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BERMUDA
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98-0501001
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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September 30,
2012 |
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December 31,
2011 |
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(unaudited)
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Assets
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Fixed maturities, at fair value (amortized cost: 2012—$4,803,217; 2011—$4,859,705)
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$
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4,887,622
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$
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4,894,145
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Short-term investments, at fair value (amortized cost: 2012—$275,099; 2011—$280,299)
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275,324
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280,191
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Other investments, at fair value (amortized cost: 2012—$511,310; 2011—$15,002)
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525,441
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16,787
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Cash and cash equivalents
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1,005,829
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832,844
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Total investments and cash
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6,694,216
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6,023,967
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Investments in affiliates
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99,312
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53,031
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Premiums receivable
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781,991
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646,354
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Deferred acquisition costs
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155,456
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121,505
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Prepaid reinsurance premiums
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144,788
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91,381
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Securities lending collateral
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10,383
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7,736
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Loss reserves recoverable
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317,252
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372,485
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Paid losses recoverable
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36,209
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90,495
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Income taxes recoverable
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5,019
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—
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Intangible assets
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111,611
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114,731
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Goodwill
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20,393
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20,393
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Accrued investment income
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19,945
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25,906
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Other assets
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67,245
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50,487
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Total assets
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$
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8,463,820
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$
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7,618,471
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Liabilities
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Reserve for losses and loss expenses
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$
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2,562,604
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$
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2,631,143
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Unearned premiums
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1,034,605
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772,382
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Reinsurance balances payable
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87,955
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119,899
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Securities lending payable
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10,849
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8,462
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Deferred income taxes
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22,848
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16,720
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Net payable for investments purchased
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26,629
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1,256
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Accounts payable and accrued expenses
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86,128
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83,402
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Senior notes payable
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247,063
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246,982
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Debentures payable
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289,800
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289,800
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Total liabilities
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$
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4,368,481
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$
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4,170,046
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Commitments and contingent liabilities
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Shareholders’ equity
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Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2012—136,632,448; 2011—134,503,065; Outstanding: 2012—93,494,391; 2011—99,471,080)
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$
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23,911
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$
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23,538
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Treasury shares (2012—43,138,057; 2011—35,031,985)
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(7,549
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)
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(6,131
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)
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Additional paid-in-capital
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1,657,767
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1,893,890
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Accumulated other comprehensive (loss)
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(4,565
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)
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(6,601
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)
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Retained earnings
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1,964,289
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1,543,729
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Total shareholders’ equity available to Validus
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3,633,853
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3,448,425
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Noncontrolling interest
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461,486
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—
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Total shareholders’ equity
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$
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4,095,339
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$
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3,448,425
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Total liabilities and shareholders’ equity
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$
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8,463,820
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$
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7,618,471
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Three Months Ended
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Nine Months Ended
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September 30, 2012
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September 30, 2011
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September 30, 2012
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September 30, 2011
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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Revenues
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Gross premiums written
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$
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390,215
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$
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391,129
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$
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1,854,593
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$
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1,846,412
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Reinsurance premiums ceded
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(45,743
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)
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(30,586
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)
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(271,847
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)
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(272,752
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)
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Net premiums written
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344,472
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360,543
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1,582,746
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1,573,660
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Change in unearned premiums
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130,632
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98,081
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(208,816
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)
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(259,863
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)
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Net premiums earned
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475,104
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458,624
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1,373,930
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1,313,797
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Net investment income
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25,489
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27,747
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79,134
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84,216
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Net realized gains on investments
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9,063
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5,246
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22,749
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23,177
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Net unrealized gains (losses) on investments
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86,345
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(27,848
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)
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53,442
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(22,150
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)
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(Loss) from investment affiliate
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(160
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—
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(558
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—
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Other income
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7,324
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—
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22,209
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2,201
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Foreign exchange gains (losses)
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1,103
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(19,932
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)
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3,617
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(22,390
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)
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Total revenues
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604,268
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443,837
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1,554,523
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1,378,851
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Expenses
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Losses and loss expenses
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155,455
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226,067
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541,136
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909,572
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Policy acquisition costs
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98,623
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77,405
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252,884
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232,931
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General and administrative expenses
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70,547
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35,926
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198,557
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145,244
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Share compensation expenses
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7,345
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7,382
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19,583
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27,059
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Finance expenses
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9,362
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10,935
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39,347
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41,297
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Transaction expenses
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3,784
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13,583
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3,784
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13,583
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Total expenses
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345,116
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371,298
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1,055,291
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1,369,686
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Net income before taxes and income from operating affiliates
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259,152
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72,539
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499,232
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9,165
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Tax (expense)
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(1,343
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)
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(2,538
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)
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(1,886
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)
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(1,050
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)
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Income from operating affiliates
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6,235
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—
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13,194
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—
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Net income
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$
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264,044
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$
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70,001
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$
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510,540
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$
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8,115
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Net (income) attributable to noncontrolling interest
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(56,746
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)
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(13,516
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)
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(11,386
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)
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(14,110
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)
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Net income (loss) available (attributable) to Validus
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$
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207,298
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$
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56,485
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$
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499,154
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$
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(5,995
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)
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Other comprehensive income (loss)
|
|
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|
|
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|
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Foreign currency translation adjustments
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1,400
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(413
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)
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2,036
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|
|
523
|
|
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|
|
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Other comprehensive income (loss)
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$
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1,400
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$
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(413
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)
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$
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2,036
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$
|
523
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|
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Comprehensive income (loss) available (attributable) to Validus
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$
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208,698
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$
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56,072
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$
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501,190
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$
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(5,472
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)
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Earnings per share
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Weighted average number of common shares and common share equivalents outstanding
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|
|
|
|
|
|
|
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|
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Basic
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93,368,775
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|
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98,961,795
|
|
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97,016,034
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|
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98,430,686
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|
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Diluted
|
98,236,490
|
|
|
100,823,335
|
|
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102,333,515
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|
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98,430,686
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|
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Basic earnings (loss) per share available (attributable) to common shareholders
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$
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2.20
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$
|
0.55
|
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$
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5.09
|
|
|
$
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(0.12
|
)
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Diluted earnings (loss) per share available (attributable) to common shareholders
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$
|
2.11
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|
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$
|
0.54
|
|
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$
|
4.88
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|
|
$
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(0.12
|
)
|
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Cash dividends declared per share
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$
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0.25
|
|
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$
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0.25
|
|
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$
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0.75
|
|
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$
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0.75
|
|
|
September 30, 2012
|
|
September 30, 2011
|
||||
|
(unaudited)
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|
(unaudited)
|
||||
Common shares
|
|
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Balance - Beginning of period
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$
|
23,538
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|
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$
|
23,247
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Common shares issued, net
|
373
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|
|
216
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|
||
Balance - End of period
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$
|
23,911
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|
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$
|
23,463
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|
|
|
|
|
||||
Treasury shares
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
(6,131
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)
|
|
$
|
(6,096
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)
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Repurchase of common shares
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(1,418
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)
|
|
(35
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)
|
||
Balance - End of period
|
$
|
(7,549
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)
|
|
$
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(6,131
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)
|
|
|
|
|
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Additional paid-in capital
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
1,893,890
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|
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$
|
1,860,960
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Common shares issued, net
|
2,551
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|
|
4,838
|
|
||
Repurchase of common shares
|
(258,257
|
)
|
|
(5,960
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)
|
||
Share compensation expenses
|
19,583
|
|
|
27,059
|
|
||
Balance - End of period
|
$
|
1,657,767
|
|
|
$
|
1,886,897
|
|
|
|
|
|
||||
Accumulated other comprehensive (loss)
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
(6,601
|
)
|
|
$
|
(5,455
|
)
|
Foreign currency translation adjustments
|
2,036
|
|
|
523
|
|
||
Balance - End of period
|
$
|
(4,565
|
)
|
|
$
|
(4,932
|
)
|
|
|
|
|
||||
Retained earnings
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
1,543,729
|
|
|
$
|
1,632,175
|
|
Dividends
|
(78,594
|
)
|
|
(81,608
|
)
|
||
Net income
|
510,540
|
|
|
8,115
|
|
||
Net (income) attributable to noncontrolling interest
|
(11,386
|
)
|
|
(14,110
|
)
|
||
Balance - End of period
|
$
|
1,964,289
|
|
|
$
|
1,544,572
|
|
|
|
|
|
||||
Total shareholders’ equity available to Validus
|
$
|
3,633,853
|
|
|
$
|
3,443,869
|
|
|
|
|
|
||||
Noncontrolling interest
|
$
|
461,486
|
|
|
$
|
146,223
|
|
|
|
|
|
||||
Total shareholders’ equity
|
$
|
4,095,339
|
|
|
$
|
3,590,092
|
|
|
|
|
|
|
September 30,
2012 |
|
September 30,
2011 |
||||
|
(unaudited)
|
|
(unaudited)
|
||||
Cash flows provided by (used in) operating activities
|
|
|
|
|
|
||
Net income
|
$
|
510,540
|
|
|
$
|
8,115
|
|
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Share compensation expenses
|
19,583
|
|
|
27,059
|
|
||
Amortization of discount on senior notes
|
81
|
|
|
81
|
|
||
Loss from investment affiliate
|
558
|
|
|
—
|
|
||
Net realized (gains) on investments
|
(22,749
|
)
|
|
(23,177
|
)
|
||
Net unrealized (gains) losses on investments
|
(53,442
|
)
|
|
22,150
|
|
||
Amortization of intangible assets
|
3,120
|
|
|
3,120
|
|
||
Income from operating affiliates
|
(13,194
|
)
|
|
—
|
|
||
Foreign exchange (gains) losses included in net income
|
(17,064
|
)
|
|
9,602
|
|
||
Amortization of premium on fixed maturities
|
19,214
|
|
|
23,470
|
|
||
Change in:
|
|
|
|
|
|
||
Premiums receivable
|
(132,292
|
)
|
|
(239,934
|
)
|
||
Deferred acquisition costs
|
(33,951
|
)
|
|
(30,797
|
)
|
||
Prepaid reinsurance premiums
|
(53,407
|
)
|
|
(70,214
|
)
|
||
Loss reserves recoverable
|
57,574
|
|
|
(103,048
|
)
|
||
Paid losses recoverable
|
54,559
|
|
|
(52,853
|
)
|
||
Income taxes recoverable
|
(5,041
|
)
|
|
(2,164
|
)
|
||
Accrued investment income
|
6,015
|
|
|
6,620
|
|
||
Other assets
|
(16,050
|
)
|
|
7,740
|
|
||
Reserve for losses and loss expenses
|
(80,954
|
)
|
|
530,925
|
|
||
Unearned premiums
|
262,223
|
|
|
330,077
|
|
||
Reinsurance balances payable
|
(33,487
|
)
|
|
40,206
|
|
||
Deferred income taxes
|
6,241
|
|
|
(518
|
)
|
||
Accounts payable and accrued expenses
|
4,948
|
|
|
(16,557
|
)
|
||
Net cash provided by operating activities
|
483,025
|
|
|
469,903
|
|
||
|
|
|
|
||||
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
||
Proceeds on sales of investments
|
2,528,442
|
|
|
3,424,462
|
|
||
Proceeds on maturities of investments
|
385,642
|
|
|
266,594
|
|
||
Purchases of fixed maturities
|
(2,832,179
|
)
|
|
(3,697,544
|
)
|
||
Sales (purchases) of short-term investments, net
|
5,123
|
|
|
(273,939
|
)
|
||
(Purchases) sales of other investments
|
(499,178
|
)
|
|
4,364
|
|
||
(Increase) in securities lending collateral
|
(2,387
|
)
|
|
(1,907
|
)
|
||
Purchase of investment in operating affiliates
|
(26,500
|
)
|
|
—
|
|
||
Purchase of investment in investment affiliate
|
(3,798
|
)
|
|
—
|
|
||
Net cash (used in) investing activities
|
(444,835
|
)
|
|
(277,970
|
)
|
||
|
|
|
|
||||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
||
Issuance of common shares, net
|
2,924
|
|
|
5,054
|
|
||
Purchases of common shares under share repurchase program
|
(259,675
|
)
|
|
(5,995
|
)
|
||
Dividends paid
|
(81,391
|
)
|
|
(81,108
|
)
|
||
Increase in securities lending payable
|
2,387
|
|
|
1,907
|
|
||
Third party investment in noncontrolling interest
|
450,100
|
|
|
132,113
|
|
||
Net cash provided by financing activities
|
114,345
|
|
|
51,971
|
|
||
|
|
|
|
||||
Effect of foreign currency rate changes on cash and cash equivalents
|
20,450
|
|
|
(8,662
|
)
|
||
|
|
|
|
||||
Net increase in cash
|
172,985
|
|
|
235,242
|
|
||
|
|
|
|
||||
Cash and cash equivalents - beginning of period
|
$
|
832,844
|
|
|
$
|
620,740
|
|
|
|
|
|
||||
Cash and cash equivalents - end of period
|
$
|
1,005,829
|
|
|
$
|
855,982
|
|
|
|
|
|
||||
Taxes paid (recovered) during the period
|
$
|
3,640
|
|
|
$
|
(3,676
|
)
|
|
|
|
|
||||
Interest paid during the period
|
$
|
37,122
|
|
|
$
|
39,336
|
|
(a)
|
Classification within the fair value hierarchy
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
U.S. Government and Government Agency
|
$
|
—
|
|
|
$
|
1,229,273
|
|
|
$
|
—
|
|
|
$
|
1,229,273
|
|
Non-U.S. Government and Government Agency
|
—
|
|
|
307,760
|
|
|
—
|
|
|
307,760
|
|
||||
States, municipalities, political subdivision
|
—
|
|
|
42,538
|
|
|
—
|
|
|
42,538
|
|
||||
Agency residential mortgage-backed securities
|
—
|
|
|
421,975
|
|
|
—
|
|
|
421,975
|
|
||||
Non-Agency residential mortgage-backed securities
|
—
|
|
|
23,832
|
|
|
—
|
|
|
23,832
|
|
||||
U.S. corporate
|
—
|
|
|
1,242,888
|
|
|
—
|
|
|
1,242,888
|
|
||||
Non-U.S. corporate
|
—
|
|
|
598,253
|
|
|
—
|
|
|
598,253
|
|
||||
Bank loans
|
—
|
|
|
602,856
|
|
|
—
|
|
|
602,856
|
|
||||
Catastrophe bonds
|
—
|
|
|
38,466
|
|
|
—
|
|
|
38,466
|
|
||||
Asset-backed securities
|
—
|
|
|
379,781
|
|
|
—
|
|
|
379,781
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total fixed maturities
|
—
|
|
|
4,887,622
|
|
|
—
|
|
|
4,887,622
|
|
||||
Short-term investments
|
241,972
|
|
|
33,352
|
|
|
—
|
|
|
275,324
|
|
||||
Fund of hedge funds
|
—
|
|
|
—
|
|
|
5,117
|
|
|
5,117
|
|
||||
Hedge funds (a)
|
—
|
|
|
—
|
|
|
512,138
|
|
|
512,138
|
|
||||
Mutual funds
|
—
|
|
|
8,186
|
|
|
—
|
|
|
8,186
|
|
||||
Total
|
$
|
241,972
|
|
|
$
|
4,929,160
|
|
|
$
|
517,255
|
|
|
$
|
5,688,387
|
|
Noncontrolling interest (a)
|
—
|
|
|
—
|
|
|
(460,924
|
)
|
|
(460,924
|
)
|
||||
Total investments excluding noncontrolling interest
|
$
|
241,972
|
|
|
$
|
4,929,160
|
|
|
$
|
56,331
|
|
|
$
|
5,227,463
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
U.S. Government and Government Agency
|
$
|
—
|
|
|
$
|
1,182,393
|
|
|
$
|
—
|
|
|
$
|
1,182,393
|
|
Non-U.S. Government and Government Agency
|
—
|
|
|
449,358
|
|
|
—
|
|
|
449,358
|
|
||||
States, municipalities, political subdivision
|
—
|
|
|
26,291
|
|
|
—
|
|
|
26,291
|
|
||||
Agency residential mortgage-backed securities
|
—
|
|
|
468,054
|
|
|
—
|
|
|
468,054
|
|
||||
Non-Agency residential mortgage-backed securities
|
—
|
|
|
32,706
|
|
|
—
|
|
|
32,706
|
|
||||
U.S. corporate
|
—
|
|
|
1,329,758
|
|
|
—
|
|
|
1,329,758
|
|
||||
Non-U.S. corporate
|
—
|
|
|
579,675
|
|
|
—
|
|
|
579,675
|
|
||||
Bank loans
|
—
|
|
|
467,256
|
|
|
—
|
|
|
467,256
|
|
||||
Catastrophe bonds
|
—
|
|
|
29,952
|
|
|
—
|
|
|
29,952
|
|
||||
Asset-backed securities
|
—
|
|
|
328,299
|
|
|
—
|
|
|
328,299
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
403
|
|
|
—
|
|
|
403
|
|
||||
Total fixed maturities
|
—
|
|
|
4,894,145
|
|
|
—
|
|
|
4,894,145
|
|
||||
Short-term investments
|
257,854
|
|
|
22,337
|
|
|
—
|
|
|
280,191
|
|
||||
Fund of hedge funds
|
—
|
|
|
—
|
|
|
5,627
|
|
|
5,627
|
|
||||
Private equity investment
|
—
|
|
|
—
|
|
|
3,253
|
|
|
3,253
|
|
||||
Mutual funds
|
—
|
|
|
7,907
|
|
|
—
|
|
|
7,907
|
|
||||
Total
|
$
|
257,854
|
|
|
$
|
4,924,389
|
|
|
$
|
8,880
|
|
|
$
|
5,191,123
|
|
|
Three Months Ended September 30, 2012
|
||||||||||
|
Fixed Maturity Investments
|
|
Other Investments
|
|
Total Fair Market Value
|
||||||
Level 3 investments - Beginning of period
|
$
|
—
|
|
|
$
|
454,793
|
|
|
$
|
454,793
|
|
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|||
Sales
|
—
|
|
|
(218
|
)
|
|
(218
|
)
|
|||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Realized gains
|
—
|
|
|
13
|
|
|
13
|
|
|||
Unrealized gains
|
—
|
|
|
61,746
|
|
|
61,746
|
|
|||
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers
|
—
|
|
|
921
|
|
|
921
|
|
|||
Level 3 investments - End of period
|
$
|
—
|
|
|
$
|
517,255
|
|
|
$
|
517,255
|
|
Noncontrolling interest (a)
|
—
|
|
|
(460,924
|
)
|
|
(460,924
|
)
|
|||
Level 3 investments excluding noncontrolling interest
|
$
|
—
|
|
|
$
|
56,331
|
|
|
$
|
56,331
|
|
|
Three Months Ended September 30, 2011
|
||||||||||
|
Fixed Maturity Investments
|
|
Other Investments
|
|
Total Fair Market Value
|
||||||
Level 3 investments - Beginning of period
|
$
|
—
|
|
|
$
|
9,776
|
|
|
$
|
9,776
|
|
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|||
Sales
|
—
|
|
|
(556
|
)
|
|
(556
|
)
|
|||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Realized gains
|
—
|
|
|
73
|
|
|
73
|
|
|||
Unrealized (losses)
|
—
|
|
|
(526
|
)
|
|
(526
|
)
|
|||
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers
|
—
|
|
|
—
|
|
|
—
|
|
|||
Level 3 investments - End of period
|
$
|
—
|
|
|
$
|
8,767
|
|
|
$
|
8,767
|
|
|
Nine Months Ended September 30, 2012
|
||||||||||
|
Fixed Maturity Investments
|
|
Other Investments
|
|
Total Fair Market Value
|
||||||
Level 3 investments - Beginning of period
|
$
|
—
|
|
|
$
|
8,880
|
|
|
$
|
8,880
|
|
Purchases
|
—
|
|
|
500,000
|
|
|
500,000
|
|
|||
Sales
|
—
|
|
|
(1,115
|
)
|
|
(1,115
|
)
|
|||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Realized gains
|
—
|
|
|
61
|
|
|
61
|
|
|||
Unrealized gains
|
—
|
|
|
11,762
|
|
|
11,762
|
|
|||
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers
|
—
|
|
|
(2,333
|
)
|
|
(2,333
|
)
|
|||
Level 3 investments - End of period
|
$
|
—
|
|
|
$
|
517,255
|
|
|
$
|
517,255
|
|
Noncontrolling interest (a)
|
—
|
|
|
(460,924
|
)
|
|
(460,924
|
)
|
|||
Level 3 investments excluding noncontrolling interest
|
$
|
—
|
|
|
$
|
56,331
|
|
|
$
|
56,331
|
|
|
Nine Months Ended September 30, 2011
|
||||||||||
|
Fixed Maturity Investments
|
|
Other Investments
|
|
Total Fair Market Value
|
||||||
Level 3 investments - Beginning of period
|
$
|
—
|
|
|
$
|
12,892
|
|
|
$
|
12,892
|
|
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|||
Sales
|
—
|
|
|
(4,365
|
)
|
|
(4,365
|
)
|
|||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Realized gains
|
—
|
|
|
508
|
|
|
508
|
|
|||
Unrealized (losses)
|
—
|
|
|
(268
|
)
|
|
(268
|
)
|
|||
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers
|
—
|
|
|
—
|
|
|
—
|
|
|||
Level 3 investments - End of period
|
$
|
—
|
|
|
$
|
8,767
|
|
|
$
|
8,767
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2012
|
|
September 30, 2011
|
|
September 30, 2012
|
|
September 30, 2011
|
||||||||
Fixed maturities and short-term investments
|
$
|
25,703
|
|
|
$
|
27,773
|
|
|
$
|
79,450
|
|
|
$
|
84,243
|
|
Cash and cash equivalents
|
1,770
|
|
|
1,864
|
|
|
5,536
|
|
|
5,132
|
|
||||
Securities lending income
|
3
|
|
|
7
|
|
|
9
|
|
|
31
|
|
||||
Total gross investment income
|
27,476
|
|
|
29,644
|
|
|
84,995
|
|
|
89,406
|
|
||||
Investment expenses
|
(1,987
|
)
|
|
(1,897
|
)
|
|
(5,861
|
)
|
|
(5,190
|
)
|
||||
Net investment income
|
$
|
25,489
|
|
|
$
|
27,747
|
|
|
$
|
79,134
|
|
|
$
|
84,216
|
|
(c)
|
Fixed maturity, short-term investments, other investments and cash equivalents
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2012
|
|
September 30, 2011
|
|
September 30, 2012
|
|
September 30, 2011
|
||||||||
Fixed maturities, short-term and other investments and cash equivalents
|
|
|
|
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
10,187
|
|
|
$
|
8,794
|
|
|
$
|
29,610
|
|
|
$
|
37,591
|
|
Gross realized (losses)
|
(1,124
|
)
|
|
(3,548
|
)
|
|
(6,861
|
)
|
|
(14,414
|
)
|
||||
Net realized gains on investments
|
9,063
|
|
|
5,246
|
|
|
22,749
|
|
|
23,177
|
|
||||
Net unrealized gains (losses) on securities lending
|
223
|
|
|
(26
|
)
|
|
260
|
|
|
15
|
|
||||
Change in net unrealized gains (losses) on investments
|
86,122
|
|
|
(27,822
|
)
|
|
53,182
|
|
|
(22,165
|
)
|
||||
Total net realized gains and change in net unrealized gains (losses) on investments
|
$
|
95,408
|
|
|
$
|
(22,602
|
)
|
|
$
|
76,191
|
|
|
$
|
1,027
|
|
Noncontrolling interest (a)
|
(55,806
|
)
|
|
—
|
|
|
(10,924
|
)
|
|
—
|
|
||||
Total net realized gains and change in net unrealized gains (losses) on investments excluding noncontrolling interest
|
$
|
39,602
|
|
|
$
|
(22,602
|
)
|
|
$
|
65,267
|
|
|
$
|
1,027
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
U.S. Government and Government Agency
|
$
|
1,219,610
|
|
|
$
|
9,676
|
|
|
$
|
(13
|
)
|
|
$
|
1,229,273
|
|
Non-U.S. Government and Government Agency
|
300,227
|
|
|
7,836
|
|
|
(303
|
)
|
|
307,760
|
|
||||
States, municipalities, political subdivision
|
41,690
|
|
|
859
|
|
|
(11
|
)
|
|
42,538
|
|
||||
Agency residential mortgage-backed securities
|
405,317
|
|
|
16,757
|
|
|
(99
|
)
|
|
421,975
|
|
||||
Non-Agency residential mortgage-backed securities
|
25,013
|
|
|
564
|
|
|
(1,745
|
)
|
|
23,832
|
|
||||
U.S. corporate
|
1,214,986
|
|
|
28,176
|
|
|
(274
|
)
|
|
1,242,888
|
|
||||
Non-U.S. corporate
|
585,454
|
|
|
12,940
|
|
|
(141
|
)
|
|
598,253
|
|
||||
Bank loans
|
596,316
|
|
|
7,177
|
|
|
(637
|
)
|
|
602,856
|
|
||||
Catastrophe bonds
|
37,750
|
|
|
716
|
|
|
—
|
|
|
38,466
|
|
||||
Asset-backed securities
|
376,854
|
|
|
3,070
|
|
|
(143
|
)
|
|
379,781
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total fixed maturities
|
4,803,217
|
|
|
87,771
|
|
|
(3,366
|
)
|
|
4,887,622
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total short-term investments
|
275,099
|
|
|
229
|
|
|
(4
|
)
|
|
275,324
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
5,111
|
|
|
331
|
|
|
(325
|
)
|
|
5,117
|
|
||||
Hedge funds (a)
|
500,000
|
|
|
12,138
|
|
|
—
|
|
|
512,138
|
|
||||
Mutual funds
|
6,199
|
|
|
1,987
|
|
|
|
|
8,186
|
|
|||||
Total other investments
|
511,310
|
|
|
14,456
|
|
|
(325
|
)
|
|
525,441
|
|
||||
Total
|
$
|
5,589,626
|
|
|
$
|
102,456
|
|
|
$
|
(3,695
|
)
|
|
$
|
5,688,387
|
|
Noncontrolling interest (a)
|
(450,000
|
)
|
|
(10,924
|
)
|
|
$
|
—
|
|
|
$
|
(460,924
|
)
|
||
Total investments excluding noncontrolling interest
|
$
|
5,139,626
|
|
|
$
|
91,532
|
|
|
$
|
(3,695
|
)
|
|
$
|
5,227,463
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
U.S. Government and Government Agency
|
$
|
1,170,810
|
|
|
$
|
11,630
|
|
|
$
|
(47
|
)
|
|
$
|
1,182,393
|
|
Non-U.S. Government and Government Agency
|
446,258
|
|
|
9,173
|
|
|
(6,073
|
)
|
|
449,358
|
|
||||
States, municipalities, political subdivision
|
25,715
|
|
|
586
|
|
|
(10
|
)
|
|
26,291
|
|
||||
Agency residential mortgage-backed securities
|
451,751
|
|
|
16,622
|
|
|
(319
|
)
|
|
468,054
|
|
||||
Non-Agency residential mortgage-backed securities
|
39,134
|
|
|
143
|
|
|
(6,571
|
)
|
|
32,706
|
|
||||
U.S. corporate
|
1,314,375
|
|
|
24,932
|
|
|
(9,549
|
)
|
|
1,329,758
|
|
||||
Non-U.S. corporate
|
577,743
|
|
|
6,320
|
|
|
(4,388
|
)
|
|
579,675
|
|
||||
Bank loans
|
475,770
|
|
|
2,435
|
|
|
(10,949
|
)
|
|
467,256
|
|
||||
Catastrophe bonds
|
29,250
|
|
|
702
|
|
|
—
|
|
|
29,952
|
|
||||
Asset-backed securities
|
328,497
|
|
|
900
|
|
|
(1,098
|
)
|
|
328,299
|
|
||||
Commercial mortgage-backed securities
|
402
|
|
|
1
|
|
|
—
|
|
|
403
|
|
||||
Total fixed maturities
|
4,859,705
|
|
|
73,444
|
|
|
(39,004
|
)
|
|
4,894,145
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total short-term investments
|
280,299
|
|
|
1
|
|
|
(109
|
)
|
|
280,191
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
5,244
|
|
|
383
|
|
|
—
|
|
|
5,627
|
|
||||
Private equity investment
|
3,253
|
|
|
—
|
|
|
—
|
|
|
3,253
|
|
||||
Mutual funds
|
6,505
|
|
|
1,402
|
|
|
—
|
|
|
7,907
|
|
||||
Total other investments
|
15,002
|
|
|
1,785
|
|
|
—
|
|
|
16,787
|
|
||||
Total
|
$
|
5,155,006
|
|
|
$
|
75,230
|
|
|
$
|
(39,113
|
)
|
|
$
|
5,191,123
|
|
|
September 30, 2012
|
|
December 31, 2011
|
||||||||||
|
Estimated Fair Value
|
|
% of Total
|
|
Estimated Fair Value
|
|
% of Total
|
||||||
AAA
|
$
|
762,664
|
|
|
15.6
|
%
|
|
$
|
882,912
|
|
|
18.0
|
%
|
AA
|
2,068,034
|
|
|
42.3
|
%
|
|
2,077,981
|
|
|
42.5
|
%
|
||
A
|
1,059,408
|
|
|
21.7
|
%
|
|
1,078,793
|
|
|
22.0
|
%
|
||
BBB
|
358,781
|
|
|
7.3
|
%
|
|
345,091
|
|
|
7.1
|
%
|
||
Investment grade
|
4,248,887
|
|
|
86.9
|
%
|
|
4,384,777
|
|
|
89.6
|
%
|
||
|
|
|
|
|
|
|
|
||||||
BB
|
352,150
|
|
|
7.2
|
%
|
|
254,409
|
|
|
5.2
|
%
|
||
B
|
263,625
|
|
|
5.4
|
%
|
|
231,420
|
|
|
4.7
|
%
|
||
CCC
|
5,578
|
|
|
0.1
|
%
|
|
12,578
|
|
|
0.3
|
%
|
||
CC
|
3,075
|
|
|
0.1
|
%
|
|
4,605
|
|
|
0.1
|
%
|
||
D/NR
|
14,307
|
|
|
0.3
|
%
|
|
6,356
|
|
|
0.1
|
%
|
||
Non-Investment grade
|
638,735
|
|
|
13.1
|
%
|
|
509,368
|
|
|
10.4
|
%
|
||
Total Fixed Maturities
|
$
|
4,887,622
|
|
|
100.0
|
%
|
|
$
|
4,894,145
|
|
|
100.0
|
%
|
|
September 30, 2012
|
|
December 31, 2011
|
||||||||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||||||
Due in one year or less
|
$
|
535,216
|
|
|
$
|
538,572
|
|
|
$
|
520,631
|
|
|
$
|
523,107
|
|
Due after one year through five years
|
3,047,712
|
|
|
3,104,660
|
|
|
3,160,647
|
|
|
3,186,711
|
|
||||
Due after five years through ten years
|
409,467
|
|
|
414,702
|
|
|
350,459
|
|
|
346,654
|
|
||||
Due after ten years
|
3,638
|
|
|
4,100
|
|
|
8,184
|
|
|
8,211
|
|
||||
|
3,996,033
|
|
|
4,062,034
|
|
|
4,039,921
|
|
|
4,064,683
|
|
||||
Asset-backed and mortgage-backed securities
|
807,184
|
|
|
825,588
|
|
|
819,784
|
|
|
829,462
|
|
||||
Total
|
$
|
4,803,217
|
|
|
$
|
4,887,622
|
|
|
$
|
4,859,705
|
|
|
$
|
4,894,145
|
|
(d)
|
Securities lending
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents
|
10,383
|
|
|
—
|
|
|
—
|
|
|
10,383
|
|
||||
Total
|
$
|
10,383
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,383
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Corporate
|
$
|
—
|
|
|
$
|
255
|
|
|
$
|
—
|
|
|
$
|
255
|
|
Cash and cash equivalents
|
7,481
|
|
|
—
|
|
|
—
|
|
|
7,481
|
|
||||
Total
|
$
|
7,481
|
|
|
$
|
255
|
|
|
$
|
—
|
|
|
$
|
7,736
|
|
(a)
|
This amount relates to certain short-term investments with short original maturities which are generally not rated.
