Validus profits fall despite strong growth

Bermuda-based Validus Holdings, which has subsidiaries including Validus Re, AlphaCat, Talbot and Western World, enjoyed solid growth in 2015 but its profits fell sharply.

The company’s gross written premiums (GWP) in 2015 reached $2.55 billion, a 8.4 percent increase on the $2.35 billion it posted in 2014. It also enjoyed a successful January renewal when Validus Re and AlphaCat underwrote $610.5 million in gross premiums written, an increase of 12.9 percent from the prior year renewal period.

However, Validus’ profits for the year fell to $374.9 million compared to $480 million for the year ended December 31, 2014, a decrease of $105.1 million (21.9 percent)

The company’s net operating income in 2015 was $409.7 million compared with $480.8 million for the year ended December 31, 2014, a decrease of $71 million, or 14.8 percent.

Its combined ratio for the year ended December 31, 2015 was 79.7 percent which included $306.1 million of favourable loss reserve development on prior accident years, benefiting the loss ratio by 13.6 percentage points compared to a combined ratio for the year ended December 31, 2014 of 73.6 percent which included $259.2 million of favourable loss reserve development on prior accident years, benefiting the loss ratio by 13.0 percentage points.

Ed Noonan, chairman and chief executive officer, Validus, was positive about the results.

“For the full year 2015, Validus earned $409.7 million in net operating income and generated an 11.3 percent net operating return on average equity,” he said.

“These strong results, despite competitive pressures, reflect the diversification of Validus’ business as we have shifted our mix to 46 percent insurance and 54 percent reinsurance during 2015.”