Validus swung to profit before sale to RenRe
Validus Re recorded 22% growth in gross written premium over the first 9 months of 2023 and swung to a $304 million profit from prior year losses before being sold to RenaissanceRe.
Validus Holdings, almost exclusively consisting of Validus Re, the key element of the 2023 M&A deal between RenaissanceRe and AIG, turned the profit from a $352 million in net losses over the prior year period.
That loss was driven primarily by $400 million in unrealized investment losses following the global interest rate reset of early 2022.
But underwriting performance had improved as well. A rough and ready measure of underwriting profits (NEP - LAE, G&A & acquisition costs) grew 15 times year on year to $311 million as loss expense grew by a comparatively minor 5.9% year on year.
Renaissance Re announced in May 2023 that it would pay AIG $2.74 billion in cash and $250 million in new equity for AIG’s reinsurance operations, chiefly Validus Re, exclusive of 95% of existing reserve development, plus the ILS manager AlphaCat and renewal rights to the treaty reinsurance book at unit Talbots, a specialty (re)insurance group operating on the Lloyd’s market. That deal closed in November 2023.
Validus Specialty brought $34 million in nine-month revenues and just under $2 million in profits.
RenaissanceRe could not offer P&L on the Talbots treaty reinsurance book, to which it bought renewal rights but not existing exposure. But it did book the fair value of total acquired renewal rights, including at Talbots, at $215 million.
The combined group, had it existed through the first nine months of 2023, would have boasted $9.87 billion in gross written premium and hauled in $1.35 billion in attributable net profits, pro forma calculations showed.
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