|
|
September 30, 2012
|
|
December 31, 2011
|
||||||||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||||||
Due in one year or less
|
$
|
10,849
|
|
|
$
|
10,383
|
|
|
$
|
7,462
|
|
|
$
|
7,481
|
|
Due after one year through five years
|
—
|
|
|
—
|
|
|
1,000
|
|
|
255
|
|
||||
Total
|
$
|
10,849
|
|
|
$
|
10,383
|
|
|
$
|
8,462
|
|
|
$
|
7,736
|
|
|
Three Months Ended September 30, 2012
|
|||||||||||
|
|
Investment in operating affiliate (AlphaCat Re 2011)
|
|
Investment in operating affiliate (AlphaCat Re 2012)
|
|
Total
|
||||||
As at June 30, 2012
|
|
$
|
59,238
|
|
|
$
|
27,252
|
|
|
$
|
86,490
|
|
Purchase of shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Income from operating affiliates
|
|
4,079
|
|
|
2,156
|
|
|
6,235
|
|
|||
As at September 30, 2012
|
|
$
|
63,317
|
|
|
$
|
29,408
|
|
|
$
|
92,725
|
|
|
Nine Months Ended September 30, 2012
|
||||||||||
|
Investment in operating affiliate (AlphaCat Re 2011)
|
|
Investment in operating affiliate (AlphaCat Re 2012)
|
|
Total
|
||||||
As at December 31, 2011
|
$
|
53,031
|
|
|
$
|
—
|
|
|
$
|
53,031
|
|
Purchase of shares
|
—
|
|
|
26,500
|
|
|
26,500
|
|
|||
Income from operating affiliates
|
10,286
|
|
|
2,908
|
|
|
13,194
|
|
|||
As at September 30, 2012
|
$
|
63,317
|
|
|
$
|
29,408
|
|
|
$
|
92,725
|
|
|
Investment in non-consolidated affiliate
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity Ownership
|
|
Carrying Value
|
||||||
AlphaCat Re 2011
|
$
|
41,389
|
|
|
43.7
|
%
|
|
22.3
|
%
|
|
$
|
63,317
|
|
AlphaCat Re 2012
|
$
|
26,500
|
|
|
49.0
|
%
|
|
37.9
|
%
|
|
$
|
29,408
|
|
|
Three Months Ended September 30, 2012
|
||
|
Investment in limited partnership (Aquiline Financial Services Fund II L.P)
|
||
As at June 30, 2012
|
$
|
6,317
|
|
Capital contributions
|
430
|
|
|
(Loss) from investment affiliate
|
(160
|
)
|
|
As at September 30, 2012
|
$
|
6,587
|
|
|
Nine Months Ended September 30, 2012
|
||
|
Investment in limited partnership (Aquiline Financial Services Fund II L.P) (a)
|
||
As at December 31, 2011
|
$
|
3,253
|
|
Capital contributions
|
5,328
|
|
|
Net unrealized loss on investments (a)
|
(1,436
|
)
|
|
(Loss) from investment affiliate
|
(558
|
)
|
|
As at September 30, 2012
|
$
|
6,587
|
|
|
Investment in non-consolidated affiliate
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity Ownership
|
|
Carrying Value
|
||||||
Aquiline Financial Services Fund II L.P
|
$
|
8,581
|
|
|
—
|
%
|
|
6.8
|
%
|
|
$
|
6,587
|
|
|
Three Months Ended September 30, 2012
|
||
|
Noncontrolling interest
|
||
Balance - June 30, 2012
|
$
|
404,740
|
|
Purchase of shares by noncontrolling interest
|
—
|
|
|
Net Income:
|
|
||
Net income attributable to noncontrolling interest
|
56,746
|
|
|
|
|
||
Balance - September 30, 2012
|
$
|
461,486
|
|
|
Nine Months Ended September 30, 2012
|
||
|
Noncontrolling interest
|
||
Balance - April 2, 2012
|
$
|
—
|
|
Purchase of shares by noncontrolling interest
|
450,100
|
|
|
Net Income:
|
|
||
Net income attributable to noncontrolling interest
|
11,386
|
|
|
|
|
||
Balance - September 30, 2012
|
$
|
461,486
|
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||
Derivatives designated as hedging instruments:
|
|
Notional amount
|
|
Balance Sheet location
|
|
Fair value
|
|
Balance Sheet location
|
|
Fair value
|
||||||
Foreign exchange contracts
|
|
$
|
43,243
|
|
|
Other assets
|
|
$
|
1,469
|
|
|
Accounts payable and accrued expenses
|
|
$
|
173
|
|
Interest rate swap contracts
|
|
$
|
289,800
|
|
|
Other assets
|
|
$
|
—
|
|
|
Accounts payable and accrued expenses
|
|
$
|
195
|
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||
Derivatives designated as hedging instruments:
|
|
Notional amount
|
|
Balance Sheet location
|
|
Fair value
|
|
Balance Sheet location
|
|
Fair value
|
||||||
Foreign exchange contracts
|
|
$
|
75,323
|
|
|
Other assets
|
|
$
|
476
|
|
|
Accounts payable and accrued expenses
|
|
$
|
—
|
|
(a)
|
Classification within the fair value hierarchy
|
(b)
|
Derivative instruments designated as a fair value hedge
|
|
|
|
|
Three Months Ended September 30, 2012
|
||||||||||
Derivatives designated as fair value hedges and related hedged item:
|
|
Location of gain (loss) recognized in income
|
|
Amount of gain (loss) recognized in income on derivative
|
|
Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged
|
|
Amount of gain (loss) recognized in income on derivative (ineffective portion)
|
||||||
Foreign exchange
|
|
Foreign exchange gains (losses)
|
|
$
|
1,749
|
|
|
$
|
(1,749
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
Three Months Ended September 30, 2011
|
||||||||||
Derivatives designated as fair value hedges and related hedged item:
|
|
Location of gain (loss) recognized in income
|
|
Amount of gain (loss) recognized in income on derivative
|
|
Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged
|
|
Amount of gain (loss) recognized in income on derivative (ineffective portion)
|
||||||
Foreign exchange
|
|
Foreign exchange gains (losses)
|
|
$
|
(617
|
)
|
|
$
|
617
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
||||||||||
Derivatives designated as fair value hedges and related hedged item:
|
|
Location of gain (loss) recognized in income
|
|
Amount of gain (loss) recognized in income on derivative
|
|
Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged
|
|
Amount of gain (loss) recognized in income on derivative (ineffective portion)
|
||||||
Foreign exchange
|
|
Foreign exchange gains (losses)
|
|
$
|
130
|
|
|
$
|
(130
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
Nine Months Ended September 30, 2011
|
||||||||||
Derivatives designated as fair value hedges and related hedged item:
|
|
Location of gain (loss) recognized in income
|
|
Amount of gain (loss) recognized in income on derivative
|
|
Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged
|
|
Amount of gain (loss) recognized in income on derivative (ineffective portion)
|
||||||
Foreign exchange
|
|
Foreign exchange gains (losses)
|
|
$
|
(3,542
|
)
|
|
$
|
3,542
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three and Nine Months Ended September 30, 2012
|
||||||||||||
Derivatives designated as cash flow hedges and related hedged item:
|
|
Location of the effective portion recognized in other comprehensive (loss) recognized in income
|
|
Location of the effective portion subsequently reclassified to earnings and the ineffective portion excluded from effectiveness testing
|
|
Amount of effective portion recognized in other comprehensive income
|
|
Amount of effective portion subsequently reclassified to earnings
|
|
Amount of ineffective portion excluded from effectiveness testing
|
||||||
Interest rate swap contracts
|
|
Other comprehensive income
|
|
Finance expenses
|
|
$
|
195
|
|
|
$
|
(195
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2012 |
|
September 30,
2011 |
|
September 30,
2012 |
|
September 30,
2011 |
||||||||
Reserve for losses and loss expenses, beginning of period
|
$
|
2,591,299
|
|
|
$
|
2,620,360
|
|
|
$
|
2,631,143
|
|
|
$
|
2,035,973
|
|
Losses and loss expenses recoverable
|
(371,484
|
)
|
|
(439,805
|
)
|
|
(372,485
|
)
|
|
(283,134
|
)
|
||||
Net reserves for losses and loss expenses, beginning of period
|
2,219,815
|
|
|
2,180,555
|
|
|
2,258,658
|
|
|
1,752,839
|
|
||||
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current year
|
205,219
|
|
|
287,149
|
|
|
658,884
|
|
|
1,022,875
|
|
||||
Prior years
|
(49,764
|
)
|
|
(61,082
|
)
|
|
(117,748
|
)
|
|
(113,303
|
)
|
||||
Total incurred losses and loss expenses
|
155,455
|
|
|
226,067
|
|
|
541,136
|
|
|
909,572
|
|
||||
Total net paid losses
|
(144,628
|
)
|
|
(200,256
|
)
|
|
(569,380
|
)
|
|
(484,559
|
)
|
||||
Foreign exchange
|
14,710
|
|
|
(26,654
|
)
|
|
14,938
|
|
|
1,860
|
|
||||
Net reserve for losses and loss expenses, end of period
|
2,245,352
|
|
|
2,179,712
|
|
|
2,245,352
|
|
|
2,179,712
|
|
||||
Losses and loss expenses recoverable
|
317,252
|
|
|
386,200
|
|
|
317,252
|
|
|
386,200
|
|
||||
Reserve for losses and loss expenses, end of period
|
$
|
2,562,604
|
|
|
$
|
2,565,912
|
|
|
$
|
2,562,604
|
|
|
$
|
2,565,912
|
|
(a)
|
Credit risk
|
|
September 30, 2012
|
|
December 31, 2011
|
||||||||||
|
Reinsurance Recoverable
|
|
% of Total
|
|
Reinsurance Recoverable
|
|
% of Total
|
||||||
Top 10 reinsurers
|
$
|
267,154
|
|
|
75.6
|
%
|
|
$
|
323,315
|
|
|
69.8
|
%
|
Other reinsurers’ balances > $1 million
|
77,005
|
|
|
21.8
|
%
|
|
132,417
|
|
|
28.6
|
%
|
||
Other reinsurers’ balances < $1 million
|
9,302
|
|
|
2.6
|
%
|
|
7,248
|
|
|
1.6
|
%
|
||
Total
|
$
|
353,461
|
|
|
100.0
|
%
|
|
$
|
462,980
|
|
|
100.0
|
%
|
|
|
September 30, 2012
|
|||||||
Top 10 Reinsurers
|
|
Rating
|
|
Reinsurance Recoverable
|
|
% of Total
|
|||
Lloyd’s Syndicates
|
|
A+
|
|
$
|
70,065
|
|
|
26.2
|
%
|
Everest Re
|
|
A+
|
|
45,964
|
|
|
17.2
|
%
|
|
Hannover Re
|
|
AA-
|
|
39,308
|
|
|
14.7
|
%
|
|
Allianz
|
|
AA-
|
|
25,000
|
|
|
9.4
|
%
|
|
Transatlantic Re
|
|
A+
|
|
20,557
|
|
|
7.7
|
%
|
|
Swiss Re
|
|
AA-
|
|
17,335
|
|
|
6.5
|
%
|
|
Munich Re
|
|
AA-
|
|
14,413
|
|
|
5.4
|
%
|
|
XL Re
|
|
A
|
|
13,107
|
|
|
4.9
|
%
|
|
Platinum Underwriters
|
|
A-
|
|
10,942
|
|
|
4.1
|
%
|
|
Tokio Millenium Re Ltd.
|
|
AA-
|
|
10,463
|
|
|
3.9
|
%
|
|
Total
|
|
|
|
$
|
267,154
|
|
|
100.0
|
%
|
|
|
December 31, 2011
|
|||||||
Top 10 Reinsurers
|
|
Rating
|
|
Reinsurance Recoverable
|
|
% of Total
|
|||
Lloyd’s Syndicates
|
|
A+
|
|
$
|
77,419
|
|
|
24.0
|
%
|
Allianz
|
|
AA-
|
|
59,764
|
|
|
18.5
|
%
|
|
Hannover Re
|
|
AA-
|
|
39,762
|
|
|
12.3
|
%
|
|
Everest Re
|
|
A+
|
|
38,618
|
|
|
11.9
|
%
|
|
Transatlantic Re
|
|
A+
|
|
21,344
|
|
|
6.6
|
%
|
|
Tokio Millenium Re Ltd.
|
|
AA-
|
|
20,432
|
|
|
6.3
|
%
|
|
Fully Collateralized
|
|
NR
|
|
18,140
|
|
|
5.6
|
%
|
|
Odyssey Reinsurance Company
|
|
A-
|
|
16,737
|
|
|
5.2
|
%
|
|
Platinum Underwriters
|
|
A
|
|
15,833
|
|
|
4.9
|
%
|
|
Munich Re
|
|
AA-
|
|
15,266
|
|
|
4.7
|
%
|
|
Total
|
|
|
|
$
|
323,315
|
|
|
100.0
|
%
|
(a)
|
Authorized and issued
|
|
Common Shares
|
|
Common shares issued, December 31, 2011
|
134,503,065
|
|
Restricted share awards vested, net of shares withheld
|
1,545,024
|
|
Restricted share units vested, net of shares withheld
|
15,173
|
|
Options exercised
|
439,065
|
|
Warrants exercised
|
130,121
|
|
Common shares issued, September 30, 2012
|
136,632,448
|
|
Shares repurchased
|
(43,138,057
|
)
|
Common shares outstanding, September 30, 2012
|
93,494,391
|
|
|
Common Shares
|
|
Common shares issued, December 31, 2010
|
132,838,111
|
|
Restricted share awards vested, net of shares withheld
|
534,658
|
|
Restricted share units vested, net of shares withheld
|
9,496
|
|
Employee seller shares vested
|
197,174
|
|
Options exercised
|
457,465
|
|
Warrants exercised
|
34,340
|
|
Direct issuance of common stock
|
363
|
|
Common shares issued, September 30, 2011
|
134,071,607
|
|
Shares repurchased
|
(35,031,985
|
)
|
Common shares outstanding, September 30, 2011
|
99,039,622
|
|
(b)
|
Warrants
|
(c)
|
Deferred share units
|
(d)
|
Dividends
|
(a)
|
Long Term Incentive Plan and Short Term Incentive Plan
|
Year
|
|
Weighted average risk free
interest rate
|
|
Weighted average
dividend yield
|
|
Expected life (years)
|
|
Expected volatility
|
2009
|
|
3.9%
|
|
3.7%
|
|
2
|
|
34.6%
|
2010 (a)
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
2011 (a)
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
(a)
|
The Company has not granted any stock options awards since September 4, 2009.
|
|
Options
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Grant Date Exercise Price
|
|||||
Options outstanding, December 31, 2011
|
2,263,012
|
|
|
$
|
6.69
|
|
|
$
|
20.12
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
(439,065
|
)
|
|
7.44
|
|
|
17.73
|
|
||
Options forfeited
|
—
|
|
|
—
|
|
|
—
|
|
||
Options outstanding, September 30, 2012
|
1,823,947
|
|
|
$
|
6.52
|
|
|
$
|
20.69
|
|
Options exercisable at September 30, 2012
|
1,823,947
|
|
|
$
|
6.52
|
|
|
$
|
20.69
|
|
|
Options
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Grant Date Exercise Price
|
|||||
Options outstanding, December 31, 2010
|
2,723,684
|
|
|
$
|
6.74
|
|
|
$
|
20.19
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
(457,465
|
)
|
|
6.97
|
|
|
20.56
|
|
||
Options forfeited
|
(370
|
)
|
|
10.30
|
|
|
20.39
|
|
||
Options outstanding, September 30, 2011
|
2,265,849
|
|
|
$
|
6.70
|
|
|
$
|
20.12
|
|
Options exercisable at September 30, 2011
|
2,182,810
|
|
|
$
|
6.62
|
|
|
$
|
20.01
|
|
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share awards outstanding, December 31, 2011
|
3,003,547
|
|
|
$
|
25.77
|
|
Restricted share awards granted
|
901,506
|
|
|
31.38
|
|
|
Restricted share awards vested
|
(1,678,905
|
)
|
|
24.36
|
|
|
Restricted share awards forfeited
|
(30,801
|
)
|
|
28.10
|
|
|
Restricted share awards outstanding, September 30, 2012
|
2,195,347
|
|
|
$
|
29.12
|
|
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share awards outstanding, December 31, 2010
|
3,114,039
|
|
|
$
|
24.33
|
|
Restricted share awards granted
|
610,469
|
|
|
31.95
|
|
|
Restricted share awards vested
|
(669,649
|
)
|
|
24.91
|
|
|
Restricted share awards forfeited
|
(14,271
|
)
|
|
27.11
|
|
|
Restricted share awards outstanding, September 30, 2011
|
3,040,588
|
|
|
$
|
25.72
|
|
|
Restricted Share Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share units outstanding, December 31, 2011
|
53,312
|
|
|
$
|
27.60
|
|
Restricted share units granted
|
16,633
|
|
|
31.77
|
|
|
Restricted share units vested
|
(22,818
|
)
|
|
26.49
|
|
|
Restricted share units issued in lieu of cash dividends
|
1,162
|
|
|
28.36
|
|
|
Restricted share units forfeited
|
(1,393
|
)
|
|
28.57
|
|
|
Restricted share units outstanding, September 30, 2012
|
46,896
|
|
|
$
|
29.61
|
|
|
Restricted Share Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share units outstanding, December 31, 2010
|
47,049
|
|
|
$
|
25.04
|
|
Restricted share units granted
|
18,388
|
|
|
32.10
|
|
|
Restricted share units vested
|
(13,340
|
)
|
|
24.72
|
|
|
Restricted share units issued in lieu of cash dividends
|
704
|
|
|
26.87
|
|
|
Restricted share units forfeited
|
—
|
|
|
—
|
|
|
Restricted share units outstanding, September 30, 2011
|
52,801
|
|
|
$
|
27.60
|
|
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Performance share awards outstanding, December 31, 2011
|
279,019
|
|
|
$
|
30.77
|
|
Performance share awards granted
|
41,128
|
|
|
31.38
|
|
|
Performance share awards vested
|
—
|
|
|
—
|
|
|
Performance share awards cancelled
|
(99,302
|
)
|
|
28.70
|
|
|
Performance share awards outstanding, September 30, 2012
|
220,845
|
|
|
$
|
31.81
|
|
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Performance share awards outstanding, December 31, 2010
|
132,401
|
|
|
$
|
28.70
|
|
Performance share awards granted
|
146,618
|
|
|
32.64
|
|
|
Performance share awards vested
|
—
|
|
|
—
|
|
|
Performance share awards forfeited
|
—
|
|
|
—
|
|
|
Performance share awards outstanding, September 30, 2011
|
279,019
|
|
|
$
|
30.77
|
|
(b)
|
Employee seller shares
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2012
|
|
September 30, 2011
|
|
September 30, 2012
|
|
September 30, 2011
|
||||||||
Options
|
$
|
—
|
|
|
$
|
183
|
|
|
$
|
142
|
|
|
$
|
1,609
|
|
Restricted share awards
|
6,626
|
|
|
6,265
|
|
|
18,742
|
|
|
21,213
|
|
||||
Restricted share units
|
132
|
|
|
122
|
|
|
363
|
|
|
333
|
|
||||
Performance share awards
|
587
|
|
|
739
|
|
|
336
|
|
|
1,611
|
|
||||
Employee seller shares
|
—
|
|
|
73
|
|
|
—
|
|
|
2,293
|
|
||||
Total
|
$
|
7,345
|
|
|
$
|
7,382
|
|
|
$
|
19,583
|
|
|
$
|
27,059
|
|
(a)
|
Financing structure and finance expenses
|
|
Commitment
|
|
Outstanding (a)
|
|
Drawn
|
||||||
2006 Junior Subordinated Deferrable Debentures
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
2007 Junior Subordinated Deferrable Debentures
|
200,000
|
|
|
139,800
|
|
|
139,800
|
|
|||
2010 Senior Notes due 2040
|
250,000
|
|
|
250,000
|
|
|
247,063
|
|
|||
$400,000 syndicated unsecured letter of credit facility
|
400,000
|
|
|
—
|
|
|
—
|
|
|||
$525,000 syndicated secured letter of credit facility
|
525,000
|
|
|
318,506
|
|
|
—
|
|
|||
$500,000 bi-lateral secured letter of credit facility
|
500,000
|
|
|
88,191
|
|
|
—
|
|
|||
Talbot FAL Facility (b)
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|||
PaCRe senior secured letter of credit facility
|
10,000
|
|
|
—
|
|
|
—
|
|
|||
IPC Bi-Lateral Facility
|
80,000
|
|
|
51,009
|
|
|
—
|
|
|||
Total
|
$
|
2,140,000
|
|
|
$
|
1,022,506
|
|
|
$
|
536,863
|
|
|
Commitment
|
|
Outstanding (a)
|
|
Drawn
|
||||||
2006 Junior Subordinated Deferrable Debentures
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
2007 Junior Subordinated Deferrable Debentures
|
200,000
|
|
|
139,800
|
|
|
139,800
|
|
|||
2010 Senior Notes due 2040
|
250,000
|
|
|
250,000
|
|
|
246,982
|
|
|||
$340,000 syndicated unsecured letter of credit facility
|
340,000
|
|
|
—
|
|
|
—
|
|
|||
$60,000 bilateral unsecured letter of credit facility
|
60,000
|
|
|
—
|
|
|
—
|
|
|||
$500,000 secured letter of credit facility
|
500,000
|
|
|
333,179
|
|
|
—
|
|
|||
Talbot FAL Facility (b)
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|||
IPC Bi-Lateral Facility
|
80,000
|
|
|
57,146
|
|
|
—
|
|
|||
Total
|
$
|
1,605,000
|
|
|
$
|
955,125
|
|
|
$
|
536,782
|
|
(a)
|
Indicates utilization of commitment amount, not drawn borrowings.
|
(b)
|
Talbot operates in Lloyd’s through a corporate member, Talbot 2002 Underwriting Capital Ltd (“T02”), which is the sole participant in Syndicate 1183. Lloyd’s sets T02’s required capital annually based on Syndicate 1183’s business plan, rating environment, reserving environment together with input arising from Lloyd’s discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd’s (“FAL”), comprises: cash, investments and undrawn letters of credit provided by various banks.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2012 |
|
September 30,
2011 |
|
September 30,
2012 |
|
September 30,
2011 |
||||||||
2006 Junior Subordinated Deferrable Debentures
|
$
|
1,628
|
|
|
$
|
1,456
|
|
|
$
|
4,729
|
|
|
$
|
8,272
|
|
2007 Junior Subordinated Deferrable Debentures
|
1,211
|
|
|
3,029
|
|
|
7,072
|
|
|
9,086
|
|
||||
2010 Senior Notes due 2040
|
5,597
|
|
|
5,597
|
|
|
16,792
|
|
|
16,791
|
|
||||
Credit facilities
|
852
|
|
|
1,508
|
|
|
10,530
|
|
|
4,821
|
|
||||
AlphaCat Re 2011 fees (a)
|
—
|
|
|
(807
|
)
|
|
—
|
|
|
2,112
|
|
||||
Talbot FAL Facility
|
30
|
|
|
152
|
|
|
93
|
|
|
215
|
|
||||
Talbot other interest
|
44
|
|
|
—
|
|
|
131
|
|
|
—
|
|
||||
Total
|
$
|
9,362
|
|
|
$
|
10,935
|
|
|
$
|
39,347
|
|
|
$
|
41,297
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.
