Validus Holdings, Ltd. (“Validus” or the “Company”) (NYSE: VR)
today reported net income available to Validus common shareholders
of $95.0 million, or $1.14 per diluted common share, for the three
months ended June 30, 2016, compared to $65.8 million, or
$0.75 per diluted common share, for the three months ended
June 30, 2015. Net income available to Validus common
shareholders was $261.8 million, or $3.12 per diluted common share,
for the six months ended June 30, 2016, compared to $239.2
million, or $2.74 per diluted common share, for the six months
ended June 30, 2015.
Net operating income available to Validus common shareholders
was $54.9 million, or $0.66 per diluted common share, for the three
months ended June 30, 2016, compared to $101.7 million, or
$1.16 per diluted common share, for the three months ended
June 30, 2015. Net operating income available to Validus
common shareholders was $172.3 million, or $2.06 per diluted common
share, for the six months ended June 30, 2016, compared to
$238.6 million, or $2.73 per diluted common share, for the six
months ended June 30, 2015.
The annualized return on average equity was 10.2% for the three
months ended June 30, 2016, compared to 7.2% for the three
months ended June 30, 2015. The annualized return on average
equity was 14.2% for the six months ended June 30, 2016,
compared to 13.1% for the six months ended June 30, 2015.
The annualized net operating return on average equity was 5.9%
for the three months ended June 30, 2016, compared to 11.1%
for the three months ended June 30, 2015. The annualized net
operating return on average equity was 9.3% for the six months
ended June 30, 2016, compared to 13.1% for the six months
ended June 30, 2015.
Book value per diluted common share at June 30, 2016 was
$44.41, reflecting quarterly growth of 1.7% inclusive of
dividends.
Commenting on the financial results for the three months ended
June 30, 2016, Validus' Chairman and CEO Ed Noonan stated:
“Validus’ financial performance was excellent in light of
meaningful loss activity during the quarter in classes of business
squarely in the Validus wheelhouse. Validus generated an 89.9%
combined ratio and a 10.2% annualized return on average equity
despite natural catastrophes in North America, Europe and Asia and
international marine and energy losses. These results speak to our
disciplined underwriting, leading edge analytics and robust risk
management, all well-honed skills that are critical to our success
in the current market environment.”
Income available to Validus common shareholders by segment for
the three months ended June 30, 2016 and June 30, 2015
was as follows:
Income available to Validus common
shareholders for the three months ended June 30, 2016
June 30, 2015 (Expressed in millions of U.S. dollars,
except per share information) Validus Re - Underwriting income (a)
$ 51.9 $ 76.6 Talbot - Underwriting income (a) 6.6 23.3
Western World - Underwriting loss (a) (5.8 ) (0.4 ) Validus' share
of PaCRe, Ltd. — 1.7 Validus' share of other AlphaCat income
4.9
6.1
Validus' share of AlphaCat income (a) 4.9 7.8
Total segmental income 57.6 107.3 Net
investment income (b) 36.8 31.9 Corporate operating expenses (37.6
) (38.0 ) Eliminations and other (1.9 ) 0.5
Net operating
income available to Validus common shareholders (c) $
54.9 $ 101.7 Net operating
income per diluted share available to Validus common shareholders
(c) $ 0.66 $ 1.16
Net income available to Validus common shareholders (c)
$ 95.0 $ 65.8 Earnings
per diluted share available to Validus common shareholders
$ 1.14 $ 0.75 (a)
Underwriting income and Validus' share of AlphaCat income are
non-GAAP measures. (b) Net investment income relates to our managed
investment portfolio. Total net investment income, inclusive of
AlphaCat's non-managed portfolio is $39.3 million and $33.6 million
for the three months ended June 30, 2016 and 2015, respectively.
(c) A reconciliation of net operating income available to Validus
common shareholders and underwriting income to net income available
to Validus common shareholders, the most directly comparable GAAP
measure, is presented at the end of this release.
This earnings release should be read in conjunction with the
Company's June 30, 2016 investor financial supplement that has
been posted to the Investors section of the Company's website
located at www.validusholdings.com.
Second Quarter 2016
Results
Highlights for the second quarter are as follows:
- Gross premiums written for the three
months ended June 30, 2016 were $764.0 million compared to
$726.2 million for the three months ended June 30, 2015, an
increase of $37.9 million, or 5.2%. The increase was primarily
driven by an increase in the AlphaCat, Western World and Talbot
segments, partially offset by a decrease in the Validus Re
segment.
- The loss ratio for the three months
ended June 30, 2016 was 53.5% which included $62.8 million of
favorable loss reserve development on prior accident years,
benefiting the loss ratio by 10.9 percentage points compared to a
loss ratio for the three months ended June 30, 2015 of 46.5%
which included $70.7 million of favorable loss reserve development
on prior accident years, benefiting the loss ratio by 12.3
percentage points. The loss ratio for the three months ended
June 30, 2016 included net notable losses of $36.9 million, or
6.4 percentage points of the loss ratio and net non-notable losses
totaling $48.3 million, or 8.4 percentage points of the loss ratio.
The loss ratio for the three months ended June 30, 2015
included net notable losses of $48.1 million, or 8.4 percentage
points of the loss ratio and net non-notable losses of $(15.0)
million, or (2.6) percentage points of the loss ratio. The
favorable development of $62.8 million for the three months ended
June 30, 2016 was primarily due to favorable development on
non-event reserves of $56.3 million and favorable development on
event specific reserves of $6.5 million.
- The combined ratio for the three months
ended June 30, 2016 was 89.9%, compared to a combined ratio of
81.0% for the three months ended June 30, 2015, an increase of
8.9 percentage points.
- Net operating income available to
Validus common shareholders for the three months ended
June 30, 2016 was $54.9 million compared to $101.7 million for
the three months ended June 30, 2015, a decrease of $46.8
million, or 46.0%.
- Net income available to Validus common
shareholders for the three months ended June 30, 2016 was
$95.0 million compared to $65.8 million for the three months ended
June 30, 2015, an increase of $29.2 million, or 44.3%.
- Annualized return on average equity was
10.2% and annualized net operating return on average equity was
5.9% for the three months ended June 30, 2016 compared to 7.2%
and 11.1%, respectively, for the three months ended June 30,
2015.
