Pemex explosion drags down profits at Validus
The Pemex oil rig explosion in April this year dragged down profits at Bermuda-based Validus in the second quarter of 2015.
Its profits fell to $64 million in the second quarter of 2015, compared with $153.4 million in the second quarter of 2014.
The Pemex explosion resulted in an estimated loss to the company of $48.1 million, or 8.4 percentage points of the loss ratio.
Validus’ gross written premiums (GWP) jumped 10.9 percent to $727 million in the quarter, compared with $655.7 million for the second quarter of 2014. This was mainly driven by the contribution from Western World and growth at AlphaCat, although partially offset by decreases at Validus Re and Talbot.
Western World contributed GWP of $79.6 million in the second quarter of 2015.
Validus Re posted a decrease of 1.5 percent in GWP to $296.9 million in the second quarter of 2015, compared with $301.3 million in the same period of the prior year, while Talbot’s GWP fell 7.8 percent to $293 million, compared with $317.9 million in the second quarter of 2014.
Overall, its combined ratio deteriorated to 80.7 percent in the quarter, compared with 68.6 percent in the second quarter of 2014.
Ed Noonan, Validus’ chairman and chief executive officer, said: “During a quarter with meaningful loss activity in our core classes of business, Validus delivered a 10.7 percent annualised operating return on average equity, a strong result in the current market.
“Our diversified business model with a focus on short tail lines continues to provide a strong platform for a thoughtful expansion into new classes of business and markets. The foundation of our success is our world class staff and an outstanding set of proprietary analytical tools that benefit both our own results and those of our clients.
“Above all, we remain committed to underwriting profitability and will continue to adjust our portfolio to maximise results in the current market conditions."