|
(b)
|
$250,000
2010 Senior Notes due 2040
|
2012
|
$
|
—
|
|
2013
|
—
|
|
|
2014
|
—
|
|
|
2015
|
—
|
|
|
2016 and thereafter
|
250,000
|
|
|
Total minimum future payments
|
$
|
250,000
|
|
(c)
|
Junior subordinated deferrable debentures
|
2012
|
$
|
—
|
|
2013
|
—
|
|
|
2014
|
—
|
|
|
2015
|
—
|
|
|
2016 and thereafter
|
289,800
|
|
|
Total minimum future payments
|
$
|
289,800
|
|
(d)
|
Credit facilities
|
(i)
|
$400,000
syndicated unsecured letter of credit facility and
$525,000
syndicated secured letter of credit facility
|
(ii)
|
Talbot FAL Facility
|
(iii)
|
IPC Syndicated Facility and IPC Bi-Lateral Facility
|
(a)
|
Concentrations of credit risk
|
(b)
|
Funds at Lloyd's
|
(c)
|
Lloyd's Central Fund
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2012 |
|
September 30,
2011 |
|
September 30,
2012 |
|
September 30,
2011 |
||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Income
|
$
|
264,044
|
|
|
$
|
70,001
|
|
|
$
|
510,540
|
|
|
$
|
8,115
|
|
(Income) attributable to noncontrolling interest
|
(56,746
|
)
|
|
(13,516
|
)
|
|
(11,386
|
)
|
|
(14,110
|
)
|
||||
Income (loss) available (attributable) to Validus
|
207,298
|
|
|
56,485
|
|
|
499,154
|
|
|
(5,995
|
)
|
||||
Less: Dividends and distributions declared on outstanding warrants
|
(1,663
|
)
|
|
(1,966
|
)
|
|
(5,121
|
)
|
|
(5,916
|
)
|
||||
Income (loss) available (attributable) to common shareholders
|
$
|
205,635
|
|
|
$
|
54,519
|
|
|
$
|
494,033
|
|
|
$
|
(11,911
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
93,368,775
|
|
|
98,961,795
|
|
|
97,016,034
|
|
|
98,430,686
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share available (attributable) to common shareholders
|
$
|
2.20
|
|
|
$
|
0.55
|
|
|
$
|
5.09
|
|
|
$
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Income (loss)
|
$
|
264,044
|
|
|
$
|
70,001
|
|
|
$
|
510,540
|
|
|
$
|
8,115
|
|
Loss (income) attributable to noncontrolling interest
|
(56,746
|
)
|
|
(13,516
|
)
|
|
(11,386
|
)
|
|
(14,110
|
)
|
||||
Income (loss) available (attributable) to Validus
|
207,298
|
|
|
56,485
|
|
|
499,154
|
|
|
(5,995
|
)
|
||||
Less: Dividends and distributions declared on outstanding warrants
|
—
|
|
|
(1,966
|
)
|
|
—
|
|
|
(5,916
|
)
|
||||
Income (loss) available (attributable) to common shareholders
|
$
|
207,298
|
|
|
$
|
54,519
|
|
|
$
|
499,154
|
|
|
$
|
(11,911
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
93,368,775
|
|
|
98,961,795
|
|
|
97,016,034
|
|
|
98,430,686
|
|
||||
Share equivalents:
|
|
|
|
|
|
|
|
||||||||
Warrants
|
3,248,788
|
|
|
—
|
|
|
3,116,298
|
|
|
—
|
|
||||
Stock options
|
716,693
|
|
|
603,581
|
|
|
777,245
|
|
|
—
|
|
||||
Unvested restricted shares
|
902,234
|
|
|
1,257,959
|
|
|
1,423,938
|
|
|
—
|
|
||||
Weighted average number of diluted common shares outstanding
|
98,236,490
|
|
|
100,823,335
|
|
|
102,333,515
|
|
|
98,430,686
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share available (attributable) to common shareholders
|
$
|
2.11
|
|
|
$
|
0.54
|
|
|
$
|
4.88
|
|
|
$
|
(0.12
|
)
|
Three Months Ended September 30, 2012
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Legal Entity Adjustments
|
|
Validus Re Consolidated
|
|
Talbot Segment
|
|
Corporate & Eliminations
|
|
Total
|
||||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
145,010
|
|
|
$
|
2,934
|
|
|
$
|
—
|
|
|
$
|
147,944
|
|
|
$
|
260,755
|
|
|
$
|
(18,484
|
)
|
|
$
|
390,215
|
|
Reinsurance premiums ceded
|
|
(10,426
|
)
|
|
—
|
|
|
—
|
|
|
(10,426
|
)
|
|
(53,801
|
)
|
|
18,484
|
|
|
(45,743
|
)
|
|||||||
Net premiums written
|
|
134,584
|
|
|
2,934
|
|
|
—
|
|
|
137,518
|
|
|
206,954
|
|
|
—
|
|
|
344,472
|
|
|||||||
Change in unearned premiums
|
|
107,728
|
|
|
2,591
|
|
|
—
|
|
|
110,319
|
|
|
20,313
|
|
|
—
|
|
|
130,632
|
|
|||||||
Net premiums earned
|
|
242,312
|
|
|
5,525
|
|
|
—
|
|
|
247,837
|
|
|
227,267
|
|
|
—
|
|
|
475,104
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
66,890
|
|
|
—
|
|
|
—
|
|
|
66,890
|
|
|
88,565
|
|
|
—
|
|
|
155,455
|
|
|||||||
Policy acquisition costs
|
|
37,785
|
|
|
547
|
|
|
—
|
|
|
38,332
|
|
|
61,640
|
|
|
(1,349
|
)
|
|
98,623
|
|
|||||||
General and administrative expenses
|
|
16,938
|
|
|
2,087
|
|
|
1,142
|
|
|
20,167
|
|
|
36,605
|
|
|
13,775
|
|
|
70,547
|
|
|||||||
Share compensation expenses
|
|
2,076
|
|
|
84
|
|
|
135
|
|
|
2,295
|
|
|
2,200
|
|
|
2,850
|
|
|
7,345
|
|
|||||||
Total underwriting deductions
|
|
123,689
|
|
|
2,718
|
|
|
1,277
|
|
|
127,684
|
|
|
189,010
|
|
|
15,276
|
|
|
331,970
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting income (loss)
|
|
$
|
118,623
|
|
|
$
|
2,807
|
|
|
$
|
(1,277
|
)
|
|
$
|
120,153
|
|
|
$
|
38,257
|
|
|
$
|
(15,276
|
)
|
|
$
|
143,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net investment income
|
|
19,644
|
|
|
1,193
|
|
|
—
|
|
|
20,837
|
|
|
5,260
|
|
|
(608
|
)
|
|
25,489
|
|
|||||||
Other income
|
|
1,543
|
|
|
7,674
|
|
|
1,620
|
|
|
10,837
|
|
|
680
|
|
|
(4,193
|
)
|
|
7,324
|
|
|||||||
Finance expenses
|
|
(789
|
)
|
|
(56
|
)
|
|
—
|
|
|
(845
|
)
|
|
(73
|
)
|
|
(8,444
|
)
|
|
(9,362
|
)
|
|||||||
Operating income (loss) before taxes and income from operating affiliates
|
|
139,021
|
|
|
11,618
|
|
|
343
|
|
|
150,982
|
|
|
44,124
|
|
|
(28,521
|
)
|
|
166,585
|
|
|||||||
Tax (expense)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(11
|
)
|
|
(1,330
|
)
|
|
(1,343
|
)
|
|||||||
Income from operating affiliates
|
|
—
|
|
|
6,235
|
|
|
—
|
|
|
6,235
|
|
|
—
|
|
|
—
|
|
|
6,235
|
|
|||||||
Net operating income (loss)
|
|
$
|
139,019
|
|
|
$
|
17,853
|
|
|
$
|
343
|
|
|
$
|
157,215
|
|
|
$
|
44,113
|
|
|
$
|
(29,851
|
)
|
|
$
|
171,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net realized gains on investments
|
|
6,643
|
|
|
300
|
|
|
—
|
|
|
6,943
|
|
|
2,120
|
|
|
—
|
|
|
9,063
|
|
|||||||
Net unrealized gains on investments
|
|
19,232
|
|
|
62,432
|
|
|
—
|
|
|
81,664
|
|
|
4,681
|
|
|
—
|
|
|
86,345
|
|
|||||||
(Loss) from investment affiliate
|
|
(160
|
)
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
|||||||
Foreign exchange gains (losses)
|
|
8
|
|
|
30
|
|
|
—
|
|
|
38
|
|
|
1,146
|
|
|
(81
|
)
|
|
1,103
|
|
|||||||
Transaction expenses (b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,784
|
)
|
|
(3,784
|
)
|
|||||||
Net income (loss)
|
|
$
|
164,742
|
|
|
$
|
80,615
|
|
|
$
|
343
|
|
|
$
|
245,700
|
|
|
$
|
52,060
|
|
|
$
|
(33,716
|
)
|
|
$
|
264,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(56,746
|
)
|
|
—
|
|
|
(56,746
|
)
|
|
—
|
|
|
—
|
|
|
(56,746
|
)
|
|||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
164,742
|
|
|
$
|
23,869
|
|
|
$
|
343
|
|
|
$
|
188,954
|
|
|
$
|
52,060
|
|
|
$
|
(33,716
|
)
|
|
$
|
207,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums written / Gross premiums written
|
|
92.8
|
%
|
|
100.0
|
%
|
|
|
|
|
|
79.4
|
%
|
|
|
|
88.3
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
27.6
|
%
|
|
0.0
|
%
|
|
|
|
|
|
39.0
|
%
|
|
|
|
32.7
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Policy acquisition costs
|
|
15.6
|
%
|
|
9.9
|
%
|
|
|
|
|
|
27.1
|
%
|
|
|
|
20.8
|
%
|
||||||||||
General and administrative expenses (a)
|
|
7.8
|
%
|
|
39.3
|
%
|
|
|
|
|
|
17.1
|
%
|
|
|
|
16.4
|
%
|
||||||||||
Expense ratio
|
|
23.4
|
%
|
|
49.2
|
%
|
|
|
|
|
|
44.2
|
%
|
|
|
|
37.2
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Combined ratio
|
|
51.0
|
%
|
|
49.2
|
%
|
|
|
|
|
|
83.2
|
%
|
|
|
|
69.9
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total assets
|
|
$
|
4,729,344
|
|
|
$
|
768,612
|
|
|
|
|
|
|
|
|
$
|
2,931,174
|
|
|
$
|
34,690
|
|
|
$
|
8,463,820
|
|
(a)
|
Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
|
(b)
|
The transaction expenses relate to costs incurred in connection with the proposed acquisition of Flagstone Reinsurance Holdings, S.A.
|
Three Months Ended September 30, 2011
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Legal Entity Adjustments
|
|
Validus Re Consolidated
|
|
Talbot Segment
|
|
Corporate & Eliminations
|
|
Total
|
||||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
163,863
|
|
|
$
|
18,940
|
|
|
$
|
—
|
|
|
$
|
182,803
|
|
|
$
|
238,937
|
|
|
$
|
(30,611
|
)
|
|
$
|
391,129
|
|
Reinsurance premiums ceded
|
|
(5,646
|
)
|
|
—
|
|
|
—
|
|
|
(5,646
|
)
|
|
(55,551
|
)
|
|
30,611
|
|
|
(30,586
|
)
|
|||||||
Net premiums written
|
|
158,217
|
|
|
18,940
|
|
|
—
|
|
|
177,157
|
|
|
183,386
|
|
|
—
|
|
|
360,543
|
|
|||||||
Change in unearned premiums
|
|
81,997
|
|
|
8,758
|
|
|
—
|
|
|
90,755
|
|
|
7,326
|
|
|
—
|
|
|
98,081
|
|
|||||||
Net premiums earned
|
|
240,214
|
|
|
27,698
|
|
|
—
|
|
|
267,912
|
|
|
190,712
|
|
|
—
|
|
|
458,624
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
128,823
|
|
|
—
|
|
|
—
|
|
|
128,823
|
|
|
97,244
|
|
|
—
|
|
|
226,067
|
|
|||||||
Policy acquisition costs
|
|
40,592
|
|
|
3,326
|
|
|
(1,084
|
)
|
|
42,834
|
|
|
36,651
|
|
|
(2,080
|
)
|
|
77,405
|
|
|||||||
General and administrative expenses
|
|
7,358
|
|
|
2,167
|
|
|
620
|
|
|
10,145
|
|
|
21,745
|
|
|
4,036
|
|
|
35,926
|
|
|||||||
Share compensation expenses
|
|
2,190
|
|
|
26
|
|
|
284
|
|
|
2,500
|
|
|
1,903
|
|
|
2,979
|
|
|
7,382
|
|
|||||||
Total underwriting deductions
|
|
178,963
|
|
|
5,519
|
|
|
(180
|
)
|
|
184,302
|
|
|
157,543
|
|
|
4,935
|
|
|
346,780
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting income (loss)
|
|
$
|
61,251
|
|
|
$
|
22,179
|
|
|
$
|
180
|
|
|
$
|
83,610
|
|
|
$
|
33,169
|
|
|
$
|
(4,935
|
)
|
|
$
|
111,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net investment income
|
|
22,807
|
|
|
751
|
|
|
—
|
|
|
23,558
|
|
|
6,451
|
|
|
(2,262
|
)
|
|
27,747
|
|
|||||||
Other income
|
|
2,187
|
|
|
2,225
|
|
|
(1,102
|
)
|
|
3,310
|
|
|
(1
|
)
|
|
(3,309
|
)
|
|
—
|
|
|||||||
Finance expenses
|
|
(2,632
|
)
|
|
787
|
|
|
—
|
|
|
(1,845
|
)
|
|
(151
|
)
|
|
(8,939
|
)
|
|
(10,935
|
)
|
|||||||
Operating income (loss) before taxes
|
|
83,613
|
|
|
25,942
|
|
|
(922
|
)
|
|
108,633
|
|
|
39,468
|
|
|
(19,445
|
)
|
|
128,656
|
|
|||||||
Tax (expense)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(2,345
|
)
|
|
(186
|
)
|
|
(2,538
|
)
|
|||||||
Net operating income (loss)
|
|
$
|
83,606
|
|
|
$
|
25,942
|
|
|
$
|
(922
|
)
|
|
$
|
108,626
|
|
|
$
|
37,123
|
|
|
$
|
(19,631
|
)
|
|
$
|
126,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net realized gains (losses) on investments
|
|
4,538
|
|
|
(25
|
)
|
|
—
|
|
|
4,513
|
|
|
733
|
|
|
—
|
|
|
5,246
|
|
|||||||
Net unrealized (losses) gains on investments
|
|
(26,298
|
)
|
|
324
|
|
|
—
|
|
|
(25,974
|
)
|
|
(1,875
|
)
|
|
1
|
|
|
(27,848
|
)
|
|||||||
Foreign exchange (losses)
|
|
(9,778
|
)
|
|
(164
|
)
|
|
—
|
|
|
(9,942
|
)
|
|
(9,943
|
)
|
|
(47
|
)
|
|
(19,932
|
)
|
|||||||
Transaction expenses (b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,583
|
)
|
|
(13,583
|
)
|
|||||||
Net income (loss)
|
|
$
|
52,068
|
|
|
$
|
26,077
|
|
|
$
|
(922
|
)
|
|
$
|
77,223
|
|
|
$
|
26,038
|
|
|
$
|
(33,260
|
)
|
|
$
|
70,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(13,516
|
)
|
|
—
|
|
|
(13,516
|
)
|
|
—
|
|
|
—
|
|
|
(13,516
|
)
|
|||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
52,068
|
|
|
$
|
12,561
|
|
|
$
|
(922
|
)
|
|
$
|
63,707
|
|
|
$
|
26,038
|
|
|
$
|
(33,260
|
)
|
|
$
|
56,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums written / Gross premiums written
|
|
96.6
|
%
|
|
100.0
|
%
|
|
|
|
|
|
76.8
|
%
|
|
|
|
92.2
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
53.6
|
%
|
|
0.0
|
%
|
|
|
|
|
|
51.0
|
%
|
|
|
|
49.3
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Policy acquisition costs
|
|
16.9
|
%
|
|
12.0
|
%
|
|
|
|
|
|
19.2
|
%
|
|
|
|
16.9
|
%
|
||||||||||
General and administrative expenses (a)
|
|
4.0
|
%
|
|
7.9
|
%
|
|
|
|
|
|
12.4
|
%
|
|
|
|
9.4
|
%
|
||||||||||
Expense ratio
|
|
20.9
|
%
|
|
19.9
|
%
|
|
|
|
|
|
31.6
|
%
|
|
|
|
26.3
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Combined ratio
|
|
74.5
|
%
|
|
19.9
|
%
|
|
|
|
|
|
82.6
|
%
|
|
|
|
75.6
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total assets
|
|
$
|
4,810,032
|
|
|
$
|
400,233
|
|
|
|
|
|
|
|
|
$
|
2,773,597
|
|
|
$
|
16,877
|
|
|
$
|
8,000,740
|
|
(a)
|
Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
|
(b)
|
The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
Nine Months Ended September 30, 2012
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Legal Entity Adjustments
|
|
Validus Re Consolidated
|
|
Talbot Segment
|
|
Corporate & Eliminations
|
|
Total
|
||||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
1,052,726
|
|
|
$
|
21,607
|
|
|
$
|
—
|
|
|
$
|
1,074,333
|
|
|
$
|
837,536
|
|
|
$
|
(57,276
|
)
|
|
$
|
1,854,593
|
|
Reinsurance premiums ceded
|
|
(137,504
|
)
|
|
—
|
|
|
—
|
|
|
(137,504
|
)
|
|
(191,619
|
)
|
|
57,276
|
|
|
(271,847
|
)
|
|||||||
Net premiums written
|
|
915,222
|
|
|
21,607
|
|
|
—
|
|
|
936,829
|
|
|
645,917
|
|
|
—
|
|
|
1,582,746
|
|
|||||||
Change in unearned premiums
|
|
(177,215
|
)
|
|
(9,832
|
)
|
|
—
|
|
|
(187,047
|
)
|
|
(21,769
|
)
|
|
—
|
|
|
(208,816
|
)
|
|||||||
Net premiums earned
|
|
738,007
|
|
|
11,775
|
|
|
—
|
|
|
749,782
|
|
|
624,148
|
|
|
—
|
|
|
1,373,930
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
244,286
|
|
|
—
|
|
|
—
|
|
|
244,286
|
|
|
296,850
|
|
|
—
|
|
|
541,136
|
|
|||||||
Policy acquisition costs
|
|
113,659
|
|
|
1,185
|
|
|
(25
|
)
|
|
114,819
|
|
|
142,181
|
|
|
(4,116
|
)
|
|
252,884
|
|
|||||||
General and administrative expenses
|
|
48,332
|
|
|
5,521
|
|
|
3,457
|
|
|
57,310
|
|
|
100,910
|
|
|
40,337
|
|
|
198,557
|
|
|||||||
Share compensation expenses
|
|
5,914
|
|
|
195
|
|
|
446
|
|
|
6,555
|
|
|
5,347
|
|
|
7,681
|
|
|
19,583
|
|
|||||||
Total underwriting deductions
|
|
412,191
|
|
|
6,901
|
|
|
3,878
|
|
|
422,970
|
|
|
545,288
|
|
|
43,902
|
|
|
1,012,160
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting income (loss)
|
|
$
|
325,816
|
|
|
$
|
4,874
|
|
|
$
|
(3,878
|
)
|
|
$
|
326,812
|
|
|
$
|
78,860
|
|
|
$
|
(43,902
|
)
|
|
$
|
361,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net investment income
|
|
64,915
|
|
|
2,672
|
|
|
—
|
|
|
67,587
|
|
|
16,475
|
|
|
(4,928
|
)
|
|
79,134
|
|
|||||||
Other income
|
|
4,229
|
|
|
22,237
|
|
|
4,528
|
|
|
30,994
|
|
|
2,033
|
|
|
(10,818
|
)
|
|
22,209
|
|
|||||||
Finance expenses
|
|
(6,628
|
)
|
|
(495
|
)
|
|
—
|
|
|
(7,123
|
)
|
|
(224
|
)
|
|
(32,000
|
)
|
|
(39,347
|
)
|
|||||||
Operating income (loss) before taxes and income from operating affiliates
|
|
388,332
|
|
|
29,288
|
|
|
650
|
|
|
418,270
|
|
|
97,144
|
|
|
(91,648
|
)
|
|
423,766
|
|
|||||||
Tax (expense)
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(562
|
)
|
|
(1,313
|
)
|
|
(1,886
|
)
|
|||||||
Income from operating affiliates
|
|
—
|
|
|
13,194
|
|
|
—
|
|
|
13,194
|
|
|
—
|
|
|
—
|
|
|
13,194
|
|
|||||||
Net operating income (loss)
|
|
$
|
388,321
|
|
|
$
|
42,482
|
|
|
$
|
650
|
|
|
$
|
431,453
|
|
|
$
|
96,582
|
|
|
$
|
(92,961
|
)
|
|
$
|
435,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net realized gains on investments
|
|
17,708
|
|
|
216
|
|
|
—
|
|
|
17,924
|
|
|
4,825
|
|
|
—
|
|
|
22,749
|
|
|||||||
Net unrealized gains on investments
|
|
35,400
|
|
|
12,316
|
|
|
—
|
|
|
47,716
|
|
|
5,726
|
|
|
—
|
|
|
53,442
|
|
|||||||
(Loss) from investment affiliate
|
|
(558
|
)
|
|
—
|
|
|
—
|
|
|
(558
|
)
|
|
—
|
|
|
—
|
|
|
(558
|
)
|
|||||||
Foreign exchange gains (losses)
|
|
2,461
|
|
|
47
|
|
|
—
|
|
|
2,508
|
|
|
1,334
|
|
|
(225
|
)
|
|
3,617
|
|
|||||||
Transaction expenses (b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,784
|
)
|
|
(3,784
|
)
|
|||||||
Net income (loss)
|
|
$
|
443,332
|
|
|
$
|
55,061
|
|
|
$
|
650
|
|
|
$
|
499,043
|
|
|
$
|
108,467
|
|
|
$
|
(96,970
|
)
|
|
$
|
510,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(11,386
|
)
|
|
—
|
|
|
(11,386
|
)
|
|
—
|
|
|
—
|
|
|
(11,386
|
)
|
|||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
443,332
|
|
|
$
|
43,675
|
|
|
$
|
650
|
|
|
$
|
487,657
|
|
|
$
|
108,467
|
|
|
$
|
(96,970
|
)
|
|
$
|
499,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums written / Gross premiums written
|
|
86.9
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
77.1
|
%
|
|
|
|
|
85.3
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
33.1
|
%
|
|
0.0
|
%
|
|
|
|
|
|
|
|
47.6
|
%
|
|
|
|
|
39.4
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Policy acquisition costs
|
|
15.4
|
%
|
|
10.1
|
%
|
|
|
|
|
|
|
|
22.8
|
%
|
|
|
|
|
18.4
|
%
|
|||||||
General and administrative expenses (a)
|
|
7.4
|
%
|
|
48.5
|
%
|
|
|
|
|
|
|
|
17.0
|
%
|
|
|
|
|
15.9
|
%
|
|||||||
Expense ratio
|
|
22.8
|
%
|
|
58.6
|
%
|
|
|
|
|
|
|
|
39.8
|
%
|
|
|
|
|
34.3
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Combined ratio
|
|
55.9
|
%
|
|
58.6
|
%
|
|
|
|
|
|
|
|
87.4
|
%
|
|
|
|
|
73.7
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total assets
|
|
$
|
4,729,344
|
|
|
$
|
768,612
|
|
|
|
|
|
|
|
|
$
|
2,931,174
|
|
|
$
|
34,690
|
|
|
$
|
8,463,820
|
|
(a)
|
Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
|
(b)
|
The transaction expenses relate to costs incurred in connection with the proposed acquisition of Flagstone Reinsurance Holdings, S.A.
|
Nine Months Ended September 30, 2011
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Legal Entity Adjustments
|
|
Validus Re Consolidated
|
|
Talbot Segment
|
|
Corporate & Eliminations
|
|
Total
|
||||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
1,058,642
|
|
|
$
|
77,050
|
|
|
$
|
—
|
|
|
$
|
1,135,692
|
|
|
$
|
778,880
|
|
|
$
|
(68,160
|
)
|
|
$
|
1,846,412
|
|
Reinsurance premiums ceded
|
|
(150,669
|
)
|
|
—
|
|
|
—
|
|
|
(150,669
|
)
|
|
(190,243
|
)
|
|
68,160
|
|
|
(272,752
|
)
|
|||||||
Net premiums written
|
|
907,973
|
|
|
77,050
|
|
|
—
|
|
|
985,023
|
|
|
588,637
|
|
|
—
|
|
|
1,573,660
|
|
|||||||
Change in unearned premiums
|
|
(194,529
|
)
|
|
(37,595
|
)
|
|
—
|
|
|
(232,124
|
)
|
|
(27,739
|
)
|
|
—
|
|
|
(259,863
|
)
|
|||||||
Net premiums earned
|
|
713,444
|
|
|
39,455
|
|
|
—
|
|
|
752,899
|
|
|
560,898
|
|
|
—
|
|
|
1,313,797
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
533,402
|
|
|
—
|
|
|
—
|
|
|
533,402
|
|
|
376,170
|
|
|
—
|
|
|
909,572
|
|
|||||||
Policy acquisition costs
|
|
115,355
|
|
|
4,615
|
|
|
(1,301
|
)
|
|
118,669
|
|
|
116,174
|
|
|
(1,912
|
)
|
|
232,931
|
|
|||||||
General and administrative expenses
|
|
32,947
|
|
|
4,122
|
|
|
3,780
|
|
|
40,849
|
|
|
82,396
|
|
|
21,999
|
|
|
145,244
|
|
|||||||
Share compensation expenses
|
|
7,118
|
|
|
74
|
|
|
786
|
|
|
7,978
|
|
|
6,648
|
|
|
12,433
|
|
|
27,059
|
|
|||||||
Total underwriting deductions
|
|
688,822
|
|
|
8,811
|
|
|
3,265
|
|
|
700,898
|
|
|
581,388
|
|
|
32,520
|
|
|
1,314,806
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting income (loss)
|
|
$
|
24,622
|
|
|
$
|
30,644
|
|
|
$
|
(3,265
|
)
|
|
$
|
52,001
|
|
|
$
|
(20,490
|
)
|
|
$
|
(32,520
|
)
|
|
$
|
(1,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net investment income
|
|
68,901
|
|
|
2,697
|
|
|
—
|
|
|
71,598
|
|
|
19,413
|
|
|
(6,795
|
)
|
|
84,216
|
|
|||||||
Other income
|
|
4,223
|
|
|
5,398
|
|
|
(1,180
|
)
|
|
8,441
|
|
|
2,194
|
|
|
(8,434
|
)
|
|
2,201
|
|
|||||||
Finance expenses
|
|
(5,924
|
)
|
|
(2,136
|
)
|
|
—
|
|
|
(8,060
|
)
|
|
(214
|
)
|
|
(33,023
|
)
|
|
(41,297
|
)
|
|||||||
Operating income (loss) before taxes
|
|
91,822
|
|
|
36,603
|
|
|
(4,445
|
)
|
|
123,980
|
|
|
903
|
|
|
(80,772
|
)
|
|
44,111
|
|
|||||||
Tax (expense)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(760
|
)
|
|
(277
|
)
|
|
(1,050
|
)
|
|||||||
Net operating income (loss)
|
|
$
|
91,809
|
|
|
$
|
36,603
|
|
|
$
|
(4,445
|
)
|
|
$
|
123,967
|
|
|
$
|
143
|
|
|
$
|
(81,049
|
)
|
|
$
|
43,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net realized gains on investments
|
|
17,453
|
|
|
531
|
|
|
—
|
|
|
17,984
|
|
|
5,193
|
|
|
—
|
|
|
23,177
|
|
|||||||
Net unrealized (losses) gains on investments
|
|
(18,597
|
)
|
|
(1,335
|
)
|
|
—
|
|
|
(19,932
|
)
|
|
(2,219
|
)
|
|
1
|
|
|
(22,150
|
)
|
|||||||
Foreign exchange (losses)
|
|
(19,314
|
)
|
|
(325
|
)
|
|
—
|
|
|
(19,639
|
)
|
|
(2,632
|
)
|
|
(119
|
)
|
|
(22,390
|
)
|
|||||||
Transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,583
|
)
|
|
(13,583
|
)
|
|||||||
Net income (loss)
|
|
$
|
71,351
|
|
|
$
|
35,474
|
|
|
$
|
(4,445
|
)
|
|
$
|
102,380
|
|
|
$
|
485
|
|
|
$
|
(94,750
|
)
|
|
$
|
8,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(14,110
|
)
|
|
—
|
|
|
(14,110
|
)
|
|
—
|
|
|
—
|
|
|
(14,110
|
)
|
|||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
71,351
|
|
|
$
|
21,364
|
|
|
$
|
(4,445
|
)
|
|
$
|
88,270
|
|
|
$
|
485
|
|
|
$
|
(94,750
|
)
|
|
$
|
(5,995
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums written / Gross premiums written
|
|
85.8
|
%
|
|
100.0
|
%
|
|
|
|
|
|
75.6
|
%
|
|
|
|
85.2
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
74.8
|
%
|
|
0.0
|
%
|
|
|
|
|
|
67.1
|
%
|
|
|
|
69.2
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Policy acquisition costs
|
|
16.2
|
%
|
|
11.7
|
%
|
|
|
|
|
|
20.7
|
%
|
|
|
|
17.7
|
%
|
||||||||||
General and administrative expenses (a)
|
|
5.6
|
%
|
|
10.6
|
%
|
|
|
|
|
|
15.9
|
%
|
|
|
|
13.1
|
%
|
||||||||||
Expense ratio
|
|
21.8
|
%
|
|
22.3
|
%
|
|
|
|
|
|
36.6
|
%
|
|
|
|
30.8
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Combined ratio
|
|
96.6
|
%
|
|
22.3
|
%
|
|
|
|
|
|
103.7
|
%
|
|
|
|
100.0
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total assets
|
|
$
|
4,810,032
|
|
|
$
|
400,233
|
|
|
|
|
|
|
$
|
2,773,597
|
|
|
$
|
16,877
|
|
|
$
|
8,000,740
|
|
(a)
|
Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
|
(b)
|
The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
|
Three Months Ended September 30, 2012
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
58,972
|
|
|
$
|
2,204
|
|
|
$
|
27,899
|
|
|
$
|
(1,978
|
)
|
|
$
|
87,097
|
|
|
22.4
|
%
|
Worldwide excluding United States (a)
|
9,202
|
|
|
—
|
|
|
64,687
|
|
|
(4,586
|
)
|
|
69,303
|
|
|
17.8
|
%
|
|||||
Europe
|
11,255
|
|
|
513
|
|
|
10,426
|
|
|
(739
|
)
|
|
21,455
|
|
|
5.5
|
%
|
|||||
Latin America and Caribbean
|
4,522
|
|
|
—
|
|
|
29,194
|
|
|
(2,069
|
)
|
|
31,647
|
|
|
8.1
|
%
|
|||||
Japan
|
727
|
|
|
—
|
|
|
1,916
|
|
|
(136
|
)
|
|
2,507
|
|
|
0.6
|
%
|
|||||
Canada
|
263
|
|
|
—
|
|
|
3,696
|
|
|
(262
|
)
|
|
3,697
|
|
|
0.9
|
%
|
|||||
Rest of the world (b)
|
7,773
|
|
|
217
|
|
|
—
|
|
|
—
|
|
|
7,990
|
|
|
2.0
|
%
|
|||||
Sub-total, non United States
|
33,742
|
|
|
730
|
|
|
109,919
|
|
|
(7,792
|
)
|
|
136,599
|
|
|
34.9
|
%
|
|||||
Worldwide including United States (a)
|
14,178
|
|
|
—
|
|
|
17,571
|
|
|
(1,245
|
)
|
|
30,504
|
|
|
7.8
|
%
|
|||||
Marine and Aerospace (c)
|
38,118
|
|
|
—
|
|
|
105,366
|
|
|
(7,469
|
)
|
|
136,015
|
|
|
34.9
|
%
|
|||||
Total
|
$
|
145,010
|
|
|
$
|
2,934
|
|
|
$
|
260,755
|
|
|
$
|
(18,484
|
)
|
|
$
|
390,215
|
|
|
100.0
|
%
|
|
Three Months Ended September 30, 2011
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
53,058
|
|
|
$
|
4,940
|
|
|
$
|
34,615
|
|
|
$
|
(4,286
|
)
|
|
$
|
88,327
|
|
|
22.6
|
%
|
Worldwide excluding United States (a)
|
15,410
|
|
|
—
|
|
|
62,570
|
|
|
(8,265
|
)
|
|
69,715
|
|
|
17.8
|
%
|
|||||
Europe
|
14,722
|
|
|
—
|
|
|
6,660
|
|
|
(919
|
)
|
|
20,463
|
|
|
5.2
|
%
|
|||||
Latin America and Caribbean
|
5,886
|
|
|
—
|
|
|
33,836
|
|
|
(4,285
|
)
|
|
35,437
|
|
|
9.1
|
%
|
|||||
Japan
|
9,679
|
|
|
—
|
|
|
3,571
|
|
|
(306
|
)
|
|
12,944
|
|
|
3.3
|
%
|
|||||
Canada
|
306
|
|
|
—
|
|
|
2,480
|
|
|
(306
|
)
|
|
2,480
|
|
|
0.6
|
%
|
|||||
Rest of the world (b)
|
3,063
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,063
|
|
|
0.8
|
%
|
|||||
Sub-total, non United States
|
49,066
|
|
|
—
|
|
|
109,117
|
|
|
(14,081
|
)
|
|
144,102
|
|
|
36.8
|
%
|
|||||
Worldwide including United States (a)
|
15,675
|
|
|
14,000
|
|
|
14,997
|
|
|
(1,836
|
)
|
|
42,836
|
|
|
11.0
|
%
|
|||||
Marine and Aerospace (c)
|
46,064
|
|
|
—
|
|
|
80,208
|
|
|
(10,408
|
)
|
|
115,864
|
|
|
29.6
|
%
|
|||||
Total
|
$
|
163,863
|
|
|
$
|
18,940
|
|
|
$
|
238,937
|
|
|
$
|
(30,611
|
)
|
|
$
|
391,129
|
|
|
100.0
|
%
|
(a)
|
Represents risks in two or more geographic zones.