Notable and Non-Notable
Losses
During the three months ended June 30, 2016, the Company
incurred a single notable loss event, defined as consolidated
losses which aggregate to a threshold greater than or equal to
$30.0 million. The estimated loss to the Company from the event,
the Canadian Wildfires, net of losses attributable to AlphaCat
investors and noncontrolling interest of $6.4 million, was $30.5
million, or 5.3 percentage points of the loss ratio. Net of
reinstatement premiums of $3.6 million, the net loss attributable
to the Company was $26.9 million. The Company also incurred three
non-notable loss events during the three months ended June 30,
2016, defined as consolidated net losses which aggregate to a
threshold greater than or equal to $15.0 million but less than
$30.0 million. The events, the Texas Hailstorms, the Kumamoto
Earthquake and Jubilee Oil, resulted in an aggregate net loss to
the Company, net of losses attributable to AlphaCat investors and
noncontrolling interest of $5.5 million, of $42.8 million, or 7.5
percentage points of the loss ratio. Net of reinstatement premiums
of $9.7 million, the net loss attributable to the Company was $33.1
million.
Three Months Ended June 30, 2016
(Dollars in thousands) Notable Loss Event
Non-notable Loss Events Total Second
Quarter 2016 Notable and Non-notable Loss Events Canadian
Wildfires Texas Hailstorms Kumamoto
Earthquake Jubilee Oil Gross Losses and Loss
Expenses $ 73,514 $ 17,814 $
15,318 $ 59,365 $ 166,011 Less:
Reinsurance Recoveries (36,599 ) (54 ) — (44,151 ) (80,804 )
Net Losses and Loss Expenses 36,915 17,760
15,318 15,214 85,207 Less: Net Losses and Loss
Expenses Attributable to AlphaCat Third Party Investors and
Noncontrolling Interest (6,422 ) (5,535 ) — — (11,957
)
Validus' Share of Net Losses and Loss Expenses
30,493 12,225 15,318 15,214
73,250 Less: Reinstatement Premiums, net (3,632 ) (1,967 ) —
(7,667 ) (13,266 )
Net Loss Attributable to Validus
$ 26,861 $ 10,258
$ 15,318 $ 7,547 $
59,984 Three Months
Ended June 30, 2016 (Dollars in thousands) Second
Quarter 2016 Notable and Non-notable Loss Events Validus
Re Talbot Western World (a)
AlphaCat Total Gross Losses and Loss
Expenses $ 130,820 $ 21,138
$ 625 $ 13,428 $ 166,011
Less: Reinsurance Recoveries (80,480 ) (324 ) — —
(80,804 )
Net Losses and Loss Expenses 50,340
20,814 625 13,428 85,207 Less: Net
Losses and Loss Expenses Attributable to AlphaCat Third Party
Investors and Noncontrolling Interest — — —
(11,957 ) (11,957 )
Validus' Share of Net Losses and Loss
Expenses 50,340 20,814 625 1,471
73,250 Less: Reinstatement Premiums, net (11,644 ) (1,622 )
— — (13,266 )
Net Loss Attributable to Validus
$ 38,696 $ 19,192
$ 625 $ 1,471 $
59,984 (a) During the three months
ended June 30, 2016, Western World also incurred $6.3 million of
property losses on other U.S.-based weather events.
During the three months ended June 30, 2015, the Company
incurred a single notable loss event, Pemex, which resulted in an
estimated loss to the Company of $48.1 million, or 8.4 percentage
points of the loss ratio. Including reinstatement premiums of $0.4
million, the net loss attributable to the Company was $48.5
million. Losses and loss expenses from non-notable loss events for
the three months ended June 30, 2015 were $(15.0) million, or
(2.6) percentage points of the loss ratio, representing a reserve
release on the first quarter 2015 non-notable loss event, Windstorm
Niklas.
Three Months Ended June 30, 2015
(Dollars in thousands) Second Quarter 2015 Notable Loss
Event Pemex Net Losses and Loss Expenses
$
48,074
Less: Net Losses and Loss Expenses
Attributable to AlphaCat Third Party Investors and Noncontrolling
Interest
—
Validus' Share of Net Losses and Loss Expenses (a)
48,074 Plus: Reinstatement Premiums, net 400
Net Loss
Attributable to Validus (a) $ 48,474 (a)
Validus' share of net losses and loss expenses is allocated
by segment as follows: Validus Re $35.2 million and Talbot $12.9
million. Net of reinstatement premiums, the net loss attributable
to Validus of $48.5 million is allocated by segment as follows:
Validus Re $26.1 million and Talbot $22.4 million.
The Company's loss ratio, excluding the impact of notable and
non-notable loss events and the change in prior accident years, for
the three months ended June 30, 2016 and 2015 was 49.6% and
53.0%, respectively.
Validus Re Segment
Highlights for the second quarter include the following:
- Gross premiums written for the three
months ended June 30, 2016 were $285.8 million compared to
$297.4 million for the three months ended June 30, 2015, a
decrease of $11.6 million, or 3.9%. Gross premiums written for the
three months ended June 30, 2016 included $216.0 million of
property premiums, $7.8 million of marine premiums and $62.0
million of specialty premiums, compared to $246.6 million of
property premiums, $6.5 million of marine premiums and $44.3
million of specialty premiums for the three months ended
June 30, 2015. The decrease in the property lines of $30.6
million was primarily driven by reductions in participation and
non-renewals on various catastrophe excess of loss contracts due to
the current rate environment, as well as timing differences on the
renewal of certain contracts year on year. Partially offsetting the
decreases was an increase in the specialty lines of $17.7 million,
primarily as a result of increased casualty business written during
the period of $23.0 million, partially offset by decreases in the
agriculture lines of $8.2 million arising from earned premium
adjustments and final contract estimate adjustments year on
year.
- The loss ratio for the three months
ended June 30, 2016 was 53.5%, which included $30.9 million of
favorable loss reserve development on prior accident years,
benefiting the loss ratio by 12.5 percentage points compared to a
loss ratio for the three months ended June 30, 2015 of 46.6% which
included $30.9 million of favorable loss reserve development on
prior accident years, benefiting the loss ratio by 11.7 percentage
points. The loss ratio for the three months ended June 30,
2016 included net notable losses of $17.9 million, or 7.2
percentage points of the loss ratio and net non-notable losses
totaling $32.5 million, or 13.1 percentage points of the loss
ratio. The loss ratio for the three months ended June 30, 2015
included net notable losses of $35.2 million, or 13.3 percentage
points of the loss ratio and net non-notable losses of $(15.0)
million, or (5.7) percentage points of the loss ratio. The
favorable development of $30.9 million on prior accident years for
the three months ended June 30, 2016 is primarily due to
favorable development on attritional losses.
