||||
Three Months Ended December 31, 2016 | |||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | Asset Management Segment and Consolidated VIEs | Corporate & Investments | Eliminations | Total | ||||||||||||||||||
Underwriting revenues | |||||||||||||||||||||||
Gross premiums written | $ | 41,813 | $ | 297,905 | $ | (264 | ) | $ | — | $ | — | $ | 339,454 | ||||||||||
Reinsurance premiums ceded | (7,773 | ) | (32,862 | ) | — | — | — | (40,635 | ) | ||||||||||||||
Net premiums written | 34,040 | 265,043 | (264 | ) | — | — | 298,819 | ||||||||||||||||
Change in unearned premiums | 200,129 | (24,900 | ) | 66,351 | — | — | 241,580 | ||||||||||||||||
Net premiums earned | 234,169 | 240,143 | 66,087 | — | — | 540,399 | |||||||||||||||||
Other insurance related income | 9 | 284 | 4,664 | — | (4,396 | ) | 561 | ||||||||||||||||
Total underwriting revenues | 234,178 | 240,427 | 70,751 | — | (4,396 | ) | 540,960 | ||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||
Losses and loss expenses | 93,503 | 164,417 | 17,206 | — | — | 275,126 | |||||||||||||||||
Policy acquisition costs | 55,352 | 58,394 | 7,143 | — | — | 120,889 | |||||||||||||||||
General and administrative expenses | 21,248 | 33,069 | 8,061 | 19,973 | (4,396 | ) | 77,955 | ||||||||||||||||
Share compensation expenses | 2,811 | 3,693 | 82 | 3,856 | — | 10,442 | |||||||||||||||||
Total underwriting deductions | 172,914 | 259,573 | 32,492 | 23,829 | (4,396 | ) | 484,412 | ||||||||||||||||
Underwriting income (loss) | $ | 61,264 | $ | (19,146 | ) | $ | 38,259 | $ | (23,829 | ) | $ | — | $ | 56,548 | |||||||||
Net investment return (a) | — | — | 2,548 | (20,469 | ) | — | (17,921 | ) | |||||||||||||||
Other items (b) | — | — | (225 | ) | 3,645 | — | 3,420 | ||||||||||||||||
(Income) attributable to AlphaCat investors | — | — | (7,080 | ) | — | — | (7,080 | ) | |||||||||||||||
Net (income) attributable to noncontrolling interests | — | — | (27,200 | ) | — | — | (27,200 | ) | |||||||||||||||
Net income (loss) available (attributable) to Validus common shareholders | $ | 61,264 | $ | (19,146 | ) | $ | 6,302 | $ | (40,653 | ) | $ | — | $ | 7,767 |
Notes:
(a) | Net investment return includes net investment income, net realized and change in net unrealized gains (losses) on investments and income (loss) from investment affiliates. |
(b) | Other items includes finance expenses, transaction expenses, dividends on preferred shares, tax benefit (expense), foreign exchange gains (losses), income (loss) from operating affiliate and other income (loss). |
20
Validus Holdings, Ltd.
Segment Reconciliation - Years Ended
Year Ended December 31, 2017 | |||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | Asset Management Segment and Consolidated VIEs | Corporate & Investments | Eliminations | Total | ||||||||||||||||||
Underwriting revenues | �� | ||||||||||||||||||||||
Gross premiums written | $ | 1,195,207 | $ | 1,453,133 | $ | 312,819 | $ | — | $ | (10,221 | ) | $ | 2,950,938 | ||||||||||
Reinsurance premiums ceded | (209,289 | ) | (261,055 | ) | (9,510 | ) | — | 10,221 | (469,633 | ) | |||||||||||||
Net premiums written | 985,918 | 1,192,078 | 303,309 | — | — | 2,481,305 | |||||||||||||||||
Change in unearned premiums | 37,086 | 64,007 | (1,310 | ) | — | — | 99,783 | ||||||||||||||||
Net premiums earned | 1,023,004 | 1,256,085 | 301,999 | — | — | 2,581,088 | |||||||||||||||||
Other insurance related income | 67 | 7,035 | 23,896 | — | (18,122 | ) | 12,876 | ||||||||||||||||
Total underwriting revenues | 1,023,071 | 1,263,120 | 325,895 | — | (18,122 | ) | 2,593,964 | ||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||
Losses and loss expenses | 692,719 | 934,199 | 673,260 | — | — | 2,300,178 | |||||||||||||||||
Policy acquisition costs | 199,430 | 241,186 | 30,937 | — | — | 471,553 | |||||||||||||||||
General and administrative expenses | 80,177 | 207,186 | 34,298 | 48,598 | (18,122 | ) | 352,137 | ||||||||||||||||
Share compensation expenses | 10,762 | 12,774 | 389 | 16,186 | — | 40,111 | |||||||||||||||||
Total underwriting deductions | 983,088 | 1,395,345 | 738,884 | 64,784 | (18,122 | ) | 3,163,979 | ||||||||||||||||
Underwriting income (loss) | $ | 39,983 | $ | (132,225 | ) | $ | (412,989 | ) | $ | (64,784 | ) | $ | — | $ | (570,015 | ) | |||||||
Net investment return (a) | — | — | 21,948 | 188,773 | — | 210,721 | |||||||||||||||||
Other items (b) | — | — | 737 | (79,135 | ) | — | (78,398 | ) | |||||||||||||||
Loss attributable to AlphaCat investors | — | — | 16,929 | — | — | 16,929 | |||||||||||||||||
Net loss attributable to noncontrolling interests | — | — | 357,280 | — | — | 357,280 | |||||||||||||||||
Net income (loss) available (attributable) to Validus common shareholders | $ | 39,983 | $ | (132,225 | ) | $ | (16,095 | ) | $ | 44,854 | $ | — | $ | (63,483 | ) | ||||||||
Year Ended December 31, 2016 | |||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | Asset Management Segment and Consolidated VIEs | Corporate & Investments | Eliminations | Total | ||||||||||||||||||
Underwriting revenues | |||||||||||||||||||||||
Gross premiums written | $ | 1,184,912 | $ | 1,194,137 | $ | 270,402 | $ | — | $ | (746 | ) | $ | 2,648,705 | ||||||||||
Reinsurance premiums ceded | (121,331 | ) | (162,669 | ) | (6,451 | ) | — | 746 | (289,705 | ) | |||||||||||||
Net premiums written | 1,063,581 | 1,031,468 | 263,951 | — | — | 2,359,000 | |||||||||||||||||
Change in unearned premiums | (67,432 | ) | (28,524 | ) | (13,879 | ) | — | — | (109,835 | ) | |||||||||||||
Net premiums earned | 996,149 | 1,002,944 | 250,072 | — | — | 2,249,165 | |||||||||||||||||
Other insurance related income | 25 | 1,367 | 22,386 | — | (20,817 | ) | 2,961 | ||||||||||||||||
Total underwriting revenues | 996,174 | 1,004,311 | 272,458 | — | (20,817 | ) | 2,252,126 | ||||||||||||||||
Underwriting deductions | |||||||||||||||||||||||
Losses and loss expenses | 415,505 | 604,741 | 44,851 | — | — | 1,065,097 | |||||||||||||||||
Policy acquisition costs | 189,797 | 232,780 | 26,905 | — | — | 449,482 | |||||||||||||||||
General and administrative expenses | 85,000 | 165,529 | 34,333 | 72,249 | (20,817 | ) | 336,294 | ||||||||||||||||
Share compensation expenses | 11,668 | 14,987 | 249 | 16,003 | — | 42,907 | |||||||||||||||||
Total underwriting deductions | 701,970 | 1,018,037 | 106,338 | 88,252 | (20,817 | ) | 1,893,780 | ||||||||||||||||
Underwriting income (loss) | $ | 294,204 | $ | (13,726 | ) | $ | 166,120 | $ | (88,252 | ) | $ | — | $ | 358,346 | |||||||||
Net investment return (a) | — | — | 13,106 | 168,421 | (597 | ) | 180,930 | ||||||||||||||||
Other items (b) | — | — | (1,364 | ) | (31,807 | ) | — | (33,171 | ) | ||||||||||||||
(Income) attributable to AlphaCat investors | — | — | (23,358 | ) | — | — | (23,358 | ) | |||||||||||||||
Net (income) attributable to noncontrolling interests | — | — | (123,363 | ) | — | — | (123,363 | ) | |||||||||||||||
Net income (loss) available (attributable) to Validus common shareholders | $ | 294,204 | $ | (13,726 | ) | $ | 31,141 | $ | 48,362 | $ | (597 | ) | $ | 359,384 |
Notes:
(a) | Net investment return includes net investment income, net realized and change in net unrealized gains (losses) on investments and income (loss) from investment affiliates. |
(b) | Other items includes finance expenses, transaction expenses, dividends on preferred shares, tax benefit (expense), foreign exchange gains (losses), income (loss) from operating affiliate and other income (loss). |
21
Validus Holdings, Ltd.