|
(b)
|
Represents risks in one geographic zone.
|
(c)
|
Not classified as geographic area as marine and aerospace risks can span multiple geographic areas and are not fixed locations in some instances.
|
|
Nine Months Ended September 30, 2012
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
426,875
|
|
|
$
|
18,778
|
|
|
$
|
89,595
|
|
|
$
|
(6,213
|
)
|
|
$
|
529,035
|
|
|
28.5
|
%
|
Worldwide excluding United States (a)
|
36,047
|
|
|
—
|
|
|
202,281
|
|
|
(13,892
|
)
|
|
224,436
|
|
|
12.1
|
%
|
|||||
Europe
|
83,473
|
|
|
1,333
|
|
|
39,871
|
|
|
(2,503
|
)
|
|
122,174
|
|
|
6.6
|
%
|
|||||
Latin America and Caribbean
|
30,735
|
|
|
—
|
|
|
82,935
|
|
|
(5,439
|
)
|
|
108,231
|
|
|
5.8
|
%
|
|||||
Japan
|
31,704
|
|
|
—
|
|
|
6,003
|
|
|
(373
|
)
|
|
37,334
|
|
|
2.0
|
%
|
|||||
Canada
|
587
|
|
|
—
|
|
|
9,366
|
|
|
(589
|
)
|
|
9,364
|
|
|
0.6
|
%
|
|||||
Rest of the world (b)
|
59,781
|
|
|
496
|
|
|
—
|
|
|
—
|
|
|
60,277
|
|
|
3.3
|
%
|
|||||
Sub-total, non United States
|
242,327
|
|
|
1,829
|
|
|
340,456
|
|
|
(22,796
|
)
|
|
561,816
|
|
|
30.4
|
%
|
|||||
Worldwide including United States (a)
|
92,931
|
|
|
1,000
|
|
|
50,737
|
|
|
(3,047
|
)
|
|
141,621
|
|
|
7.6
|
%
|
|||||
Marine and Aerospace (c)
|
290,593
|
|
|
—
|
|
|
356,748
|
|
|
(25,220
|
)
|
|
622,121
|
|
|
33.5
|
%
|
|||||
Total
|
$
|
1,052,726
|
|
|
$
|
21,607
|
|
|
$
|
837,536
|
|
|
$
|
(57,276
|
)
|
|
$
|
1,854,593
|
|
|
100.0
|
%
|
|
Nine Months Ended September 30, 2011
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
454,539
|
|
|
$
|
57,188
|
|
|
$
|
96,627
|
|
|
$
|
(8,490
|
)
|
|
$
|
599,864
|
|
|
32.5
|
%
|
Worldwide excluding United States (a)
|
44,968
|
|
|
—
|
|
|
187,741
|
|
|
(11,234
|
)
|
|
221,475
|
|
|
12.0
|
%
|
|||||
Europe
|
83,188
|
|
|
1,229
|
|
|
41,604
|
|
|
(1,480
|
)
|
|
124,541
|
|
|
6.7
|
%
|
|||||
Latin America and Caribbean
|
41,804
|
|
|
633
|
|
|
74,369
|
|
|
(26,856
|
)
|
|
89,950
|
|
|
4.9
|
%
|
|||||
Japan
|
43,748
|
|
|
—
|
|
|
6,327
|
|
|
(406
|
)
|
|
49,669
|
|
|
2.7
|
%
|
|||||
Canada
|
416
|
|
|
—
|
|
|
8,731
|
|
|
(416
|
)
|
|
8,731
|
|
|
0.5
|
%
|
|||||
Rest of the world (b)
|
48,059
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,059
|
|
|
2.6
|
%
|
|||||
Sub-total, non United States
|
262,183
|
|
|
1,862
|
|
|
318,772
|
|
|
(40,392
|
)
|
|
542,425
|
|
|
29.4
|
%
|
|||||
Worldwide including United States (a)
|
92,455
|
|
|
18,000
|
|
|
41,033
|
|
|
(2,378
|
)
|
|
149,110
|
|
|
8.1
|
%
|
|||||
Marine and Aerospace (c)
|
249,465
|
|
|
—
|
|
|
322,448
|
|
|
(16,900
|
)
|
|
555,013
|
|
|
30.0
|
%
|
|||||
Total
|
$
|
1,058,642
|
|
|
$
|
77,050
|
|
|
$
|
778,880
|
|
|
$
|
(68,160
|
)
|
|
$
|
1,846,412
|
|
|
100.0
|
%
|
(a)
|
Represents risks in two or more geographic zones.
|
(b)
|
Represents risks in one geographic zone.
|
(c)
|
Not classified as geographic area as marine and aerospace risks can span multiple geographic areas and are not fixed locations in some instances.
|
|
Three Months Ended September 30,
|
|
Year Ended December 31,
|
|||||
|
2012
|
|
2011
|
|
2011
|
|||
Annualized return on average equity
|
23.3
|
%
|
|
6.6
|
%
|
|
0.6
|
%
|
•
|
Premiums;
|
•
|
Reinsurance premiums ceded and reinsurance recoverable;
|
•
|
Investment valuation; and
|
•
|
Reserve for losses and loss expenses.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Dollars in thousands)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
|
$
|
390,215
|
|
|
$
|
391,129
|
|
|
$
|
1,854,593
|
|
|
$
|
1,846,412
|
|
Reinsurance premiums ceded
|
|
(45,743
|
)
|
|
(30,586
|
)
|
|
(271,847
|
)
|
|
(272,752
|
)
|
||||
Net premiums written
|
|
344,472
|
|
|
360,543
|
|
|
1,582,746
|
|
|
1,573,660
|
|
||||
Change in unearned premiums
|
|
130,632
|
|
|
98,081
|
|
|
(208,816
|
)
|
|
(259,863
|
)
|
||||
Net premiums earned
|
|
475,104
|
|
|
458,624
|
|
|
1,373,930
|
|
|
1,313,797
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
|
155,455
|
|
|
226,067
|
|
|
541,136
|
|
|
909,572
|
|
||||
Policy acquisition costs
|
|
98,623
|
|
|
77,405
|
|
|
252,884
|
|
|
232,931
|
|
||||
General and administrative expenses
|
|
70,547
|
|
|
35,926
|
|
|
198,557
|
|
|
145,244
|
|
||||
Share compensation expenses
|
|
7,345
|
|
|
7,382
|
|
|
19,583
|
|
|
27,059
|
|
||||
Total underwriting deductions
|
|
331,970
|
|
|
346,780
|
|
|
1,012,160
|
|
|
1,314,806
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Underwriting income (loss) (a)
|
|
143,134
|
|
|
111,844
|
|
|
361,770
|
|
|
(1,009
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
|
25,489
|
|
|
27,747
|
|
|
79,134
|
|
|
84,216
|
|
||||
Other income
|
|
7,324
|
|
|
—
|
|
|
22,209
|
|
|
2,201
|
|
||||
Finance expenses
|
|
(9,362
|
)
|
|
(10,935
|
)
|
|
(39,347
|
)
|
|
(41,297
|
)
|
||||
Operating income before taxes and income from operating affiliates
|
|
166,585
|
|
|
128,656
|
|
|
423,766
|
|
|
44,111
|
|
||||
Tax (expense)
|
|
(1,343
|
)
|
|
(2,538
|
)
|
|
(1,886
|
)
|
|
(1,050
|
)
|
||||
Income from operating affiliates
|
|
6,235
|
|
|
—
|
|
|
13,194
|
|
|
—
|
|
||||
Net operating income (a)
|
|
171,477
|
|
|
126,118
|
|
|
435,074
|
|
|
43,061
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net realized gains on investments
|
|
9,063
|
|
|
5,246
|
|
|
22,749
|
|
|
23,177
|
|
||||
Net unrealized gains (losses) on investments
|
|
86,345
|
|
|
(27,848
|
)
|
|
53,442
|
|
|
(22,150
|
)
|
||||
(Loss) from investment affiliate
|
|
(160
|
)
|
|
—
|
|
|
(558
|
)
|
|
—
|
|
||||
Foreign exchange gains (losses)
|
|
1,103
|
|
|
(19,932
|
)
|
|
3,617
|
|
|
(22,390
|
)
|
||||
Transaction expenses (c)
|
|
(3,784
|
)
|
|
(13,583
|
)
|
|
(3,784
|
)
|
|
(13,583
|
)
|
||||
Net income
|
|
264,044
|
|
|
70,001
|
|
|
510,540
|
|
|
8,115
|
|
||||
Net (income) attributable to noncontrolling interest
|
|
(56,746
|
)
|
|
(13,516
|
)
|
|
(11,386
|
)
|
|
(14,110
|
)
|
||||
Net income (loss) available (attributable) to Validus
|
|
$
|
207,298
|
|
|
$
|
56,485
|
|
|
$
|
499,154
|
|
|
$
|
(5,995
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net premiums written / Gross premiums written
|
|
88.3
|
%
|
|
92.2
|
%
|
|
85.3
|
%
|
|
85.2
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
|
32.7
|
%
|
|
49.3
|
%
|
|
39.4
|
%
|
|
69.2
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Policy acquisition costs
|
|
20.8
|
%
|
|
16.9
|
%
|
|
18.4
|
%
|
|
17.7
|
%
|
||||
General and administrative expenses (b)
|
|
16.4
|
%
|
|
9.4
|
%
|
|
15.9
|
%
|
|
13.1
|
%
|
||||
Expense ratio
|
|
37.2
|
%
|
|
26.3
|
%
|
|
34.3
|
%
|
|
30.8
|
%
|
||||
Combined ratio
|
|
69.9
|
%
|
|
75.6
|
%
|
|
73.7
|
%
|
|
100.0
|
%
|
c)
|
The transaction expenses relate to costs incurred in connection with the proposed acquisition of Flagstone Reinsurance Holdings, S.A. The transaction expenses for 2011 relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Validus Re
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
145,010
|
|
|
$
|
163,863
|
|
|
$
|
1,052,726
|
|
|
$
|
1,058,642
|
|
Reinsurance premiums ceded
|
(10,426
|
)
|
|
(5,646
|
)
|
|
(137,504
|
)
|
|
(150,669
|
)
|
||||
Net premiums written
|
134,584
|
|
|
158,217
|
|
|
915,222
|
|
|
907,973
|
|
||||
Change in unearned premiums
|
107,728
|
|
|
81,997
|
|
|
(177,215
|
)
|
|
(194,529
|
)
|
||||
Net premiums earned
|
242,312
|
|
|
240,214
|
|
|
738,007
|
|
|
713,444
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
66,890
|
|
|
128,823
|
|
|
244,286
|
|
|
533,402
|
|
||||
Policy acquisition costs
|
37,785
|
|
|
40,592
|
|
|
113,659
|
|
|
115,355
|
|
||||
General and administrative expenses
|
16,938
|
|
|
7,358
|
|
|
48,332
|
|
|
32,947
|
|
||||
Share compensation expenses
|
2,076
|
|
|
2,190
|
|
|
5,914
|
|
|
7,118
|
|
||||
Total underwriting deductions
|
123,689
|
|
|
178,963
|
|
|
412,191
|
|
|
688,822
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting income (a)
|
$
|
118,623
|
|
|
$
|
61,251
|
|
|
$
|
325,816
|
|
|
$
|
24,622
|
|
|
|
|
|
|
|
|
|
||||||||
AlphaCat
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
2,934
|
|
|
$
|
18,940
|
|
|
$
|
21,607
|
|
|
$
|
77,050
|
|
Reinsurance premiums ceded
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net premiums written
|
2,934
|
|
|
18,940
|
|
|
21,607
|
|
|
77,050
|
|
||||
Change in unearned premiums
|
2,591
|
|
|
8,758
|
|
|
(9,832
|
)
|
|
(37,595
|
)
|
||||
Net premiums earned
|
5,525
|
|
|
27,698
|
|
|
11,775
|
|
|
39,455
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Policy acquisition costs
|
547
|
|
|
3,326
|
|
|
1,185
|
|
|
4,615
|
|
||||
General and administrative expenses
|
2,087
|
|
|
2,167
|
|
|
5,521
|
|
|
4,122
|
|
||||
Share compensation expenses
|
84
|
|
|
26
|
|
|
195
|
|
|
74
|
|
||||
Total underwriting deductions
|
2,718
|
|
|
5,519
|
|
|
6,901
|
|
|
8,811
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting income (a)
|
$
|
2,807
|
|
|
$
|
22,179
|
|
|
$
|
4,874
|
|
|
$
|
30,644
|
|
|
|
|
|
|
|
|
|
||||||||
Legal Entity adjustments
|
|
|
|
|
|
|
|
||||||||
Policy acquisition costs
|
$
|
—
|
|
|
$
|
(1,084
|
)
|
|
$
|
(25
|
)
|
|
$
|
(1,301
|
)
|
General and administrative expenses
|
1,142
|
|
|
620
|
|
|
3,457
|
|
|
3,780
|
|
||||
Share compensation expenses
|
135
|
|
|
284
|
|
|
446
|
|
|
786
|
|
||||
Total underwriting deductions
|
1,277
|
|
|
(180
|
)
|
|
3,878
|
|
|
3,265
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting (loss) income (a)
|
$
|
(1,277
|
)
|
|
$
|
180
|
|
|
$
|
(3,878
|
)
|
|
$
|
(3,265
|
)
|
|
|
|
|
|
|
|
|
||||||||
Talbot
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
260,755
|
|
|
$
|
238,937
|
|
|
$
|
837,536
|
|
|
$
|
778,880
|
|
Reinsurance premiums ceded
|
(53,801
|
)
|
|
(55,551
|
)
|
|
(191,619
|
)
|
|
(190,243
|
)
|
||||
Net premiums written
|
206,954
|
|
|
183,386
|
|
|
645,917
|
|
|
588,637
|
|
||||
Change in unearned premiums
|
20,313
|
|
|
7,326
|
|
|
(21,769
|
)
|
|
(27,739
|
)
|
||||
Net premiums earned
|
227,267
|
|
|
190,712
|
|
|
624,148
|
|
|
560,898
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
88,565
|
|
|
97,244
|
|
|
296,850
|
|
|
376,170
|
|
||||
Policy acquisition costs
|
61,640
|
|
|
36,651
|
|
|
142,181
|
|
|
116,174
|
|
||||
General and administrative expenses
|
36,605
|
|
|
21,745
|
|
|
100,910
|
|
|
82,396
|
|
||||
Share compensation expenses
|
2,200
|
|
|
1,903
|
|
|
5,347
|
|
|
6,648
|
|
||||
Total underwriting deductions
|
189,010
|
|
|
157,543
|
|
|
545,288
|
|
|
581,388
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting income (loss) (a)
|
$
|
38,257
|
|
|
$
|
33,169
|
|
|
$
|
78,860
|
|
|
$
|
(20,490
|
)
|
|
|
|
|
|
|
|
|
||||||||
Corporate & Eliminations
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
(18,484
|
)
|
|
$
|
(30,611
|
)
|
|
$
|
(57,276
|
)
|
|
$
|
(68,160
|
)
|
Reinsurance premiums ceded
|
18,484
|
|
|
30,611
|
|
|
57,276
|
|
|
68,160
|
|
||||
Net premiums written
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Policy acquisition costs
|
(1,349
|
)
|
|
(2,080
|
)
|
|
(4,116
|
)
|
|
(1,912
|
)
|
||||
General and administrative expenses
|
13,775
|
|
|
4,036
|
|
|
40,337
|
|
|
21,999
|
|
||||
Share compensation expenses
|
2,850
|
|
|
2,979
|
|
|
7,681
|
|
|
12,433
|
|
||||
Total underwriting deductions
|
15,276
|
|
|
4,935
|
|
|
43,902
|
|
|
32,520
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting (loss) (a)
|
$
|
(15,276
|
)
|
|
$
|
(4,935
|
)
|
|
$
|
(43,902
|
)
|
|
$
|
(32,520
|
)
|
|
|
|
|
|
|
|
|
||||||||
Total underwriting income (loss) (a)
|
$
|
143,134
|
|
|
$
|
111,844
|
|
|
$
|
361,770
|
|
|
$
|
(1,009
|
)
|
•
|
A favorable movement of
$114.2 million
in net unrealized gains (losses) on investments, of which
$55.8 million
is attributable to noncontrolling interest;
|
•
|
Increase in underwriting income of
$31.3 million
primarily due to:
|
•
|
An increase in net premiums earned of
$16.5 million
;
|
•
|
A decrease in underwriting deductions of
$14.8 million
due primarily to a decrease in losses and loss expenses of
$70.6 million
partially offset by an increase in general and administrative expenses of
$34.6 million
; and
|
•
|
A favorable movement in foreign exchange gains (losses) of
$21.0 million
,
|
|
|
Three Months Ended September 30, 2012
|
||||||||||||||||||
|
|
Increase (Decrease) Over the Three Months Ended September 30, 2011
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Corporate and Eliminations (a)
|
|
Total
|
||||||||||
Notable losses - decrease in net loss and loss expenses (b)
|
|
$
|
3,900
|
|
|
$
|
—
|
|
|
$
|
10,750
|
|
|
—
|
|
|
$
|
14,650
|
|
|
Less: Notable losses - decrease in net reinstatement premiums (b)
|
|
(2,333
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,333
|
)
|
|||||
Other underwriting income (loss)
|
|
55,805
|
|
|
(19,372
|
)
|
|
(5,662
|
)
|
|
(11,798
|
)
|
|
18,973
|
|
|||||
Underwriting income (loss) (c)
|
|
57,372
|
|
|
(19,372
|
)
|
|
5,088
|
|
|
(11,798
|
)
|
|
31,290
|
|
|||||
Net investment income
|
|
(3,163
|
)
|
|
442
|
|
|
(1,191
|
)
|
|
1,654
|
|
|
(2,258
|
)
|
|||||
Other income
|
|
(644
|
)
|
|
5,449
|
|
|
681
|
|
|
1,838
|
|
|
7,324
|
|
|||||
Finance expenses
|
|
1,843
|
|
|
(843
|
)
|
|
78
|
|
|
495
|
|
|
1,573
|
|
|||||
Operating income (loss) before taxes and income from operating affiliates
|
|
55,408
|
|
|
(14,324
|
)
|
|
4,656
|
|
|
(7,811
|
)
|
|
37,929
|
|
|||||
Tax benefit (expense)
|
|
5
|
|
|
—
|
|
|
2,334
|
|
|
(1,144
|
)
|
|
1,195
|
|
|||||
Income from operating affiliates
|
|
—
|
|
|
6,235
|
|
|
—
|
|
|
—
|
|
|
6,235
|
|
|||||
Net operating income (loss)
|
|
55,413
|
|
|
(8,089
|
)
|
|
6,990
|
|
|
(8,955
|
)
|
|
45,359
|
|
|||||
Net realized gains on investments
|
|
2,105
|
|
|
325
|
|
|
1,387
|
|
|
—
|
|
|
3,817
|
|
|||||
Net unrealized gains (losses) on investments
|
|
45,530
|
|
|
62,108
|
|
|
6,556
|
|
|
(1
|
)
|
|
114,193
|
|
|||||
(Loss) from investment affilate
|
|
(160
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
|||||
Foreign exchange gains (losses)
|
|
9,786
|
|
|
194
|
|
|
11,089
|
|
|
(34
|
)
|
|
21,035
|
|
|||||
Transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,799
|
|
|
9,799
|
|
|||||
Net income
|
|
112,674
|
|
|
54,538
|
|
|
26,022
|
|
|
809
|
|
|
194,043
|
|
|||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(43,230
|
)
|
|
—
|
|
|
—
|
|
|
(43,230
|
)
|
|||||
Net income available to Validus
|
|
$
|
112,674
|
|
|
$
|
11,308
|
|
|
$
|
26,022
|
|
|
$
|
809
|
|
|
$
|
150,813
|
|
(a)
|
The Corporate and Eliminations column includes legal entity adjustments.
|
(b)
|
Notable losses for the
three months ended September 30, 2012
included: U.S. drought and Hurricane Isaac. Notable losses for the
three months ended September 30, 2011
included: Danish floods and Hurricane Irene. Excludes the reserve for potential development on 2011 notable loss events.
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
176,137
|
|
|
45.1
|
%
|
|
$
|
198,195
|
|
|
50.6
|
%
|
|
(11.1
|
)%
|
Marine
|
|
125,523
|
|
|
32.2
|
%
|
|
100,743
|
|
|
25.8
|
%
|
|
24.6
|
%
|
||
Specialty
|
|
88,555
|
|
|
22.7
|
%
|
|
92,191
|
|
|
23.6
|
%
|
|
(3.9
|
)%
|
||
Total
|
|
$
|
390,215
|
|
|
100.0
|
%
|
|
$
|
391,129
|
|
|
100.0
|
%
|
|
(0.2
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premium Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
105,990
|
|
|
73.1
|
%
|
|
$
|
122,618
|
|
|
74.8
|
%
|
|
(13.6
|
)%
|
Marine
|
|
25,523
|
|
|
17.6
|
%
|
|
32,780
|
|
|
20.0
|
%
|
|
(22.1
|
)%
|
||
Specialty
|
|
13,497
|
|
|
9.3
|
%
|
|
8,465
|
|
|
5.2
|
%
|
|
59.4
|
%
|
||
Total
|
|
$
|
145,010
|
|
|
100.0
|
%
|
|
$
|
163,863
|
|
|
100.0
|
%
|
|
(11.5
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
2,934
|
|
|
100.0
|
%
|
|
$
|
18,940
|
|
|
100.0
|
%
|
|
(84.5
|
)%
|
Total
|
|
$
|
2,934
|
|
|
100.0
|
%
|
|
$
|
18,940
|
|
|
100.0
|
%
|
|
(84.5
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
84,321
|
|
|
32.3
|
%
|
|
$
|
86,063
|
|
|
36.1
|
%
|
|
(2.0
|
)%
|
Marine
|
|
100,847
|
|
|
38.7
|
%
|
|
69,159
|
|
|
28.9
|
%
|
|
45.8
|
%
|
||
Specialty
|
|
75,587
|
|
|
29.0
|
%
|
|
83,715
|
|
|
35.0
|
%
|
|
(9.7
|
)%
|
||
Total
|
|
$
|
260,755
|
|
|
100.0
|
%
|
|
$
|
238,937
|
|
|
100.0
|
%
|
|
9.1
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
24,001
|
|
|
52.5
|
%
|
|
$
|
16,522
|
|
|
54.1
|
%
|
|
45.3
|
%
|
Marine
|
|
8,102
|
|
|
17.7
|
%
|
|
2,610
|
|
|
8.5
|
%
|
|
210.4
|
%
|
||
Specialty
|
|
13,640
|
|
|
29.8
|
%
|
|
11,454
|
|
|
37.4
|
%
|
|
19.1
|
%
|
||
Total
|
|
$
|
45,743
|
|
|
100.0
|
%
|
|
$
|
30,586
|
|
|
100.0
|
%
|
|
49.6
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
6,245
|
|
|
59.9
|
%
|
|
$
|
3,320
|
|
|
58.8
|
%
|
|
88.1
|
%
|
Marine
|
|
4,175
|
|
|
40.0
|
%
|
|
2,326
|
|
|
41.2
|
%
|
|
79.5
|
%
|
||
Specialty
|
|
6
|
|
|
0.1
|
%
|
|
—
|
|
|
—
|
%
|
|
NM
|
|
||
Total
|
|
$
|
10,426
|
|
|
100.0
|
%
|
|
$
|
5,646
|
|
|
100.0
|
%
|
|
84.7
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
34,864
|
|
|
64.8
|
%
|
|
$
|
42,628
|
|
|
76.7
|
%
|
|
(18.2
|
)%
|
Marine
|
|
4,774
|
|
|
8.9
|
%
|
|
1,480
|
|
|
2.7
|
%
|
|
222.6
|
%
|
||
Specialty
|
|
14,163
|
|
|
26.3
|
%
|
|
11,443
|
|
|
20.6
|
%
|
|
23.8
|
%
|
||
Total
|
|
$
|
53,801
|
|
|
100.0
|
%
|
|
$
|
55,551
|
|
|
100.0
|
%
|
|
(3.2
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
152,136
|
|
|
44.2
|
%
|
|
$
|
181,673
|
|
|
50.4
|
%
|
|
(16.3
|
)%
|
Marine
|
|
117,421
|
|
|
34.1
|
%
|
|
98,133
|
|
|
27.2
|
%
|
|
19.7
|
%
|
||
Specialty
|
|
74,915
|
|
|
21.7
|
%
|
|
80,737
|
|
|
22.4
|
%
|
|
(7.2
|
)%
|
||
Total
|
|
$
|
344,472
|
|
|
100.0
|
%
|
|
$
|
360,543
|
|
|
100.0
|
%
|
|
(4.5
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
99,745
|
|
|
74.1
|
%
|
|
$
|
119,298
|
|
|
75.4
|
%
|
|
(16.4
|
)%
|
Marine
|
|
21,348
|
|
|
15.9
|
%
|
|
30,454
|
|
|
19.2
|
%
|
|
(29.9
|
)%
|
||
Specialty
|
|
13,491
|
|
|
10.0
|
%
|
|
8,465
|
|
|
5.4
|
%
|
|
59.4
|
%
|
||
Total
|
|
$
|
134,584
|
|
|
100.0
|
%
|
|
$
|
158,217
|
|
|
100.0
|
%
|
|
(14.9
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
2,934
|
|
|
100.0
|
%
|
|
$
|
18,940
|
|
|
100.0
|
%
|
|
(84.5
|
)%
|
Total
|
|
$
|
2,934
|
|
|
100.0
|
%
|
|
$
|
18,940
|
|
|
100.0
|
%
|
|
(84.5
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
49,457
|
|
|
23.9
|
%
|
|
$
|
43,435
|
|
|
23.7
|
%
|
|
13.9
|
%
|
Marine
|
|
96,073
|
|
|
46.4
|
%
|
|
67,679
|
|
|
36.9
|
%
|
|
42.0
|
%
|
||
Specialty
|
|
61,424
|
|
|
29.7
|
%
|
|
72,272
|
|
|
39.4
|
%
|
|
(15.0
|
)%
|
||
Total
|
|
$
|
206,954
|
|
|
100.0
|
%
|
|
$
|
183,386
|
|
|
100.0
|
%
|
|
12.9
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
162,231
|
|
|
$
|
134,179
|
|
|
20.9
|
%
|
Change in prepaid reinsurance premiums
|
|
(31,599
|
)
|
|
(36,098
|
)
|
|
12.5
|
%
|
||
Net change in unearned premiums
|
|
$
|
130,632
|
|
|
$
|
98,081
|
|
|
33.2
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
135,217
|
|
|
$
|
120,384
|
|
|
12.3
|
%
|
Change in prepaid reinsurance premiums
|
|
(27,489
|
)
|
|
(38,387
|
)
|
|
28.4
|
%
|
||
Net change in unearned premiums
|
|
$
|
107,728
|
|
|
$
|
81,997
|
|
|
31.4
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
2,591
|
|
|
$
|
8,758
|
|
|
(70.4
|
)%
|
Net change in unearned premiums
|
|
$
|
2,591
|
|
|
$
|
8,758
|
|
|
(70.4
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
24,423
|
|
|
$
|
5,037
|
|
|
384.9
|
%
|
Change in prepaid reinsurance premiums
|
|
(4,110
|
)
|
|
2,289
|
|
|
(279.6
|
)%
|
||
Net change in unearned premiums
|
|
$
|
20,313
|
|
|
$
|
7,326
|
|
|
177.3
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
205,860
|
|
|
43.4
|
%
|
|
$
|
234,440
|
|
|
51.1
|
%
|
|
(12.2
|
)%
|
Marine
|
|
169,845
|
|
|
35.7
|
%
|
|
126,630
|
|
|
27.6
|
%
|
|
34.1
|
%
|
||
Specialty
|
|
99,399
|
|
|
20.9
|
%
|
|
97,554
|
|
|
21.3
|
%
|
|
1.9
|
%
|
||
Total
|
|
$
|
475,104
|
|
|
100.0
|
%
|
|
$
|
458,624
|
|
|
100.0
|
%
|
|
3.6
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
157,518
|
|
|
65.0
|
%
|
|
$
|
163,400
|
|
|
68.1
|
%
|
|
(3.6
|
)%
|
Marine
|
|
60,867
|
|
|
25.1
|
%
|
|
53,413
|
|
|
22.2
|
%
|
|
14.0
|
%
|
||
Specialty
|
|
23,927
|
|
|
9.9
|
%
|
|
23,401
|
|
|
9.7
|
%
|
|
2.2
|
%
|
||
Total
|
|
$
|
242,312
|
|
|
100.0
|
%
|
|
$
|
240,214
|
|
|
100.0
|
%
|
|
0.9
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
5,525
|
|
|
100.0
|
%
|
|
$
|
27,698
|
|
|
100.0
|
%
|
|
(80.1
|
)%
|
Total
|
|
$
|
5,525
|
|
|
100.0
|
%
|
|
$
|
27,698
|
|
|
100.0
|
%
|
|
(80.1
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
42,817
|
|
|
18.8
|
%
|
|
$
|
43,342
|
|
|
22.7
|
%
|
|
(1.2
|
)%
|
Marine
|
|
108,978
|
|
|
48.0
|
%
|
|
73,217
|
|
|
38.4
|
%
|
|
48.8
|
%
|
||
Specialty
|
|
75,472
|
|
|
33.2
|
%
|
|
74,153
|
|
|
38.9
|
%
|
|
1.8
|
%
|
||
Total
|
|
$
|
227,267
|
|
|
100.0
|
%
|
|
$
|
190,712
|
|
|
100.0
|
%
|
|
19.2
|
%
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
Percentage Point Change
|
|||
Property
|
12.8
|
%
|
|
69.3
|
%
|
|
(56.5
|
)
|
Marine
|
46.9
|
%
|
|
24.6
|
%
|
|
22.3
|
|
Specialty
|
49.8
|
%
|
|
33.2
|
%
|
|
16.6
|
|
All lines
|
32.7
|
%
|
|
49.3
|
%
|
|
(16.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
Three Months Ended September 30, 2012
|
|||||||||||||||||||
|
|
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Third Quarter 2012 Notable Loss Events
|
|
Validus Re
|
|
Talbot
|
|
Total
|
|||||||||||||||||
Description
|
|
|
|
Net Losses and Loss Expenses (a)
|
|
% of NPE
|
|
Net Losses and Loss Expenses (a)
|
|
% of NPE
|
|
Net Losses and Loss Expenses (a)
|
|
% of NPE
|
|||||||||
U.S. drought
|
|
Drought
|
|
$
|
22,021
|
|
|
9.1
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
22,021
|
|
|
4.6
|
%
|
Hurricane Isaac
|
|
Windstorm
|
|
13,459
|
|
|
5.6
|
%
|
|
1,750
|
|
|
0.8
|
%
|
|
15,209
|
|
|
3.2
|
%
|
|||
Total
|
|
|
|
$
|
35,480
|
|
|
14.7
|
%
|
|
$
|
1,750
|
|
|
0.8
|
%
|
|
$
|
37,230
|
|
|
7.8
|
%
|
|
|
|
|
Three Months Ended September 30, 2011
|
|||||||||||||||||||
|
|
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Third Quarter 2011 Notable Loss Events (b)
|
|
Validus Re
|
|
Talbot
|
|
Total
|
|||||||||||||||||
Description
|
|
|
|
Net Losses and Loss Expenses (a)
|
|
% of NPE (c)
|
|
Net Losses and Loss Expenses (a)
|
|
% of NPE
|
|
Net Losses and Loss Expenses (a)
|
|
% of NPE
|
|||||||||
Danish floods
|
|
Rainstorm
|
|
$
|
16,429
|
|
|
6.8
|
%
|
|
$
|
3,000
|
|
|
1.6
|
%
|
|
$
|
19,429
|
|
|
4.2
|
%
|
Hurricane Irene
|
|
Windstorm
|
|
22,951
|
|
|
9.6
|
%
|
|
9,500
|
|
|
5.0
|
%
|
|
32,451
|
|
|
7.1
|
%
|
|||
Total
|
|
|
|
$
|
39,380
|
|
|
16.4
|
%
|
|
$
|
12,500
|
|
|
6.6
|
%
|
|
$
|
51,880
|
|
|
11.3
|
%
|
(a)
|
Net of reinsurance but not net of reinstatement premiums. Total reinstatement premiums were
$1.6 million
for the
three months ended September 30, 2012
and
$4.0 million
for the
three months ended September 30, 2011
.
