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BERMUDA
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98-0501001
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class:
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Name of Each Exchange on Which Registered:
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Common Shares, $0.175 par value per share
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New York Stock Exchange
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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a
smaller reporting company)
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Smaller reporting company
o
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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•
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Raising approximately $1.0 billion of initial equity capital in December 2005 and underwriting $217.4 million in gross premiums written for the January 2006 renewal season;
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•
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At the time of the Company’s formation an executive management team was assembled with an average of 20 years of industry experience and senior expertise spanning multiple aspects of the global insurance and reinsurance business;
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•
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Building a risk analytics staff comprised of over 40 experts, many of whom have PhDs and Masters degrees in related fields;
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•
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Developing Validus Capital Allocation and Pricing System (“VCAPS”), a proprietary computer-based system for modeling, pricing, allocating capital and analyzing catastrophe-exposed risks;
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•
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Acquiring all of the outstanding shares of Talbot Holdings Ltd. on July 2, 2007;
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•
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Completing an initial public offering (“IPO”) on July 30, 2007;
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•
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Acquiring all of the outstanding shares of IPC Holdings Ltd. (“IPC”) on September 4, 2009;
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•
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Raising $185.0 million of initial capital for AlphaCat Re 2011, Ltd. (“AlphaCat Re 2011”) on May 25, 2011 and a further $71.0 million of additional capital on December 23, 2011;
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•
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Raising $500.0 million of capital for PaCRe, Ltd. ("PaCRe") a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance, on April 2, 2012;
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•
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Raising $70.0 million of capital for AlphaCat Re 2012, Ltd. (“AlphaCat Re 2012”) on May 29, 2012;
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•
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Acquiring all of the outstanding shares of Flagstone Reinsurance Holdings, S.A. ("Flagstone") on November 30, 2012;
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•
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Raising $230.0 million of capital for Alpha Cat 2013, Ltd. ("AlphaCat 2013") on December 17, 2012 and receiving $219.4 million of third party subscriptions for AlphaCat Insurance Linked Securities ("ILS") Funds;
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•
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Increasing the annual dividend by 20% from $1.00 to $1.20 per common share and per common share equivalent and announcing a $2.00 special dividend per common share and per common share equivalent on February 6, 2013; and
|
•
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Repurchasing approximately
43.7 million
common shares for an aggregate purchase price of
$1,227.1 million
and paying and aggregate amount of
$467.6 million
in dividends from inception of the Company to February 13, 2013.
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(a)
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AlphaCat Re 2012 and AlphaCat 2013 are non-consolidated operating affiliates.
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Year Ended December 31, 2012
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|||||
(Dollars in thousands)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
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|||
Bankers blanket bond
|
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$
|
20,933
|
|
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58.5
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%
|
Professional indemnity
|
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12,887
|
|
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36.0
|
%
|
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Directors’ and Officers’
|
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1,986
|
|
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5.5
|
%
|
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Total
|
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$
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35,806
|
|
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100.0
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%
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•
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Ceding companies may often report insufficient data and many reinsurers may not be sufficiently critical in their analysis of this data. The Company generally scrutinizes data for anomalies that may indicate insufficient data quality. These circumstances are addressed by either declining the program or, if the variances are manageable, by modifying the model output and pricing to reflect insufficient data quality;
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•
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Prior to making overall adjustments for changes in climate variables, other variables are carefully examined (for example, demand surge, storm surge, and secondary uncertainty); and
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•
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Pricing individual contracts frequently requires further adjustments to the three vendor models. Examples include bias in damage curves for commercial structures and occupancies and frequency of specific perils.
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•
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VCAPS takes into account annual limits, event/franchise/annual aggregate deductibles, and reinstatement premiums. This allows for more accurate evaluation of treaties with a broad range of features, including both common (reinstatement premium and annual limits) and complex features (second or third event coverage, aggregate excess of loss, attritional loss components, covers with varying attachment across different geographical zones or lines of businesses and covers with complicated structures); and
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•
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VCAPS use of 100,000-year simulations enables robust pricing of catastrophe-exposed business. This is possible in real-time operation because the Company has designed a computing hardware platform and software environment to accommodate the significant computing needs.
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•
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lines of business that a particular underwriter is authorized to write;
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•
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exposure limits by line of business;
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•
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contractual exposures and limits requiring mandatory referrals to the Chief Executive Officer at Validus Re and the Chief Executive Officer at Talbot; and
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•
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level of analysis to be performed by lines of business.
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•
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seek high quality clients who have demonstrated superior performance over an extended period;
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•
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evaluate our clients’ exposures and make adjustments where their exposure is not adequately reflected;
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•
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apply the comprehensive knowledge and experience of our entire underwriting team to make progressive and cohesive decisions about the business they underwrite;
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•
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employ our well-founded and carefully maintained market contacts within the group to enhance our robust distribution capabilities; and
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•
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refer submissions to the Chief Underwriting Officer at Validus Re, the Chief Executive Officer at Talbot, Chief Executive Officer at Validus Re and the Risk Committee of our Board of Directors according to our underwriting guidelines.
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•
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Validating that underwriting decisions are in accordance with risk appetite, authorities, agreed business plans and standards for type, quality and profitability of risk;
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•
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Providing an experienced and suitably qualified second review of individual risks;
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•
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Ensuring that risks identified as significant undergo the highest level of technical underwriting review;
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•
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Elevating technical underwriting queries and/or need for remedial actions on a timely basis; and
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•
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Improving data accuracy and coding for subsequent management reporting.
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•
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The TUL Executive Committee oversees the management of key risks with regard to strategy and reserves;
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•
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The Insurance Management Committee oversees the management of insurance risks;
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•
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The Operational Risk Committee oversees the management of risks related to people, processes, systems and external events; and
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•
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The Financial Risk Committee oversees the management of credit risks associated with reinsurers, brokers, coverholders and investments, market risk and liquidity risk.
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Year Ended December 31, 2012
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|||||||||||||||||||||
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Gross Premiums Written
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|||||||||||||||||||||
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Validus Re
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AlphaCat
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Talbot
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Corporate and Eliminations
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Total
|
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%
|
|||||||||||
United States
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$
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468,730
|
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$
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18,774
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|
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$
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120,086
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|
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$
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(7,285
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)
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$
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600,305
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|
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27.7
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%
|
Worldwide excluding United States (a)
|
40,168
|
|
|
—
|
|
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263,597
|
|
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(16,049
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)
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287,716
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|
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13.3
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%
|
|||||
Europe
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90,673
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|
|
1,333
|
|
|
50,262
|
|
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(2,868
|
)
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139,400
|
|
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6.4
|
%
|
|||||
Latin America and Caribbean
|
33,031
|
|
|
—
|
|
|
103,543
|
|
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(6,164
|
)
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|
130,410
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|
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6.0
|
%
|
|||||
Japan
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30,781
|
|
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—
|
|
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6,630
|
|
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(396
|
)
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37,015
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|
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1.7
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%
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|||||
Canada
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688
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|
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—
|
|
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12,243
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|
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(690
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)
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12,241
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|
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0.6
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%
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|||||
Rest of the world (b)
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68,754
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|
|
496
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|
|
—
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|
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—
|
|
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69,250
|
|
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3.2
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%
|
|||||
Sub-total, non United States
|
264,095
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|
|
1,829
|
|
|
436,275
|
|
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(26,167
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)
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|
676,032
|
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31.2
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%
|
|||||
Worldwide including United States
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101,594
|
|
|
1,000
|
|
|
65,084
|
|
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(3,552
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)
|
|
164,126
|
|
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7.6
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%
|
|||||
Marine and Aerospace (c)
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297,540
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—
|
|
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457,191
|
|
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(28,754
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)
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|
725,977
|
|
|
33.5
|
%
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|||||
Total
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$
|
1,131,959
|
|
|
$
|
21,603
|
|
|
$
|
1,078,636
|
|
|
$
|
(65,758
|
)
|
|
$
|
2,166,440
|
|
|
100.0
|
%
|
(a)
|
Represents risks in two or more geographic zones.
|
(b)
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Represents risk in one geographic zone.
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(c)
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Not classified by geographic area as marine and aerospace risks can span multiple geographic areas and are not fixed locations in some instances.
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•
|
budgeted underwriting for the coming year;
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•
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loss experience from prior years;
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•
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loss information from the coming year’s individual capital assessment calculations;
|
•
|
changes to risk limits and aggregation limits expected and any other changes to Talbot’s risk tolerance;
|
•
|
scenario planning;
|
•
|
changes to capital requirements; and
|
•
|
Realistic Disaster Scenarios (“RDSs”) prescribed by Lloyd’s.
|
|
|
Year Ended December 31, 2012
|
|||||||||||||||||||||
|
|
Gross Premiums Written
|
|||||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Corporate and Eliminations
|
|
Total
|
|
%
|
|||||||||||
Name of Broker
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Marsh & McLennan
|
|
$
|
399,325
|
|
|
$
|
7,426
|
|
|
$
|
244,776
|
|
|
$
|
(14,809
|
)
|
|
$
|
636,718
|
|
|
29.4
|
%
|
Aon Benfield Group Ltd.
|
|
400,018
|
|
|
6,133
|
|
|
180,234
|
|
|
(10,904
|
)
|
|
575,481
|
|
|
26.5
|
%
|
|||||
Willis Group Holdings Ltd.
|
|
187,353
|
|
|
3,418
|
|
|
167,249
|
|
|
(10,119
|
)
|
|
347,901
|
|
|
16.1
|
%
|
|||||
Sub-total
|
|
986,696
|
|
|
16,977
|
|
|
592,259
|
|
|
(35,832
|
)
|
|
1,560,100
|
|
|
72.0
|
%
|
|||||
All Others/Direct
|
|
145,263
|
|
|
4,626
|
|
|
486,377
|
|
|
(29,926
|
)
|
|
606,340
|
|
|
28.0
|
%
|
|||||
Total
|
|
$
|
1,131,959
|
|
|
$
|
21,603
|
|
|
$
|
1,078,636
|
|
|
$
|
(65,758
|
)
|
|
$
|
2,166,440
|
|
|
100.0
|
%
|
|
|
As at December 31, 2012
|
||||||||||
(Dollars in thousands)
|
|
Gross Case Reserves
|
|
Gross IBNR
|
|
Total Gross Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
930,553
|
|
|
$
|
892,227
|
|
|
$
|
1,822,780
|
|
Marine
|
|
522,907
|
|
|
477,948
|
|
|
1,000,855
|
|
|||
Specialty
|
|
265,638
|
|
|
428,300
|
|
|
693,938
|
|
|||
Total
|
|
$
|
1,719,098
|
|
|
$
|
1,798,475
|
|
|
$
|
3,517,573
|
|
|
|
As at December 31, 2012
|
||||||||||
(Dollars in thousands)
|
|
Net Case Reserves
|
|
Net IBNR
|
|
Total Net Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
768,722
|
|
|
$
|
803,182
|
|
|
$
|
1,571,904
|
|
Marine
|
|
465,080
|
|
|
438,009
|
|
|
903,089
|
|
|||
Specialty
|
|
230,584
|
|
|
372,029
|
|
|
602,613
|
|
|||
Total
|
|
$
|
1,464,386
|
|
|
$
|
1,613,220
|
|
|
$
|
3,077,606
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||||
(Dollars in thousands)
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012 (b)
|
||||||||||||||
Estimated liability for unpaid losses and loss expense, net of reinsurance recoverable
|
|
$
|
77,363
|
|
|
$
|
791,713
|
|
|
$
|
1,096,507
|
|
|
$
|
1,440,369
|
|
|
$
|
1,752,839
|
|
|
$
|
2,258,658
|
|
|
$
|
3,077,606
|
|
Liability—estimated as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
One year later
|
|
60,106
|
|
|
722,010
|
|
|
1,018,930
|
|
|
1,283,759
|
|
|
1,596,720
|
|
|
2,083,378
|
|
|
|
||||||||
Two years later
|
|
54,302
|
|
|
670,069
|
|
|
937,696
|
|
|
1,181,987
|
|
|
1,451,448
|
|
|
|
|
|
|||||||||
Three years later
|
|
50,149
|
|
|
606,387
|
|
|
902,161
|
|
|
1,085,664
|
|
|
|
|
|
|
|
||||||||||
Four years later
|
|
46,851
|
|
|
584,588
|
|
|
847,935
|
|
|
|
|
|
|
|
|
|
|||||||||||
Five years later
|
|
45,946
|
|
|
547,965
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Six years later
|
|
45,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cumulative redundancy (deficiency)(a)
|
|
32,164
|
|
|
243,748
|
|
|
248,572
|
|
|
354,705
|
|
|
301,391
|
|
|
175,280
|
|
|
|
||||||||
Cumulative paid losses, net of reinsurance recoveries, as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
One year later
|
|
$
|
27,180
|
|
|
$
|
216,469
|
|
|
$
|
353,476
|
|
|
$
|
384,828
|
|
|
$
|
476,779
|
|
|
$
|
631,889
|
|
|
|
||
Two years later
|
|
34,935
|
|
|
320,803
|
|
|
562,831
|
|
|
634,041
|
|
|
741,940
|
|
|
|
|
|
|||||||||
Three years later
|
|
39,520
|
|
|
350,521
|
|
|
662,319
|
|
|
744,324
|
|
|
|
|
|
|
|
||||||||||
Four years later
|
|
41,746
|
|
|
374,788
|
|
|
722,652
|
|
|
|
|
|
|
|
|
|
|||||||||||
Five years later
|
|
41,901
|
|
|
390,895
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Six years later
|
|
43,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
See Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion.
|
(b)
|
The reserves for losses and loss expenses or Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||||
(Dollars in thousands)
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012 (b)
|
||||||||||||||
Estimated gross liability for unpaid losses and loss expense
|
|
$
|
77,363
|
|
|
$
|
926,117
|
|
|
$
|
1,305,303
|
|
|
$
|
1,622,134
|
|
|
$
|
2,035,973
|
|
|
$
|
2,631,143
|
|
|
$
|
3,517,573
|
|
Liability—estimated as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
One year later
|
|
60,106
|
|
|
846,863
|
|
|
1,223,018
|
|
|
1,484,646
|
|
|
1,854,565
|
|
|
2,422,343
|
|
|
|
||||||||
Two years later
|
|
54,302
|
|
|
791,438
|
|
|
1,164,923
|
|
|
1,385,533
|
|
|
1,705,995
|
|
|
|
|
|
|||||||||
Three years later
|
|
50,149
|
|
|
745,624
|
|
|
1,134,043
|
|
|
1,288,915
|
|
|
|
|
|
|
|
||||||||||
Four years later
|
|
46,851
|
|
|
721,730
|
|
|
1,079,842
|
|
|
|
|
|
|
|
|
|
|||||||||||
Five years later
|
|
45,946
|
|
|
675,884
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Six years later
|
|
46,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cumulative redundancy (deficiency)(a)
|
|
31,259
|
|
|
250,233
|
|
|
225,461
|
|
|
333,219
|
|
|
329,978
|
|
|
208,800
|
|
|
|
||||||||
Cumulative paid losses, gross of reinsurance recoveries, as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
One year later
|
|
$
|
27,180
|
|
|
$
|
245,240
|
|
|
$
|
437,210
|
|
|
$
|
455,182
|
|
|
$
|
557,894
|
|
|
$
|
807,296
|
|
|
|
||
Two years later
|
|
34,935
|
|
|
394,685
|
|
|
706,249
|
|
|
709,309
|
|
|
878,406
|
|
|
|
|
|
|||||||||
Three years later
|
|
39,520
|
|
|
452,559
|
|
|
825,159
|
|
|
864,918
|
|
|
|
|
|
|
|
||||||||||
Four years later
|
|
41,746
|
|
|
480,277
|
|
|
898,338
|
|
|
|
|
|
|
|
|
|
|||||||||||
Five years later
|
|
41,901
|
|
|
496,511
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Six years later
|
|
43,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
See Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion.
|
(b)
|
The reserves for losses and loss expenses or Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2012
|
|
2011
|
|
2010
|
||||||
Reserve for losses and loss expenses, beginning of year
|
|
$
|
2,631,143
|
|
|
$
|
2,035,973
|
|
|
$
|
1,622,134
|
|
Losses and loss expenses recoverable
|
|
(372,485
|
)
|
|
(283,134
|
)
|
|
(181,765
|
)
|
|||
Net reserves for losses and loss expenses, beginning of year
|
|
2,258,658
|
|
|
1,752,839
|
|
|
1,440,369
|
|
|||
Net loss reserves acquired in Flagstone acquisition
|
|
639,641
|
|
|
—
|
|
|
—
|
|
|||
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
|
|
|
|
|
|
|
||||||
Current year
|
|
1,174,415
|
|
|
1,400,520
|
|
|
1,144,196
|
|
|||
Prior years
|
|
(174,969
|
)
|
|
(156,119
|
)
|
|
(156,610
|
)
|
|||
Total incurred losses and loss expenses
|
|
999,446
|
|
|
1,244,401
|
|
|
987,586
|
|
|||
Less net losses and loss expenses paid in respect of losses occurring in:
|
|
|
|
|
|
|
||||||
Current year
|
|
(182,146
|
)
|
|
(266,247
|
)
|
|
(288,594
|
)
|
|||
Prior years
|
|
(653,874
|
)
|
|
(476,779
|
)
|
|
(384,828
|
)
|
|||
Total net paid losses
|
|
(836,020
|
)
|
|
(743,026
|
)
|
|
(673,422
|
)
|
|||
Foreign exchange
|
|
15,881
|
|
|
4,444
|
|
|
(1,694
|
)
|
|||
Net reserve for losses and loss expenses, end of year
|
|
3,077,606
|
|
|
2,258,658
|
|
|
1,752,839
|
|
|||
Losses and loss expenses recoverable
|
|
439,967
|
|
|
372,485
|
|
|
283,134
|
|
|||
Reserve for losses and loss expenses, end of year
|
|
$
|
3,517,573
|
|
|
$
|
2,631,143
|
|
|
$
|
2,035,973
|
|
•
|
Arch Capital Group Limited, Argo Group International Holdings, Ltd., Aspen Insurance Holdings Limited, Alterra Capital Holdings, Ltd., Allied World Assurance Company Holdings Limited, Alleghany Corporation, Axis Capital Holdings Limited, Endurance Specialty Holdings Limited, Everest Re Group Limited, Montpelier Re Holdings Ltd, PartnerRe Ltd., Platinum Underwriters Holdings Ltd., and Renaissance Reinsurance Holdings Ltd.;
|
•
|
Amlin plc, Catlin Group Limited, Hiscox and others in the Lloyd’s market;
|
•
|
Treaty and direct insurers, in not only the global but also the London Market, that compete with Lloyd’s on a worldwide basis;
|
•
|
Various capital markets participants who access insurance and reinsurance business in securitized form, through special purpose entities or derivative transactions; and
|
•
|
Government-sponsored insurers and reinsurers.
|
•
|
Premiums charged and other terms and conditions offered;
|
•
|
Services provided;
|
•
|
Financial ratings assigned by independent rating agencies;
|
•
|
Speed of claims payment;
|
•
|
Reputation;
|
•
|
Perceived financial strength; and
|
•
|
The experience of the underwriter in the line of insurance or reinsurance written.
|
•
|
Proportionality principle;
|
•
|
Corporate Governance;
|
•
|
Risk Management;
|
•
|
Governance Mechanism;
|
•
|
Outsourcing; and
|
•
|
Market Discipline and Disclosure.
|
•
|
A new Prudential Regulation Authority (“PRA”) will be responsible for the day-to-day supervision of financial institutions that are subject to significant prudential regulation. It will adopt a more judgment-focused approach to regulation so that business models can be challenged, risks identified and action taken to preserve financial stability.
|
•
|
A new Financial Conduct Authority (“FCA”) will have a strong mandate for promoting confidence and transparency in financial services and to give greater protection for consumers of financial services.
|
Location
|
|
Validus Re
|
|
Talbot
|
|
AlphaCat
|
|
Corporate
|
|
Total
|
|
%
|
||||||
London, England
|
|
—
|
|
|
302
|
|
|
—
|
|
|
—
|
|
|
302
|
|
|
48.0
|
%
|
Pembroke, Bermuda
|
|
65
|
|
|
—
|
|
|
5
|
|
|
50
|
|
|
120
|
|
|
19.0
|
%
|
Halifax, Canada
|
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|
9.5
|
%
|
Hyderabad, India
|
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
4.4
|
%
|
Waterloo, Canada
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
26
|
|
|
4.1
|
%
|
Republic of Singapore
|
|
9
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
3.5
|
%
|
New York, United States
|
|
—
|
|
|
11
|
|
|
—
|
|
|
9
|
|
|
20
|
|
|
3.2
|
%
|
Miami, United States
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
2.7
|
%
|
Martigny, Switzerland
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
1.9
|
%
|
Dubai, United Arab Emirates
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
1.1
|
%
|
Santiago, Chile
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
1.0
|
%
|
Toronto, Canada
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
0.8
|
%
|
Luxembourg City, Luxembourg
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
0.6
|
%
|
Hamburg, Germany
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
0.2
|
%
|
Total
|
|
202
|
|
|
333
|
|
|
5
|
|
|
90
|
|
|
630
|
|
|
100.0
|
%
|
•
|
integrating financial and operational reporting systems;
|
•
|
integration into new geographical regions;
|
•
|
establishing satisfactory budgetary and other financial controls;
|
•
|
funding increased capital needs and overhead expenses;
|
•
|
obtaining management personnel required for expanded operations;
|
•
|
obtaining necessary regulatory permissions;
|
•
|
funding cash flow shortages that may occur if anticipated sales and revenues are not realized or are delayed, whether by general economic or market conditions or unforeseen internal difficulties;
|
•
|
the value of assets related to acquisitions or new ventures may be lower than expected or may diminish due to credit defaults or changes in interest rates and liabilities assumed may be greater than expected;
|
•
|
the assets and liabilities related to acquisitions or new ventures may be subject to foreign currency exchange rate fluctuation; and
|
•
|
financial exposures in the event that the sellers of the entities we acquire are unable or unwilling to meet their indemnification, reinsurance and other obligations to us.
|
•
|
A new Prudential Regulation Authority (“PRA”) will be responsible for the day-to-day supervision of financial institutions that are subject to significant prudential regulation. It will adopt a more judgment-focused approach to regulation so that business models can be challenged, risks identified and action taken to preserve financial stability.
|
•
|
A new Financial Conduct Authority (“FCA”) will have a strong mandate for promoting confidence and transparency in financial services and to give greater protection for consumers of financial services.
|
Legal entity
|
|
Location
|
|
Expiration date
|
Validus Holdings, Ltd. and Validus Reinsurance, Ltd.
|
|
Pembroke, Bermuda
|
|
December 31, 2021
|
Validus Reinsurance, Ltd.
|
|
Hamburg, Germany
|
|
January 1, 2014
|
Validus Research Inc.
|
|
Waterloo, Canada
|
|
March 31, 2015
|
Validus Research Inc.
|
|
Toronto, Canada
|
|
March 31, 2013
|
Validus Reaseguros, Inc.
|
|
Miami, Florida, USA
|
|
April 1, 2018
|
Validus Services, Inc.
|
|
New York, New York, USA
|
|
November 8, 2015
|
Talbot Underwriting Services (U.S.) Ltd.
|
|
New York, New York, USA
|
|
November 8, 2015
|
Validus Re Americas (New Jersey), Inc.
|
|
Princeton, New Jersey, USA
|
|
June 30, 2022
|
Talbot Holdings Ltd. and Talbot Underwriting Services Ltd.
|
|
London, England
|
|
June 22, 2024
|
Validus Reinsurance, Ltd.
|
|
Republic of Singapore
|
|
August 31, 2013
|
Talbot Risk Services PTE Ltd.
|
|
Republic of Singapore
|
|
December 31, 2015
|
Talbot Underwriting Services (MENA) Ltd.
|
|
Dubai, United Arab Emirates
|
|
January 31, 2014
|
Validus Re Chile S.A.
|
|
Santiago, Chile
|
|
May 1, 2014
|
Flagstone Management Services (Halifax)
|
|
Halifax, Canada
|
|
July 31, 2014
|
Flagstone Bermuda Holdings
|
|
Hamilton, Bermuda
|
|
June 1, 2016
|
Flagstone Reinsurance (Africa)
|
|
South Africa
|
|
August 31, 2014
|
Flagstone Reinsurance Holdings Limited
|
|
Hamilton, Bermuda
|
|
September 30, 2015
|
Name
|
|
Age
|
|
Position
|
Edward J. Noonan
|
|
54
|
|
Chairman of the Board of Directors and Chief Executive Officer of the Validus Group
|
Joseph E. (Jeff) Consolino
|
|
46
|
|
Director, President and Chief Financial Officer
|
Jeffrey D. Sangster
|
|
40
|
|
Executive Vice President and Chief Accounting Officer
|
C.N. Rupert Atkin
|
|
54
|
|
Chief Executive Officer of the Talbot Group
|
Kean D. Driscoll
|
|
39
|
|
Executive Vice President and Chief Executive Officer of Validus Reinsurance, Ltd.
|
Andrew E. Kudera
|
|
53
|
|
Executive Vice President and Chief Actuary
|
Robert F. Kuzloski
|
|
49
|
|
Executive Vice President and General Counsel
|
Stuart W. Mercer
|
|
53
|
|
Executive Vice President and Chief Risk Officer
|
Jonathan P. Ritz
|
|
45
|
|
Executive Vice President and Chief Operating Officer
|
Lixin Zeng
|
|
44
|
|
Executive Vice President and Chief Executive Officer of AlphaCat Managers, Ltd. and Validus Research Inc.
|
|
High
|
|
Low
|
||||
2012:
|
|
|
|
||||
1st Quarter
|
$
|
32.51
|
|
|
$
|
29.97
|
|
2nd Quarter
|
$
|
33.25
|
|
|
$
|
30.41
|
|
3rd Quarter
|
$
|
34.91
|
|
|
$
|
31.62
|
|
4th Quarter
|
$
|
37.63
|
|
|
$
|
33.11
|
|
|
High
|
|
Low
|
||||
2011:
|
|
|
|
||||
1st Quarter
|
$
|
33.72
|
|
|
$
|
28.86
|
|
2nd Quarter
|
$
|
34.95
|
|
|
$
|
29.44
|
|
3rd Quarter
|
$
|
31.35
|
|
|
$
|
23.24
|
|
4th Quarter
|
$
|
31.77
|
|
|
$
|
23.87
|
|
|
|
|
|
Share Repurchase Activity by Quarter
|
||||||||||||||||
Effect of share repurchases:
|
|
As at December 31, 2011 (cumulative)
|
|
Quarter ended March 31, 2012
|
|
Quarter ended June 30, 2012
|
|
Quarter ended September 30, 2012
|
|
Quarter ended December 31, 2012
|
||||||||||
|
|
(Dollars in thousands, except share and per share amounts)
|
||||||||||||||||||
Aggregate purchase price(a)
|
|
$
|
947,170
|
|
|
$
|
11,308
|
|
|
$
|
209,944
|
|
|
$
|
38,423
|
|
|
$
|
—
|
|
Shares repurchased
|
|
35,031,985
|
|
|
372,560
|
|
|
6,558,884
|
|
|
1,174,628
|
|
|
—
|
|
|||||
Average price(a)
|
|
$
|
27.04
|
|
|
$
|
30.35
|
|
|
$
|
32.01
|
|
|
$
|
32.71
|
|
|
$
|
—
|
|
Estimated net cumulative accretive (dilutive) impact on:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted BV per common share(b)
|
|
|
|
$
|
1.49
|
|
|
$
|
1.87
|
|
|
$
|
2.42
|
|
|
$
|
1.93
|
|
||
Diluted EPS—Quarter(c)
|
|
|
|
0.29
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
|
$
|
0.32
|
|
|
|
|
|
Share Repurchase Activity Post Year End
|
|
|
||||||||||||||
Effect of share repurchases:
|
|
As at December 31, 2012 (cumulative)
|
|
January
|
|
February
|
|
As at February 13, 2013
|
|
Cumulative to Date
Effect
|
||||||||||
|
|
(Dollars in thousands, except share and per share amounts)
|
||||||||||||||||||
Aggregate purchase price(a)
|
|
$
|
1,206,845
|
|
|
$
|
—
|
|
|
$
|
20,218
|
|
|
$
|
20,218
|
|
|
$
|
1,227,063
|
|
Shares repurchased
|
|
43,138,057
|
|
|
—
|
|
|
550,576
|
|
|
550,576
|
|
|
43,688,633
|
|
|||||
Average price(a)
|
|
$
|
27.98
|
|
|
$
|
—
|
|
|
$
|
36.72
|
|
|
$
|
36.72
|
|
|
$
|
28.09
|
|
(a)
|
Share transactions are on a trade date basis through
February 13, 2013
and are inclusive of commissions. Average share price is rounded to two decimal places.
|
(b)
|
As the average price per share repurchased during the periods
2010
,
2011
and
2012
was lower than the book value per common share, the repurchase of shares increased the ending book value per share.
|
(c)
|
The estimated impact on diluted earnings per share was calculated by comparing reported results versus i) net income per share plus an estimate of lost net investment income on the cumulative share repurchases divided by ii) weighted average diluted shares outstanding excluding the weighted average impact of cumulative share repurchases. The impact of cumulative share repurchases was accretive to diluted earnings per share.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(Dollars in thousands, except share and per share amounts)
|
||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
$
|
2,166,440
|
|
|
$
|
2,124,691
|
|
|
$
|
1,990,566
|
|
|
$
|
1,621,241
|
|
|
$
|
1,362,484
|
|
Reinsurance premiums ceded
|
(307,506
|
)
|
|
(289,241
|
)
|
|
(229,482
|
)
|
|
(232,883
|
)
|
|
(124,160
|
)
|
|||||
Net premiums written
|
1,858,934
|
|
|
1,835,450
|
|
|
1,761,084
|
|
|
1,388,358
|
|
|
1,238,324
|
|
|||||
Change in unearned premiums
|
14,282
|
|
|
(33,307
|
)
|
|
39
|
|
|
61,219
|
|
|
18,194
|
|
|||||
Net premiums earned
|
1,873,216
|
|
|
1,802,143
|
|
|
1,761,123
|
|
|
1,449,577
|
|
|
1,256,518
|
|
|||||
Gain on bargain purchase, net of expenses (a)
|
17,701
|
|
|
—
|
|
|
—
|
|
|
287,099
|
|
|
—
|
|
|||||
Net investment income
|
107,936
|
|
|
112,296
|
|
|
134,103
|
|
|
118,773
|
|
|
139,528
|
|
|||||
Realized gain on repurchase of debentures
|
—
|
|
|
—
|
|
|
—
|
|
|
4,444
|
|
|
8,752
|
|
|||||
Net realized gains (losses) on investments
|
18,233
|
|
|
28,532
|
|
|
32,498
|
|
|
(11,543
|
)
|
|
(1,591
|
)
|
|||||
Net unrealized gains (losses) on investments
|
17,585
|
|
|
(19,991
|
)
|
|
45,952
|
|
|
84,796
|
|
|
(79,707
|
)
|
|||||
(Loss) from investment affiliate
|
(964
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other income
|
22,396
|
|
|
5,718
|
|
|
5,219
|
|
|
4,634
|
|
|
5,264
|
|
|||||
Foreign exchange gains (losses)
|
4,798
|
|
|
(22,124
|
)
|
|
1,351
|
|
|
(674
|
)
|
|
(49,397
|
)
|
|||||
Total revenues
|
2,060,901
|
|
|
1,906,574
|
|
|
1,980,246
|
|
|
1,937,106
|
|
|
1,279,367
|
|
|||||
Expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
999,446
|
|
|
1,244,401
|
|
|
987,586
|
|
|
523,757
|
|
|
772,154
|
|
|||||
Policy acquisition costs
|
334,698
|
|
|
314,184
|
|
|
292,899
|
|
|
262,966
|
|
|
234,951
|
|
|||||
General and administrative expenses
|
263,652
|
|
|
197,497
|
|
|
209,290
|
|
|
185,568
|
|
|
123,948
|
|
|||||
Share compensation expenses
|
26,709
|
|
|
34,296
|
|
|
28,911
|
|
|
27,037
|
|
|
27,097
|
|
|||||
Finance expenses
|
53,857
|
|
|
54,817
|
|
|
55,870
|
|
|
44,130
|
|
|
57,318
|
|
|||||
Transaction expenses (b)
|
—
|
|
|
17,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total expenses
|
1,678,362
|
|
|
1,862,628
|
|
|
1,574,556
|
|
|
1,043,458
|
|
|
1,215,468
|
|
|||||
Net income before taxes and income from operating affiliates
|
382,539
|
|
|
43,946
|
|
|
405,690
|
|
|
893,648
|
|
|
63,899
|
|
|||||
Tax (expense) benefit
|
(2,501
|
)
|
|
(824
|
)
|
|
(3,126
|
)
|
|
3,759
|
|
|
(10,788
|
)
|
|||||
Income from operating affiliates
|
12,580
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
392,618
|
|
|
43,122
|
|
|
402,564
|
|
|
897,407
|
|
|
53,111
|
|
|||||
Net loss (income) attributable to noncontrolling interest
|
15,820
|
|
|
(21,793
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income available to Validus
|
408,438
|
|
|
21,329
|
|
|
402,564
|
|
|
897,407
|
|
|
53,111
|
|
|||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
3,648
|
|
|
(1,146
|
)
|
|
(604
|
)
|
|
3,007
|
|
|
(7,809
|
)
|
|||||
Comprehensive income
|
$
|
412,086
|
|
|
$
|
20,183
|
|
|
$
|
401,960
|
|
|
$
|
900,414
|
|
|
$
|
45,302
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average number of common shares and common share equivalents outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
97,184,110
|
|
|
98,607,439
|
|
|
116,018,364
|
|
|
93,697,194
|
|
|
74,677,903
|
|
|||||
Diluted
|
102,384,923
|
|
|
100,928,284
|
|
|
120,630,945
|
|
|
97,168,409
|
|
|
75,819,413
|
|
|||||
Basic earnings per share available to common shareholders
|
$
|
4.13
|
|
|
$
|
0.14
|
|
|
$
|
3.41
|
|
|
$
|
9.51
|
|
|
$
|
0.62
|
|
Diluted earnings per share available to common shareholders
|
$
|
3.99
|
|
|
$
|
0.14
|
|
|
$
|
3.34
|
|
|
$
|
9.24
|
|
|
$
|
0.61
|
|
Cash dividends declared per share
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
0.88
|
|
|
$
|
0.80
|
|
|
$
|
0.80
|
|
Selected financial ratios
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses (c)
|
53.4
|
%
|
|
69.1
|
%
|
|
56.1
|
%
|
|
36.1
|
%
|
|
61.5
|
%
|
|||||
Policy acquisition cost (d)
|
17.9
|
%
|
|
17.4
|
%
|
|
16.6
|
%
|
|
18.1
|
%
|
|
18.7
|
%
|
|||||
General and administrative expense (e)
|
15.5
|
%
|
|
12.9
|
%
|
|
13.5
|
%
|
|
14.7
|
%
|
|
12.0
|
%
|
|||||
Expense ratio (f)
|
33.4
|
%
|
|
30.3
|
%
|
|
30.1
|
%
|
|
32.8
|
%
|
|
30.7
|
%
|
|||||
Combined ratio (g)
|
86.8
|
%
|
|
99.4
|
%
|
|
86.2
|
%
|
|
68.9
|
%
|
|
92.2
|
%
|
|||||
Annualized return on average equity (h)
|
11.3
|
%
|
|
0.6
|
%
|
|
10.8
|
%
|
|
31.8
|
%
|
|
2.7
|
%
|
|
As at December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
(Dollars in thousands, except share and per share amounts)
|
||||||||||||||||||
Summary Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments at fair value
|
$
|
6,764,032
|
|
|
$
|
5,191,123
|
|
|
$
|
5,118,859
|
|
|
$
|
5,388,759
|
|
|
$
|
2,831,537
|
|
Cash and cash equivalents
|
1,219,379
|
|
|
832,844
|
|
|
620,740
|
|
|
387,585
|
|
|
449,848
|
|
|||||
Total assets
|
10,020,264
|
|
|
7,618,471
|
|
|
7,060,878
|
|
|
7,019,140
|
|
|
4,322,480
|
|
|||||
Reserve for losses and loss expenses
|
3,517,573
|
|
|
2,631,143
|
|
|
2,035,973
|
|
|
1,622,134
|
|
|
1,305,303
|
|
|||||
Unearned premiums
|
894,362
|
|
|
772,382
|
|
|
728,516
|
|
|
724,104
|
|
|
539,450
|
|
|||||
Senior notes payable
|
247,090
|
|
|
246,982
|
|
|
246,874
|
|
|
—
|
|
|
—
|
|
|||||
Debentures payable
|
540,709
|
|
|
289,800
|
|
|
289,800
|
|
|
289,800
|
|
|
304,300
|
|
|||||
Total shareholders’ equity
|
4,455,107
|
|
|
3,448,425
|
|
|
3,504,831
|
|
|
4,031,120
|
|
|
1,938,734
|
|
|||||
Book value per common share (i)
|
37.26
|
|
|
34.67
|
|
|
35.76
|
|
|
31.38
|
|
|
25.64
|
|
|||||
Diluted book value per common share (j)
|
35.22
|
|
|
32.28
|
|
|
32.98
|
|
|
29.68
|
|
|
23.78
|
|
(a)
|
The gain on bargain purchase, net of expenses, arises from the acquisition of Flagstone on November 30, 2012 and IPC on September 4, 2009 and is net of transaction related expenses.
|
(b)
|
The transaction expenses relate to cost 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.
|
(c)
|
The loss and loss expense ratio is calculated by dividing losses and loss expenses by net premiums earned.
|
(d)
|
The policy acquisition cost ratio is calculated by dividing policy acquisition costs by net premiums earned.
|
(e)
|
The general and administrative expense ratio is calculated by dividing the sum of general and administrative expenses and share compensation expenses by net premiums earned.
|
(f)
|
The expense ratio is calculated by combining the policy acquisition cost ratio and the general and administrative expense ratio.
|
(g)
|
The combined ratio is calculated by combining the loss ratio, the policy acquisition cost ratio and the general and administrative expense ratio.
|
(h)
|
Return on average equity is calculated by dividing the net income available to Validus for the period by the average shareholders’ equity available to Validus during the period. Quarterly average shareholders’ equity is the average of the beginning and ending shareholders’ equity balances. Annual average shareholders’ equity is the average of the beginning, ending and intervening quarter end shareholders’ equity balances.
|
(i)
|
Book value per common share is defined as total shareholders’ equity available to Validus divided by the number of common shares outstanding as at the end of the period, giving no effect to dilutive securities.
|
(j)
|
Diluted book value per common share is calculated based on total shareholders’ equity available to Validus plus the assumed proceeds from the exercise of outstanding options and warrants, divided by the sum of common shares, unvested restricted shares, options and warrants outstanding (assuming their exercise).