Non-GAAP Financial Measure Reconciliation
Net Operating Income (Loss) available (attributable) to Validus Common Shareholders, Net Operating Income (Loss) per diluted share available (attributable) to Validus Common Shareholders and Annualized Net Operating Return on Average Equity)
Three Months Ended | Years Ended | ||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||
Net (loss) income (attributable) available to Validus common shareholders | $ | (8,693 | ) | $ | 7,767 | $ | (63,483 | ) | $ | 359,384 | |||||
Non-GAAP Adjustments: | |||||||||||||||
Net realized (gains) on investments | (5,607 | ) | (9,220 | ) | (7,623 | ) | (15,757 | ) | |||||||
Change in net unrealized losses (gains) on investments | 21,257 | 67,460 | (3,215 | ) | (16,871 | ) | |||||||||
(Income) loss from investment affiliates | (6,345 | ) | (2,166 | ) | (22,010 | ) | 2,083 | ||||||||
Foreign exchange losses (gains) | 283 | 901 | 7,447 | (10,864 | ) | ||||||||||
Other (income) loss | — | (7 | ) | (303 | ) | 766 | |||||||||
Transaction expenses | — | — | 4,427 | — | |||||||||||
Net income (loss) attributable to noncontrolling interests | 4,597 | (412 | ) | (767 | ) | 457 | |||||||||
Tax (benefit) expense (a) | (1,339 | ) | (5,863 | ) | 521 | 1,687 | |||||||||
Net operating income (loss) available (attributable) to Validus common shareholders (b) | $ | 4,153 | $ | 58,460 | $ | (85,006 | ) | $ | 320,885 | ||||||
Weighted average number of diluted common shares outstanding | 78,966,938 | 80,621,967 | 79,091,376 | 82,359,460 | |||||||||||
(Loss) earnings per diluted share (attributable) available to Validus common shareholders | $ | (0.11 | ) | $ | 0.10 | $ | (0.80 | ) | $ | 4.36 | |||||
Non-GAAP Adjustments: | |||||||||||||||
Net realized (gains) on investments | (0.07 | ) | (0.11 | ) | (0.10 | ) | (0.19 | ) | |||||||
Change in net unrealized losses (gains) on investments | 0.27 | 0.84 | (0.04 | ) | (0.20 | ) | |||||||||
(Income) loss from investment affiliates | (0.08 | ) | (0.03 | ) | (0.28 | ) | 0.03 | ||||||||
Foreign exchange losses (gains) | — | 0.01 | 0.09 | (0.14 | ) | ||||||||||
Other (income) loss | — | — | — | 0.01 | |||||||||||
Transaction expenses | — | — | 0.06 | — | |||||||||||
Net income (loss) attributable to noncontrolling interests | 0.06 | (0.01 | ) | (0.01 | ) | 0.01 | |||||||||
Tax (benefit) expense (a) | (0.02 | ) | (0.07 | ) | 0.01 | 0.02 | |||||||||
Net operating income (loss) per diluted share available (attributable) to Validus common shareholders (b) | $ | 0.05 | $ | 0.73 | $ | (1.07 | ) | $ | 3.90 | ||||||
Average shareholders' equity available to Validus common shareholders (c) | $ | 3,515,680 | $ | 3,702,956 | $ | 3,658,591 | $ | 3,697,114 | |||||||
Annualized return on average equity | (1.0 | %) | 0.8 | % | (1.7 | %) | 9.7 | % | |||||||
Annualized net operating return on average equity (b) | 0.5 | % | 6.3 | % | (2.3 | %) | 8.7 | % |
Notes:
(a) | Represents the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates to. The tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize tax losses carried forward. |
(b) | Non-GAAP financial measure. Refer to the Explanatory Notes on page 3 for further information. |
(c) | Average shareholders’ equity for the three months ended is the average of the beginning and ending quarter end shareholders’ equity balances, excluding the liquidation value of the preferred shares. Average shareholders’ equity for the year ended is the average of the beginning, ending and intervening quarter end shareholders’ equity balances, excluding the liquidation value of the preferred shares. |
22
Validus Holdings, Ltd.
Gross Premiums Written by Segment by Class of Business
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Reinsurance Segment | ||||||||||||||||||||||||||||
Property | Cat XOL (a) | $ | 5,089 | $ | 108,717 | $ | 162,701 | $ | 155,977 | $ | 1,918 | $ | 432,484 | $ | 374,242 | |||||||||||||
Per Risk XOL | 1,330 | 11,907 | 4,358 | 8,385 | 119 | 25,980 | 25,360 | |||||||||||||||||||||
Proportional (b) | 11,707 | 6,857 | 19,644 | 52,305 | 6,442 | 90,513 | 97,661 | |||||||||||||||||||||
Total Property | 18,126 | 127,481 | 186,703 | 216,667 | 8,479 | 548,977 | 497,263 | |||||||||||||||||||||
Specialty - Short-tail | Aerospace and Aviation | 886 | 4,751 | 25,308 | 21,334 | 1,787 | 52,279 | 62,071 | ||||||||||||||||||||
Agriculture | 5,168 | 449 | 22,061 | 152,447 | (9,681 | ) | 180,125 | 243,180 | ||||||||||||||||||||
Composite | 4,209 | 7,170 | 17,349 | 34,090 | 2,281 | 62,818 | 59,244 | |||||||||||||||||||||
Marine | 1,224 | 2,559 | 16,324 | 103,162 | (2,328 | ) | 123,269 | 117,614 | ||||||||||||||||||||
Other Specialty - Short-tail (c) | 365 | 1,410 | 3,507 | 10,837 | 29 | 16,119 | 8,359 | |||||||||||||||||||||
Technical Lines | 110 | 3,207 | 4,959 | 4,182 | 629 | 12,458 | 12,534 | |||||||||||||||||||||
Terrorism | 529 | 1,010 | (154 | ) | 5,039 | (2,240 | ) | 6,424 | 6,159 | |||||||||||||||||||
Trade Credit | (89 | ) | (8 | ) | 50 | 44,154 | 28 | 44,107 | 38,279 | |||||||||||||||||||
Workers' Compensation | 595 | 3,084 | 2,200 | 1,633 | 732 | 7,512 | 8,064 | |||||||||||||||||||||
Total Specialty - Short Tail | 12,997 | 23,632 | 91,604 | 376,878 | (8,763 | ) | 505,111 | 555,504 | ||||||||||||||||||||
Specialty - Other | Casualty | 12,023 | 8,890 | 39,126 | 24,510 | 31,991 | 84,549 | 86,107 | ||||||||||||||||||||
Financial | 8,814 | 9,569 | 13,101 | 25,086 | 10,106 | 56,570 | 46,038 | |||||||||||||||||||||
Total Specialty - Other | 20,837 | 18,459 | 52,227 | 49,596 | 42,097 | 141,119 | 132,145 | |||||||||||||||||||||
Total Reinsurance Segment | $ | 51,960 | $ | 169,572 | $ | 330,534 | $ | 643,141 | $ | 41,813 | $ | 1,195,207 | $ | 1,184,912 | ||||||||||||||
Insurance Segment | ||||||||||||||||||||||||||||
Property | Direct | $ | 78,639 | $ | 76,868 | $ | 86,113 | $ | 67,878 | $ | 71,353 | $ | 309,498 | $ | 277,024 | |||||||||||||
Downstream Energy and Power | 26,366 | 17,994 | 29,765 | 13,669 | 24,872 | 87,794 | 94,197 | |||||||||||||||||||||
Total Property | 105,005 | 94,862 | 115,878 | 81,547 | 96,225 | 397,292 | 371,221 | |||||||||||||||||||||
Specialty - Short-tail | Accident and Health | 4,560 | 4,411 | 5,176 | 5,910 | 4,929 | 20,057 | 29,326 | ||||||||||||||||||||
Agriculture | 65,737 | 51,800 | 23,939 | 84,299 | — | 225,775 | — | |||||||||||||||||||||
Aviation | 9,119 | 5,587 | 4,417 | 5,159 | 13,235 | 24,282 | 27,290 | |||||||||||||||||||||
Contingency | 11,754 | 3,615 | 6,988 | 3,964 | 14,160 | 26,321 | 35,412 | |||||||||||||||||||||
Marine | 34,761 | 29,735 | 59,409 | 47,364 | 28,445 | 171,269 | 192,526 | |||||||||||||||||||||
Political Lines (d) | 29,302 | 23,167 | 28,254 | 32,525 | 25,799 | 113,248 | 113,048 | |||||||||||||||||||||
Total Specialty - Short Tail | 155,233 | 118,315 | 128,183 | 179,221 | 86,568 | 580,952 | 397,602 | |||||||||||||||||||||
Specialty - Other | Financial | 22,281 | 19,530 | 13,980 | 13,738 | 16,332 | 69,529 | 53,484 | ||||||||||||||||||||
Liability (e) | 60,874 | 65,906 | 67,393 | 58,637 | 56,967 | 252,810 | 225,776 | |||||||||||||||||||||
Marine and Energy Liability | 10,428 | 8,034 | 12,900 | 24,172 | 10,961 | 55,534 | 53,515 | |||||||||||||||||||||
Political Risk | 21,394 | 20,231 | 18,545 | 22,136 | 27,689 | 82,306 | 78,598 | |||||||||||||||||||||
Products and Airports | 1,799 | 6,394 | 3,178 | 3,339 | 3,163 | 14,710 | 13,941 | |||||||||||||||||||||
Total Specialty - Other | 116,776 | 120,095 | 115,996 | 122,022 | 115,112 | 474,889 | 425,314 | |||||||||||||||||||||
Total Insurance Segment | $ | 377,014 | $ | 333,272 | $ | 360,057 | $ | 382,790 | $ | 297,905 | $ | 1,453,133 | $ | 1,194,137 | ||||||||||||||
Asset Management Segment | ||||||||||||||||||||||||||||
Property | Cat XOL | $ | 13,278 | $ | 22,013 | $ | 99,318 | $ | 159,765 | $ | (264 | ) | $ | 294,374 | $ | 260,786 | ||||||||||||
Total Property | 13,278 | 22,013 | 99,318 | 159,765 | (264 | ) | 294,374 | 260,786 | ||||||||||||||||||||
Specialty - Short-tail | Agriculture | (1,391 | ) | 1,936 | 4,020 | (35 | ) | 4 | 4,530 | 2,879 | ||||||||||||||||||
Composite | 3,111 | 2,872 | 2,362 | 4,788 | — | 13,133 | 5,518 | |||||||||||||||||||||
Workers' Compensation | — | 392 | (18 | ) | 408 | (4 | ) | 782 | 1,219 | |||||||||||||||||||
Total Specialty - Short Tail | 1,720 | 5,200 | 6,364 | 5,161 | — | 18,445 | 9,616 | |||||||||||||||||||||
Total Asset Management Segment | $ | 14,998 | $ | 27,213 | $ | 105,682 | $ | 164,926 | $ | (264 | ) | $ | 312,819 | $ | 270,402 | |||||||||||||
Intersegment Revenue | Property | (649 | ) | (6,248 | ) | (725 | ) | — | — | (7,622 | ) | (746 | ) | |||||||||||||||
Specialty - Short-tail | — | 47 | (2,646 | ) | — | — | (2,599 | ) | — | |||||||||||||||||||
Specialty - Other | — | — | — | — | — | — | — | |||||||||||||||||||||
Total Intersegment Revenue | $ | (649 | ) | $ | (6,201 | ) | $ | (3,371 | ) | $ | — | $ | — | $ | (10,221 | ) | $ | (746 | ) | |||||||||
Total Gross Premiums Written | $ | 443,323 | $ | 523,856 | $ | 792,902 | $ | 1,190,857 | $ | 339,454 | $ | 2,950,938 | $ | 2,648,705 |
(a) | Property Cat XOL is comprised of Catastrophe XOL, Aggregate XOL, Reinstatement Premium Protection, Per Event XOL, Second Event and Third Event covers. |
(b) | Proportional is comprised of Quota Share and Surplus Share covers. |
(c) | Other Specialty - Short-tail classes include Contingency, Crisis Management and Life and Accident & Health. |
(d) | Political Lines includes War and Political Violence. |
(e) | Liability includes General Liability, Professional Liability, Products Liability and Miscellaneous Malpractice. |
23
Validus Holdings, Ltd.
