Bermudian reinsurer Validus Holdings reported a net loss of $8.7 million for the fourth quarter of last year, as wildfires in California racked up more than $120 million in losses.

Validus, which last month announced it had struck a $5.6 billion deal to be acquired by American International Group, said it made a loss of $63.5 million for the full year, which featured three third-quarter hurricanes making landfall in the US.

Combined ratio for the year was 122.6 per cent and for the fourth quarter, 109.7 per cent. A combined ratio of more than 100 per cent indicates an underwriting loss.

But the company added it had seen a large growth in revenue during the important January 2018 renewals season, as its reinsurance and asset management segments underwrote $921.1 million in gross premiums written, up 41.6 per cent year over year, as rates rose.

Ed Noonan, Validus’s chairman and chief executive officer, said: “We continue to position the company well, utilising both traditional retro and the Validus-sponsored Tailwind Re catastrophe bond to improve the risk-return characteristics of our portfolio.

“Through portfolio optimisation we were able to take advantage of rate increases while reducing our peak US hurricane PMLs [probable maximum losses], which are down 65 per cent since their height in 2013.

“Looking ahead, we are very excited to become part of the AIG Group at closing and are looking forward to being able to continue to serve our clients and brokers in new and exciting ways.”

Of the losses from the California fires, $87.7 million was borne by the group’s third-party capital management platform AlphaCat, of which $81.4 million was attributable to third-party investors and $6.3 million to Validus.

Validus also lowered its estimates on third-quarter catastrophe losses by $5.4 million.

Validus’s insurance segment saw a 26.6 per cent increase in gross premiums in the fourth quarter to $377 million.

Validus ended the year with shareholders’ equity of $3.9 billion and book value per common share of $44.06.