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
||||||||||||
|
2012
|
|
2011
|
|
|
2012
|
|
2011
|
|
2010
|
|||||
Annualized return on average equity
|
(9.5
|
)%
|
|
3.2
|
%
|
|
|
11.3
|
%
|
|
0.6
|
%
|
|
10.8
|
%
|
|
|
As at December 31, 2012
|
||||||||||
(Dollars in thousands)
|
|
Gross Case
Reserves
|
|
Gross
IBNR
|
|
Total Gross
Reserve for
Losses and
Loss Expenses
|
||||||
Validus Re
|
|
$
|
1,009,434
|
|
|
$
|
1,113,461
|
|
|
$
|
2,122,895
|
|
AlphaCat
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|||
Talbot
|
|
760,149
|
|
|
720,158
|
|
|
1,480,307
|
|
|||
Eliminations
|
|
(55,485
|
)
|
|
(35,144
|
)
|
|
(90,629
|
)
|
|||
Total
|
|
$
|
1,719,098
|
|
|
$
|
1,798,475
|
|
|
$
|
3,517,573
|
|
|
|
As at December 31, 2011
|
||||||||||
(Dollars in thousands)
|
|
Gross Case
Reserves
|
|
Gross
IBNR
|
|
Total Gross
Reserve for
Losses and
Loss Expenses
|
||||||
Validus Re
|
|
$
|
765,299
|
|
|
$
|
585,550
|
|
|
$
|
1,350,849
|
|
AlphaCat
|
|
—
|
|
|
10,000
|
|
|
10,000
|
|
|||
Talbot
|
|
703,965
|
|
|
673,596
|
|
|
1,377,561
|
|
|||
Eliminations
|
|
(54,822
|
)
|
|
(52,445
|
)
|
|
(107,267
|
)
|
|||
Total
|
|
$
|
1,414,442
|
|
|
$
|
1,216,701
|
|
|
$
|
2,631,143
|
|
Change in assumption
|
|
Reserve for losses and loss
expenses
|
||
|
|
(Dollars in thousands)
|
||
Six month acceleration
|
|
$
|
2,661,432
|
|
Three month acceleration
|
|
2,855,922
|
|
|
No change (selected)
|
|
3,077,606
|
|
|
Three month deceleration
|
|
3,325,264
|
|
|
Six month deceleration
|
|
3,598,079
|
|
Change in assumption
|
|
Reserve for losses and loss
expenses
|
||
|
|
(Dollars in thousands)
|
||
10% favorable
|
|
$
|
2,959,320
|
|
5% favorable
|
|
3,018,463
|
|
|
No change (selected)
|
|
3,077,606
|
|
|
5% unfavorable
|
|
3,136,749
|
|
|
10% unfavorable
|
|
3,195,892
|
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross
Written
Premiums
|
|
Gross
Written
Premiums (%)
|
|
Gross
Written
Premiums
|
|
Gross
Written
Premiums (%)
|
|
Gross
Written
Premiums
|
|
Gross
Written
Premiums (%)
|
|||||||||
Proportional
|
|
$
|
333,469
|
|
|
15.4
|
%
|
|
$
|
267,378
|
|
|
12.6
|
%
|
|
$
|
260,149
|
|
|
13.1
|
%
|
Non-proportional
|
|
1,832,971
|
|
|
84.6
|
%
|
|
1,857,313
|
|
|
87.4
|
%
|
|
1,730,417
|
|
|
86.9
|
%
|
|||
Total
|
|
$
|
2,166,440
|
|
|
100.0
|
%
|
|
$
|
2,124,691
|
|
|
100.0
|
%
|
|
$
|
1,990,566
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended December 31,
|
||||||||||||||||
(Dollars in thousands)
|
|
2012 (a)
|
|
2011
|
|
2012 (a)
|
|
2011
|
|
2010
|
||||||||||
Gross premiums written
|
|
$
|
311,847
|
|
|
$
|
278,279
|
|
|
$
|
2,166,440
|
|
|
$
|
2,124,691
|
|
|
1,990,566
|
|
|
Reinsurance premiums ceded
|
|
(35,659
|
)
|
|
(16,489
|
)
|
|
(307,506
|
)
|
|
(289,241
|
)
|
|
(229,482
|
)
|
|||||
Net premiums written
|
|
276,188
|
|
|
261,790
|
|
|
1,858,934
|
|
|
1,835,450
|
|
|
1,761,084
|
|
|||||
Change in unearned premiums
|
|
223,098
|
|
|
226,556
|
|
|
14,282
|
|
|
(33,307
|
)
|
|
39
|
|
|||||
Net premiums earned
|
|
499,286
|
|
|
488,346
|
|
|
1,873,216
|
|
|
1,802,143
|
|
|
1,761,123
|
|
|||||
Losses and loss expenses
|
|
458,310
|
|
|
334,829
|
|
|
999,446
|
|
|
1,244,401
|
|
|
987,586
|
|
|||||
Policy acquisition costs
|
|
81,814
|
|
|
81,253
|
|
|
334,698
|
|
|
314,184
|
|
|
292,899
|
|
|||||
General and administrative expenses
|
|
65,095
|
|
|
52,253
|
|
|
263,652
|
|
|
197,497
|
|
|
209,290
|
|
|||||
Share compensation expenses
|
|
7,126
|
|
|
7,237
|
|
|
26,709
|
|
|
34,296
|
|
|
28,911
|
|
|||||
Total underwriting deductions
|
|
612,345
|
|
|
475,572
|
|
|
1,624,505
|
|
|
1,790,378
|
|
|
1,518,686
|
|
|||||
Underwriting (loss) income (b)
|
|
(113,059
|
)
|
|
12,774
|
|
|
248,711
|
|
|
11,765
|
|
|
242,437
|
|
|||||
Net investment income
|
|
28,802
|
|
|
28,080
|
|
|
107,936
|
|
|
112,296
|
|
|
134,103
|
|
|||||
Other income
|
|
187
|
|
|
3,517
|
|
|
22,396
|
|
|
5,718
|
|
|
5,219
|
|
|||||
Finance expenses
|
|
(14,510
|
)
|
|
(13,520
|
)
|
|
(53,857
|
)
|
|
(54,817
|
)
|
|
(55,870
|
)
|
|||||
Operating (loss) income before taxes and (loss) income from operating affilites (b)
|
|
(98,580
|
)
|
|
30,851
|
|
|
325,186
|
|
|
74,962
|
|
|
325,889
|
|
|||||
Tax (expense) benefit
|
|
(615
|
)
|
|
226
|
|
|
(2,501
|
)
|
|
(824
|
)
|
|
(3,126
|
)
|
|||||
(Loss) income from operating affiliates
|
|
(614
|
)
|
|
—
|
|
|
12,580
|
|
|
—
|
|
|
—
|
|
|||||
Net operating (loss) income (b)
|
|
(99,809
|
)
|
|
31,077
|
|
|
335,265
|
|
|
74,138
|
|
|
322,763
|
|
|||||
Gain on bargain purchase, net of expenses (c)
|
|
21,485
|
|
|
—
|
|
|
17,701
|
|
|
—
|
|
|
—
|
|
|||||
Net realized (losses) gains on investments
|
|
(4,516
|
)
|
|
5,355
|
|
|
18,233
|
|
|
28,532
|
|
|
32,498
|
|
|||||
Net unrealized (losses) gains on investments
|
|
(35,857
|
)
|
|
2,159
|
|
|
17,585
|
|
|
(19,991
|
)
|
|
45,952
|
|
|||||
(Loss) from investment affiliate
|
|
(406
|
)
|
|
—
|
|
|
(964
|
)
|
|
—
|
|
|
—
|
|
|||||
Foreign exchange gains (losses)
|
|
1,181
|
|
|
266
|
|
|
4,798
|
|
|
(22,124
|
)
|
|
1,351
|
|
|||||
Transaction expenses (d)
|
|
—
|
|
|
(3,850
|
)
|
|
—
|
|
|
(17,433
|
)
|
|
—
|
|
|||||
Net (loss) income
|
|
(117,922
|
)
|
|
35,007
|
|
|
392,618
|
|
|
43,122
|
|
|
402,564
|
|
|||||
Net loss (income) attributable to noncontrolling interest
|
|
27,206
|
|
|
(7,683
|
)
|
|
15,820
|
|
|
(21,793
|
)
|
|
—
|
|
|||||
Net (loss) income (attributable) available to Validus
|
|
$
|
(90,716
|
)
|
|
$
|
27,324
|
|
|
$
|
408,438
|
|
|
$
|
21,329
|
|
|
$
|
402,564
|
|
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums written / Gross premiums written
|
|
88.6
|
%
|
|
94.1
|
%
|
|
85.8
|
%
|
|
86.4
|
%
|
|
88.5
|
%
|
|||||
Losses and loss expenses
|
|
91.8
|
%
|
|
68.6
|
%
|
|
53.4
|
%
|
|
69.1
|
%
|
|
56.1
|
%
|
|||||
Policy acquisition costs
|
|
16.4
|
%
|
|
16.6
|
%
|
|
17.9
|
%
|
|
17.4
|
%
|
|
16.6
|
%
|
|||||
General and administrative expenses (e)
|
|
14.5
|
%
|
|
12.2
|
%
|
|
15.5
|
%
|
|
12.9
|
%
|
|
13.5
|
%
|
|||||
Expense ratio
|
|
30.9
|
%
|
|
28.8
|
%
|
|
33.4
|
%
|
|
30.3
|
%
|
|
30.1
|
%
|
|||||
Combined ratio
|
|
122.7
|
%
|
|
97.4
|
%
|
|
86.8
|
%
|
|
99.4
|
%
|
|
86.2
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and 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. Reconciliations of these measures to the most comparable U.S. GAAP financial measure, are presented in the section below entitled “Underwriting Income.”
|
(c)
|
The gain on bargain purchase, net of expenses, arises from the acquisition of Flagstone on November 30, 2012 and is net of transaction related expenses.
|
(d)
|
The transaction expenses relate to costs incurred in connection with the Company’s proposed acquisition of Transatlantic. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
(e)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended December 31,
|
||||||||||||||||
(Dollars in thousands)
|
|
2012 (a)
|
|
2011
|
|
2012 (a)
|
|
2011
|
|
2010
|
||||||||||
Validus Re
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
79,233
|
|
|
$
|
55,851
|
|
|
$
|
1,131,959
|
|
|
$
|
1,114,493
|
|
|
$
|
1,089,443
|
|
Reinsurance premiums ceded
|
|
(7,074
|
)
|
|
(49
|
)
|
|
(144,578
|
)
|
|
(150,718
|
)
|
|
(63,147
|
)
|
|||||
Net premiums written
|
|
72,159
|
|
|
55,802
|
|
|
987,381
|
|
|
963,775
|
|
|
1,026,296
|
|
|||||
Change in unearned premiums
|
|
213,105
|
|
|
196,679
|
|
|
35,890
|
|
|
2,150
|
|
|
13,822
|
|
|||||
Net premiums earned
|
|
285,264
|
|
|
252,481
|
|
|
1,023,271
|
|
|
965,925
|
|
|
1,040,118
|
|
|||||
Losses and loss expenses
|
|
331,130
|
|
|
215,903
|
|
|
575,416
|
|
|
749,305
|
|
|
601,610
|
|
|||||
Policy acquisition costs
|
|
40,703
|
|
|
39,227
|
|
|
154,362
|
|
|
154,582
|
|
|
159,527
|
|
|||||
General and administrative expenses
|
|
14,716
|
|
|
11,716
|
|
|
63,048
|
|
|
44,663
|
|
|
45,613
|
|
|||||
Share compensation expenses
|
|
1,849
|
|
|
2,191
|
|
|
7,763
|
|
|
9,309
|
|
|
7,181
|
|
|||||
Total underwriting deductions
|
|
388,398
|
|
|
269,037
|
|
|
800,589
|
|
|
957,859
|
|
|
813,931
|
|
|||||
Underwriting (loss) income (b)
|
|
(103,134
|
)
|
|
(16,556
|
)
|
|
222,682
|
|
|
8,066
|
|
|
226,187
|
|
|||||
AlphaCat
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
(4
|
)
|
|
$
|
(1,323
|
)
|
|
$
|
21,603
|
|
|
$
|
75,727
|
|
|
$
|
11,796
|
|
Reinsurance premiums ceded
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net premiums written
|
|
(4
|
)
|
|
(1,323
|
)
|
|
21,603
|
|
|
75,727
|
|
|
11,796
|
|
|||||
Change in unearned premiums
|
|
5,895
|
|
|
27,834
|
|
|
(3,937
|
)
|
|
(9,761
|
)
|
|
(714
|
)
|
|||||
Net premiums earned
|
|
5,891
|
|
|
26,511
|
|
|
17,666
|
|
|
65,966
|
|
|
11,082
|
|
|||||
Losses and loss expenses
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|||||
Policy acquisition costs
|
|
589
|
|
|
3,331
|
|
|
1,774
|
|
|
7,946
|
|
|
1,072
|
|
|||||
General and administrative expenses
|
|
2,011
|
|
|
6,807
|
|
|
7,532
|
|
|
10,929
|
|
|
5,327
|
|
|||||
Share compensation expenses
|
|
84
|
|
|
33
|
|
|
279
|
|
|
107
|
|
|
594
|
|
|||||
Total underwriting deductions
|
|
2,684
|
|
|
20,171
|
|
|
9,585
|
|
|
28,982
|
|
|
6,993
|
|
|||||
Underwriting income (b)
|
|
3,207
|
|
|
6,340
|
|
|
8,081
|
|
|
36,984
|
|
|
4,089
|
|
|||||
Legal Entity adjustments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reinsurance premiums ceded
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net premiums written
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|||||
Change in unearned premiums
|
|
(3,833
|
)
|
|
—
|
|
|
(3,833
|
)
|
|
—
|
|
|
—
|
|
|||||
Net premiums earned
|
|
(3,826
|
)
|
|
—
|
|
|
(3,826
|
)
|
|
—
|
|
|
—
|
|
|||||
Losses and loss expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Policy acquisition costs
|
|
(365
|
)
|
|
(1,093
|
)
|
|
(390
|
)
|
|
(2,394
|
)
|
|
—
|
|
|||||
General and administrative expenses
|
|
1,673
|
|
|
(5,438
|
)
|
|
5,130
|
|
|
(1,658
|
)
|
|
15,927
|
|
|||||
Share compensation expenses
|
|
115
|
|
|
196
|
|
|
561
|
|
|
982
|
|
|
80
|
|
|||||
Total underwriting deductions
|
|
1,423
|
|
|
(6,335
|
)
|
|
5,301
|
|
|
(3,070
|
)
|
|
16,007
|
|
|||||
Underwriting (loss) income (b)
|
|
(5,249
|
)
|
|
6,335
|
|
|
(9,127
|
)
|
|
3,070
|
|
|
(16,007
|
)
|
|||||
Talbot
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
241,100
|
|
|
$
|
235,242
|
|
|
$
|
1,078,636
|
|
|
$
|
1,014,122
|
|
|
$
|
981,073
|
|
Reinsurance premiums ceded
|
|
(37,067
|
)
|
|
(27,931
|
)
|
|
(228,686
|
)
|
|
(218,174
|
)
|
|
(258,081
|
)
|
|||||
Net premiums written
|
|
204,033
|
|
|
207,311
|
|
|
849,950
|
|
|
795,948
|
|
|
722,992
|
|
|||||
Change in unearned premiums
|
|
4,098
|
|
|
2,043
|
|
|
(17,671
|
)
|
|
(25,696
|
)
|
|
(13,069
|
)
|
|||||
Net premiums earned
|
|
208,131
|
|
|
209,354
|
|
|
832,279
|
|
|
770,252
|
|
|
709,923
|
|
|||||
Losses and loss expenses
|
|
127,180
|
|
|
108,926
|
|
|
424,030
|
|
|
485,096
|
|
|
385,976
|
|
|||||
Policy acquisition costs
|
|
41,745
|
|
|
41,160
|
|
|
183,926
|
|
|
157,334
|
|
|
143,769
|
|
|||||
General and administrative expenses
|
|
32,371
|
|
|
29,676
|
|
|
133,281
|
|
|
112,072
|
|
|
107,557
|
|
|||||
Share compensation expenses
|
|
2,442
|
|
|
1,934
|
|
|
7,789
|
|
|
8,582
|
|
|
6,923
|
|
|||||
Total underwriting deductions
|
|
203,738
|
|
|
181,696
|
|
|
749,026
|
|
|
763,084
|
|
|
644,225
|
|
|||||
Underwriting income (b)
|
|
4,393
|
|
|
27,658
|
|
|
83,253
|
|
|
7,168
|
|
|
65,698
|
|
|||||
Corporate & Eliminations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
(8,489
|
)
|
|
$
|
(11,491
|
)
|
|
$
|
(65,765
|
)
|
|
$
|
(79,651
|
)
|
|
$
|
(91,746
|
)
|
Reinsurance premiums ceded
|
|
8,482
|
|
|
11,491
|
|
|
65,758
|
|
|
79,651
|
|
|
91,746
|
|
|||||
Net premiums written
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|||||
Change in unearned premiums
|
|
3,833
|
|
|
—
|
|
|
3,833
|
|
|
—
|
|
|
—
|
|
|||||
Net premiums earned
|
|
3,826
|
|
|
—
|
|
|
3,826
|
|
|
—
|
|
|
—
|
|
|||||
Losses and loss expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Policy acquisition costs
|
|
(858
|
)
|
|
(1,372
|
)
|
|
(4,974
|
)
|
|
(3,284
|
)
|
|
(11,469
|
)
|
|||||
General and administrative expenses
|
|
14,324
|
|
|
9,492
|
|
|
54,661
|
|
|
31,491
|
|
|
34,866
|
|
|||||
Share compensation expenses
|
|
2,636
|
|
|
2,883
|
|
|
10,317
|
|
|
15,316
|
|
|
14,133
|
|
|||||
Total underwriting deductions
|
|
16,102
|
|
|
11,003
|
|
|
60,004
|
|
|
43,523
|
|
|
37,530
|
|
|||||
Underwriting (loss) (b)
|
|
(12,276
|
)
|
|
(11,003
|
)
|
|
(56,178
|
)
|
|
(43,523
|
)
|
|
(37,530
|
)
|
|||||
Total underwriting (loss) income (b)
|
|
$
|
(113,059
|
)
|
|
$
|
12,774
|
|
|
$
|
248,711
|
|
|
$
|
11,765
|
|
|
$
|
242,437
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
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.”
|
•
|
Decrease in underwriting income of
$125.8 million
primarily due to:
|
•
|
A
$123.5 million
increase in loss and loss expenses;
|
•
|
A
$12.8 million
increase in general and administrative expenses; and
|
•
|
Offset by a
$10.9 million
increase in net premiums earned.
|
•
|
Unfavorable movements in net realized and unrealized losses on investments of
$9.9 million
and
$38.0 million
, respectively.
|
•
|
Gain on bargain purchase, net of expenses and transaction expenses of
$21.5 million
; and
|
•
|
Net loss attributable to noncontrolling interest which resulted in an increase to net income attributable to Validus of
$34.9 million
.
|
|
|
Three Months Ended December 31, 2012
|
||||||||||||||||||
|
|
Increase (Decrease) Over the Three Months Ended December 31, 2011 (a)
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re (a)
|
|
AlphaCat
|
|
Talbot
|
|
Corporate and
Eliminations (b)
|
|
Total
|
||||||||||
Notable losses—(increase) in net loss and loss expenses (c)
|
|
$
|
(259,639
|
)
|
|
$
|
—
|
|
|
$
|
(47,249
|
)
|
|
$
|
—
|
|
|
$
|
(306,888
|
)
|
Less: Notable losses—increase in net reinstatement premium (c)
|
|
33,177
|
|
|
—
|
|
|
4,540
|
|
|
—
|
|
|
37,717
|
|
|||||
Other underwriting income (loss)
|
|
139,884
|
|
|
(3,133
|
)
|
|
19,444
|
|
|
(12,857
|
)
|
|
143,338
|
|
|||||
Underwriting (loss) income (d)
|
|
(86,578
|
)
|
|
(3,133
|
)
|
|
(23,265
|
)
|
|
(12,857
|
)
|
|
(125,833
|
)
|
|||||
Net investment income
|
|
(535
|
)
|
|
528
|
|
|
(1,132
|
)
|
|
1,861
|
|
|
722
|
|
|||||
Other income
|
|
(2,311
|
)
|
|
(5,076
|
)
|
|
(1,291
|
)
|
|
5,348
|
|
|
(3,330
|
)
|
|||||
Finance expenses
|
|
(462
|
)
|
|
(1,043
|
)
|
|
75
|
|
|
440
|
|
|
(990
|
)
|
|||||
Operating (loss) income before taxes and (loss) from operating affiliates
|
|
(89,886
|
)
|
|
(8,724
|
)
|
|
(25,613
|
)
|
|
(5,208
|
)
|
|
(129,431
|
)
|
|||||
Tax (expense) benefit
|
|
(152
|
)
|
|
—
|
|
|
(1,776
|
)
|
|
1,087
|
|
|
(841
|
)
|
|||||
(Loss) from operating affiliates
|
|
—
|
|
|
(614
|
)
|
|
—
|
|
|
—
|
|
|
(614
|
)
|
|||||
Net operating (loss) income
|
|
(90,038
|
)
|
|
(9,338
|
)
|
|
(27,389
|
)
|
|
(4,121
|
)
|
|
(130,886
|
)
|
|||||
Gain on bargain purchase, net of expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,485
|
|
|
21,485
|
|
|||||
Net realized (losses) on investments
|
|
(9,367
|
)
|
|
—
|
|
|
(504
|
)
|
|
—
|
|
|
(9,871
|
)
|
|||||
Net unrealized (losses) gains on investments
|
|
(4,266
|
)
|
|
(31,819
|
)
|
|
(1,932
|
)
|
|
1
|
|
|
(38,016
|
)
|
|||||
(Loss) from investment affiliate
|
|
(406
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(406
|
)
|
|||||
Foreign exchange gains (losses)
|
|
413
|
|
|
136
|
|
|
749
|
|
|
(383
|
)
|
|
915
|
|
|||||
Transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,850
|
|
|
3,850
|
|
|||||
Net (loss) income
|
|
(103,664
|
)
|
|
(41,021
|
)
|
|
(29,076
|
)
|
|
20,832
|
|
|
(152,929
|
)
|
|||||
Net loss (income) attributable to noncontrolling interest
|
|
—
|
|
|
34,889
|
|
|
—
|
|
|
—
|
|
|
34,889
|
|
|||||
Net (loss) income (attributable) available to Validus
|
|
$
|
(103,664
|
)
|
|
$
|
(6,132
|
)
|
|
$
|
(29,076
|
)
|
|
$
|
20,832
|
|
|
$
|
(118,040
|
)
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
The Corporate and Eliminations column includes legal entity adjustments.
|
(c)
|
Notable losses for the
three months ended December 31, 2012
include: Hurricane Sandy. Notable losses for the
three months ended December 31, 2011
include: the Thai floods and excludes the reserve for potential development on
2011
notable loss events. The AlphaCat segment's non-consolidated
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income (loss) 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.”
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums
Written
|
|
Gross Premiums
Written (%)
|
|
Gross Premiums
Written
|
|
Gross Premiums
Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
110,561
|
|
|
35.4
|
%
|
|
$
|
73,200
|
|
|
26.3
|
%
|
|
51.0
|
%
|
Marine
|
|
89,394
|
|
|
28.7
|
%
|
|
84,247
|
|
|
30.3
|
%
|
|
6.1
|
%
|
||
Specialty
|
|
111,892
|
|
|
35.9
|
%
|
|
120,832
|
|
|
43.4
|
%
|
|
(7.4
|
)%
|
||
Total
|
|
$
|
311,847
|
|
|
100.0
|
%
|
|
$
|
278,279
|
|
|
100.0
|
%
|
|
12.1
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums
Written
|
|
Gross Premiums
Written (%)
|
|
Gross Premiums
Written
|
|
Gross Premiums
Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
54,878
|
|
|
69.2
|
%
|
|
$
|
34,053
|
|
|
61.0
|
%
|
|
61.2
|
%
|
Marine
|
|
8,621
|
|
|
10.9
|
%
|
|
9,742
|
|
|
17.4
|
%
|
|
(11.5
|
)%
|
||
Specialty
|
|
15,734
|
|
|
19.9
|
%
|
|
12,056
|
|
|
21.6
|
%
|
|
30.5
|
%
|
||
Total
|
|
$
|
79,233
|
|
|
100.0
|
%
|
|
$
|
55,851
|
|
|
100.0
|
%
|
|
41.9
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
62,258
|
|
|
25.8
|
%
|
|
$
|
51,793
|
|
|
22.0
|
%
|
|
20.2
|
%
|
Marine
|
|
81,540
|
|
|
33.8
|
%
|
|
74,235
|
|
|
31.6
|
%
|
|
9.8
|
%
|
||
Specialty
|
|
97,302
|
|
|
40.4
|
%
|
|
109,214
|
|
|
46.4
|
%
|
|
(10.9
|
)%
|
||
Total
|
|
$
|
241,100
|
|
|
100.0
|
%
|
|
$
|
235,242
|
|
|
100.0
|
%
|
|
2.5
|
%
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
19,644
|
|
|
55.1
|
%
|
|
$
|
11,979
|
|
|
72.7
|
%
|
|
64.0
|
%
|
Marine
|
|
4,890
|
|
|
13.7
|
%
|
|
(1,363
|
)
|
|
(8.3
|
)%
|
|
458.8
|
%
|
||
Specialty
|
|
11,125
|
|
|
31.2
|
%
|
|
5,873
|
|
|
35.6
|
%
|
|
89.4
|
%
|
||
Total
|
|
$
|
35,659
|
|
|
100.0
|
%
|
|
$
|
16,489
|
|
|
100.0
|
%
|
|
116.3
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
4,275
|
|
|
60.5
|
%
|
|
$
|
980
|
|
|
2,000.0
|
%
|
|
336.2
|
%
|
Marine
|
|
2,803
|
|
|
39.6
|
%
|
|
(931
|
)
|
|
(1,900.0
|
)%
|
|
401.1
|
%
|
||
Specialty
|
|
(4
|
)
|
|
(0.1
|
)%
|
|
—
|
|
|
—
|
%
|
|
NM
|
|
||
Total
|
|
$
|
7,074
|
|
|
100.0
|
%
|
|
$
|
49
|
|
|
100.0
|
%
|
|
NM
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
Reinsurance Premiums Ceded
|
|
Reinsurance Premiums Ceded (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
21,940
|
|
|
59.2
|
%
|
|
$
|
22,322
|
|
|
79.9
|
%
|
|
(1.7
|
)%
|
Marine
|
|
2,854
|
|
|
7.7
|
%
|
|
(702
|
)
|
|
(2.5
|
)%
|
|
506.6
|
%
|
||
Specialty
|
|
12,273
|
|
|
33.1
|
%
|
|
6,311
|
|
|
22.6
|
%
|
|
94.5
|
%
|
||
Total
|
|
$
|
37,067
|
|
|
100.0
|
%
|
|
$
|
27,931
|
|
|
100.0
|
%
|
|
32.7
|
%
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
90,917
|
|
|
32.9
|
%
|
|
$
|
61,221
|
|
|
23.4
|
%
|
|
48.5
|
%
|
Marine
|
|
84,504
|
|
|
30.6
|
%
|
|
85,610
|
|
|
32.7
|
%
|
|
(1.3
|
)%
|
||
Specialty
|
|
100,767
|
|
|
36.5
|
%
|
|
114,959
|
|
|
43.9
|
%
|
|
(12.3
|
)%
|
||
Total
|
|
$
|
276,188
|
|
|
100.0
|
%
|
|
$
|
261,790
|
|
|
100.0
|
%
|
|
5.5
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
50,603
|
|
|
70.1
|
%
|
|
$
|
33,073
|
|
|
59.3
|
%
|
|
53.0
|
%
|
Marine
|
|
5,818
|
|
|
8.1
|
%
|
|
10,673
|
|
|
19.1
|
%
|
|
(45.5
|
)%
|
||
Specialty
|
|
15,738
|
|
|
21.8
|
%
|
|
12,056
|
|
|
21.6
|
%
|
|
30.5
|
%
|
||
Total
|
|
$
|
72,159
|
|
|
100.0
|
%
|
|
$
|
55,802
|
|
|
100.0
|
%
|
|
29.3
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
Net Premiums Written
|
|
Net Premiums Written (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
40,318
|
|
|
19.8
|
%
|
|
$
|
29,471
|
|
|
14.2
|
%
|
|
36.8
|
%
|
Marine
|
|
78,686
|
|
|
38.5
|
%
|
|
74,937
|
|
|
36.1
|
%
|
|
5.0
|
%
|
||
Specialty
|
|
85,029
|
|
|
41.7
|
%
|
|
102,903
|
|
|
49.7
|
%
|
|
(17.4
|
)%
|
||
Total
|
|
$
|
204,033
|
|
|
100.0
|
%
|
|
$
|
207,311
|
|
|
100.0
|
%
|
|
(1.6
|
)%
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned
Premiums
|
|
Net Change in Unearned
Premiums
|
|
% Change
|
|||||
Change in gross unearned premium
|
|
$
|
140,243
|
|
|
$
|
286,211
|
|
|
(51.0
|
)%
|
Less change due to Flagstone acquisition
|
|
139,389
|
|
|
—
|
|
|
NM
|
|
||
Deconsolidation of AlphaCat Re 2011
|
|
—
|
|
|
(9,405
|
)
|
|
NM
|
|
||
Net change in gross unearned premium
|
|
279,632
|
|
|
276,806
|
|
|
1.0
|
%
|
||
|
|
|
|
|
|
|
|||||
Change in prepaid reinsurance premium
|
|
(45,195
|
)
|
|
(50,250
|
)
|
|
(10.1
|
)%
|
||
Less change due to Flagstone acquisition
|
|
(11,339
|
)
|
|
—
|
|
|
NM
|
|
||
Net change in prepaid reinsurance premiums
|
|
(56,534
|
)
|
|
(50,250
|
)
|
|
12.5
|
%
|
||
Net change in unearned premium
|
|
$
|
223,098
|
|
|
$
|
226,556
|
|
|
(1.5
|
)%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned
Premiums
|
|
Net Change in Unearned
Premiums
|
|
% Change
|
|||||
Change in gross unearned premium
|
|
$
|
110,621
|
|
|
$
|
228,747
|
|
|
(51.6
|
)%
|
Less change due to Flagstone acquisition
|
|
139,389
|
|
|
—
|
|
|
NM
|
|
||
Deconsolidation of AlphaCatRe 2011
|
|
—
|
|
|
(9,405
|
)
|
|
NM
|
|
||
Net change in gross unearned premium
|
|
250,010
|
|
|
219,342
|
|
|
14.0
|
%
|
||
|
|
|
|
|
|
|
|||||
Change in prepaid reinsurance premium
|
|
(25,566
|
)
|
|
(22,663
|
)
|
|
(12.8
|
)%
|
||
Less change due to Flagstone acquisition
|
|
(11,339
|
)
|
|
—
|
|
|
NM
|
|
||
Net change in prepaid reinsurance premiums
|
|
(36,905
|
)
|
|
(22,663
|
)
|
|
(62.8
|
)%
|
||
Net change in unearned premium
|
|
$
|
213,105
|
|
|
$
|
196,679
|
|
|
8.4
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
5,895
|
|
|
$
|
27,834
|
|
|
(78.8
|
)%
|
Net change in unearned premiums
|
|
$
|
5,895
|
|
|
$
|
27,834
|
|
|
(78.8
|
)%
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||
(Dollars in thousands)
|
|
Net Change in Unearned Premiums
|
|
Net Change in Unearned Premiums
|
|
% Change
|
|||||
Change in gross unearned premiums
|
|
$
|
23,727
|
|
|
$
|
29,630
|
|
|
(19.9
|
)%
|
Change in prepaid reinsurance premiums
|
|
(19,629
|
)
|
|
(27,587
|
)
|
|
28.8
|
%
|
||
Net change in unearned premiums
|
|
$
|
4,098
|
|
|
$
|
2,043
|
|
|
100.6
|
%
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
250,480
|
|
|
50.2
|
%
|
|
$
|
236,671
|
|
|
48.5
|
%
|
|
5.8
|
%
|
Marine
|
|
146,744
|
|
|
29.4
|
%
|
|
146,953
|
|
|
30.1
|
%
|
|
(0.1
|
)%
|
||
Specialty
|
|
102,062
|
|
|
20.4
|
%
|
|
104,722
|
|
|
21.4
|
%
|
|
(2.5
|
)%
|
||
Total
|
|
$
|
499,286
|
|
|
100.0
|
%
|
|
$
|
488,346
|
|
|
100.0
|
%
|
|
2.2
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
198,002
|
|
|
69.4
|
%
|
|
$
|
169,052
|
|
|
67.0
|
%
|
|
17.1
|
%
|
Marine
|
|
60,163
|
|
|
21.1
|
%
|
|
57,524
|
|
|
22.8
|
%
|
|
4.6
|
%
|
||
Specialty
|
|
27,099
|
|
|
9.5
|
%
|
|
25,905
|
|
|
10.2
|
%
|
|
4.6
|
%
|
||
Total
|
|
$
|
285,264
|
|
|
100.0
|
%
|
|
$
|
252,481
|
|
|
100.0
|
%
|
|
13.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
5,891
|
|
|
100.0
|
%
|
|
$
|
26,511
|
|
|
100.0
|
%
|
|
(77.8
|
)%
|
Total
|
|
$
|
5,891
|
|
|
100.0
|
%
|
|
$
|
26,511
|
|
|
100.0
|
%
|
|
(77.8
|
)%
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
Net Premiums Earned
|
|
Net Premiums Earned (%)
|
|
% Change
|
|||||||
Property
|
|
$
|
46,587
|
|
|
22.4
|
%
|
|
$
|
41,108
|
|
|
19.6
|
%
|
|
13.3
|
%
|
Marine
|
|
86,581
|
|
|
41.6
|
%
|
|
89,429
|
|
|
42.8
|
%
|
|
(3.2
|
)%
|
||
Specialty
|
|
74,963
|
|
|
36.0
|
%
|
|
78,817
|
|
|
37.6
|
%
|
|
(4.9
|
)%
|
||
Total
|
|
$
|
208,131
|
|
|
100.0
|
%
|
|
$
|
209,354
|
|
|
100.0
|
%
|
|
(0.6
|
)%
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
Percentage Point Change
|
|||
Property
|
126.0
|
%
|
|
90.0
|
%
|
|
36.0
|
|
Marine
|
76.2
|
%
|
|
53.0
|
%
|
|
23.2
|
|
Specialty
|
30.2
|
%
|
|
42.0
|
%
|
|
(11.8
|
)
|
All lines
|
91.8
|
%
|
|
68.6
|
%
|
|
23.2
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
|
|
Three Months Ended December 31, 2012 (b)
|
|||||||||||||||||||
|
|
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Fourth Quarter 2012 Notable Loss Events (a) (b)
|
|
Validus Re (b)
|
|
Talbot
|
|
Total
|
|||||||||||||||||
(Dollars in thousands)
|
|
Description
|
|
Net Losses
and Loss
Expenses(c)
|
|
% of NPE
|
|
Net Losses
and Loss
Expenses(c)
|
|
% of NPE
|
|
Net Losses
and Loss
Expenses(c)
|
|
% of NPE
|
|||||||||
Hurricane Sandy (d)
|
|
Windstorm
|
|
$
|
282,603
|
|
|
99.1
|
%
|
|
$
|
78,433
|
|
|
37.7
|
%
|
|
$
|
361,036
|
|
|
72.3
|
%
|
Total
|
|
|
|
$
|
282,603
|
|
|
99.1
|
%
|
|
$
|
78,433
|
|
|
37.7
|
%
|
|
$
|
361,036
|
|
|
72.3
|
%
|
|
|
|
|
Three Months Ended December 31, 2011
|
|||||||||||||||||||
|
|
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Fourth Quarter 2011 Notable Loss Events (a)
|
|
Validus Re
|
|
Talbot
|
|
Total
|
|||||||||||||||||
(Dollars in thousands)
|
|
Description
|
|
Net Losses
and Loss
Expenses(c)
|
|
% of NPE
|
|
Net Losses
and Loss
Expenses(c)
|
|
% of NPE
|
|
Net Losses
and Loss
Expenses(c)
|
|
% of NPE
|
|||||||||
Thailand floods
|
|
Multiple flooding events
|
|
$
|
22,964
|
|
|
9.1
|
%
|
|
$
|
31,184
|
|
|
14.9
|
%
|
|
$
|
54,148
|
|
|
11.1
|
%
|
Total
|
|
|
|
$
|
22,964
|
|
|
9.1
|
%
|
|
$
|
31,184
|
|
|
14.9
|
%
|
|
$
|
54,148
|
|
|
11.1
|
%
|
(a)
|
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 and recent occurrence of these events in relation to the corresponding period end date, and other uncertainties inherent in loss estimation, meaningful uncertainty exists at the relevant reporting date regarding losses from these events and the Company’s actual ultimate net losses from these events can vary materially from these estimates.
|
(c)
|
Net of reinsurance but not of reinstatement premiums. Total reinstatement premiums were
$36.4 million
and
$(1.3) million
for the three months ended December 31,
2012
and December 31,
2011
, respectively.
|
(d)
|
The AlphaCat segment's non-consolidated affiliates incurred loss and loss expenses of $8.4 million related to Hurricane Sandy for the three months ended December 31, 2012. These losses are not included in the table above as the entities are accounted for as investments in operating affiliates.
|
|
Three Months Ended December 31,
|
|||||||
|
2012 (a)
|
|
2011
|
|
Percentage
Point Change
|
|||
Property—current period—excluding items below
|
21.0
|
%
|
|
46.9
|
%
|
|
(25.9
|
)
|
Property—current period—notable losses
|
113.2
|
%
|
|
20.3
|
%
|
|
92.9
|
|
Property—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
30.8
|
%
|
|
(30.8
|
)
|
Property—change in prior accident years
|
(8.2
|
)%
|
|
(8.0
|
)%
|
|
(0.2
|
)
|
Property—loss ratio
|
126.0
|
%
|
|
90.0
|
%
|
|
36.0
|
|
Marine—current period—excluding items below
|
42.8
|
%
|
|
53.8
|
%
|
|
(11.0
|
)
|
Marine—current period—notable losses
|
47.5
|
%
|
|
2.9
|
%
|
|
44.6
|
|
Marine—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
3.4
|
%
|
|
(3.4
|
)
|
Marine—change in prior accident years
|
(14.1
|
)%
|
|
(7.1
|
)%
|
|
(7.0
|
)
|
Marine—loss ratio
|
76.2
|
%
|
|
53.0
|
%
|
|
23.2
|
|
Specialty—current period—excluding items below
|
38.2
|
%
|
|
53.0
|
%
|
|
(14.8
|
)
|
Specialty—current period—notable losses
|
7.7
|
%
|
|
1.8
|
%
|
|
5.9
|
|
Specialty—change in prior accident years
|
(15.7
|
)%
|
|
(12.8
|
)%
|
|
(2.9
|
)
|
Specialty—loss ratio
|
30.2
|
%
|
|
42.0
|
%
|
|
(11.8
|
)
|
All lines—current period—excluding items below
|
31.0
|
%
|
|
50.3
|
%
|
|
(19.3
|
)
|
All lines—current period—notable losses
|
72.3
|
%
|
|
11.1
|
%
|
|
61.2
|
|
All lines—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
16.0
|
%
|
|
(16.0
|
)
|
All lines—change in prior accident years
|
(11.5
|
)%
|
|
(8.8
|
)%
|
|
(2.7
|
)
|
All lines—loss ratio
|
91.8
|
%
|
|
68.6
|
%
|
|
23.2
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
Three Months Ended
December 31,
|
|||||||
|
2012 (a)
|
|
2011
|
|
Percentage
Point Change
|
|||
Property—current period excluding items below
|
18.7
|
%
|
|
39.3
|
%
|
|
(20.6
|
)
|
Property—current period—notable losses
|
120.2
|
%
|
|
11.7
|
%
|
|
108.5
|
|
Property—current period—reserves for potential development on notable loss events
|
0.0
|
%
|
|
43.2
|
%
|
|
(43.2
|
)
|
Property—change in prior accident years
|
(3.2
|
)%
|
|
(2.8
|
)%
|
|
(0.4
|
)
|
Property—loss ratio
|
135.7
|
%
|
|
91.4
|
%
|
|
44.3
|
|
Marine—current period excluding items below
|
39.3
|
%
|
|
62.5
|
%
|
|
(23.2
|
)
|
Marine—current period—notable losses
|
72.3
|
%
|
|
5.6
|
%
|
|
66.7
|
|
Marine—current period—reserves for potential development on notable loss events
|
0.0
|
%
|
|
8.7
|
%
|
|
(8.7
|
)
|
Marine—change in prior accident years
|
(7.0
|
)%
|
|
(0.5
|
)%
|
|
(6.5
|
)
|
Marine—loss ratio
|
104.6
|
%
|
|
76.3
|
%
|
|
28.3
|
|
Specialty—current period excluding items below
|
28.4
|
%
|
|
75.6
|
%
|
|
(47.2
|
)
|
Specialty—current period—notable losses
|
4.2
|
%
|
|
0.0
|
%
|
|
4.2
|
|
Specialty—change in prior accident years
|
(34.4
|
)%
|
|
(8.1
|
)%
|
|
(26.3
|
)
|
Specialty—loss ratio
|
(1.8
|
)%
|
|
67.5
|
%
|
|
(69.3
|
)
|
All lines—current period excluding items below
|
23.9
|
%
|
|
48.3
|
%
|
|
(24.4
|
)
|
All lines—current period—notable losses
|
99.1
|
%
|
|
9.1
|
%
|
|
90.0
|
|
All lines—current period—reserves for potential development on notable loss events
|
0.0
|
%
|
|
30.9
|
%
|
|
(30.9
|
)
|
All lines—change in prior accident years
|
(6.9
|
)%
|
|
(2.8
|
)%
|
|
(4.1
|
)
|
All lines—loss ratio
|
116.1
|
%
|
|
85.5
|
%
|
|
30.6
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
Three Months Ended
December 31,
|
|||||||
|
2012
|
|
2011
|
|
Percentage
Point Change
|
|||
Property—current period excluding items below
|
33.5
|
%
|
|
83.8
|
%
|
|
(50.3
|
)
|
Property—current period—notable losses
|
97.8
|
%
|
|
68.9
|
%
|
|
28.9
|
|
Property—change in prior accident years
|
(30.5
|
)%
|
|
(34.8
|
)%
|
|
4.3
|
|
Property—loss ratio
|
100.8
|
%
|
|
117.9
|
%
|
|
(17.1
|
)
|
Marine—current period excluding items below
|
45.3
|
%
|
|
48.2
|
%
|
|
(2.9
|
)
|
Marine—current period—notable losses
|
30.2
|
%
|
|
1.1
|
%
|
|
29.1
|
|
Marine—change in prior accident years
|
(19.0
|
)%
|
|
(11.3
|
)%
|
|
(7.7
|
)
|
Marine—loss ratio
|
56.5
|
%
|
|
38.0
|
%
|
|
18.5
|
|
Specialty—current period excluding items below
|
41.8
|
%
|
|
45.6
|
%
|
|
(3.8
|
)
|
Specialty—current period—notable losses
|
8.9
|
%
|
|
2.3
|
%
|
|
6.6
|
|
Specialty—change in prior accident years
|
(8.9
|
)%
|
|
(14.3
|
)%
|
|
5.4
|
|
Specialty—loss ratio
|
41.8
|
%
|
|
33.6
|
%
|
|
8.2
|
|
All lines—current period excluding items below
|
41.4
|
%
|
|
54.1
|
%
|
|
(12.7
|
)
|
All lines—current period—notable losses
|
37.7
|
%
|
|
14.9
|
%
|
|
22.8
|
|
All lines—change in prior accident years
|
(18.0
|
)%
|
|
(17.0
|
)%
|
|
(1.0
|
)
|
All lines—loss ratio
|
61.1
|
%
|
|
52.0
|
%
|
|
9.1
|
|
|
|
As at December 31, 2012
|
||||||||||
(Dollars in thousands)
|
|
Gross Case
Reserves
|
|
Gross IBNR
|
|
Total Gross Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
930,553
|
|
|
$
|
892,227
|
|
|
$
|
1,822,780
|
|
Marine
|
|
522,907
|
|
|
477,948
|
|
|
1,000,855
|
|
|||
Specialty
|
|
265,638
|
|
|
428,300
|
|
|
693,938
|
|
|||
Total
|
|
$
|
1,719,098
|
|
|
$
|
1,798,475
|
|
|
$
|
3,517,573
|
|
|
|
As at December 31, 2012
|
||||||||||
(Dollars in thousands)
|
|
Net Case
Reserves
|
|
Net IBNR
|
|
Total Net Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
768,722
|
|
|
$
|
803,182
|
|
|
$
|
1,571,904
|
|
Marine
|
|
465,080
|
|
|
438,009
|
|
|
903,089
|
|
|||
Specialty
|
|
230,584
|
|
|
372,029
|
|
|
602,613
|
|
|||
Total
|
|
$
|
1,464,386
|
|
|
$
|
1,613,220
|
|
|
$
|
3,077,606
|
|
|
|
Three Months Ended December 31, 2012
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Eliminations
|
|
Total
|
||||||||||
Gross reserves at period beginning
|
|
$
|
1,216,560
|
|
|
$
|
10,000
|
|
|
$
|
1,422,568
|
|
|
$
|
(86,524
|
)
|
|
$
|
2,562,604
|
|
Losses recoverable
|
|
(38,371
|
)
|
|
—
|
|
|
(365,405
|
)
|
|
86,524
|
|
|
(317,252
|
)
|
|||||
Net reserves at period beginning
|
|
1,178,189
|
|
|
10,000
|
|
|
1,057,163
|
|
|
—
|
|
|
2,245,352
|
|
|||||
Net reserves acquired in Flagstone acquisition
|
|
639,641
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
639,641
|
|
|||||
Incurred losses—current year
|
|
350,926
|
|
|
—
|
|
|
164,605
|
|
|
—
|
|
|
515,531
|
|
|||||
Change in prior accident years
|
|
(19,796
|
)
|
|
—
|
|
|
(37,425
|
)
|
|
—
|
|
|
(57,221
|
)
|
|||||
Incurred losses
|
|
331,130
|
|
|
—
|
|
|
127,180
|
|
|
—
|
|
|
458,310
|
|
|||||
Foreign exchange
|
|
(1,804
|
)
|
|
—
|
|
|
2,747
|
|
|
—
|
|
|
943
|
|
|||||
Paid losses
|
|
(172,907
|
)
|
|
(5,000
|
)
|
|
(88,733
|
)
|
|
—
|
|
|
(266,640
|
)
|
|||||
Net reserves at period end
|
|
1,974,249
|
|
|
5,000
|
|
|
1,098,357
|
|
|
—
|
|
|
3,077,606
|
|
|||||
Losses recoverable
|
|
148,646
|
|
|
—
|
|
|
381,950
|
|
|
(90,629
|
)
|
|
439,967
|
|
|||||
Gross reserves at period end
|
|
$
|
2,122,895
|
|
|
$
|
5,000
|
|
|
$
|
1,480,307
|
|
|
$
|
(90,629
|
)
|
|
$
|
3,517,573
|
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
29,237
|
|
|
35.8
|
%
|
|
11.7
|
%
|
|
$
|
26,753
|
|
|
32.9
|
%
|
|
11.3
|
%
|
|
9.3
|
%
|
Marine
|
|
29,429
|
|
|
36.0
|
%
|
|
20.1
|
%
|
|
31,603
|
|
|
38.9
|
%
|
|
21.5
|
%
|
|
(6.9
|
)%
|
||
Specialty
|
|
23,148
|
|
|
28.3
|
%
|
|
22.7
|
%
|
|
22,897
|
|
|
28.2
|
%
|
|
21.9
|
%
|
|
1.1
|
%
|
||
Total
|
|
$
|
81,814
|
|
|
100.1
|
%
|
|
16.4
|
%
|
|
$
|
81,253
|
|
|
100.0
|
%
|
|
16.6
|
%
|
|
0.7
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
25,820
|
|
|
63.4
|
%
|
|
13.0
|
%
|
|
$
|
24,734
|
|
|
63.0
|
%
|
|
14.6
|
%
|
|
4.4
|
%
|
Marine
|
|
10,526
|
|
|
25.9
|
%
|
|
17.5
|
%
|
|
11,165
|
|
|
28.5
|
%
|
|
19.4
|
%
|
|
(5.7
|
)%
|
||
Specialty
|
|
4,357
|
|
|
10.7
|
%
|
|
16.1
|
%
|
|
3,328
|
|
|
8.5
|
%
|
|
12.8
|
%
|
|
30.9
|
%
|
||
Total
|
|
$
|
40,703
|
|
|
100.0
|
%
|
|
14.3
|
%
|
|
$
|
39,227
|
|
|
100.0
|
%
|
|
15.5
|
%
|
|
3.8
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
589
|
|
|
100.0
|
%
|
|
10.0
|
%
|
|
$
|
3,331
|
|
|
100.0
|
%
|
|
12.6
|
%
|
|
(82.3
|
)%
|
Total
|
|
$
|
589
|
|
|
100.0
|
%
|
|
10.0
|
%
|
|
$
|
3,331
|
|
|
100.0
|
%
|
|
12.6
|
%
|
|
(82.3
|
)%
|
|
|
Three Months Ended December 31, 2012
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
Policy Acquisition Costs
|
|
Policy Acquisition Costs (%)
|
|
Acquisition Cost Ratio
|
|
% Change
|
|||||||||
Property
|
|
$
|
4,648
|
|
|
11.1
|
%
|
|
10.0
|
%
|
|
$
|
1,053
|
|
|
2.5
|
%
|
|
2.6
|
%
|
|
341.4
|
%
|
Marine
|
|
18,269
|
|
|
43.8
|
%
|
|
21.1
|
%
|
|
20,523
|
|
|
49.9
|
%
|
|
22.9
|
%
|
|
(11.0
|
)%
|
||
Specialty
|
|
18,828
|
|
|
45.1
|
%
|
|
25.1
|
%
|
|
19,584
|
|
|
47.6
|
%
|
|
24.8
|
%
|
|
(3.9
|
)%
|
||
Total
|
|
$
|
41,745
|
|
|
100.0
|
%
|
|
20.1
|
%
|
|
$
|
41,160
|
|
|
100.0
|
%
|
|
19.7
|
%
|
|
1.4
|
%
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
General and Administrative Expenses
|
|
General and Administrative Expenses (%)
|
|
General and Administrative Expenses
|
|
General and Administrative Expenses (%)
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
14,716
|
|
|
22.6
|
%
|
|
$
|
11,716
|
|
|
22.4
|
%
|
|
25.6
|
%
|
AlphaCat
|
|
2,011
|
|
|
3.1
|
%
|
|
6,807
|
|
|
13.0
|
%
|
|
(70.5
|
)%
|
||
Talbot
|
|
32,371
|
|
|
49.7
|
%
|
|
29,676
|
|
|
56.8
|
%
|
|
9.1
|
%
|
||
Corporate & Eliminations(b)
|
|
15,997
|
|
|
24.6
|
%
|
|
4,054
|
|
|
7.8
|
%
|
|
294.6
|
%
|
||
Total
|
|
$
|
65,095
|
|
|
100.0
|
%
|
|
$
|
52,253
|
|
|
100.0
|
%
|
|
24.6
|
%
|
(b)
|
Corporate and Eliminations includes legal entity adjustments
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
|
|||||||||||
(Dollars in thousands)
|
|
Share Compensation Expenses
|
|
Share Compensation Expenses (%)
|
|
Share Compensation Expenses
|
|
Share Compensation Expenses (%)
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
1,849
|
|
|
25.9
|
%
|
|
$
|
2,191
|
|
|
30.3
|
%
|
|
(15.6
|
)%
|
AlphaCat
|
|
84
|
|
|
1.2
|
%
|
|
33
|
|
|
0.5
|
%
|
|
154.5
|
%
|
||
Talbot
|
|
2,442
|
|
|
34.3
|
%
|
|
1,934
|
|
|
26.7
|
%
|
|
26.3
|
%
|
||
Corporate & Eliminations (b)
|
|
2,751
|
|
|
38.6
|
%
|
|
3,079
|
|
|
42.5
|
%
|
|
(10.7
|
)%
|
||
Total
|
|
$
|
7,126
|
|
|
100.0
|
%
|
|
$
|
7,237
|
|
|
100.0
|
%
|
|
(1.5
|
)%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Corporate and Eliminations includes legal entity adjustments.