Consolidated Analysis of Reserves for Losses and Loss Expenses
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Reserve for losses and loss expenses | Loss reserves recoverable | Net | Reserve for losses and loss expenses | Loss reserves recoverable | Net | ||||||||||||||||||
Property | $ | 2,291,743 | $ | 739,153 | $ | 1,552,590 | $ | 830,672 | $ | 107,573 | $ | 723,099 | |||||||||||
Specialty - Short-tail | 1,445,512 | 356,618 | 1,088,894 | 1,185,654 | 186,817 | 998,837 | |||||||||||||||||
Specialty - Other | 1,094,135 | 138,226 | 955,909 | 978,869 | 136,031 | 842,838 | |||||||||||||||||
Total | $ | 4,831,390 | $ | 1,233,997 | $ | 3,597,393 | $ | 2,995,195 | $ | 430,421 | $ | 2,564,774 | |||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Case Reserves | IBNR Reserves | Reserve for losses and loss expenses | Case Reserves | IBNR Reserves | Reserve for losses and loss expenses | ||||||||||||||||||
Property | $ | 893,180 | $ | 1,398,563 | $ | 2,291,743 | $ | 390,141 | $ | 440,531 | $ | 830,672 | |||||||||||
Specialty - Short-tail | 515,450 | 930,062 | 1,445,512 | 509,317 | 676,337 | 1,185,654 | |||||||||||||||||
Specialty - Other | 345,214 | 748,921 | 1,094,135 | 338,314 | 640,555 | 978,869 | |||||||||||||||||
Total | $ | 1,753,844 | $ | 3,077,546 | $ | 4,831,390 | $ | 1,237,772 | $ | 1,757,423 | $ | 2,995,195 | |||||||||||
% of Total | 36.3 | % | 63.7 | % | 100.0 | % | 41.3 | % | 58.7 | % | 100.0 | % |
24
Validus Holdings, Ltd.
Consolidated Losses and Loss Ratios by Segment
At or for the Three Months Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | Asset Management Segment | Total | Reinsurance Segment | Insurance Segment | Asset Management Segment | Total | |||||||||||||||||||||||||
Gross reserves, beginning of period | $ | 1,939,766 | $ | 2,319,656 | $ | 676,215 | $ | 4,935,637 | $ | 1,232,108 | $ | 1,766,735 | $ | 37,144 | $ | 3,035,987 | ||||||||||||||||
Loss reserves recoverable | (611,116 | ) | (663,900 | ) | (60,000 | ) | (1,335,016 | ) | (122,982 | ) | (321,627 | ) | — | (444,609 | ) | |||||||||||||||||
Net reserves, beginning of period | 1,328,650 | 1,655,756 | 616,215 | 3,600,621 | 1,109,126 | 1,445,108 | 37,144 | 2,591,378 | ||||||||||||||||||||||||
Incurred losses - current year | 157,049 | 264,593 | 101,148 | 522,790 | 128,375 | 175,203 | 18,335 | 321,913 | ||||||||||||||||||||||||
Change in prior accident years | (21,245 | ) | (19,685 | ) | (2,018 | ) | (42,948 | ) | (34,872 | ) | (10,786 | ) | (1,129 | ) | (46,787 | ) | ||||||||||||||||
Total net incurred losses and loss expenses | 135,804 | 244,908 | 99,130 | 479,842 | 93,503 | 164,417 | 17,206 | 275,126 | ||||||||||||||||||||||||
Foreign exchange loss (gain) | 2,211 | 701 | (69 | ) | 2,843 | (15,303 | ) | (8,755 | ) | (250 | ) | (24,308 | ) | |||||||||||||||||||
Paid losses - current year | (150,868 | ) | (163,686 | ) | (44,255 | ) | (358,809 | ) | (61,816 | ) | (81,579 | ) | (5,477 | ) | (148,872 | ) | ||||||||||||||||
Paid losses - prior years | (47,274 | ) | (78,108 | ) | (1,722 | ) | (127,104 | ) | (40,541 | ) | (87,920 | ) | (89 | ) | (128,550 | ) | ||||||||||||||||
Total net paid losses | (198,142 | ) | (241,794 | ) | (45,977 | ) | (485,913 | ) | (102,357 | ) | (169,499 | ) | (5,566 | ) | (277,422 | ) | ||||||||||||||||
Net reserves, end of period | 1,268,523 | 1,659,571 | 669,299 | 3,597,393 | 1,084,969 | 1,431,271 | 48,534 | 2,564,774 | ||||||||||||||||||||||||
Loss reserves recoverable | 548,131 | 640,866 | 45,000 | 1,233,997 | 108,528 | 321,893 | — | 430,421 | ||||||||||||||||||||||||
Gross reserves, end of period | $ | 1,816,654 | $ | 2,300,437 | $ | 714,299 | $ | 4,831,390 | $ | 1,193,497 | $ | 1,753,164 | $ | 48,534 | $ | 2,995,195 | ||||||||||||||||
Net premiums earned | $ | 250,564 | $ | 333,029 | $ | 67,884 | $ | 651,477 | $ | 234,169 | $ | 240,143 | $ | 66,087 | $ | 540,399 | ||||||||||||||||
Current year loss ratio | 62.7 | % | 79.4 | % | 149.0 | % | 80.3 | % | 54.8 | % | 73.0 | % | 27.7 | % | 59.6 | % | ||||||||||||||||
Change in prior accident years loss ratio | (8.5 | )% | (5.9 | )% | (3.0 | )% | (6.6 | )% | (14.9 | )% | (4.5 | )% | (1.7 | )% | (8.7 | )% | ||||||||||||||||
Net loss ratio | 54.2 | % | 73.5 | % | 146.0 | % | 73.7 | % | 39.9 | % | 68.5 | % | 26.0 | % | 50.9 | % | ||||||||||||||||
Paid to incurred ratio | 145.9 | % | 98.7 | % | 46.4 | % | 101.3 | % | 109.5 | % | 103.1 | % | 32.3 | % | 100.8 | % | ||||||||||||||||
At or for the Years Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | Asset Management Segment | Total | Reinsurance Segment | Insurance Segment | Asset Management Segment | Total | |||||||||||||||||||||||||
Gross reserves, beginning of year | $ | 1,193,497 | $ | 1,753,164 | $ | 48,534 | $ | 2,995,195 | $ | 1,237,245 | $ | 1,748,309 | $ | 11,013 | $ | 2,996,567 | ||||||||||||||||
Loss reserves recoverable | (108,528 | ) | (321,893 | ) | — | (430,421 | ) | (45,217 | ) | (305,369 | ) | — | (350,586 | ) | ||||||||||||||||||
Net reserves, beginning of year | 1,084,969 | 1,431,271 | 48,534 | 2,564,774 | 1,192,028 | 1,442,940 | 11,013 | 2,645,981 | ||||||||||||||||||||||||
Net reserves acquired | — | 23,753 | — | 23,753 | — | — | — | — | ||||||||||||||||||||||||
Incurred losses - current year | 806,021 | 1,030,891 | 685,799 | 2,522,711 | 551,131 | 682,570 | 47,588 | 1,281,289 | ||||||||||||||||||||||||
Change in prior accident years | (113,302 | ) | (96,692 | ) | (12,539 | ) | (222,533 | ) | (135,626 | ) | (77,829 | ) | (2,737 | ) | (216,192 | ) | ||||||||||||||||
Total net incurred losses and loss expenses | 692,719 | 934,199 | 673,260 | 2,300,178 | 415,505 | 604,741 | 44,851 | 1,065,097 | ||||||||||||||||||||||||
Foreign exchange loss (gain) | 31,205 | 16,908 | 1,004 | 49,117 | (1,501 | ) | (29,965 | ) | (436 | ) | (31,902 | ) | ||||||||||||||||||||
Paid losses - current year | (238,550 | ) | (318,014 | ) | (44,313 | ) | (600,877 | ) | (200,031 | ) | (182,554 | ) | (6,649 | ) | (389,234 | ) | ||||||||||||||||
Paid losses - prior years | (301,820 | ) | (428,546 | ) | (9,186 | ) | (739,552 | ) | (321,032 | ) | (403,891 | ) | (245 | ) | (725,168 | ) | ||||||||||||||||
Total net paid losses | (540,370 | ) | (746,560 | ) | (53,499 | ) | (1,340,429 | ) | (521,063 | ) | (586,445 | ) | (6,894 | ) | (1,114,402 | ) | ||||||||||||||||
Net reserves, end of year | 1,268,523 | 1,659,571 | 669,299 | 3,597,393 | 1,084,969 | 1,431,271 | 48,534 | 2,564,774 | ||||||||||||||||||||||||
Loss reserves recoverable | 548,131 | 640,866 | 45,000 | 1,233,997 | 108,528 | 321,893 | — | 430,421 | ||||||||||||||||||||||||
Gross reserves, end of year | $ | 1,816,654 | $ | 2,300,437 | $ | 714,299 | $ | 4,831,390 | $ | 1,193,497 | $ | 1,753,164 | $ | 48,534 | $ | 2,995,195 | ||||||||||||||||
Net premiums earned | $ | 1,023,004 | $ | 1,256,085 | $ | 301,999 | $ | 2,581,088 | $ | 996,149 | $ | 1,002,944 | $ | 250,072 | $ | 2,249,165 | ||||||||||||||||
Current year loss ratio | 78.8 | % | 82.1 | % | 227.1 | % | 97.7 | % | 55.3 | % | 68.1 | % | 19.0 | % | 57.0 | % | ||||||||||||||||
Change in prior accident years loss ratio | (11.1 | )% | (7.7 | )% | (4.2 | )% | (8.6 | )% | (13.6 | )% | (7.8 | )% | (1.1 | )% | (9.6 | )% | ||||||||||||||||
Net loss ratio | 67.7 | % | 74.4 | % | 222.9 | % | 89.1 | % | 41.7 | % | 60.3 | % | 17.9 | % | 47.4 | % | ||||||||||||||||
Paid to incurred ratio | 78.0 | % | 79.9 | % | 7.9 | % | 58.3 | % | 125.4 | % | 97.0 | % | 15.4 | % | 104.6 | % |
25
Validus Holdings, Ltd.