- The combined ratio for the three months
ended June 30, 2016 was 79.1% compared to 71.2% for the three
months ended June 30, 2015, an increase of 7.9 percentage
points.
- Underwriting income for the three
months ended June 30, 2016 was $51.9 million compared to $76.6
million for the three months ended June 30, 2015, a decrease
of $24.7 million, or 32.2%.
Talbot Segment
Highlights for the second quarter include the following:
- Gross premiums written for the three
months ended June 30, 2016 were $296.1 million compared to
$293.0 million for the three months ended June 30, 2015, an
increase of $3.0 million, or 1.0%. Gross premiums written for the
three months ended June 30, 2016 included $111.6 million of
property premiums, $86.0 million of marine premiums and $98.4
million of specialty premiums compared to $108.8 million of
property premiums, $89.7 million of marine premiums and $94.5
million of specialty premiums for the three months ended
June 30, 2015.
- The loss ratio for the three months
ended June 30, 2016 was 54.2%, which included $28.3 million of
favorable loss reserve development on prior accident years,
benefiting the loss ratio by 14.1 percentage points compared to a
loss ratio for the three months ended June 30, 2015 of 46.7% which
included $35.6 million of favorable loss reserve development on
prior accident years, benefiting the loss ratio by 17.3 percentage
points. The loss ratio for the three months ended June 30,
2016 included net notable losses of $11.7 million, or 5.8
percentage points of the loss ratio and net non-notable losses
totaling $9.1 million, or 4.5 percentage points of the loss ratio.
The loss ratio for the three months ended June 30, 2015
included net notable losses of $12.9 million, or 6.3 percentage
points of the loss ratio. There were no non-notable losses during
the three months ended June 30, 2015. The favorable
development of $28.3 million on prior accident years for the three
months ended June 30, 2016 is primarily due to favorable
development on non-event reserves of $22.2 million and favorable
development on event specific reserves of $6.1 million.
- The combined ratio for the three months
ended June 30, 2016 was 96.9% compared to 88.7% for the three
months ended June 30, 2015, an increase of 8.2 percentage
points.
- Underwriting income for the three
months ended June 30, 2016 was $6.6 million compared to $23.3
million for the three months ended June 30, 2015, a decrease
of $16.7 million.
Western World Segment
Highlights for the second quarter include the following:
- Gross premiums written for the three
months ended June 30, 2016 were $87.0 million compared to
$79.6 million for the three months ended June 30, 2015, an
increase of $7.4 million, or 9.3%. Gross premiums written for the
three months ended June 30, 2016 included $26.2 million of
property premiums and $60.8 million of liability premiums, compared
to $15.9 million of property premiums and $63.7 million of
liability premiums for the three months ended June 30, 2015.
The increase in gross premiums written in the property lines of
$10.3 million was primarily due to additional business written in
the brokerage property, commercial package property, and program
flood classes of $3.2 million, $2.9 million, and $1.9 million,
respectively, as a result of the continued build out of the
underwriting platform in short tail lines.
- The loss ratio for the three months
ended June 30, 2016 was 67.4%, which included $3.2 million of
favorable loss reserve development on prior accident years,
benefiting the loss ratio by 4.8 percentage points compared to a
loss ratio for the three months ended June 30, 2015 of 71.8% which
included $4.3 million of favorable loss reserve development on
prior accident years, benefiting the loss ratio by 6.5 percentage
points. The losses and loss expenses for the three months ended
June 30, 2016 included $0.6 million, or 1.0 percentage point
of the loss ratio, of net non-notable losses arising from the Texas
Hailstorms and $6.3 million, or 9.6 percentage points of the loss
ratio, of property losses on other U.S.-based weather events
including flood. There were no notable or non-notable losses during
the three months ended June 30, 2015. Of the 2015 incurred losses,
$2.9 million, or 4.4 percentage points of the loss ratio, arose
from the amortization of the risk premium adjustment accounted for
at the time of the acquisition of Western World.
- The combined ratio for the three months
ended June 30, 2016 was 109.1% compared to 101.1% for the
three months ended June 30, 2015, an increase of 8.0
percentage points, primarily due to the amortization of the fair
value adjustment accounted for at the time of the acquisition of
Western World, which benefited the policy acquisition cost ratio by
10.1 percentage points during the three months ended June 30,
2015.
- Underwriting loss for the three months
ended June 30, 2016 was $5.8 million compared to $0.4 million
for the three months ended June 30, 2015, an increase of $5.4
million.
AlphaCat Segment
Highlights for the second quarter include the following:
- AlphaCat's assets under management were
$2,510.5 million as at July 1, 2016, compared to $2,386.2
million as at January 1, 2016. Third party assets under
management were $2,186.9 million as at July 1, 2016, compared
to $2,059.5 million as at January 1, 2016. During the three
months ended July 1, 2016, a total of $206.3 million of
capital was raised, of which $190.2 million was raised from third
parties. During the three months ended July 1, 2016, $21.3
million was returned to investors, of which $19.2 million was
returned to third party investors.
- Revenues earned for the three months
ended June 30, 2016 were $3.4 million, of which $0.3 million
were earned from related parties, compared to $5.5 million for the
three months ended June 30, 2015, of which $1.1 million were
earned from related parties. The decrease was primarily a result of
lower performance fees due to losses arising from notable and
non-notable loss events during the three months ended June 30,
2016.
- Total expenses for the three months
ended June 30, 2016 were $3.0 million, compared to $5.0
million for the three months ended June 30, 2015, a decrease
of $2.1 million. The decrease was primarily due to reduced
placement fees incurred in relation to raising new capital during
the three months ended June 30, 2016.
- Income available to Validus common
shareholders before investment income from AlphaCat Funds and
Sidecars for the three months ended June 30, 2016 was $0.5
million, compared to $0.4 million for the three months ended
June 30, 2015.
- Investment income available to Validus
common shareholders from AlphaCat Funds and Sidecars for the three
months ended June 30, 2016 was $4.4 million, compared to $5.6
million for the three months ended June 30, 2015, a decrease
of $1.2 million. The decrease was primarily due to Validus' share
of the net losses and loss expenses of $1.5 million from notable
and non-notable loss events during the three months ended
June 30, 2016. There were no notable or non-notable losses
during the three months ended June 30, 2015.
