|
BERMUDA
|
|
98-0501001
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
|
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
|
|
||
Fixed maturities, at fair value (amortized cost: 2015—$5,581,846; 2014—$5,534,494)
|
$
|
5,578,856
|
|
|
$
|
5,532,731
|
|
Short-term investments, at fair value (amortized cost: 2015—$1,661,705; 2014—$1,051,222)
|
1,661,687
|
|
|
1,051,074
|
|
||
Other investments, at fair value (cost: 2015—$864,651; 2014—$879,176)
|
817,374
|
|
|
813,011
|
|
||
Cash and cash equivalents
|
408,485
|
|
|
577,240
|
|
||
Restricted cash
|
74,002
|
|
|
173,003
|
|
||
Total investments and cash
|
8,540,404
|
|
|
8,147,059
|
|
||
Investments in affiliates
|
347,962
|
|
|
261,483
|
|
||
Premiums receivable
|
1,062,654
|
|
|
707,647
|
|
||
Deferred acquisition costs
|
225,065
|
|
|
161,295
|
|
||
Prepaid reinsurance premiums
|
125,547
|
|
|
81,983
|
|
||
Securities lending collateral
|
6,461
|
|
|
470
|
|
||
Loss reserves recoverable
|
385,212
|
|
|
377,466
|
|
||
Paid losses recoverable
|
21,681
|
|
|
38,078
|
|
||
Income taxes recoverable
|
15,870
|
|
|
—
|
|
||
Deferred tax asset
|
22,352
|
|
|
23,821
|
|
||
Receivable for investments sold
|
15,055
|
|
|
18,318
|
|
||
Intangible assets
|
122,676
|
|
|
126,924
|
|
||
Goodwill
|
196,758
|
|
|
195,897
|
|
||
Accrued investment income
|
23,755
|
|
|
24,865
|
|
||
Other assets
|
124,511
|
|
|
164,633
|
|
||
Total assets
|
$
|
11,235,963
|
|
|
$
|
10,329,939
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Reserve for losses and loss expenses
|
$
|
3,169,334
|
|
|
$
|
3,234,394
|
|
Unearned premiums
|
1,281,319
|
|
|
990,564
|
|
||
Reinsurance balances payable
|
90,838
|
|
|
127,128
|
|
||
Securities lending payable
|
6,927
|
|
|
936
|
|
||
Deferred tax liability
|
8,921
|
|
|
5,541
|
|
||
Payable for investments purchased
|
118,164
|
|
|
68,574
|
|
||
Accounts payable and accrued expenses
|
248,834
|
|
|
318,245
|
|
||
Notes payable to AlphaCat investors
|
1,443,198
|
|
|
671,465
|
|
||
Senior notes payable
|
247,387
|
|
|
247,306
|
|
||
Debentures payable
|
538,054
|
|
|
539,277
|
|
||
Total liabilities
|
$
|
7,152,976
|
|
|
$
|
6,203,430
|
|
|
|
|
|
||||
Commitments and contingent liabilities
|
|
|
|
|
|
||
Redeemable noncontrolling interest
|
—
|
|
|
79,956
|
|
||
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2015—158,434,541; 2014—155,554,224; Outstanding: 2015—81,997,891; 2014—83,869,845)
|
$
|
27,726
|
|
|
$
|
27,222
|
|
Treasury shares (2015—76,436,650; 2014—71,684,379)
|
(13,376
|
)
|
|
(12,545
|
)
|
||
Additional paid-in-capital
|
1,048,917
|
|
|
1,207,493
|
|
||
Accumulated other comprehensive loss
|
(10,869
|
)
|
|
(8,556
|
)
|
||
Retained earnings
|
2,592,162
|
|
|
2,374,344
|
|
||
Total shareholders’ equity available to Validus
|
3,644,560
|
|
|
3,587,958
|
|
||
Noncontrolling interest
|
438,427
|
|
|
458,595
|
|
||
Total shareholders’ equity
|
$
|
4,082,987
|
|
|
$
|
4,046,553
|
|
|
|
|
|
||||
Total liabilities, noncontrolling interests and shareholders’ equity
|
$
|
11,235,963
|
|
|
$
|
10,329,939
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
401,681
|
|
|
$
|
358,974
|
|
|
$
|
2,248,147
|
|
|
$
|
2,026,639
|
|
Reinsurance premiums ceded
|
(48,425
|
)
|
|
(30,137
|
)
|
|
(294,161
|
)
|
|
(275,610
|
)
|
||||
Net premiums written
|
353,256
|
|
|