Losses and Loss Ratios by Class of Business - Reinsurance Segment
Table of Contents
At or for the Three Months Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | |||||||||||||||||||||||||
Gross reserves, beginning of period | $ | 1,114,645 | $ | 729,771 | $ | 95,350 | $ | 1,939,766 | $ | 516,537 | $ | 678,679 | $ | 36,892 | $ | 1,232,108 | ||||||||||||||||
Loss reserves recoverable | (472,914 | ) | (135,703 | ) | (2,499 | ) | (611,116 | ) | (53,867 | ) | (67,504 | ) | (1,611 | ) | (122,982 | ) | ||||||||||||||||
Net reserves, beginning of period | 641,731 | 594,068 | 92,851 | 1,328,650 | 462,670 | 611,175 | 35,281 | 1,109,126 | ||||||||||||||||||||||||
Incurred losses - current year | 62,599 | 70,746 | 23,704 | 157,049 | 43,596 | 73,987 | 10,792 | 128,375 | ||||||||||||||||||||||||
Change in prior accident years | (1,955 | ) | (16,252 | ) | (3,038 | ) | (21,245 | ) | (5,215 | ) | (27,889 | ) | (1,768 | ) | (34,872 | ) | ||||||||||||||||
Total net incurred losses and loss expenses | 60,644 | 54,494 | 20,666 | 135,804 | 38,381 | 46,098 | 9,024 | 93,503 | ||||||||||||||||||||||||
Foreign exchange loss (gain) | 953 | 1,222 | 36 | 2,211 | (12,037 | ) | (3,068 | ) | (198 | ) | (15,303 | ) | ||||||||||||||||||||
Paid losses - current year | (123,815 | ) | (26,698 | ) | (355 | ) | (150,868 | ) | (21,995 | ) | (38,610 | ) | (1,211 | ) | (61,816 | ) | ||||||||||||||||
Paid losses - prior years | (17,308 | ) | (29,419 | ) | (547 | ) | (47,274 | ) | (32,003 | ) | (9,506 | ) | 968 | (40,541 | ) | |||||||||||||||||
Total net paid losses | (141,123 | ) | (56,117 | ) | (902 | ) | (198,142 | ) | (53,998 | ) | (48,116 | ) | (243 | ) | (102,357 | ) | ||||||||||||||||
Net reserves, end of period | 562,205 | 593,667 | 112,651 | 1,268,523 | 435,016 | 606,089 | 43,864 | 1,084,969 | ||||||||||||||||||||||||
Loss reserves recoverable | 412,592 | 131,287 | 4,252 | 548,131 | 41,892 | 66,423 | 213 | 108,528 | ||||||||||||||||||||||||
Gross reserves, end of period | $ | 974,797 | $ | 724,954 | $ | 116,903 | $ | 1,816,654 | $ | 476,908 | $ | 672,512 | $ | 44,077 | $ | 1,193,497 | ||||||||||||||||
Net premiums earned | $ | 98,991 | $ | 116,425 | $ | 35,148 | $ | 250,564 | $ | 101,582 | $ | 112,890 | $ | 19,697 | $ | 234,169 | ||||||||||||||||
Current year loss ratio | 63.2 | % | 60.8 | % | 67.4 | % | 62.7 | % | 42.9 | % | 65.5 | % | 54.8 | % | 54.8 | % | ||||||||||||||||
Change in prior accident years loss ratio | (2.0 | )% | (14.0 | )% | (8.6 | )% | (8.5 | )% | (5.1 | )% | (24.7 | )% | (9.0 | )% | (14.9 | )% | ||||||||||||||||
Net loss ratio | 61.2 | % | 46.8 | % | 58.8 | % | 54.2 | % | 37.8 | % | 40.8 | % | 45.8 | % | 39.9 | % | ||||||||||||||||
Paid to incurred ratio | 232.7 | % | 103.0 | % | 4.4 | % | 145.9 | % | 140.7 | % | 104.4 | % | 2.7 | % | 109.5 | % | ||||||||||||||||
At or for the Years Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | |||||||||||||||||||||||||
Gross reserves, beginning of year | $ | 476,908 | $ | 672,512 | $ | 44,077 | $ | 1,193,497 | $ | 569,794 | $ | 656,444 | $ | 11,007 | $ | 1,237,245 | ||||||||||||||||
Loss reserves recoverable | (41,892 | ) | (66,423 | ) | (213 | ) | (108,528 | ) | (22,137 | ) | (23,080 | ) | — | (45,217 | ) | |||||||||||||||||
Net reserves, beginning of year | 435,016 | 606,089 | 43,864 | 1,084,969 | 547,657 | 633,364 | 11,007 | 1,192,028 | ||||||||||||||||||||||||
Incurred losses - current year | 398,175 | 333,561 | 74,285 | 806,021 | 163,436 | 351,655 | 36,040 | 551,131 | ||||||||||||||||||||||||
Change in prior accident years | (34,063 | ) | (76,620 | ) | (2,619 | ) | (113,302 | ) | (61,102 | ) | (70,439 | ) | (4,085 | ) | (135,626 | ) | ||||||||||||||||
Total net incurred losses and loss expenses | 364,112 | 256,941 | 71,666 | 692,719 | 102,334 | 281,216 | 31,955 | 415,505 | ||||||||||||||||||||||||
Foreign exchange loss (gain) | 22,917 | 7,525 | 763 | 31,205 | 2,200 | (3,905 | ) | 204 | (1,501 | ) | ||||||||||||||||||||||
Paid losses - current year | (135,183 | ) | (102,395 | ) | (972 | ) | (238,550 | ) | (30,658 | ) | (168,040 | ) | (1,333 | ) | (200,031 | ) | ||||||||||||||||
Paid losses - prior years | (124,657 | ) | (174,493 | ) | (2,670 | ) | (301,820 | ) | (186,517 | ) | (136,546 | ) | 2,031 | (321,032 | ) | |||||||||||||||||
Total net paid losses | (259,840 | ) | (276,888 | ) | (3,642 | ) | (540,370 | ) | (217,175 | ) | (304,586 | ) | 698 | (521,063 | ) | |||||||||||||||||
Net reserves, end of year | 562,205 | 593,667 | 112,651 | 1,268,523 | 435,016 | 606,089 | 43,864 | 1,084,969 | ||||||||||||||||||||||||
Loss reserves recoverable | 412,592 | 131,287 | 4,252 | 548,131 | 41,892 | 66,423 | 213 | 108,528 | ||||||||||||||||||||||||
Gross reserves, end of year | $ | 974,797 | $ | 724,954 | $ | 116,903 | $ | 1,816,654 | $ | 476,908 | $ | 672,512 | $ | 44,077 | $ | 1,193,497 | ||||||||||||||||
Net premiums earned | $ | 447,376 | $ | 453,020 | $ | 122,608 | $ | 1,023,004 | $ | 419,135 | $ | 522,616 | $ | 54,398 | $ | 996,149 | ||||||||||||||||
Current year loss ratio | 89.0 | % | 73.6 | % | 60.6 | % | 78.8 | % | 39.0 | % | 67.3 | % | 66.2 | % | 55.3 | % | ||||||||||||||||
Change in prior accident years loss ratio | (7.6 | )% | (16.9 | )% | (2.1 | )% | (11.1 | )% | (14.6 | )% | (13.5 | )% | (7.5 | )% | (13.6 | )% | ||||||||||||||||
Net loss ratio | 81.4 | % | 56.7 | % | 58.5 | % | 67.7 | % | 24.4 | % | 53.8 | % | 58.7 | % | 41.7 | % | ||||||||||||||||
Paid to incurred ratio | 71.4 | % | 107.8 | % | 5.1 | % | 78.0 | % | 212.2 | % | 108.3 | % | (2.2 | )% | 125.4 | % |
26
Validus Holdings, Ltd.