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
Percentage Point Change
|
|||
Consolidated
|
|
|
|
|
|
|||
Losses and loss expense ratio
|
91.8
|
%
|
|
68.6
|
%
|
|
23.2
|
|
Policy acquisition cost ratio
|
16.4
|
%
|
|
16.6
|
%
|
|
(0.2
|
)
|
General and administrative expense ratio (b)
|
14.5
|
%
|
|
12.2
|
%
|
|
2.3
|
|
Expense ratio
|
30.9
|
%
|
|
28.8
|
%
|
|
2.1
|
|
Combined ratio
|
122.7
|
%
|
|
97.4
|
%
|
|
25.3
|
|
Validus Re
|
|
|
|
|
|
|||
Losses and loss expense ratio
|
116.1
|
%
|
|
85.5
|
%
|
|
30.6
|
|
Policy acquisition cost ratio
|
14.3
|
%
|
|
15.5
|
%
|
|
(1.2
|
)
|
General and administrative expense ratio (b)
|
5.8
|
%
|
|
5.5
|
%
|
|
0.3
|
|
Expense ratio
|
20.1
|
%
|
|
21.0
|
%
|
|
(0.9
|
)
|
Combined ratio
|
136.2
|
%
|
|
106.5
|
%
|
|
29.7
|
|
AlphaCat
|
|
|
|
|
|
|||
Losses and loss expense ratio
|
0.0
|
%
|
|
37.7
|
%
|
|
(37.7
|
)
|
Policy acquisition cost ratio
|
10.0
|
%
|
|
12.6
|
%
|
|
(2.6
|
)
|
General and administrative expense ratio (b)
|
35.6
|
%
|
|
25.8
|
%
|
|
9.8
|
|
Expense ratio
|
45.6
|
%
|
|
38.4
|
%
|
|
7.2
|
|
Combined ratio
|
45.6
|
%
|
|
76.1
|
%
|
|
(30.5
|
)
|
Talbot
|
|
|
|
|
|
|||
Losses and loss expense ratio
|
61.1
|
%
|
|
52.0
|
%
|
|
9.1
|
|
Policy acquisition cost ratio
|
20.1
|
%
|
|
19.7
|
%
|
|
0.4
|
|
General and administrative expense ratio (b)
|
16.7
|
%
|
|
15.1
|
%
|
|
1.6
|
|
Expense ratio
|
36.8
|
%
|
|
34.8
|
%
|
|
2.0
|
|
Combined ratio
|
97.9
|
%
|
|
86.8
|
%
|
|
11.1
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
Expenses as % of Net Earned Premiums
|
|
Expenses
|
|
Expenses as % of Net Earned Premiums
|
||||||
General and administrative expenses
|
|
$
|
65,095
|
|
|
13.0
|
%
|
|
$
|
52,253
|
|
|
10.7
|
%
|
Share compensation expenses
|
|
7,126
|
|
|
1.5
|
%
|
|
7,237
|
|
|
1.5
|
%
|
||
Total
|
|
$
|
72,221
|
|
|
14.5
|
%
|
|
$
|
59,490
|
|
|
12.2
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(Dollars in thousands)
|
|
Three Months Ended December 31, 2012 (a)
|
|
% of Sub-total
|
|
Three Months Ended December 31, 2011
|
|
% of Sub-total
|
|
% Change
|
|||||||
Validus Re
|
|
$
|
(103,134
|
)
|
|
108.0
|
%
|
|
$
|
(16,556
|
)
|
|
(94.9
|
)%
|
|
(522.9
|
)%
|
AlphaCat
|
|
3,207
|
|
|
(3.4
|
)%
|
|
6,340
|
|
|
36.3
|
%
|
|
(49.4
|
)%
|
||
Talbot
|
|
4,393
|
|
|
(4.6
|
)%
|
|
27,658
|
|
|
158.6
|
%
|
|
(84.1
|
)%
|
||
Sub-total
|
|
(95,534
|
)
|
|
100.0
|
%
|
|
17,442
|
|
|
100.0
|
%
|
|
(647.7
|
)%
|
||
Corporate & Eliminations (b)
|
|
(17,525
|
)
|
|
|
|
(4,668
|
)
|
|
|
|
(275.4
|
)%
|
||||
Total
|
|
$
|
(113,059
|
)
|
|
|
|
$
|
12,774
|
|
|
|
|
(985.1
|
)%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Corporate and Eliminations include legal entity adjustments.
|
(Dollars in thousands)
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
||||
Underwriting (loss) income
|
|
$
|
(113,059
|
)
|
|
$
|
12,774
|
|
Net investment income
|
|
28,802
|
|
|
28,080
|
|
||
Other income
|
|
187
|
|
|
3,517
|
|
||
Finance expenses
|
|
(14,510
|
)
|
|
(13,520
|
)
|
||
Net realized (losses) gains on investments
|
|
(4,516
|
)
|
|
5,355
|
|
||
Net unrealized (losses) gains on investments
|
|
(35,857
|
)
|
|
2,159
|
|
||
Gain on bargain purchase, net of expenses
|
|
21,485
|
|
|
—
|
|
||
Transaction expenses
|
|
—
|
|
|
(3,850
|
)
|
||
(Loss) from investment affiliate
|
|
(406
|
)
|
|
—
|
|
||
Foreign exchange gains
|
|
1,181
|
|
|
266
|
|
||
Tax (expense) benefit
|
|
(615
|
)
|
|
226
|
|
||
(Loss) from operating affiliates
|
|
(614
|
)
|
|
—
|
|
||
Net (loss) income
|
|
$
|
(117,922
|
)
|
|
$
|
35,007
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(Dollars in thousands)
|
|
Three Months Ended December 31, 2012 (a)
|
|
Three Months Ended December 31, 2011
|
|
% Change
|
|||||
Fixed maturities and short-term investments
|
|
$
|
26,487
|
|
|
$
|
27,740
|
|
|
(4.5
|
)%
|
Other investments
|
|
2,790
|
|
|
—
|
|
|
NM
|
|
||
Cash and cash equivalents
|
|
1,723
|
|
|
2,153
|
|
|
(20.0
|
)%
|
||
Securities lending income
|
|
5
|
|
|
27
|
|
|
(81.5
|
)%
|
||
Total gross investment income
|
|
31,005
|
|
|
29,920
|
|
|
3.6
|
%
|
||
Investment expenses
|
|
(2,203
|
)
|
|
(1,840
|
)
|
|
(19.7
|
)%
|
||
Net investment income
|
|
$
|
28,802
|
|
|
$
|
28,080
|
|
|
2.6
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended December 31,
|
|
|
|||||||
(Dollars in thousands)
|
|
2012 (a)
|
|
2011
|
|
% Change
|
|||||
2006 Junior Subordinated Deferrable Debentures
|
|
$
|
2,235
|
|
|
$
|
1,496
|
|
|
49.4
|
%
|
2007 Junior Subordinated Deferrable Debentures
|
|
1,850
|
|
|
3,029
|
|
|
(38.9
|
)%
|
||
2010 Senior Notes due 2040
|
|
5,596
|
|
|
5,597
|
|
|
0.0
|
%
|
||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
|
459
|
|
|
—
|
|
|
NM
|
|
||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
|
327
|
|
|
—
|
|
|
NM
|
|
||
Credit facilities
|
|
1,469
|
|
|
1,671
|
|
|
(12.1
|
)%
|
||
Bank charges
|
|
138
|
|
|
218
|
|
|
22.9
|
%
|
||
AlphaCat Re 2011 fees (b)
|
|
—
|
|
|
1,497
|
|
|
(100.0
|
)%
|
||
AlphaCat ILS Funds fees (c)
|
|
2,432
|
|
|
—
|
|
|
NM
|
|
||
Talbot FAL Facility
|
|
4
|
|
|
12
|
|
|
(66.7
|
)%
|
||
Finance expenses
|
|
$
|
14,510
|
|
|
$
|
13,520
|
|
|
7.3
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended December 31,
|
||||||||||||||||
(Dollars in thousands)
|
|
2012 (a)
|
|
2011
|
|
2012 (a)
|
|
2011
|
|
2010
|
||||||||||
Gross premiums written
|
|
$
|
311,847
|
|
|
$
|
278,279
|
|
|
$
|
2,166,440
|
|
|
$
|
2,124,691
|
|
|
1,990,566
|
|
|
Reinsurance premiums ceded
|
|
(35,659
|
)
|
|
(16,489
|
)
|
|
(307,506
|
)
|
|
(289,241
|
)
|
|
(229,482
|
)
|
|||||
Net premiums written
|
|
276,188
|
|
|
261,790
|
|
|
1,858,934
|
|
|
1,835,450
|
|
|
1,761,084
|
|
|||||
Change in unearned premiums
|
|
223,098
|
|
|
226,556
|
|
|
14,282
|
|
|
(33,307
|
)
|
|
39
|
|
|||||
Net premiums earned
|
|
499,286
|
|
|
488,346
|
|
|
1,873,216
|
|
|
1,802,143
|
|
|
1,761,123
|
|
|||||
Losses and loss expenses
|
|
458,310
|
|
|
334,829
|
|
|
999,446
|
|
|
1,244,401
|
|
|
987,586
|
|
|||||
Policy acquisition costs
|
|
81,814
|
|
|
81,253
|
|
|
334,698
|
|
|
314,184
|
|
|
292,899
|
|
|||||
General and administrative expenses
|
|
65,095
|
|
|
52,253
|
|
|
263,652
|
|
|
197,497
|
|
|
209,290
|
|
|||||
Share compensation expenses
|
|
7,126
|
|
|
7,237
|
|
|
26,709
|
|
|
34,296
|
|
|
28,911
|
|
|||||
Total underwriting deductions
|
|
612,345
|
|
|
475,572
|
|
|
1,624,505
|
|
|
1,790,378
|
|
|
1,518,686
|
|
|||||
Underwriting (loss) income (b)
|
|
(113,059
|
)
|
|
12,774
|
|
|
248,711
|
|
|
11,765
|
|
|
242,437
|
|
|||||
Net investment income
|
|
28,802
|
|
|
28,080
|
|
|
107,936
|
|
|
112,296
|
|
|
134,103
|
|
|||||
Other income
|
|
187
|
|
|
3,517
|
|
|
22,396
|
|
|
5,718
|
|
|
5,219
|
|
|||||
Finance expenses
|
|
(14,510
|
)
|
|
(13,520
|
)
|
|
(53,857
|
)
|
|
(54,817
|
)
|
|
(55,870
|
)
|
|||||
Operating (loss) income before taxes and (loss) income from oprating affiliates (b)
|
|
(98,580
|
)
|
|
30,851
|
|
|
325,186
|
|
|
74,962
|
|
|
325,889
|
|
|||||
Tax (expense) benefit
|
|
(615
|
)
|
|
226
|
|
|
(2,501
|
)
|
|
(824
|
)
|
|
(3,126
|
)
|
|||||
(Loss) income from operating affiliates
|
|
(614
|
)
|
|
—
|
|
|
12,580
|
|
|
—
|
|
|
—
|
|
|||||
Net operating (loss) income (b)
|
|
(99,809
|
)
|
|
31,077
|
|
|
335,265
|
|
|
74,138
|
|
|
322,763
|
|
|||||
Gain on bargain purchase, net of expenses (c)
|
|
21,485
|
|
|
—
|
|
|
17,701
|
|
|
—
|
|
|
—
|
|
|||||
Net realized (losses) gains on investments
|
|
(4,516
|
)
|
|
5,355
|
|
|
18,233
|
|
|
28,532
|
|
|
32,498
|
|
|||||
Net unrealized (losses) gains on investments
|
|
(35,857
|
)
|
|
2,159
|
|
|
17,585
|
|
|
(19,991
|
)
|
|
45,952
|
|
|||||
(Loss) from investment affiliate
|
|
(406
|
)
|
|
—
|
|
|
(964
|
)
|
|
—
|
|
|
—
|
|
|||||
Foreign exchange gains (losses)
|
|
1,181
|
|
|
266
|
|
|
4,798
|
|
|
(22,124
|
)
|
|
1,351
|
|
|||||
Transaction expenses (d)
|
|
—
|
|
|
(3,850
|
)
|
|
—
|
|
|
(17,433
|
)
|
|
—
|
|
|||||
Net (loss) income
|
|
(117,922
|
)
|
|
35,007
|
|
|
392,618
|
|
|
43,122
|
|
|
402,564
|
|
|||||
Net loss (income) attributable to noncontrolling interest
|
|
27,206
|
|
|
(7,683
|
)
|
|
15,820
|
|
|
(21,793
|
)
|
|
—
|
|
|||||
Net (loss) income (attributable) available to Validus
|
|
$
|
(90,716
|
)
|
|
$
|
27,324
|
|
|
$
|
408,438
|
|
|
$
|
21,329
|
|
|
$
|
402,564
|
|
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums written / Gross premiums written
|
|
88.6
|
%
|
|
94.1
|
%
|
|
85.8
|
%
|
|
86.4
|
%
|
|
88.5
|
%
|
|||||
Losses and loss expenses
|
|
91.8
|
%
|
|
68.6
|
%
|
|
53.4
|
%
|
|
69.1
|
%
|
|
56.1
|
%
|
|||||
Policy acquisition costs
|
|
16.4
|
%
|
|
16.6
|
%
|
|
17.9
|
%
|
|
17.4
|
%
|
|
16.6
|
%
|
|||||
General and administrative expenses (e)
|
|
14.5
|
%
|
|
12.2
|
%
|
|
15.5
|
%
|
|
12.9
|
%
|
|
13.5
|
%
|
|||||
Expense ratio
|
|
30.9
|
%
|
|
28.8
|
%
|
|
33.4
|
%
|
|
30.3
|
%
|
|
30.1
|
%
|
|||||
Combined ratio
|
|
122.7
|
%
|
|
97.4
|
%
|
|
86.8
|
%
|
|
99.4
|
%
|
|
86.2
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and 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. Reconciliations of these measures to the most comparable U.S. GAAP financial measure, are presented in the section below entitled “Underwriting Income”
|
(c)
|
The gain on bargain purchase, net of expenses, arises from the acquisition of Flagstone Reinsurance Holdings S.A. on November 30, 2012 and is net of transaction related expenses.
|
(d)
|
The transaction expenses relate to costs incurred in connection with the Company’s proposed acquisition of Transatlantic. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
(e)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended December 31,
|
||||||||||||||||
(Dollars in thousands)
|
|
2012 (a)
|
|
2011
|
|
2012 (a)
|
|
2011
|
|
2010
|
||||||||||
Validus Re
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
79,233
|
|
|
$
|
55,851
|
|
|
$
|
1,131,959
|
|
|
$
|
1,114,493
|
|
|
$
|
1,089,443
|
|
Reinsurance premiums ceded
|
|
(7,074
|
)
|
|
(49
|
)
|
|
(144,578
|
)
|
|
(150,718
|
)
|
|
(63,147
|
)
|
|||||
Net premiums written
|
|
72,159
|
|
|
55,802
|
|
|
987,381
|
|
|
963,775
|
|
|
1,026,296
|
|
|||||
Change in unearned premiums
|
|
213,105
|
|
|
196,679
|
|
|
35,890
|
|
|
2,150
|
|
|
13,822
|
|
|||||
Net premiums earned
|
|
285,264
|
|
|
252,481
|
|
|
1,023,271
|
|
|
965,925
|
|
|
1,040,118
|
|
|||||
Losses and loss expenses
|
|
331,130
|
|
|
215,903
|
|
|
575,416
|
|
|
749,305
|
|
|
601,610
|
|
|||||
Policy acquisition costs
|
|
40,703
|
|
|
39,227
|
|
|
154,362
|
|
|
154,582
|
|
|
159,527
|
|
|||||
General and administrative expenses
|
|
14,716
|
|
|
11,716
|
|
|
63,048
|
|
|
44,663
|
|
|
45,613
|
|
|||||
Share compensation expenses
|
|
1,849
|
|
|
2,191
|
|
|
7,763
|
|
|
9,309
|
|
|
7,181
|
|
|||||
Total underwriting deductions
|
|
388,398
|
|
|
269,037
|
|
|
800,589
|
|
|
957,859
|
|
|
813,931
|
|
|||||
Underwriting (loss) income (b)
|
|
(103,134
|
)
|
|
(16,556
|
)
|
|
222,682
|
|
|
8,066
|
|
|
226,187
|
|
|||||
AlphaCat
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
(4
|
)
|
|
$
|
(1,323
|
)
|
|
$
|
21,603
|
|
|
$
|
75,727
|
|
|
$
|
11,796
|
|
Reinsurance premiums ceded
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net premiums written
|
|
(4
|
)
|
|
(1,323
|
)
|
|
21,603
|
|
|
75,727
|
|
|
11,796
|
|
|||||
Change in unearned premiums
|
|
5,895
|
|
|
27,834
|
|
|
(3,937
|
)
|
|
(9,761
|
)
|
|
(714
|
)
|
|||||
Net premiums earned
|
|
5,891
|
|
|
26,511
|
|
|
17,666
|
|
|
65,966
|
|
|
11,082
|
|
|||||
Losses and loss expenses
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|||||
Policy acquisition costs
|
|
589
|
|
|
3,331
|
|
|
1,774
|
|
|
7,946
|
|
|
1,072
|
|
|||||
General and administrative expenses
|
|
2,011
|
|
|
6,807
|
|
|
7,532
|
|
|
10,929
|
|
|
5,327
|
|
|||||
Share compensation expenses
|
|
84
|
|
|
33
|
|
|
279
|
|
|
107
|
|
|
594
|
|
|||||
Total underwriting deductions
|
|
2,684
|
|
|
20,171
|
|
|
9,585
|
|
|
28,982
|
|
|
6,993
|
|
|||||
Underwriting income (b)
|
|
3,207
|
|
|
6,340
|
|
|
8,081
|
|
|
36,984
|
|
|
4,089
|
|
|||||
Legal Entity adjustments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reinsurance premiums ceded
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net premiums written
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|||||
Change in unearned premiums
|
|
(3,833
|
)
|
|
—
|
|
|
(3,833
|
)
|
|
—
|
|
|
—
|
|
|||||
Net premiums earned
|
|
(3,826
|
)
|
|
—
|
|
|
(3,826
|
)
|
|
—
|
|
|
—
|
|
|||||
Losses and loss expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Policy acquisition costs
|
|
$
|
(365
|
)
|
|
$
|
(1,093
|
)
|
|
$
|
(390
|
)
|
|
$
|
(2,394
|
)
|
|
$
|
—
|
|
General and administrative expenses
|
|
1,673
|
|
|
(5,438
|
)
|
|
5,130
|
|
|
(1,658
|
)
|
|
15,927
|
|
|||||
Share compensation expenses
|
|
115
|
|
|
196
|
|
|
561
|
|
|
982
|
|
|
80
|
|
|||||
Total underwriting deductions
|
|
1,423
|
|
|
(6,335
|
)
|
|
5,301
|
|
|
(3,070
|
)
|
|
16,007
|
|
|||||
Underwriting (loss) income(b)
|
|
(5,249
|
)
|
|
6,335
|
|
|
(9,127
|
)
|
|
3,070
|
|
|
(16,007
|
)
|
|||||
Talbot
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
241,100
|
|
|
$
|
235,242
|
|
|
$
|
1,078,636
|
|
|
$
|
1,014,122
|
|
|
$
|
981,073
|
|
Reinsurance premiums ceded
|
|
(37,067
|
)
|
|
(27,931
|
)
|
|
(228,686
|
)
|
|
(218,174
|
)
|
|
(258,081
|
)
|
|||||
Net premiums written
|
|
204,033
|
|
|
207,311
|
|
|
849,950
|
|
|
795,948
|
|
|
722,992
|
|
|||||
Change in unearned premiums
|
|
4,098
|
|
|
2,043
|
|
|
(17,671
|
)
|
|
(25,696
|
)
|
|
(13,069
|
)
|
|||||
Net premiums earned
|
|
208,131
|
|
|
209,354
|
|
|
832,279
|
|
|
770,252
|
|
|
709,923
|
|
|||||
Losses and loss expenses
|
|
127,180
|
|
|
108,926
|
|
|
424,030
|
|
|
485,096
|
|
|
385,976
|
|
|||||
Policy acquisition costs
|
|
41,745
|
|
|
41,160
|
|
|
183,926
|
|
|
157,334
|
|
|
143,769
|
|
|||||
General and administrative expenses
|
|
32,371
|
|
|
29,676
|
|
|
133,281
|
|
|
112,072
|
|
|
107,557
|
|
|||||
Share compensation expenses
|
|
2,442
|
|
|
1,934
|
|
|
7,789
|
|
|
8,582
|
|
|
6,923
|
|
|||||
Total underwriting deductions
|
|
203,738
|
|
|
181,696
|
|
|
749,026
|
|
|
763,084
|
|
|
644,225
|
|
|||||
Underwriting income (b)
|
|
4,393
|
|
|
27,658
|
|
|
83,253
|
|
|
7,168
|
|
|
65,698
|
|
|||||
Corporate & Eliminations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
(8,489
|
)
|
|
$
|
(11,491
|
)
|
|
$
|
(65,765
|
)
|
|
$
|
(79,651
|
)
|
|
$
|
(91,746
|
)
|
Reinsurance premiums ceded
|
|
8,482
|
|
|
11,491
|
|
|
65,758
|
|
|
79,651
|
|
|
91,746
|
|
|||||
Net premiums written
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|||||
Change in unearned premiums
|
|
3,833
|
|
|
—
|
|
|
3,833
|
|
|
—
|
|
|
—
|
|
|||||
Net premiums earned
|
|
3,826
|
|
|
—
|
|
|
3,826
|
|
|
—
|
|
|
—
|
|
|||||
Losses and loss expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Policy acquisition costs
|
|
(858
|
)
|
|
(1,372
|
)
|
|
(4,974
|
)
|
|
(3,284
|
)
|
|
(11,469
|
)
|
|||||
General and administrative expenses
|
|
14,324
|
|
|
9,492
|
|
|
54,661
|
|
|
31,491
|
|
|
34,866
|
|
|||||
Share compensation expenses
|
|
2,636
|
|
|
2,883
|
|
|
10,317
|
|
|
15,316
|
|
|
14,133
|
|
|||||
Total underwriting deductions
|
|
16,102
|
|
|
11,003
|
|
|
60,004
|
|
|
43,523
|
|
|
37,530
|
|
|||||
Underwriting (loss) (b)
|
|
(12,276
|
)
|
|
(11,003
|
)
|
|
(56,178
|
)
|
|
(43,523
|
)
|
|
(37,530
|
)
|
|||||
Total underwriting (loss) income (b)
|
|
$
|
(113,059
|
)
|
|
$
|
12,774
|
|
|
$
|
248,711
|
|
|
$
|
11,765
|
|
|
$
|
242,437
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
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.”
|
•
|
Increase in underwriting income of
$236.9 million
due primarily to:
|
•
|
A
$245.0 million
decrease in loss and loss expenses and a
$71.1 million
increase in net premiums earned;
|
•
|
Offset by the following factors:
|
◦
|
A
$20.5 million
increase in policy acquisition costs; and
|
◦
|
A
$66.2 million
increase in general and administrative expenses, partially offset by a
$7.6 million
decrease in share compensation expenses;
|
•
|
Increases in other income of
$16.7 million
and income from operating affiliates of
$12.6 million
;
|
•
|
Increase in net unrealized gains on investments and foreign exchange of
$37.6 million
and
$26.9 million
, respectively;
|
•
|
Decrease in transaction expenses of
$17.4 million
($nil in the current year) and a $17.7 million gain on bargain purchase, net of expenses; and
|
•
|
Net loss attributable to controlling interest which resulted in an increase to net income attributable to Validus of
$37.6 million
.
|
•
|
Unfavorable movement in net investment income and net realized gains on investments of $4.4 million and
$10.3 million
, respectively.
|
|
|
Year Ended December 31, 2012
|
||||||||||||||||||
|
|
Decrease (increase) over the year ended December 31, 2011
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re (a)
|
|
AlphaCat
|
|
Talbot
|
|
Corporate and
Eliminations(b)
|
|
Total
|
||||||||||
Notable losses—decrease in net losses and loss expenses (c)
|
|
$
|
72,055
|
|
|
$
|
—
|
|
|
$
|
61,240
|
|
|
$
|
—
|
|
|
$
|
133,295
|
|
Less: Notable losses— increase in net reinstatement premiums (c)
|
|
6,932
|
|
|
—
|
|
|
5,898
|
|
|
—
|
|
|
12,830
|
|
|||||
Other underwriting (loss) income
|
|
135,629
|
|
|
(28,903
|
)
|
|
8,947
|
|
|
(24,852
|
)
|
|
90,821
|
|
|||||
Underwriting income (loss) (d)
|
|
214,616
|
|
|
(28,903
|
)
|
|
76,085
|
|
|
(24,852
|
)
|
|
236,946
|
|
|||||
Net investment income
|
|
(4,521
|
)
|
|
503
|
|
|
(4,070
|
)
|
|
3,728
|
|
|
(4,360
|
)
|
|||||
Other income
|
|
(2,305
|
)
|
|
11,763
|
|
|
(1,452
|
)
|
|
8,672
|
|
|
16,678
|
|
|||||
Finance expenses
|
|
(1,166
|
)
|
|
598
|
|
|
65
|
|
|
1,463
|
|
|
960
|
|
|||||
Operating income (loss) before taxes and income from operating affiliates
|
|
206,624
|
|
|
(16,039
|
)
|
|
70,628
|
|
|
(10,989
|
)
|
|
250,224
|
|
|||||
Tax (expense)
|
|
(150
|
)
|
|
—
|
|
|
(1,578
|
)
|
|
51
|
|
|
(1,677
|
)
|
|||||
Income from operating affiliates
|
|
—
|
|
|
12,580
|
|
|
—
|
|
|
—
|
|
|
12,580
|
|
|||||
Net operating income (loss)
|
|
206,474
|
|
|
(3,459
|
)
|
|
69,050
|
|
|
(10,938
|
)
|
|
261,127
|
|
|||||
Gain on bargain purchase, net of expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,701
|
|
|
17,701
|
|
|||||
Net realized gains on investments
|
|
(9,112
|
)
|
|
(315
|
)
|
|
(872
|
)
|
|
—
|
|
|
(10,299
|
)
|
|||||
Net unrealized gains (losses) on investments
|
|
49,731
|
|
|
(18,168
|
)
|
|
6,013
|
|
|
—
|
|
|
37,576
|
|
|||||
(Loss) from investment affiliate
|
|
(964
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(964
|
)
|
|||||
Foreign exchange gains (losses)
|
|
22,188
|
|
|
508
|
|
|
4,715
|
|
|
(489
|
)
|
|
26,922
|
|
|||||
Transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,433
|
|
|
17,433
|
|
|||||
Net income (loss)
|
|
268,317
|
|
|
(21,434
|
)
|
|
78,906
|
|
|
23,707
|
|
|
349,496
|
|
|||||
Net loss (income) attributable to noncontrolling interest
|
|
—
|
|
|
37,613
|
|
|
—
|
|
|
—
|
|
|
37,613
|
|
|||||
Net income (loss) available (attributable) to Validus
|
|
$
|
268,317
|
|
|
$
|
16,179
|
|
|
$
|
78,906
|
|
|
$
|
23,707
|
|
|
$
|
387,109
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
The Corporate and Eliminations column includes legal entity adjustments.
|
(c)
|
Notable losses for the year ended December 31,
2012
include: Costa Concordia, Cat 67, U.S. drought, Hurricane Isaac and Hurricane Sandy. Notable losses for the year ended December 31,
2011
include: Tohoku earthquake, Gryphon Alpha mooring failure, Christchurch earthquake, Brisbane floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish floods, Hurricane Irene and the Thai floods. Excludes the reserve for potential development on 2011 notable loss events.
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income (loss) 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”.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
|
|||||||||
Property
|
|
$
|
1,060,297
|
|
|
48.9
|
%
|
|
$
|
1,099,303
|
|
|
51.7
|
%
|
|
$
|
1,037,061
|
|
|
52.1
|
%
|
Marine
|
|
649,421
|
|
|
30.0
|
%
|
|
569,981
|
|
|
26.9
|
%
|
|
525,307
|
|
|
26.4
|
%
|
|||
Specialty
|
|
456,722
|
|
|
21.1
|
%
|
|
455,407
|
|
|
21.4
|
%
|
|
428,198
|
|
|
21.5
|
%
|
|||
Total
|
|
$
|
2,166,440
|
|
|
100.0
|
%
|
|
$
|
2,124,691
|
|
|
100.0
|
%
|
|
$
|
1,990,566
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
|
|||||||||
Property
|
|
$
|
771,617
|
|
|
68.2
|
%
|
|
$
|
786,937
|
|
|
70.6
|
%
|
|
$
|
778,794
|
|
|
71.5
|
%
|
Marine
|
|
257,469
|
|
|
22.7
|
%
|
|
232,401
|
|
|
20.9
|
%
|
|
227,135
|
|
|
20.8
|
%
|
|||
Specialty
|
|
102,873
|
|
|
9.1
|
%
|
|
95,155
|
|
|
8.5
|
%
|
|
83,514
|
|
|
7.7
|
%
|
|||
Total
|
|
$
|
1,131,959
|
|
|
100.0
|
%
|
|
$
|
1,114,493
|
|
|
100.0
|
%
|
|
$
|
1,089,443
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
|
Gross Premiums Written
|
|
Gross Premiums Written (%)
|
||||||
Property
|
|
21,603
|
|
|
100.0
|
%
|
|
75,727
|
|
|
100.0
|
%
|
|
11,796
|
|
|
100.0
|
%
|
Total
|
|
21,603
|
|
|
100.0
|
%
|
|
75,727
|
|
|
100.0
|
%
|
|
11,796
|
|
|
100.0
|
%
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|||||||||
Property
|
|
$
|
206,000
|
|
|
67.0
|
%
|
|
$
|
208,968
|
|
|
72.2
|
%
|
|
$
|
123,383
|
|
|
53.7
|
%
|
Marine
|
|
46,853
|
|
|
15.2
|
%
|
|
32,847
|
|
|
11.4
|
%
|
|
38,701
|
|
|
16.9
|
%
|
|||
Specialty
|
|
54,653
|
|
|
17.8
|
%
|
|
47,426
|
|
|
16.4
|
%
|
|
67,398
|
|
|
29.4
|
%
|
|||
Total
|
|
$
|
307,506
|
|
|
100.0
|
%
|
|
$
|
289,241
|
|
|
100.0
|
%
|
|
$
|
229,482
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|||||||||
Property
|
|
$
|
123,610
|
|
|
85.5
|
%
|
|
$
|
136,369
|
|
|
90.5
|
%
|
|
$
|
45,536
|
|
|
72.2
|
%
|
Marine
|
|
20,397
|
|
|
14.1
|
%
|
|
13,848
|
|
|
9.2
|
%
|
|
17,643
|
|
|
27.9
|
%
|
|||
Specialty
|
|
571
|
|
|
0.4
|
%
|
|
501
|
|
|
0.3
|
%
|
|
(32
|
)
|
|
(0.1
|
)%
|
|||
Total
|
|
$
|
144,578
|
|
|
100.0
|
%
|
|
$
|
150,718
|
|
|
100.0
|
%
|
|
$
|
63,147
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|
Reinsurance
Premiums
Ceded
|
|
Reinsurance
Premiums
Ceded (%)
|
|||||||||
Property
|
|
$
|
140,223
|
|
|
61.3
|
%
|
|
$
|
142,277
|
|
|
65.2
|
%
|
|
$
|
146,145
|
|
|
56.6
|
%
|
Marine
|
|
30,711
|
|
|
13.4
|
%
|
|
23,240
|
|
|
10.7
|
%
|
|
37,988
|
|
|
14.7
|
%
|
|||
Specialty
|
|
57,752
|
|
|
25.3
|
%
|
|
52,657
|
|
|
24.1
|
%
|
|
73,948
|
|
|
28.7
|
%
|
|||
Total
|
|
$
|
228,686
|
|
|
100.0
|
%
|
|
$
|
218,174
|
|
|
100.0
|
%
|
|
$
|
258,081
|
|
|
100.0
|
%
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|||||||||
Property
|
|
$
|
854,297
|
|
|
46.0
|
%
|
|
$
|
890,335
|
|
|
48.5
|
%
|
|
$
|
913,678
|
|
|
51.9
|
%
|
Marine
|
|
602,568
|
|
|
32.4
|
%
|
|
537,134
|
|
|
29.3
|
%
|
|
486,606
|
|
|
27.6
|
%
|
|||
Specialty
|
|
402,069
|
|
|
21.6
|
%
|
|
407,981
|
|
|
22.2
|
%
|
|
360,800
|
|
|
20.5
|
%
|
|||
Total
|
|
$
|
1,858,934
|
|
|
100.0
|
%
|
|
$
|
1,835,450
|
|
|
100.0
|
%
|
|
$
|
1,761,084
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|||||||||
Property
|
|
$
|
648,007
|
|
|
65.6
|
%
|
|
$
|
650,568
|
|
|
67.5
|
%
|
|
$
|
733,258
|
|
|
71.5
|
%
|
Marine
|
|
237,072
|
|
|
24.0
|
%
|
|
218,553
|
|
|
22.7
|
%
|
|
209,492
|
|
|
20.4
|
%
|
|||
Specialty
|
|
102,302
|
|
|
10.4
|
%
|
|
94,654
|
|
|
9.8
|
%
|
|
83,546
|
|
|
8.1
|
%
|
|||
Total
|
|
$
|
987,381
|
|
|
100.0
|
%
|
|
$
|
963,775
|
|
|
100.0
|
%
|
|
$
|
1,026,296
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|
Net Premiums
Written
|
|
Net Premiums
Written (%)
|
|||||||||
Property
|
|
$
|
21,603
|
|
|
100.0
|
%
|
|
$
|
75,727
|
|
|
100.0
|
%
|
|
$
|
11,796
|
|
|
100.0
|
%
|
Total
|
|
$
|
21,603
|
|
|
100.0
|
%
|
|
$
|
75,727
|
|
|
100.0
|
%
|
|
$
|
11,796
|
|
|
100.0
|
%
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
(Dollars in thousands)
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
||||||
Change in gross unearned premium
|
|
$
|
(121,980
|
)
|
|
$
|
(43,866
|
)
|
|
$
|
(12,079
|
)
|
Less change due to Flagstone acquisition
|
|
139,389
|
|
|
—
|
|
|
—
|
|
|||
Deconsolidation of AlphaCat Re 2011
|
|
—
|
|
|
(9,405
|
)
|
|
—
|
|
|||
Net change in gross unearned premium
|
|
17,409
|
|
|
(53,271
|
)
|
|
(12,079
|
)
|
|||
|
|
|
|
|
|
|
||||||
Change in prepaid reinsurance premium
|
|
8,212
|
|
|
19,964
|
|
|
12,118
|
|
|||
Less change due to Flagstone acquisition
|
|
(11,339
|
)
|
|
—
|
|
|
—
|
|
|||
Net change in prepaid reinsurance premium
|
|
(3,127
|
)
|
|
19,964
|
|
|
12,118
|
|
|||
Net change in unearned premium
|
|
$
|
14,282
|
|
|
$
|
(33,307
|
)
|
|
$
|
39
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012(a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
(Dollars in thousands)
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
||||||
Change in gross unearned premium
|
|
$
|
(104,420
|
)
|
|
$
|
(7,771
|
)
|
|
$
|
16,277
|
|
Less change due to Flagstone acquisition
|
|
139,389
|
|
|
—
|
|
|
—
|
|
|||
Deconsolidation of AlphaCat Re 2011
|
|
—
|
|
|
(9,405
|
)
|
|
—
|
|
|||
Net change in gross unearned premium
|
|
34,969
|
|
|
(17,176
|
)
|
|
16,277
|
|
|||
|
|
|
|
|
|
|
||||||
Change in prepaid reinsurance premium
|
|
12,260
|
|
|
19,326
|
|
|
(2,455
|
)
|
|||
Less change due to Flagstone acquisition
|
|
(11,339
|
)
|
|
—
|
|
|
—
|
|
|||
Net change in prepaid reinsurance premium
|
|
921
|
|
|
19,326
|
|
|
(2,455
|
)
|
|||
Net change in unearned premium
|
|
$
|
35,890
|
|
|
$
|
2,150
|
|
|
$
|
13,822
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
(Dollars in thousands)
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
||||||
Change in gross unearned premium
|
|
$
|
(3,937
|
)
|
|
$
|
(9,761
|
)
|
|
$
|
(714
|
)
|
Net change in unearned premium
|
|
$
|
(3,937
|
)
|
|
$
|
(9,761
|
)
|
|
$
|
(714
|
)
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
(Dollars in thousands)
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
|
Net Change in
Unearned
Premiums
|
||||||
Change in gross unearned premium
|
|
$
|
(13,623
|
)
|
|
$
|
(26,334
|
)
|
|
$
|
(27,642
|
)
|
Change in prepaid reinsurance premium
|
|
(4,048
|
)
|
|
638
|
|
|
14,573
|
|
|||
Net change in unearned premium
|
|
$
|
(17,671
|
)
|
|
$
|
(25,696
|
)
|
|
$
|
(13,069
|
)
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|||||||||
Property
|
|
$
|
866,365
|
|
|
46.3
|
%
|
|
$
|
891,448
|
|
|
49.5
|
%
|
|
$
|
923,370
|
|
|
52.4
|
%
|
Marine
|
|
609,012
|
|
|
32.5
|
%
|
|
517,376
|
|
|
28.7
|
%
|
|
445,426
|
|
|
25.3
|
%
|
|||
Specialty
|
|
397,839
|
|
|
21.2
|
%
|
|
393,319
|
|
|
21.8
|
%
|
|
392,327
|
|
|
22.3
|
%
|
|||
Total
|
|
$
|
1,873,216
|
|
|
100.0
|
%
|
|
$
|
1,802,143
|
|
|
100.0
|
%
|
|
$
|
1,761,123
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|||||||||
Property
|
|
$
|
673,928
|
|
|
65.9
|
%
|
|
$
|
664,244
|
|
|
68.8
|
%
|
|
$
|
754,583
|
|
|
72.5
|
%
|
Marine
|
|
254,092
|
|
|
24.8
|
%
|
|
211,344
|
|
|
21.9
|
%
|
|
176,601
|
|
|
17.0
|
%
|
|||
Specialty
|
|
95,251
|
|
|
9.3
|
%
|
|
90,337
|
|
|
9.3
|
%
|
|
108,934
|
|
|
10.5
|
%
|
|||
Total
|
|
$
|
1,023,271
|
|
|
100.0
|
%
|
|
$
|
965,925
|
|
|
100.0
|
%
|
|
$
|
1,040,118
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|
Net Premiums
Earned
|
|
Net Premiums
Earned (%)
|
|||||||||
Property
|
|
$
|
17,666
|
|
|
100.0
|
%
|
|
$
|
65,966
|
|
|
100.0
|
%
|
|
$
|
11,082
|
|
|
100.0
|
%
|
Total
|
|
$
|
17,666
|
|
|
100.0
|
%
|
|
$
|
65,966
|
|
|
100.0
|
%
|
|
$
|
11,082
|
|
|
100.0
|
%
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||
Property
|
54.7
|
%
|
|
87.1
|
%
|
|
60.5
|
%
|
Marine
|
60.1
|
%
|
|
61.7
|
%
|
|
50.3
|
%
|
Specialty
|
40.0
|
%
|
|
37.8
|
%
|
|
52.2
|
%
|
All lines
|
53.4
|
%
|
|
69.1
|
%
|
|
56.1
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
Year Ended
December 31,
|
|||||||
|
2012 (a)
|
|
2011
|
|
2010
|
|||
Property—current period—excluding items below
|
25.5
|
%
|
|
28.2
|
%
|
|
21.7
|
%
|
Property—current period—notable losses
|
37.5
|
%
|
|
58.7
|
%
|
|
45.7
|
%
|
Property—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
8.2
|
%
|
|
0.9
|
%
|
Property—change in prior accident years
|
(8.3
|
)%
|
|
(8.0
|
)%
|
|
(7.8
|
)%
|
Property—loss ratio
|
54.7
|
%
|
|
87.1
|
%
|
|
60.5
|
%
|
Marine—current period—excluding items below
|
44.6
|
%
|
|
48.4
|
%
|
|
44.9
|
%
|
Marine—current period—notable losses
|
23.9
|
%
|
|
20.3
|
%
|
|
15.5
|
%
|
Marine—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
1.0
|
%
|
|
5.6
|
%
|
Marine—change in prior accident years
|
(8.4
|
)%
|
|
(8.0
|
)%
|
|
(15.7
|
)%
|
Marine—loss ratio
|
60.1
|
%
|
|
61.7
|
%
|
|
50.3
|
%
|
Specialty—current period—excluding items below
|
45.4
|
%
|
|
47.3
|
%
|
|
45.7
|
%
|
Specialty—current period—notable losses (b)
|
7.6
|
%
|
|
1.5
|
%
|
|
10.1
|
%
|
Specialty—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Specialty—change in prior accident years (b)
|
(13.0
|
)%
|
|
(11.0
|
)%
|
|
(3.6
|
)%
|
Specialty—loss ratio
|
40.0
|
%
|
|
37.8
|
%
|
|
52.2
|
%
|
All lines—current period—excluding items below
|
36.0
|
%
|
|
38.3
|
%
|
|
33.0
|
%
|
All lines—current period—notable losses (b)
|
26.7
|
%
|
|
35.2
|
%
|
|
30.1
|
%
|
All lines—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
4.3
|
%
|
|
1.9
|
%
|
All lines—change in prior accident years (b)
|
(9.3
|
)%
|
|
(8.7
|
)%
|
|
(8.9
|
)%
|
All lines—loss ratio
|
53.4
|
%
|
|
69.1
|
%
|
|
56.1
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
The financial institution loss occurred in a prior period but developed over the notable loss threshold in the three months ended December 31, 2010. In 2010, this loss was included in the change in prior year development and excluded as a notable loss as presented above.