|
(b)
|
These notable loss event amounts exclude the reserve for potential development on 2011 notable loss events and are based on management's estimates following a review of the Company's potential exposure and discussions with certain clients and brokers. Given the magnitude of these events, and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events and the Company's actual ultimate net losses from these events may vary materially from these estimates.
|
(c)
|
The 2011 loss ratios for the Validus Re segment have been represented to exclude the impact of the AlphaCat segment.
|
|
Three Months Ended September 30,
|
|||||||
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||
Property - current period - excluding items below
|
28.2
|
%
|
|
62.5
|
%
|
|
(34.3
|
)
|
Property - current period - notable losses
|
6.2
|
%
|
|
21.7
|
%
|
|
(15.5
|
)
|
Property - change in prior accident years
|
(21.6
|
)%
|
|
(14.9
|
)%
|
|
(6.7
|
)
|
Property - loss ratio
|
12.8
|
%
|
|
69.3
|
%
|
|
(56.5
|
)
|
|
|
|
|
|
|
|||
Marine - current period - excluding items below
|
40.2
|
%
|
|
37.1
|
%
|
|
3.1
|
|
Marine - current period - notable losses
|
1.2
|
%
|
|
0.4
|
%
|
|
0.8
|
|
Marine - change in prior accident years
|
5.5
|
%
|
|
(12.9
|
)%
|
|
18.4
|
|
Marine - loss ratio
|
46.9
|
%
|
|
24.6
|
%
|
|
22.3
|
|
|
|
|
|
|
|
|||
Specialty - current period - excluding items below
|
42.1
|
%
|
|
42.8
|
%
|
|
(0.7
|
)
|
Specialty - current period - notable losses
|
22.5
|
%
|
|
0.5
|
%
|
|
22.0
|
|
Specialty - change in prior accident years
|
(14.8
|
)%
|
|
(10.1
|
)%
|
|
(4.7
|
)
|
Specialty – loss ratio
|
49.8
|
%
|
|
33.2
|
%
|
|
16.6
|
|
|
|
|
|
|
|
|||
All lines - current period - excluding items below
|
35.4
|
%
|
|
51.3
|
%
|
|
(15.9
|
)
|
All lines - current period - notable losses
|
7.8
|
%
|
|
11.3
|
%
|
|
(3.5
|
)
|
All lines - change in prior accident years
|
(10.5
|
)%
|
|
(13.3
|
)%
|
|
2.8
|
|
All lines - loss ratio
|
32.7
|
%
|
|
49.3
|
%
|
|
(16.6
|
)
|
|
Three Months Ended September 30,
|
|||||||
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||
Property - current period excluding items below
|
18.6
|
%
|
|
69.5
|
%
|
|
(50.9
|
)
|
Property - current period - notable losses
|
7.3
|
%
|
|
24.1
|
%
|
|
(16.8
|
)
|
Property - change in prior accident years
|
(24.0
|
)%
|
|
(19.5
|
)%
|
|
(4.5
|
)
|
Property - loss ratio
|
1.9
|
%
|
|
74.1
|
%
|
|
(72.2
|
)
|
|
|
|
|
|
|
|||
Marine - current period excluding items below
|
27.7
|
%
|
|
26.5
|
%
|
|
1.2
|
|
Marine - current period - notable losses
|
3.3
|
%
|
|
—
|
|
|
3.3
|
|
Marine - change in prior accident years
|
23.0
|
%
|
|
(10.4
|
)%
|
|
33.4
|
|
Marine - loss ratio
|
54.0
|
%
|
|
16.1
|
%
|
|
37.9
|
|
|
|
|
|
|
|
|||
Specialty - current period excluding items below
|
37.5
|
%
|
|
(1.1
|
)%
|
|
38.6
|
|
Specialty - current period - notable losses
|
92.0
|
%
|
|
—
|
|
|
92.0
|
|
Specialty - change in prior accident years
|
(0.1
|
)%
|
|
(2.4
|
)%
|
|
2.3
|
|
Specialty – loss ratio
|
129.4
|
%
|
|
(3.5
|
)%
|
|
132.9
|
|
|
|
|
|
|
|
|||
All lines - current period excluding items below
|
22.7
|
%
|
|
53.0
|
%
|
|
(30.3
|
)
|
All lines - current period - notable losses
|
14.7
|
%
|
|
16.4
|
%
|
|
(1.7
|
)
|
All lines - change in prior accident years
|
(9.8
|
)%
|
|
(15.8
|
)%
|
|
6.0
|
|
All lines - loss ratio
|
27.6
|
%
|
|
53.6
|
%
|
|
(26.0
|
)
|
|
Three Months Ended September 30,
|
|||||||
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||
Property - current period excluding items below
|
67.1
|
%
|
|
76.4
|
%
|
|
(9.3
|
)
|
Property - current period - notable losses
|
3.2
|
%
|
|
26.5
|
%
|
|
(23.3
|
)
|
Property - change in prior accident years
|
(15.8
|
)%
|
|
(7.2
|
)%
|
|
(8.6
|
)
|
Property - loss ratio
|
54.5
|
%
|
|
95.7
|
%
|
|
(41.2
|
)
|
|
|
|
|
|
|
|||
Marine - current period excluding items below
|
47.1
|
%
|
|
44.7
|
%
|
|
2.4
|
|
Marine - current period - notable losses
|
—
|
|
|
0.7
|
%
|
|
(0.7
|
)
|
Marine - change in prior accident years
|
(4.2
|
)%
|
|
(14.7
|
)%
|
|
10.5
|
|
Marine - loss ratio
|
42.9
|
%
|
|
30.7
|
%
|
|
12.2
|
|
|
|
|
|
|
|
|||
Specialty - current period excluding items below
|
43.4
|
%
|
|
56.6
|
%
|
|
(13.2
|
)
|
Specialty - current period - notable losses
|
0.5
|
%
|
|
0.7
|
%
|
|
(0.2
|
)
|
Specialty - change in prior accident years
|
(19.4
|
)%
|
|
(12.5
|
)%
|
|
(6.9
|
)
|
Specialty – loss ratio
|
24.5
|
%
|
|
44.8
|
%
|
|
(20.3
|
)
|
|
|
|
|
|
|
|||
All lines - current period excluding items below
|
49.6
|
%
|
|
56.6
|
%
|
|
(7.0
|
)
|
All lines - current period - notable losses
|
0.8
|
%
|
|
6.6
|
%
|
|
(5.8
|
)
|
All lines - change in prior accident years
|
(11.4
|
)%
|
|
(12.2
|
)%
|
|
0.8
|
|
All lines - loss ratio
|
39.0
|
%
|
|
51.0
|
%
|
|
(12.0
|
)
|
|
|
As at September 30, 2012
|
||||||||||
(Dollars in thousands)
|
|
Gross Case Reserves
|
|
Gross IBNR
|
|
Total Gross Reserve for Losses and Loss Expenses
|
||||||
Property
|
|
$
|
703,961
|
|
|
$
|
402,457
|
|
|
$
|
1,106,418
|
|
Marine
|
|
462,535
|
|
|
417,743
|
|
|
880,278
|
|
|||
Specialty
|
|
235,365
|
|
|
340,543
|
|
|
575,908
|
|
|||
Total
|
|
$
|
1,401,861
|
|
|
$
|
1,160,743
|
|
|
$
|
2,562,604
|
|
|
|
As at September 30, 2012
|
||||||||||
(Dollars in thousands)
|
|
Net Case Reserves
|
|
Net IBNR
|
|
Total Net Reserve for Losses and Loss Expenses
|
||||||
Property
|
|
$
|
592,993
|
|
|
$
|
373,264
|
|
|
$
|
966,257
|
|
Marine
|
|
403,537
|
|
|
390,819
|
|
|
794,356
|
|
|||
Specialty
|
|
197,166
|
|
|
287,573
|
|
|
484,739
|
|
|||
Total
|
|
$
|
1,193,696
|
|
|
$
|
1,051,656
|
|
|
$
|
2,245,352
|
|
|
|
Three Months Ended September 30, 2012
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Eliminations
|
|
Total
|
||||||||||
Gross reserves at period beginning
|
|
$
|
1,247,472
|
|
|
$
|
10,000
|
|
|
$
|
1,434,790
|
|
|
$
|
(100,963
|
)
|
|
$
|
2,591,299
|
|
Losses recoverable
|
|
(79,964
|
)
|
|
—
|
|
|
(392,483
|
)
|
|
100,963
|
|
|
(371,484
|
)
|
|||||
Net reserves at period beginning
|
|
1,167,508
|
|
|
10,000
|
|
|
1,042,307
|
|
|
—
|
|
|
2,219,815
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Incurred losses - current year
|
|
90,648
|
|
|
—
|
|
|
114,571
|
|
|
—
|
|
|
205,219
|
|
|||||
Change in prior accident years
|
|
(23,758
|
)
|
|
—
|
|
|
(26,006
|
)
|
|
—
|
|
|
(49,764
|
)
|
|||||
Incurred losses
|
|
66,890
|
|
|
—
|
|
|
88,565
|
|
|
—
|
|
|
155,455
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange
|
|
7,515
|
|
|
—
|
|
|
7,195
|
|
|
—
|
|
|
14,710
|
|
|||||
Paid losses
|
|
(63,724
|
)
|
|
—
|
|
|
(80,904
|
)
|
|
—
|
|
|
(144,628
|
)
|
|||||
Net reserves at period end
|
|
1,178,189
|
|
|
10,000
|
|
|
1,057,163
|
|
|
—
|
|
|
2,245,352
|
|
|||||
Losses recoverable
|
|
38,371
|
|
|
—
|
|
|
365,405
|
|
|
(86,524
|
)
|
|
317,252
|
|
|||||
Gross reserves at period end
|
|
$
|
1,216,560
|
|
|
$
|
10,000
|
|
|
$
|
1,422,568
|
|
|
$
|
(86,524
|
)
|
|
$
|
2,562,604
|
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
27,573
|
|
|
28.0
|
%
|
|
13.4
|
%
|
|
$
|
26,292
|
|
|
34.0
|
%
|
|
11.2
|
%
|
|
4.9
|
%
|
Marine
|
|
50,014
|
|
|
50.7
|
%
|
|
29.4
|
%
|
|
28,182
|
|
|
36.4
|
%
|
|
22.3
|
%
|
|
77.5
|
%
|
||
Specialty
|
|
21,036
|
|
|
21.3
|
%
|
|
21.2
|
%
|
|
22,931
|
|
|
29.6
|
%
|
|
23.5
|
%
|
|
(8.3
|
)%
|
||
Total
|
|
$
|
98,623
|
|
|
100.0
|
%
|
|
20.8
|
%
|
|
$
|
77,405
|
|
|
100.0
|
%
|
|
16.9
|
%
|
|
27.4
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
23,116
|
|
|
61.2
|
%
|
|
14.7
|
%
|
|
$
|
23,810
|
|
|
58.6
|
%
|
|
14.6
|
%
|
|
(2.9
|
)%
|
Marine
|
|
10,513
|
|
|
27.8
|
%
|
|
17.3
|
%
|
|
12,609
|
|
|
31.1
|
%
|
|
23.6
|
%
|
|
(16.6
|
)%
|
||
Specialty
|
|
4,156
|
|
|
11.0
|
%
|
|
17.4
|
%
|
|
4,173
|
|
|
10.3
|
%
|
|
17.8
|
%
|
|
(0.4
|
)%
|
||
Total
|
|
$
|
37,785
|
|
|
100.0
|
%
|
|
15.6
|
%
|
|
$
|
40,592
|
|
|
100.0
|
%
|
|
16.9
|
%
|
|
(6.9
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
547
|
|
|
100.0
|
%
|
|
9.9
|
%
|
|
$
|
3,326
|
|
|
100.0
|
%
|
|
12.0
|
%
|
|
(83.6
|
)%
|
Total
|
|
$
|
547
|
|
|
100.0
|
%
|
|
9.9
|
%
|
|
$
|
3,326
|
|
|
100.0
|
%
|
|
12.0
|
%
|
|
(83.6
|
)%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
4,376
|
|
|
7.1
|
%
|
|
10.2
|
%
|
|
$
|
2,178
|
|
|
5.9
|
%
|
|
5.0
|
%
|
|
100.9
|
%
|
Marine
|
|
40,382
|
|
|
65.5
|
%
|
|
37.1
|
%
|
|
15,674
|
|
|
42.8
|
%
|
|
21.4
|
%
|
|
157.6
|
%
|
||
Specialty
|
|
16,882
|
|
|
27.4
|
%
|
|
22.4
|
%
|
|
18,799
|
|
|
51.3
|
%
|
|
25.4
|
%
|
|
(10.2
|
)%
|
||
Total
|
|
$
|
61,640
|
|
|
100.0
|
%
|
|
27.1
|
%
|
|
$
|
36,651
|
|
|
100.0
|
%
|
|
19.2
|
%
|
|
68.2
|
%
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
General and Administrative Expenses
|
|
General and Administrative Expenses (%)
|
|
General and Administrative Expenses
|
|
General and Administrative Expenses (%)
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
16,938
|
|
|
24.0
|
%
|
|
$
|
7,358
|
|
|
20.5
|
%
|
|
130.2
|
%
|
AlphaCat
|
|
2,087
|
|
|
3.0
|
%
|
|
2,167
|
|
|
6.0
|
%
|
|
(3.7
|
)%
|
||
Talbot
|
|
36,605
|
|
|
51.9
|
%
|
|
21,745
|
|
|
60.5
|
%
|
|
68.3
|
%
|
||
Corporate & Eliminations (a)
|
|
14,917
|
|
|
21.1
|
%
|
|
4,656
|
|
|
13.0
|
%
|
|
220.4
|
%
|
||
Total
|
|
$
|
70,547
|
|
|
100.0
|
%
|
|
$
|
35,926
|
|
|
100.0
|
%
|
|
96.4
|
%
|
(a)
|
Corporate and Eliminations includes legal entity adjustments.
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Share Compensation Expenses
|
|
Share Compensation Expenses (%)
|
|
Share Compensation Expenses
|
|
Share Compensation Expenses (%)
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
2,076
|
|
|
28.3
|
%
|
|
$
|
2,190
|
|
|
29.7
|
%
|
|
(5.2
|
)%
|
AlphaCat
|
|
84
|
|
|
1.1
|
%
|
|
26
|
|
|
0.4
|
%
|
|
223.1
|
%
|
||
Talbot
|
|
2,200
|
|
|
30.0
|
%
|
|
1,903
|
|
|
25.8
|
%
|
|
15.6
|
%
|
||
Corporate & Eliminations (a)
|
|
2,985
|
|
|
40.6
|
%
|
|
3,263
|
|
|
44.1
|
%
|
|
(8.5
|
)%
|
||
Total
|
|
$
|
7,345
|
|
|
100.0
|
%
|
|
$
|
7,382
|
|
|
100.0
|
%
|
|
(0.5
|
)%
|
(a)
|
Corporate and Eliminations includes legal entity adjustments.
|
Consolidated
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
Percentage Point Change
|
|||
Losses and loss expense ratio
|
|
32.7
|
%
|
|
49.3
|
%
|
|
(16.6
|
)
|
Policy acquisition cost ratio
|
|
20.8
|
%
|
|
16.9
|
%
|
|
3.9
|
|
General and administrative expense ratio (a)
|
|
16.4
|
%
|
|
9.4
|
%
|
|
7.0
|
|
Expense ratio
|
|
37.2
|
%
|
|
26.3
|
%
|
|
10.9
|
|
Combined ratio
|
|
69.9
|
%
|
|
75.6
|
%
|
|
(5.7
|
)
|
Validus Re
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
Percentage Point Change
|
|||
Losses and loss expense ratio
|
|
27.6
|
%
|
|
53.6
|
%
|
|
(26.0
|
)
|
Policy acquisition cost ratio
|
|
15.6
|
%
|
|
16.9
|
%
|
|
(1.3
|
)
|
General and administrative expense ratio (a)
|
|
7.8
|
%
|
|
4.0
|
%
|
|
3.8
|
|
Expense ratio
|
|
23.4
|
%
|
|
20.9
|
%
|
|
2.5
|
|
Combined ratio
|
|
51.0
|
%
|
|
74.5
|
%
|
|
(23.5
|
)
|
AlphaCat
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
Percentage Point Change
|
|||
Losses and loss expense ratio
|
|
0.0
|
%
|
|
0.0
|
%
|
|
—
|
|
Policy acquisition cost ratio
|
|
9.9
|
%
|
|
12.0
|
%
|
|
(2.1
|
)
|
General and administrative expense ratio (a)
|
|
39.3
|
%
|
|
7.9
|
%
|
|
31.4
|
|
Expense ratio
|
|
49.2
|
%
|
|
19.9
|
%
|
|
29.3
|
|
Combined ratio
|
|
49.2
|
%
|
|
19.9
|
%
|
|
29.3
|
|
Talbot
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
Percentage Point Change
|
|||
Losses and loss expense ratio
|
|
39.0
|
%
|
|
51.0
|
%
|
|
(12.0
|
)
|
Policy acquisition cost ratio
|
|
27.1
|
%
|
|
19.2
|
%
|
|
7.9
|
|
General and administrative expense ratio (a)
|
|
17.1
|
%
|
|
12.4
|
%
|
|
4.7
|
|
Expense ratio
|
|
44.2
|
%
|
|
31.6
|
%
|
|
12.6
|
|
Combined ratio
|
|
83.2
|
%
|
|
82.6
|
%
|
|
0.6
|
|
a)
|
Includes general and administrative expenses and share compensation expenses.