328,837
|
|
|
1,953,986
|
|
|
1,751,029
|
|
||||
Change in unearned premiums
|
202,203
|
|
|
165,859
|
|
|
(247,191
|
)
|
|
(307,373
|
)
|
||||
Net premiums earned
|
555,459
|
|
|
494,696
|
|
|
1,706,795
|
|
|
1,443,656
|
|
||||
Net investment income
|
31,524
|
|
|
25,261
|
|
|
96,153
|
|
|
69,909
|
|
||||
Net realized (losses) gains on investments
|
(41,906
|
)
|
|
4,595
|
|
|
(35,493
|
)
|
|
16,193
|
|
||||
Change in net unrealized (losses) gains on investments
|
(34,908
|
)
|
|
(84,974
|
)
|
|
19,766
|
|
|
16,146
|
|
||||
Income from investment affiliate
|
2,482
|
|
|
1,754
|
|
|
5,542
|
|
|
7,881
|
|
||||
Other insurance related income and other (loss)
|
8,187
|
|
|
(4,080
|
)
|
|
15,559
|
|
|
14,985
|
|
||||
Foreign exchange losses
|
(2,274
|
)
|
|
(11,441
|
)
|
|
(9,061
|
)
|
|
(14,761
|
)
|
||||
Total revenues
|
518,564
|
|
|
425,811
|
|
|
1,799,261
|
|
|
1,554,009
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
258,258
|
|
|
224,125
|
|
|
765,333
|
|
|
545,541
|
|
||||
Policy acquisition costs
|
105,091
|
|
|
86,404
|
|
|
308,152
|
|
|
251,006
|
|
||||
General and administrative expenses
|
95,999
|
|
|
83,319
|
|
|
263,990
|
|
|
231,606
|
|
||||
Share compensation expenses
|
9,983
|
|
|
8,764
|
|
|
28,279
|
|
|
24,252
|
|
||||
Finance expenses
|
17,498
|
|
|
15,354
|
|
|
55,085
|
|
|
47,380
|
|
||||
Transaction expenses
|
—
|
|
|
149
|
|
|
—
|
|
|
3,401
|
|
||||
Total expenses
|
486,829
|
|
|
418,115
|
|
|
1,420,839
|
|
|
1,103,186
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before taxes, income from operating affiliates and (income) attributable to AlphaCat investors
|
31,735
|
|
|
7,696
|
|
|
378,422
|
|
|
450,823
|
|
||||
Tax (expense) benefit
|
(2,018
|
)
|
|
953
|
|
|
(7,132
|
)
|
|
(398
|
)
|
||||
Income from operating affiliates
|
5,526
|
|
|
3,761
|
|
|
12,083
|
|
|
13,580
|
|
||||
(Income) attributable to AlphaCat investors
|
(40,256
|
)
|
|
(25,807
|
)
|
|
(94,341
|
)
|
|
(82,833
|
)
|
||||
Net (loss) income
|
$
|
(5,013
|
)
|
|
$
|
(13,397
|
)
|
|
$
|
289,032
|
|
|
$
|
381,172
|
|
Net loss (income) attributable to noncontrolling interest
|
71,663
|
|
|
53,069
|
|
|
15,042
|
|
|
(25,745
|
)
|
||||
Net income available to Validus
|
$
|
66,650
|
|
|
$
|
39,672
|
|
|
$
|
304,074
|
|
|
$
|
355,427
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
||||||
Change in foreign currency translation adjustments
|
(1,850
|
)
|
|
(5,198
|
)
|
|
(2,106
|
)
|
|
(2,121
|
)
|
||||
Change in minimum pension liability, net of tax
|
(28
|
)
|
|
—
|
|
|
129
|
|
|
—
|
|
||||
Change in fair value of cash flow hedge
|
75
|
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
||||
Other comprehensive loss
|
$
|
(1,803
|
)
|
|
$
|
(5,198
|
)
|
|
$
|
(2,313
|
)
|
|
$
|
(2,121
|
)
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income available to Validus
|
$
|
64,847
|
|
|
$
|
34,474
|
|
|
$
|
301,761
|
|
|
$
|
353,306
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares and common share equivalents outstanding
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
82,635,316
|
|
|
90,593,329
|
|
|
83,296,703
|
|
|
91,665,950
|
|
||||
Diluted
|
85,629,494
|
|
|
91,939,610
|
|
|
86,841,927
|
|
|
95,937,641
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share available to common shareholders
|
$
|
0.79
|
|
|
$
|
0.42
|
|
|