- Validus' share of AlphaCat income for
the three months ended June 30, 2016 was $4.9 million,
compared to $6.0 million for the three months ended June 30,
2015, a decrease of $1.2 million. The income for the three months
ended June 30, 2015 excludes $1.7 million of investment income
from PaCRe which was off-risk effective January 1, 2016.
Investments
Highlights of our managed portfolio for the second quarter
include the following:
- Net investment income for the three
months ended June 30, 2016 was $36.8 million compared to $31.9
million for the three months ended June 30, 2015, an increase
of $5.0 million, or 15.7%. The increase was primarily due to strong
performance on the Company's portfolio of structured securities,
including $5.6 million of returns generated from a single fixed
income fund. Annualized effective yield for the three months ended
June 30, 2016 was 2.34%, compared to 2.02% for the three
months ended June 30, 2015, an increase of 32 basis
points.
- Net realized gains on managed
investments for the three months ended June 30, 2016 were $2.5
million compared to $2.1 million for the three months ended June
30, 2015, a favorable movement of $0.4 million, or 19.8%.
- The change in net unrealized gains on
managed investments for the three months ended June 30, 2016 was
$30.1 million compared to losses of $33.9 million for the three
months ended June 30, 2015, a favorable movement of $64.0 million,
or 188.6%. The favorable movement was primarily due to the impact
of declining interest rates on our fixed maturity investments
during three months ended June 30, 2016 as compared to the three
months ended June 30, 2015.
Corporate Operating
Expenses
Highlights for the second quarter include the following:
- General and administrative expenses for
the three months ended June 30, 2016, were $17.9 million
compared to $17.1 million for the three months ended June 30,
2015, an increase of $0.8 million or 4.6%.
- Share compensation expenses for the
three months ended June 30, 2016 were $4.0 million compared to
$3.2 million for the three months ended June 30, 2015, an
increase of $0.8 million or 26.1%.
- Finance expenses, excluding the
Company's share of AlphaCat finance expenses from consolidated
variable interest entities, for the three months ended June 30,
2016 were $14.0 million compared to $15.1 million for the three
months ended June 30, 2015, a decrease of $1.2 million or 7.7%
primarily due to reduced credit facility expenses.
Year to Date 2016
Results
Highlights for the year to date include the following:
- Gross premiums written for the six
months ended June 30, 2016 were $1,936.8 million compared to
$1,845.4 million for the six months ended June 30, 2015, an
increase of $91.4 million, or 5.0%.
- The loss ratio for the six months ended
June 30, 2016 was 46.4% which included $116.5 million of
favorable loss reserve development on prior accident years,
benefiting the loss ratio by 10.2 percentage points compared to a
loss ratio for the six months ended June 30, 2015 of 44.1%
which included $154.3 million of favorable loss reserve development
on prior accident years, benefiting the loss ratio by 13.4
percentage points. The loss ratio for the six months ended
June 30, 2016 included net notable losses of $36.9 million, or
3.2 percentage points of the loss ratio and net non-notable losses
totaling $48.3 million, or 4.2 percentage points of the loss ratio.
The loss ratio for the six months ended June 30, 2015 included
net notable losses of $48.1 million, or 4.2 percentage points of
the loss ratio. There were no non-notable loss events during the
six months ended June 30, 2015. The favorable development of
$116.5 million for the six months ended June 30, 2016 was
primarily due to favorable development on non-event reserves of
$127.8 million and was partially offset by unfavorable development
on event reserves of $11.3 million.
- The combined ratio for the six months
ended June 30, 2016 was 82.5% compared to 78.0% for the six
months ended June 30, 2015, an increase of 4.5 percentage
points.
- Net operating income available to
Validus common shareholders for the six months ended June 30,
2016 was $172.3 million compared to $238.6 million for the six
months ended June 30, 2015, a decrease of $66.3 million, or
27.8%.
- Net income available to Validus common
shareholders for the six months ended June 30, 2016 was $261.8
million compared to $239.2 million for the six months ended
June 30, 2015, an increase of $22.6 million, or 9.4%.
- Annualized return on average equity was
14.2% and annualized net operating return on average equity was
9.3% for the six months ended June 30, 2016 compared to 13.1%
and 13.1%, respectively, for the six months ended June 30,
2015.
Shareholders' Equity and
Capitalization
As at June 30, 2016, total shareholders' equity was $4.1
billion including $212.2 million of noncontrolling interest and
$150.0 million of preference shares issued June 13, 2016.
Shareholders' equity available to Validus common shareholders was
$3.7 billion as at June 30, 2016. Book value per diluted
common share was $44.41 at June 30, 2016 based on 83,700,593
diluted common shares, compared to $44.00 at March 31, 2016
based on 84,670,648 diluted common shares, an increase of 1.7%,
inclusive of dividends. Book value per diluted common share is a
non-GAAP financial measure. A reconciliation of this measure to
book value per common share is presented at the end of this
release.
Total capitalization available to Validus at June 30, 2016
was $4.6 billion, including $150.0 million of preference shares
issued June 13, 2016, $538.0 million of junior subordinated
deferrable debentures and $245.3 million of senior notes. Total
capitalization at June 30, 2016 was $6.4 billion, including
$1.5 billion of redeemable noncontrolling interest and $212.2
million of noncontrolling interest related to AlphaCat.
Share Repurchases
The Company repurchased 1.45 million shares during the three
months ended June 30, 2016. The share repurchases made during
the three months ended June 30, 2016 resulted in a dilutive
impact to book value per diluted common share of $0.05 for the
quarter. A summary of the share repurchases made to date under
the Company’s previously announced share repurchase program is as
follows:
Share Repurchase Activity(Expressed
in thousands of U.S. dollars except for share and per share
information) As at March 31, 2016
Quarter ended Effect of share repurchases:
(cumulative) April May June June 30,
2016 Aggregate purchase price (a) $ 2,552,098 $ 387 $ 32,686 $
35,643 $ 68,716 Shares repurchased 77,387,916 8,718 686,272 758,852
1,453,842 Average price (a) $ 32.98 $ 44.45 $ 47.63 $ 46.97 $ 47.27
Share Repurchase Activity
(Expressed in thousands of U.S. dollars
except for share and per share information)
Effect of share repurchases: As at June 30, 2016
As at July 25, 2016 Cumulative to Date
Effect Aggregate purchase price (a) $ 2,620,814 $ 18,432 $
2,639,246 Shares repurchased 78,841,758 382,548 79,224,306 Average
price (a) $ 33.24 $ 48.18 $ 33.31 (a) Share
transactions are on a trade date basis through July 25, 2016 and
are inclusive of commissions. Average share price is rounded to two
decimal places.