|
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
Expenses as % of Net Earned Premiums
|
|
Expenses
|
|
Expenses as % of Net Earned Premiums
|
||||||
General and administrative expenses
|
|
$
|
70,547
|
|
|
14.9
|
%
|
|
$
|
35,926
|
|
|
7.8
|
%
|
Share compensation expenses
|
|
7,345
|
|
|
1.5
|
%
|
|
7,382
|
|
|
1.6
|
%
|
||
Total
|
|
$
|
77,892
|
|
|
16.4
|
%
|
|
$
|
43,308
|
|
|
9.4
|
%
|
(Dollars in thousands)
|
|
Three Months Ended September 30, 2012
|
|
% of sub-total
|
|
Three Months Ended September 30, 2011
|
|
% of sub-total
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
118,623
|
|
|
74.2
|
%
|
|
$
|
61,251
|
|
|
52.6
|
%
|
|
93.7
|
%
|
AlphaCat
|
|
2,807
|
|
|
1.8
|
%
|
|
22,179
|
|
|
19.0
|
%
|
|
(87.3
|
)%
|
||
Talbot
|
|
38,257
|
|
|
24.0
|
%
|
|
33,169
|
|
|
28.4
|
%
|
|
15.3
|
%
|
||
Sub-total
|
|
159,687
|
|
|
100.0
|
%
|
|
116,599
|
|
|
100.0
|
%
|
|
37.0
|
%
|
||
Corporate & Eliminations (a)
|
|
(16,553
|
)
|
|
|
|
|
(4,755
|
)
|
|
|
|
|
(248.1
|
)%
|
||
Total
|
|
$
|
143,134
|
|
|
|
|
|
$
|
111,844
|
|
|
|
|
|
28.0
|
%
|
(Dollars in thousands)
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
||||
Underwriting income
|
|
$
|
143,134
|
|
|
$
|
111,844
|
|
Net investment income
|
|
25,489
|
|
|
27,747
|
|
||
Other income
|
|
7,324
|
|
|
—
|
|
||
Finance expenses
|
|
(9,362
|
)
|
|
(10,935
|
)
|
||
Net realized gains on investments
|
|
9,063
|
|
|
5,246
|
|
||
Net unrealized gains (losses) on investments
|
|
86,345
|
|
|
(27,848
|
)
|
||
(Loss) from investment affiliate
|
|
(160
|
)
|
|
—
|
|
||
Foreign exchange gains (losses)
|
|
1,103
|
|
|
(19,932
|
)
|
||
Transaction expenses
|
|
(3,784
|
)
|
|
(13,583
|
)
|
||
Tax (expense)
|
|
(1,343
|
)
|
|
(2,538
|
)
|
||
Income from operating affiliates
|
|
6,235
|
|
|
—
|
|
||
Net income
|
|
$
|
264,044
|
|
|
$
|
70,001
|
|
(Dollars in thousands)
|
|
Three Months Ended September 30, 2012
|
|
Three Months Ended September 30, 2011
|
|
% Change
|
|||||
Fixed maturities and short-term investments
|
|
$
|
25,703
|
|
|
$
|
27,773
|
|
|
(7.5
|
)%
|
Cash and cash equivalents
|
|
1,770
|
|
|
1,864
|
|
|
(5.0
|
)%
|
||
Securities lending income
|
|
3
|
|
|
7
|
|
|
(57.1
|
)%
|
||
Total gross investment income
|
|
27,476
|
|
|
29,644
|
|
|
(7.3
|
)%
|
||
Investment expenses
|
|
(1,987
|
)
|
|
(1,897
|
)
|
|
(4.7
|
)%
|
||
Net investment income
|
|
$
|
25,489
|
|
|
$
|
27,747
|
|
|
(8.1
|
)%
|
|
|
Three Months Ended September 30,
|
|
|
|||||||
(Dollars in thousands)
|
|
2012
|
|
2011
|
|
% Change
|
|||||
2006 Junior Subordinated Deferrable Debentures
|
|
$
|
1,628
|
|
|
$
|
1,456
|
|
|
11.8
|
%
|
2007 Junior Subordinated Deferrable Debentures
|
|
1,211
|
|
|
3,029
|
|
|
(60.0
|
)%
|
||
2010 Senior Notes due 2040
|
|
5,597
|
|
|
5,597
|
|
|
0.0
|
%
|
||
Credit facilities
|
|
852
|
|
|
1,508
|
|
|
(43.5
|
)%
|
||
AlphaCat Re 2011 preferred dividend (a)
|
|
—
|
|
|
(807
|
)
|
|
(100.0
|
)%
|
||
Talbot FAL Facility
|
|
30
|
|
|
152
|
|
|
NM
|
|
||
Talbot other interest
|
|
44
|
|
|
—
|
|
|
NM
|
|
||
Finance expenses
|
|
$
|
9,362
|
|
|
$
|
10,935
|
|
|
(14.4
|
)%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||||||||
(Dollars in thousands)
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|||||||||
Underwriting income
|
|
|
|
|
|
|
|
|||||||||
Gross premiums written
|
$
|
390,215
|
|
|
$
|
391,129
|
|
|
$
|
1,854,593
|
|
|
$
|
1,846,412
|
|
|
Reinsurance premiums ceded
|
(45,743
|
)
|
|
(30,586
|
)
|
|
(271,847
|
)
|
|
(272,752
|
)
|
|||||
Net premiums written
|
344,472
|
|
|
360,543
|
|
|
1,582,746
|
|
|
1,573,660
|
|
|||||
Change in unearned premiums
|
130,632
|
|
|
98,081
|
|
|
(208,816
|
)
|
|
(259,863
|
)
|
|||||
Net premiums earned
|
475,104
|
|
|
458,624
|
|
|
1,373,930
|
|
|
1,313,797
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|||||||||
Losses and loss expenses
|
155,455
|
|
|
226,067
|
|
|
541,136
|
|
|
909,572
|
|
|||||
Policy acquisition costs
|
98,623
|
|
|
77,405
|
|
|
252,884
|
|
|
232,931
|
|
|||||
General and administrative expenses
|
70,547
|
|
|
35,926
|
|
|
198,557
|
|
|
145,244
|
|
|||||
Share compensation expenses
|
7,345
|
|
|
7,382
|
|
|
19,583
|
|
|
27,059
|
|
|||||
Total underwriting deductions
|
331,970
|
|
|
346,780
|
|
|
1,012,160
|
|
|
1,314,806
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Underwriting income (loss) (a)
|
143,134
|
|
|
111,844
|
|
|
361,770
|
|
|
(1,009
|
)
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Net investment income
|
25,489
|
|
|
27,747
|
|
|
79,134
|
|
|
84,216
|
|
|||||
Other income
|
7,324
|
|
|
—
|
|
|
22,209
|
|
|
2,201
|
|
|||||
Finance expenses
|
(9,362
|
)
|
|
(10,935
|
)
|
|
(39,347
|
)
|
|
(41,297
|
)
|
|||||
Operating income before taxes and income from operating affiliates
|
166,585
|
|
|
128,656
|
|
|
423,766
|
|
|
44,111
|
|
|||||
Tax (expense)
|
(1,343
|
)
|
|
(2,538
|
)
|
|
(1,886
|
)
|
|
(1,050
|
)
|
|||||
Income from operating affiliates
|
6,235
|
|
|
—
|
|
|
13,194
|
|
|
—
|
|
|||||
Net operating income (a)
|
171,477
|
|
|
126,118
|
|
|
435,074
|
|
|
43,061
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Net realized gains on investments
|
9,063
|
|
|
5,246
|
|
|
22,749
|
|
|
23,177
|
|
|||||
Net unrealized gains (losses) on investments
|
86,345
|
|
|
(27,848
|
)
|
|
53,442
|
|
|
(22,150
|
)
|
|||||
(Loss) from investment affiliate
|
(160
|
)
|
|
—
|
|
|
(558
|
)
|
|
—
|
|
|||||
Foreign exchange gains (losses)
|
1,103
|
|
|
(19,932
|
)
|
|
3,617
|
|
|
(22,390
|
)
|
|||||
Transaction expenses (c)
|
(3.784
|
)
|
|
(13,583
|
)
|
|
(3,784
|
)
|
|
(13,583
|
)
|
|||||
Net income
|
264,044
|
|
|
70,001
|
|
|
510,540
|
|
|
8,115
|
|
|||||
Net (income) loss attributable to noncontrolling interest
|
(56,746
|
)
|
|
(13,516
|
)
|
|
(11,386
|
)
|
|
(14,110
|
)
|
|||||
Net income (loss) available (attributable) to Validus
|
$
|
207,298
|
|
|
$
|
56,485
|
|
|
$
|
499,154
|
|
$
|
(5,995
|
)
|
||
|
|
|
|
|
|
|
|
|||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||
Net premiums written / Gross premiums written
|
88.3
|
%
|
|
92.2
|
%
|
|
85.3
|
%
|
|
85.2
|
%
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Losses and loss expenses
|
32.7
|
%
|
|
49.3
|
%
|
|
39.4
|
%
|
|
69.2
|
%
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Policy acquisition costs
|
20.8
|
%
|
|
16.9
|
%
|
|
18.4
|
%
|
|
17.7
|
%
|
|||||
General and administrative expenses (b)
|
16.4
|
%
|
|
9.4
|
%
|
|
15.9
|
%
|
|
13.1
|
%
|
|||||
Expense ratio
|
37.2
|
%
|
|
26.3
|
%
|
|
34.3
|
%
|
|
30.8
|
%
|
|||||
Combined ratio
|
69.9
|
%
|
|
75.6
|
%
|
|
73.7
|
%
|
|
100.0
|
%
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company’s results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. A reconciliation of underwriting income to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled “Underwriting Income (Loss).”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
(c)
|
The transaction expenses relate to costs incurred in connection with the proposed acquisition of Flagstone Reinsurance Holdings, S.A. The transaction expenses for 2011 relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Validus Re
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
145,010
|
|
|
$
|
163,863
|
|
|
$
|
1,052,726
|
|
|
$
|
1,058,642
|
|
Reinsurance premiums ceded
|
(10,426
|
)
|
|
(5,646
|
)
|
|
(137,504
|
)
|
|
(150,669
|
)
|
||||
Net premiums written
|
134,584
|
|
|
158,217
|
|
|
915,222
|
|
|
907,973
|
|
||||
Change in unearned premiums
|
107,728
|
|
|
81,997
|
|
|
(177,215
|
)
|
|
(194,529
|
)
|
||||
Net premiums earned
|
242,312
|
|
|
240,214
|
|
|
738,007
|
|
|
713,444
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
66,890
|
|
|
128,823
|
|
|
244,286
|
|
|
533,402
|
|
||||
Policy acquisition costs
|
37,785
|
|
|
40,592
|
|
|
113,659
|
|
|
115,355
|
|
||||
General and administrative expenses
|
16,938
|
|
|
7,358
|
|
|
48,332
|
|
|
32,947
|
|
||||
Share compensation expenses
|
2,076
|
|
|
2,190
|
|
|
5,914
|
|
|
7,118
|
|
||||
Total underwriting deductions
|
123,689
|
|
|
178,963
|
|
|
412,191
|
|
|
688,822
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting income (a)
|
$
|
118,623
|
|
|
$
|
61,251
|
|
|
$
|
325,816
|
|
|
$
|
24,622
|
|
|
|
|
|
|
|
|
|
||||||||
AlphaCat
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
2,934
|
|
|
$
|
18,940
|
|
|
$
|
21,607
|
|
|
$
|
77,050
|
|
Reinsurance premiums ceded
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net premiums written
|
2,934
|
|
|
18,940
|
|
|
21,607
|
|
|
77,050
|
|
||||
Change in unearned premiums
|
2,591
|
|
|
8,758
|
|
|
(9,832
|
)
|
|
(37,595
|
)
|
||||
Net premiums earned
|
5,525
|
|
|
27,698
|
|
|
11,775
|
|
|
39,455
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Policy acquisition costs
|
547
|
|
|
3,326
|
|
|
1,185
|
|
|
4,615
|
|
||||
General and administrative expenses
|
2,087
|
|
|
2,167
|
|
|
5,521
|
|
|
4,122
|
|
||||
Share compensation expenses
|
84
|
|
|
26
|
|
|
195
|
|
|
74
|
|
||||
Total underwriting deductions
|
2,718
|
|
|
5,519
|
|
|
6,901
|
|
|
8,811
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting income (a)
|
$
|
2,807
|
|
|
$
|
22,179
|
|
|
$
|
4,874
|
|
|
$
|
30,644
|
|
|
|
|
|
|
|
|
|
||||||||
Legal Entity adjustments
|
|
|
|
|
|
|
|
||||||||
Policy acquisition costs
|
$
|
—
|
|
|
$
|
(1,084
|
)
|
|
$
|
(25
|
)
|
|
$
|
(1,301
|
)
|
General and administrative expenses
|
1,142
|
|
|
620
|
|
|
3,457
|
|
|
3,780
|
|
||||
Share compensation expenses
|
135
|
|
|
284
|
|
|
446
|
|
|
786
|
|
||||
Total underwriting deductions
|
1,277
|
|
|
(180
|
)
|
|
3,878
|
|
|
3,265
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting (loss) income (a)
|
$
|
(1,277
|
)
|
|
$
|
180
|
|
|
$
|
(3,878
|
)
|
|
$
|
(3,265
|
)
|
|
|
|
|
|
|
|
|
||||||||
Talbot
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
260,755
|
|
|
$
|
238,937
|
|
|
$
|
837,536
|
|
|
$
|
778,880
|
|
Reinsurance premiums ceded
|
(53,801
|
)
|
|
(55,551
|
)
|
|
(191,619
|
)
|
|
(190,243
|
)
|
||||
Net premiums written
|
206,954
|
|
|
183,386
|
|
|
645,917
|
|
|
588,637
|
|
||||
Change in unearned premiums
|
20,313
|
|
|
7,326
|
|
|
(21,769
|
)
|
|
(27,739
|
)
|
||||
Net premiums earned
|
227,267
|
|
|
190,712
|
|
|
624,148
|
|
|
560,898
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
88,565
|
|
|
97,244
|
|
|
296,850
|
|
|
376,170
|
|
||||
Policy acquisition costs
|
61,640
|
|
|
36,651
|
|
|
142,181
|
|
|
116,174
|
|
||||
General and administrative expenses
|
36,605
|
|
|
21,745
|
|
|
100,910
|
|
|
82,396
|
|
||||
Share compensation expenses
|
2,200
|
|
|
1,903
|
|
|
5,347
|
|
|
6,648
|
|
||||
Total underwriting deductions
|
189,010
|
|
|
157,543
|
|
|
545,288
|
|
|
581,388
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting income (loss) (a)
|
$
|
38,257
|
|
|
$
|
33,169
|
|
|
$
|
78,860
|
|
|
$
|
(20,490
|
)
|
|
|
|
|
|
|
|
|
||||||||
Corporate & Eliminations
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
(18,484
|
)
|
|
$
|
(30,611
|
)
|
|
$
|
(57,276
|
)
|
|
$
|
(68,160
|
)
|
Reinsurance premiums ceded
|
18,484
|
|
|
30,611
|
|
|
57,276
|
|
|
68,160
|
|
||||
Net premiums written
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Policy acquisition costs
|
(1,349
|
)
|
|
(2,080
|
)
|
|
(4,116
|
)
|
|
(1,912
|
)
|
||||
General and administrative expenses
|
13,775
|
|
|
4,036
|
|
|
40,337
|
|
|
21,999
|
|
||||
Share compensation expenses
|
2,850
|
|
|
2,979
|
|
|
7,681
|
|
|
12,433
|
|
||||
Total underwriting deductions
|
15,276
|
|
|
4,935
|
|
|
43,902
|
|
|
32,520
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Underwriting (loss) (a)
|
$
|
(15,276
|
)
|
|
$
|
(4,935
|
)
|
|
$
|
(43,902
|
)
|
|
$
|
(32,520
|
)
|
|
|
|
|
|
|
|
|
||||||||
Total underwriting income (loss) (a)
|
$
|
143,134
|
|
|
$
|
111,844
|
|
|
$
|
361,770
|
|
|
$
|
(1,009
|
)
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. A reconciliation of this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled “Underwriting Income (Loss).”
|
•
|
Increase in underwriting income of
$362.8 million
primarily due to:
|
•
|
A decrease in underwriting deductions of
$302.6 million
which includes the effect of a
$403.2 million
decrease in notable loss events; and
|
•
|
An increase in net premiums earned of
$60.1 million
.
|
•
|
A favorable movement of
$75.6 million
in net unrealized gains (losses) on investments, of which
$10.9 million
is attributable to noncontrolling interest.
|
|
|
Nine Months Ended September 30, 2012
|
||||||||||||||||||
|
|
Increase (Decrease) Over the Nine Months Ended September 30, 2011
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Corporate and Eliminations (a)
|
|
Total
|
||||||||||
Notable losses — decrease in net loss and loss expenses (b)
|
|
$
|
294,532
|
|
|
$
|
—
|
|
|
$
|
108,644
|
|
|
$
|
—
|
|
|
$
|
403,176
|
|
Less: Notable losses - (decrease) increase in net reinstatement premiums (b)
|
|
(23,076
|
)
|
|
—
|
|
|
1,755
|
|
|
—
|
|
|
(21,321
|
)
|
|||||
Other underwriting income (loss)
|
|
29,738
|
|
|
(25,770
|
)
|
|
(11,049
|
)
|
|
(11,995
|
)
|
|
(19,076
|
)
|
|||||
Underwriting income (loss) (c)
|
|
301,194
|
|
|
(25,770
|
)
|
|
99,350
|
|
|
(11,995
|
)
|
|
362,779
|
|
|||||
Net investment income
|
|
(3,986
|
)
|
|
(25
|
)
|
|
(2,938
|
)
|
|
1,867
|
|
|
(5,082
|
)
|
|||||
Other income
|
|
6
|
|
|
16,839
|
|
|
(161
|
)
|
|
3,324
|
|
|
20,008
|
|
|||||
Finance expenses
|
|
(704
|
)
|
|
1,641
|
|
|
(10
|
)
|
|
1,023
|
|
|
1,950
|
|
|||||
Operating income (loss) before taxes and income from operating affiliates
|
|
296,510
|
|
|
(7,315
|
)
|
|
96,241
|
|
|
(5,781
|
)
|
|
379,655
|
|
|||||
Tax benefit (expense)
|
|
2
|
|
|
—
|
|
|
198
|
|
|
(1,036
|
)
|
|
(836
|
)
|
|||||
Income from operating affiliates
|
|
—
|
|
|
13,194
|
|
|
—
|
|
|
—
|
|
|
13,194
|
|
|||||
Net operating income (loss)
|
|
296,512
|
|
|
5,879
|
|
|
96,439
|
|
|
(6,817
|
)
|
|
392,013
|
|
|||||
Net realized gains (losses) on investments
|
|
255
|
|
|
(315
|
)
|
|
(368
|
)
|
|
—
|
|
|
(428
|
)
|
|||||
Net unrealized gains (losses) on investments
|
|
53,997
|
|
|
13,651
|
|
|
7,945
|
|
|
(1
|
)
|
|
75,592
|
|
|||||
(Loss) from investment affiliate
|
|
(558
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(558
|
)
|
|||||
Foreign exchange gains (losses)
|
|
21,775
|
|
|
372
|
|
|
3,966
|
|
|
(106
|
)
|
|
26,007
|
|
|||||
Transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,799
|
|
|
9,799
|
|
|||||
Net income
|
|
371,981
|
|
|
19,587
|
|
|
107,982
|
|
|
2,875
|
|
|
502,425
|
|
|||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
2,724
|
|
|
—
|
|
|
—
|
|
|
2,724
|
|
|||||
Net income (loss) available (attributable) to Validus
|
|
371,981
|
|
|
22,311
|
|
|
107,982
|
|
|
2,875
|
|
|
505,149
|
|
(a)
|
The Corporate and Eliminations column includes legal entity adjustments.
|
(b)
|
Notable losses for the
nine months ended
September 30, 2012
included: Costa Concordia, Cat 67, U.S. drought and Hurricane Isaac. Notable losses for the
nine months ended
September 30, 2011
included: Tohoku earthquake, Gryphon Alpha, Christchurch earthquake, Brisbane floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish floods and Hurricane Irene. Excludes the reserve for potential development on 2011 notable loss events.
|
(c)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income (loss) and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. A reconciliation of this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income (Loss)."
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
949,736
|
|
|
51.2
|
%
|
|
$
|
1,026,103
|
|
|
55.6
|
%
|
|
(7.4
|
)%
|
Marine
|
|
560,027
|
|
|
30.2
|
%
|
|
485,734
|
|
|
26.3
|
%
|
|
15.3
|
%
|
||
Specialty
|
|
344,830
|
|
|
18.6
|
%
|
|
334,575
|
|
|
18.1
|
%
|
|
3.1
|
%
|
||
Total
|
|
$
|
1,854,593
|
|
|
100.0
|
%
|
|
$
|
1,846,412
|
|
|
100.0
|
%
|
|
0.4
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
716,739
|
|
|
68.1
|
%
|
|
$
|
752,884
|
|
|
71.2
|
%
|
|
(4.8
|
)%
|
Marine
|
|
248,848
|
|
|
23.6
|
%
|
|
222,659
|
|
|
21.0
|
%
|
|
11.8
|
%
|
||
Specialty
|
|
87,139
|
|
|
8.3
|
%
|
|
83,099
|
|
|
7.8
|
%
|
|
4.9
|
%
|
||
Total
|
|
$
|
1,052,726
|
|
|
100.0
|
%
|
|
$
|
1,058,642
|
|
|
100.0
|
%
|
|
(0.6
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||
Property
|
|
21,607
|
|
|
100.0
|
%
|
|
77,050
|
|
|
100.0
|
%
|
|
(72.0
|
)%
|
Total
|
|
21,607
|
|
|
100.0
|
%
|
|
77,050
|
|
|
100.0
|
%
|
|
(72.0
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
262,652
|
|
|
31.4
|
%
|
|
$
|
254,524
|
|
|
32.6
|
%
|
|
3.2
|
%
|
Marine
|
|
314,667
|
|
|
37.5
|
%
|
|
267,586
|
|
|
34.4
|
%
|
|
17.6
|
%
|
||
Specialty
|
|
260,217
|
|
|
31.1
|
%
|
|
256,770
|
|
|
33.0
|
%
|
|
1.3
|
%
|
||
Total
|
|
$
|
837,536
|
|
|
100.0
|
%
|
|
$
|
778,880
|
|
|
100.0
|
%
|
|
7.5
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
186,356
|
|
|
68.6
|
%
|
|
$
|
196,989
|
|
|
72.3
|
%
|
|
(5.4
|
)%
|
Marine
|
|
41,963
|
|
|
15.4
|
%
|
|
34,210
|
|
|
12.5
|
%
|
|
22.7
|
%
|
||
Specialty
|
|
43,528
|
|
|
16.0
|
%
|
|
41,553
|
|
|
15.2
|
%
|
|
4.8
|
%
|
||
Total
|
|
$
|
271,847
|
|
|
100.0
|
%
|
|
$
|
272,752
|
|
|
100.0
|
%
|
|
(0.3
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
119,335
|
|
|
86.8
|
%
|
|
$
|
135,389
|
|
|
89.9
|
%
|
|
(11.9
|
)%
|
Marine
|
|
17,594
|
|
|
12.8
|
%
|
|
14,779
|
|
|
9.8
|
%
|
|
19.0
|
%
|
||
Specialty
|
|
575
|
|
|
0.4
|
%
|
|
501
|
|
|
0.3
|
%
|
|
14.8
|
%
|
||
Total
|
|
$
|
137,504
|
|
|
100.0
|
%
|
|
$
|
150,669
|
|
|
100.0
|
%
|
|
(8.7
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
118,283
|
|
|
61.7
|
%
|
|
$
|
119,955
|
|
|
63.0
|
%
|
|
(1.4
|
)%
|
Marine
|
|
27,857
|
|
|
14.6
|
%
|
|
23,942
|
|
|
12.6
|
%
|
|
16.4
|
%
|
||
Specialty
|
|
45,479
|
|
|
23.7
|
%
|
|
46,346
|
|
|
24.4
|
%
|
|
(1.9
|
)%
|
||
Total
|
|
$
|
191,619
|
|
|
100.0
|
%
|
|
$
|
190,243
|
|
|
100.0
|
%
|
|
0.7
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums
Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
763,380
|
|
|
48.3
|
%
|
|
$
|
829,114
|
|
|
52.7
|
%
|
|
(7.9
|
)%
|
Marine
|
|
518,064
|
|
|
32.7
|
%
|
|
451,524
|
|
|
28.7
|
%
|
|
14.7
|
%
|
||
Specialty
|
|
301,302
|
|
|
19.0
|
%
|
|
293,022
|
|
|
18.6
|
%
|
|
2.8
|
%
|
||
Total
|
|
$
|
1,582,746
|
|
|
100.0
|
%
|
|
$
|
1,573,660
|
|
|
100.0
|
%
|
|
0.6
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net
Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
597,404
|
|
|
65.2
|
%
|
|
$
|
617,495
|
|
|
68.0
|
%
|
|
(3.3
|
)%
|
Marine
|
|
231,254
|
|
|
25.3
|
%
|
|
207,880
|
|
|
22.9
|
%
|
|
11.2
|
%
|
||
Specialty
|
|
86,564
|
|
|
9.5
|
%
|
|
82,598
|
|
|
9.1
|
%
|
|
4.8
|
%
|
||
Total
|
|
$
|
915,222
|
|
|
100.0
|
%
|
|
$
|
907,973
|
|
|
100.0
|
%
|
|
0.8
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
21,607
|
|
|
100.0
|
%
|
|
$
|
77,050
|
|
|
100.0
|
%
|
|
(72.0
|
)%
|
Total
|
|
$
|
21,607
|
|
|
100.0
|
%
|
|
$
|
77,050
|
|
|
100.0
|
%
|
|
(72.0
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
144,369
|
|
|
22.4
|
%
|
|
$
|
134,569
|
|
|
22.9
|
%
|
|
7.3
|
%
|
Marine
|
|
286,810
|
|
|
44.4
|
%
|
|
243,644
|
|
|
41.4
|
%
|
|
17.7
|
%
|
||
Specialty
|
|
214,738
|
|
|
33.2
|
%
|
|
210,424
|
|
|
35.7
|
%
|
|
2.1
|
%
|
||
Total
|
|
$
|
645,917
|
|
|
100.0
|
%
|
|
$
|
588,637
|
|
|
100.0
|
%
|
|
9.7
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
(262,223
|
)
|
|
$
|
(330,077
|
)
|
|
20.6
|
%
|
Change in prepaid reinsurance premiums
|
|
53,407
|
|
|
70,214
|
|
|
(23.9
|
)%
|
||
Net change in unearned premiums
|
|
$
|
(208,816
|
)
|
|
$
|
(259,863
|
)
|
|
19.6
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
(215,041
|
)
|
|
$
|
(236,518
|
)
|
|
9.1
|
%
|
Change in prepaid reinsurance premiums
|
|
37,826
|
|
|
41,989
|
|
|
(9.9
|
)%
|
||
Net change in unearned premiums
|
|
$
|
(177,215
|
)
|
|
$
|
(194,529
|
)
|
|
8.9
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
(9,832
|
)
|
|
$
|
(37,595
|
)
|
|
73.8
|
%
|
Net change in unearned premiums
|
|
$
|
(9,832
|
)
|
|
$
|
(37,595
|
)
|
|
73.8
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Change in Unearned Premiums
|
|
Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
(37,350
|
)
|
|
$
|
(55,964
|
)
|
|
33.3
|
%
|
Change in prepaid reinsurance premiums
|
|
15,581
|
|
|
28,225
|
|
|
(44.8
|
)%
|
||
Net change in unearned premiums
|
|
$
|
(21,769
|
)
|
|
$
|
(27,739
|
)
|
|
21.5
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
615,885
|
|
|
44.9
|
%
|
|
$
|
654,777
|
|
|
49.8
|
%
|
|
(5.9
|
)%
|
Marine
|
|
462,268
|
|
|
33.6
|
%
|
|
370,423
|
|
|
28.2
|
%
|
|
24.8
|
%
|
||
Specialty
|
|
295,777
|
|
|
21.5
|
%
|
|
288,597
|
|
|
22.0
|
%
|
|
2.5
|
%
|
||
Total
|
|
$
|
1,373,930
|
|
|
100.0
|
%
|
|
$
|
1,313,797
|
|
|
100.0
|
%
|
|
4.6
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
475,926
|
|
|
64.5
|
%
|
|
$
|
495,192
|
|
|
69.4
|
%
|
|
(3.9
|
)%
|
Marine
|
|
193,929
|
|
|
26.3
|
%
|
|
153,820
|
|
|
21.6
|
%
|
|
26.1
|
%
|
||
Specialty
|
|
68,152
|
|
|
9.2
|
%
|
|
64,432
|
|
|
9.0
|
%
|
|
5.8
|
%
|
||
Total
|
|
$
|
738,007
|
|
|
100.0
|
%
|
|
$
|
713,444
|
|
|
100.0
|
%
|
|
3.4
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
11,775
|
|
|
100.0
|
%
|
|
$
|
39,455
|
|
|
100.0
|
%
|
|
(70.2
|
)%
|
Total
|
|
$
|
11,775
|
|
|
100.0
|
%
|
|
$
|
39,455
|
|
|
100.0
|
%
