Validus CEO remains confident despite profit fall


The chief executive officer (CEO) of Bermuda-based Validus Holdings has remained positive about the future despite the insurer seeing a fall in profits in the third quarter of 2014.

High losses in its aviation war and energy lines led to a fall in profits, but Validus’ CEO said losses were part and parcel of the volatile but usually lucrative business it writes.

The Bermuda-based company’s profits fell to $39.7 million in the third quarter of 2014, compared with $183.4 million in the third quarter of 2013.

Its net operating income fell to $77.3 million, or $0.82 per diluted common share, in the quarter compared with $155.2 million in the prior-year quarter.

The results missed the expectations of Zacks Investment Research with the average estimate of analysts surveyed by Zacks for earnings being $1.12 per share.

Its gross premiums written improved minimally to $359 million in the third quarter of 2014, compared with $356.8 million in the third quarter of 2013.

Validus’ combined ratio deteriorated to 81.4 percent, compared with 68.6 percent in the third quarter of 2013.

Ed Noonan, Validus' chairman and chief executive officer, said: “Validus’ results for the quarter were impacted by $61.4 million of losses concentrated in the classes of aviation war and energy. Despite these losses, the company still generated $92.1 million in underwriting income, $77.3 million in net operating income and an 8.3 percent annualised operating return on average equity.

“Validus takes on volatile business as we get paid more for assuming the risk. By definition this means that our results will sometimes be lumpy, but I’d rather have a lumpy high return on equity than a lower consistent one. Our thoughtful underwriting of these classes of business is what has allowed Validus to create strong growth in book value since the company’s formation.”

Validus, Third Quarter 2014 Results, Ed Noonan, Bermuda

Bermuda Re