Losses and Loss Ratios by Class of Business - Insurance Segment
At or for the Three Months Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | |||||||||||||||||||||||||
Gross reserves, beginning of period | $ | 643,001 | $ | 709,902 | $ | 966,753 | $ | 2,319,656 | $ | 291,403 | $ | 505,461 | $ | 969,871 | $ | 1,766,735 | ||||||||||||||||
Loss reserves recoverable | (299,466 | ) | (220,126 | ) | (144,308 | ) | (663,900 | ) | (64,369 | ) | (110,233 | ) | (147,025 | ) | (321,627 | ) | ||||||||||||||||
Net reserves, beginning of period | 343,535 | 489,776 | 822,445 | 1,655,756 | 227,034 | 395,228 | 822,846 | 1,445,108 | ||||||||||||||||||||||||
Incurred losses - current year | 85,813 | 101,447 | 77,333 | 264,593 | 71,663 | 43,145 | 60,395 | 175,203 | ||||||||||||||||||||||||
Change in prior accident years | (4,878 | ) | (3,364 | ) | (11,443 | ) | (19,685 | ) | (8,161 | ) | (871 | ) | (1,754 | ) | (10,786 | ) | ||||||||||||||||
Total net incurred losses and loss expenses | 80,935 | 98,083 | 65,890 | 244,908 | 63,502 | 42,274 | 58,641 | 164,417 | ||||||||||||||||||||||||
Foreign exchange (gain) loss | (756 | ) | 698 | 759 | 701 | (2,506 | ) | (2,678 | ) | (3,571 | ) | (8,755 | ) | |||||||||||||||||||
Paid losses - current year | (59,001 | ) | (95,061 | ) | (9,624 | ) | (163,686 | ) | (31,646 | ) | (28,735 | ) | (21,198 | ) | (81,579 | ) | ||||||||||||||||
Paid losses - prior years | (18,382 | ) | (23,514 | ) | (36,212 | ) | (78,108 | ) | (9,647 | ) | (20,529 | ) | (57,744 | ) | (87,920 | ) | ||||||||||||||||
Total net paid losses | (77,383 | ) | (118,575 | ) | (45,836 | ) | (241,794 | ) | (41,293 | ) | (49,264 | ) | (78,942 | ) | (169,499 | ) | ||||||||||||||||
Net reserves, end of period | 346,331 | 469,982 | 843,258 | 1,659,571 | 246,737 | 385,560 | 798,974 | 1,431,271 | ||||||||||||||||||||||||
Loss reserves recoverable | 281,561 | 225,331 | 133,974 | 640,866 | 65,681 | 120,394 | 135,818 | 321,893 | ||||||||||||||||||||||||
Gross reserves, end of period | $ | 627,892 | $ | 695,313 | $ | 977,232 | $ | 2,300,437 | $ | 312,418 | $ | 505,954 | $ | 934,792 | $ | 1,753,164 | ||||||||||||||||
Net premiums earned | $ | 65,065 | $ | 163,335 | $ | 104,629 | $ | 333,029 | $ | 70,976 | $ | 77,633 | $ | 91,534 | $ | 240,143 | ||||||||||||||||
Current year loss ratio | 131.9 | % | 62.1 | % | 73.9 | % | 79.4 | % | 101.0 | % | 55.6 | % | 66.0 | % | 73.0 | % | ||||||||||||||||
Change in prior accident years loss ratio | (7.5 | )% | (2.1 | )% | (10.9 | )% | (5.9 | )% | (11.5 | )% | (1.1 | )% | (1.9 | )% | (4.5 | )% | ||||||||||||||||
Net loss ratio | 124.4 | % | 60.0 | % | 63.0 | % | 73.5 | % | 89.5 | % | 54.5 | % | 64.1 | % | 68.5 | % | ||||||||||||||||
Paid to incurred ratio | 95.6 | % | 120.9 | % | 69.6 | % | 98.7 | % | 65.0 | % | 116.5 | % | 134.6 | % | 103.1 | % | ||||||||||||||||
At or for the Years Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Property | Specialty - Short-tail | Specialty - Other | Total | Property | Specialty - Short-tail | Specialty - Other | Total | |||||||||||||||||||||||||
Gross reserves, beginning of year | $ | 312,418 | $ | 505,954 | $ | 934,792 | $ | 1,753,164 | $ | 290,736 | $ | 474,526 | $ | 983,047 | $ | 1,748,309 | ||||||||||||||||
Loss reserves recoverable | (65,681 | ) | (120,394 | ) | (135,818 | ) | (321,893 | ) | (73,829 | ) | (96,881 | ) | (134,659 | ) | (305,369 | ) | ||||||||||||||||
Net reserves, beginning of year | 246,737 | 385,560 | 798,974 | 1,431,271 | 216,907 | 377,645 | 848,388 | 1,442,940 | ||||||||||||||||||||||||
Net reserves acquired | — | 23,753 | — | 23,753 | — | — | — | — | ||||||||||||||||||||||||
Incurred losses - current year | 341,645 | 398,711 | 290,535 | 1,030,891 | 221,518 | 194,047 | 267,005 | 682,570 | ||||||||||||||||||||||||
Change in prior accident years | (26,202 | ) | (29,721 | ) | (40,769 | ) | (96,692 | ) | (37,855 | ) | 5,801 | (45,775 | ) | (77,829 | ) | |||||||||||||||||
Total net incurred losses and loss expenses | 315,443 | 368,990 | 249,766 | 934,199 | 183,663 | 199,848 | 221,230 | 604,741 | ||||||||||||||||||||||||
Foreign exchange loss (gain) | 2,605 | 6,543 | 7,760 | 16,908 | (5,395 | ) | (10,722 | ) | (13,848 | ) | (29,965 | ) | ||||||||||||||||||||
Paid losses - current year | (116,479 | ) | (182,824 | ) | (18,711 | ) | (318,014 | ) | (77,034 | ) | (63,477 | ) | (42,043 | ) | (182,554 | ) | ||||||||||||||||
Paid losses - prior years | (101,975 | ) | (132,040 | ) | (194,531 | ) | (428,546 | ) | (71,404 | ) | (117,734 | ) | (214,753 | ) | (403,891 | ) | ||||||||||||||||
Total net paid losses | (218,454 | ) | (314,864 | ) | (213,242 | ) | (746,560 | ) | (148,438 | ) | (181,211 | ) | (256,796 | ) | (586,445 | ) | ||||||||||||||||
Net reserves, end of year | 346,331 | 469,982 | 843,258 | 1,659,571 | 246,737 | 385,560 | 798,974 | 1,431,271 | ||||||||||||||||||||||||
Loss reserves recoverable | 281,561 | 225,331 | 133,974 | 640,866 | 65,681 | 120,394 | 135,818 | 321,893 | ||||||||||||||||||||||||
Gross reserves, end of year | $ | 627,892 | $ | 695,313 | $ | 977,232 | $ | 2,300,437 | $ | 312,418 | $ | 505,954 | $ | 934,792 | $ | 1,753,164 | ||||||||||||||||
Net premiums earned | $ | 260,672 | $ | 586,782 | $ | 408,631 | $ | 1,256,085 | $ | 270,691 | $ | 369,100 | $ | 363,153 | $ | 1,002,944 | ||||||||||||||||
Current year loss ratio | 131.1 | % | 67.9 | % | 71.1 | % | 82.1 | % | 81.8 | % | 52.5 | % | 73.5 | % | 68.1 | % | ||||||||||||||||
Change in prior accident years loss ratio | (10.1 | )% | (5.1 | )% | (10.0 | )% | (7.7 | )% | (14.0 | )% | 1.6 | % | (12.6 | )% | (7.8 | )% | ||||||||||||||||
Net loss ratio | 121.0 | % | 62.8 | % | 61.1 | % | 74.4 | % | 67.8 | % | 54.1 | % | 60.9 | % | 60.3 | % | ||||||||||||||||
Paid to incurred ratio | 69.3 | % | 85.3 | % | 85.4 | % | 79.9 | % | 80.8 | % | 90.7 | % | 116.1 | % | 97.0 | % |
27
Validus Holdings, Ltd.