|
|
(70.2
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
128,184
|
|
|
20.5
|
%
|
|
$
|
120,130
|
|
|
21.4
|
%
|
|
6.7
|
%
|
Marine
|
|
268,339
|
|
|
43.0
|
%
|
|
216,603
|
|
|
38.6
|
%
|
|
23.9
|
%
|
||
Specialty
|
|
227,625
|
|
|
36.5
|
%
|
|
224,165
|
|
|
40.0
|
%
|
|
1.5
|
%
|
||
Total
|
|
$
|
624,148
|
|
|
100.0
|
%
|
|
$
|
560,898
|
|
|
100.0
|
%
|
|
11.3
|
%
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
Percentage Point Change
|
|||
Property
|
25.8
|
%
|
|
86.1
|
%
|
|
(60.3
|
)%
|
Marine
|
55.0
|
%
|
|
65.1
|
%
|
|
(10.1
|
)%
|
Specialty
|
43.4
|
%
|
|
36.2
|
%
|
|
7.2
|
%
|
All lines
|
39.4
|
%
|
|
69.2
|
%
|
|
(29.8
|
)%
|
|
Nine Months Ended September 30,
|
|||||||
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||
Property - current period - excluding items below
|
27.6
|
%
|
|
26.4
|
%
|
|
1.2
|
|
Property - current period - notable losses
|
6.6
|
%
|
|
67.7
|
%
|
|
(61.1
|
)
|
Property - change in prior accident years
|
(8.4
|
)%
|
|
(8.0
|
)%
|
|
(0.4
|
)
|
Property - loss ratio
|
25.8
|
%
|
|
86.1
|
%
|
|
(60.3
|
)
|
|
|
|
|
|
|
|||
Marine - current period - excluding notable losses
|
45.4
|
%
|
|
48.4
|
%
|
|
(3.0
|
)
|
Marine - current period - notable losses
|
16.2
|
%
|
|
25.1
|
%
|
|
(8.9
|
)
|
Marine - change in prior accident years
|
(6.6
|
)%
|
|
(8.4
|
)%
|
|
1.8
|
|
Marine - loss ratio
|
55.0
|
%
|
|
65.1
|
%
|
|
(10.1
|
)
|
|
|
|
|
|
|
|||
Specialty - current period - excluding notable losses
|
47.8
|
%
|
|
44.9
|
%
|
|
2.9
|
|
Specialty - current period - notable losses
|
7.6
|
%
|
|
1.7
|
%
|
|
5.9
|
|
Specialty - change in prior accident years
|
(12.0
|
)%
|
|
(10.4
|
)%
|
|
(1.6
|
)
|
Specialty — loss ratio
|
43.4
|
%
|
|
36.2
|
%
|
|
7.2
|
|
|
|
|
|
|
|
|||
All lines - current period - excluding notable losses
|
38.0
|
%
|
|
36.6
|
%
|
|
1.4
|
|
All lines - current period - notable losses
|
10.0
|
%
|
|
41.2
|
%
|
|
(31.2
|
)
|
All lines - change in prior accident years
|
(8.6
|
)%
|
|
(8.6
|
)%
|
|
—
|
|
All lines - loss ratio
|
39.4
|
%
|
|
69.2
|
%
|
|
(29.8
|
)
|
|
Nine Months Ended September 30,
|
|||||||
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||
Property - current period excluding notable losses
|
18.4
|
%
|
|
20.3
|
%
|
|
(1.9
|
)
|
Property - current period - notable losses
|
8.2
|
%
|
|
72.3
|
%
|
|
(64.1
|
)
|
Property - change in prior accident years
|
(8.3
|
)%
|
|
(8.9
|
)%
|
|
0.6
|
|
Property - loss ratio
|
18.3
|
%
|
|
83.7
|
%
|
|
(65.4
|
)
|
|
|
|
|
|
|
|||
Marine - current period excluding notable losses
|
35.4
|
%
|
|
43.0
|
%
|
|
(7.6
|
)
|
Marine - current period - notable losses
|
30.5
|
%
|
|
37.0
|
%
|
|
(6.5
|
)
|
Marine - change in prior accident years
|
(3.7
|
)%
|
|
(6.5
|
)%
|
|
2.8
|
|
Marine - loss ratio
|
62.2
|
%
|
|
73.5
|
%
|
|
(11.3
|
)
|
|
|
|
|
|
|
|||
Specialty - current period excluding notable losses
|
30.4
|
%
|
|
20.4
|
%
|
|
10.0
|
|
Specialty - current period - notable losses
|
32.3
|
%
|
|
—
|
|
|
32.3
|
|
Specialty - change in prior accident years
|
(9.1
|
)%
|
|
(11.3
|
)%
|
|
2.2
|
|
Specialty — loss ratio
|
53.6
|
%
|
|
9.1
|
%
|
|
44.5
|
|
|
|
|
|
|
|
|||
All lines - current period excluding notable losses
|
24.0
|
%
|
|
25.3
|
%
|
|
(1.3
|
)
|
All lines - current period - notable losses
|
16.3
|
%
|
|
58.1
|
%
|
|
(41.8
|
)
|
All lines - change in prior accident years
|
(7.2
|
)%
|
|
(8.6
|
)%
|
|
1.4
|
|
All lines - loss ratio
|
33.1
|
%
|
|
74.8
|
%
|
|
(41.7
|
)
|
|
Nine Months Ended September 30,
|
|||||||
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||
Property - current period excluding items below
|
63.8
|
%
|
|
59.8
|
%
|
|
4.0
|
|
Property - current period - notable losses
|
1.4
|
%
|
|
71.0
|
%
|
|
(69.6
|
)
|
Property - change in prior accident years
|
(9.4
|
)%
|
|
(6.5
|
)%
|
|
(2.9
|
)
|
Property - loss ratio
|
55.8
|
%
|
|
124.3
|
%
|
|
(68.5
|
)
|
|
|
|
|
|
|
|||
Marine - current period excluding items below
|
52.7
|
%
|
|
52.3
|
%
|
|
0.4
|
|
Marine - current period - notable losses
|
5.8
|
%
|
|
16.7
|
%
|
|
(10.9
|
)
|
Marine - change in prior accident years
|
(8.8
|
)%
|
|
(9.8
|
)%
|
|
1.0
|
|
Marine - loss ratio
|
49.7
|
%
|
|
59.2
|
%
|
|
(9.5
|
)
|
|
|
|
|
|
|
|||
Specialty - current period excluding items below
|
53.1
|
%
|
|
51.9
|
%
|
|
1.2
|
|
Specialty - current period - notable losses
|
0.2
|
%
|
|
2.2
|
%
|
|
(2.0
|
)
|
Specialty - change in prior accident years
|
(12.9
|
)%
|
|
(10.1
|
)%
|
|
(2.8
|
)
|
Specialty — loss ratio
|
40.4
|
%
|
|
44.0
|
%
|
|
(3.6
|
)
|
|
|
|
|
|
|
|||
All lines - current period excluding items below
|
55.2
|
%
|
|
53.8
|
%
|
|
1.4
|
|
All lines - current period - notable losses
|
2.8
|
%
|
|
22.5
|
%
|
|
(19.7
|
)
|
All lines - change in prior accident years
|
(10.4
|
)%
|
|
(9.2
|
)%
|
|
(1.2
|
)
|
All lines - loss ratio
|
47.6
|
%
|
|
67.1
|
%
|
|
(19.5
|
)
|
|
|
As at September 30, 2012
|
||||||||||
(Dollars in thousands)
|
|
Gross Case Reserves
|
|
Gross IBNR
|
|
Total Gross Reserve for Losses and Loss Expenses
|
||||||
Property
|
|
$
|
703,961
|
|
|
$
|
402,457
|
|
|
$
|
1,106,418
|
|
Marine
|
|
462,535
|
|
|
417,743
|
|
|
880,278
|
|
|||
Specialty
|
|
235,365
|
|
|
340,543
|
|
|
575,908
|
|
|||
Total
|
|
$
|
1,401,861
|
|
|
$
|
1,160,743
|
|
|
$
|
2,562,604
|
|
|
|
As at September 30, 2012
|
||||||||||
(Dollars in thousands)
|
|
Net Case Reserves
|
|
Net IBNR
|
|
Total Net Reserve for Losses and Loss Expenses
|
||||||
Property
|
|
$
|
592,993
|
|
|
$
|
373,264
|
|
|
$
|
966,257
|
|
Marine
|
|
403,537
|
|
|
390,819
|
|
|
794,356
|
|
|||
Specialty
|
|
197,166
|
|
|
287,573
|
|
|
484,739
|
|
|||
Total
|
|
$
|
1,193,696
|
|
|
$
|
1,051,656
|
|
|
$
|
2,245,352
|
|
|
|
Nine Months Ended September 30, 2012
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Eliminations
|
|
Total
|
||||||||||
Gross reserves at period beginning
|
|
$
|
1,350,849
|
|
|
$
|
10,000
|
|
|
$
|
1,377,561
|
|
|
$
|
(107,267
|
)
|
|
$
|
2,631,143
|
|
Losses recoverable
|
|
(95,509
|
)
|
|
—
|
|
|
(384,243
|
)
|
|
107,267
|
|
|
(372,485
|
)
|
|||||
Net reserves at period beginning
|
|
1,255,340
|
|
|
10,000
|
|
|
993,318
|
|
|
—
|
|
|
2,258,658
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Incurred losses- current year
|
|
297,051
|
|
|
—
|
|
|
361,833
|
|
|
—
|
|
|
658,884
|
|
|||||
Change in prior accident years
|
|
(52,765
|
)
|
|
—
|
|
|
(64,983
|
)
|
|
—
|
|
|
(117,748
|
)
|
|||||
Incurred losses
|
|
244,286
|
|
|
—
|
|
|
296,850
|
|
|
—
|
|
|
541,136
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign exchange
|
|
6,007
|
|
|
—
|
|
|
8,931
|
|
|
—
|
|
|
14,938
|
|
|||||
Paid losses
|
|
(327,444
|
)
|
|
—
|
|
|
(241,936
|
)
|
|
—
|
|
|
(569,380
|
)
|
|||||
Net reserves at period end
|
|
1,178,189
|
|
|
10,000
|
|
|
1,057,163
|
|
|
—
|
|
|
2,245,352
|
|
|||||
Losses recoverable
|
|
38,371
|
|
|
—
|
|
|
365,405
|
|
|
(86,524
|
)
|
|
317,252
|
|
|||||
Gross reserves at period end
|
|
$
|
1,216,560
|
|
|
$
|
10,000
|
|
|
$
|
1,422,568
|
|
|
$
|
(86,524
|
)
|
|
$
|
2,562,604
|
|
RESERVES FOR NOTABLE LOSS EVENTS - USD (000's)
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2010 NOTABLE LOSS EVENTS
|
|
Year Ended December 31, 2010
|
|
Year Ended December 31, 2011
|
|
Nine Months Ended September 30, 2012
|
||||||||||||||||||||||||
|
|
|
|
Development
|
|
|
|
Closing
|
|
Development
|
|
|
|
Closing
|
|
Development
|
|
|
|
Closing
|
||||||||||
|
|
Initial
|
|
(Favorable) /
|
|
Allocations
|
|
Estimate (c)
|
|
(Favorable) /
|
|
Allocations
|
|
Estimate (c)
|
|
(Favorable) /
|
|
Allocations
|
|
Estimate (c)
|
||||||||||
Notable Loss
|
|
Estimate (a)
|
|
Unfavorable (b)
|
|
of RDE (f)
|
|
31-Dec-10
|
|
Unfavorable (b)
|
|
of RDE (f)
|
|
31-Dec-11
|
|
Unfavorable (b)
|
|
of RDE (f)
|
|
30-Sept-12
|
||||||||||
Chilean earthquake
|
|
293,116
|
|
|
2,548
|
|
|
19,242
|
|
|
314,906
|
|
|
(14,449
|
)
|
|
—
|
|
|
300,457
|
|
|
(15,154
|
)
|
|
—
|
|
|
285,303
|
|
Deepwater Horizon (e)
|
|
44,101
|
|
|
737
|
|
|
—
|
|
|
44,838
|
|
|
3
|
|
|
14,769
|
|
|
59,610
|
|
|
12,985
|
|
|
18,618
|
|
|
91,213
|
|
New Zealand earthquake
|
|
28,685
|
|
|
1,167
|
|
|
16,614
|
|
|
46,466
|
|
|
(297
|
)
|
|
—
|
|
|
46,169
|
|
|
33
|
|
|
—
|
|
|
46,202
|
|
Queensland floods
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
(17,966
|
)
|
|
—
|
|
|
7,034
|
|
|
(2,500
|
)
|
|
—
|
|
|
4,534
|
|
Melbourne hailstorm
|
|
18,200
|
|
|
2,644
|
|
|
—
|
|
|
20,844
|
|
|
293
|
|
|
—
|
|
|
21,137
|
|
|
—
|
|
|
—
|
|
|
21,137
|
|
Windstorm Xynthia
|
|
12,558
|
|
|
(11,177
|
)
|
|
—
|
|
|
1,381
|
|
|
(220
|
)
|
|
—
|
|
|
1,161
|
|
|
—
|
|
|
—
|
|
|
1,161
|
|
Political violence loss
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
12,500
|
|
|
2,195
|
|
|
—
|
|
|
14,695
|
|
|
—
|
|
|
—
|
|
|
14,695
|
|
Aban Pearl
|
|
10,500
|
|
|
20
|
|
|
—
|
|
|
10,520
|
|
|
272
|
|
|
—
|
|
|
10,792
|
|
|
—
|
|
|
—
|
|
|
10,792
|
|
Satellite failure
|
|
8,786
|
|
|
—
|
|
|
—
|
|
|
8,786
|
|
|
(810
|
)
|
|
—
|
|
|
7,976
|
|
|
—
|
|
|
—
|
|
|
7,976
|
|
Perth hailstorm
|
|
8,390
|
|
|
—
|
|
|
—
|
|
|
8,390
|
|
|
1,063
|
|
|
—
|
|
|
9,453
|
|
|
—
|
|
|
—
|
|
|
9,453
|
|
Oklahoma windstorm
|
|
7,677
|
|
|
29
|
|
|
—
|
|
|
7,706
|
|
|
(841
|
)
|
|
—
|
|
|
6,865
|
|
|
1
|
|
|
—
|
|
|
6,866
|
|
Bangkok riots
|
|
7,500
|
|
|
4,159
|
|
|
—
|
|
|
11,659
|
|
|
1,055
|
|
|
—
|
|
|
12,714
|
|
|
(173
|
)
|
|
—
|
|
|
12,541
|
|
Hurricane Karl
|
|
6,313
|
|
|
—
|
|
|
—
|
|
|
6,313
|
|
|
—
|
|
|
—
|
|
|
6,313
|
|
|
(4,320
|
)
|
|
—
|
|
|
1,993
|
|
Financial institutions loss
|
|
5,487
|
|
|
—
|
|
|
—
|
|
|
5,487
|
|
|
95
|
|
|
—
|
|
|
5,582
|
|
|
—
|
|
|
—
|
|
|
5,582
|
|
Political risk loss
|
|
5,000
|
|
|
349
|
|
|
—
|
|
|
5,349
|
|
|
(3,828
|
)
|
|
—
|
|
|
1,521
|
|
|
—
|
|
|
—
|
|
|
1,521
|
|
Total 2010 Notable Loss Events
|
|
493,813
|
|
|
476
|
|
|
35,856
|
|
|
530,145
|
|
|
(33,435
|
)
|
|
14,769
|
|
|
511,479
|
|
|
(9,128
|
)
|
|
18,618
|
|
|
520,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
Closing
|
|
|
|
|
|
Closing
|
|
|
|
|
|
Closing
|
||||||||||
|
|
|
|
|
|
Paid Loss (Recovery)
|
|
Reserve (d)
|
|
|
|
Paid Loss (Recovery)
|
|
Reserve (d)
|
|
|
|
Paid Loss (Recovery)
|
|
Reserve (d)
|
||||||||||
Notable Loss
|
|
|
|
|
|
|
31-Dec-10
|
|
|
|
|
31-Dec-11
|
|
|
|
|
30-Sept-12
|
|||||||||||||
Chilean earthquake
|
|
|
|
|
|
120,549
|
|
|
194,357
|
|
|
|
|
103,847
|
|
|
76,061
|
|
|
|
|
22,664
|
|
|
38,243
|
|
||||
Deepwater Horizon (e)
|
|
|
|
|
|
45,152
|
|
|
(314
|
)
|
|
|
|
(34,881
|
)
|
|
49,339
|
|
|
|
|
5,562
|
|
|
75,380
|
|
||||
New Zealand earthquake
|
|
|
|
|
|
—
|
|
|
46,466
|
|
|
|
|
1,254
|
|
|
44,915
|
|
|
|
|
6,870
|
|
|
38,078
|
|
||||
Queensland floods
|
|
|
|
|
|
—
|
|
|
25,000
|
|
|
|
|
—
|
|
|
7,034
|
|
|
|
|
77
|
|
|
4,457
|
|
||||
Melbourne hailstorm
|
|
|
|
|
|
7,163
|
|
|
13,681
|
|
|
|
|
11,611
|
|
|
2,363
|
|
|
|
|
1,092
|
|
|
1,271
|
|
||||
Windstorm Xynthia
|
|
|
|
|
|
111
|
|
|
1,270
|
|
|
|
|
369
|
|
|
681
|
|
|
|
|
37
|
|
|
644
|
|
||||
Political violence loss
|
|
|
|
|
|
—
|
|
|
12,500
|
|
|
|
|
—
|
|
|
14,695
|
|
|
|
|
—
|
|
|
14,695
|
|
||||
Aban Pearl
|
|
|
|
|
|
7,346
|
|
|
3,174
|
|
|
|
|
2,418
|
|
|
1,028
|
|
|
|
|
162
|
|
|
866
|
|
||||
Satellite failure
|
|
|
|
|
|
5,206
|
|
|
3,580
|
|
|
|
|
2,234
|
|
|
536
|
|
|
|
|
(1
|
)
|
|
537
|
|
||||
Perth hailstorm
|
|
|
|
|
|
5,339
|
|
|
3,051
|
|
|
|
|
3,751
|
|
|
363
|
|
|
|
|
258
|
|
|
105
|
|
||||
Oklahoma windstorm
|
|
|
|
|
|
4,054
|
|
|
3,652
|
|
|
|
|
2,047
|
|
|
764
|
|
|
|
|
27
|
|
|
738
|
|
||||
Bangkok riots
|
|
|
|
|
|
(1
|
)
|
|
11,660
|
|
|
|
|
7,500
|
|
|
5,215
|
|
|
|
|
—
|
|
|
5,042
|
|
||||
Hurricane Karl
|
|
|
|
|
|
—
|
|
|
6,313
|
|
|
|
|
—
|
|
|
6,313
|
|
|
|
|
8
|
|
|
1,985
|
|
||||
Financial institutions loss
|
|
|
|
|
|
57
|
|
|
5,430
|
|
|
|
|
3,039
|
|
|
2,486
|
|
|
|
|
69
|
|
|
2,417
|
|
||||
Political risk loss
|
|
|
|
|
|
7
|
|
|
5,342
|
|
|
|
|
1,514
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
||||
Total 2010 Notable Loss Events
|
|
|
|
|
|
194,983
|
|
|
335,162
|
|
|
|
|
104,703
|
|
|
211,793
|
|
|
|
|
36,825
|
|
|
184,458
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESERVES FOR NOTABLE LOSS EVENTS - USD (000's) CONTINUED
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2011 NOTABLE LOSS EVENTS
|
|
|
|
Year Ended December 31, 2011
|
|
Nine Months Ended September 30, 2012
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
Closing
|
|
Development
|
|
|
|
Closing
|
|||||||
|
|
Initial
|
|
|
|
|
|
|
|
(Favorable) /
|
|
Allocations
|
|
Estimate (c)
|
|
(Favorable) /
|
|
Allocations
|
|
Estimate (c)
|
|||||||
Notable Loss
|
|
Estimate (a)
|
|
|
|
|
|
|
|
Unfavorable (b)
|
|
of RDE
|
|
31-Dec-11
|
|
Unfavorable (b)
|
|
of RDE
|
|
30-Sept-12
|
|||||||
Tohoku earthquake
|
|
148,926
|
|
|
|
|
|
|
|
|
37,963
|
|
|
29,788
|
|
|
216,677
|
|
|
(3,565
|
)
|
|
16,342
|
|
|
229,454
|
|
Thailand floods
|
|
54,148
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
54,148
|
|
|
10,589
|
|
|
14,260
|
|
|
78,997
|
|
Gryphon Alpha
|
|
52,434
|
|
|
|
|
|
|
|
|
9,151
|
|
|
—
|
|
|
61,585
|
|
|
127
|
|
|
—
|
|
|
61,712
|
|
Cat 46
|
|
43,806
|
|
|
|
|
|
|
|
|
18,553
|
|
|
—
|
|
|
62,359
|
|
|
108
|
|
|
—
|
|
|
62,467
|
|
Christchurch earthquake
|
|
41,881
|
|
|
|
|
|
|
|
|
16,854
|
|
|
20,212
|
|
|
78,947
|
|
|
1,426
|
|
|
16,358
|
|
|
96,731
|
|
Hurricane Irene
|
|
32,451
|
|
|
|
|
|
|
|
|
3
|
|
|
—
|
|
|
32,454
|
|
|
(7,027
|
)
|
|
—
|
|
|
25,427
|
|
Cat 48
|
|
31,481
|
|
|
|
|
|
|
|
|
9,190
|
|
|
—
|
|
|
40,671
|
|
|
5,615
|
|
|
—
|
|
|
46,286
|
|
Brisbane floods
|
|
31,023
|
|
|
|
|
|
|
|
|
4,848
|
|
|
—
|
|
|
35,871
|
|
|
(805
|
)
|
|
—
|
|
|
35,066
|
|
CNRL Horizon (g)
|
|
19,500
|
|
|
|
|
|
|
|
|
(8,706
|
)
|
|
—
|
|
|
10,794
|
|
|
558
|
|
|
—
|
|
|
11,352
|
|
Danish flood
|
|
19,429
|
|
|
|
|
|
|
|
|
5,987
|
|
|
—
|
|
|
25,416
|
|
|
2,566
|
|
|
7,665
|
|
|
35,647
|
|
Jupiter 1
|
|
15,008
|
|
|
|
|
|
|
|
|
(73
|
)
|
|
—
|
|
|
14,935
|
|
|
(168
|
)
|
|
—
|
|
|
14,767
|
|
Total 2011 Notable Loss Events
|
|
490,087
|
|
|
|
|
|
|
|
|
93,770
|
|
|
50,000
|
|
|
633,857
|
|
|
9,424
|
|
|
54,625
|
|
|
697,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing
|
|
|
|
|
|
Closing
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Paid Loss (Recovery)
|
|
Reserve (d)
|
|
|
|
Paid Loss (Recovery)
|
|
Reserve (d)
|
|||||||
Notable Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
31-Dec-11
|
|
|
|
|
30-Sept-12
|
|||||||||
Tohoku earthquake
|
|
|
|
|
|
|
|
|
|
|
|
59,100
|
|
|
157,577
|
|
|
|
|
82,749
|
|
|
87,605
|
|
|||
Thailand floods
|
|
|
|
|
|
|
|
|
|
|
|
1,748
|
|
|
52,400
|
|
|
|
|
10,116
|
|
|
67,133
|
|
|||
Gryphon Alpha
|
|
|
|
|
|
|
|
|
|
|
|
8,686
|
|
|
52,899
|
|
|
|
|
14,198
|
|
|
38,828
|
|
|||
Cat 46
|
|
|
|
|
|
|
|
|
|
|
|
51,429
|
|
|
10,930
|
|
|
|
|
(786
|
)
|
|
11,824
|
|
|||
Christchurch earthquake
|
|
|
|
|
|
|
|
|
|
|
|
(42
|
)
|
|
78,989
|
|
|
|
|
(384
|
)
|
|
97,157
|
|
|||
Hurricane Irene
|
|
|
|
|
|
|
|
|
|
|
|
8,669
|
|
|
23,785
|
|
|
|
|
3,077
|
|
|
13,681
|
|
|||
Cat 48
|
|
|
|
|
|
|
|
|
|
|
|
19,934
|
|
|
20,737
|
|
|
|
|
12,880
|
|
|
13,472
|
|
|||
Brisbane floods
|
|
|
|
|
|
|
|
|
|
|
|
16,151
|
|
|
19,720
|
|
|
|
|
10,507
|
|
|
8,408
|
|
|||
CNRL Horizon (g)
|
|
|
|
|
|
|
|
|
|
|
|
5,600
|
|
|
5,194
|
|
|
|
|
5,746
|
|
|
6
|
|
|||
Danish flood
|
|
|
|
|
|
|
|
|
|
|
|
7,872
|
|
|
17,544
|
|
|
|
|
12,255
|
|
|
15,520
|
|
|||
Jupiter 1
|
|
|
|
|
|
|
|
|
|
|
|
14,342
|
|
|
593
|
|
|
|
|
231
|
|
|
194
|
|
|||
Total 2011 Notable Loss Events
|
|
|
|
|
|
|
|
|
|
|
|
193,489
|
|
|
440,368
|
|
|
|
|
150,589
|
|
|
353,828
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESERVES FOR NOTABLE LOSS EVENTS - USD (000's) CONTINUED
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
2012 NOTABLE LOSS EVENTS
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
Closing
|
||||
|
|
Initial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Favorable) /
|
|
Allocations
|
|
Estimate (c)
|
||||
Notable Loss
|
|
Estimate (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfavorable (b)
|
|
of RDE
|
|
30-Sept-12
|
||||
Costa Concordia
|
|
76,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,515
|
)
|
|
—
|
|
|
72,682
|
|
Cat 67
|
|
22,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,330
|
|
|
—
|
|
|
28,043
|
|
U.S. drought
|
|
22,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
22,021
|
|
Hurricane Isaac
|
|
15,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
15,209
|
|
Total 2012 Notable Loss Events
|
|
136,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,815
|
|
|
—
|
|
|
137,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve (d)
|
||||
Notable Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid Loss
|
|
30-Sept-12
|
||||
Costa Concordia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,373
|
|
|
62,309
|
|
||
Cat 67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,029
|
|
|
17,014
|
|
||
U.S. drought
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
22,021
|
|
||
Hurricane Isaac
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
15,209
|
|
||
Total 2012 Notable Loss Events
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,402
|
|
|
116,553
|
|
(a)
|
Includes paid losses, case reserves and IBNR reserves.
|
(b)
|
Development other than allocation of RDE.
|
(c)
|
Excludes impact of movements in foreign exchange rates.
|
(d)
|
Closing Reserve for the period equals Closing Estimate for the period less cumulative Paid Losses.
|
(e)
|
Net movement in 2011 impacted by recognition of recoveries under retrocessional contracts.
|
(f)
|
As at September 30, 2012, the Company has allocated all of the 2010 RDE.
|
(g)
|
As at September 30, 2012, the Company has concluded that CNRL Horizon and Jupiter 1 no longer remains eligible for potential allocations from the 2011 RDE.
|
RESERVE FOR DEVELOPMENT ON EVENTS
|
Reserve for potential development on 2010 notable loss events
|
|
Reserve for potential development on 2011 notable loss events
|
|
Reserve for potential development on 2012 notable loss events
|
|
Total Reserve for potential development on notable loss events
|
||||
|
($ in 000's)
|
|
($ in 000's)
|
|
($ in 000's)
|
|
($ in 000's)
|
||||
As at December 31, 2009
|
—
|
|
|
|
|
|
|
—
|
|
||
Reserve for potential development additions
|
69,242
|
|
|
|
|
|
|
69,242
|
|
||
Reserve for potential development allocations (a)
|
(35,856
|
)
|
|
|
|
|
|
(35,856
|
)
|
||
Reserve for potential development releases
|
—
|
|
|
|
|
|
|
—
|
|
||
As at December 31, 2010 (b)
|
33,386
|
|
|
—
|
|
|
—
|
|
|
33,386
|
|
|
|
|
|
|
|
|
|
||||
Reserve for potential development additions
|
—
|
|
|
128,000
|
|
|
|
|
128,000
|
|
|
Reserve for potential development allocations (a)
|
(14,769
|
)
|
|
(50,000
|
)
|
|
|
|
(64,769
|
)
|
|
Reserve for potential development releases
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
As at December 31, 2011 (b)
|
18,617
|
|
|
78,000
|
|
|
—
|
|
|
96,617
|
|
|
|
|
|
|
|
|
|
||||
Reserve for potential development additions (c)
|
—
|
|
|
27,926
|
|
|
—
|
|
|
27,926
|
|
Reserve for potential development allocations (a)
|
(18,617
|
)
|
|
(54,626
|
)
|
|
—
|
|
|
(73,243
|
)
|
Reserve for potential development releases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
As at September 30, 2012 (b)
|
—
|
|
|
51,300
|
|
|
—
|
|
|
51,300
|
|
|
|
|
|
|
|
|
|
(a)
|
During the year ended December 31, 2010, $19,242 was allocated to the Chilean earthquake and $16,614 was allocated to the New Zealand earthquake from the 2010 reserve for development on notable loss events.
|
(b)
|
Notable losses for the year ended December 31, 2010 included Chilean earthquake, Melbourne hailstorm, Windstorm Xynthia, Deepwater Horizon, Aban Pearl, Bangkok riots, Perth hailstorm, New Zealand earthquake, Oklahoma windstorm, Political risk loss, Hurricane Karl, Queensland floods, Political violence loss, Satelite failure and Financial institution loss.
|
(c)
|
The 2011 notable loss events, principally the Tohoku earthquake, the Christchurch earthquake and the Thailand floods continued to experience adverse development as shown in the notable loss roll forward table. Contract complexity, the nature and number of perils arising from these events, limits and sub limits exposed, the quality, flow and timing of information received by the Company, information regarding retrocessional covers, assumptions, both explicit and implicit, regarding future paid and reported loss development patterns, frequency and severity trends, claims settlement practices and potential changes in the legal environment continue to lead to complexity and volatility in the ultimate loss estimates for these events. Given the potential that one or some of the 2011 notable loss events eligible for potential allocation from the 2011 RDE may experience adverse development, rather than all deteriorating proportionately, an addition to the 2011 RDE of $27.9 million was made.
|
(d)
|
The reserve for potential development on notable loss events (or “RDE”) is included as part of the Company's overall reserve requirement as defined and disclosed in the Critical Accounting Policies and Estimates section of the Company's Annual Report on Form 10-K.