|
|
Year Ended
December 31,
|
|||||||
|
2012 (a)
|
|
2011 (b)
|
|
2010 (b)
|
|||
Property—current period excluding items below
|
18.5
|
%
|
|
21.0
|
%
|
|
16.6
|
%
|
Property—current period—notable losses
|
41.1
|
%
|
|
61.1
|
%
|
|
46.5
|
%
|
Property—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
11.0
|
%
|
|
1.1
|
%
|
Property—change in prior accident years
|
(6.8
|
)%
|
|
(7.4
|
)%
|
|
(6.6
|
)%
|
Property—loss ratio
|
52.8
|
%
|
|
85.7
|
%
|
|
57.6
|
%
|
Marine—current period excluding items below
|
36.3
|
%
|
|
44.0
|
%
|
|
36.5
|
%
|
Marine—current period—notable losses
|
40.3
|
%
|
|
32.7
|
%
|
|
29.1
|
%
|
Marine—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
2.4
|
%
|
|
14.2
|
%
|
Marine—change in prior accident years
|
(4.4
|
)%
|
|
(4.8
|
)%
|
|
(10.0
|
)%
|
Marine—loss ratio
|
72.2
|
%
|
|
74.3
|
%
|
|
69.8
|
%
|
Specialty—current period excluding items below
|
29.9
|
%
|
|
36.3
|
%
|
|
19.2
|
%
|
Specialty—current period—notable losses
|
24.3
|
%
|
|
0.0
|
%
|
|
23.7
|
%
|
Specialty—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Specialty—change in prior accident years
|
(16.3
|
)%
|
|
(10.4
|
)%
|
|
(2.9
|
)%
|
Specialty—loss ratio
|
37.9
|
%
|
|
25.9
|
%
|
|
40.0
|
%
|
All lines—current period excluding items below
|
23.9
|
%
|
|
27.4
|
%
|
|
20.3
|
%
|
All lines—current period—notable losses
|
39.4
|
%
|
|
49.2
|
%
|
|
41.1
|
%
|
All lines—current period—reserve for potential development on notable loss events
|
0.0
|
%
|
|
8.1
|
%
|
|
3.2
|
%
|
All lines—change in prior accident years
|
(7.1
|
)%
|
|
(7.1
|
)%
|
|
(6.8
|
)%
|
All lines—loss ratio
|
56.2
|
%
|
|
77.6
|
%
|
|
57.8
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
The prior year ratios have been represented to exclude the impact of the AlphaCat segment premiums.
|
|
Year Ended
December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Property—current period excluding items below
|
55.6
|
%
|
|
63.6
|
%
|
|
47.5
|
%
|
Property—current period—notable losses
|
27.2
|
%
|
|
72.8
|
%
|
|
45.3
|
%
|
Property—change in prior accident years
|
(15.0
|
)%
|
|
(13.7
|
)%
|
|
(14.2
|
)%
|
Property—loss ratio
|
67.8
|
%
|
|
122.7
|
%
|
|
78.6
|
%
|
Marine—current period excluding items below
|
50.5
|
%
|
|
51.5
|
%
|
|
50.5
|
%
|
Marine—current period—notable losses
|
12.2
|
%
|
|
11.7
|
%
|
|
6.6
|
%
|
Marine—change in prior accident years
|
(11.3
|
)%
|
|
(10.2
|
)%
|
|
(19.5
|
)%
|
Marine—loss ratio
|
51.4
|
%
|
|
53.0
|
%
|
|
37.6
|
%
|
Specialty—current period excluding items below
|
50.3
|
%
|
|
50.6
|
%
|
|
55.8
|
%
|
Specialty—current period—notable losses (a)
|
2.3
|
%
|
|
1.9
|
%
|
|
4.9
|
%
|
Specialty—change in prior accident years (a)
|
(11.9
|
)%
|
|
(11.2
|
)%
|
|
(3.9
|
)%
|
Specialty—loss ratio
|
40.7
|
%
|
|
41.3
|
%
|
|
56.8
|
%
|
All lines—current period excluding items below
|
51.4
|
%
|
|
53.7
|
%
|
|
52.0
|
%
|
All lines—current period—notable losses (a)
|
11.8
|
%
|
|
20.7
|
%
|
|
14.5
|
%
|
All lines—change in prior accident years (a)
|
(12.3
|
)%
|
|
(11.4
|
)%
|
|
(12.1
|
)%
|
All lines—loss ratio
|
50.9
|
%
|
|
63.0
|
%
|
|
54.4
|
%
|
(a)
|
The financial institution loss occurred in a prior period but developed over the notable loss threshold in the three months ended December 31, 2010. In 2010, this loss was included in the change in prior year development and excluded as a notable loss as presented above.
|
|
|
As at December 31, 2012
|
||||||||||
(Dollars in thousands)
|
|
Gross Case Reserves
|
|
Gross IBNR
|
|
Total Gross Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
930,553
|
|
|
$
|
892,227
|
|
|
$
|
1,822,780
|
|
Marine
|
|
522,907
|
|
|
477,948
|
|
|
1,000,855
|
|
|||
Specialty
|
|
265,638
|
|
|
428,300
|
|
|
693,938
|
|
|||
Total
|
|
$
|
1,719,098
|
|
|
$
|
1,798,475
|
|
|
$
|
3,517,573
|
|
|
|
As at December 31, 2012
|
||||||||||
(Dollars in thousands)
|
|
Net Case Reserves
|
|
Net IBNR
|
|
Total Net Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
768,722
|
|
|
$
|
803,182
|
|
|
$
|
1,571,904
|
|
Marine
|
|
465,080
|
|
|
438,009
|
|
|
903,089
|
|
|||
Specialty
|
|
230,584
|
|
|
372,029
|
|
|
602,613
|
|
|||
Total
|
|
$
|
1,464,386
|
|
|
$
|
1,613,220
|
|
|
$
|
3,077,606
|
|
|
|
Year Ended December 31, 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
|
|
|||||
Net reserves acquired in purchase of Flagstone
|
|
639,641
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
639,641
|
|
|||||
Incurred losses—current year
|
|
647,977
|
|
|
—
|
|
|
526,438
|
|
|
—
|
|
|
1,174,415
|
|
|||||
Change in prior accident years
|
|
(72,561
|
)
|
|
—
|
|
|
(102,408
|
)
|
|
—
|
|
|
(174,969
|
)
|
|||||
Incurred losses
|
|
575,416
|
|
|
—
|
|
|
424,030
|
|
|
—
|
|
|
999,446
|
|
|||||
Foreign exchange
|
|
4,203
|
|
|
—
|
|
|
11,678
|
|
|
—
|
|
|
15,881
|
|
|||||
Paid losses
|
|
(500,351
|
)
|
|
(5,000
|
)
|
|
(330,669
|
)
|
|
—
|
|
|
(836,020
|
)
|
|||||
Net reserves at period end
|
|
1,974,249
|
|
|
5,000
|
|
|
1,098,357
|
|
|
—
|
|
|
3,077,606
|
|
|||||
Losses recoverable
|
|
148,646
|
|
|
—
|
|
|
381,950
|
|
|
(90,629
|
)
|
|
439,967
|
|
|||||
Gross reserves at period end
|
|
$
|
2,122,895
|
|
|
$
|
5,000
|
|
|
$
|
1,480,307
|
|
|
$
|
(90,629
|
)
|
|
$
|
3,517,573
|
|
RESERVES FOR NOTABLE LOSS EVENTS - (Dollars in thousands)
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
2010 NOTABLE LOSS EVENTS
|
|
Year Ended December 31, 2010
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 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)
|
|
31-Dec-12
|
||||||||||||||||||||
Chilean earthquake
|
|
$
|
293,116
|
|
|
$
|
2,548
|
|
|
$
|
19,242
|
|
|
$
|
314,906
|
|
|
$
|
(14,449
|
)
|
|
$
|
—
|
|
|
$
|
300,457
|
|
|
$
|
(15,172
|
)
|
|
$
|
—
|
|
|
$
|
285,285
|
|
Deepwater Horizon (e)
|
|
44,101
|
|
|
737
|
|
|
—
|
|
|
44,838
|
|
|
3
|
|
|
14,769
|
|
|
59,610
|
|
|
13,529
|
|
|
18,617
|
|
|
91,756
|
|
||||||||||
New Zealand earthquake
|
|
28,685
|
|
|
1,167
|
|
|
16,614
|
|
|
46,466
|
|
|
(297
|
)
|
|
—
|
|
|
46,169
|
|
|
3,026
|
|
|
—
|
|
|
49,195
|
|
||||||||||
Queensland floods
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
(17,966
|
)
|
|
—
|
|
|
7,034
|
|
|
(3,700
|
)
|
|
—
|
|
|
3,334
|
|
||||||||||
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
|
|
|
(203
|
)
|
|
—
|
|
|
12,511
|
|
||||||||||
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
|
|
|
$
|
(6,839
|
)
|
|
$
|
18,617
|
|
|
$
|
523,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
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
|
|
|
|
|
31-Dec-12
|
|||||||||||||||||||||||
Chilean earthquake
|
|
|
|
|
|
$
|
120,549
|
|
|
$
|
194,357
|
|
|
|
|
$
|
103,847
|
|
|
$
|
76,061
|
|
|
|
|
$
|
25,380
|
|
|
$
|
35,509
|
|
||||||||
Deepwater Horizon (e)
|
|
|
|
|
|
45,152
|
|
|
(314
|
)
|
|
|
|
(34,881
|
)
|
|
49,339
|
|
|
|
|
14,458
|
|
|
67,027
|
|
||||||||||||||
New Zealand earthquake
|
|
|
|
|
|
—
|
|
|
46,466
|
|
|
|
|
1,254
|
|
|
44,915
|
|
|
|
|
12,182
|
|
|
35,759
|
|
||||||||||||||
Queensland floods
|
|
|
|
|
|
—
|
|
|
25,000
|
|
|
|
|
—
|
|
|
7,034
|
|
|
|
|
112
|
|
|
3,222
|
|
||||||||||||||
Melbourne hailstorm
|
|
|
|
|
|
7,163
|
|
|
13,681
|
|
|
|
|
11,611
|
|
|
2,363
|
|
|
|
|
1,290
|
|
|
1,073
|
|
||||||||||||||
Windstorm Xynthia
|
|
|
|
|
|
111
|
|
|
1,270
|
|
|
|
|
369
|
|
|
681
|
|
|
|
|
53
|
|
|
628
|
|
||||||||||||||
Political violence loss
|
|
|
|
|
|
—
|
|
|
12,500
|
|
|
|
|
—
|
|
|
14,695
|
|
|
|
|
—
|
|
|
14,695
|
|
||||||||||||||
Aban Pearl
|
|
|
|
|
|
7,346
|
|
|
3,174
|
|
|
|
|
2,418
|
|
|
1,028
|
|
|
|
|
165
|
|
|
863
|
|
||||||||||||||
Satellite failure
|
|
|
|
|
|
5,206
|
|
|
3,580
|
|
|
|
|
2,234
|
|
|
536
|
|
|
|
|
82
|
|
|
454
|
|
||||||||||||||
Perth hailstorm
|
|
|
|
|
|
5,339
|
|
|
3,051
|
|
|
|
|
3,751
|
|
|
363
|
|
|
|
|
134
|
|
|
229
|
|
||||||||||||||
Oklahoma windstorm
|
|
|
|
|
|
4,054
|
|
|
3,652
|
|
|
|
|
2,047
|
|
|
764
|
|
|
|
|
79
|
|
|
686
|
|
||||||||||||||
Bangkok riots
|
|
|
|
|
|
(1
|
)
|
|
11,660
|
|
|
|
|
7,500
|
|
|
5,215
|
|
|
|
|
—
|
|
|
5,012
|
|
||||||||||||||
Hurricane Karl
|
|
|
|
|
|
—
|
|
|
6,313
|
|
|
|
|
—
|
|
|
6,313
|
|
|
|
|
1,637
|
|
|
356
|
|
||||||||||||||
Financial institutions loss
|
|
|
|
|
|
57
|
|
|
5,430
|
|
|
|
|
3,039
|
|
|
2,486
|
|
|
|
|
174
|
|
|
2,312
|
|
||||||||||||||
Political risk loss
|
|
|
|
|
|
7
|
|
|
5,342
|
|
|
|
|
1,514
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
||||||||||||||
Total 2010 Notable Loss Events
|
|
|
|
|
|
$
|
194,983
|
|
|
$
|
335,162
|
|
|
|
|
$
|
104,703
|
|
|
$
|
211,793
|
|
|
|
|
$
|
55,746
|
|
|
$
|
167,825
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESERVES FOR NOTABLE LOSS EVENTS - (Dollars in thousands) - CONTINUED
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2011 NOTABLE LOSS EVENTS
|
|
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 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
|
|
31-Dec12
|
||||||||||||||
Tohoku earthquake
|
|
$
|
148,926
|
|
|
|
|
|
|
|
|
$
|
37,963
|
|
|
$
|
29,788
|
|
|
$
|
216,677
|
|
|
$
|
(6,652
|
)
|
|
$
|
16,342
|
|
|
$
|
226,367
|
|
Thailand floods
|
|
54,148
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
54,148
|
|
|
10,704
|
|
|
14,262
|
|
|
79,114
|
|
|||||||
Gryphon Alpha
|
|
52,434
|
|
|
|
|
|
|
|
|
9,151
|
|
|
—
|
|
|
61,585
|
|
|
874
|
|
|
5,355
|
|
|
67,814
|
|
|||||||
Cat 46
|
|
43,806
|
|
|
|
|
|
|
|
|
18,553
|
|
|
—
|
|
|
62,359
|
|
|
$
|
118
|
|
|
—
|
|
|
62,477
|
|
||||||
Christchurch earthquake
|
|
41,881
|
|
|
|
|
|
|
|
|
16,854
|
|
|
20,212
|
|
|
78,947
|
|
|
(495
|
)
|
|
20,121
|
|
|
98,573
|
|
|||||||
Hurricane Irene
|
|
32,451
|
|
|
|
|
|
|
|
|
3
|
|
|
—
|
|
|
32,454
|
|
|
(10,788
|
)
|
|
—
|
|
|
21,666
|
|
|||||||
Cat 48
|
|
31,481
|
|
|
|
|
|
|
|
|
9,190
|
|
|
—
|
|
|
40,671
|
|
|
5,612
|
|
|
—
|
|
|
46,283
|
|
|||||||
Brisbane floods
|
|
31,023
|
|
|
|
|
|
|
|
|
4,848
|
|
|
—
|
|
|
35,871
|
|
|
(1,394
|
)
|
|
—
|
|
|
34,477
|
|
|||||||
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
|
|
|
(166
|
)
|
|
—
|
|
|
14,769
|
|
|||||||
Total 2011 Notable Loss Events
|
|
$
|
490,087
|
|
|
|
|
|
|
|
|
$
|
93,770
|
|
|
$
|
50,000
|
|
|
$
|
633,857
|
|
|
$
|
937
|
|
|
$
|
63,745
|
|
|
$
|
698,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing
|
|
|
|
|
|
Closing
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Paid Loss (Recovery)
|
|
Reserve (d)
|
|
|
|
Paid Loss (Recovery)
|
|
Reserve (d)
|
||||||||||||||
Notable Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
31-Dec-11
|
|
|
|
|
31-Dec-12
|
||||||||||||||||
Tohoku earthquake
|
|
|
|
|
|
|
|
|
|
|
|
$
|
59,100
|
|
|
$
|
157,577
|
|
|
|
|
$
|
94,011
|
|
|
$
|
73,256
|
|
||||||
Thailand floods
|
|
|
|
|
|
|
|
|
|
|
|
1,748
|
|
|
52,400
|
|
|
|
|
13,017
|
|
|
64,349
|
|
||||||||||
Gryphon Alpha
|
|
|
|
|
|
|
|
|
|
|
|
8,686
|
|
|
52,899
|
|
|
|
|
19,487
|
|
|
39,641
|
|
||||||||||
Cat 46
|
|
|
|
|
|
|
|
|
|
|
|
51,429
|
|
|
10,930
|
|
|
|
|
1,700
|
|
|
9,348
|
|
||||||||||
Christchurch earthquake
|
|
|
|
|
|
|
|
|
|
|
|
(42
|
)
|
|
78,989
|
|
|
|
|
5,708
|
|
|
92,907
|
|
||||||||||
Hurricane Irene
|
|
|
|
|
|
|
|
|
|
|
|
8,669
|
|
|
23,785
|
|
|
|
|
3,743
|
|
|
9,254
|
|
||||||||||
Cat 48
|
|
|
|
|
|
|
|
|
|
|
|
19,934
|
|
|
20,737
|
|
|
|
|
14,032
|
|
|
12,317
|
|
||||||||||
Brisbane floods
|
|
|
|
|
|
|
|
|
|
|
|
16,151
|
|
|
19,720
|
|
|
|
|
10,998
|
|
|
7,328
|
|
||||||||||
CNRL Horizon (g)
|
|
|
|
|
|
|
|
|
|
|
|
5,600
|
|
|
5,194
|
|
|
|
|
5,746
|
|
|
6
|
|
||||||||||
Danish flood
|
|
|
|
|
|
|
|
|
|
|
|
7,872
|
|
|
17,544
|
|
|
|
|
15,099
|
|
|
12,676
|
|
||||||||||
Jupiter 1
|
|
|
|
|
|
|
|
|
|
|
|
14,342
|
|
|
593
|
|
|
|
|
245
|
|
|
182
|
|
||||||||||
Total 2011 Notable Loss Events
|
|
|
|
|
|
|
|
|
|
|
|
$
|
193,489
|
|
|
$
|
440,368
|
|
|
|
|
$
|
183,786
|
|
|
$
|
321,264
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESERVES FOR NOTABLE LOSS EVENTS - (Dollars in thousands) CONTINUED
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2012 NOTABLE LOSS EVENTS
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2012
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
Closing
|
||||||||
|
|
Initial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Favorable) /
|
|
Allocations
|
|
Estimate (c)
|
||||||||
Notable Loss
|
|
Estimate (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfavorable (b)
|
|
of RDE
|
|
30-Dec-12
|
||||||||
Hurricane Sandy
|
|
$
|
361,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
361,036
|
|
Costa Concordia
|
|
76,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,061
|
)
|
|
—
|
|
|
74,136
|
|
||||
Cat 67
|
|
22,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,377
|
|
|
—
|
|
|
28,090
|
|
||||
U.S. drought
|
|
22,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
22,021
|
|
||||
Hurricane Isaac
|
|
15,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67
|
|
|
—
|
|
|
15,276
|
|
||||
Total 2012 Notable Loss Events
|
|
$
|
497,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,383
|
|
|
$
|
—
|
|
|
$
|
500,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2012
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve (d)
|
||||||||
Notable Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid Loss
|
|
31-Dec-12
|
||||||||
Hurricane Sandy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
38,515
|
|
|
$
|
322,521
|
|
||||
Costa Concordia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,040
|
|
|
61,096
|
|
||||||
Cat 67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,432
|
|
|
14,658
|
|
||||||
U.S. drought
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,346
|
|
|
9,675
|
|
||||||
Hurricane Isaac
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
|
14,963
|
|
||||||
Total 2012 Notable Loss Events
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
77,646
|
|
|
$
|
422,913
|
|
(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 December 31, 2012, the Company has allocated all of the 2010 RDE.
|
(g)
|
As at December 31, 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
|
||||||||
|
(dollars in thousands)
|
|
(dollars in thousands)
|
|
(dollars in thousands)
|
|
(dollars in thousands)
|
||||||||
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
|
)
|
|
(63,746
|
)
|
|
—
|
|
|
(82,363
|
)
|
||||
Reserve for potential development releases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
As at December 31, 2012 (b)
|
$
|
—
|
|
|
$
|
42,180
|
|
|
$
|
—
|
|
|
$
|
42,180
|
|
|
|
|
|
|
|
|
|
(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 RDE is included as part of the Company's overall reserve requirement as defined and disclosed in the Critical Accounting Policies and Estimates section above.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||
(Dollars in
thousands)
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
||||||||||||
Property
|
|
$
|
107,062
|
|
|
32.0
|
%
|
|
12.4
|
%
|
|
$
|
112,261
|
|
|
35.8
|
%
|
|
12.6
|
%
|
|
$
|
119,894
|
|
|
40.9
|
%
|
|
13.0
|
%
|
Marine
|
|
140,714
|
|
|
42.0
|
%
|
|
23.1
|
%
|
|
113,845
|
|
|
36.2
|
%
|
|
22.0
|
%
|
|
92,271
|
|
|
31.5
|
%
|
|
20.7
|
%
|
|||
Specialty
|
|
86,922
|
|
|
26.0
|
%
|
|
21.8
|
%
|
|
88,078
|
|
|
28.0
|
%
|
|
22.4
|
%
|
|
80,734
|
|
|
27.6
|
%
|
|
20.6
|
%
|
|||
Total
|
|
$
|
334,698
|
|
|
100.0
|
%
|
|
17.9
|
%
|
|
$
|
314,184
|
|
|
100.0
|
%
|
|
17.4
|
%
|
|
$
|
292,899
|
|
|
100.0
|
%
|
|
16.6
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||
(Dollars in
thousands)
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
||||||||||||
Property
|
|
$
|
94,239
|
|
|
61.1
|
%
|
|
14.0
|
%
|
|
$
|
95,893
|
|
|
62.1
|
%
|
|
14.4
|
%
|
|
$
|
111,478
|
|
|
69.9
|
%
|
|
14.8
|
%
|
Marine
|
|
44,343
|
|
|
28.7
|
%
|
|
17.5
|
%
|
|
44,431
|
|
|
28.7
|
%
|
|
21.0
|
%
|
|
33,691
|
|
|
21.1
|
%
|
|
19.1
|
%
|
|||
Specialty
|
|
15,780
|
|
|
10.2
|
%
|
|
16.6
|
%
|
|
14,258
|
|
|
9.2
|
%
|
|
15.8
|
%
|
|
14,358
|
|
|
9.0
|
%
|
|
13.2
|
%
|
|||
Total
|
|
$
|
154,362
|
|
|
100.0
|
%
|
|
15.1
|
%
|
|
$
|
154,582
|
|
|
100.0
|
%
|
|
16.0
|
%
|
|
$
|
159,527
|
|
|
100.0
|
%
|
|
15.3
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||
(Dollars in
thousands)
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
||||||||||||
Property
|
|
$
|
1,774
|
|
|
100.0
|
%
|
|
10.0
|
%
|
|
$
|
7,946
|
|
|
100.0
|
%
|
|
12.0
|
%
|
|
$
|
1,072
|
|
|
100.0
|
%
|
|
9.7
|
%
|
Total
|
|
$
|
1,774
|
|
|
100.0
|
%
|
|
10.0
|
%
|
|
$
|
7,946
|
|
|
100.0
|
%
|
|
12.0
|
%
|
|
$
|
1,072
|
|
|
100.0
|
%
|
|
9.7
|
%
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||
(Dollars in
thousands)
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
|
Policy
Acquisition
Costs
|
|
Policy
Acquisition
Costs (%)
|
|
Acquisition
Cost
Ratio
|
||||||||||||
Property
|
|
$
|
16,114
|
|
|
8.8
|
%
|
|
9.2
|
%
|
|
$
|
13,814
|
|
|
8.7
|
%
|
|
8.6
|
%
|
|
$
|
18,628
|
|
|
12.9
|
%
|
|
11.8
|
%
|
Marine
|
|
96,582
|
|
|
52.5
|
%
|
|
27.2
|
%
|
|
69,624
|
|
|
44.3
|
%
|
|
22.8
|
%
|
|
58,614
|
|
|
40.8
|
%
|
|
21.8
|
%
|
|||
Specialty
|
|
71,230
|
|
|
38.7
|
%
|
|
23.5
|
%
|
|
73,896
|
|
|
47.0
|
%
|
|
24.4
|
%
|
|
66,527
|
|
|
46.3
|
%
|
|
23.5
|
%
|
|||
Total
|
|
$
|
183,926
|
|
|
100.0
|
%
|
|
22.1
|
%
|
|
$
|
157,334
|
|
|
100.0
|
%
|
|
20.4
|
%
|
|
$
|
143,769
|
|
|
100.0
|
%
|
|
20.3
|
%
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
General and
Administrative
Expenses
|
|
General and
Administrative
Expenses (%)
|
|
General and
Administrative
Expenses
|
|
General and
Administrative
Expenses (%)
|
|
General and
Administrative
Expenses
|
|
General and
Administrative
Expenses (%)
|
|||||||||
Validus Re
|
|
$
|
63,048
|
|
|
23.9
|
%
|
|
$
|
44,663
|
|
|
22.6
|
%
|
|
$
|
45,613
|
|
|
21.8
|
%
|
AlphaCat
|
|
7,532
|
|
|
2.9
|
%
|
|
10,929
|
|
|
5.5
|
%
|
|
5,327
|
|
|
2.5
|
%
|
|||
Talbot
|
|
133,281
|
|
|
50.5
|
%
|
|
112,072
|
|
|
56.7
|
%
|
|
107,557
|
|
|
51.4
|
%
|
|||
Corporate & Eliminations (b)
|
|
59,791
|
|
|
22.7
|
%
|
|
29,833
|
|
|
15.2
|
%
|
|
50,793
|
|
|
24.3
|
%
|
|||
Total
|
|
$
|
263,652
|
|
|
100.0
|
%
|
|
$
|
197,497
|
|
|
100.0
|
%
|
|
$
|
209,290
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Corporate and Eliminations includes legal entity adjustments.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Share
Compensation
Expense
|
|
Share
Compensation
Expense
Expenses (%)
|
|
Share
Compensation
Expense
|
|
Share
Compensation
Expense
Expenses (%)
|
|
Share
Compensation
Expense
|
|
Share
Compensation
Expense
Expenses (%)
|
|||||||||
Validus Re
|
|
$
|
7,763
|
|
|
29.1
|
%
|
|
$
|
9,309
|
|
|
27.2
|
%
|
|
$
|
7,181
|
|
|
24.9
|
%
|
AlphaCat
|
|
279
|
|
|
1.0
|
%
|
|
107
|
|
|
0.3
|
%
|
|
594
|
|
|
2.1
|
%
|
|||
Talbot
|
|
7,789
|
|
|
29.2
|
%
|
|
8,582
|
|
|
25.0
|
%
|
|
6,923
|
|
|
23.9
|
%
|
|||
Corporate & Eliminations (b)
|
|
10,878
|
|
|
40.7
|
%
|
|
16,298
|
|
|
47.5
|
%
|
|
14,213
|
|
|
49.1
|
%
|
|||
Total
|
|
$
|
26,709
|
|
|
100.0
|
%
|
|
$
|
34,296
|
|
|
100.0
|
%
|
|
$
|
28,911
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Corporate and Eliminations includes legal entity adjustments.
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||
Consolidated
|
|
|
|
|
|
|||
Losses and loss expenses ratio
|
53.4
|
%
|
|
69.1
|
%
|
|
56.1
|
%
|
Policy acquisition costs ratio
|
17.9
|
%
|
|
17.4
|
%
|
|
16.6
|
%
|
General and administrative expenses ratio (b)
|
15.5
|
%
|
|
12.9
|
%
|
|
13.5
|
%
|
Expense ratio
|
33.4
|
%
|
|
30.3
|
%
|
|
30.1
|
%
|
Combined ratio
|
86.8
|
%
|
|
99.4
|
%
|
|
86.2
|
%
|
Validus Re
|
|
|
|
|
|
|||
Losses and loss expenses ratio
|
56.2
|
%
|
|
77.6
|
%
|
|
57.8
|
%
|
Policy acquisition costs ratio
|
15.1
|
%
|
|
16.0
|
%
|
|
15.3
|
%
|
General and administrative expenses ratio (b)
|
6.9
|
%
|
|
5.6
|
%
|
|
5.1
|
%
|
Expense ratio
|
22.0
|
%
|
|
21.6
|
%
|
|
20.4
|
%
|
Combined ratio
|
78.2
|
%
|
|
99.2
|
%
|
|
78.2
|
%
|
AlphaCat
|
|
|
|
|
|
|||
Losses and loss expenses ratio
|
0.0
|
%
|
|
15.2
|
%
|
|
0.0
|
%
|
Policy acquisition costs ratio
|
10.0
|
%
|
|
12.0
|
%
|
|
9.7
|
%
|
General and administrative expenses ratio (b)
|
44.2
|
%
|
|
16.7
|
%
|
|
53.4
|
%
|
Expense ratio
|
54.2
|
%
|
|
28.7
|
%
|
|
63.1
|
%
|
Combined ratio
|
54.2
|
%
|
|
43.9
|
%
|
|
63.1
|
%
|
Talbot
|
|
|
|
|
|
|||
Losses and loss expenses ratio
|
50.9
|
%
|
|
63.0
|
%
|
|
54.4
|
%
|
Policy acquisition costs ratio
|
22.1
|
%
|
|
20.4
|
%
|
|
20.3
|
%
|
General and administrative expenses ratio (b)
|
16.9
|
%
|
|
15.7
|
%
|
|
16.1
|
%
|
Expense ratio
|
39.0
|
%
|
|
36.1
|
%
|
|
36.4
|
%
|
Combined ratio
|
89.9
|
%
|
|
99.1
|
%
|
|
90.7
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Includes general and administrative expenses and share compensation expenses.
|
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
Expenses as
% of Net
Earned
Premiums
|
|
Expenses
|
|
Expenses as
% of Net
Earned
Premiums
|
|
Expenses
|
|
Expenses as
% of Net
Earned
Premiums
|
|||||||||
General and administrative expenses
|
|
$
|
263,652
|
|
|
14.1
|
%
|
|
$
|
197,497
|
|
|
11.0
|
%
|
|
$
|
209,290
|
|
|
11.9
|
%
|
Share compensation expenses
|
|
26,709
|
|
|
1.4
|
%
|
|
34,296
|
|
|
1.9
|
%
|
|
28,911
|
|
|
1.6
|
%
|
|||
Total
|
|
$
|
290,361
|
|
|
15.5
|
%
|
|
$
|
231,793
|
|
|
12.9
|
%
|
|
$
|
238,201
|
|
|
13.5
|
%
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(Dollars in thousands)
|
|
Year Ended December 31, 2012
|
|
% of Sub-
total
|
|
Year Ended December 31, 2011
|
|
% of Sub-
total
|
|
Year Ended December 31, 2010
|
|
% of Sub-
total
|
|||||||||
Validus Re (a)
|
|
$
|
222,682
|
|
|
70.9
|
%
|
|
$
|
8,066
|
|
|
15.5
|
%
|
|
$
|
226,187
|
|
|
76.4
|
%
|
AlphaCat
|
|
8,081
|
|
|
2.6
|
%
|
|
36,984
|
|
|
70.8
|
%
|
|
4,089
|
|
|
1.4
|
%
|
|||
Talbot
|
|
83,253
|
|
|
26.5
|
%
|
|
7,168
|
|
|
13.7
|
%
|
|
65,698
|
|
|
22.2
|
%
|
|||
Sub total
|
|
314,016
|
|
|
100.0
|
%
|
|
52,218
|
|
|
100.0
|
%
|
|
295,974
|
|
|
100.0
|
%
|
|||
Corporate & Eliminations
|
|
(65,305
|
)
|
|
|
|
(40,453
|
)
|
|
|
|
(53,537
|
)
|
|
|
||||||
Total
|
|
$
|
248,711
|
|
|
|
|
$
|
11,765
|
|
|
|
|
$
|
242,437
|
|
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(Dollars in thousands)
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
Underwriting income
|
|
$
|
248,711
|
|
|
$
|
11,765
|
|
|
$
|
242,437
|
|
Net investment income
|
|
107,936
|
|
|
112,296
|
|
|
134,103
|
|
|||
Other income
|
|
22,396
|
|
|
5,718
|
|
|
5,219
|
|
|||
Finance expenses
|
|
(53,857
|
)
|
|
(54,817
|
)
|
|
(55,870
|
)
|
|||
Gain on bargain purchase, net of expenses
|
|
17,701
|
|
|
—
|
|
|
—
|
|
|||
Net realized gains on investments
|
|
18,233
|
|
|
28,532
|
|
|
32,498
|
|
|||
Net unrealized gains (losses) on investments
|
|
17,585
|
|
|
(19,991
|
)
|
|
45,952
|
|
|||
(Loss) from investment affiliate
|
|
(964
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign exchange gains (losses)
|
|
4,798
|
|
|
(22,124
|
)
|
|
1,351
|
|
|||
Transaction expenses
|
|
—
|
|
|
(17,433
|
)
|
|
—
|
|
|||
Tax (expense) benefit
|
|
(2,501
|
)
|
|
(824
|
)
|
|
(3,126
|
)
|
|||
Income from operating affiliates
|
|
12,580
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
|
$
|
392,618
|
|
|
$
|
43,122
|
|
|
$
|
402,564
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(Dollars in thousands)
|
|
Year Ended December 31, 2012 (a)
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
Fixed maturities and short-term investments
|
|
$
|
105,937
|
|
|
$
|
111,983
|
|
|
$
|
132,669
|
|
Other investments
|
|
2,790
|
|
|
—
|
|
|
—
|
|
|||
Cash and cash equivalents
|
|
7,259
|
|
|
7,285
|
|
|
8,180
|
|
|||
Securities lending income
|
|
14
|
|
|
58
|
|
|
200
|
|
|||
Total gross investment income
|
|
116,000
|
|
|
119,326
|
|
|
141,049
|
|
|||
Investment expenses
|
|
(8,064
|
)
|
|
(7,030
|
)
|
|
(6,946
|
)
|
|||
Net investment income
|
|
$
|
107,936
|
|
|
$
|
112,296
|
|
|
$
|
134,103
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31,
|
|||||||||
(Dollars in thousands)
|
|
2012 (a)
|
|
2011
|
|
2010
|
|||||
2006 Junior Subordinated Deferrable Debentures
|
|
$
|
6,964
|
|
|
$
|
9,768
|
|
|
14,354
|
|
2007 Junior Subordinated Deferrable Debentures
|
|
8,922
|
|
|
12,115
|
|
|
12,114
|
|
||
2010 Senior Notes due 2040
|
|
22,388
|
|
|
22,388
|
|
|
20,770
|
|
||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
|
459
|
|
|
—
|
|
|
—
|
|
||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
|
327
|
|
|
—
|
|
|
—
|
|
||
Credit facilities
|
|
11,999
|
|
|
6,492
|
|
|
5,246
|
|
||
Bank charges
|
|
269
|
|
|
218
|
|
|
246
|
|
||
AlphaCat Re 2011 preferred dividend(b)
|
|
—
|
|
|
3,609
|
|
|
—
|
|
||
AlphaCat ILS Funds fees (c)
|
|
2,432
|
|
|
—
|
|
|
—
|
|
||
Talbot FAL Facility
|
|
97
|
|
|
227
|
|
|
333
|
|
||
Talbot third party FAL facility
|
|
—
|
|
|
—
|
|
|
2,807
|
|
||
Finance expenses
|
|
$
|
53,857
|
|
|
$
|
54,817
|
|
|
55,870
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
(b)
|
Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.
|
U.S. dollar (weakened) strengthened against:
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
|||
British Pound sterling
|
|
(4.4
|
)%
|
|
(0.4
|
)%
|
|
3.0
|
%
|
Euro
|
|
(1.7
|
)%
|
|
2.3
|
%
|
|
8.2
|
%
|
Canadian Dollar
|
|
(2.7
|
)%
|
|
2.1
|
%
|
|
(4.7
|
)%
|
Swiss Franc
|
|
(2.4
|
)%
|
|
(0.2
|
)%
|
|
(9.4
|
)%
|
Indian Rupee
|
|
3.6
|
%
|
|
16.5
|
%
|
|
(2.6
|
)%
|
South African Rand
|
|
4.7
|
%
|
|
21.6
|
%
|
|
(10.4
|
)%
|
Singapore Dollar
|
|
(5.8
|
)%
|
|
0.4
|
%
|
|
(8.1
|
)%
|
•
|
Decrease in underwriting income of $230.7 million due primarily to a $256.8 million increase in loss and loss expenses from increased severity of catastrophe events. This was partially offset by a $41.0 million increase in net premiums earned;
|
•
|
Decrease in net investment income of $21.8 million;
|
•
|
Unfavorable movement in net unrealized gains on investments of $65.9 million; and
|
•
|
Unfavorable movement in foreign exchange of $23.5 million.