Analysis of Loss Ratios by Segment
Three Months Ended | Years Ended | |||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||
Reinsurance Segment | ||||||||||||||||||||
Current period - excluding items below | 53.1 | % | 43.5 | % | 48.2 | % | 46.1 | % | 46.9 | % | 47.6 | % | 46.1 | % | ||||||
Current period - notable loss events (a) | 5.9 | % | 100.2 | % | — | % | — | % | 7.9 | % | 29.1 | % | 4.5 | % | ||||||
Current period - non-notable loss events (b) | 3.7 | % | 0.3 | % | 2.2 | % | 2.2 | % | — | % | 2.1 | % | 4.7 | % | ||||||
Change in prior accident years | (8.5 | )% | (16.0 | )% | (6.1 | )% | (13.4 | )% | (14.9 | )% | (11.1 | )% | (13.6 | )% | ||||||
Net loss ratio | 54.2 | % | 128.0 | % | 44.3 | % | 34.9 | % | 39.9 | % | 67.7 | % | 41.7 | % | ||||||
Insurance Segment | ||||||||||||||||||||
Current period - excluding items below | 73.8 | % | 75.3 | % | 66.5 | % | 71.2 | % | 65.5 | % | 71.9 | % | 64.3 | % | ||||||
Current period - notable loss events (a) | 6.3 | % | 24.2 | % | — | % | — | % | 7.4 | % | 8.2 | % | 2.1 | % | ||||||
Current period - non-notable loss events (b) | (0.7 | )% | 3.2 | % | 0.6 | % | 5.3 | % | 0.1 | % | 2.0 | % | 1.7 | % | ||||||
Change in prior accident years | (5.9 | )% | (7.8 | )% | (7.8 | )% | (9.6 | )% | (4.5 | )% | (7.7 | )% | (7.8 | )% | ||||||
Net loss ratio | 73.5 | % | 94.9 | % | 59.3 | % | 66.9 | % | 68.5 | % | 74.4 | % | 60.3 | % | ||||||
Asset Management Segment | ||||||||||||||||||||
Current period - excluding items below | 19.7 | % | 11.3 | % | 7.3 | % | 8.5 | % | 3.3 | % | 11.7 | % | 6.8 | % | ||||||
Current period - notable loss events (a) | 125.4 | % | 552.0 | % | — | % | — | % | 24.2 | % | 214.0 | % | 9.7 | % | ||||||
Current period - non-notable loss events (b) | 3.9 | % | 1.7 | % | — | % | — | % | 0.2 | % | 1.4 | % | 2.5 | % | ||||||
Change in prior accident years | (3.0 | )% | (3.2 | )% | (5.7 | )% | (5.3 | )% | (1.7 | )% | (4.2 | )% | (1.1 | )% | ||||||
Net loss ratio | 146.0 | % | 561.8 | % | 1.6 | % | 3.2 | % | 26.0 | % | 222.9 | % | 17.9 | % | ||||||
Consolidated | ||||||||||||||||||||
Current period - excluding items below | 60.3 | % | 53.9 | % | 52.6 | % | 54.1 | % | 49.8 | % | 55.1 | % | 49.9 | % | ||||||
Current period - notable loss events (a) | 18.5 | % | 128.1 | % | — | % | — | % | 9.7 | % | 40.6 | % | 4.0 | % | ||||||
Current period - non-notable loss events (b) | 1.5 | % | 1.9 | % | 1.2 | % | 3.4 | % | 0.1 | % | 2.0 | % | 3.1 | % | ||||||
Change in prior accident years | (6.6 | )% | (10.4 | )% | (6.9 | )% | (10.6 | )% | (8.7 | )% | (8.6 | )% | (9.6 | )% | ||||||
Net loss ratio | 73.7 | % | 173.5 | % | 46.9 | % | 46.9 | % | 50.9 | % | 89.1 | % | 47.4 | % |
Notes:
(a) | The Company defines a notable loss event as an event whereby consolidated net losses and loss expenses aggregate to a threshold greater than or equal to $30.0 million. |
(b) | The Company defines a non-notable loss event as an event whereby consolidated net losses and loss expenses aggregate to a threshold greater than or equal to $15.0 million but less than $30.0 million. |
28
Validus Holdings, Ltd.
Consolidated Reinsurance Recoverable Analysis
Consolidated Reinsurance Recoverable at December 31, 2017 | ||||||||||||||||||
Categories | Reinsurance Recoverable (a) | % | Top 10 Reinsurers | Rating (b) | Reinsurance Recoverable (a) | % | ||||||||||||
Top 10 reinsurers | $ | 1,055,445 | 82.5 | % | Fully collateralized reinsurers | NR | $ | 459,339 | 35.9 | % | ||||||||
Other reinsurers' balances > $1 million | 218,226 | 17.0 | % | Everest Re | A+ | 128,206 | 10.0 | % | ||||||||||
Other reinsurers' balances < $1 million | 7,199 | 0.5 | % | Munich Re | AA- | 94,180 | 7.4 | % | ||||||||||
Total | $ | 1,280,870 | 100.0 | % | Lloyd's Syndicates | A+ | 74,277 | 5.8 | % | |||||||||
Federal Crop Insurance Corporation | (c) | 68,745 | 5.4 | % | ||||||||||||||
Swiss Re | AA- | 65,218 | 5.1 | % | ||||||||||||||
Hannover Re | AA- | 53,523 | 4.2 | % | ||||||||||||||
Qatar Insurance Company | A | 50,160 | 3.9 | % | ||||||||||||||
Transatlantic Re | A+ | 33,729 | 2.6 | % | ||||||||||||||
Markel | A | 28,068 | 2.2 | % | ||||||||||||||
Total | $ | 1,055,445 | 82.5 | % | ||||||||||||||
Consolidated Reinsurance Recoverable at December 31, 2016 | ||||||||||||||||||
Categories | Reinsurance Recoverable (a) | % | Top 10 Reinsurers | Rating (b) | Reinsurance Recoverable (a) | % | ||||||||||||
Top 10 reinsurers | $ | 395,308 | 84.9 | % | Lloyd's Syndicates | A+ | $ | 84,419 | 18.2 | % | ||||||||
Other reinsurers' balances > $1 million | 66,944 | 14.4 | % | Swiss Re | AA- | 84,044 | 18.1 | % | ||||||||||
Other reinsurers' balances < $1 million | 3,416 | 0.7 | % | Fully collateralized reinsurers | NR | 83,088 | 17.8 | % | ||||||||||
Total | $ | 465,668 | 100.0 | % | Hannover Re | AA- | 50,603 | 10.9 | % | |||||||||
Everest Re | A+ | 36,912 | 7.9 | % | ||||||||||||||
Munich Re | AA- | 18,214 | 3.9 | % | ||||||||||||||
Transatlantic Re | A+ | 10,593 | 2.3 | % | ||||||||||||||
Hamilton Re | A- | 10,343 | 2.2 | % | ||||||||||||||
Toa Re | A+ | 9,510 | 2.0 | % | ||||||||||||||
National Indemnity Company | AA+ | 7,582 | 1.6 | % | ||||||||||||||
Total | $ | 395,308 | 84.9 | % |
Notes:
(a) | Reinsurance Recoverable includes Loss Reserves Recoverable and Paid Losses Recoverable. |
(b) | 99.2% of Reinsurance Recoverable at December 31, 2017 were from reinsurers rated A- or better by internationally recognized rating agencies or were fully collateralized. |
(c) | The Company participates in a crop reinsurance program sponsored by the U.S. federal government. The Company remains obligated for amounts ceded in the event that its reinsurers or retrocessionaires do not meet their obligations, except for amounts ceded to the U.S. federal government in the Insurance segment agriculture line of business. |
29
Validus Holdings, Ltd.
Consolidated Investment Portfolio Composition and Net Investment Income
Investment portfolio | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||||||
Managed investments, cash and cash equivalents and restricted cash | ||||||||||||||||||||||||||||
U.S. Government and Government Agency | $ | 727,397 | $ | 595,694 | $ | 646,436 | $ | 718,025 | $ | 804,126 | ||||||||||||||||||
Non-U.S. Government and Government Agency | 312,239 | 290,538 | 292,504 | 258,463 | 240,791 | |||||||||||||||||||||||
States, municipalities, political subdivision | 201,303 | 206,667 | 227,949 | 229,129 | 271,830 | |||||||||||||||||||||||
Agency residential mortgage-backed securities | 978,049 | 828,400 | 783,006 | 653,395 | 679,595 | |||||||||||||||||||||||
Non-Agency residential mortgage-backed securities | 40,373 | 38,993 | 26,683 | 19,382 | 15,477 | |||||||||||||||||||||||
U.S. corporate | 1,533,395 | 1,466,739 | 1,386,484 | 1,486,882 | 1,534,508 | |||||||||||||||||||||||
Non-U.S. corporate | 422,249 | 392,242 | 379,480 | 397,989 | 410,227 | |||||||||||||||||||||||
Bank loans | 442,951 | 464,464 | 552,901 | 567,012 | 570,399 | |||||||||||||||||||||||
Asset-backed securities | 658,303 | 522,524 | 502,056 | 514,690 | 526,814 | |||||||||||||||||||||||
Commercial mortgage-backed securities | 312,395 | 314,221 | 316,190 | 318,288 | 330,932 | |||||||||||||||||||||||
Total fixed maturities | 5,628,654 | 5,120,482 | 5,113,689 | 5,163,255 | 5,384,699 | |||||||||||||||||||||||
Total short-term investments | 230,011 | 258,646 | 255,516 | 232,955 | 228,386 | |||||||||||||||||||||||
Total other investments | 355,218 | 471,300 | 448,618 | 443,004 | 405,712 | |||||||||||||||||||||||
Investment in investment affiliates | 100,137 | 92,079 | 103,377 | 94,697 | 100,431 | |||||||||||||||||||||||
Cash and cash equivalents | 691,687 | 961,539 | 796,476 | 619,810 | 415,419 | |||||||||||||||||||||||
Restricted cash | 62,848 | 51,585 | 48,101 | 36,099 | 15,000 | |||||||||||||||||||||||
Total managed investments, cash and cash equivalents and restricted cash (a) | 7,068,555 | 6,955,631 | 6,765,777 | 6,589,820 | 6,549,647 | |||||||||||||||||||||||
Non-managed investments, cash and cash equivalents and restricted cash | ||||||||||||||||||||||||||||
Catastrophe bonds | 229,694 | 299,484 | 304,954 | 201,961 | 158,331 | |||||||||||||||||||||||
Short-term investments | 3,151,746 | 2,734,600 | 2,615,837 | 2,552,271 | 2,567,784 | |||||||||||||||||||||||
Cash and cash equivalents | 63,303 | 4,091 | 3,929 | 4,127 | 4,557 | |||||||||||||||||||||||
Restricted cash | 331,815 | 37,818 | 146,938 | 56,448 | 55,956 | |||||||||||||||||||||||
Total non-managed investments, cash and cash equivalents and restricted cash (a) | 3,776,558 | 3,075,993 | 3,071,658 | 2,814,807 | 2,786,628 | |||||||||||||||||||||||
Total investments, cash and cash equivalents and restricted cash | $ | 10,845,113 | $ | 10,031,624 | $ | 9,837,435 | $ | 9,404,627 | $ | 9,336,275 | ||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
Net investment income | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Managed investments (a) | ||||||||||||||||||||||||||||
Fixed maturities and short-term investments | $ | 33,894 | $ | 30,823 | $ | 31,212 | $ | 31,671 | $ | 29,875 | $ | 127,600 | $ | 119,085 | ||||||||||||||
Other investments | 8,098 | 7,391 | 7,571 | 6,870 | 7,194 | 29,930 | 27,860 | |||||||||||||||||||||
Cash and cash equivalents and restricted cash | 1,513 | 1,230 | 716 | 610 | 803 | 4,069 | 2,939 | |||||||||||||||||||||
Securities lending income | 2 | 3 | 7 | 13 | 16 | 25 | 55 | |||||||||||||||||||||
Total gross investment income | 43,507 | 39,447 | 39,506 | 39,164 | 37,888 | 161,624 | 149,939 | |||||||||||||||||||||
Investment expenses | (1,898 | ) | (2,356 | ) | (1,443 | ) | (2,972 | ) | (2,013 | ) | (8,669 | ) | (8,221 | ) | ||||||||||||||
Total managed net investment income | $ | 41,609 | $ | 37,091 | $ | 38,063 | $ | 36,192 | $ | 35,875 | $ | 152,955 | $ | 141,718 | ||||||||||||||
Annualized effective investment yield - managed investments (b) | 2.44 | % | 2.23 | % | 2.35 | % | 2.27 | % | 2.25 | % | 2.32 | % | 2.24 | % | ||||||||||||||
Non-managed investments | ||||||||||||||||||||||||||||
Fixed maturities and short-term investments | $ | 3,332 | $ | 3,941 | $ | 4,500 | $ | 3,060 | $ | 1,689 | $ | 14,833 | $ | 6,931 | ||||||||||||||
Cash and cash equivalents and restricted cash | 4,019 | 3,426 | 1,678 | 962 | 589 | 10,085 | 1,736 | |||||||||||||||||||||
Total non-managed net investment income | 7,351 | 7,367 | 6,178 | 4,022 | 2,278 | 24,918 | 8,667 | |||||||||||||||||||||
Total net investment income | $ | 48,960 | $ | 44,458 | $ | 44,241 | $ | 40,214 | $ | 38,153 | $ | 177,873 | $ | 150,385 |
Notes:
(a) | Managed investments represent assets governed by the Company’s investment policy statement (“IPS”) whereas, non-managed investments represent assets held in support of consolidated AlphaCat variable interest entities which are not governed by the Company’s IPS. |
(b) | Annualized effective investment yield on managed investments is calculated by dividing managed net investment income by the average balance of the yield bearing assets managed by our portfolio managers (including funds of high grade structured products which are included in other investments, but excluding all other investments). Average assets for the three months ended is the average of the beginning and ending quarter end asset balances. Average assets for the year ended is the average of the beginning, ending and intervening quarter end asset balances. Percentages for the quarter periods are annualized. |
30
Validus Holdings, Ltd.