Conference Call
The Company will host a conference call for analysts and
investors on July 27, 2016 at 11:00 AM (Eastern) to discuss
the second quarter 2016 financial results and related matters. The
conference call may be accessed by dialing 1-866-440-4674
(toll-free U.S.) or 1-704-908-0454 (international) and entering the
passcode 2950 9313. Those who intend to participate in the
conference call should register at least ten minutes in advance to
ensure access to the call. A telephone replay of the conference
call will be available through August 10, 2016, by dialing
1-855-859-2056 (toll-free U.S.) or 1-404-537-3406 (international)
and entering the passcode 2950 9313.
This conference call will also be available through a live audio
webcast accessible through the Investor Relations section of the
Company's website located at www.validusholdings.com. A replay of the webcast
will be available at the Investor Relations section of the
Company's website through August 10, 2016. In addition, a
financial supplement relating to the Company's financial results
for the three and six months ended June 30, 2016 is available
in the Investor Relations section of the Company's website.
About Validus Holdings,
Ltd.
Validus Holdings, Ltd. ("Validus") is a holding company for
reinsurance and insurance operating companies and investment
advisors including Validus Reinsurance, Ltd. (“Validus Re”), Talbot
Holdings Ltd. (“Talbot”), Western World Insurance Group, Inc.
(“Western World”) and AlphaCat Managers, Ltd. (“AlphaCat”).
Validus Re is a Bermuda based reinsurer focused on treaty
reinsurance. Talbot is the Bermuda parent of the specialty
insurance group primarily operating within the Lloyd's insurance
market through Syndicate 1183. Western World is a U.S.
specialty lines insurance company focused on excess and surplus
lines. AlphaCat is a Bermuda based investment adviser managing
capital for third parties and Validus in insurance linked
securities and other property catastrophe and specialty reinsurance
investments.
Validus Holdings, Ltd.
Consolidated Balance Sheets
As at
June 30, 2016 and December 31, 2015
(Expressed in thousands of U.S. dollars,
except share and per share information)
June 30, 2016 December
31, 2015 (unaudited) Assets Fixed
maturities trading, at fair value (amortized cost: 2016—$5,524,027;
2015—$5,556,900) $ 5,551,586 $ 5,510,331 Short-term investments
trading, at fair value (amortized cost: 2016—$2,369,704;
2015—$1,941,615) 2,369,654 1,941,635 Other investments, at fair
value (cost: 2016—$338,669; 2015—$315,963) 359,526 336,856 Cash and
cash equivalents 568,798 723,109 Restricted cash 96,022
73,270 Total investments and cash 8,945,586 8,585,201
Investments in affiliates, equity method (cost: 2016—$86,101;
2015—$70,186) 99,278 88,065 Premiums receivable 1,372,000 658,682
Deferred acquisition costs 283,213 181,002 Prepaid reinsurance
premiums 145,567 77,992 Securities lending collateral 10,224 4,863
Loss reserves recoverable 442,987 350,586 Paid losses recoverable
27,648 23,071 Income taxes recoverable 8,526 16,228 Deferred tax
asset 23,745 21,661 Receivable for investments sold 13,736 39,766
Intangible assets 118,426 121,258 Goodwill 196,758 196,758 Accrued
investment income 24,925 23,897 Other assets 105,625 126,782
Total assets $ 11,818,244 $ 10,515,812
Liabilities Reserve for losses and loss expenses $
3,122,717 $ 2,996,567 Unearned premiums 1,621,563 966,210
Reinsurance balances payable 92,488 75,380 Securities lending
payable 10,690 5,329 Deferred tax liability 3,552 3,847 Payable for
investments purchased 52,718 77,475 Accounts payable and accrued
expenses 149,593 627,331 Notes payable to AlphaCat investors
370,982 75,493 Senior notes payable 245,261 245,161 Debentures
payable 537,987 537,668
Total liabilities $
6,207,551 $ 5,610,461 Commitments and
contingent liabilities Redeemable noncontrolling interest 1,532,283
1,111,714
Shareholders’ equity Preference shares, par
value $0.175 (Issued: 2016—6,000; 2015—nil; Outstanding:
2016—6,000; 2015—nil) $ 150,000 $ — Common shares, 571,428,571
authorized, par value $0.175 (Issued: 2016—161,252,871;
2015—160,570,772; Outstanding: 2016—80,772,238; 2015—82,900,617)
28,219 28,100 Treasury shares (2016—80,480,633; 2015—77,670,155)
(14,084 ) (13,592 ) Additional paid-in capital 883,701 1,002,980
Accumulated other comprehensive loss (18,182 ) (12,569 ) Retained
earnings 2,836,602 2,634,056
Total shareholders’
equity available to Validus 3,866,256 3,638,975 Noncontrolling
interest 212,154 154,662
Total shareholders’
equity $ 4,078,410 $ 3,793,637
Total
liabilities, noncontrolling interests and shareholders’ equity
$ 11,818,244 $ 10,515,812
Three Months Ended June 30, Six Months Ended June
30, (Dollars in thousands) 2016
2015 2016 2015 Underwriting
revenues Gross premiums written $ 764,042 $ 726,168 $ 1,936,833
$ 1,845,392 Reinsurance premiums ceded (36,229 ) (55,418 ) (204,064
) (246,743 ) Net premiums written 727,813 670,750 1,732,769
1,598,649 Change in unearned premiums (154,090 ) (98,062 ) (587,778
) (450,071 )
Net premiums earned 573,723 572,688
1,144,991 1,148,578 Other insurance related
income 745 708 1,481 1,648
Total
underwriting revenues 574,468 573,396 1,146,472
1,150,226
Underwriting deductions
Losses and loss expenses 307,130 266,146 531,577 507,075 Policy
acquisition costs 107,966 104,323 215,159 202,734 General and
administrative expenses 89,688 84,025 175,896 168,260 Share
compensation expenses 10,727 9,242 21,964
18,296
Total underwriting deductions 515,511
463,736 944,596 896,365
Underwriting
income $ 58,957 $ 109,660 $
201,876 $ 253,861 Net investment income
39,257 33,611 68,718 64,640 Finance expenses (14,166 ) (18,682 )
(29,369 ) (39,649 ) Dividends on preference shares — — — — Tax
(expense) benefit (1,706 ) (2,549 ) 412 (5,114 ) Income (loss) from
operating affiliates — 1,738 (23 ) 5,722 (Income) attributable to
AlphaCat investors (6,114 ) — (10,714 ) — Net operating (income)
attributable to noncontrolling interest (21,328 ) (22,061 ) (58,622
) (40,869 )
Net operating income available to Validus common
shareholders $ 54,900 $ 101,717
$ 172,278 $ 238,591 Net realized
gains on investments 2,724 2,244 2,140 6,413 Change in net
unrealized gains (losses) on investments 31,428 (34,676 ) 78,872
(1,449 ) (Loss) income from investment affiliate (589 ) 284 (4,702
) 3,060 Foreign exchange gains (losses) 6,286 (2,671 ) 12,531
(6,936 ) Other income (loss) 79 (608 ) 756 (608 ) Net loss (income)
attributable to noncontrolling interest 135 (500 ) (102 )
130
Net income available to Validus common
shareholders $ 94,963 $
65,790 $ 261,773 $
239,201 Selected ratios: Net premiums
written / Gross premiums written 95.3 % 92.4 % 89.5 % 86.6 %
Losses and loss expenses 53.5 % 46.5 % 46.4 % 44.1 % Policy
acquisition costs 18.8 % 18.2 % 18.8 % 17.7 % General and
administrative expenses (a) 17.6 % 16.3 % 17.3 % 16.2 % Expense
ratio 36.4 % 34.5 % 36.1 % 33.9 % Combined ratio 89.9 % 81.0
% 82.5 % 78.0 % (a) The general and administrative
expense ratio includes share compensation expenses.