|
|
|
Year Ended December 31, 2011
|
||||||||||||||||||
|
|
Decrease (increase) over the year ended December 31, 2010
|
||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Corporate and
other reconciling
items
|
|
Total
|
||||||||||
Notable losses—(increase) decrease in net losses and loss expenses(a)
|
|
$
|
(46,951
|
)
|
|
$
|
—
|
|
|
$
|
(56,111
|
)
|
|
$
|
—
|
|
|
$
|
(103,062
|
)
|
Less: Notable losses—increase (decrease) net reinstatement premiums(a)
|
|
21,989
|
|
|
—
|
|
|
1,602
|
|
|
—
|
|
|
23,591
|
|
|||||
Other underwriting (loss) income
|
|
(193,159
|
)
|
|
32,895
|
|
|
(4,021
|
)
|
|
13,084
|
|
|
(151,201
|
)
|
|||||
Underwriting (loss) income(b)
|
|
(218,121
|
)
|
|
32,895
|
|
|
(58,530
|
)
|
|
13,084
|
|
|
(230,672
|
)
|
|||||
Net investment income
|
|
(14,922
|
)
|
|
(2,613
|
)
|
|
(3,907
|
)
|
|
(365
|
)
|
|
(21,807
|
)
|
|||||
Other income
|
|
3,452
|
|
|
7,617
|
|
|
(2,830
|
)
|
|
(7,740
|
)
|
|
499
|
|
|||||
Finance expenses
|
|
(2,306
|
)
|
|
(3,659
|
)
|
|
2,913
|
|
|
4,105
|
|
|
1,053
|
|
|||||
Operating (loss) income before taxes and income from operating affiliates
|
|
(231,897
|
)
|
|
34,240
|
|
|
(62,354
|
)
|
|
9,084
|
|
|
(250,927
|
)
|
|||||
Tax benefit
|
|
63
|
|
|
—
|
|
|
2,079
|
|
|
160
|
|
|
2,302
|
|
|||||
Net operating (loss) income
|
|
(231,834
|
)
|
|
34,240
|
|
|
(60,275
|
)
|
|
9,244
|
|
|
(248,625
|
)
|
|||||
Net realized gains (losses) on investments
|
|
(2,393
|
)
|
|
425
|
|
|
(1,998
|
)
|
|
—
|
|
|
(3,966
|
)
|
|||||
Net unrealized (losses) on investments
|
|
(59,314
|
)
|
|
(2,001
|
)
|
|
(4,628
|
)
|
|
—
|
|
|
(65,943
|
)
|
|||||
Foreign exchange (losses) gains
|
|
(18,902
|
)
|
|
99
|
|
|
(4,279
|
)
|
|
(393
|
)
|
|
(23,475
|
)
|
|||||
Transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,433
|
)
|
|
(17,433
|
)
|
|||||
Net (loss) income
|
|
(312,443
|
)
|
|
32,763
|
|
|
(71,180
|
)
|
|
(8,582
|
)
|
|
(359,442
|
)
|
|||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(21,793
|
)
|
|
—
|
|
|
—
|
|
|
(21,793
|
)
|
|||||
Net (loss) income available to Validus
|
|
$
|
(312,443
|
)
|
|
$
|
10,970
|
|
|
$
|
(71,180
|
)
|
|
$
|
(8,582
|
)
|
|
$
|
(381,235
|
)
|
(a)
|
Notable losses for the year ended December 31,
2011
include: the Tohoku earthquake, Gryphon Alpha mooring failure, Christchurch earthquake, Brisbane floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish floods, Hurricane Irene and the Thailand floods. Excludes reserve for potential development on
2011
notable loss events. Notable losses for the year ended December 31,
2010
include: the Chilean earthquake, Melbourne hailstorm, windstorm Xynthia, Deepwater Horizon, Aban Pearl, Bangkok riots, Perth hailstorm, New Zealand earthquake, Oklahoma windstorm, two Political risk losses, Hurricane Karl, Queensland floods, a Political violence loss, a Satellite failure and a Financial institutions loss.
|
(b)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income (loss) 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”.
|
|
As at December 31, 2012
|
|||||||||||||
|
Equity Amount
|
|
Shares
|
|
Exercise Price
|
|
Book Value Per
Share
|
|||||||
Book value per common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity
|
$
|
4,020,827
|
|
|
107,921,259
|
|
|
|
|
$
|
37.26
|
|
||
Diluted book value per common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity
|
4,020,827
|
|
|
107,921,259
|
|
|
|
|
|
|||||
Assumed exercise of outstanding warrants
|
118,015
|
|
|
6,410,472
|
|
|
$
|
18.41
|
|
|
|
|||
Assumed exercise of outstanding stock options
|
37,745
|
|
|
1,823,947
|
|
|
$
|
20.69
|
|
|
|
|||
Unvested restricted shares
|
—
|
|
|
2,443,631
|
|
|
|
|
|
|||||
Diluted book value per common share
|
$
|
4,176,587
|
|
|
118,599,309
|
|
|
|
|
$
|
35.22
|
|
|
As at December 31, 2011
|
|||||||||||||
|
Equity Amount
|
|
Shares
|
|
Exercise Price
|
|
Book Value Per
Share
|
|||||||
Book value per common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity
|
$
|
3,448,425
|
|
|
99,471,080
|
|
|
|
|
$
|
34.67
|
|
||
Diluted book value per common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity
|
3,448,425
|
|
|
99,471,080
|
|
|
|
|
|
|||||
Assumed exercise of outstanding warrants
|
121,445
|
|
|
6,916,678
|
|
|
$
|
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
|
|
|
111,991,499
|
|
|
|
|
$
|
32.28
|
|
|
Year Ended
|
|
||||||
|
(unaudited)
|
|
||||||
|
December 31,
|
|
December 31,
|
|
||||
|
2012
|
|
2011(a)
|
|
||||
|
|
|
|
|
||||
Total gross premiums written
|
$
|
2,166,440
|
|
|
$
|
2,124,691
|
|
|
Adjustments for:
|
|
|
|
|
||||
Gross premiums written on behalf of AlphaCat Re 2011
|
94,317
|
|
|
—
|
|
|
||
Gross premiums written on behalf of AlphaCat Re 2012
|
32,171
|
|
|
—
|
|
|
||
Total managed gross premiums written
|
$
|
2,292,928
|
|
|
$
|
2,124,691
|
|
|
|
|
Year Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2012 (a)
|
|
2011
|
|
2010
|
||||||
Net cash provided by operating activities
|
|
$
|
562,565
|
|
|
$
|
545,140
|
|
|
$
|
630,001
|
|
Net cash (used in) provided by investing activities
|
|
(268,915
|
)
|
|
(392,834
|
)
|
|
378,426
|
|
|||
Net cash provided by (used in) financing activities
|
|
75,345
|
|
|
68,681
|
|
|
(774,842
|
)
|
|||
Effect of foreign currency rate changes on cash and cash equivalents
|
|
17,540
|
|
|
(8,883
|
)
|
|
(430
|
)
|
|||
Net increase in cash
|
|
$
|
386,535
|
|
|
$
|
212,104
|
|
|
$
|
233,155
|
|
(a)
|
The results of operations for Flagstone are consolidated only from the November 30, 2012 date of acquisition.
|
|
|
Year Ended December 31,
|
||||||||||
Net cash used in:
|
|
2012
|
|
2011
|
|
2010
|
||||||
Purchase of subsidiary, net of cash acquired
|
|
$
|
17,196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investments in operating affiliates, net
|
|
(91,500
|
)
|
|
(56,808
|
)
|
|
—
|
|
|||
Investments in investment affiliates, net
|
|
(12,835
|
)
|
|
—
|
|
|
—
|
|
(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
|
|
376,570
|
|
|
$500,000 secured letter of credit facility
|
|
Evergreen
|
|
92,402
|
|
|
Talbot FAL facility
|
|
December 31, 2015
|
|
25,000
|
|
|
PaCRe Senior secured letter of credit
|
|
May 10, 2013
|
|
219
|
|
|
IPC Bi-Lateral Facility
|
|
Evergreen
|
|
40,613
|
|
|
Flagstone Bi-Lateral Facility
|
|
Evergreen
|
|
381,019
|
|
|
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
|
September 15, 2037
|
|
137,159
|
|
|
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
|
September 15, 2036
|
|
113,750
|
|
|
Total
|
|
|
|
$
|
1,706,532
|
|
|
|
Year Ended December 31,
|
||||||||||
Net cash used in:
|
|
2012
|
|
2011
|
|
2010
|
||||||
Share repurchases
|
|
$
|
(259,962
|
)
|
|
$
|
(5,995
|
)
|
|
$
|
(856,926
|
)
|
Dividends paid to shareholders
|
|
(110,037
|
)
|
|
(107,691
|
)
|
|
(105,662
|
)
|
|
|
Payment Due by Period
|
|||||||||||||||||
(Dollars in thousands)
|
|
Total
|
|
Less Than
1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More Than
5 Years
|
|||||||||
Reserve for losses and loss expenses(a)
|
|
$
|
3,517,573
|
|
|
$
|
1,686,439
|
|
|
$
|
1,290,199
|
|
|
$
|
399,042
|
|
|
141,893
|
|
2010 Senior Notes due 2040—principal(b)
|
|
250,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250,000
|
|
||||
2010 Senior Notes due 2040—interest(b)
|
|
n/a
|
|
|
22,188
|
|
|
44,375
|
|
|
44,375
|
|
|
22,188 p.a.
|
|
||||
2006 Junior Subordinated Deferrable Debentures—principal(c)
|
|
150,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
|
||||
2006 Junior Subordinated Deferrable Debentures—interest(c)
|
|
n/a
|
|
|
8,747
|
|
|
17,494
|
|
|
17,494
|
|
|
8,747 p.a.
|
|
||||
2007 Junior Subordinated Deferrable Debentures—principal(d)
|
|
200,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200,000
|
|
||||
2007 Junior Subordinated Deferrable Debentures—interest(d)
|
|
n/a
|
|
|
10,360
|
|
|
20,720
|
|
|
20,720
|
|
|
10,360 p.a.
|
|
||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes—principal (e)
|
|
137,159
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137,159
|
|
||||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes—interest (e)
|
|
n/a
|
|
|
5,278
|
|
|
20,720
|
|
|
7,576
|
|
|
5,278 p.a.
|
|
||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes—principal (f)
|
|
113,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113,750
|
|
||||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes—interest (f)
|
|
n/a
|
|
|
3,788
|
|
|
7,576
|
|
|
7,576
|
|
|
3,788 p.a.
|
|
||||
Operating lease obligations
|
|
70,962
|
|
|
11,933
|
|
|
20,328
|
|
|
16,785
|
|
|
21,916
|
|
||||
Aquiline Financial Services Fund II L.P. (g)
|
|
32,382
|
|
|
32,382
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(a)
|
The reserve for losses and loss expenses represents an estimate, including actuarial and statistical projections at a given point in time of an insurer’s or reinsurer’s expectations of the ultimate settlement and administration costs of claims incurred. As a result, it is likely that the ultimate liability will differ from such estimates, perhaps significantly. Such estimates are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends in loss severity and frequency and other variable factors such as inflation, litigation and tort reform. This uncertainty is heightened by the short time in which the Company has operated, thereby providing limited claims loss emergence patterns specifically for the Company. The lack of historical information for the Company has necessitated the use of industry loss emergence patterns in deriving IBNR. Further, expected losses and loss ratios are typically developed using vendor and proprietary computer models and these expected loss ratios are a material component in the calculation deriving IBNR. Actual loss ratios will deviate from expected loss ratios and ultimate loss ratios will be greater or less than expected loss ratios. During the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, ultimate liability will exceed or be less than the revised estimates. The actual payment of the reserve for losses and loss expenses will differ from estimated payouts.
|
(b)
|
The 2010 Senior Notes mature on January 26, 2040, and are redeemable at the Company’s option in whole or any time or in part from time to time at a make-whole redemption price. The Company may redeem the notes in whole, but not in part, at any time upon the occurrence of certain tax events as described in the notes prospectus supplement. The 2010 Senior Notes bear interest at the rate of 8.875% per annum from January 26, 2010 to maturity or early redemption.
|
(c)
|
The 2006 Junior Subordinated Deferrable Debentures (the "2006 JSDs") mature on mature on June 15, 2036, are redeemable at the Company’s option at par beginning June 15, 2011, and require quarterly interest payments by the Company to the holders of the 2006 Junior Subordinated Deferrable Debentures. Interest was payable at 9.069% per annum through June 15, 2011, and thereafter at a floating rate of three-month LIBOR plus 355 basis points, reset
|
(d)
|
The 2007 Junior Subordinated Deferrable Debentures (the "2007 JSDs") mature on mature on June 15, 2037, are redeemable at the Company’s option at par beginning June 15, 2012, and require quarterly interest payments by the Company to the holders of the 2007 Junior Subordinated Deferrable Debentures. Interest was payable at 8.480% per annum through June 15, 2012, and thereafter at a floating rate of three-month LIBOR plus 295 basis points, reset quarterly. We have estimated the interest due in
2013
and future years using the December 31,
2012
LIBOR rate. During the third quarter of 2012, the Company entered into an interest rate swap which fixed the rate of interest on the 2007 JSDs at 5.18%. The term of the swap is matched to the maturity date of the 2007 JSDs.
|
(e)
|
The Flagstone 2006 Junior Subordinated Deferrable Interest Notes mature on September 15, 2036, are redeemable at the Company's option at par beginning September 15, 2011, and require quarterly interest payments by the Company to the holders of the Flagstone 2006 Junior Subordinated Deferrable Interest Notes. Interest is payable at a floating rate of three-month LIBOR plus 354 basis points, reset quarterly. We have estimated the interest due in
2013
and future years using the December 31,
2012
LIBOR rate.
|
(f)
|
$88,750 of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes mature on July 30, 2037, are redeemable at the Company's option at par beginning July 30, 2012, and require quarterly interest payments by the Company to the holders of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes. Interest is payable at a floating rate of three-month LIBOR plus 300 basis points, reset quarterly. $25,000 of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes mature on September 15, 2037, are redeemable at the Company's option at par beginning September 15, 2012, and require quarterly interest payments by the Company to the holders of the Flagstone 2007 Junior Subordinated Deferrable Interest Notes. Interest is payable at a floating rate of three-month LIBOR plus 310 basis points, reset quarterly. We have estimated the interest due in
2013
and future years using the December 31,
2012
LIBOR rate.
|
(g)
|
Please refer to Note 20 (f) to the Consolidated Financial Statements (Part II, Item 8) for further details describing the Aquiline commitment. While the commitment expires on July 2, 2015, it does not have a defined contractual commitment date and therefore it is included in the less than one year category.
|
(Dollars in thousands)
|
|
Capital at December 31, 2012
|
||
Validus Reinsurance, Ltd. (consolidated), excluding Validus Re Americas, Ltd. and Validus UPS, Ltd.
|
|
$
|
2,928,446
|
|
Validus Re Americas, Ltd. (formerly IPCRe, Ltd)
|
|
132,405
|
|
|
Validus UPS, Ltd. (formerly Flagstone)
|
|
1,028,281
|
|
|
Total Validus Reinsurance, Ltd. (consolidated)
|
|
4,089,132
|
|
|
Noncontrolling Interest in PaCRe, Ltd.
|
|
434,280
|
|
|
Talbot Holdings, Ltd. (consolidated)
|
|
774,184
|
|
|
Other subsidiaries, net
|
|
35,885
|
|
|
Other, net
|
|
(90,575
|
)
|
|
Total consolidated capitalization
|
|
5,242,906
|
|
|
Senior notes payable
|
|
(247,090
|
)
|
|
Debentures payable
|
|
(540,709
|
)
|
|
Total shareholders’ equity
|
|
$
|
4,455,107
|
|
|
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 Lloyd’s syndicates
|
A
|
|
A+
|
|
—
|
|
A+
|
Flagstone Reassurance Suisse, SA
|
|
|
|
|
|
|
|
Financial strength rating
|
A-
|
|
|
|
|
|
|
Issuer credit rating
|
a-
|
|
|
|
|
|
|
Outlook on ratings
|
Stable
|
|
|
|
|
|
|
(a)
|
The A.M. Best ratings were most recently affirmed on
February 7, 2013
|
(b)
|
The S&P ratings were most recently affirmed on
August 30, 2012
|
(c)
|
All Moody’s ratings were most recently affirmed on
August 31, 2012
|
(d)
|
All Fitch ratings were most recently affirmed on
May 8, 2012
|
(Dollars in thousands)
|
|
Commitments(a)
|
|
In Use/Outstanding
|
||||
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
|
|
|
376,570
|
|
||
$500,000 bi-lateral secured letter of credit facility
|
|
500,000
|
|
|
92,402
|
|
||
Talbot FAL Facility(b)
|
|
25,000
|
|
|
25,000
|
|
||
PaCRe senior secured letter of credit facility
|
|
10,000
|
|
|
219
|
|
||
IPC Bi-Lateral Facility
|
|
80,000
|
|
|
40,613
|
|
||
Flagstone Bi-Lateral Facility
|
|
550,000
|
|
|
381,019
|
|
||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
|
137,159
|
|
|
137,159
|
|
||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
|
113,750
|
|
|
113,750
|
|
||
Total
|
|
$
|
2,940,909
|
|
|
$
|
1,706,532
|
|
(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.
|
•
|
A new Prudential Regulation Authority (“PRA”) will be responsible for the day-to-day supervision of financial institutions that are subject to significant prudential regulation. It will adopt a more judgment-focused approach to regulation so that business models can be challenged, risks identified and action taken to preserve financial stability.
|
•
|
A new Financial Conduct Authority (“FCA”) will have a strong mandate for promoting confidence and transparency in financial services and to give greater protection for consumers of financial services.
|
•
|
unpredictability and severity of catastrophic events;
|
•
|
our ability to obtain and maintain ratings, which may affect by our ability to raise additional equity or debt financings, as well as other factors described herein;
|
•
|
adequacy of the Company’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 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 businesses we may acquire or new business ventures, including overseas offices, we may start and the risk associated with implementing our business strategies and initiatives with respect to the new business ventures;
|
•
|
accuracy of those estimates and judgments used in the preparation of our 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 our company, are even more difficult to make than those made in a mature company because of limited historical information;
|
•
|
the effect on the Company’s investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and other factors;
|
•
|
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 this Annual Report on Form 10-K for the year ended December 31,
2012
, 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
|
•
|
inflation risk.
|
(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
|
|
376,570
|
|
|
$500,000 secured letter of credit facility
|
|
Evergreen
|
|
92,402
|
|
|
Talbot FAL facility
|
|
December 31, 2015
|
|
25,000
|
|
|
PaCRe Senior secured letter of credit
|
|
May 10, 2013
|
|
219
|
|
|
IPC Bi-Lateral Facility
|
|
December 31, 2012
|
|
40,613
|
|
|
Flagstone Bi-Lateral Facility
|
|
Evergreen
|
|
381,019
|
|
|
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
|
September 15, 2037
|
|
137,159
|
|
|
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
|
September 15, 2036
|
|
113,750
|
|
|
Total
|
|
|
|
$
|
1,706,532
|
|
(Dollars in thousands)
|
|
Number of Securities to
be Issued Upon Exercise of
Outstanding Options and
Restricted Stock
|
|
Weighted-Average
Exercise Price of
Outstanding Options
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
compensation plans
|
||||
2005 Amended and Restated Long-Term Incentive Plan
|
|
3,944,845
|
|
|
$
|
20.69
|
|
|
3,128,443
|
|
Director Stock Compensation Plan
|
|
5,001
|
|
|
|
|
52,142
|
|
(a)
|
Financial Statements and Financial Statement Schedules are included as pages F-1
to F-69.
|
(b)
|
The exhibits numbers followed by an asterisk (*) indicate exhibits physically filed with this Annual Report on Form 10-K. All other exhibit numbers indicate exhibits filed by incorporation by reference.
|
Exhibit
Number
|
|
Description of Document
|
|
2.1
|
|
|
Agreement and Plan of Merger, dated as of 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)
|
|
|
|
|
3.1
|
|
|
Memorandum of Association dated October 10, 2005 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bye-laws (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.1
|
|
|
Specimen Common Share Certificate (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.2
|
|
|
Certificate of Deposit of Memorandum of Increase of Share Capital dated October 28, 2005 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.3
|
|
|
Form of Warrant (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.4
|
|
|
Form of Amendment to Warrants dated as of December 21, 2007 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on December 1, 2007)
|
|
|
|
|
4.5
|
|
|
9.069% Junior Subordinated Deferrable Debentures Indenture dated as of June 15, 2006 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.6
|
|
|
Form of 9.069% Junior Subordinated Deferrable Debentures (Included in Exhibit 4.5 hereto) (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.7
|
|
|
First Supplemental Indenture to the 9.069% Junior Subordinated Deferrable Debentures Indenture dated as of September 15, 2006 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.8
|
|
|
8.480% Junior Subordinated Deferrable Debentures Indenture dated as of June 29, 2007 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.9
|
|
|
Form of 8.480% Junior Subordinated Deferrable Debentures (Included in Exhibit 4.8 hereto) (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.10
|
|
|
Senior Note Indenture, by and between Validus Holdings, Ltd. and The Bank of New York Mellon, dated January 26, 2010 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on January 26, 2010)
|
|
|
|
|
4.11
|
|
|
8.875% Senior Notes Supplemental Indenture, by and between Validus Holdings, Ltd. and The Bank of New York Mellon, dated January 26, 2010 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on January 26, 2010)
|
|
|
|
|
4.12
|
|
|
Form of 8.875% Senior Note (Included in Exhibit 4.10 hereto) (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on January 26, 2010)
|
|
|
|
|
4.13
|
|
|
Shareholders’ Agreement dated as of December 12, 2005 among Validus Holdings, Ltd. and the Shareholders Named Therein (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
4.14
|
|
|
Junior Subordinated Indenture dated as of August 23, 2006, between Flagstone Reinsurance Holdings Limited and JP Morgan Chase Bank, National Association, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.15
|
|
|
First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Reinsurance Holdings, S.A., Flagstone Reinsurance Holdings Limited and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.16
|
|
|
Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holding, S.A. and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.17
|
|
|
Third Supplemental Indenture, dated as of November 30, 2012, among Validus UPS, Ltd., Validus Holdings, Ltd. and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.18
|
|
|
Junior Subordinated Indenture, dated as of September 20, 2007, between Flagstone Reinsurance Holdings Limited and The Bank of New York Trust Company, National Association, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.19
|
|
|
First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Reinsurance Holdings, S.A., Flagstone Reinsurance Holdings Limited and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.20
|
|
|
Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holdings, S.A. and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.21
|
|
|
Third Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A., Validus UPS, Ltd., Validus Holdings, Ltd. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.22
|
|
|
Junior Subordinated Indenture, dated as of June 8, 2007, among Flagstone Finance S.A., Flagstone Reinsurance Holdings Limited and Wilmington Trust Company, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.23
|
|
|
First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Finance S.A., Flagstone Reinsurance Holdings, S.A. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.24
|
|
|
Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A., Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holdings, S.A. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.25
|
|
|
Third Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A, Validus UPS, Ltd., Validus Holdings, Ltd. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.26
|
|
|
Note Purchase Agreement, dated as of August 23, 2006, between Flagstone Reinsurance Holdings Limited and Merrill Lynch International (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.27
|
|
|
Amendment No. 2, dated as of November 30, 2012, to the Note Purchase Agreement, among Validus UPS, Ltd., Validus Holdings, Ltd. and the noteholders named therein (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.28
|
|
|
Amendment No. 2, dated as of November 30, 2012, to the Note Purchase Agreement, among Validus UPS, Ltd., Validus Holdings, Ltd. and the noteholders named therein (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
4.29
|
|
|
Share Purchase Warrant, dated November 30, 2012, between Validus Holdings, Ltd. and Leyton Limited (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
|
10.1
|
|
|
Amendment and Restatement Agreement dated as of November 18, 2011 relating to the Talbot $25 million Standby Letter of Credit Facility dated as of November 28, 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 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 23, 2011)
|
|
|
|
|
10.2
|
|
|
Amended letter dated as of November 23, 2011 relating to a $25 million Standby Letter of Credit Facility dated as of November 28,2007, 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 and restated on November 18, 2011 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 29, 2011)
|
|
|
|
|
10.2.1
|
|
|
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).
|
|
|
|
10.3
|
|
|
Four-Year Unsecured Revolving Credit and Letter of Credit Facility, dated as of March 9, 2012, among Validus Holdings, Ltd., Validus Re Americas, Ltd., PaCRe, Ltd. and Validus Reinsurance, Ltd., the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and Deutsche Bank Securities Inc, as syndication agent. (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on March 13, 2012)
|
|
|
|
|
10.4
|
|
|
Four-Year Secured Letter of Credit Facility, dated as of March 9, 2012, among Validus Holdings, Ltd., Validus Re Americas, Ltd. and Validus Reinsurance, Ltd., the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and Deutsche Bank Securities Inc, as syndication agent. (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on March 13, 2012)
|
|
|
|
|
10.5
|
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Lixin Zeng dated as of November 1, 2012 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2012 filed with the SEC on November 6. 2012)
|
|
|
|
|
10.6
|
|
*
|
Amended and Restated Employment Agreement dated as of February 15, 2013 between Validus Holdings, Ltd. and Jeffrey D. Sangster
|
|
|
|
|
10.7
|
|
|
Third Amended and Restated Employment Agreement, dated as of May 21, 2012, by and between Validus Holdings, Ltd. and Conan M. Ward (Incorporated by reference from the Company's Current Report on Form 8-K filed on May 21, 2012)
|
|
|
|
|
10.8
|
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.8.1
|
|
|
Amendment to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2008, filed with the SEC on November 13, 2008)
|
|
|
|
|
10.9
|
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Joseph E. (Jeff) Consolino dated as of February 17, 2011 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
|
10.10
|
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Stuart W. Mercer (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.11
|
|
|
Amendment to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Stuart W. Mercer (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2008, filed with the SEC on November 13, 2008)
|
|
|
|
|
10.12
|
|
|
Employment Agreement dated as of September 1, 2010 between Validus Holdings, Ltd. and Jonathan P. Ritz. (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on September 8, 2010)
|
|
|
|
|
10.12.1
|
|
|
Amendment No. 1 to Employment Agreement between Validus Holdings, Ltd. and Jonathan P. Ritz dated as of October 1, 2010 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
|
10.13
|
|
|
Service Agreement between Talbot Underwriting Services, Ltd. and Charles Neville Rupert Atkin (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 6, 2008)
|
|
|
|
|
10.14
|
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Robert F. Kuzloski dated as of April 1, 2011 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed with the SEC on November 4, 2011)
|
|
|
|
|
10.14.1
|
|
|
Amendment No. 1 to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Robert F. Kuzloski dated as of August 1, 2012 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2012 filed with the SEC on November 6, 2012)
|
|
|
|
|
10.15
|
|
|
Employment Agreement between Validus Holdings, Ltd. and Andrew Kudera dated as of February 2, 2010 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed with the SEC on November 4, 2011)
|
|
|
|
|
10.16
|
|
|
Investment Manager Agreement with BlackRock Financial Management, Inc. (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.17
|
|
|
Risk Reporting & Investment Accounting Services Agreement with BlackRock Financial Management, Inc. (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
10.18
|
|
|
Validus Holdings, Ltd. 2005 Amended & Restated Long-Term Incentive Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.19
|
|
|
Form of Amended Post-IPO Restricted Share Award Agreement for Validus Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
|
10.20
|
|
|
Form of Pre-IPO Restricted Share Agreement for Executive Officers (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.21
|
|
|
Form of Amended Restricted Share Agreement for Talbot Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
|
10.22
|
|
|
Amended and Restated Restricted Share Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.23
|
|
|
Stock Option Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.24
|
|
|
Form of Stock Option Agreement for Executive Officers prior to 2008 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.25
|
|
|
Form of Stock Option Agreement for Executive Officers commencing in 2008 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 6, 2008)
|
|
|
|
|
10.26
|
|
|
Form of Performance Share Award Agreement for Validus Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
|
10.27
|
|
|
Form of Performance Share Award Agreement for Talbot Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
|
10.28
|
|
|
Nonqualified Supplemental Deferred Compensation Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.29
|
|
|
Validus Holdings, Ltd. Director Stock Compensation Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
|
10.30
|
|
|
Amendment No. 1 to Validus Holdings, Ltd. Directors Stock Compensation Plan dated as of January 5, 2009 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on February 27, 2009)
|
|
|
|
|
10.30.1
|
|
|
Assignment and Assumption Agreement dated as of December 20, 2011, by and among Aquiline Capital Partners LLC, Validus Reinsurance, Ltd. and Aquiline Capital Partners II GP (Offshore) Ltd.
|
|
|
|
|
10.31
|
|
*
|
Employment Agreement dated October 25 2012 between Validus America, Inc, and for purposes of Section 12.04, countersigned by Validus Holdings, Ltd. and John J. Hendrickson
|
|
|
|
|
21
|
|
*
|
Subsidiaries of the Registrant
|
|
|
|
|
23
|
|
*
|
Consent of PricewaterhouseCoopers
|
|
|
|
|
24
|
|
|
Power of attorney (Incorporated by Reference from signature page)
|
|
|
|
|
31
|
|
*
|
Rule 13a-14(a)/15d-14(a) Certifications
|
|
|
|
|
32
|
|
*
|
Section 1350 Certification
|
|
|
|
|
101.INS
|
|
*
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
*
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
|
*
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
|
|
101.LAB
|
|
*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE
|
|
*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
101.DEF
|
|
*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Validus Holdings, Ltd.
|
||
|
By:
|
/s/ EDWARD J. NOONAN
|
|
|
|
Name:
|
Edward J. Noonan
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
|
|
By:
|
/s/ JOSEPH E. (JEFF) CONSOLINO
|
|
|
|
Name:
|
Joseph E. (Jeff) Consolino
|
|
|
Title:
|
President and Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ EDWARD J. NOONAN
|
|
Chairman of the Board of Directors
|
|
February 15, 2013
|
Name: Edward J. Noonan
|
|
and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ JOSEPH E. (JEFF) CONSOLINO
|
|
Director, President and Chief Financial Officer
|
|
February 15, 2013
|
Name: Joseph E. (Jeff) Consolino
|
|
(Principal Financial Officer and
Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ MAHMOUD ABDALLAH
|
|
Director
|
|
February 15, 2013
|
Name: Mahmoud Abdallah
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL CARPENTER
|
|
Director
|
|
February 15, 2013
|
Name: Michael Carpenter
|
|
|
|
|
|
|
|
|
|
/s/ MATTHEW J. GRAYSON
|
|
Director
|
|
February 15, 2013
|
Name: Matthew J. Grayson
|
|
|
|
|
|
|
|
|
|
/s/ JEFFREY W. GREENBERG
|
|
Director
|
|
February 15, 2013
|
Name: Jeffrey W. Greenberg
|
|
|
|
|
|
|
|
|
|
/s/ JOHN J. HENDRICKSON
|
|
Director
|
|
February 15, 2013
|
Name: John J. Hendrickson
|
|
|
|
|
|
|
|
|
|
/s/ JEAN-MARIE NESSI
|
|
Director
|
|
February 15, 2013
|
Name: Jean-Marie Nessi
|
|
|
|
|
|
|
|
|
|
/s/ MANDAKINI PURI
|
|
Director
|
|
February 15, 2013
|
Name: Mandakini Puri
|
|
|
|
|
|
|
|
|
|
/s/ ALOK SINGH
|
|
Director
|
|
February 15, 2013
|
Name: Alok Singh
|
|
|
|
|
|
|
|
|
|
/s/ CHRISTOPHER E. WATSON
|
|
Director
|
|
February 15, 2013
|
Name: Christopher E. Watson
|
|
|
|
|
|
Page No.
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2012, 2011 and 2010
|
|
|
|
|
|
|
|
|
|
Financial Statement Schedules:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012 |
|
December 31,
2011 |
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Fixed maturities, at fair value (amortized cost: 2012—$5,008,514; 2011—$4,859,705)
|
$
|
5,085,334
|
|
|
$
|
4,894,145
|
|
Short-term investments, at fair value (amortized cost: 2012—$1,112,929; 2011—$280,299)
|
1,114,250
|
|
|
280,191
|
|
||
Other investments, at fair value (amortized cost: 2012—$583,068; 2011—$15,002)
|
564,448
|
|
|
16,787
|
|
||
Cash and cash equivalents
|
1,219,379
|
|
|
832,844
|
|
||
Total investments and cash
|
7,983,411
|
|
|
6,023,967
|
|
||
Investments in affiliates
|
172,329
|
|
|
53,031
|
|
||
Premiums receivable
|
802,159
|
|
|
646,354
|
|
||
Deferred acquisition costs
|
146,588
|
|
|
121,505
|
|
||
Prepaid reinsurance premiums
|
99,593
|
|
|
91,381
|
|
||
Securities lending collateral
|
225
|
|
|
7,736
|
|
||
Loss reserves recoverable
|
439,967
|
|
|
372,485
|
|
||
Paid losses recoverable
|
46,435
|
|
|
90,495
|
|
||
Intangible assets
|
110,569
|
|
|
114,731
|
|
||
Goodwill
|
20,393
|
|
|
20,393
|
|
||
Accrued investment income
|
21,321
|
|
|
25,906
|
|
||
Other assets
|
177,274
|
|
|
50,487
|
|
||
Total assets
|
$
|
10,020,264
|
|
|
$
|
7,618,471
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
||
Reserve for losses and loss expenses
|
$
|
3,517,573
|
|
|
$
|
2,631,143
|
|
Unearned premiums
|
894,362
|
|
|
772,382
|
|
||
Reinsurance balances payable
|
138,550
|
|
|
119,899
|
|
||
Securities lending payable
|
691
|
|
|
8,462
|
|
||
Deferred income taxes
|
20,259
|
|
|
16,720
|
|
||
Net payable for investments purchased
|
38,346
|
|
|
1,256
|
|
||
Accounts payable and accrued expenses
|
167,577
|
|
|
83,402
|
|
||
Senior notes payable
|
247,090
|
|
|
246,982
|
|
||
Debentures payable
|
540,709
|
|
|
289,800
|
|
||
Total liabilities
|
$
|
5,565,157
|
|
|
$
|
4,170,046
|
|
|
|
|
|
||||
Commitments and contingent liabilities
|
|
|
|
|
|||
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
|
|
||
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2012—152,698,191; 2011—134,503,065; Outstanding: 2012—107,921,259; 2011—99,471,080)
|
$
|
26,722
|
|
|
$
|
23,538
|
|
Treasury shares (2012—44,776,932; 2011—35,031,985)
|
(7,836
|
)
|
|
(6,131
|
)
|
||
Additional paid-in-capital
|
2,160,478
|
|
|
1,893,890
|
|
||
Accumulated other comprehensive (loss)
|
(2,953
|
)
|
|
(6,601
|
)
|
||
Retained earnings
|
1,844,416
|
|
|
1,543,729
|
|
||
Total shareholders’ equity available to Validus
|
4,020,827
|
|
|
3,448,425
|
|
||
Noncontrolling interest
|
434,280
|
|
|
—
|
|
||
Total shareholders’ equity
|
$
|
4,455,107
|
|
|
$
|
3,448,425
|
|
|
|
|
|
||||
Total liabilities and shareholders’ equity
|
$
|
10,020,264
|
|
|
$
|
7,618,471
|
|
|
December 31,
2012 |
|
December 31,
2011 |
|
December 31,
2010 |
||||||
Revenues
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
2,166,440
|
|
|
$
|
2,124,691
|
|
|
$
|
1,990,566
|
|
Reinsurance premiums ceded
|
(307,506
|
)
|
|
(289,241
|
)
|
|
(229,482
|
)
|
|||
Net premiums written
|
1,858,934
|
|
|
1,835,450
|
|
|
1,761,084
|
|
|||
Change in unearned premiums
|
14,282
|
|
|
(33,307
|
)
|
|
39
|
|
|||
Net premiums earned
|
1,873,216
|
|
|
1,802,143
|
|
|
1,761,123
|
|
|||
Gain on bargain purchase, net of expenses
|
17,701
|
|
|
—
|
|
|
—
|
|
|||
Net investment income
|
107,936
|
|
|
112,296
|
|
|
134,103
|
|
|||
Net realized gains on investments
|
18,233
|
|
|
28,532
|
|
|
32,498
|
|
|||
Net unrealized gains (losses) on investments
|
17,585
|
|
|
(19,991
|
)
|
|
45,952
|
|
|||
(Loss) from investment affiliate
|
(964
|
)
|
|
—
|
|
|
—
|
|
|||
Other income
|
22,396
|
|
|
5,718
|
|
|
5,219
|
|
|||
Foreign exchange gains (losses)
|
4,798
|
|
|
(22,124
|
)
|
|
1,351
|
|
|||
Total revenues
|
2,060,901
|
|
|
1,906,574
|
|
|
1,980,246
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Losses and loss expenses
|
999,446
|
|
|
1,244,401
|
|
|
987,586
|
|
|||
Policy acquisition costs
|
334,698
|
|
|
314,184
|
|
|
292,899
|
|
|||
General and administrative expenses
|
263,652
|
|
|
197,497
|
|
|
209,290
|
|
|||
Share compensation expenses
|
26,709
|
|
|
34,296
|
|
|
28,911
|
|
|||
Finance expenses
|
53,857
|
|
|
54,817
|
|
|
55,870
|
|
|||
Transaction expenses
|
—
|
|
|
17,433
|
|
|
—
|
|
|||
Total expenses
|
1,678,362
|
|
|
1,862,628
|
|
|
1,574,556
|
|
|||
Net income before taxes and income from operating affiliates
|
382,539
|
|
|
43,946
|
|
|
405,690
|
|
|||
Tax (expense)
|
(2,501
|
)
|
|
(824
|
)
|
|
(3,126
|
)
|
|||
Income from operating affiliates
|
12,580
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
$
|
392,618
|
|
|
$
|
43,122
|
|
|
$
|
402,564
|
|
Net loss (income) attributable to noncontrolling interest
|
15,820
|
|
|
(21,793
|
)
|
|
—
|
|
|||
Net income available to Validus
|
$
|
408,438
|
|
|
$
|
21,329
|
|
|
$
|
402,564
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss)
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
3,648
|
|
|
(1,146
|
)
|
|
(604
|
)
|
|||
|
|
|
|
|
|
||||||
Other comprehensive income (loss)
|
$
|
3,648
|
|
|
$
|
(1,146
|
)
|
|
$
|
(604
|
)
|
|
|
|
|
|
|
||||||
Comprehensive income available to Validus
|
$
|
412,086
|
|
|
$
|
20,183
|
|
|
$
|
401,960
|
|
|
|
|
|
|
|
||||||
Earnings per share
|
|
|
|
|
|
||||||
Weighted average number of common shares and common share equivalents outstanding
|
|
|
|
|
|
||||||
Basic
|
97,184,110
|
|
|
98,607,439
|
|
|
116,018,364
|
|
|||
Diluted
|
102,384,923
|
|
|
100,928,284
|
|
|
120,630,945
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share available to common shareholders
|
$
|
4.13
|
|
|
$
|
0.14
|
|
|
$
|
3.41
|
|
Diluted earnings per share available to common shareholders
|
$
|
3.99
|
|
|
$
|
0.14
|
|
|
$
|
3.34
|
|
|
|
|
|
|
|
||||||
Cash dividends declared per share
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
0.88
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Common shares
|
|
|
|
|
|
||||||
Balance—Beginning of period
|
$
|
23,538
|
|
|
$
|
23,247
|
|
|
$
|
23,033
|
|
Common shares issued, net
|
3,184
|
|
|
291
|
|
|
214
|
|
|||
Balance—End of period
|
$
|
26,722
|
|
|
$
|
23,538
|
|
|
$
|
23,247
|
|
Treasury shares
|
|
|
|
|
|
||||||
Balance—Beginning of period
|
$
|
(6,131
|
)
|
|
$
|
(6,096
|
)
|
|
$
|
(553
|
)
|
Repurchase of common shares
|
(1,705
|
)
|
|
(35
|
)
|
|
(5,543
|
)
|
|||
Balance—End of period
|
$
|
(7,836
|
)
|
|
$
|
(6,131
|
)
|
|
$
|
(6,096
|
)
|
Additional paid-in capital
|
|
|
|
|
|
||||||
Balance—Beginning of period
|
$
|
1,893,890
|
|
|
$
|
1,860,960
|
|
|
$
|
2,675,680
|
|
Common shares issued, net
|
498,136
|
|
|
4,594
|
|
|
7,752
|
|
|||
Repurchase of common shares
|
(258,257
|
)
|
|
(5,960
|
)
|
|
(851,383
|
)
|
|||
Share compensation expenses
|
26,709
|
|
|
34,296
|
|
|
28,911
|
|
|||
Balance—End of period
|
$
|
2,160,478
|
|
|
$
|
1,893,890
|
|
|
$
|
1,860,960
|
|
Accumulated other comprehensive (loss)
|
|
|
|
|
|
||||||
Balance—Beginning of period
|
$
|
(6,601
|
)
|
|
$
|
(5,455
|
)
|
|
$
|
(4,851
|
)
|
Other comprehensive income (loss)
|
3,648
|
|
|
(1,146
|
)
|
|
(604
|
)
|
|||
Balance—End of period
|
$
|
(2,953
|
)
|
|
$
|
(6,601
|
)
|
|
$
|
(5,455
|
)
|
Retained earnings
|
|
|
|
|
|
||||||
Balance—Beginning of period
|
$
|
1,543,729
|
|
|
$
|
1,632,175
|
|
|
$
|
1,337,811
|
|
Dividends
|
(107,751
|
)
|
|
(109,775
|
)
|
|
(108,200
|
)
|
|||
Net income
|
392,618
|
|
|
43,122
|
|
|
402,564
|
|
|||
Net loss (income) attributable to noncontrolling interest
|
15,820
|
|
|
(21,793
|
)
|
|
—
|
|
|||
Balance—End of period
|
$
|
1,844,416
|
|
|
$
|
1,543,729
|
|
|
$
|
1,632,175
|
|
|
|
|
|
|
|
||||||
Total shareholders’ equity available to Validus
|
$
|
4,020,827
|
|
|
$
|
3,448,425
|
|
|
$
|
3,504,831
|
|
|
|
|
|
|
|
||||||
Noncontrolling interest
|
$
|
434,280
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Total shareholders' equity
|
$
|
4,455,107
|
|
|
$
|
3,448,425
|
|
|
$
|
3,504,831
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Cash flows provided by (used in) operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
392,618
|
|
|
$
|
43,122
|
|
|
$
|
402,564
|
|
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Share compensation expenses
|
26,709
|
|
|
34,296
|
|
|
28,911
|
|
|||
Bargain purchase gain
|
(49,702
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of discount on senior notes
|
108
|
|
|
108
|
|
|
81
|
|
|||
Loss from investment affiliate
|
964
|
|
|
—
|
|
|
—
|
|
|||
Net realized (gains) on investments
|
(18,233
|
)
|
|
(28,532
|
)
|
|
(32,498
|
)
|
|||
Net unrealized (gains) losses on investments
|
(17,585
|
)
|
|
19,991
|
|
|
(45,952
|
)
|
|||
Amortization of intangible assets
|
10,159
|
|
|
4,162
|
|
|
4,162
|
|
|||
Income from operating affiliates
|
(12,580
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign exchange (gains) losses included in net income
|
(16,123
|
)
|
|
9,659
|
|
|
(1,451
|
)
|
|||
Amortization of premium on fixed maturities
|
24,289
|
|
|
31,150
|
|
|
32,175
|
|
|||
Change in:
|
|
|
|
|
|
||||||
Premiums receivable
|
19,860
|
|
|
(77,634
|
)
|
|
(19,011
|
)
|
|||
Deferred acquisition costs
|
(1,875
|
)
|
|
2,392
|
|
|
(11,568
|
)
|
|||
Prepaid reinsurance premiums
|
3,116
|
|
|
(19,964
|
)
|
|
1,747
|
|
|||
Loss reserves recoverable
|
40,708
|
|
|
(89,232
|
)
|
|
(102,268
|
)
|
|||
Paid losses recoverable
|
54,248
|
|
|
(62,566
|
)
|
|
(13,244
|
)
|
|||
Income taxes recoverable
|
522
|
|
|
1,216
|
|
|
994
|
|
|||
Accrued investment income
|
7,404
|
|
|
7,750
|
|
|
4,351
|
|
|||
Other assets
|
(9,618
|
)
|
|
(574
|
)
|
|
(13,198
|
)
|
|||
Reserve for losses and loss expenses
|
116,902
|
|
|
596,325
|
|
|
419,350
|
|
|||
Unearned premiums
|
(17,148
|
)
|
|
43,866
|
|
|
4,412
|
|
|||
Reinsurance balances payable
|
(12,365
|
)
|
|
56,041
|
|
|
(659
|
)
|
|||
Deferred income taxes
|
1,040
|
|
|
(8,146
|
)
|
|
277
|
|
|||
Accounts payable and accrued expenses
|
19,147
|
|
|
(18,290
|
)
|
|
(29,174
|
)
|
|||
Net cash provided by operating activities
|
562,565
|
|
|
545,140
|
|
|
630,001
|
|
|||
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
||||||
Proceeds on sales of investments
|
3,393,740
|
|
|
4,058,495
|
|
|
5,349,053
|
|
|||
Proceeds on maturities of investments
|
548,226
|
|
|
353,006
|
|
|
349,851
|
|
|||
Purchases of fixed maturities
|
(3,726,611
|
)
|
|
(4,551,070
|
)
|
|
(5,612,979
|
)
|
|||
Sales (purchases) of short-term investments, net
|
74,954
|
|
|
(215,055
|
)
|
|
208,278
|
|
|||
(Purchases) sales of other investments
|
(479,856
|
)
|
|
3,967
|
|
|
17,210
|
|
|||
Decrease in securities lending collateral
|
7,771
|
|
|
14,631
|
|
|
67,013
|
|
|||
Purchase of investment in operating affiliates
|
(91,500
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of investment in affiliate
|
(12,835
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds on sale of AlphaCat Re 2011
|
—
|
|
|
11,000
|
|
|
—
|
|
|||
Cash (redeemed) in deconsolidation of AlphaCat Re 2011
|
—
|
|
|
(67,808
|
)
|
|
—
|
|
|||
Purchase of subsidiary, net of cash acquired
|
17,196
|
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by investing activities
|
(268,915
|
)
|
|
(392,834
|
)
|
|
378,426
|
|
|||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
||||||
Net proceeds on issuance of senior notes
|
—
|
|
|
—
|
|
|
246,793
|
|
|||
Issuance of common shares, net
|
3,015
|
|
|
4,885
|
|
|
7,966
|
|
|||
Purchases of common shares under share repurchase program
|
(259,962
|
)
|
|
(5,995
|
)
|
|
(856,926
|
)
|
|||
Dividends paid
|
(110,037
|
)
|
|
(107,691
|
)
|
|
(105,662
|
)
|
|||
Decrease in securities lending payable
|
(7,771
|
)
|
|
(14,631
|
)
|
|
(67,013
|
)
|
|||
Third party investment in noncontrolling interest
|
450,100
|
|
|
192,113
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
75,345
|
|
|
68,681
|
|
|
(774,842
|
)
|
|||
Effect of foreign currency rate changes on cash and cash equivalents
|
17,540
|
|
|
(8,883
|
)
|
|
(430
|
)
|
|||
Net increase in cash
|
386,535
|
|
|
212,104
|
|
|
233,155
|
|
|||
Cash and cash equivalents—beginning of period
|
832,844
|
|
|
620,740
|
|
|
387,585
|
|
|||
Cash and cash equivalents—end of period
|
$
|
1,219,379
|
|
|
$
|
832,844
|
|
|
$
|
620,740
|
|
Taxes paid (recovered) during the period
|
$
|
3,832
|
|
|
$
|
(4,632
|
)
|
|
$
|
2,379
|
|
Interest paid during the period
|
$
|
43,249
|
|
|
$
|
43,777
|
|
|
$
|
36,552
|
|
(a)
|
Premiums
|
(b)
|
Policy acquisition costs
|
(c)
|
Reserve for losses and loss expenses
|
(d)
|
Reinsurance
|
(e)
|
Investments
|
(f)
|
Other investments
|
(g)
|
Derivative instruments
|
(h)
|
Cash and cash equivalents
|
(i)
|
Foreign exchange
|
(j)
|
Stock plans
|
(k)
|
Warrants
|
(l)
|
Earnings per share
|
(m)
|
Income taxes and uncertain tax provisions
|
(n)
|
Business combinations
|
(o)
|
Goodwill and other intangible assets
|
(p)
|
Investments in affiliates
|
(q)
|
Variable interest entities ("VIE")
|
(r)
|
Noncontrolling interest
|
Total allocable purchase price
|
|
|
|||
|
Flagstone shares outstanding at November 30, 2012
|
73,852,137
|
|
|
|
|
Exchange ratio
|
0.1935
|
|
||
|
Validus common shares issued, gross of taxes withheld
|
14,290,389
|
|
|
|
|
Validus share price at acquisition
|
34.87
|
|
|
|
|
Total value of Validus shares issued
|
|
498,306
|
|
|
|
Total cash consideration paid at $2.00 per Flagstone share
|
|
147,731
|
|
|
|
Total allocable purchase price
|
|
646,037
|
|
|
|
|
|
|
||
Tangible assets acquired
|
|
|
|||
|
Cash and cash equivalents
|
159,339
|
|
|
|
|
Investments
|
1,323,002
|
|
|
|
|
Receivables (a)
|
171,620
|
|
|
|
|
Other assets
|
129,245
|
|
|
|
|
Tangible assets acquired
|
|
1,783,206
|
|
|
|
|
|
|
||
Liabilities acquired
|
|
|
|||
|
Net loss reserves and paid losses recoverable
|
639,641
|
|
|
|
|
Unearned premiums, net of expenses
|
104,592
|
|
|
|
|
Debentures payable
|
250,657
|
|
|
|
|
Other liabilities
|
98,574
|
|
|
|
|
Liabilities acquired
|
|
1,093,464
|
|
|
|
|
|
|
|
|
Net tangible assets acquired, at fair value
|
|
689,742
|
|
||
Bargain purchase gain before establishment of intangible assets
|
|
43,705
|
|
||
|
Intangible asset—customer relationships and brand name
|
|
5,997
|
|
|
Bargain purchase gain on acquisition of Flagstone
|
|
49,702
|
|
(a)
|
Premiums receivable of $171,620 are net of an allowance for doubtful accounts of $2,216 and are expected to be fully recoverable.