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
77,825
|
|
|
30.8
|
%
|
|
12.6
|
%
|
|
$
|
85,508
|
|
|
36.7
|
%
|
|
13.1
|
%
|
|
(9.0
|
)%
|
Marine
|
|
111,285
|
|
|
44.0
|
%
|
|
24.1
|
%
|
|
82,242
|
|
|
35.3
|
%
|
|
22.2
|
%
|
|
35.3
|
%
|
||
Specialty
|
|
63,774
|
|
|
25.2
|
%
|
|
21.6
|
%
|
|
65,181
|
|
|
28.0
|
%
|
|
22.6
|
%
|
|
(2.2
|
)%
|
||
Total
|
|
$
|
252,884
|
|
|
100.0
|
%
|
|
18.4
|
%
|
|
$
|
232,931
|
|
|
100.0
|
%
|
|
17.7
|
%
|
|
8.6
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
68,419
|
|
|
60.1
|
%
|
|
14.4
|
%
|
|
$
|
71,159
|
|
|
61.7
|
%
|
|
14.4
|
%
|
|
(3.9
|
)%
|
Marine
|
|
33,817
|
|
|
29.8
|
%
|
|
17.4
|
%
|
|
33,266
|
|
|
28.8
|
%
|
|
21.6
|
%
|
|
1.7
|
%
|
||
Specialty
|
|
11,423
|
|
|
10.1
|
%
|
|
16.8
|
%
|
|
10,930
|
|
|
9.5
|
%
|
|
17.0
|
%
|
|
4.5
|
%
|
||
Total
|
|
$
|
113,659
|
|
|
100.0
|
%
|
|
15.4
|
%
|
|
$
|
115,355
|
|
|
100.0
|
%
|
|
16.2
|
%
|
|
(1.5
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
1,185
|
|
|
100.0
|
%
|
|
10.1
|
%
|
|
$
|
4,615
|
|
|
100.0
|
%
|
|
11.7
|
%
|
|
(74.3
|
)%
|
Total
|
|
$
|
1,185
|
|
|
100.0
|
%
|
|
10.1
|
%
|
|
$
|
4,615
|
|
|
100.0
|
%
|
|
11.7
|
%
|
|
(74.3
|
)%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
11,466
|
|
|
8.0
|
%
|
|
8.9
|
%
|
|
$
|
12,761
|
|
|
11.0
|
%
|
|
10.6
|
%
|
|
(10.1
|
)%
|
Marine
|
|
78,313
|
|
|
55.1
|
%
|
|
29.2
|
%
|
|
49,101
|
|
|
42.3
|
%
|
|
22.7
|
%
|
|
59.5
|
%
|
||
Specialty
|
|
52,402
|
|
|
36.9
|
%
|
|
23.0
|
%
|
|
54,312
|
|
|
46.7
|
%
|
|
24.2
|
%
|
|
(3.5
|
)%
|
||
Total
|
|
$
|
142,181
|
|
|
100.0
|
%
|
|
22.8
|
%
|
|
$
|
116,174
|
|
|
100.0
|
%
|
|
20.7
|
%
|
|
22.4
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
General and Administrative Expenses
|
|
General and Administrative Expenses (%)
|
|
General and Administrative Expenses
|
|
General and Administrative Expenses (%)
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
48,332
|
|
|
24.3
|
%
|
|
$
|
32,947
|
|
|
22.7
|
%
|
|
46.7
|
%
|
AlphaCat
|
|
5,521
|
|
|
2.8
|
%
|
|
4,122
|
|
|
2.8
|
%
|
|
33.9
|
%
|
||
Talbot
|
|
100,910
|
|
|
50.8
|
%
|
|
82,396
|
|
|
56.8
|
%
|
|
22.5
|
%
|
||
Corporate & Eliminations (a)
|
|
43,794
|
|
|
22.1
|
%
|
|
25,779
|
|
|
17.7
|
%
|
|
69.9
|
%
|
||
Total
|
|
$
|
198,557
|
|
|
100.0
|
%
|
|
$
|
145,244
|
|
|
100.0
|
%
|
|
36.7
|
%
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Share Compensation Expenses
|
|
Share Compensation Expenses (%)
|
|
Share Compensation Expenses
|
|
Share Compensation Expenses (%)
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
5,914
|
|
|
30.2
|
%
|
|
$
|
7,118
|
|
|
26.3
|
%
|
|
(16.9
|
)%
|
AlphaCat
|
|
195
|
|
|
1.0
|
%
|
|
74
|
|
|
0.3
|
%
|
|
163.5
|
%
|
||
Talbot
|
|
5,347
|
|
|
27.3
|
%
|
|
6,648
|
|
|
24.6
|
%
|
|
(19.6
|
)%
|
||
Corporate & Eliminations (a)
|
|
8,127
|
|
|
41.5
|
%
|
|
13,219
|
|
|
48.8
|
%
|
|
(38.5
|
)%
|
||
Total
|
|
$
|
19,583
|
|
|
100.0
|
%
|
|
$
|
27,059
|
|
|
100.0
|
%
|
|
(27.6
|
)%
|
a)
|
Corporate and Eliminations includes legal entity adjustments.
|
Consolidated
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
Percentage point change
|
|||
Losses and loss expenses ratio
|
|
39.4
|
%
|
|
69.2
|
%
|
|
(29.8
|
)
|
Policy acquisition costs ratio
|
|
18.4
|
%
|
|
17.7
|
%
|
|
0.7
|
|
General and administrative expenses ratio (a)
|
|
15.9
|
%
|
|
13.1
|
%
|
|
2.8
|
|
Expense ratio
|
|
34.3
|
%
|
|
30.8
|
%
|
|
3.5
|
|
Combined ratio
|
|
73.7
|
%
|
|
100.0
|
%
|
|
(26.3
|
)
|
Validus Re
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
Percentage point change
|
|||
Losses and loss expenses ratio
|
|
33.1
|
%
|
|
74.8
|
%
|
|
(41.7
|
)
|
Policy acquisition costs ratio
|
|
15.4
|
%
|
|
16.2
|
%
|
|
(0.8
|
)
|
General and administrative expenses ratio (a)
|
|
7.4
|
%
|
|
5.6
|
%
|
|
1.8
|
|
Expense ratio
|
|
22.8
|
%
|
|
21.8
|
%
|
|
1.0
|
|
Combined ratio
|
|
55.9
|
%
|
|
96.6
|
%
|
|
(40.7
|
)
|
AlphaCat
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
Percentage point change
|
|||
Losses and loss expenses ratio
|
|
0.0
|
%
|
|
0.0
|
%
|
|
—
|
|
Policy acquisition costs ratio
|
|
10.1
|
%
|
|
11.7
|
%
|
|
(1.6
|
)
|
General and administrative expenses ratio (a)
|
|
48.5
|
%
|
|
10.6
|
%
|
|
37.9
|
|
Expense ratio
|
|
58.6
|
%
|
|
22.3
|
%
|
|
36.3
|
|
Combined ratio
|
|
58.6
|
%
|
|
22.3
|
%
|
|
36.3
|
|
Talbot
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
Percentage point change
|
|||
Losses and loss expenses ratio
|
|
47.6
|
%
|
|
67.1
|
%
|
|
(19.5
|
)
|
Policy acquisition costs ratio
|
|
22.8
|
%
|
|
20.7
|
%
|
|
2.1
|
|
General and administrative expenses ratio (a)
|
|
17.0
|
%
|
|
15.9
|
%
|
|
1.1
|
|
Expense ratio
|
|
39.8
|
%
|
|
36.6
|
%
|
|
3.2
|
|
Combined ratio
|
|
87.4
|
%
|
|
103.7
|
%
|
|
(16.3
|
)
|
(a)
|
Includes general and administrative expenses and share compensation expenses.
|
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
Expenses as % of Net Earned Premiums
|
|
Expenses
|
|
Expenses as % of Net Earned Premiums
|
||||||
General and administrative expenses
|
|
$
|
198,557
|
|
|
14.5
|
%
|
|
$
|
145,244
|
|
|
11.0
|
%
|
Share compensation expenses
|
|
19,583
|
|
|
1.4
|
%
|
|
27,059
|
|
|
2.1
|
%
|
||
Total
|
|
$
|
218,140
|
|
|
15.9
|
%
|
|
$
|
172,303
|
|
|
13.1
|
%
|
(Dollars in thousands)
|
|
Nine Months Ended September 30, 2012
|
|
% of Sub-total
|
|
Nine Months Ended September 30, 2011
|
|
% of Sub-total
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
325,816
|
|
|
79.5
|
%
|
|
$
|
24,622
|
|
|
70.8
|
%
|
|
1,223.3
|
%
|
AlphaCat
|
|
4,874
|
|
|
1.2
|
%
|
|
30,644
|
|
|
88.1
|
%
|
|
(84.1
|
)%
|
||
Talbot
|
|
78,860
|
|
|
19.3
|
%
|
|
(20,490
|
)
|
|
(58.9
|
)%
|
|
484.9
|
%
|
||
Sub total
|
|
409,550
|
|
|
100.0
|
%
|
|
34,776
|
|
|
100.0
|
%
|
|
1,077.7
|
%
|
||
Corporate & Eliminations (a)
|
|
(47,780
|
)
|
|
|
|
|
(35,785
|
)
|
|
|
|
|
(33.5
|
)%
|
||
Total
|
|
$
|
361,770
|
|
|
|
|
|
$
|
(1,009
|
)
|
|
|
|
|
35,954.3
|
%
|
(a)
|
Corporate and Eliminations includes legal entity adjustments.
|
(Dollars in thousands)
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
||||
Underwriting income (loss)
|
|
$
|
361,770
|
|
|
$
|
(1,009
|
)
|
Net investment income
|
|
79,134
|
|
|
84,216
|
|
||
Other income
|
|
22,209
|
|
|
2,201
|
|
||
Finance expenses
|
|
(39,347
|
)
|
|
(41,297
|
)
|
||
Net realized gains on investments
|
|
22,749
|
|
|
23,177
|
|
||
Net unrealized gains (losses) on investments
|
|
53,442
|
|
|
(22,150
|
)
|
||
(Loss) from investment affiliate
|
|
(558
|
)
|
|
—
|
|
||
Foreign exchange gains (losses)
|
|
3,617
|
|
|
(22,390
|
)
|
||
Transaction expenses
|
|
(3,784
|
)
|
|
(13,583
|
)
|
||
Tax (expense)
|
|
(1,886
|
)
|
|
(1,050
|
)
|
||
Income from operating affiliates
|
|
13,194
|
|
|
—
|
|
||
Net income
|
|
$
|
510,540
|
|
|
$
|
8,115
|
|
(Dollars in thousands)
|
|
Nine Months Ended September 30, 2012
|
|
Nine Months Ended September 30, 2011
|
|
% Change
|
|||||
Fixed maturities and short-term investments
|
|
$
|
79,450
|
|
|
$
|
84,243
|
|
|
(5.7
|
)%
|
Cash and cash equivalents
|
|
5,536
|
|
|
5,132
|
|
|
7.9
|
%
|
||
Securities lending income
|
|
9
|
|
|
31
|
|
|
(71.0
|
)%
|
||
Total gross investment income
|
|
84,995
|
|
|
89,406
|
|
|
(4.9
|
)%
|
||
Investment expenses
|
|
(5,861
|
)
|
|
(5,190
|
)
|
|
(12.9
|
)%
|
||
Net investment income
|
|
$
|
79,134
|
|
|
$
|
84,216
|
|
|
(6.0
|
)%
|
|
|
Nine Months Ended September 30,
|
|||||||||
(Dollars in thousands)
|
|
2012
|
|
2011
|
|
% Change
|
|||||
2006 Junior Subordinated Deferrable Debentures
|
|
$
|
4,729
|
|
|
$
|
8,272
|
|
|
(42.8
|
)%
|
2007 Junior Subordinated Deferrable Debentures
|
|
7,072
|
|
|
9,086
|
|
|
(22.2
|
)%
|
||
2010 Senior Notes due 2040
|
|
16,792
|
|
|
16,791
|
|
|
0.0
|
%
|
||
Credit facilities
|
|
10,530
|
|
|
4,821
|
|
|
118.4
|
%
|
||
AlphaCat Re 2011 fees (a)
|
|
—
|
|
|
2,112
|
|
|
(100.0
|
)%
|
||
Talbot FAL Facility
|
|
93
|
|
|
215
|
|
|
(56.7
|
)%
|
||
Talbot other interest
|
|
131
|
|
|
—
|
|
|
NM
|
|
||
Finance expenses
|
|
$
|
39,347
|
|
|
$
|
41,297
|
|
|
(4.7
|
)%
|
|
As at September 30, 2012
|
|||||||||||||
|
(unaudited)
|
|||||||||||||
|
Equity Amount
|
|
Shares
|
|
Exercise Price
|
|
Book Value Per
Share
|
|||||||
Book value per common share
|
|
|
|
|
|
|
|
|
||||||
Total shareholders' equity available to Validus
|
$
|
3,633,853
|
|
|
93,494,391
|
|
|
|
|
$
|
38.87
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Diluted book value per common share
|
|
|
|
|
|
|
|
|
||||||
Total shareholders' equity available to Validus
|
3,633,853
|
|
|
93,494,391
|
|
|
|
|
|
|||||
Assumed exercise of outstanding warrants
|
116,822
|
|
|
6,652,550
|
|
|
$
|
17.56
|
|
|
|
|||
Assumed exercise of outstanding stock options
|
37,745
|
|
|
1,823,947
|
|
|
$
|
20.69
|
|
|
|
|||
Unvested restricted shares
|
—
|
|
|
2,468,053
|
|
|
|
|
|
|||||
Diluted book value per common share
|
$
|
3,788,420
|
|
|
104,438,941
|
|
|
|
|
$
|
36.27
|
|
|
As at December 31, 2011
|
|||||||||||||
|
Equity Amount
|
|
Shares
|
|
Exercise Price
|
|
Book Value Per
Share
|
|||||||
Book value per common share
|
|
|
|
|
|
|
|
|
||||||
Total shareholders' equity available to Validus
|
$
|
3,448,425
|
|
|
99,471,080
|
|
|
|
|
$
|
34.67
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Diluted book value per common share
|
|
|
|
|
|
|
|
|
||||||
Total shareholders' equity available to Validus
|
3,448,425
|
|
|
99,471,080
|
|
|
|
|
|
|||||
Assumed exercise of outstanding warrants
|
121,445
|
|
|
6,916,677
|
|
|
$
|
17.56
|
|
|
|
|||
Assumed exercise of outstanding stock options
|
45,530
|
|
|
2,263,012
|
|
|
$
|
20.12
|
|
|
|
|||
Unvested restricted shares
|
—
|
|
|
3,340,729
|
|
|
|
|
|
|||||
Diluted book value per common share
|
$
|
3,615,400
|
|
|
111,991,498
|
|
|
|
|
$
|
32.28
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
(unaudited)
|
|
(unaudited)
|
||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
|
2012
|
|
2011(a)
|
|
2012
|
|
2011(a)
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Total gross premiums written
|
$
|
390,215
|
|
|
$
|
391,129
|
|
|
$
|
1,854,593
|
|
|
$
|
1,846,412
|
|
Adjustments for:
|
|
|
|
|
|
|
|
||||||||
Gross premiums written on behalf of AlphaCat Re 2011
|
7,604
|
|
|
—
|
|
|
94,309
|
|
|
—
|
|
||||
Gross premiums written on behalf of AlphaCat Re 2012
|
1,658
|
|
|
—
|
|
|
32,216
|
|
|
—
|
|
||||
Total managed gross premiums written
|
$
|
399,477
|
|
|
$
|
391,129
|
|
|
$
|
1,981,118
|
|
|
$
|
1,846,412
|
|
|
|
Nine Months Ended September 30,
|
|||||||||
(Dollars in thousands)
|
|
2012
|
|
2011
|
|
% Change
|
|||||
Net cash provided by operating activities
|
|
$
|
483,025
|
|
|
$
|
469,903
|
|
|
2.8
|
%
|
Net cash (used in) investing activities
|
|
(444,835
|
)
|
|
(277,970
|
)
|
|
(60.0
|
)%
|
||
Net cash provided by financing activities
|
|
114,345
|
|
|
51,971
|
|
|
120.0
|
%
|
||
Effect of foreign currency rate changes on cash and cash equivalents
|
|
20,450
|
|
|
(8,662
|
)
|
|
(336.1
|
)%
|
||
Net increase in cash
|
|
$
|
172,985
|
|
|
$
|
235,242
|
|
|
(26.5
|
)%
|
(Dollars in thousands)
|
|
Maturity Date / Term
|
|
Outstanding (a)
|
||
2006 Junior Subordinated Deferrable Debentures
|
|
June 15, 2036
|
|
$
|
150,000
|
|
2007 Junior Subordinated Deferrable Debentures
|
|
June 15, 2037
|
|
139,800
|
|
|
2010 Senior Notes due 2040
|
|
January 26, 2040
|
|
250,000
|
|
|
$400,000 syndicated unsecured letter of credit facility
|
|
March 9, 2016
|
|
—
|
|
|
$525,000 syndicated secured letter of credit facility
|
|
March 9, 2016
|
|
318,506
|
|
|
$500,000 bi-lateral secured letter of credit facility
|
|
Evergreen
|
|
88,191
|
|
|
Talbot FAL Facility (b)
|
|
December 31, 2015
|
|
25,000
|
|
|
PaCRe senior secured letter of credit facility
|
|
May 10, 2013
|
|
—
|
|
|
IPC Bi-Lateral Facility
|
|
December 31, 2012
|
|
51,009
|
|
|
Total
|
|
|
|
$
|
1,022,506
|
|
(a)
|
Indicates utilization of commitment amount, not drawn borrowings.
|
(b)
|
Talbot operates in Lloyd’s through a corporate member, Talbot 2002 Underwriting Capital Ltd (“T02”), which is the sole participant in Syndicate 1183. Lloyd’s sets T02’s required capital annually based on Syndicate 1183’s business plan, rating environment, reserving environment together with input arising from Lloyd’s discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd’s (“FAL”), comprises: cash, investments and undrawn letters of credit provided by various banks.
|
|
|
Capital at
|
||
(Dollars in thousands)
|
|
September 30, 2012
|
||
Validus Reinsurance, Ltd. (consolidated), excluding Validus Re Americas, Ltd.
|
|
$
|
3,290,111
|
|
Validus Re Americas, Ltd. (formerly IPCRe, Ltd.)
|
|
132,610
|
|
|
AlphaCat Reinsurance, Ltd.
|
|
854
|
|
|
Total Validus Reinsurance, Ltd. (consolidated)
|
|
3,423,575
|
|
|
Noncontrolling interest in PacRe, Ltd.
|
|
461,486
|
|
|
Talbot Holdings, Ltd.
|
|
764,422
|
|
|
Other subsidiaries
|
|
2,737
|
|
|
Other, net
|
|
(20,018
|
)
|
|
Total consolidated capitalization
|
|
4,632,202
|
|
|
Senior notes payable
|
|
(247,063
|
)
|
|
Debentures payable
|
|
(289,800
|
)
|
|
Total shareholders' equity
|
|
$
|
4,095,339
|
|
|
A.M. Best (a)
|
|
S&P (b)
|
|
Moody’s (c)
|
|
Fitch (d)
|
Validus Holdings, Ltd.
|
|
|
|
|
|
|
|
Issuer credit rating
|
bbb
|
|
BBB+
|
|
Baa2
|
|
BBB+
|
Senior debt
|
bbb
|
|
BBB+
|
|
Baa2
|
|
BBB
|
Subordinated debt
|
bbb-
|
|
BBB-
|
|
Baa3
|
|
BB+
|
Preferred stock
|
bb+
|
|
BBB-
|
|
Ba1
|
|
—
|
Outlook on ratings
|
Stable
|
|
Stable
|
|
Stable
|
|
Positive
|
|
|
|
|
|
|
|
|
Validus Reinsurance, Ltd.
|
|
|
|
|
|
|
|
Financial strength rating
|
A
|
|
A
|
|
A3
|
|
A-
|
Issuer credit rating
|
a-
|
|
—
|
|
—
|
|
—
|
Outlook on ratings
|
Stable
|
|
Stable
|
|
Stable
|
|
Positive
|
|
|
|
|
|
|
|
|
Talbot
|
|
|
|
|
|
|
|
Financial strength rating applicable to all Lloyds syndicates
|
A
|
|
A+
|
|
—
|
|
A+
|
(Dollars in thousands)
|
|
Commitments
|
|
Outstanding (a)
|
||||
2006 Junior Subordinated Deferrable Debentures
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
2007 Junior Subordinated Deferrable Debentures
|
|
200,000
|
|
|
139,800
|
|
||
2010 Senior Notes due 2040
|
|
250,000
|
|
|
250,000
|
|
||
$400,000 syndicated unsecured letter of credit facility
|
|
400,000
|
|
|
—
|
|
||
$525,000 syndicated secured letter of credit facility
|
|
525,000
|
|
|
318,506
|
|
||
$500,000 bi-lateral secured letter of credit facility
|
|
500,000
|
|
|
88,191
|
|
||
Talbot FAL Facility (b)
|
|
25,000
|
|
|
25,000
|
|
||
PaCRe senior secured letter of credit facility
|
|
10,000
|
|
|
—
|
|
||
IPC Bi-Lateral Facility
|
|
80,000
|
|
|
51,009
|
|
||
Total
|
|
$
|
2,140,000
|
|
|
$
|
1,022,506
|
|
(a)
|
Indicates utilization of commitment amount, not drawn borrowings.
|
(b)
|
Talbot operates in Lloyd’s through a corporate member, Talbot 2002 Underwriting Capital Ltd (“T02”), which is the sole participant in Syndicate 1183. Lloyd’s sets T02’s required capital annually based on Syndicate 1183’s business plan, rating environment, reserving environment together with input arising from Lloyd’s discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd’s (“FAL”), comprises: cash, investments and undrawn letters of credit provided by various banks.
|
•
|
unpredictability and severity of catastrophic events;
|
•
|
our ability to obtain and maintain ratings, which may affect our ability to raise additional equity or debt financings, as well as other factors described herein;
|
•
|
adequacy of the Company’s and Flagstone's risk management and loss limitation methods;
|
•
|
cyclicality of demand and pricing in the insurance and reinsurance markets;
|
•
|
the Company’s ability to implement its business strategy during “soft” as well as “hard” markets;
|
•
|
adequacy of the Company’s and Flagstone's loss reserves;
|
•
|
continued availability of capital and financing;
|
•
|
the Company’s ability to identify, hire and retain, on a timely and unimpeded basis and on anticipated economic and other terms, experienced and capable senior management, as well as underwriters, claims professionals and support staff;
|
•
|
acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and (re)insureds;
|
•
|
competition, including increased competition, on the basis of pricing, capacity, coverage terms or other factors;
|
•
|
potential loss of business from one or more major insurance or reinsurance brokers;
|
•
|
the Company’s ability to implement, successfully and on a timely basis, complex infrastructure, distribution capabilities, systems, procedures and internal controls, and to develop accurate actuarial data to support the business and regulatory and reporting requirements;
|
•
|
general economic and market conditions (including inflation, volatility in the credit and capital markets, interest rates and foreign currency exchange rates) and conditions specific to the insurance and reinsurance markets in which we operate;
|
•
|
the integration of Flagstone and other businesses we may acquire or new business ventures, including overseas offices, we may start;
|
•
|
accuracy of those estimates and judgments used in the preparation of the Company's and Flagstone's financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, taxes, contingencies, litigation and any determination to use the deposit method of accounting, which, for a relatively new insurance and reinsurance company like the Company and Flagstone, are even more difficult to make than those made in a mature company because of limited historical information;
|
•
|
the effect on the Company’s and Flagstone's investment portfolio of changing financial market conditions including
|
•
|
acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events;
|
•
|
availability and cost of reinsurance and retrocession coverage;
|
•
|
the failure of reinsurers, retrocessionaires, producers or others to meet their obligations to us;
|
•
|
the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us;
|
•
|
changes in domestic or foreign laws or regulations, or their interpretations;
|
•
|
changes in accounting principles or the application of such principles by regulators;
|
•
|
statutory or regulatory or rating agency developments, including as to tax policy and reinsurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers; and
|
•
|
the other factors set forth herein under Part I Item 1A "Risk Factors" and under Part II Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the other sections of the Company's Annual Report on Form 10-K for the year ended
December 31, 2011
, as well as the risk and other factors set forth in the Company's other filings with the SEC, as well as management's response to any of the aforementioned factors.
|
•
|
interest rate risk;
|
•
|
foreign currency risk;
|
•
|
credit risk;
|
•
|
liquidity risk; and
|
•
|
effects of inflation.
|
(Dollars in thousands)
|
Maturity Date / Term
|
|
In Use / Outstanding
|
||
2006 Junior Subordinated Deferrable Debentures
|
June 15, 2036
|
|
$
|
150,000
|
|
2007 Junior Subordinated Deferrable Debentures
|
June 15, 2037
|
|
139,800
|
|
|
2010 Senior Notes due 2040
|
January 26, 2040
|
|
250,000
|
|
|
$400,000 syndicated unsecured letter of credit facility
|
March 9, 2016
|
|
—
|
|
|
$525,000 syndicated secured letter of credit facility
|
March 9, 2016
|
|
318,506
|
|
|
$500,000 bi-lateral secured letter of credit facility
|
Evergreen
|
|
88,191
|
|
|
Talbot FAL Facility
|
December 31, 2015
|
|
25,000
|
|
|
PaCRe senior secured letter of credit facility
|
May 10, 2013
|
|
—
|
|
|
IPC Bi-Lateral Facility
|
December 31, 2012
|
|
51,009
|
|
|
Total
|
|
|
$
|
1,022,506
|
|
•
|
the Florida Office of Insurance Regulation; and
|
•
|
the Swiss Financial Market Supervisory Authority (FINMA).
|
|
•
|
the attention of management of Validus and Flagstone will have been diverted to the mergers instead of being directed solely to each company’s own operations and the pursuit of other opportunities that could have been beneficial to such company;
|
|
•
|
Validus and/or Flagstone will have to pay certain costs relating to the mergers, which may include, as applicable, legal, accounting, financial advisory, filing and printing fees;
|
|
•
|
the potential decline in the market price of Validus or Flagstone shares;
|
|
•
|
the manner in which brokers, insurers, cedants and other third parties perceive Validus or Flagstone may be negatively impacted, which in turn could affect the ability of Validus or Flagstone to compete for or to write new business or obtain renewals in the marketplace;
|
|
•
|
the loss of time and resources; and
|
|
•
|
Flagstone may be required, in certain circumstances, to pay a termination fee of $24.16 million, or a fee in the amount of $6.0 million, as provided in the merger agreement.
|
|
The interests of Flagstone’s executive officers include the rights to:
|
|
|
•
|
accelerated vesting and receipt of the share unit consideration with respect to the executive officers’ PSUs, calculated assuming attainment of all applicable performance goals at the maximum level;
|
|
•
|
with respect to Flagstone’s executive officers other than Messrs. Slade and Fawcett, certain contractual severance payments in the event of a qualifying termination of employment following the mergers;
|
|
•
|
with respect to Messrs. Brown, Flitman, Swayne, Fawcett and Slade, certain statutory severance payments in the event of a termination of employment following the mergers;
|
|
•
|
continued employment during a specified notice period following termination of employment or, with respect to Flagstone’s executive officers other than Messrs. Boisvert and Traimond, payment of base salary in lieu of such notice;
|
|
•
|
accelerated payment of the executive officer’s guaranteed minimum 2012 bonus in the event of a qualifying termination of employment following the mergers and prior to December 31, 2012; and
|
|
•
|
solely with respect to Mr. Brown, the Leyton Limited Warrant to acquire 630,194 Flagstone shares, which, pursuant to the merger agreement, will be amended at the effective time of the second-step merger such that, upon payment during the exercise period (which runs from December 1, 2013 to December 31, 2013) of the exercise price as of the completion of the mergers, subject to adjustments (if any) pursuant to the terms of the Leyton Limited Warrant, the Leyton Limited Warrant will be converted into the right to receive the $2.00 in cash and 0.1935 Validus common shares, on a per share basis for each of the Flagstone shares subject to the Leyton Limited Warrant (the Leyton Limited Warrant will have value during the exercise period only if the value of the merger consideration during the exercise period is greater than the Leyton Limited Warrant’s exercise price, which, as of the date of the proxy statement/prospectus, is $13.96 per Flagstone share).
|
|
|
Share Repurchase Activity
(Expressed in thousands of U.S. dollars except for share and per share information)
|
||||||||||||||||||
|
|
As at June 30, 2012
|
|
|
|
|
|
|
|
Quarter ended
|
||||||||||
Effect of share repurchases:
|
|
(cumulative)
|
|
July
|
|
August
|
|
September
|
|
September 30, 2012
|
||||||||||
Aggregate purchase price (a)
|
|
$
|
1,168,422
|
|
|
$
|
22,805
|
|
|
$
|
15,618
|
|
|
$
|
—
|
|
|
$
|
38,423
|
|
Shares repurchased
|
|
41,963,429
|
|
|
$
|
696,347
|
|
|
$
|
478,281
|
|
|
$
|
—
|
|
|
$
|
1,174,628
|
|
|
Average price (a)
|
|
$
|
27.84
|
|
|
$
|
32.75
|
|
|
$
|
32.65
|
|
|
$
|
—
|
|
|
$
|
32.71
|
|
Estimated cumulative net accretive (dilutive) impact on:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Diluted BV per common share (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.42
|
|
|||||
Diluted EPS - Quarter (c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.63
|
|
|
|
Share Repurchase Activity
(Expressed in thousands of U.S. dollars except for share and per share information)
|
||||||||||
|
|
As at September 30, 2012
|
|
As at
|
|
|
||||||
Effect of share repurchases:
|
|
(cumulative)
|
|
November 5, 2012
|
|
Cumulative to Date Effect
|
||||||
Aggregate purchase price (a)
|
|
$
|
1,206,845
|
|
|
$
|
—
|
|
|
$
|
1,206,845
|
|
Shares repurchased
|
|
43,138,057
|
|
|
—
|
|
|
43,138,057
|
|
|||
Average price (a)
|
|
$
|
27.98
|
|
|
$
|
—
|
|
|
$
|
27.98
|
|
|
|
Exhibit
|
Description
|
Exhibit 2.1
|
Agreement and Plan of Merger, dated August 30, 2012, by and among Validus Holdings, Ltd., Validus UPS, Ltd., Flagstone Reinsurance Holdings, S.A. and Flagstone Reinsurance Holdings (Bermuda) Limited (Incorporated by reference from the Company's Current Report on Form 8-K filed on September 4, 2012).
|
|
|
Exhibit 10.1*
|
Amendment No. 1 to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Robert F. Kuzloski dated as of August 1, 2012.
|
|
|
Exhibit 10.2*
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Lixin Zeng dated as of November 1, 2012.
|
|
|
Exhibit 10.3
|
Amendment Letter, dated as of August 30, 2012, relating to a $25 million Standby Letter of Credit Facility dated as of 28 November 2007, among Talbot Holdings Ltd., as Borrower, Validus Holdings, Ltd., as Guarantor, Lloyds TSB Bank plc, as joint Mandated Lead Arranger, Agent, and Security Trustee, and ING Bank N.V., London Branch, as joint Mandated Lead Arranger, as amended (Incorporated by reference from the Company's Current Report on Form 8-K filed on September 4, 2012).
|
|
|
Exhibit 31.1*
|
Certification of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
Exhibit 31.2*
|
Certification of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
Exhibit 32*
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
|
|
|
Exhibit 101.1 INS*
|
XBRL Instance Document
|
|
|
Exhibit 101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
|
|
Exhibit 101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
Exhibit 101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
VALIDUS HOLDINGS, LTD.
|
|
|
(Registrant)
|
|
|
|
Date:
|
November 6, 2012
|
/s/ Edward J. Noonan
|
|
|
Edward J. Noonan
|
|
|
Chief Executive Officer
|
|
|
|
Date:
|
November 6, 2012
|
/s/ Joseph E. (Jeff) Consolino
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
President and Chief Financial Officer
|
1.
|
Section 3.01 of the Agreement is amended to read in its entirety as follows:
|
2.
|
Section 4.02 of the Agreement is amended to read in its entirety as follows:
|
If to the Executive:
|
To the last address delivered to the Company by the Executive in the manner set forth herein.
|
|
|
If to the Company:
|
Validus Holdings, Ltd.
29 Richmond Road Pembroke, HM08 Bermuda Attn: General Counsel |
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Validus Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
November 6, 2012
|
|
|
|
/s/ Edward J. Noonan
|
|
|
Edward J. Noonan
|
|
|
Chief Executive Officer
|
1.
|
I, Joseph
E.
(
Jeff
)
Consolino, certify that:
|
2.
|
I have reviewed this Quarterly Report on Form 10-Q of Validus Holdings, Ltd.;
|
3.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
4.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
5.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
6.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
November 6, 2012
|
|
|
|
/s/ Joseph E. (Jeff) Consolino
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
President and Chief Financial Officer
|
Dated:
|
November 6, 2012
|
|
|
|
/s/ Edward J. Noonan
|
|
|
Edward J. Noonan
|
|
|
Chief Executive Officer
|
|
|
Validus Holdings, Ltd.
|
Dated:
|
November 6, 2012
|
|
|
|
/s/ Joseph E. (Jeff) Consolino
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
President and Chief Financial Officer
|
|
|
Validus Holdings, Ltd.
|