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Validus profits increase 17-fold

Validus CEO Ed Noonan

Validus Holdings Ltd. last night reported a near 17-fold increase in annual profits as the reinsurer saw benefits from last September's acquisition of IPC Holdings.

Validus said net income for 2009 was $897.4 million, or $9.24 per share, compared with $53.1 million, or $0.61 per share, for the year ended December 31, 2008.

Chairman and chief executive officer Ed Noonan said that 2010 had started off well for the company, as it managed to increase its gross premiums written in January renewals by 56.6 percent to $574.3 million.

For the fourth quarter, the company made earnings of $165.8 million, or $1.23 per share, compared with $37 million, or $0.47 per share, for the same period in 2008.

Mr. Noonan said: "We completed the IPC amalgamation on September 4, 2009. As a consequence of this acquisition and of strong underlying financial results in our Validus Re and Talbot segments, we closed the quarter with total shareholders' equity of $4.03 billion, total assets of $7.02 billion and total investments and cash of $5.78 billion.

"Diluted book value per share rose to $29.68 at December 31, 2009, which when combined with our $0.20 quarterly dividend resulted in an increase in diluted book value per share plus dividends of 4.4 percent in the quarter.

"Total value creation for our shareholders in 2009 as measured by growth in diluted book value per share plus accumulated dividends for the year was 28.2 percent."

Commenting on 2010 market conditions, Mr. Noonan said: "We were very pleased with our ability to execute on our goals in January. We were able to grow the combined premium of Validus Re post acquisition, while bringing more diversification to our risk profile.

"We improved the loss ratio on the combined catastrophe portfolio, while materially reducing our probable maximum loss.

"We were extremely gratified with the reception afforded us by clients and brokers as one of the largest underwriters of catastrophe risk. In our Talbot Syndicate we saw rate increases diminish but continue to be at attractive levels in most classes."

Net operating income for the fourth quarter was $176.9 million, or $1.31 per share, compared to $50.9 million, or $0.65 per share, for the same three months of 2008.

Net operating income for the year ended December 31, 2009 was $533.3 million, or $5.49 per share, compared with net operating income of $175.1 million, or $2.22 per share, for 2008.

Gross premiums written for the quarter were $255.3 million, up 33.1 percent from the same period a year earlier. For the year, GPW totalled $1.62 billion, a rise of 19 percent from 2008.

Validus's Lloyd's platform Talbot contributed $919.9 million of GPW in 2009, compared to $709 million in 2008 - an increase of 29.7 percent.

Combined ratio - the percentage of premium dollars spent on claims and expenses - was 64.1 percent for the quarter. For the year combined ratio was 68.9 percent, which included $102.1 million of favourable prior-year loss reserve development, benefiting the loss ratio by 7.0 percentage points.

Annualised return on average equity in 2009 was 31.8 percent and annualised operating return on average equity was 18.9 percent.

Shareholders' equity was $4.03 billion and diluted book value per share was $29.68 at the end of last year, compared to $23.78 at December 31, 2008.

Validus also said its board had authorised an expansion of its share repurchase programme of up to $750 million.

VALIDUS Q4 REPORT CARD

Net income: $165.8 million compared to $37 million in 2008

Gross premiums written: $255.3 million compared to $191.7 million in 2008

Combined ratio: 64.1 percent compared to 92.2 percent in 2008