|
|
Year Ended
|
|
|
December 31, 2012
|
|
Bargain purchase gain on acquisition of Flagstone
|
49,702
|
|
Transaction expenses
|
(5,760
|
)
|
Termination expenses
|
(20,244
|
)
|
Amortization of intangible asset—customer relationships and brand name
|
(5,997
|
)
|
Gain on bargain purchase, net of expenses
|
17,701
|
|
|
From Acquisition Date to
|
||
|
December 31, 2012
|
||
Net premiums written
|
$
|
11,305
|
|
Total revenue
|
26,778
|
|
|
Total expenses
|
(17,061
|
)
|
|
Net income
|
$
|
9,717
|
|
|
Year ended
|
|
Year ended
|
||||
|
December 31, 2012
|
|
December 31, 2011
|
||||
|
(unaudited)
|
|
(unaudited)
|
||||
Revenues
|
|
|
|
||||
Gross premiums written
|
$
|
2,536,535
|
|
|
$
|
2,914,388
|
|
Reinsurance premiums ceded
|
(397,008
|
)
|
|
(520,506
|
)
|
||
Net premiums written
|
2,139,527
|
|
|
2,393,882
|
|
||
Change in unearned premiums
|
86,935
|
|
|
(20,261
|
)
|
||
Net premiums earned
|
2,226,462
|
|
|
2,373,621
|
|
||
Net investment income
|
126,140
|
|
|
143,472
|
|
||
Net realized gains on investments
|
63,601
|
|
|
37,366
|
|
||
Net unrealized gains (losses) on investments
|
5,654
|
|
|
(47,101
|
)
|
||
(Loss) from investment affiliate
|
(964
|
)
|
|
—
|
|
||
Other income
|
29,984
|
|
|
11,152
|
|
||
Foreign exchange gains (losses)
|
1,363
|
|
|
(26,605
|
)
|
||
Total revenues
|
2,452,240
|
|
|
2,491,905
|
|
||
|
|
|
|
||||
Expenses
|
|
|
|
|
|
||
Losses and loss expenses
|
1,242,449
|
|
|
1,920,936
|
|
||
Policy acquisition costs
|
413,579
|
|
|
429,509
|
|
||
General and administrative expenses
|
323,061
|
|
|
282,183
|
|
||
Share compensation expenses
|
30,750
|
|
|
35,427
|
|
||
Transaction expenses
|
—
|
|
|
17,433
|
|
||
Finance expenses
|
64,306
|
|
|
66,485
|
|
||
Total expenses
|
2,074,145
|
|
|
2,751,973
|
|
||
|
|
|
|
||||
Net income before taxes and income from operating affiliates
|
378,095
|
|
|
(260,068
|
)
|
||
Tax (expense)
|
(3,385
|
)
|
|
(773
|
)
|
||
Income (loss) from operating affiliates
|
12,868
|
|
|
(922
|
)
|
||
Net income (loss) from continuing operations
|
387,578
|
|
|
(261,763
|
)
|
||
|
|
|
|
||||
Net income (loss) from discontinued operations, net of taxes
|
19,366
|
|
|
(21,662
|
)
|
||
Net income (loss)
|
406,944
|
|
|
(283,425
|
)
|
||
|
|
|
|
||||
Net loss (income) attributable to noncontrolling interest
|
14,685
|
|
|
(24,515
|
)
|
||
Net income (loss) available (attributable) to Validus
|
421,629
|
|
|
(307,940
|
)
|
||
|
|
|
|
||||
Basic earnings per share
|
$
|
3.73
|
|
|
$
|
(3.20
|
)
|
Diluted earnings per share
|
$
|
3.62
|
|
|
$
|
(3.20
|
)
|
|
Goodwill
|
|
Intangible assets
with an
indefinite life
|
|
Intangible assets
with a
finite life
|
|
Total
|
||||||||
Gross balance at December 31, 2012
|
$
|
20,393
|
|
|
$
|
91,843
|
|
|
$
|
41,616
|
|
|
$
|
153,852
|
|
Accumulated amortization
|
—
|
|
|
—
|
|
|
(22,890
|
)
|
|
(22,890
|
)
|
||||
Net balance at December 31, 2012
|
$
|
20,393
|
|
|
$
|
91,843
|
|
|
$
|
18,726
|
|
|
$
|
130,962
|
|
Gross balance at December 31, 2011
|
$
|
20,393
|
|
|
$
|
91,843
|
|
|
$
|
41,616
|
|
|
$
|
153,852
|
|
Accumulated amortization
|
—
|
|
|
—
|
|
|
(18,728
|
)
|
|
(18,728
|
)
|
||||
Net balance at December 31, 2011
|
$
|
20,393
|
|
|
$
|
91,843
|
|
|
$
|
22,888
|
|
|
$
|
135,124
|
|
Gross balance at December 31, 2010
|
$
|
20,393
|
|
|
$
|
91,843
|
|
|
$
|
41,616
|
|
|
$
|
153,852
|
|
Accumulated amortization
|
—
|
|
|
—
|
|
|
(14,566
|
)
|
|
(14,566
|
)
|
||||
Net balance at December 31, 2010
|
$
|
20,393
|
|
|
$
|
91,843
|
|
|
$
|
27,050
|
|
|
$
|
139,286
|
|
2013
|
$
|
4,162
|
|
2014
|
4,162
|
|
|
2015
|
4,162
|
|
|
2016
|
4,162
|
|
|
2017 and thereafter
|
2,078
|
|
|
|
$
|
18,726
|
|
(a)
|
Classification within the fair value hierarchy
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
U.S. Government and Government Agency
|
$
|
—
|
|
|
$
|
1,099,230
|
|
|
$
|
—
|
|
|
$
|
1,099,230
|
|
Non-U.S. Government and Government Agency
|
—
|
|
|
302,279
|
|
|
—
|
|
|
302,279
|
|
||||
States, municipalities, political subdivision
|
—
|
|
|
42,063
|
|
|
—
|
|
|
42,063
|
|
||||
Agency residential mortgage-backed securities
|
—
|
|
|
388,874
|
|
|
—
|
|
|
388,874
|
|
||||
Non-Agency residential mortgage-backed securities
|
—
|
|
|
106,456
|
|
|
—
|
|
|
106,456
|
|
||||
U.S. corporate
|
—
|
|
|
1,210,173
|
|
|
—
|
|
|
1,210,173
|
|
||||
Non-U.S. corporate
|
—
|
|
|
593,265
|
|
|
—
|
|
|
593,265
|
|
||||
Bank loans
|
—
|
|
|
673,383
|
|
|
—
|
|
|
673,383
|
|
||||
Catastrophe bonds
|
—
|
|
|
56,947
|
|
|
—
|
|
|
56,947
|
|
||||
Asset-backed securities
|
—
|
|
|
612,664
|
|
|
—
|
|
|
612,664
|
|
||||
Total fixed maturities
|
—
|
|
|
5,085,334
|
|
|
—
|
|
|
5,085,334
|
|
||||
Short-term investments
|
1,063,175
|
|
|
51,075
|
|
|
—
|
|
|
1,114,250
|
|
||||
Fund of hedge funds
|
—
|
|
|
—
|
|
|
4,757
|
|
|
4,757
|
|
||||
Private equity investments
|
—
|
|
|
—
|
|
|
12,951
|
|
|
12,951
|
|
||||
Hedge funds (a)
|
—
|
|
|
—
|
|
|
538,526
|
|
|
538,526
|
|
||||
Mutual funds
|
—
|
|
|
8,214
|
|
|
—
|
|
|
8,214
|
|
||||
Total
|
$
|
1,063,175
|
|
|
$
|
5,144,623
|
|
|
$
|
556,234
|
|
|
$
|
6,764,032
|
|
Noncontrolling interest (a)
|
—
|
|
|
—
|
|
|
(432,737
|
)
|
|
(432,737
|
)
|
||||
Total investments excluding noncontrolling interest
|
$
|
1,063,175
|
|
|
$
|
5,144,623
|
|
|
$
|
123,497
|
|
|
$
|
6,331,295
|
|
(a)
|
The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.
|
|
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
|
|
|
Year Ended December 31, 2012
|
||||||||||
|
Fixed Maturity Investments
|
|
Other Investments
|
|
Total Fair Market Value
|
||||||
Level 3 investments—Beginning of period
|
$
|
—
|
|
|
$
|
8,880
|
|
|
$
|
8,880
|
|
Purchases (a)
|
—
|
|
|
572,287
|
|
|
572,287
|
|
|||
Sales
|
—
|
|
|
(1,682
|
)
|
|
(1,682
|
)
|
|||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Realized gains
|
—
|
|
|
100
|
|
|
100
|
|
|||
Unrealized (losses)
|
—
|
|
|
(21,018
|
)
|
|
(21,018
|
)
|
|||
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers
|
—
|
|
|
(2,333
|
)
|
|
(2,333
|
)
|
|||
Level 3 investments—End of period
|
$
|
—
|
|
|
$
|
556,234
|
|
|
$
|
556,234
|
|
Noncontrolling interest (b)
|
—
|
|
|
(432,737
|
)
|
|
(432,737
|
)
|
|||
Level 3 investments excluding noncontrolling interest
|
$
|
—
|
|
|
$
|
123,497
|
|
|
$
|
123,497
|
|
(a)
|
Includes $70,657 assumed from the Flagstone Acquisition.
|
|
Year Ended December 31, 2011
|
||||||||||
|
Fixed Maturity Investments
|
|
Other Investments
|
|
Total Fair Market Value
|
||||||
Level 3 investments—Beginning of period
|
$
|
—
|
|
|
$
|
12,892
|
|
|
$
|
12,892
|
|
Purchases
|
—
|
|
|
3,253
|
|
|
3,253
|
|
|||
Sales
|
—
|
|
|
(7,220
|
)
|
|
(7,220
|
)
|
|||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Realized gains
|
—
|
|
|
697
|
|
|
697
|
|
|||
Unrealized (losses)
|
—
|
|
|
(742
|
)
|
|
(742
|
)
|
|||
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers
|
—
|
|
|
—
|
|
|
—
|
|
|||
Level 3 investments—End of period
|
$
|
—
|
|
|
$
|
8,880
|
|
|
$
|
8,880
|
|
(b)
|
The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.
|
(c)
|
Net investment income
|
|
Year Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Fixed maturities and short-term investments
|
$
|
105,937
|
|
|
$
|
111,983
|
|
|
$
|
132,669
|
|
Other investments
|
2,790
|
|
|
—
|
|
|
—
|
|
|||
Cash and cash equivalents
|
7,259
|
|
|
7,285
|
|
|
8,180
|
|
|||
Securities lending income
|
14
|
|
|
58
|
|
|
200
|
|
|||
Total gross investment income
|
116,000
|
|
|
119,326
|
|
|
141,049
|
|
|||
Investment expenses
|
(8,064
|
)
|
|
(7,030
|
)
|
|
(6,946
|
)
|
|||
Net investment income
|
$
|
107,936
|
|
|
$
|
112,296
|
|
|
$
|
134,103
|
|
(c)
|
Fixed maturity, short-term and other investments
|
|
Year Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Fixed maturities, short-term and other investments and cash equivalents
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
38,905
|
|
|
$
|
45,026
|
|
|
$
|
76,920
|
|
Gross realized (losses)
|
(20,672
|
)
|
|
(16,494
|
)
|
|
(44,422
|
)
|
|||
Net realized gains on investments
|
18,233
|
|
|
28,532
|
|
|
32,498
|
|
|||
Net unrealized gains (losses) on securities lending
|
260
|
|
|
39
|
|
|
(1,009
|
)
|
|||
Change in net unrealized gains (losses) on investments
|
17,325
|
|
|
(20,030
|
)
|
|
46,961
|
|
|||
Total net realized gains and change in net unrealized gains (losses) on investments
|
$
|
35,818
|
|
|
$
|
8,541
|
|
|
$
|
78,450
|
|
Noncontrolling interest (a)
|
(17,263
|
)
|
|
—
|
|
|
—
|
|
|||
Total net realized gains and change in net unrealized gains (losses) on investments excluding noncontrolling interest
|
$
|
18,555
|
|
|
$
|
8,541
|
|
|
$
|
78,450
|
|
(a)
|
The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
U.S. Government and Government Agency
|
$
|
1,091,357
|
|
|
$
|
7,957
|
|
|
$
|
(84
|
)
|
|
$
|
1,099,230
|
|
Non-U.S. Government and Government Agency
|
295,602
|
|
|
6,904
|
|
|
(227
|
)
|
|
302,279
|
|
||||
States, municipalities, political subdivision
|
41,286
|
|
|
800
|
|
|
(23
|
)
|
|
42,063
|
|
||||
Agency residential mortgage-backed securities
|
375,368
|
|
|
13,708
|
|
|
(202
|
)
|
|
388,874
|
|
||||
Non-Agency residential mortgage-backed securities
|
106,536
|
|
|
1,266
|
|
|
(1,346
|
)
|
|
106,456
|
|
||||
U.S. corporate
|
1,189,173
|
|
|
21,681
|
|
|
(681
|
)
|
|
1,210,173
|
|
||||
Non-U.S. corporate
|
582,115
|
|
|
11,373
|
|
|
(223
|
)
|
|
593,265
|
|
||||
Bank loans
|
663,217
|
|
|
10,593
|
|
|
(427
|
)
|
|
673,383
|
|
||||
Catastrophe bonds
|
56,757
|
|
|
481
|
|
|
(291
|
)
|
|
56,947
|
|
||||
Asset-backed securities
|
607,103
|
|
|
5,767
|
|
|
(206
|
)
|
|
612,664
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total fixed maturities
|
5,008,514
|
|
|
80,530
|
|
|
(3,710
|
)
|
|
5,085,334
|
|
||||
Total short-term investments
|
1,112,929
|
|
|
1,349
|
|
|
(28
|
)
|
|
1,114,250
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
4,677
|
|
|
299
|
|
|
(219
|
)
|
|
4,757
|
|
||||
Hedge funds (a)
|
559,335
|
|
|
21,814
|
|
|
(42,623
|
)
|
|
538,526
|
|
||||
Private equity investments
|
12,857
|
|
|
94
|
|
|
—
|
|
|
12,951
|
|
||||
Mutual funds
|
6,199
|
|
|
2,015
|
|
|
—
|
|
|
8,214
|
|
||||
Total other investments
|
583,068
|
|
|
24,222
|
|
|
(42,842
|
)
|
|
564,448
|
|
||||
Total
|
$
|
6,704,511
|
|
|
$
|
106,101
|
|
|
$
|
(46,580
|
)
|
|
$
|
6,764,032
|
|
Noncontrolling interest (a)
|
$
|
(450,000
|
)
|
|
$
|
(19,427
|
)
|
|
$
|
36,690
|
|
|
$
|
(432,737
|
)
|
Total investments excluding noncontrolling interest
|
$
|
6,254,511
|
|
|
$
|
86,674
|
|
|
$
|
(9,890
|
)
|
|
$
|
6,331,295
|
|
(a)
|
The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.
|
|
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
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
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
|
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
Estimated Fair Value
|
|
% of Total
|
|
Estimated Fair Value
|
|
% of Total
|
||||||
AAA
|
$
|
1,062,794
|
|
|
20.9
|
%
|
|
$
|
882,912
|
|
|
18.0
|
%
|
AA
|
1,862,322
|
|
|
36.6
|
%
|
|
2,077,981
|
|
|
42.5
|
%
|
||
A
|
1,049,969
|
|
|
20.6
|
%
|
|
1,078,793
|
|
|
22.0
|
%
|
||
BBB
|
374,447
|
|
|
7.4
|
%
|
|
345,091
|
|
|
7.1
|
%
|
||
Investment grade
|
4,349,532
|
|
|
85.5
|
%
|
|
4,384,777
|
|
|
89.6
|
%
|
||
|
|
|
|
|
|
|
|
||||||
BB
|
373,907
|
|
|
7.4
|
%
|
|
254,409
|
|
|
5.2
|
%
|
||
B
|
330,416
|
|
|
6.5
|
%
|
|
231,420
|
|
|
4.7
|
%
|
||
CCC
|
4,483
|
|
|
0.1
|
%
|
|
12,578
|
|
|
0.3
|
%
|
||
CC
|
3,259
|
|
|
0.1
|
%
|
|
4,605
|
|
|
0.1
|
%
|
||
D/NR
|
23,737
|
|
|
0.4
|
%
|
|
6,356
|
|
|
0.1
|
%
|
||
Non-Investment grade
|
735,802
|
|
|
14.5
|
%
|
|
509,368
|
|
|
10.4
|
%
|
||
|
|
|
|
|
|
|
|
||||||
Total Fixed Maturities
|
$
|
5,085,334
|
|
|
100.0
|
%
|
|
$
|
4,894,145
|
|
|
100.0
|
%
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||||||
Due in one year or less
|
$
|
526,529
|
|
|
$
|
530,499
|
|
|
$
|
520,631
|
|
|
$
|
523,107
|
|
Due after one year through five years
|
2,971,118
|
|
|
3,018,544
|
|
|
3,160,647
|
|
|
3,186,711
|
|
||||
Due after five years through ten years
|
418,377
|
|
|
424,304
|
|
|
350,459
|
|
|
346,654
|
|
||||
Due after ten years
|
3,483
|
|
|
3,993
|
|
|
8,184
|
|
|
8,211
|
|
||||
|
3,919,507
|
|
|
3,977,340
|
|
|
4,039,921
|
|
|
4,064,683
|
|
||||
Asset-backed and mortgage-backed securities
|
1,089,007
|
|
|
1,107,994
|
|
|
819,784
|
|
|
829,462
|
|
||||
Total
|
$
|
5,008,514
|
|
|
$
|
5,085,334
|
|
|
$
|
4,859,705
|
|
|
$
|
4,894,145
|
|
(d)
|
Securities lending
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents
|
$
|
225
|
|
|
—
|
|
|
—
|
|
|
$
|
225
|
|
||
Total
|
$
|
225
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
225
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Corporate
|
$
|
—
|
|
|
$
|
255
|
|
|
$
|
—
|
|
|
$
|
255
|
|
Cash and cash equivalents
|
7,481
|
|
|
—
|
|
|
—
|
|
|
7,481
|
|
||||
Total
|
$
|
7,481
|
|
|
$
|
255
|
|
|
$
|
—
|
|
|
$
|
7,736
|
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
Estimated Fair Value
|
|
% of Total
|
|
Estimated Fair Value
|
|
% of Total
|
||||||
NR
|
$
|
—
|
|
|
0.0
|
%
|
|
$
|
255
|
|
|
3.3
|
%
|
NR – Short-term investments(a)
|
225
|
|
|
100.0
|
%
|
|
7,481
|
|
|
96.7
|
%
|
||
Total
|
$
|
225
|
|
|
100.0
|
%
|
|
$
|
7,736
|
|
|
100.0
|
%
|
(a)
|
This amount relates to certain short-term investments with short original maturities which are generally not rated.
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||||||
Due in one year or less
|
$
|
691
|
|
|
$
|
225
|
|
|
$
|
7,462
|
|
|
$
|
7,481
|
|
Due after one year through five years
|
—
|
|
|
—
|
|
|
1,000
|
|
|
255
|
|
||||
Total
|
$
|
691
|
|
|
$
|
225
|
|
|
$
|
8,462
|
|
|
$
|
7,736
|
|
(a)
|
Operating affiliates
|
|
Year Ended December 31, 2012
|
||||||||||||||
|
Investment in operating affiliate (AlphaCat Re 2011)
|
|
Investment in operating affiliate (AlphaCat Re 2012)
|
|
Investment in operating affiliate (AlphaCat 2013)
|
|
Total
|
||||||||
As at December 31, 2011
|
$
|
53,031
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
53,031
|
|
Purchase of shares
|
—
|
|
|
26,500
|
|
|
45,000
|
|
|
71,500
|
|
||||
Income from operating affiliates
|
9,761
|
|
|
2,819
|
|
|
—
|
|
|
12,580
|
|
||||
As at December 31, 2012
|
$
|
62,792
|
|
|
$
|
29,319
|
|
|
$
|
45,000
|
|
|
$
|
137,111
|
|
|
Investment in operating affiliates
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity ownership %
|
|
Carrying value
|
||||||
AlphaCat Re 2011
|
$
|
41,389
|
|
|
43.7
|
%
|
|
22.3
|
%
|
|
$
|
62,792
|
|
AlphaCat Re 2012
|
$
|
26,500
|
|
|
49.0
|
%
|
|
37.9
|
%
|
|
$
|
29,319
|
|
AlphaCat 2013
|
$
|
45,000
|
|
|
40.9
|
%
|
|
18.9
|
%
|
|
$
|
45,000
|
|
Total
|
$
|
112,889
|
|
|
|
|
|
|
$
|
137,111
|
|
|
Combined investees summarized financial data
|
||||||||||||||
|
Total assets
|
|
Total liabilities
|
|
Total revenue
|
|
Net income
|
||||||||
AlphaCat Re 2011
|
$
|
366,697
|
|
|
$
|
47,345
|
|
|
$
|
104,031
|
|
|
$
|
43,852
|
|
AlphaCat Re 2012
|
$
|
98,596
|
|
|
$
|
21,586
|
|
|
$
|
19,496
|
|
|
$
|
7,445
|
|
AlphaCat 2013
|
$
|
228,144
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(b)
|
Investment in Insurance Linked Securities ("ILS")
|
(c)
|
Investment affiliate
|
|
Year Ended December 31, 2012
|
||
|
Investment in limited partnership
(Aquiline Financial Services Fund II L.P.)(a)
|
||
As at December 31, 2011
|
$
|
3,253
|
|
Capital contributions
|
14,365
|
|
|
Net unrealized loss on investments (a)
|
(1,436
|
)
|
|
Loss from investment affiliate
|
(964
|
)
|
|
As at December 31, 2012
|
$
|
15,218
|
|
(a)
|
As at December 31, 2011, this investment was included in
“Other investments”
as a Level 3 investment in the fair value hierarchy, hence the change in fair value was included in net unrealized (losses) gains on investments.
|
|
Investment in investment affiliate
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity ownership %
|
|
Carrying value
|
||||||
Aquiline Financial Services Fund II L.P.
|
$
|
17,618
|
|
|
—
|
%
|
|
6.7
|
%
|
|
$
|
15,218
|
|
|
Noncontrolling interest -
|
||
|
PacRe
|
||
Balance—December 31, 2011
|
$
|
—
|
|
Purchase of shares by noncontrolling interest
|
450,100
|
|
|
Net (loss) attributable to noncontrolling interest
|
(15,820
|
)
|
|
Balance—December 31, 2012
|
$
|
434,280
|
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||
Derivatives designated as hedging instruments:
|
|
Net notional exposure
|
|
Balance Sheet location
|
|
Fair value
|
|
Balance Sheet location
|
|
Fair value
|
||||||
Foreign currency forward contracts
|
|
$
|
35,976
|
|
|
Other assets
|
|
$
|
—
|
|
|
Accounts payable and accrued expenses
|
|
$
|
223
|
|
Interest rate swap contracts
|
|
$
|
289,800
|
|
|
Other assets
|
|
$
|
—
|
|
|
Accounts payable and accrued expenses
|
|
$
|
220
|
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||
Derivatives not designated as hedging instruments:
|
|
Net notional exposure
|
|
Balance Sheet location
|
|
Fair value
|
|
Balance Sheet location
|
|
Fair value
|
||||||
Currency swaps
|
|
$
|
17,153
|
|
|
Other assets
|
|
$
|
—
|
|
|
Accounts payable and accrued expenses
|
|
$
|
772
|
|
Foreign currency forward contracts
|
|
$
|
310,541
|
|
|
Other assets
|
|
$
|
—
|
|
|
Accounts payable and accrued expenses
|
|
$
|
394
|
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||
Derivatives designated as hedging instruments:
|
|
Net notional exposure
|
|
Balance Sheet location
|
|
Fair value
|
|
Balance Sheet location
|
|
Fair value
|
||||||
Foreign currency forward 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
|
|
|
|
|
Year Ended December 31, 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 currency forward contracts (a)
|
|
Foreign exchange (loss) gain
|
|
$
|
1,017
|
|
|
$
|
(912
|
)
|
|
$
|
(105
|
)
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
Year Ended December 31, 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 currency forward contracts
|
|
Foreign exchange (loss) gain
|
|
$
|
(3,994
|
)
|
|
$
|
3,994
|
|
|
$
|
—
|
|
(a)
|
There were no designated hedge derivatives as part of the Flagstone Acquisition as at December 31, 2012, however some were held during the one-month period from November 30, 2012 to December 31, 2012.
|
|
|
|
|
Year Ended December 31, 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
|
|
$
|
1,588
|
|
|
$
|
(1,588
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
in course
of collection
|
|
Premiums
accrued
but unbilled
|
|
Total
|
||||||
Balance as at December 31, 2011
|
$
|
175,111
|
|
|
$
|
471,243
|
|
|
$
|
646,354
|
|
Change during 2012
|
39,780
|
|
|
116,025
|
|
|
155,805
|
|
|||
Balance as at December 31, 2012
|
$
|
214,891
|
|
|
$
|
587,268
|
|
|
$
|
802,159
|
|
|
|
|
|
|
|
||||||
Balance as at December 31, 2010
|
$
|
118,342
|
|
|
$
|
450,419
|
|
|
$
|
568,761
|
|
Change during 2011
|
56,769
|
|
|
20,824
|
|
|
77,593
|
|
|||
Balance as at December 31, 2011
|
$
|
175,111
|
|
|
$
|
471,243
|
|
|
$
|
646,354
|
|
|
Years Ended
|
||||||||||
|
December 31,
2012 |
|
December 31,
2011 |
|
December 31,
2010 |
||||||
Reserve for losses and loss expenses, beginning of year
|
$
|
2,631,143
|
|
|
$
|
2,035,973
|
|
|
$
|
1,622,134
|
|
Losses and loss expenses recoverable
|
(372,485
|
)
|
|
(283,134
|
)
|
|
(181,765
|
)
|
|||
Net reserves for losses and loss expenses, beginning of year
|
2,258,658
|
|
|
1,752,839
|
|
|
1,440,369
|
|
|||
Net loss reserves acquired in Flagstone acquisition
|
639,641
|
|
|
—
|
|
|
—
|
|
|||
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
1,174,415
|
|
|
1,400,520
|
|
|
1,144,196
|
|
|||
Prior years
|
(174,969
|
)
|
|
(156,119
|
)
|
|
(156,610
|
)
|
|||
Total incurred losses and loss expenses
|
999,446
|
|
|
1,244,401
|
|
|
987,586
|
|
|||
Less net losses and loss expenses paid in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
(182,146
|
)
|
|
(266,247
|
)
|
|
(288,594
|
)
|
|||
Prior years
|
(653,874
|
)
|
|
(476,779
|
)
|
|
(384,828
|
)
|
|||
Total net paid losses
|
(836,020
|
)
|
|
(743,026
|
)
|
|
(673,422
|
)
|
|||
Foreign exchange
|
15,881
|
|
|
4,444
|
|
|
(1,694
|
)
|
|||
Net reserve for losses and loss expenses, end of year
|
3,077,606
|
|
|
2,258,658
|
|
|
1,752,839
|
|
|||
Losses and loss expenses recoverable
|
439,967
|
|
|
372,485
|
|
|
283,134
|
|
|||
Reserve for losses and loss expenses, end of year
|
$
|
3,517,573
|
|
|
$
|
2,631,143
|
|
|
$
|
2,035,973
|
|
|
Years Ended
|
||||||||||
|
December 31,
2012 |
|
December 31,
2011 |
|
December 31,
2010 |
||||||
Gross losses and loss expenses
|
$
|
1,192,494
|
|
|
$
|
1,555,275
|
|
|
$
|
1,411,192
|
|
Reinsurance recoverable
|
(193,048
|
)
|
|
(310,874
|
)
|
|
(423,606
|
)
|
|||
Net incurred losses and loss expenses
|
$
|
999,446
|
|
|
$
|
1,244,401
|
|
|
$
|
987,586
|
|
|
Year Ended December 31, 2012
|
||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
Validus Re
|
$
|
(45,733
|
)
|
|
$
|
(11,298
|
)
|
|
$
|
(15,530
|
)
|
|
$
|
(72,561
|
)
|
Talbot
|
(26,263
|
)
|
|
(40,060
|
)
|
|
(36,085
|
)
|
|
(102,408
|
)
|
||||
Net favorable development
|
$
|
(71,996
|
)
|
|
$
|
(51,358
|
)
|
|
$
|
(51,615
|
)
|
|
$
|
(174,969
|
)
|
|
Year Ended December 31, 2011
|
||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
Validus Re
|
$
|
(49,020
|
)
|
|
$
|
(10,234
|
)
|
|
$
|
(9,356
|
)
|
|
$
|
(68,610
|
)
|
Talbot
|
(22,169
|
)
|
|
(31,382
|
)
|
|
(33,958
|
)
|
|
(87,509
|
)
|
||||
Net favorable development
|
$
|
(71,189
|
)
|
|
$
|
(41,616
|
)
|
|
$
|
(43,314
|
)
|
|
$
|
(156,119
|
)
|
|
Year Ended December 31, 2010
|
||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
Validus Re
|
$
|
(49,831
|
)
|
|
$
|
(17,616
|
)
|
|
$
|
(3,170
|
)
|
|
$
|
(70,617
|
)
|
Talbot
|
(22,450
|
)
|
|
(52,415
|
)
|
|
(11,128
|
)
|
|
(85,993
|
)
|
||||
Net favorable development (a)
|
$
|
(72,281
|
)
|
|
$
|
(70,031
|
)
|
|
$
|
(14,298
|
)
|
|
$
|
(156,610
|
)
|
|
Years Ended
|
||||||
|
December 31,
2012 |
|
December 31,
2011 |
||||
Accrued interest on debt
|
$
|
10,662
|
|
|
$
|
10,454
|
|
Amounts due to brokers
|
3,628
|
|
|
18,996
|
|
||
Trade and compensation payables
|
153,287
|
|
|
53,952
|
|
||
Total
|
$
|
167,577
|
|
|
$
|
83,402
|
|
(a)
|
Effects of reinsurance on premiums written and earned
|
|
Year Ended December 31, 2012
|
||||||||||||||||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Total
|
||||||||||||||||||||||||||||
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Elimination
|
|
Written
|
|
Earned
|
||||||||||||||||||
Direct
|
$
|
1,551
|
|
|
$
|
364
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
548,940
|
|
|
$
|
535,508
|
|
|
$
|
—
|
|
|
$
|
550,491
|
|
|
$
|
535,872
|
|
Assumed
|
1,130,408
|
|
|
1,174,681
|
|
|
21,603
|
|
|
17,666
|
|
|
529,696
|
|
|
529,544
|
|
|
(65,758
|
)
|
|
1,615,949
|
|
|
1,721,891
|
|
|||||||||
Ceded
|
(144,578
|
)
|
|
(151,774
|
)
|
|
—
|
|
|
—
|
|
|
(228,686
|
)
|
|
(232,773
|
)
|
|
65,758
|
|
|
(307,506
|
)
|
|
(384,547
|
)
|
|||||||||
Total
|
$
|
987,381
|
|
|
$
|
1,023,271
|
|
|
$
|
21,603
|
|
|
$
|
17,666
|
|
|
$
|
849,950
|
|
|
$
|
832,279
|
|
|
$
|
—
|
|
|
$
|
1,858,934
|
|
|
$
|
1,873,216
|
|
|
Year Ended December 31, 2011
|
||||||||||||||||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Total
|
||||||||||||||||||||||||||||
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Elimination
|
|
Written
|
|
Earned
|
||||||||||||||||||
Direct
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
510,200
|
|
|
$
|
480,432
|
|
|
$
|
—
|
|
|
$
|
510,200
|
|
|
$
|
480,432
|
|
Assumed
|
1,114,493
|
|
|
1,092,951
|
|
|
75,727
|
|
|
65,966
|
|
|
503,922
|
|
|
507,383
|
|
|
(79,651
|
)
|
|
1,614,491
|
|
|
1,666,300
|
|
|||||||||
Ceded
|
(150,718
|
)
|
|
(127,026
|
)
|
|
—
|
|
|
—
|
|
|
(218,174
|
)
|
|
(217,563
|
)
|
|
79,651
|
|
|
(289,241
|
)
|
|
(344,589
|
)
|
|||||||||
Total
|
$
|
963,775
|
|
|
$
|
965,925
|
|
|
$
|
75,727
|
|
|
$
|
65,966
|
|
|
$
|
795,948
|
|
|
$
|
770,252
|
|
|
$
|
—
|
|
|
$
|
1,835,450
|
|
|
$
|
1,802,143
|
|
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Total
|
||||||||||||||||||||||||||||
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Elimination
|
|
Written
|
|
Earned
|
||||||||||||||||||
Direct
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
460,337
|
|
|
$
|
450,348
|
|
|
$
|
—
|
|
|
$
|
460,337
|
|
|
$
|
450,348
|
|
Assumed
|
1,089,443
|
|
|
1,116,167
|
|
|
11,796
|
|
|
11,082
|
|
|
520,736
|
|
|
503,021
|
|
|
(91,746
|
)
|
|
1,530,229
|
|
|
1,630,270
|
|
|||||||||
Ceded
|
(63,147
|
)
|
|
(76,049
|
)
|
|
—
|
|
|
—
|
|
|
(258,081
|
)
|
|
(243,446
|
)
|
|
91,746
|
|
|
(229,482
|
)
|
|
(319,495
|
)
|
|||||||||
Total
|
$
|
1,026,296
|
|
|
$
|
1,040,118
|
|
|
$
|
11,796
|
|
|
$
|
11,082
|
|
|
$
|
722,992
|
|
|
$
|
709,923
|
|
|
$
|
—
|
|
|
$
|
1,761,084
|
|
|
$
|
1,761,123
|
|
(b)
|
Credit risk
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
Reinsurance Recoverable
|
|
% of Total
|
|
Reinsurance Recoverable
|
|
% of Total
|
||||||
Top 10 reinsurers
|
$
|
360,234
|
|
|
74.1
|
%
|
|
$
|
323,315
|
|
|
69.8
|
%
|
Other reinsurers’ balances > $1 million
|
115,262
|
|
|
23.7
|
%
|
|
132,417
|
|
|
28.6
|
%
|
||
Other reinsurers’ balances < $1 million
|
10,906
|
|
|
2.2
|
%
|
|
7,248
|
|
|
1.6
|
%
|
||
Total
|
$
|
486,402
|
|
|
100.0
|
%
|
|
$
|
462,980
|
|
|
100.0
|
%
|
|
|
December 31, 2012
|
|||||||
Top 10 Reinsurers
|
|
Rating
|
|
Reinsurance Recoverable
|
|
% of Total
|
|||
Lloyd’s Syndicates
|
|
A+
|
|
$
|
71,469
|
|
|
19.9
|
%
|
National Indemnity
|
|
AA+
|
|
59,941
|
|
|
16.6
|
%
|
|
Everest Re
|
|
A+
|
|
51,340
|
|
|
14.3
|
%
|
|
Fully Collateralized
|
|
NR
|
|
47,445
|
|
|
13.2
|
%
|
|
Hannover Re
|
|
AA-
|
|
40,552
|
|
|
11.3
|
%
|
|
Munich Re
|
|
AA-
|
|
20,954
|
|
|
5.8
|
%
|
|
Transatlantic Re
|
|
A+
|
|
20,320
|
|
|
5.6
|
%
|
|
Swiss Re
|
|
AA-
|
|
16,992
|
|
|
4.7
|
%
|
|
Allianz
|
|
AA-
|
|
16,367
|
|
|
4.5
|
%
|
|
XL Re
|
|
A
|
|
14,854
|
|
|
4.1
|
%
|
|
Total
|
|
|
|
$
|
360,234
|
|
|
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
|
1,572,634
|
|
Restricted share units vested, net of shares withheld
|
15,173
|
|
Options exercised
|
439,065
|
|
Warrants exercised
|
326,715
|
|
Direct issuance of common stock
|
15,841,539
|
|
Common shares issued, December 31, 2012
|
152,698,191
|
|
Treasury shares, December 31, 2012
|
(44,776,932
|
)
|
Common shares outstanding, December 31, 2012
|
107,921,259
|
|
|
Common Shares
|
|
Common shares issued, December 31, 2010
|
132,838,111
|
|
Restricted share awards vested, net of shares withheld
|
569,104
|
|
Restricted share units vested, net of shares withheld
|
9,497
|
|
Employee seller shares vested
|
197,174
|
|
Options exercised
|
459,932
|
|
Warrants exercised
|
428,884
|
|
Direct issuance of common stock
|
363
|
|
Common shares issued, December 31, 2011
|
134,503,065
|
|
Treasury shares, December 31, 2011
|
(35,031,985
|
)
|
Common shares outstanding, December 31, 2011
|
99,471,080
|
|
|
Common Shares
|
|
Common shares issued, December 31, 2009
|
131,616,349
|
|
Restricted share awards vested, net of shares withheld
|
405,055
|
|
Restricted share units vested, net of shares withheld
|
57,192
|
|
Employee seller shares vested
|
203,544
|
|
Options exercised
|
550,014
|
|
Warrants exercised
|
5,957
|
|
Common shares issued, December 31, 2010
|
132,838,111
|
|
Treasury shares, December 31, 2010
|
(34,836,885
|
)
|
Common shares outstanding, December 31, 2010
|
98,001,226
|
|
(b)
|
Warrants
|
|
July 24,
2007
Issuance
|
|
February 3,
2006
Issuance
|
|
December 15,
2005
Issuance
|
||||||
Warrants issued
|
256,409
|
|
|
8,593
|
|
|
8,446,727
|
|
|||
Average strike price
|
$
|
20.00
|
|
|
$
|
17.50
|
|
|
$
|
17.50
|
|
Volatility
|
30.0
|
%
|
|
30.0
|
%
|
|
30.0
|
%
|
|||
Risk-free rate
|
4.5
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
|||
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|||
Expected term (years)
|
8
|
|
|
10
|
|
|
10
|
|
|||
Calculated fair value per warrant
|
$
|
11.28
|
|
|
$
|
8.89
|
|
|
$
|
8.89
|
|
(c)
|
Deferred share units
|
(d)
|
Dividends
|
(a)
|
Long Term Incentive Plan and Short Term Incentive Plan
|
i.