Validus Holdings, Ltd.
Segment Information
For the three and
six months ended June 30, 2016 and 2015
(Expressed in thousands of U.S. dollars,
except share and per share information)
Validus Re Segment Three
Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Underwriting revenues Gross premiums written $ 285,810 $
297,420 $ 977,478 $ 1,009,113 Reinsurance premiums ceded (3,196 )
(19,378 ) (95,691 ) (133,155 ) Net premiums written 282,614 278,042
881,787 875,958 Change in unearned premiums (35,492 ) (13,492 )
(390,834 ) (358,320 )
Net premiums earned 247,122
264,550 490,953 517,638 Other insurance
related income (loss) 150 434 (165 ) 749
Total underwriting revenues 247,272 264,984
490,788 518,387
Underwriting deductions
Losses and loss expenses 132,139 123,405 215,007 236,533 Policy
acquisition costs 42,564 43,826 84,823 85,920 General and
administrative expenses 17,872 18,781 35,051 38,290 Share
compensation expenses 2,775 2,396 5,676 4,974
Total underwriting deductions 195,350 188,408
340,557 365,717
Underwriting income $ 51,922 $
76,576 $ 150,231 $
152,670 Talbot Segment
Three Months Ended June 30, Six Months Ended June
30, 2016 2015 2016
2015 Underwriting revenues Gross premiums written $
296,067 $ 293,046 $ 562,384 $ 563,123 Reinsurance premiums ceded
(27,161 ) (37,246 ) (114,619 ) (128,321 ) Net premiums written
268,906 255,800 447,765 434,802 Change in unearned premiums (67,357
) (50,362 ) (39,424 ) (6,775 )
Net premiums earned 201,549
205,438 408,341 428,027 Other insurance
related income 279 40 290 94
Total
underwriting revenues 201,828 205,478 408,631
428,121
Underwriting deductions Losses
and loss expenses 109,310 95,970 209,411 174,098 Policy acquisition
costs 43,613 47,659 87,956 96,763 General and administrative
expenses 39,061 35,555 77,596 72,049 Share compensation expenses
3,270 3,024 6,792 5,981
Total
underwriting deductions 195,254 182,208 381,755
348,891
Underwriting
income $ 6,574 $ 23,270
$ 26,876 $ 79,230
Western World Segment Three
Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Underwriting revenues Gross premiums written $ 86,971 $
79,554 $ 150,930 $ 136,501 Reinsurance premiums ceded (5,006 )
(5,441 ) (9,145 ) (8,674 ) Net premiums written 81,965 74,113
141,785 127,827 Change in unearned premiums (16,309 ) (8,995 )
(14,630 ) 5,173
Net premiums earned 65,656
65,118 127,155 133,000 Other insurance related
income 189 276 477 539
Total
underwriting revenues 65,845 65,394 127,632
133,539
Underwriting deductions Losses
and loss expenses 44,229 46,771 83,875 97,288 Policy acquisition
costs 15,410 9,617 29,610 13,896 General and administrative
expenses 11,458 8,923 23,533 19,550 Share compensation expenses 542
494 1,123 971
Total underwriting
deductions 71,639 65,805 138,141 131,705
Underwriting (loss)
income $ (5,794 ) $ (411
) $ (10,509 ) $ 1,834
Validus Holdings, Ltd.
Segment Information
For the three and
six months ended June 30, 2016 and 2015
(Expressed in thousands of U.S. dollars,
except share and per share information)
AlphaCat Segment Three Months Ended
June 30, Six Months Ended June 30, 2016
2015 2016 2015 Revenues Third
party $ 3,091 $ 4,323 $ 7,818 $ 8,860 Related party 328
1,134 1,219 2,320
Total revenues 3,419
5,457 9,037 11,180
Expenses General and administrative expenses 2,751 2,330
4,233 4,759 Share compensation expenses 133 150 274 299 Finance
expenses 75 2,534 883 6,962 Foreign exchange losses 4 15
12 2
Total expenses 2,963 5,029 5,402
12,022
Income (loss) before
investments from AlphaCat Funds and Sidecars 456 428
3,635 (842 )
Investment income (loss) from
AlphaCat Funds and Sidecars (a) AlphaCat Sidecars 541 1,273 665
2,441 AlphaCat ILS Funds - Lower Risk (b) 2,075 1,894 4,582 3,180
AlphaCat ILS Funds - Higher Risk (b) 692 2,376 3,128 4,801 BetaCat
ILS Funds 1,113 60 1,676 234 PaCRe — 1,738 (23 )
5,722
Total investment income from AlphaCat Funds and
Sidecars 4,421 7,341 10,028 16,378
Validus' share of AlphaCat
income $ 4,877 $ 7,769
$ 13,663 $ 15,536
(a) The investment income from the 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.