Consolidated Fixed Maturity Portfolio Credit Quality and Maturity Profile
December 31, 2017 | December 31, 2016 | |||||||||||||
Fixed maturities - Credit Quality | Fair Value | % | Fair Value | % | ||||||||||
Managed fixed maturities | ||||||||||||||
AAA | $ | 2,715,074 | 46.4 | % | $ | 2,405,597 | 43.4 | % | ||||||
AA | 442,397 | 7.6 | % | 538,289 | 9.7 | % | ||||||||
A | 1,137,795 | 19.4 | % | 1,081,949 | 19.5 | % | ||||||||
BBB | 828,392 | 14.1 | % | 740,861 | 13.4 | % | ||||||||
Total investment grade managed fixed maturities | 5,123,658 | 87.5 | % | 4,766,696 | 86.0 | % | ||||||||
BB | 168,967 | 2.9 | % | 213,568 | 3.9 | % | ||||||||
B | 237,131 | 4.0 | % | 177,737 | 3.2 | % | ||||||||
CCC | 18,217 | 0.3 | % | 13,371 | 0.2 | % | ||||||||
NR | 80,681 | 1.4 | % | 213,327 | 3.8 | % | ||||||||
Total non-investment grade managed fixed maturities | 504,996 | 8.6 | % | 618,003 | 11.1 | % | ||||||||
Total managed fixed maturities | $ | 5,628,654 | 96.1 | % | $ | 5,384,699 | 97.1 | % | ||||||
Non-managed catastrophe bonds | ||||||||||||||
BB | 22,110 | 0.3 | % | 29,731 | 0.6 | % | ||||||||
B | 3,265 | 0.1 | % | 4,524 | 0.1 | % | ||||||||
NR | 204,319 | 3.5 | % | 124,076 | 2.2 | % | ||||||||
Total non-investment grade non-managed catastrophe bonds | 229,694 | 3.9 | % | 158,331 | 2.9 | % | ||||||||
Total non-managed catastrophe bonds | $ | 229,694 | 3.9 | % | $ | 158,331 | 2.9 | % | ||||||
Total fixed maturities | $ | 5,858,348 | 100.0 | % | $ | 5,543,030 | 100.0 | % | ||||||
December 31, 2017 | December 31, 2016 | |||||||||||||
Fixed maturities - Maturity Profile | Fair Value | % | Fair Value | % | ||||||||||
Managed fixed maturities | ||||||||||||||
Due in one year or less | $ | 343,541 | 5.9 | % | $ | 346,161 | 6.2 | % | ||||||
Due after one year through five years | 2,513,620 | 42.8 | % | 2,933,146 | 52.9 | % | ||||||||
Due after five years through ten years | 577,109 | 9.9 | % | 426,647 | 7.7 | % | ||||||||
Due after ten years | 205,264 | 3.5 | % | 125,927 | 2.3 | % | ||||||||
3,639,534 | 62.1 | % | 3,831,881 | 69.1 | % | |||||||||
Asset-backed and mortgage backed securities | 1,989,120 | 34.0 | % | 1,552,818 | 28.0 | % | ||||||||
Total managed fixed maturities | 5,628,654 | 96.1 | % | 5,384,699 | 97.1 | % | ||||||||
Non-managed catastrophe bonds | ||||||||||||||
Due in one year or less | 88,367 | 1.5 | % | 45,418 | 0.8 | % | ||||||||
Due after one year through five years | 138,844 | 2.4 | % | 111,656 | 2.1 | % | ||||||||
Due after five years through ten years | 2,483 | — | % | 1,257 | — | % | ||||||||
Total non-managed catastrophe bonds | $ | 229,694 | 3.9 | % | $ | 158,331 | 2.9 | % | ||||||
Total fixed maturities | $ | 5,858,348 | 100.0 | % | $ | 5,543,030 | 100.0 | % |
31
Validus Holdings, Ltd.
Top Ten Exposures to Fixed Income Corporate Issuers
December 31, 2017 | |||||||||
Issuer (a) | Fair Value (b) | Rating (c) | % of Managed Investments, Cash and Cash Equivalents and Restricted Cash | ||||||
JPMorgan Chase & Co. | $ | 67,079 | BBB+ | 0.9 | % | ||||
Citigroup Inc. | 59,438 | BBB+ | 0.8 | % | |||||
Morgan Stanley | 56,503 | BBB+ | 0.8 | % | |||||
Bank of America Corp. | 51,579 | A- | 0.7 | % | |||||
Goldman Sachs Group | 49,679 | BBB+ | 0.7 | % | |||||
Wells Fargo & Company | 45,545 | A | 0.6 | % | |||||
AT&T Inc. | 34,615 | BBB+ | 0.5 | % | |||||
HSBC Holdings plc | 33,972 | A | 0.5 | % | |||||
Bank of New York Mellon Corp. | 32,592 | A | 0.5 | % | |||||
Capital One Financial Corporation | 29,145 | BBB+ | 0.4 | % | |||||
Total | $ | 460,147 | 6.4 | % |
Notes:
(a) | Issuers exclude government-backed, government-sponsored enterprises and cash and cash equivalents. |
(b) | Credit exposures represent only direct exposure to fixed maturities and short-term investments of the parent issuer and its major subsidiaries. These exposures exclude asset and mortgage backed securities that were issued, sponsored or serviced by the parent. |
(c) | Investment ratings are the median of Moody's, Standard & Poor's and Fitch, presented in Standard & Poor's equivalent rating. For investments where three ratings are unavailable, the lower of the ratings shall apply, presented in Standard & Poor's equivalent rating. |
32
Validus Holdings, Ltd.