|
Options
|
|
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, December 31, 2012
|
1,823,947
|
|
|
$
|
6.52
|
|
|
$
|
20.69
|
|
Options exercisable at December 31, 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
|
(459,932
|
)
|
|
6.98
|
|
|
20.55
|
|
||
Options forfeited
|
(740
|
)
|
|
10.30
|
|
|
20.39
|
|
||
Options outstanding, December 31, 2011
|
2,263,012
|
|
|
$
|
6.69
|
|
|
$
|
20.12
|
|
Options exercisable at December 31, 2011
|
2,188,566
|
|
|
$
|
6.63
|
|
|
$
|
20.01
|
|
|
Options
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Grant Date Exercise Price
|
|||||
Options outstanding, December 31, 2009
|
3,278,015
|
|
|
$
|
6.83
|
|
|
$
|
19.88
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
(550,014
|
)
|
|
7.22
|
|
|
18.32
|
|
||
Options forfeited
|
(4,317
|
)
|
|
10.30
|
|
|
20.39
|
|
||
Options outstanding, December 31, 2010
|
2,723,684
|
|
|
$
|
6.74
|
|
|
$
|
20.19
|
|
Options exercisable at December 31, 2010
|
2,505,905
|
|
|
$
|
6.61
|
|
|
$
|
20.07
|
|
ii.
|
Restricted share awards
|
|
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
|
921,506
|
|
|
31.47
|
|
|
Restricted share awards vested
|
(1,719,855
|
)
|
|
24.40
|
|
|
Restricted share awards forfeited
|
(34,651
|
)
|
|
27.85
|
|
|
Restricted share awards outstanding, December 31, 2012
|
2,170,547
|
|
|
$
|
29.24
|
|
|
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
|
621,254
|
|
|
31.92
|
|
|
Restricted share awards vested
|
(712,692
|
)
|
|
24.85
|
|
|
Restricted share awards forfeited
|
(19,054
|
)
|
|
26.63
|
|
|
Restricted share awards outstanding, December 31, 2011
|
3,003,547
|
|
|
$
|
25.77
|
|
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share awards outstanding, December 31, 2009
|
2,525,958
|
|
|
$
|
23.39
|
|
Restricted share awards granted
|
1,191,873
|
|
|
25.94
|
|
|
Restricted share awards vested
|
(503,322
|
)
|
|
23.43
|
|
|
Restricted share awards forfeited
|
(100,470
|
)
|
|
24.22
|
|
|
Restricted share awards outstanding, December 31, 2010
|
3,114,039
|
|
|
$
|
24.33
|
|
iii.
|
Restricted share units
|
|
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
|
1,504
|
|
|
28.66
|
|
|
Restricted share units forfeited
|
(1,393
|
)
|
|
28.57
|
|
|
Restricted share units outstanding, December 31, 2012
|
47,238
|
|
|
$
|
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
|
1,215
|
|
|
27.30
|
|
|
Restricted share units forfeited
|
—
|
|
|
—
|
|
|
Restricted share units outstanding, December 31, 2011
|
53,312
|
|
|
$
|
27.60
|
|
|
Restricted Share Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share units outstanding, December 31, 2009
|
79,447
|
|
|
$
|
19.02
|
|
Restricted share units granted
|
26,782
|
|
|
25.65
|
|
|
Restricted share units vested
|
(59,193
|
)
|
|
17.31
|
|
|
Restricted share units issued in lieu of cash dividends
|
1,107
|
|
|
25.45
|
|
|
Restricted share units forfeited
|
(1,094
|
)
|
|
21.49
|
|
|
Restricted share units outstanding, December 31, 2010
|
47,049
|
|
|
$
|
25.04
|
|
iv.
|
Performance share awards
|
|
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, December 31, 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, December 31, 2011
|
279,019
|
|
|
$
|
30.77
|
|
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Performance share awards outstanding, December 31, 2009
|
—
|
|
|
$
|
—
|
|
Performance share awards granted
|
132,401
|
|
|
28.70
|
|
|
Performance share awards vested
|
—
|
|
|
—
|
|
|
Performance share awards forfeited
|
—
|
|
|
—
|
|
|
Performance share awards outstanding, December 31, 2010
|
132,401
|
|
|
$
|
28.70
|
|
(b)
|
Employee seller shares
|
|
Employee Seller Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Employee seller shares outstanding, December 31, 2010
|
197,879
|
|
|
$
|
22.01
|
|
Employee seller shares granted
|
—
|
|
|
—
|
|
|
Employee seller shares vested
|
(197,174
|
)
|
|
22.01
|
|
|
Employee seller shares forfeited
|
(705
|
)
|
|
22.01
|
|
|
Employee seller shares outstanding, December 31, 2011
|
—
|
|
|
$
|
—
|
|
|
Employee Seller Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Employee seller shares outstanding, December 31, 2009
|
410,667
|
|
|
$
|
22.01
|
|
Employee seller shares granted
|
—
|
|
|
—
|
|
|
Employee seller shares vested
|
(203,544
|
)
|
|
22.01
|
|
|
Employee seller shares forfeited
|
(9,244
|
)
|
|
22.01
|
|
|
Employee seller shares outstanding, December 31, 2010
|
197,879
|
|
|
$
|
22.01
|
|
(c)
|
Total share compensation expenses
|
|
Years Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31,
2010 |
||||||
Options
|
$
|
142
|
|
|
$
|
1,770
|
|
|
$
|
3,845
|
|
Restricted share awards
|
25,145
|
|
|
27,428
|
|
|
20,038
|
|
|||
Restricted share units
|
499
|
|
|
456
|
|
|
393
|
|
|||
Performance share awards
|
923
|
|
|
2,349
|
|
|
232
|
|
|||
Employee seller shares
|
—
|
|
|
2,293
|
|
|
4,403
|
|
|||
Total
|
$
|
26,709
|
|
|
$
|
34,296
|
|
|
$
|
28,911
|
|
(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
|
|
|
247,090
|
|
|||
$400,000 syndicated unsecured letter of credit facility
|
400,000
|
|
|
—
|
|
|
—
|
|
|||
$525,000 syndicated secured letter of credit facility
|
525,000
|
|
|
376,570
|
|
|
—
|
|
|||
$500,000 secured bi-lateral letter of credit facility
|
500,000
|
|
|
92,402
|
|
|
—
|
|
|||
Talbot FAL Facility (b)
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|||
PaCRe senior secured letter of credit facility
|
10,000
|
|
|
219
|
|
|
—
|
|
|||
IPC Bi-Lateral Facility
|
80,000
|
|
|
40,613
|
|
|
—
|
|
|||
$550,000 Flagstone Bi-Lateral Facility
|
550,000
|
|
|
381,019
|
|
|
—
|
|
|||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
137,159
|
|
|
137,159
|
|
|
137,159
|
|
|||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
113,750
|
|
|
113,750
|
|
|
113,750
|
|
|||
Total
|
$
|
2,940,909
|
|
|
$
|
1,706,532
|
|
|
$
|
787,799
|
|
|
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.
|
|
Years Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
2006 Junior Subordinated Deferrable Debentures
|
$
|
6,964
|
|
|
$
|
9,768
|
|
|
$
|
14,354
|
|
2007 Junior Subordinated Deferrable Debentures
|
8,922
|
|
|
12,115
|
|
|
12,114
|
|
|||
2010 Senior Notes due 2040
|
22,388
|
|
|
22,388
|
|
|
20,770
|
|
|||
Flagstone 2006 Junior Subordinated Deferrable Interest Notes
|
459
|
|
|
—
|
|
|
—
|
|
|||
Flagstone 2007 Junior Subordinated Deferrable Interest Notes
|
327
|
|
|
—
|
|
|
—
|
|
|||
Credit facilities
|
11,999
|
|
|
6,492
|
|
|
5,246
|
|
|||
Bank charges
|
269
|
|
|
218
|
|
|
246
|
|
|||
AlphaCat Re 2011 fees (a)
|
—
|
|
|
3,609
|
|
|
—
|
|
|||
AlphaCat ILS fund fees (b)
|
2,432
|
|
|
—
|
|
|
—
|
|
|||
Talbot FAL Facility
|
97
|
|
|
227
|
|
|
333
|
|
|||
Talbot third party FAL facility
|
—
|
|
|
—
|
|
|
2,807
|
|
|||
Total
|
$
|
53,857
|
|
|
$
|
54,817
|
|
|
$
|
55,870
|
|
(a)
|
Included preferred share dividends and finance expenses attributable to AlphaCat Re 2011.
|
(b)
|
Includes finance expenses incurred by AlphaCat Managers, Ltd. in relation to the AlphaCat ILS funds and fund-raising for AlphaCat 2013.
|
(b)
|
$250,000
2010 Senior Notes due 2040
|
(c)
|
Junior subordinated deferrable interest debentures and Junior subordinated deferrable interest notes
|
(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
|
(iv)
|
$500,000
secured bi-lateral letter of credit facility
|
(v)
|
$10,000
PaCRe Senior secured letter of credit facility
|
(vi)
|
$
550,000
Flagstone Bi-Lateral Facility
|
|
Years Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Income before tax—Bermuda
|
$
|
369,675
|
|
|
$
|
42,230
|
|
|
$
|
400,631
|
|
Income before tax—United Kingdom
|
10,277
|
|
|
1,415
|
|
|
4,275
|
|
|||
(Loss) before tax—Switzerland
|
(3,381
|
)
|
|
—
|
|
|
—
|
|
|||
Income before tax—Canada
|
391
|
|
|
301
|
|
|
784
|
|
|||
Income before tax—Other
|
5,577
|
|
|
—
|
|
|
—
|
|
|||
Income before tax—Total
|
$
|
382,539
|
|
|
$
|
43,946
|
|
|
$
|
405,690
|
|
|
Years Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Current
|
$
|
1,328
|
|
|
$
|
8,977
|
|
|
$
|
2,941
|
|
Deferred
|
1,173
|
|
|
(8,153
|
)
|
|
185
|
|
|||
Income tax expense
|
$
|
2,501
|
|
|
$
|
824
|
|
|
$
|
3,126
|
|
|
Years Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Expected tax provision at Bermuda
|
|
|
|
|
|
||||||
Statutory Rate of 0%
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Effect of taxable income generated in:
|
|
|
|
|
|
||||||
United Kingdom
|
3,204
|
|
|
389
|
|
|
1,374
|
|
|||
Canada
|
1,348
|
|
|
151
|
|
|
1,231
|
|
|||
Other jurisdictions
|
330
|
|
|
1,233
|
|
|
114
|
|
|||
|
4,882
|
|
|
1,773
|
|
|
2,719
|
|
|||
Adjustments to deferred tax rate
|
(1,611
|
)
|
|
—
|
|
|
—
|
|
|||
Adjustments to prior period tax
|
(770
|
)
|
|
(949
|
)
|
|
407
|
|
|||
Income tax expense
|
$
|
2,501
|
|
|
$
|
824
|
|
|
$
|
3,126
|
|
|
Years Ended
|
||||||
|
December 31, 2012
|
|
December 31, 2011
|
||||
Deferred tax asset
|
|
|
|
||||
Tax losses carried forward
|
$
|
(42,215
|
)
|
|
$
|
(11,206
|
)
|
Timing differences
|
(4,366
|
)
|
|
(3,162
|
)
|
||
Deferred tax asset, gross of valuation allowance
|
(46,581
|
)
|
|
(14,368
|
)
|
||
Valuation allowance
|
37,974
|
|
|
—
|
|
||
Net deferred tax asset
|
(8,607
|
)
|
|
(14,368
|
)
|
||
Deferred tax liability
|
|
|
|
||||
Underwriting profit taxable in future periods
|
25,732
|
|
|
31,088
|
|
||
Revenue to be taxed in future periods
|
3,134
|
|
|
—
|
|
||
Deferred tax liability
|
28,866
|
|
|
31,088
|
|
||
Net deferred tax liability
|
$
|
20,259
|
|
|
$
|
16,720
|
|
(a)
|
Concentrations of credit risk
|
|
Years Ended
|
|||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
|||
Marsh & McLennan
|
29.4
|
%
|
|
25.9
|
%
|
|
25.5
|
%
|
Aon Benfield Group Ltd.
|
26.5
|
%
|
|
23.8
|
%
|
|
22.6
|
%
|
Willis Group Holdings Ltd.
|
16.1
|
%
|
|
17.0
|
%
|
|
17.1
|
%
|
(b)
|
Employment agreements
|
(c)
|
Operating leases
|
2013
|
$
|
11,933
|
|
2014
|
10,502
|
|
|
2015
|
9,826
|
|
|
2016
|
8,608
|
|
|
2017 and thereafter
|
30,093
|
|
|
|
$
|
70,962
|
|
(d)
|
Funds at Lloyd’s
|
|
2013 Underwriting Year
|
|
2012 Underwriting Year
|
|
2011 Underwriting Year
|
||||||
Talbot FAL facility
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Group funds
|
403,700
|
|
|
448,800
|
|
|
416,000
|
|
|||
Total
|
$
|
428,700
|
|
|
$
|
473,800
|
|
|
$
|
441,000
|
|
(e)
|
Lloyd’s Central Fund
|
(f)
|
Aquiline Commitment
|
|
Years Ended
|
||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||
Basic earnings per share
|
|
|
|
|
|
||||||
Net income
|
$
|
392,618
|
|
|
$
|
43,122
|
|
|
$
|
402,564
|
|
Loss (income) attributable to noncontrolling interest
|
15,820
|
|
|
(21,793
|
)
|
|
—
|
|
|||
Net income available to Validus
|
$
|
408,438
|
|
|
$
|
21,329
|
|
|
$
|
402,564
|
|
Less: Dividends and distributions declared on outstanding warrants
|
(6,693
|
)
|
|
(7,644
|
)
|
|
(6,991
|
)
|
|||
Income available to common shareholders
|
$
|
401,745
|
|
|
$
|
13,685
|
|
|
$
|
395,573
|
|
Weighted average number of common shares outstanding
|
97,184,110
|
|
|
98,607,439
|
|
|
116,018,364
|
|
|||
Basic earnings per share available to common shareholders
|
$
|
4.13
|
|
|
$
|
0.14
|
|
|
$
|
3.41
|
|
|
|
|
|
|
|
||||||
Diluted earnings per share
|
|
|
|
|
|
||||||
Net income
|
$
|
392,618
|
|
|
$
|
43,122
|
|
|
$
|
402,564
|
|
Loss (income) attributable to noncontrolling interest
|
15,820
|
|
|
(21,793
|
)
|
|
—
|
|
|||
Net income available to Validus
|
$
|
408,438
|
|
|
$
|
21,329
|
|
|
$
|
402,564
|
|
Less: Dividends and distributions declared on outstanding warrants
|
—
|
|
|
(7,644
|
)
|
|
—
|
|
|||
Income available to common shareholders
|
$
|
408,438
|
|
|
$
|
13,685
|
|
|
$
|
402,564
|
|
Weighted average number of common shares outstanding
|
97,184,110
|
|
|
98,607,439
|
|
|
116,018,364
|
|
|||
Share equivalents:
|
|
|
|
|
|
||||||
Warrants
|
3,137,956
|
|
|
—
|
|
|
2,657,258
|
|
|||
Stock options
|
769,618
|
|
|
776,204
|
|
|
888,281
|
|
|||
Unvested restricted shares
|
1,293,239
|
|
|
1,544,641
|
|
|
1,067,042
|
|
|||
Weighted average number of diluted common shares outstanding
|
102,384,923
|
|
|
100,928,284
|
|
|
120,630,945
|
|
|||
Diluted earnings per share available to common shareholders
|
$
|
3.99
|
|
|
$
|
0.14
|
|
|
$
|
3.34
|
|
Year Ended December 31, 2012
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Legal Entity Adjustments
|
|
Validus Re Consolidated
|
|
Talbot Segment
|
|
Corporate &
Eliminations
|
|
Total
|
||||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gross premiums written
|
|
$
|
1,131,959
|
|
|
$
|
21,603
|
|
|
$
|
7
|
|
|
$
|
1,153,569
|
|
|
$
|
1,078,636
|
|
|
$
|
(65,765
|
)
|
|
$
|
2,166,440
|
|
Reinsurance premiums ceded
|
|
(144,578
|
)
|
|
—
|
|
|
—
|
|
|
(144,578
|
)
|
|
(228,686
|
)
|
|
65,758
|
|
|
(307,506
|
)
|
|||||||
Net premiums written
|
|
987,381
|
|
|
21,603
|
|
|
7
|
|
|
1,008,991
|
|
|
849,950
|
|
|
(7
|
)
|
|
1,858,934
|
|
|||||||
Change in unearned premiums
|
|
35,890
|
|
|
(3,937
|
)
|
|
(3,833
|
)
|
|
28,120
|
|
|
(17,671
|
)
|
|
3,833
|
|
|
14,282
|
|
|||||||
Net premiums earned
|
|
1,023,271
|
|
|
17,666
|
|
|
(3,826
|
)
|
|
1,037,111
|
|
|
832,279
|
|
|
3,826
|
|
|
1,873,216
|
|
|||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
575,416
|
|
|
—
|
|
|
—
|
|
|
575,416
|
|
|
424,030
|
|
|
—
|
|
|
999,446
|
|
|||||||
Policy acquisition costs
|
|
154,362
|
|
|
1,774
|
|
|
(390
|
)
|
|
155,746
|
|
|
183,926
|
|
|
(4,974
|
)
|
|
334,698
|
|
|||||||
General and administrative expenses
|
|
63,048
|
|
|
7,532
|
|
|
5,130
|
|
|
75,710
|
|
|
133,281
|
|
|
54,661
|
|
|
263,652
|
|
|||||||
Share compensation expenses
|
|
7,763
|
|
|
279
|
|
|
561
|
|
|
8,603
|
|
|
7,789
|
|
|
10,317
|
|
|
26,709
|
|
|||||||
Total underwriting deductions
|
|
800,589
|
|
|
9,585
|
|
|
5,301
|
|
|
815,475
|
|
|
749,026
|
|
|
60,004
|
|
|
1,624,505
|
|
|||||||
Underwriting income (loss)
|
|
$
|
222,682
|
|
|
$
|
8,081
|
|
|
$
|
(9,127
|
)
|
|
$
|
221,636
|
|
|
$
|
83,253
|
|
|
$
|
(56,178
|
)
|
|
$
|
248,711
|
|
Net investment income
|
|
88,727
|
|
|
3,748
|
|
|
2,846
|
|
|
95,321
|
|
|
21,310
|
|
|
(8,695
|
)
|
|
107,936
|
|
|||||||
Other income
|
|
5,085
|
|
|
23,229
|
|
|
3,823
|
|
|
32,137
|
|
|
2,033
|
|
|
(11,774
|
)
|
|
22,396
|
|
|||||||
Finance expenses
|
|
(8,943
|
)
|
|
(3,061
|
)
|
|
2,433
|
|
|
(9,571
|
)
|
|
(162
|
)
|
|
(44,124
|
)
|
|
(53,857
|
)
|
|||||||
Operating income (loss) before taxes and income from operating affiliates
|
|
307,551
|
|
|
31,997
|
|
|
(25
|
)
|
|
339,523
|
|
|
106,434
|
|
|
(120,771
|
)
|
|
325,186
|
|
|||||||
Tax (expense)
|
|
(168
|
)
|
|
—
|
|
|
(4
|
)
|
|
(172
|
)
|
|
(2,229
|
)
|
|
(100
|
)
|
|
(2,501
|
)
|
|||||||
Income from operating affiliates
|
|
—
|
|
|
12,580
|
|
|
—
|
|
|
12,580
|
|
|
—
|
|
|
—
|
|
|
12,580
|
|
|||||||
Net operating income (loss)
|
|
$
|
307,383
|
|
|
$
|
44,577
|
|
|
$
|
(29
|
)
|
|
$
|
351,931
|
|
|
$
|
104,205
|
|
|
$
|
(120,871
|
)
|
|
$
|
335,265
|
|
Gain on bargain purchase, net of expenses (a)
|
|
—
|
|
|
—
|
|
|
23,460
|
|
|
23,460
|
|
|
—
|
|
|
(5,759
|
)
|
|
17,701
|
|
|||||||
Net realized gains on investments
|
|
12,026
|
|
|
216
|
|
|
—
|
|
|
12,242
|
|
|
5,991
|
|
|
—
|
|
|
18,233
|
|
|||||||
Net unrealized gains (losses) on investments
|
|
35,033
|
|
|
(19,509
|
)
|
|
506
|
|
|
16,030
|
|
|
2,061
|
|
|
(506
|
)
|
|
17,585
|
|
|||||||
(Loss) from investment affiliate
|
|
(964
|
)
|
|
—
|
|
|
—
|
|
|
(964
|
)
|
|
—
|
|
|
—
|
|
|
(964
|
)
|
|||||||
Foreign exchange gains (losses)
|
|
2,664
|
|
|
44
|
|
|
477
|
|
|
3,185
|
|
|
2,527
|
|
|
(914
|
)
|
|
4,798
|
|
|||||||
Net income (loss)
|
|
$
|
356,142
|
|
|
$
|
25,328
|
|
|
$
|
24,414
|
|
|
$
|
405,884
|
|
|
$
|
114,784
|
|
|
$
|
(128,050
|
)
|
|
$
|
392,618
|
|
Net loss attributable to noncontrolling interest
|
|
—
|
|
|
15,820
|
|
|
—
|
|
|
15,820
|
|
|
—
|
|
|
—
|
|
|
15,820
|
|
|||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
356,142
|
|
|
$
|
41,148
|
|
|
$
|
24,414
|
|
|
$
|
421,704
|
|
|
$
|
114,784
|
|
|
$
|
(128,050
|
)
|
|
$
|
408,438
|
|
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums written / Gross premiums written
|
|
87.2
|
%
|
|
100.0
|
%
|
|
|
|
|
|
78.8
|
%
|
|
|
|
85.8
|
%
|
||||||||||
Losses and loss expenses
|
|
56.2
|
%
|
|
0.0
|
%
|
|
|
|
|
|
50.9
|
%
|
|
|
|
53.4
|
%
|
||||||||||
Policy acquisition costs
|
|
15.1
|
%
|
|
10.0
|
%
|
|
|
|
|
|
22.1
|
%
|
|
|
|
17.9
|
%
|
||||||||||
General and administrative expenses (b)
|
|
6.9
|
%
|
|
44.2
|
%
|
|
|
|
|
|
16.9
|
%
|
|
|
|
15.5
|
%
|
||||||||||
Expense ratio
|
|
22.0
|
%
|
|
54.2
|
%
|
|
|
|
|
|
39.0
|
%
|
|
|
|
33.4
|
%
|
||||||||||
Combined ratio
|
|
78.2
|
%
|
|
54.2
|
%
|
|
|
|
|
|
89.9
|
%
|
|
|
|
86.8
|
%
|
||||||||||
Total assets
|
|
$
|
6,206,084
|
|
|
$
|
805,513
|
|
|
|
|
|
|
$
|
2,968,224
|
|
|
$
|
40,443
|
|
|
$
|
10,020,264
|
|
(a)
|
The gain on bargain purchase, net of expenses, arose from the acquisition of Flagstone Reinsurance Holdings S.A. on November 30, 2012 and is net of transaction related expenses which included legal, financial advisory, audit related services and termination expenses.
|
(b)
|
Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
|
Year Ended December 31, 2011
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Legal Entity Adjustments
|
|
Validus Re Consolidated
|
|
Talbot Segment
|
|
Corporate &
Eliminations
|
|
Total
|
||||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gross premiums written
|
|
$
|
1,114,493
|
|
|
$
|
75,727
|
|
|
$
|
—
|
|
|
$
|
1,190,220
|
|
|
$
|
1,014,122
|
|
|
$
|
(79,651
|
)
|
|
$
|
2,124,691
|
|
Reinsurance premiums ceded
|
|
(150,718
|
)
|
|
—
|
|
|
—
|
|
|
(150,718
|
)
|
|
(218,174
|
)
|
|
79,651
|
|
|
(289,241
|
)
|
|||||||
Net premiums written
|
|
963,775
|
|
|
75,727
|
|
|
—
|
|
|
1,039,502
|
|
|
795,948
|
|
|
—
|
|
|
1,835,450
|
|
|||||||
Change in unearned premiums
|
|
2,150
|
|
|
(9,761
|
)
|
|
—
|
|
|
(7,611
|
)
|
|
(25,696
|
)
|
|
—
|
|
|
(33,307
|
)
|
|||||||
Net premiums earned
|
|
965,925
|
|
|
65,966
|
|
|
—
|
|
|
1,031,891
|
|
|
770,252
|
|
|
—
|
|
|
1,802,143
|
|
|||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
749,305
|
|
|
10,000
|
|
|
—
|
|
|
759,305
|
|
|
485,096
|
|
|
—
|
|
|
1,244,401
|
|
|||||||
Policy acquisition costs
|
|
154,582
|
|
|
7,946
|
|
|
(2,394
|
)
|
|
160,134
|
|
|
157,334
|
|
|
(3,284
|
)
|
|
314,184
|
|
|||||||
General and administrative expenses
|
|
44,663
|
|
|
10,929
|
|
|
(1,658
|
)
|
|
53,934
|
|
|
112,072
|
|
|
31,491
|
|
|
197,497
|
|
|||||||
Share compensation expenses
|
|
9,309
|
|
|
107
|
|
|
982
|
|
|
10,398
|
|
|
8,582
|
|
|
15,316
|
|
|
34,296
|
|
|||||||
Total underwriting deductions
|
|
957,859
|
|
|
28,982
|
|
|
(3,070
|
)
|
|
983,771
|
|
|
763,084
|
|
|
43,523
|
|
|
1,790,378
|
|
|||||||
Underwriting income (loss)
|
|
$
|
8,066
|
|
|
$
|
36,984
|
|
|
$
|
3,070
|
|
|
$
|
48,120
|
|
|
$
|
7,168
|
|
|
$
|
(43,523
|
)
|
|
$
|
11,765
|
|
Net investment income
|
|
93,248
|
|
|
3,245
|
|
|
—
|
|
|
96,493
|
|
|
25,380
|
|
|
(9,577
|
)
|
|
112,296
|
|
|||||||
Other income
|
|
7,390
|
|
|
11,466
|
|
|
(6,017
|
)
|
|
12,839
|
|
|
3,485
|
|
|
(10,606
|
)
|
|
5,718
|
|
|||||||
Finance expenses
|
|
(7,777
|
)
|
|
(3,659
|
)
|
|
—
|
|
|
(11,436
|
)
|
|
(227
|
)
|
|
(43,154
|
)
|
|
(54,817
|
)
|
|||||||
Operating income (loss) before taxes
|
|
100,927
|
|
|
48,036
|
|
|
(2,947
|
)
|
|
146,016
|
|
|
35,806
|
|
|
(106,860
|
)
|
|
74,962
|
|
|||||||
Tax (expense)
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(651
|
)
|
|
(155
|
)
|
|
(824
|
)
|
|||||||
Net operating income (loss)
|
|
$
|
100,909
|
|
|
$
|
48,036
|
|
|
$
|
(2,947
|
)
|
|
$
|
145,998
|
|
|
$
|
35,155
|
|
|
$
|
(107,015
|
)
|
|
$
|
74,138
|
|
Net realized gains on investments
|
|
21,138
|
|
|
531
|
|
|
—
|
|
|
21,669
|
|
|
6,863
|
|
|
—
|
|
|
28,532
|
|
|||||||
Net unrealized (losses) on investments
|
|
(14,698
|
)
|
|
(1,341
|
)
|
|
—
|
|
|
(16,039
|
)
|
|
(3,952
|
)
|
|
—
|
|
|
(19,991
|
)
|
|||||||
Foreign exchange (losses) gains
|
|
(19,524
|
)
|
|
(464
|
)
|
|
—
|
|
|
(19,988
|
)
|
|
(2,188
|
)
|
|
52
|
|
|
(22,124
|
)
|
|||||||
Transaction expenses (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,433
|
)
|
|
(17,433
|
)
|
|||||||
Net income (loss)
|
|
$
|
87,825
|
|
|
$
|
46,762
|
|
|
$
|
(2,947
|
)
|
|
$
|
131,640
|
|
|
$
|
35,878
|
|
|
$
|
(124,396
|
)
|
|
$
|
43,122
|
|
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(21,793
|
)
|
|
—
|
|
|
(21,793
|
)
|
|
—
|
|
|
—
|
|
|
(21,793
|
)
|
|||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
87,825
|
|
|
$
|
24,969
|
|
|
$
|
(2,947
|
)
|
|
$
|
109,847
|
|
|
$
|
35,878
|
|
|
$
|
(124,396
|
)
|
|
$
|
21,329
|
|
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums written / Gross premiums written
|
|
86.5
|
%
|
|
100.0
|
%
|
|
|
|
|
|
78.5
|
%
|
|
|
|
86.4
|
%
|
||||||||||
Losses and loss expenses
|
|
77.6
|
%
|
|
15.2
|
%
|
|
|
|
|
|
63.0
|
%
|
|
|
|
69.1
|
%
|
||||||||||
Policy acquisition costs
|
|
16.0
|
%
|
|
12.0
|
%
|
|
|
|
|
|
20.4
|
%
|
|
|
|
17.4
|
%
|
||||||||||
General and administrative expenses (b)
|
|
5.6
|
%
|
|
16.7
|
%
|
|
|
|
|
|
15.7
|
%
|
|
|
|
12.9
|
%
|
||||||||||
Expense ratio
|
|
21.6
|
%
|
|
28.7
|
%
|
|
|
|
|
|
36.1
|
%
|
|
|
|
30.3
|
%
|
||||||||||
Combined ratio
|
|
99.2
|
%
|
|
43.9
|
%
|
|
|
|
|
|
99.1
|
%
|
|
|
|
99.4
|
%
|
||||||||||
Total Assets
|
|
$
|
4,604,965
|
|
|
$
|
223,889
|
|
|
|
|
|
|
$
|
2,775,632
|
|
|
$
|
13,985
|
|
|
$
|
7,618,471
|
|
(a)
|
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.
|
(b)
|
Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
|
Year Ended December 31, 2010
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Legal Entity Adjustments
|
|
Validus Re Consolidated
|
|
Talbot Segment
|
|
Corporate &
Eliminations
|
|
Total
|
||||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gross premiums written
|
|
$
|
1,089,443
|
|
|
$
|
11,796
|
|
|
$
|
—
|
|
|
$
|
1,101,239
|
|
|
$
|
981,073
|
|
|
$
|
(91,746
|
)
|
|
$
|
1,990,566
|
|
Reinsurance premiums ceded
|
|
(63,147
|
)
|
|
—
|
|
|
—
|
|
|
(63,147
|
)
|
|
(258,081
|
)
|
|
91,746
|
|
|
(229,482
|
)
|
|||||||
Net premiums written
|
|
1,026,296
|
|
|
11,796
|
|
|
—
|
|
|
1,038,092
|
|
|
722,992
|
|
|
—
|
|
|
1,761,084
|
|
|||||||
Change in unearned premiums
|
|
13,822
|
|
|
(714
|
)
|
|
—
|
|
|
13,108
|
|
|
(13,069
|
)
|
|
—
|
|
|
39
|
|
|||||||
Net premiums earned
|
|
1,040,118
|
|
|
11,082
|
|
|
—
|
|
|
1,051,200
|
|
|
709,923
|
|
|
—
|
|
|
1,761,123
|
|
|||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
|
601,610
|
|
|
—
|
|
|
—
|
|
|
601,610
|
|
|
385,976
|
|
|
—
|
|
|
987,586
|
|
|||||||
Policy acquisition costs
|
|
159,527
|
|
|
1,072
|
|
|
—
|
|
|
160,599
|
|
|
143,769
|
|
|
(11,469
|
)
|
|
292,899
|
|
|||||||
General and administrative expenses
|
|
45,613
|
|
|
5,327
|
|
|
15,927
|
|
|
66,867
|
|
|
107,557
|
|
|
34,866
|
|
|
209,290
|
|
|||||||
Share compensation expenses
|
|
7,181
|
|
|
594
|
|
|
80
|
|
|
7,855
|
|
|
6,923
|
|
|
14,133
|
|
|
28,911
|
|
|||||||
Total underwriting deductions
|
|
813,931
|
|
|
6,993
|
|
|
16,007
|
|
|
836,931
|
|
|
644,225
|
|
|
37,530
|
|
|
1,518,686
|
|
|||||||
Underwriting income (loss)
|
|
$
|
226,187
|
|
|
$
|
4,089
|
|
|
$
|
(16,007
|
)
|
|
$
|
214,269
|
|
|
$
|
65,698
|
|
|
$
|
(37,530
|
)
|
|
$
|
242,437
|
|
Net investment income
|
|
108,170
|
|
|
5,858
|
|
|
—
|
|
|
114,028
|
|
|
29,287
|
|
|
(9,212
|
)
|
|
134,103
|
|
|||||||
Other income
|
|
3,938
|
|
|
3,849
|
|
|
4,715
|
|
|
12,502
|
|
|
6,315
|
|
|
(13,598
|
)
|
|
5,219
|
|
|||||||
Finance expenses
|
|
(5,471
|
)
|
|
—
|
|
|
—
|
|
|
(5,471
|
)
|
|
(3,140
|
)
|
|
(47,259
|
)
|
|
(55,870
|
)
|
|||||||
Operating income (loss) before taxes
|
|
332,824
|
|
|
13,796
|
|
|
(11,292
|
)
|
|
335,328
|
|
|
98,160
|
|
|
(107,599
|
)
|
|
325,889
|
|
|||||||
Tax (expense)
|
|
(81
|
)
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|
(2,730
|
)
|
|
(315
|
)
|
|
(3,126
|
)
|
|||||||
Net operating income (loss)
|
|
$
|
332,743
|
|
|
$
|
13,796
|
|
|
$
|
(11,292
|
)
|
|
$
|
335,247
|
|
|
$
|
95,430
|
|
|
$
|
(107,914
|
)
|
|
$
|
322,763
|
|
Net realized gains on investments
|
|
23,531
|
|
|
106
|
|
|
—
|
|
|
23,637
|
|
|
8,861
|
|
|
—
|
|
|
32,498
|
|
|||||||
Net unrealized gains on investments
|
|
44,616
|
|
|
660
|
|
|
—
|
|
|
45,276
|
|
|
676
|
|
|
—
|
|
|
45,952
|
|
|||||||
Foreign exchange (losses) gains
|
|
(622
|
)
|
|
(563
|
)
|
|
—
|
|
|
(1,185
|
)
|
|
2,091
|
|
|
445
|
|
|
1,351
|
|
|||||||
Net income (loss)
|
|
$
|
400,268
|
|
|
$
|
13,999
|
|
|
$
|
(11,292
|
)
|
|
$
|
402,975
|
|
|
$
|
107,058
|
|
|
$
|
(107,469
|
)
|
|
$
|
402,564
|
|
Net income (loss) available (attributable) to Validus
|
|
$
|
400,268
|
|
|
$
|
13,999
|
|
|
$
|
(11,292
|
)
|
|
$
|
402,975
|
|
|
$
|
107,058
|
|
|
$
|
(107,469
|
)
|
|
$
|
402,564
|
|
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums written / Gross premiums written
|
|
94.2
|
%
|
|
100.0
|
%
|
|
|
|
|
|
73.7
|
%
|
|
|
|
88.5
|
%
|
||||||||||
Losses and loss expenses
|
|
57.8
|
%
|
|
—
|
%
|
|
|
|
|
|
54.4
|
%
|
|
|
|
56.1
|
%
|
||||||||||
Policy acquisition costs
|
|
15.3
|
%
|
|
9.7
|
%
|
|
|
|
|
|
20.3
|
%
|
|
|
|
16.6
|
%
|
||||||||||
General and administrative expenses(a)
|
|
5.1
|
%
|
|
53.4
|
%
|
|
|
|
|
|
16.1
|
%
|
|
|
|
13.5
|
%
|
||||||||||
Expense ratio
|
|
20.4
|
%
|
|
63.1
|
%
|
|
|
|
|
|
36.4
|
%
|
|
|
|
30.1
|
%
|
||||||||||
Combined ratio
|
|
78.2
|
%
|
|
63.1
|
%
|
|
|
|
|
|
90.7
|
%
|
|
|
|
86.2
|
%
|
||||||||||
Total assets
|
|
$
|
4,256,435
|
|
|
$
|
163,123
|
|
|
|
|
|
|
$
|
2,599,159
|
|
|
$
|
42,161
|
|
|
$
|
7,060,878
|
|
(a)
|
Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
|
|
Year Ended December 31, 2012
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
468,730
|
|
|
$
|
18,774
|
|
|
$
|
120,086
|
|
|
$
|
(7,285
|
)
|
|
$
|
600,305
|
|
|
27.7
|
%
|
Worldwide excluding United States(a)
|
40,168
|
|
|
—
|
|
|
263,597
|
|
|
(16,049
|
)
|
|
287,716
|
|
|
13.3
|
%
|
|||||
Europe
|
90,673
|
|
|
1,333
|
|
|
50,262
|
|
|
(2,868
|
)
|
|
139,400
|
|
|
6.4
|
%
|
|||||
Latin America and Caribbean
|
33,031
|
|
|
—
|
|
|
103,543
|
|
|
(6,164
|
)
|
|
130,410
|
|
|
6.0
|
%
|
|||||
Japan
|
30,781
|
|
|
—
|
|
|
6,630
|
|
|
(396
|
)
|
|
37,015
|
|
|
1.7
|
%
|
|||||
Canada
|
688
|
|
|
—
|
|
|
12,243
|
|
|
(690
|
)
|
|
12,241
|
|
|
0.6
|
%
|
|||||
Rest of the world(b)
|
68,754
|
|
|
496
|
|
|
—
|
|
|
—
|
|
|
69,250
|
|
|
3.2
|
%
|
|||||
Sub-total, non United States
|
264,095
|
|
|
1,829
|
|
|
436,275
|
|
|
(26,167
|
)
|
|
676,032
|
|
|
31.2
|
%
|
|||||
Worldwide including United States
|
101,594
|
|
|
1,000
|
|
|
65,084
|
|
|
(3,552
|
)
|
|
164,126
|
|
|
7.6
|
%
|
|||||
Marine and Aerospace(c)
|
297,540
|
|
|
—
|
|
|
457,191
|
|
|
(28,754
|
)
|
|
725,977
|
|
|
33.5
|
%
|
|||||
Total
|
$
|
1,131,959
|
|
|
$
|
21,603
|
|
|
$
|
1,078,636
|
|
|
$
|
(65,758
|
)
|
|
$
|
2,166,440
|
|
|
100.0
|
%
|
|
Year Ended December 31, 2011
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
463,055
|
|
|
$
|
57,186
|
|
|
$
|
117,178
|
|
|
$
|
(9,494
|
)
|
|
$
|
627,925
|
|
|
29.6
|
%
|
Worldwide excluding United States(a)
|
48,047
|
|
|
—
|
|
|
247,367
|
|
|
(14,146
|
)
|
|
281,268
|
|
|
13.2
|
%
|
|||||
Europe
|
88,467
|
|
|
1,238
|
|
|
52,018
|
|
|
(1,988
|
)
|
|
139,735
|
|
|
6.6
|
%
|
|||||
Latin America and Caribbean
|
42,994
|
|
|
633
|
|
|
94,859
|
|
|
(27,857
|
)
|
|
110,629
|
|
|
5.2
|
%
|
|||||
Japan
|
43,032
|
|
|
—
|
|
|
7,380
|
|
|
(458
|
)
|
|
49,954
|
|
|
2.3
|
%
|
|||||
Canada
|
518
|
|
|
—
|
|
|
10,583
|
|
|
(507
|
)
|
|
10,594
|
|
|
0.5
|
%
|
|||||
Rest of the world(b)
|
58,908
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,908
|
|
|
2.8
|
%
|
|||||
Sub-total, non United States
|
281,966
|
|
|
1,871
|
|
|
412,207
|
|
|
(44,956
|
)
|
|
651,088
|
|
|
30.6
|
%
|
|||||
Worldwide including United States
|
105,271
|
|
|
16,670
|
|
|
50,723
|
|
|
(2,852
|
)
|
|
169,812
|
|
|
8.0
|
%
|
|||||
Marine and Aerospace(c)
|
264,201
|
|
|
—
|
|
|
434,014
|
|
|
(22,349
|
)
|
|
675,866
|
|
|
31.8
|
%
|
|||||
Total
|
$
|
1,114,493
|
|
|
$
|
75,727
|
|
|
$
|
1,014,122
|
|
|
$
|
(79,651
|
)
|
|
$
|
2,124,691
|
|
|
100.0
|
%
|
|
Year Ended December 31, 2010
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
479,338
|
|
|
$
|
6,795
|
|
|
$
|
110,944
|
|
|
$
|
(8,543
|
)
|
|
$
|
588,534
|
|
|
29.6
|
%
|
Worldwide excluding United States(a)
|
55,462
|
|
|
—
|
|
|
265,760
|
|
|
(7,051
|
)
|
|
314,171
|
|
|
15.8
|
%
|
|||||
Europe
|
104,168
|
|
|
1,153
|
|
|
50,074
|
|
|
(1,239
|
)
|
|
154,156
|
|
|
7.7
|
%
|
|||||
Latin America and Caribbean
|
70,455
|
|
|
195
|
|
|
83,274
|
|
|
(52,632
|
)
|
|
101,292
|
|
|
5.1
|
%
|
|||||
Japan
|
26,449
|
|
|
—
|
|
|
5,982
|
|
|
(177
|
)
|
|
32,254
|
|
|
1.6
|
%
|
|||||
Canada
|
177
|
|
|
—
|
|
|
11,892
|
|
|
(177
|
)
|
|
11,892
|
|
|
0.6
|
%
|
|||||
Rest of the world(b)
|
23,006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,006
|
|
|
1.2
|
%
|
|||||
Sub-total, non United States
|
279,717
|
|
|
1,348
|
|
|
416,982
|
|
|
(61,276
|
)
|
|
636,771
|
|
|
32.0
|
%
|
|||||
Worldwide including United States
|
87,606
|
|
|
3,653
|
|
|
49,212
|
|
|
(2,492
|
)
|
|
137,979
|
|
|
6.9
|
%
|
|||||
Marine and Aerospace(c)
|
242,782
|
|
|
—
|
|
|
403,935
|
|
|
(19,435
|
)
|
|
627,282
|
|
|
31.5
|
%
|
|||||
Total
|
$
|
1,089,443
|
|
|
$
|
11,796
|
|
|
$
|
981,073
|
|
|
$
|
(91,746
|
)
|
|
$
|
1,990,566
|
|
|
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.