Corporate and
Investments Three Months Ended June
30, Six Months Ended June 30, 2016
2015 2016 2015 Investment income
Net investment income (a) $ 36,849 $ 31,854 $ 64,772 $ 61,290
Operating expenses General and administrative
expenses 17,872 17,092 34,055 32,698 Share compensation expenses
4,007 3,178 8,099 6,071 Finance expenses (a) 13,979 15,144 28,320
30,480 Dividends on preference shares — — — — Tax expense (benefit)
1,706 2,549 (412 ) 5,114
Total operating
expenses 37,564 37,963 70,062 74,363
Other items Net realized gains on investments
(a) 2,520 2,104 1,434 6,284 Change in net unrealized gains (losses)
on investments (a) 30,052 (33,926 ) 77,130 743 (Loss) income from
investment affiliate (589 ) 284 (4,702 ) 3,060 Foreign exchange
gains (losses) (a) 6,621 (3,237 ) 12,695 (6,693 ) Other income
(loss) 79 (608 ) 756 (608 )
Total other items
38,683 (35,383 ) 87,313 2,786
Total Corporate and Investments $
37,968 $ (41,492 ) $
82,023 $ (10,287 ) (a)
These items exclude the components which are included in Validus'
share of AlphaCat and amounts which are consolidated from variable
interest entities.
Validus Holdings, Ltd.Non-GAAP
Financial Measures ReconciliationBook Value per Common Share, Book
Value per Diluted Common Share and Book Value per Diluted Common
Share plus Accumulated DividendsAs at June
30, 2016 and December 31, 2015(Expressed in thousands of
U.S. dollars, except share and per share information)
June 30, 2016 (Dollars in thousands, except share
and per share amounts) Equity Amount
Shares Exercise Price (a) Book Value
Per
Share
Book value per common share Total shareholders' equity
available to Validus common shareholders (b) $ 3,716,256 80,772,238
$ 46.01
Tangible book value per common share $ 42.11
Book value per diluted common share Total
shareholders' equity available to Validus common shareholders (b)
3,716,256 80,772,238 Assumed exercise of outstanding stock options
(c) 1,080 51,357 $ 21.03 Unvested restricted shares —
2,876,998
Book value per diluted common share $
3,717,336 83,700,593 $ 44.41 Adjustment for
accumulated dividends 10.86
Book value per diluted common share
plus accumulated dividends $ 55.27
Tangible book
value per diluted common share $ 40.65
December 31, 2015 (Dollars in thousands, except share and
per share amounts) Equity Amount Shares
Exercise Price (a) Book Value Per
Share
Book value per common share Total shareholders' equity
available to Validus common shareholders (b) $ 3,638,975 82,900,617
$ 43.90
Tangible book value per common share $ 40.06
Book value per diluted common share Total
shareholders' equity available to Validus common shareholders (b)
3,638,975 82,900,617 Assumed exercise of outstanding stock options
(c) 1,319 65,401 $ 20.17 Unvested restricted shares —
3,026,376
Book value per diluted common share $
3,640,294 85,992,394 $ 42.33 Adjustment for
accumulated dividends 10.16
Book value per diluted common share
plus accumulated dividends $ 52.49
Tangible book
value per diluted common share $ 38.63 (a)
Weighted average exercise price for those stock options that have
an exercise price lower than book value per share. (b) Total
shareholders' equity available to Validus common shareholders
excludes the liquidation value of the preference shares of $150.0
million. (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.
Validus Holdings, Ltd.
Non-GAAP Financial Measures
Reconciliation
Underwriting Income, Net Operating Income
available to Validus Common Shareholders, Net Operating Income per
share available to Validus Common Shareholders and Annualized Net
Operating Return on Average Equity
For the three and
six months ended June 30, 2016 and 2015
(Expressed in thousands of U.S. dollars,
except share and per share information)
Three Months Ended June 30, Six Months
Ended June 30, 2016 2015 2016
2015 Net income available to Validus common
shareholders $ 94,963 $ 65,790 $ 261,773 $ 239,201 Adjustments
for: Net realized gains on investments (2,724 ) (2,244 ) (2,140 )
(6,413 ) Change in net unrealized (gains) losses on investments
(31,428 ) 34,676 (78,872 ) 1,449 Loss (income) from investment
affiliate 589 (284 ) 4,702 (3,060 ) Foreign exchange (gains) losses
(6,286 ) 2,671 (12,531 ) 6,936 Other (income) loss (79 ) 608 (756 )
608 Net (loss) income attributable to noncontrolling interest (135
) 500 102 (130 )
Net operating income available to
Validus common shareholders $ 54,900 $ 101,717 $ 172,278 $
238,591 Net investment income (39,257 ) (33,611 ) (68,718 ) (64,640
) Finance expenses 14,166 18,682 29,369 39,649 Dividends on
preference shares — — — — Tax expense (benefit) 1,706 2,549 (412 )
5,114 Loss (income) from operating affiliates — (1,738 ) 23 (5,722
) Income attributable to AlphaCat investors 6,114 — 10,714 — Net
operating income attributable to noncontrolling interest 21,328
22,061 58,622 40,869
Underwriting
income $ 58,957 $ 109,660 $ 201,876 $
253,861
Net operating income available to Validus
common shareholders 54,900 101,717 172,278 238,591 Less:
Dividends on outstanding warrants — (1,081 ) — (2,486
)
Net operating income allocated to Validus, adjusted $
54,900 $ 100,636 $ 172,278 $ 236,105
Net income per share available to Validus common
shareholders - diluted $ 1.14 $ 0.75 $ 3.12 $ 2.74 Adjustments
for: Net realized (gains) on investments (0.03 ) (0.03 ) (0.02 )
(0.07 ) Change in net unrealized (gains) losses on investments
(0.38 ) 0.39 (0.94 ) 0.02 Loss (income) from investment affiliate
0.01 — 0.06 (0.04 ) Foreign exchange (gains) losses (0.08 ) 0.03
(0.15 ) 0.08 Other income (loss) — 0.01 (0.01 ) — Net income
attributable to noncontrolling interest — 0.01 —
—
Net operating income per share available to
Validus common shareholders - diluted $ 0.66 $ 1.16
$ 2.06 $ 2.73
Weighted average
number of common shares and common share equivalents 83,373,003
87,313,154 83,785,659 87,448,142
Average shareholders'
equity available to Validus common shareholders $ 3,720,341 $
3,669,537 $ 3,693,219 $ 3,641,886
Annualized return on
average equity 10.2 % 7.2 % 14.2 % 13.1 %
Annualized net
operating return on average equity 5.9 % 11.1 % 9.3 % 13.1 %
Cautionary Note Regarding Forward-Looking Statements
This press release may include forward-looking statements, both
with respect to the Company and its industry, that reflect our
current views with respect to future events and financial
performance. Statements that include the words "expect", "intend",
"plan", "believe", "project", "anticipate", "will", "may" and
similar statements of a future or forward-looking nature identify
forward-looking statements. All forward-looking statements address
matters that involve risks and uncertainties, many of which are
beyond the Company's control. Accordingly, there are or will be
important factors that could cause actual results to differ
materially from those indicated in such statements and, therefore,
you should not place undue reliance on any such statements. We
believe that these factors include, but are not limited to, the
following: 1) unpredictability and severity of catastrophic events;
2) rating agency actions; 3) adequacy of Validus' risk management
and loss limitation methods; 4) cyclicality of demand and pricing