Capitalization
Capitalization | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||
Senior Notes (a) | $ | 245,564 | $ | 245,513 | $ | 245,463 | $ | 245,412 | $ | 245,362 | ||||||||||
Junior Subordinated Deferrable Debentures (JSDs) (a) | 289,800 | 289,800 | 289,800 | 289,800 | 289,800 | |||||||||||||||
Flagstone Junior Subordinated Deferrable Debentures (JSDs) (a) | 249,358 | 249,110 | 248,600 | 247,602 | 247,426 | |||||||||||||||
Total debt | 784,722 | 784,423 | 783,863 | 782,814 | 782,588 | |||||||||||||||
Redeemable noncontrolling interests | 1,004,094 | 1,133,880 | 1,251,660 | 1,657,630 | 1,528,001 | |||||||||||||||
Preferred shares, liquidation value (a) | 400,000 | 400,000 | 400,000 | 150,000 | $ | 150,000 | ||||||||||||||
Ordinary shares, capital and surplus available to Validus common shareholders | 3,517,264 | 3,554,717 | 3,831,355 | 3,784,329 | 3,711,507 | |||||||||||||||
Accumulated other comprehensive loss | (22,192 | ) | (18,430 | ) | (19,924 | ) | (22,453 | ) | (23,216 | ) | ||||||||||
Noncontrolling interests | 16,718 | 78,947 | 415,658 | 330,597 | 165,977 | |||||||||||||||
Total shareholders' equity | $ | 3,911,790 | $ | 4,015,234 | $ | 4,627,089 | $ | 4,242,473 | $ | 4,004,268 | ||||||||||
Total capitalization (b) | $ | 5,700,606 | $ | 5,933,537 | $ | 6,662,612 | $ | 6,682,917 | $ | 6,314,857 | ||||||||||
Total capitalization available to Validus (c) | $ | 4,679,794 | $ | 4,720,710 | $ | 4,995,294 | $ | 4,694,690 | $ | 4,620,879 | ||||||||||
Debt to total capitalization | 13.8 | % | 13.2 | % | 11.8 | % | 11.7 | % | 12.4 | % | ||||||||||
Debt (excluding JSDs) to total capitalization | 4.3 | % | 4.1 | % | 3.7 | % | 3.7 | % | 3.9 | % | ||||||||||
Debt and preferred shares to total capitalization | 20.8 | % | 20.0 | % | 17.8 | % | 14.0 | % | 14.8 | % | ||||||||||
Debt to total capitalization available to Validus | 16.8 | % | 16.6 | % | 15.7 | % | 16.7 | % | 16.9 | % | ||||||||||
Debt (excluding JSDs) to total capitalization available to Validus | 5.2 | % | 5.2 | % | 4.9 | % | 5.2 | % | 5.3 | % | ||||||||||
Debt and preferred shares to total capitalization available to Validus | 25.3 | % | 25.1 | % | 23.7 | % | 19.9 | % | 20.2 | % |
Notes:
(a) | For further information regarding the Company's debt and preferred shares, refer to the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. |
(b) | Total capitalization equals total shareholders' equity plus redeemable noncontrolling interests, Senior Notes and Junior Subordinated Deferrable Debentures. |
(c) | Total capitalization available to Validus equals total shareholders' equity less noncontrolling interests plus Senior Notes and Junior Subordinated Deferrable Debentures. |
33
Validus Holdings, Ltd.
Estimated Exposures to Peak Zone Property Catastrophe Losses - As of January 1, 2018
Probable Maximum Losses by Zone and Peril
Consolidated (Insurance and Reinsurance Segments) Estimated Net Loss (a) | ||||||||||||||||||||||
Zones | Perils | 20 year return period | 50 year return period | 100 year return period | 250 year return period | Reinsurance Segment Net Maximum Zonal Aggregate (a) | ||||||||||||||||
United States | Hurricane | $ | 259,970 | $ | 308,684 | $ | 335,490 | $ | 545,121 | $ | 1,694,259 | |||||||||||
California | Earthquake | 49,085 | 195,133 | 287,734 | 322,762 | 1,444,727 | ||||||||||||||||
Europe | Windstorm | 93,276 | 213,719 | 268,337 | 456,383 | 1,374,612 | ||||||||||||||||
Japan | Earthquake | 57,124 | 130,705 | 208,205 | 295,699 | 955,949 | ||||||||||||||||
Japan | Typhoon | 66,129 | 134,493 | 219,350 | 256,136 | 843,280 |
Notes:
(a) | Net probable maximum losses and maximum zonal aggregates include Validus' share of the Asset Management segment limits. |
Net loss estimates and zonal aggregates are before income tax, net of reinstatement premiums, and net of reinsurance and retrocessional recoveries. The estimates set forth above are based on an Occurrence basis on assumptions that are inherently subject to significant uncertainties and contingencies. These uncertainties and contingencies can affect actual losses and could cause actual losses to differ materially from those expressed above. In particular, modeled loss estimates do not necessarily accurately predict actual losses, and may significantly mis-estimate actual losses. Such estimates, therefore, should not be considered as a representation of actual losses.
The Company has developed the estimates of losses expected from certain catastrophes for its portfolio of property, marine, workers’ compensation, and personal accident contracts using commercially available catastrophe models such as RMS, AIR and EQECAT, which are applied and adjusted by the Company. These estimates include assumptions regarding the location, size and magnitude of an event, the frequency of events, the construction type and damageability of property in a zone, policy terms and conditions and the cost of rebuilding property in a zone, among other assumptions. These assumptions will evolve following any actual event. Accordingly, if the estimates and assumptions that are entered into the risk model are incorrect, or if the risk model proves to be an inaccurate forecasting tool, the losses the Company might incur from an actual catastrophe could be materially higher than its expectation of losses generated from modeled catastrophe scenarios. In addition, many risks such as second-event covers, aggregate excess of loss, or attritional loss components cannot be fully evaluated using the vendor models. Further, the Company cannot assure that such third party models are free of defects in the modeling logic or in the software code.
Investors should not rely on the information set forth in this presentation when considering investment in the Company. The information contained in this presentation has not been audited nor has it been subject to independent verification. The estimates set forth above speak only as of the date of this presentation and the Company undertakes no obligation to update or revise such information to reflect the occurrence of future events, including, but not limited to, the composition of the Company's business. The events presented reflect a specific set of proscribed calculations and do not necessarily reflect all events that may impact the Company.
34
Validus Holdings, Ltd.
Estimated Exposures to Specified Loss Scenarios - As of July 1, 2017
Consolidated Realistic Disaster Scenarios ("RDS")
Type | Catastrophe Scenarios | Description | Estimated Consolidated Net Loss (in millions of U.S. dollars) | % of latest 12 Months Consolidated Net Premiums Earned | |||||||
Marine | Loss of major complex | Total loss to all platforms and bridge links of a major oil complex | $ | 173.3 | 6.7 | % | |||||
Marine | Major cruise vessel incident | U.S.-owned cruise vessel sunk or severely damaged | 147.3 | 5.7 | % | ||||||
Marine | Marine collision | Fully laden tanker collides with a cruise vessel in U.S. waters | 111.6 | 4.3 | % | ||||||
Political Risks | South East Asia | Chinese economy has a "hard landing" with sharp fall in growth rates; regional contagion | 177.4 | 6.9 | % | ||||||
Political Risks | Russia | The Russian corporate sector struggles to deal with the effects of crashing commodity and stock prices | 62.2 | 2.4 | % | ||||||
Political Risks | Turkey | Severe economic crisis in Turkey due to political upheaval | 50.1 | 1.9 | % | ||||||
Political Risks | Nigeria | Severe economic, political and social crisis in Nigeria leads to widespread civil unrest | 49.8 | 1.9 | % | ||||||
Political Risks | Middle East | U.S. and Iran escalate into military confrontation; regional contagion | 88.2 | 3.4 | % | ||||||
Aviation | Aviation collision | Collision of two aircraft over a major city | 34.0 | 1.3 | % | ||||||
Satellite | Solar flare | Large single or sequence of proton flares results in loss to all satellites in synchronous orbit | 54.7 | 2.1 | % | ||||||
Satellite | Generic defect | Undetected defect in a number of operational satellites causing major loss | 29.4 | 1.1 | % | ||||||
Terrorism | Rockefeller Center | Midtown Manhattan suffers a 2-tonne conventional bomb blast | 96.2 | 3.7 | % | ||||||
Terrorism | One World Trade Center | Lower Manhattan suffers a 2-tonne conventional bomb blast | 45.3 | 1.8 | % | ||||||
Liability | Professional lines | Failure or collapse of a major corporation | 42.4 | 1.6 | % | ||||||
Liability | Professional lines | U.K. pensions mis-selling | 19.1 | 0.7 | % | ||||||
Cyber | Major data security breach | Simultaneous cyber-attacks on organizations within one industrial sector; loss of customer data | 74.6 | 2.9 | % |
The Company has presented the Company Realistic Disaster Scenarios for non-natural catastrophe events. Twice yearly, Lloyd's syndicates' including the Company's Syndicate 1183 are required to provide details of their potential exposures to specific disaster scenarios. Lloyd’s makes its updated Realistic Disaster Scenarios (RDS) guidance available to the market annually. The RDS scenario specification document for 2017 can be accessed at the RDS part of the Lloyd's public website: http://www.lloyds.com/the-market/tools-and-resources/research/exposure-management/realistic-disaster-scenarios.
The Consolidated Net Premiums Earned used in the calculation represent the latest 12 months of net premiums earned up to December 31, 2017.
Modeling catastrophe threat scenarios is a complex exercise involving numerous variables and is inherently subject to significant uncertainties and contingencies. These uncertainties and contingencies can affect actual losses and could cause actual losses incurred by the Company to differ materially from those expressed above. Should an event occur, the modeled outcomes may prove inadequate, possibly materially so. This may occur for a number of reasons including, legal requirements, model deficiency, non-modeled risks or data inaccuracies.
A modeled outcome of net loss from a single event also relies in significant part on the reinsurance and retrocession arrangements in place, or expected to be in place at the time of the analysis, and may change during the year. Modeled outcomes assume that the reinsurance and retrocession in place responds as expected with minimal reinsurance failure or dispute. Reinsurance is purchased to match the original exposure as far as possible, but it is possible for there to be a mismatch or gap in cover which could result in higher than modeled losses to the Company. In addition, many parts of the reinsurance program are purchased with limited reinstatements and, therefore, the number of claims or events which may be recovered from second or subsequent events is limited. It should also be noted that renewal dates of the reinsurance program do not necessarily coincide with those of the inwards business written. Where original business is not protected by risks attaching reinsurance or retrocession programs, the programs could expire resulting in an increase in the possible net loss retained by the Company.
Investors should not rely on the information set forth in this presentation when considering investment in the Company. The information contained in this presentation has not been audited nor has it been subject to independent verification. The estimates set forth above speak only as of the date of this presentation and the Company undertakes no obligation to update or revise such information to reflect the occurrence of future events. The events presented reflect a specific set of prescribed calculations and do not necessarily reflect all events that may impact the Company.
35