|
|
Validus Re
|
|
Validus Re Americas, Ltd.
|
||||||||||||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||||||||
Total statutory capital and surplus
|
$
|
3,702,773
|
|
|
$
|
3,304,987
|
|
|
$
|
3,330,523
|
|
|
$
|
126,651
|
|
|
$
|
125,000
|
|
|
$
|
296,854
|
|
Total statutory capital
|
3,398,395
|
|
|
2,670,447
|
|
|
2,667,249
|
|
|
125,000
|
|
|
125,000
|
|
|
296,242
|
|
||||||
Statutory net income
|
389,243
|
|
|
101,995
|
|
|
1,216,083
|
|
|
1,651
|
|
|
31,916
|
|
|
99,258
|
|
||||||
Unrestricted net assets
|
826,247
|
|
|
832,631
|
|
|
894,240
|
|
|
—
|
|
|
74,214
|
|
|
488,010
|
|
|
TIBL
(a)
|
|
AlphaCat Reinsurance, Ltd.
|
||||||||||||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||||||||
Total statutory capital and surplus
|
$
|
530,049
|
|
|
$
|
457,374
|
|
|
$
|
430,763
|
|
|
$
|
134
|
|
|
$
|
133
|
|
|
$
|
123
|
|
Total statutory capital
|
62,731
|
|
|
62,731
|
|
|
62,731
|
|
|
120
|
|
|
120
|
|
|
120
|
|
||||||
Statutory net income
|
107,675
|
|
|
26,610
|
|
|
89,448
|
|
|
1
|
|
|
10
|
|
|
3
|
|
||||||
Unrestricted net assets
|
467,318
|
|
|
394,643
|
|
|
368,032
|
|
|
14
|
|
|
13
|
|
|
3
|
|
|
PaCRe, Ltd.
|
|
Flagstone Reassurance Suisse SA (Bermuda Branch)
(b)
|
||||||||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||||
Total statutory capital and surplus
|
$
|
485,936
|
|
|
n/a
|
|
n/a
|
|
$
|
1,394,138
|
|
|
n/a
|
|
n/a
|
Total statutory capital
|
500,100
|
|
|
n/a
|
|
n/a
|
|
1,342,216
|
|
|
n/a
|
|
n/a
|
||
Statutory net income
|
(14,164
|
)
|
|
n/a
|
|
n/a
|
|
(23,768
|
)
|
|
n/a
|
|
n/a
|
||
Unrestricted net assets
|
—
|
|
|
n/a
|
|
n/a
|
|
349,444
|
|
|
n/a
|
|
n/a
|
|
Mont Fort Re Ltd.
(b)
|
||||||
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
||
Total statutory capital and surplus
|
$
|
1,428
|
|
|
n/a
|
|
n/a
|
Total statutory capital
|
1,327
|
|
|
n/a
|
|
n/a
|
|
Statutory net income
|
(35
|
)
|
|
n/a
|
|
n/a
|
|
Unrestricted net assets
|
101
|
|
|
n/a
|
|
n/a
|
(a)
|
Unrestricted net assets are calculated using the criteria stated in The Act, however, TIBL is also subject to additional Lloyd's FAL requirements which restrict the amount of dividends to be paid to Validus Holdings, Ltd. The Company would need to apply to Lloyd's to obtain an unrestricted amount of net assets which is subject to passing a Lloyd's release test. This application occurs in the second quarter of the following year.
|
(b)
|
The Company assumed Flagstone Reassurance Suisse SA (Bermuda Branch) and Mont Fort Re, Ltd. as part of the Flagstone Acquisition, therefore, comparative information has been excluded.
|
|
Quarters Ended
|
||||||||||||||
|
December 31, 2012
|
|
September 30, 2012
|
|
June 30,
2012 |
|
March 31,
2012 |
||||||||
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
||||||||
Underwriting income
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
311,847
|
|
|
$
|
390,215
|
|
|
$
|
627,089
|
|
|
$
|
837,289
|
|
Reinsurance premiums ceded
|
(35,659
|
)
|
|
(45,743
|
)
|
|
(119,052
|
)
|
|
(107,052
|
)
|
||||
Net premiums written
|
276,188
|
|
|
344,472
|
|
|
508,037
|
|
|
730,237
|
|
||||
Change in unearned premiums
|
223,098
|
|
|
130,632
|
|
|
(60,410
|
)
|
|
(279,038
|
)
|
||||
Net premiums earned
|
499,286
|
|
|
475,104
|
|
|
447,627
|
|
|
451,199
|
|
||||
Underwriting deductions
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
458,310
|
|
|
155,455
|
|
|
153,692
|
|
|
231,989
|
|
||||
Policy acquisition costs
|
81,814
|
|
|
98,623
|
|
|
76,129
|
|
|
78,132
|
|
||||
General and administrative expenses
|
65,095
|
|
|
70,547
|
|
|
61,635
|
|
|
66,375
|
|
||||
Share compensation expenses
|
7,126
|
|
|
7,345
|
|
|
6,800
|
|
|
5,438
|
|
||||
Total underwriting deductions
|
612,345
|
|
|
331,970
|
|
|
298,256
|
|
|
381,934
|
|
||||
Underwriting (loss) income
|
$
|
(113,059
|
)
|
|
$
|
143,134
|
|
|
$
|
149,371
|
|
|
$
|
69,265
|
|
Net investment income
|
28,802
|
|
|
25,489
|
|
|
25,885
|
|
|
27,760
|
|
||||
Other income
|
187
|
|
|
7,324
|
|
|
5,994
|
|
|
8,891
|
|
||||
Finance expenses
|
(14,510
|
)
|
|
(9,362
|
)
|
|
(13,706
|
)
|
|
(16,279
|
)
|
||||
Operating (loss) income before taxes and (loss) income from operating affiliates
|
(98,580
|
)
|
|
166,585
|
|
|
167,544
|
|
|
89,637
|
|
||||
Tax (expense)
|
(615
|
)
|
|
(1,343
|
)
|
|
(404
|
)
|
|
(139
|
)
|
||||
(Loss) income from operating affiliates
|
$
|
(614
|
)
|
|
$
|
6,235
|
|
|
$
|
3,592
|
|
|
$
|
3,367
|
|
Net operating (loss) income
|
$
|
(99,809
|
)
|
|
$
|
171,477
|
|
|
$
|
170,732
|
|
|
$
|
92,865
|
|
Gain on bargain purchase, net of expenses (a)
|
21,485
|
|
|
(3,784
|
)
|
|
—
|
|
|
—
|
|
||||
Net realized (losses) gains on investments
|
(4,516
|
)
|
|
9,063
|
|
|
6,154
|
|
|
7,532
|
|
||||
Net unrealized (losses) gains on investments
|
(35,857
|
)
|
|
86,345
|
|
|
(53,574
|
)
|
|
20,671
|
|
||||
(Loss) from investment affiliate
|
(406
|
)
|
|
(160
|
)
|
|
(398
|
)
|
|
—
|
|
||||
Foreign exchange gains (losses)
|
1,181
|
|
|
1,103
|
|
|
(652
|
)
|
|
3,166
|
|
||||
Net (loss) income
|
$
|
(117,922
|
)
|
|
$
|
264,044
|
|
|
$
|
122,262
|
|
|
$
|
124,234
|
|
Net loss (income) attributable to noncontrolling interest
|
27,206
|
|
|
(56,746
|
)
|
|
45,360
|
|
|
—
|
|
||||
Net (loss) income (attributable) available to Validus
|
$
|
(90,716
|
)
|
|
$
|
207,298
|
|
|
$
|
167,622
|
|
|
$
|
124,234
|
|
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares and common share equivalents outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
97,688,338
|
|
|
93,368,775
|
|
|
98,254,186
|
|
|
99,425,140
|
|
||||
Diluted
|
97,688,338
|
|
|
98,236,490
|
|
|
103,667,967
|
|
|
105,096,090
|
|
||||
Basic (loss) earnings per share (attributable) available to common shareholders
|
$
|
(0.94
|
)
|
|
$
|
2.20
|
|
|
$
|
1.69
|
|
|
$
|
1.23
|
|
Diluted (loss) earnings per share (attributable) available to common shareholders
|
$
|
(0.94
|
)
|
|
$
|
2.11
|
|
|
$
|
1.62
|
|
|
$
|
1.18
|
|
Selected ratios:
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
91.8
|
%
|
|
32.7
|
%
|
|
34.3
|
%
|
|
51.4
|
%
|
||||
Expense ratio
|
30.9
|
%
|
|
37.2
|
%
|
|
32.3
|
%
|
|
33.2
|
%
|
||||
Combined ratio
|
122.7
|
%
|
|
69.9
|
%
|
|
66.6
|
%
|
|
84.6
|
%
|
(a)
|
The gain on bargain purchase, net of expenses, arose from the acquisition of Flagstone Reinsurance Holdings S.A. on November 30, 2012 and is net of transaction related expenses which included legal, financial advisory, audit related services and termination expenses.
|
|
Quarters Ended
|
||||||||||||||
|
December 31,
2011 |
|
September 30,
2011 |
|
June 30,
2011 |
|
March 31,
2011 |
||||||||
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
||||||||
Underwriting income
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
278,279
|
|
|
$
|
391,129
|
|
|
$
|
605,387
|
|
|
$
|
849,896
|
|
Reinsurance premiums ceded
|
(16,489
|
)
|
|
(30,586
|
)
|
|
(132,346
|
)
|
|
(109,820
|
)
|
||||
Net premiums written
|
261,790
|
|
|
360,543
|
|
|
473,041
|
|
|
740,076
|
|
||||
Change in unearned premiums
|
226,556
|
|
|
98,081
|
|
|
(47,401
|
)
|
|
(310,543
|
)
|
||||
Net premiums earned
|
488,346
|
|
|
458,624
|
|
|
425,640
|
|
|
429,533
|
|
||||
Underwriting deductions
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
334,829
|
|
|
226,067
|
|
|
207,307
|
|
|
476,198
|
|
||||
Policy acquisition costs
|
81,253
|
|
|
77,405
|
|
|
78,230
|
|
|
77,296
|
|
||||
General and administrative expenses
|
52,253
|
|
|
35,926
|
|
|
60,841
|
|
|
48,477
|
|
||||
Share compensation expenses
|
7,237
|
|
|
7,382
|
|
|
7,628
|
|
|
12,049
|
|
||||
Total underwriting deductions
|
475,572
|
|
|
346,780
|
|
|
354,006
|
|
|
614,020
|
|
||||
Underwriting income (loss)
|
$
|
12,774
|
|
|
$
|
111,844
|
|
|
$
|
71,634
|
|
|
$
|
(184,487
|
)
|
Net investment income
|
28,080
|
|
|
27,747
|
|
|
26,494
|
|
|
29,975
|
|
||||
Other income
|
3,517
|
|
|
—
|
|
|
595
|
|
|
1,606
|
|
||||
Finance expenses
|
(13,520
|
)
|
|
(10,935
|
)
|
|
(16,361
|
)
|
|
(14,001
|
)
|
||||
Operating income (loss) before taxes
|
30,851
|
|
|
128,656
|
|
|
82,362
|
|
|
(166,907
|
)
|
||||
Tax benefit (expense)
|
226
|
|
|
(2,538
|
)
|
|
29
|
|
|
1,459
|
|
||||
Net operating income (loss)
|
$
|
31,077
|
|
|
$
|
126,118
|
|
|
$
|
82,391
|
|
|
$
|
(165,448
|
)
|
Net realized gains on investments
|
5,355
|
|
|
5,246
|
|
|
11,552
|
|
|
6,379
|
|
||||
Net unrealized gains (losses) on investments
|
2,159
|
|
|
(27,848
|
)
|
|
18,526
|
|
|
(12,828
|
)
|
||||
Foreign exchange gains (losses)
|
266
|
|
|
(19,932
|
)
|
|
(1,991
|
)
|
|
(467
|
)
|
||||
Transaction expenses (a)
|
(3,850
|
)
|
|
(13,583
|
)
|
|
—
|
|
|
—
|
|
||||
Net income (loss)
|
$
|
35,007
|
|
|
$
|
70,001
|
|
|
$
|
110,478
|
|
|
$
|
(172,364
|
)
|
Net (income) attributable to noncontrolling interest
|
(7,683
|
)
|
|
(13,516
|
)
|
|
(594
|
)
|
|
—
|
|
||||
Net income (loss) available (attributable) to Validus
|
$
|
27,324
|
|
|
$
|
56,485
|
|
|
$
|
109,884
|
|
|
$
|
(172,364
|
)
|
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares and common share equivalents outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
99,137,696
|
|
|
98,961,795
|
|
|
98,385,924
|
|
|
97,944,340
|
|
||||
Diluted
|
101,324,291
|
|
|
100,823,335
|
|
|
104,562,450
|
|
|
97,944,340
|
|
||||
Basic earnings (loss) per share available (attributable) to common shareholders
|
$
|
0.26
|
|
|
$
|
0.55
|
|
|
$
|
1.10
|
|
|
$
|
(1.78
|
)
|
Diluted earnings (loss) per share available (attributable) to common shareholders
|
$
|
0.25
|
|
|
$
|
0.54
|
|
|
$
|
1.05
|
|
|
$
|
(1.78
|
)
|
Selected Ratios:
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
68.6
|
%
|
|
49.3
|
%
|
|
48.7
|
%
|
|
110.9
|
%
|
||||
Expense ratio
|
28.8
|
%
|
|
26.3
|
%
|
|
34.5
|
%
|
|
32.1
|
%
|
||||
Combined ratio
|
97.4
|
%
|
|
75.6
|
%
|
|
83.2
|
%
|
|
143.0
|
%
|
(a)
|
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.
|
|
Quarters Ended
|
||||||||||||||
|
December 31, 2010
|
|
September 30, 2010
|
|
June 30,
2010 |
|
March 31,
2010 |
||||||||
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
||||||||
Underwriting income
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
258,731
|
|
|
$
|
344,040
|
|
|
$
|
516,861
|
|
|
$
|
870,934
|
|
Reinsurance premiums ceded
|
(35,376
|
)
|
|
(35,641
|
)
|
|
(67,726
|
)
|
|
(90,739
|
)
|
||||
Net premiums written
|
223,355
|
|
|
308,399
|
|
|
449,135
|
|
|
780,195
|
|
||||
Change in unearned premiums
|
209,456
|
|
|
124,275
|
|
|
(11,191
|
)
|
|
(322,501
|
)
|
||||
Net premiums earned
|
432,811
|
|
|
432,674
|
|
|
437,944
|
|
|
457,694
|
|
||||
Underwriting deductions
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
155,225
|
|
|
158,936
|
|
|
194,894
|
|
|
478,531
|
|
||||
Policy acquisition costs
|
75,523
|
|
|
67,074
|
|
|
74,126
|
|
|
76,176
|
|
||||
General and administrative expenses
|
54,511
|
|
|
48,831
|
|
|
52,379
|
|
|
53,569
|
|
||||
Share compensation expenses
|
7,871
|
|
|
7,618
|
|
|
6,846
|
|
|
6,576
|
|
||||
Total underwriting deductions
|
293,130
|
|
|
282,459
|
|
|
328,245
|
|
|
614,852
|
|
||||
Underwriting income (loss)
|
$
|
139,681
|
|
|
$
|
150,215
|
|
|
$
|
109,699
|
|
|
$
|
(157,158
|
)
|
Net investment income
|
30,962
|
|
|
34,033
|
|
|
34,809
|
|
|
34,299
|
|
||||
Other income
|
552
|
|
|
1,082
|
|
|
2,697
|
|
|
888
|
|
||||
Finance expenses
|
(13,786
|
)
|
|
(13,715
|
)
|
|
(13,218
|
)
|
|
(15,151
|
)
|
||||
Operating income (loss) before taxes
|
157,409
|
|
|
171,615
|
|
|
133,987
|
|
|
(137,122
|
)
|
||||
Tax (expense) benefit
|
(1,058
|
)
|
|
1,422
|
|
|
(4,187
|
)
|
|
697
|
|
||||
Net operating income (loss)
|
$
|
156,351
|
|
|
$
|
173,037
|
|
|
$
|
129,800
|
|
|
$
|
(136,425
|
)
|
Net realized (losses) gains on investments
|
(14,399
|
)
|
|
23,058
|
|
|
12,441
|
|
|
11,398
|
|
||||
Net unrealized (losses) gains on investments
|
(42,689
|
)
|
|
31,588
|
|
|
41,640
|
|
|
15,413
|
|
||||
Foreign exchange gains (losses)
|
3,424
|
|
|
10,790
|
|
|
(4,099
|
)
|
|
(8,764
|
)
|
||||
Net income (loss)
|
$
|
102,687
|
|
|
$
|
238,473
|
|
|
$
|
179,782
|
|
|
$
|
(118,378
|
)
|
Net (income) attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income (loss) available (attributable) to Validus
|
$
|
102,687
|
|
|
$
|
238,473
|
|
|
$
|
179,782
|
|
|
$
|
(118,378
|
)
|
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares and common share equivalents outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
105,828,739
|
|
|
110,601,888
|
|
|
121,009,553
|
|
|
126,633,277
|
|
||||
Diluted
|
111,316,736
|
|
|
114,842,742
|
|
|
125,152,300
|
|
|
126,633,277
|
|
||||
Basic earnings (loss) per share available (attributable) to common shareholders
|
$
|
0.95
|
|
|
$
|
2.14
|
|
|
$
|
1.47
|
|
|
$
|
(0.95
|
)
|
Diluted earnings (loss) per share available (attributable) to common shareholders
|
$
|
0.92
|
|
|
$
|
2.08
|
|
|
$
|
1.44
|
|
|
$
|
(0.95
|
)
|
Selected Ratios:
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
35.9
|
%
|
|
36.7
|
%
|
|
44.5
|
%
|
|
104.6
|
%
|
||||
Expense ratio
|
31.8
|
%
|
|
28.5
|
%
|
|
30.4
|
%
|
|
29.7
|
%
|
||||
Combined ratio
|
67.7
|
%
|
|
65.2
|
%
|
|
74.9
|
%
|
|
134.3
|
%
|
|
Amortized
cost
|
|
Fair
value
|
|
Amount at which
shown on the
Balance Sheet
|
||||||
U.S. Government and Government Agency
|
$
|
1,091,357
|
|
|
$
|
1,099,230
|
|
|
$
|
1,099,230
|
|
Non-U.S. Government and Government Agency
|
295,602
|
|
|
302,279
|
|
|
302,279
|
|
|||
States, municipalities, political subdivision
|
41,286
|
|
|
42,063
|
|
|
42,063
|
|
|||
Agency residential mortgage-backed securities
|
375,368
|
|
|
388,874
|
|
|
388,874
|
|
|||
Non-Agency residential mortgage-backed securities
|
106,536
|
|
|
106,456
|
|
|
106,456
|
|
|||
U.S. corporate
|
1,189,173
|
|
|
1,210,173
|
|
|
1,210,173
|
|
|||
Non-U.S. corporate
|
582,115
|
|
|
593,265
|
|
|
593,265
|
|
|||
Bank loans
|
663,217
|
|
|
673,383
|
|
|
673,383
|
|
|||
Catastrophe bonds
|
56,757
|
|
|
56,947
|
|
|
56,947
|
|
|||
Asset-backed securities
|
607,103
|
|
|
612,664
|
|
|
612,664
|
|
|||
Total fixed maturities
|
5,008,514
|
|
|
5,085,334
|
|
|
5,085,334
|
|
|||
Total short-term investments
|
1,112,929
|
|
|
1,114,250
|
|
|
1,114,250
|
|
|||
Total other investments
|
583,068
|
|
|
564,448
|
|
|
564,448
|
|
|||
Total
|
$
|
6,704,511
|
|
|
$
|
6,764,032
|
|
|
$
|
6,764,032
|
|
|
December 31, 2012
|
|
December 31, 2011
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
19,666
|
|
|
$
|
4,944
|
|
Investment in subsidiaries on an equity basis
|
4,587,611
|
|
|
4,101,389
|
|
||
Balances due from subsidiaries
|
31,250
|
|
|
—
|
|
||
Other assets
|
4,632
|
|
|
4,747
|
|
||
Total assets
|
$
|
4,643,159
|
|
|
$
|
4,111,080
|
|
LIABILITIES
|
|
|
|
||||
Balances due to subsidiaries
|
$
|
—
|
|
|
$
|
45,808
|
|
Accounts payable and accrued expenses
|
25,242
|
|
|
19,865
|
|
||
Senior notes payable
|
247,090
|
|
|
246,982
|
|
||
Debentures payable
|
350,000
|
|
|
350,000
|
|
||
Total liabilities
|
622,332
|
|
|
662,655
|
|
||
Commitments and contingent liabilities
|
|
|
|
||||
SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2012—152,698,191; 2011—134,503,065; Outstanding: 2012—107,921,259; 2011—99,471,080)
|
26,722
|
|
|
23,538
|
|
||
Treasury shares (2012—44,776,932; 2011—35,031,985)
|
(7,836
|
)
|
|
(6,131
|
)
|
||
Additional paid-in capital
|
2,160,478
|
|
|
1,893,890
|
|
||
Accumulated other comprehensive (loss)
|
(2,953
|
)
|
|
(6,601
|
)
|
||
Retained earnings
|
1,844,416
|
|
|
1,543,729
|
|
||
Total shareholders’ equity
|
4,020,827
|
|
|
$
|
3,448,425
|
|
|
Total liabilities and shareholders’ equity
|
$
|
4,643,159
|
|
|
$
|
4,111,080
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
Revenues
|
|
|
|
|
|
||||||
Net investment income
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
2
|
|
Other income
|
—
|
|
|
5,321
|
|
|
—
|
|
|||
Foreign exchange (losses) gains
|
(469
|
)
|
|
158
|
|
|
154
|
|
|||
Total revenues
|
(466
|
)
|
|
5,485
|
|
|
156
|
|
|||
Expenses
|
|
|
|
|
|
||||||
General and administrative expenses
|
66,576
|
|
|
44,276
|
|
|
37,601
|
|
|||
Share compensation expenses
|
8,503
|
|
|
11,598
|
|
|
8,899
|
|
|||
Finance expenses
|
45,203
|
|
|
49,530
|
|
|
52,485
|
|
|||
Transaction expenses
|
—
|
|
|
16,285
|
|
|
—
|
|
|||
Total expenses
|
120,282
|
|
|
121,689
|
|
|
98,985
|
|
|||
(Loss) before equity in net earnings of subsidiaries
|
(120,748
|
)
|
|
(116,204
|
)
|
|
(98,829
|
)
|
|||
Equity in net earnings of subsidiaries
|
529,186
|
|
|
137,533
|
|
|
501,393
|
|
|||
Net income
|
$
|
408,438
|
|
|
$
|
21,329
|
|
|
$
|
402,564
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|
Year Ended December 31, 2010
|
||||||
Cash flows provided by (used in) operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
408,438
|
|
|
$
|
21,329
|
|
|
$
|
402,564
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Equity in net earnings of subsidiary
|
(529,186
|
)
|
|
(137,533
|
)
|
|
(501,393
|
)
|
|||
Dividends received from subsidiaries
|
734,000
|
|
|
200,000
|
|
|
760,000
|
|
|||
Share compensation expenses
|
8,503
|
|
|
11,598
|
|
|
8,899
|
|
|||
Amortization of discount on senior notes
|
108
|
|
|
108
|
|
|
81
|
|
|||
Change in:
|
|
|
|
|
|
||||||
Other assets
|
115
|
|
|
1,058
|
|
|
(2,203
|
)
|
|||
Balances due from subsidiaries
|
(35,522
|
)
|
|
—
|
|
|
5,336
|
|
|||
Balances due to subsidiaries
|
(45,808
|
)
|
|
(729
|
)
|
|
46,537
|
|
|||
Accounts payable and accrued expenses
|
7,640
|
|
|
(4,321
|
)
|
|
3,597
|
|
|||
Net cash provided by operating activities
|
548,288
|
|
|
91,510
|
|
|
723,418
|
|
|||
Cash flows (used in) investing activities
|
|
|
|
|
|
||||||
Investment in subsidiaries
|
(166,582
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) investing activities
|
(166,582
|
)
|
|
—
|
|
|
—
|
|
|||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
||||||
Net proceeds on issuance of senior notes
|
—
|
|
|
—
|
|
|
246,793
|
|
|||
Issuance of common shares, net
|
3,015
|
|
|
4,885
|
|
|
7,966
|
|
|||
Purchases of common shares under repurchase program
|
(259,962
|
)
|
|
(5,995
|
)
|
|
(856,926
|
)
|
|||
Dividends paid
|
(110,037
|
)
|
|
(107,691
|
)
|
|
(105,662
|
)
|
|||
Net cash (used in) financing activities
|
(366,984
|
)
|
|
(108,801
|
)
|
|
(707,829
|
)
|
|||
Net increase (decrease) in cash
|
14,722
|
|
|
(17,291
|
)
|
|
15,589
|
|
|||
Cash and cash equivalents—beginning of period
|
4,944
|
|
|
22,235
|
|
|
6,646
|
|
|||
Cash and cash equivalents—end of period
|
$
|
19,666
|
|
|
$
|
4,944
|
|
|
$
|
22,235
|
|
|
As at and for the year ended December 31, 2012
|
||||||||||||||||||||||||||||||||||
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
|
|
Losses
and Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
|
|
Net
Premiums
Written
|
||||||||||||||||||
Validus Re
|
$
|
75,138
|
|
|
$
|
2,122,895
|
|
|
$
|
414,343
|
|
|
$
|
1,023,271
|
|
|
$
|
88,727
|
|
|
$
|
575,416
|
|
|
$
|
154,362
|
|
|
$
|
70,811
|
|
|
$
|
987,381
|
|
AlphaCat
|
713
|
|
|
5,000
|
|
|
6,992
|
|
|
17,666
|
|
|
3,748
|
|
|
—
|
|
|
1,774
|
|
|
7,811
|
|
|
21,603
|
|
|||||||||
Talbot
|
79,747
|
|
|
1,480,307
|
|
|
494,883
|
|
|
832,279
|
|
|
21,310
|
|
|
424,030
|
|
|
183,926
|
|
|
141,070
|
|
|
849,950
|
|
|||||||||
Corporate & Eliminations
|
(9,010
|
)
|
|
(90,629
|
)
|
|
(21,856
|
)
|
|
—
|
|
|
(5,849
|
)
|
|
—
|
|
|
(5,364
|
)
|
|
70,669
|
|
|
—
|
|
|||||||||
Total
|
$
|
146,588
|
|
|
$
|
3,517,573
|
|
|
$
|
894,362
|
|
|
$
|
1,873,216
|
|
|
$
|
107,936
|
|
|
$
|
999,446
|
|
|
$
|
334,698
|
|
|
$
|
290,361
|
|
|
$
|
1,858,934
|
|
|
As at and for the year ended December 31, 2011
|
||||||||||||||||||||||||||||||||||
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
|
|
Losses
and Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
|
|
Net
Premiums
Written
|
||||||||||||||||||
Validus Re
|
$
|
57,911
|
|
|
$
|
1,350,849
|
|
|
$
|
318,092
|
|
|
$
|
965,925
|
|
|
$
|
93,248
|
|
|
$
|
749,305
|
|
|
$
|
154,582
|
|
|
$
|
53,972
|
|
|
$
|
963,775
|
|
AlphaCat
|
314
|
|
|
10,000
|
|
|
3,055
|
|
|
65,966
|
|
|
3,245
|
|
|
10,000
|
|
|
7,946
|
|
|
11,036
|
|
|
75,727
|
|
|||||||||
Talbot
|
74,345
|
|
|
1,377,561
|
|
|
481,261
|
|
|
770,252
|
|
|
25,380
|
|
|
485,096
|
|
|
157,334
|
|
|
120,654
|
|
|
795,948
|
|
|||||||||
Corporate & Eliminations
|
(11,065
|
)
|
|
(107,267
|
)
|
|
(30,026
|
)
|
|
—
|
|
|
(9,577
|
)
|
|
—
|
|
|
(5,678
|
)
|
|
46,131
|
|
|
—
|
|
|||||||||
Total
|
$
|
121,505
|
|
|
$
|
2,631,143
|
|
|
$
|
772,382
|
|
|
$
|
1,802,143
|
|
|
$
|
112,296
|
|
|
$
|
1,244,401
|
|
|
$
|
314,184
|
|
|
$
|
231,793
|
|
|
$
|
1,835,450
|
|
|
As at and for the year ended December 31, 2010
|
||||||||||||||||||||||||||||||||||
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
|
|
Losses
and Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
|
|
Net
Premiums
Written
|
||||||||||||||||||
Validus Re
|
$
|
57,711
|
|
|
$
|
998,165
|
|
|
$
|
296,552
|
|
|
$
|
1,040,118
|
|
|
$
|
108,170
|
|
|
$
|
601,610
|
|
|
$
|
159,527
|
|
|
$
|
52,794
|
|
|
$
|
1,026,296
|
|
AlphaCat
|
271
|
|
|
—
|
|
|
2,698
|
|
|
11,082
|
|
|
5,858
|
|
|
—
|
|
|
1,072
|
|
|
5,921
|
|
|
11,796
|
|
|||||||||
Talbot
|
74,846
|
|
|
1,191,548
|
|
|
454,927
|
|
|
709,923
|
|
|
29,287
|
|
|
385,976
|
|
|
143,769
|
|
|
114,480
|
|
|
722,992
|
|
|||||||||
Corporate & Eliminations
|
(8,931
|
)
|
|
(153,740
|
)
|
|
(25,661
|
)
|
|
—
|
|
|
(9,212
|
)
|
|
—
|
|
|
(11,469
|
)
|
|
65,006
|
|
|
—
|
|
|||||||||
Total
|
$
|
123,897
|
|
|
$
|
2,035,973
|
|
|
$
|
728,516
|
|
|
$
|
1,761,123
|
|
|
$
|
134,103
|
|
|
$
|
987,586
|
|
|
$
|
292,899
|
|
|
$
|
238,201
|
|
|
$
|
1,761,084
|
|
|
Gross
|
|
Ceded to
other companies
|
|
Assumed
from other
companies
|
|
Net amount
|
|
Percentage
of amount
assumed to net
|
|||||||||
Year Ended December 31, 2012
|
$
|
550,491
|
|
|
$
|
307,506
|
|
|
$
|
1,615,949
|
|
|
$
|
1,858,934
|
|
|
87
|
%
|
Year Ended December 31, 2011
|
510,200
|
|
|
289,241
|
|
|
1,614,491
|
|
|
1,835,450
|
|
|
88
|
%
|
||||
Year Ended December 31, 2010
|
460,337
|
|
|
229,482
|
|
|
1,530,229
|
|
|
1,761,084
|
|
|
87
|
%
|
Affiliation with
registrant
|
|
Deferred
acquisition
costs
|
|
Reserves for
losses
and loss
expenses
|
|
Reserves for
unearned
premiums
|
|
Net
earned
premiums
|
|
Net
investment
income
|
|
Losses and loss
expenses
incurred related to
|
|
Net paid
losses
and loss
expenses
|
|
Amortization of
deferred
acquisition
costs
|
|
Net
premiums
written
|
||||||||||||||||||||||
Current
year
|
|
Prior
year
|
||||||||||||||||||||||||||||||||||||||
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
2012
|
|
$
|
146,588
|
|
|
$
|
3,517,573
|
|
|
$
|
894,362
|
|
|
$
|
1,873,216
|
|
|
$
|
107,936
|
|
|
$
|
1,174,415
|
|
|
$
|
(174,969
|
)
|
|
$
|
836,020
|
|
|
$
|
334,698
|
|
|
$
|
1,858,934
|
|
2011
|
|
121,505
|
|
|
2,631,143
|
|
|
772,382
|
|
|
1,802,143
|
|
|
112,296
|
|
|
1,400,520
|
|
|
(156,119
|
)
|
|
743,026
|
|
|
314,184
|
|
|
1,835,450
|
|
||||||||||
2010
|
|
123,897
|
|
|
2,035,973
|
|
|
728,516
|
|
|
1,761,123
|
|
|
134,103
|
|
|
1,144,196
|
|
|
(156,610
|
)
|
|
673,422
|
|
|
292,899
|
|
|
1,761,084
|
|
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
|
(c)
|
benefits, including an annual pension contribution (or equivalent) equal to 10% of Base Salary, under any plan or arrangement available generally for senior executive officers of the Parent (excluding any benefits provided exclusively on account of a senior executives officer's employment in Bermuda), subject to and consistent with the terms and conditions and overall administration of such plans as set forth from time to time in the applicable plan documents; and
|
(d)
|
other fringe benefits customarily provided to similarly situated senior executives of the Parent or the Company residing in the United States.
|
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
|
|
|
Exhibit 21
|
|||
|
|
|
|
|
|
Validus Holdings, Ltd.
|
|||||
List of Subsidiaries
|
|||||
|
|
|
|
|
|
|
|
|
|
Ownership
Interest Held
By Immediate Parent
100% unless otherwise indicated
|
|
|
|
|
|
||
Subsidiary
|
|
Jurisdiction
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Validus Holdings, Ltd.
|
|
Bermuda
|
|
|
|
Underwriting Risk Services Holdings (Bermuda) Ltd.
|
|
Bermuda
|
|
|
|
Validus Reinsurance, Ltd.
|
|
Bermuda
|
|
|
|
Validus Amalgamation Subsidiary Ltd.
|
|
Bermuda
|
|
|
|
Validus Re Europe Limited
|
|
Ireland
|
|
|
|
Validus Re Chile S.A.
|
|
Chile
|
|
99%
|
|
Underwriting Risk Services S.A.
|
|
Chile
|
|
99%
|
|
Validus Holdings (UK) Ltd
|
|
United Kingdom
|
|
|
|
Validus Specialty, Inc.
|
|
Delaware
|
|
|
|
Validus Reaseguros, Inc.
|
|
Florida
|
|
|
|
Validus Services, Inc.
|
|
Delaware
|
|
|
|
Validus Re Americas, Ltd.
|
|
Bermuda
|
|
|
|
Validus Re Americas (New Jersey), Inc.
|
|
New Jersey
|
|
|
|
PaCRe, Ltd.
|
|
Bermuda
|
|
10%
|
|
Validus Services (Bermuda), Ltd.
|
|
Bermuda
|
|
|
|
Validus Research, Inc.
|
|
Ontario
|
|
|
|
Validus America, Inc.
|
|
Delaware
|
|
|
|
Validus Ventures Ltd
|
|
Bermuda
|
|
|
|
AlphaCat Managers, Ltd
|
|
Bermuda
|
|
|
|
AlphaCat Advantage Fund, Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Reinsurance Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat High Return Fund Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Diversified Fund Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Master Fund Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Prima Fund Ltd.
|
|
Bermuda
|
|
|
|
Validus UPS, Ltd
|
|
Bermuda
|
|
|
|
Flagstone Reinsurance (Luxembourg), SARL
|
|
Luxembourg
|
|
|
|
Flagstone (Gibraltar) Limited
|
|
Gibraltar
|
|
|
|
Flagstone (Bermuda) Holdings Limited
|
|
Bermuda
|
|
|
|
Flagstone Services (Isle of Man) Limited
|
|
Isle of Man
|
|
|
|
Flagstone Management Services (Halifax) Limited
|
|
Nova Scotia
|
|
|
|
IAL Leasing Ltd.
|
|
Bermuda
|
|
|
|
Mont Fort Re Limited
|
|
Bermuda
|
|
|
|
Flagstone (Mauritius) Limited
|
|
Mauritius
|
|
|
|
Flagstone Underwriting Support Services (India) Private Limited
|
|
India
|
|
99%
|
|
Flagstone Finance S.A.
|
|
Luxembourg
|
|
|
|
Flagstone Reassurance Suisse S.A.
|
|
Switzerland
|
|
|
|
Flagstone Alliance Insurance and Reinsurance PLC
|
|
Cyprus
|
|
|
|
Alliance Insurance Agents
|
|
Cyprus
|
|
|
|
|
|
|
|
Ownership
Interest Held
By Immediate Parent
100% unless otherwise indicated
|
|
|
|
|
|
||
Subsidiary
|
|
Jurisdiction
|
|
||
|
|
|
|
|
|
L.P. Holdings Limited
|
|
Cyprus
|
|
|
|
Limassol Power Plant Limited
|
|
Cyprus
|
|
|
|
Flagstone Capital Management Luxembourg SICAF-FIS SA
|
|
Luxembourg
|
|
|
|
Flagstone Reinsurance Africa Limited
|
|
South Africa
|
|
|
|
Flagstone Management, S.A.
|
|
Switzerland
|
|
|
|
Talbot Holdings Ltd.
|
|
Bermuda
|
|
|
|
Talbot Capital Ltd.
|
|
Bermuda
|
|
|
|
Talbot 2002 Underwriting Capital, Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Holdings Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Services, Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Risk Services, Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Services (US), Ltd.
|
|
Delaware
|
|
|
|
Talbot Risk Services Pte, Ltd.
|
|
Singapore
|
|
|
|
Talbot Underwriting (MENA), Ltd.
|
|
Dubai
|
|
|
|
Talbot Risk Services (Labuan) Pte, Ltd.
|
|
Labuan
|
|
|
|
Talbot Insurance (Bermuda) Ltd.
|
|
Bermuda
|
|
|
|
Talbot Underwriting Capital Ltd.
|
|
United Kingdom
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K 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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/s/ EDWARD J. NOONAN
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Edward J. Noonan
Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of Validus Holdings, Ltd.;
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2.
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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;
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3.
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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
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(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
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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.
|
|
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/s/ JOSEPH E. (JEFF) CONSOLINO
|
|
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Joseph E. (Jeff) Consolino
President and Chief Financial Officer
|
|
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/s/ EDWARD J. NOONAN
|
|
|
Edward J. Noonan
Chief Executive Officer
Validus Holdings, Ltd.
|
|
|
/s/ JOSEPH E. (JEFF) CONSOLINO
|
|
|
Joseph E. (Jeff) Consolino
President and Chief Financial Officer
Validus Holdings, Ltd.
|