in the insurance and reinsurance markets; 5) statutory or
regulatory developments including tax policy, reinsurance and other
regulatory matters; 6) Validus' ability to implement its business
strategy during "soft" as well as "hard" markets; 7) adequacy of
Validus' loss reserves; 8) continued availability of capital and
financing; 9) retention of key personnel; 10) competition; 11)
potential loss of business from one or more major insurance or
reinsurance brokers; 12) Validus' ability to implement,
successfully and on a timely basis, complex infrastructure,
distribution capabilities, systems, procedures and internal
controls, and to develop accurate actuarial data to support the
business and regulatory and reporting requirements; 13) general
economic and market conditions (including inflation, volatility in
the credit and capital markets, interest rates and foreign currency
exchange rates); 14) the integration of businesses Validus may
acquire or new business ventures Validus may start; 15) the effect
on Validus' investment portfolios of changing financial market
conditions including inflation, interest rates, liquidity and other
factors; 16) acts of terrorism or outbreak of war; and 17)
availability of reinsurance and retrocessional coverage, as well as
management's response to any of the aforementioned factors.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included herein and elsewhere,
including the risk factors included in Validus' most recent reports
on Form 10-K and Form 10-Q and other documents of the Company on
file with or furnished to the U.S. Securities and Exchange
Commission (“SEC”). Any forward-looking statements made in this
press release are qualified by these cautionary statements, and
there can be no assurance that the actual results or developments
anticipated by Validus will be realized or, even if substantially
realized, that they will have the expected consequences to, or
effects on, Validus or its business or operations. Except as
required by law, the Company undertakes no obligation to update
publicly or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise.
Non-GAAP Financial Measures
In presenting the Company's results, management has included and
discussed certain schedules containing net operating income (loss),
net operating income (loss) available (attributable) to Validus
common shareholders, net operating income (loss) per share,
underwriting income (loss), annualized net operating return on
average equity, book value per diluted common share and book value
per diluted common share plus accumulated dividends that are not
calculated under standards or rules that comprise U.S. GAAP. Such
measures are referred to as non-GAAP. Non-GAAP measures may be
defined or calculated differently by other companies. These
measures should not be viewed as a substitute for those determined
in accordance with U.S. GAAP. A reconciliation of underwriting
income and net operating income (loss) available (attributable) to
Validus common shareholders to net income (loss) available
(attributable) to Validus common shareholders, the most comparable
U.S. GAAP financial measure, is presented in the section above
entitled “Underwriting Income, Net Operating Income available to
Validus common shareholders, Net Operating Income per share
available to Validus common shareholders and Annualized Net
Operating Return on Average Equity”. A reconciliation of
underwriting income and operating income to net income, the most
comparable U.S. GAAP financial measure, is presented in the
“Consolidated Statements of Operations” above.
The AlphaCat segment information is presented as an asset
manager view and therefore is considered non-GAAP.
Underwriting income indicates the performance of the Company's
core underwriting segments, excluding revenues and expenses such as
net investment income (loss), finance expenses, net realized and
change in unrealized gains (losses) on investments, foreign
exchange gains (losses), other income (loss) and transaction
expenses. The Company believes the reporting of underwriting income
enhances the understanding of our results by highlighting the
underlying profitability of the Company's core insurance and
reinsurance business. Underwriting profitability is influenced
significantly by earned premium growth, adequacy of the Company's
pricing and loss frequency and severity.
Underwriting profitability over time 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.
The Company believes that underwriting income provides investors
with a valuable measure of profitability derived from underwriting
activities.
Net operating income (loss), a non-GAAP financial measure, is
defined as net income (loss) excluding net realized and change in
net unrealized gains (losses) on investments, income (loss) from
investment affiliate, foreign exchange gains (losses), other income
(loss) and non-recurring items. Net operating income (loss)
available (attributable) to Validus common shareholders is defined
as above, but excludes operating income (loss) available
(attributable) to noncontrolling interest and dividends on
preference shares. Reconciliations of these measures to net income
(loss) and net income (loss) available (attributable) to Validus
common shareholders, the most directly comparable GAAP measures,
are presented at the end of this release.
Annualized net operating return on average equity is presented
in the section above entitled “Underwriting Income, Net Operating
Income available to Validus common shareholders, Net Operating
Income per share available to Validus common shareholders and
Annualized Net Operating Return on Average Equity.” A
reconciliation of book value per diluted common share and book
value per diluted common share plus accumulated dividends to book
value per common share, the most comparable U.S. GAAP financial
measure, is presented in the section above entitled “Book Value per
Common Share, Book Value per Diluted Common Share and Book Value
per Diluted Common Share plus Accumulated Dividends.” Net operating
income (loss) is calculated based on net income (loss) excluding
net realized gains (losses) on investments, change in net
unrealized gains (losses) on investments, foreign exchange gains
(losses), other income (loss), income (loss) from investment
affiliates and non-recurring items. Realized gains (losses) from
the sale of investments are driven by the timing of the disposition
of investments, not by our operating performance. Gains (losses)
arising from translation of non-US$ denominated balances are
unrelated to our underlying business. Net operating income (loss)
available (attributable) to Validus common shareholders is defined
as net operating income (loss) as defined above, but excluding
operating income (loss) available (attributable) to noncontrolling
interest and dividends on preference shares.
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Investors:Validus Holdings,
Ltd.Investor.Relations@validusholdings.com+1-441-278-9000orMedia:Brunswick
GroupLaura Pietruszki / Mustafa Riffat+1-212-333-3810
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