$
|
3.61
|
|
|
$
|
3.83
|
|
Earnings per diluted share available to common shareholders
|
$
|
0.78
|
|
|
$
|
0.41
|
|
|
$
|
3.50
|
|
|
$
|
3.70
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per share
|
$
|
0.32
|
|
|
$
|
0.30
|
|
|
$
|
0.96
|
|
|
$
|
0.90
|
|
|
September 30,
2015 |
|
September 30,
2014 |
||||
|
(unaudited)
|
|
(unaudited)
|
||||
Common shares
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
27,222
|
|
|
$
|
27,036
|
|
Common shares issued, net
|
504
|
|
|
133
|
|
||
Balance - End of period
|
$
|
27,726
|
|
|
$
|
27,169
|
|
|
|
|
|
||||
Treasury shares
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
(12,545
|
)
|
|
$
|
(10,228
|
)
|
Repurchase of common shares
|
(831
|
)
|
|
(1,347
|
)
|
||
Balance - End of period
|
$
|
(13,376
|
)
|
|
$
|
(11,575
|
)
|
|
|
|
|
||||
Additional paid-in capital
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
1,207,493
|
|
|
$
|
1,677,894
|
|
Common shares issued, net
|
16,231
|
|
|
(3,822
|
)
|
||
Repurchase of common shares
|
(203,086
|
)
|
|
(285,179
|
)
|
||
Share compensation expenses
|
28,279
|
|
|
24,252
|
|
||
Balance - End of period
|
$
|
1,048,917
|
|
|
$
|
1,413,145
|
|
|
|
|
|
||||
Accumulated other comprehensive loss
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
(8,556
|
)
|
|
$
|
(617
|
)
|
Other comprehensive loss
|
(2,313
|
)
|
|
(2,121
|
)
|
||
Balance - End of period
|
$
|
(10,869
|
)
|
|
$
|
(2,738
|
)
|
|
|
|
|
||||
Retained earnings
|
|
|
|
|
|
||
Balance - Beginning of period
|
$
|
2,374,344
|
|
|
$
|
2,010,009
|
|
Dividends
|
(86,256
|
)
|
|
(89,027
|
)
|
||
Net income
|
289,032
|
|
|
381,172
|
|
||
Net loss (income) attributable to noncontrolling interest
|
15,042
|
|
|
(25,745
|
)
|
||
Balance - End of period
|
$
|
2,592,162
|
|
|
$
|
2,276,409
|
|
|
|
|
|
||||
Total shareholders’ equity available to Validus
|
$
|
3,644,560
|
|
|
$
|
3,702,410
|
|
|
|
|
|
||||
Noncontrolling interest
|
$
|
438,427
|
|
|
$
|
522,287
|
|
|
|
|
|
||||
Total shareholders’ equity
|
$
|
4,082,987
|
|
|
$
|
4,224,697
|
|
|
September 30, 2015
|
|
September 30, 2014
|
||||
|
(unaudited)
|
|
(unaudited)
|
||||
Cash flows provided by (used in) operating activities
|
|
|
|
|
|
||
Net income
|
$
|
289,032
|
|
|
$
|
381,172
|
|
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Share compensation expenses
|
28,279
|
|
|
24,252
|
|
||
Loss (gain) on deconsolidation/sale of subsidiary
|
1,777
|
|
|
(2,081
|
)
|
||
Amortization of discount on senior notes
|
81
|
|
|
81
|
|
||
Income from investment affiliate
|
(5,542
|
)
|
|
(7,881
|
)
|
||
Net realized losses (gains) on investments
|
35,493
|
|
|
(16,193
|
)
|
||
Change in net unrealized gains on investments
|
(19,766
|
)
|
|
(16,146
|
)
|
||
Amortization of intangible assets
|
4,248
|
|
|
3,120
|
|
||
Income from operating affiliates
|
(12,083
|
)
|
|
(13,580
|
)
|
||
Foreign exchange losses included in net income
|
16,549
|
|
|
10,841
|
|
||
Amortization of premium on fixed maturities
|
17,866
|
|
|
11,922
|
|
||
Change in:
|
|
|
|
|
|
||
Premiums receivable
|
(357,285
|
)
|
|
(241,175
|
)
|
||
Deferred acquisition costs
|
(63,770
|
)
|
|
(52,008
|
)
|
||
Prepaid reinsurance premiums
|
(43,564
|
)
|
|
(26,558
|
)
|
||
Loss reserves recoverable
|
(9,111
|
)
|
|
70,444
|
|
||
Paid losses recoverable
|
16,408
|
|
|
17,245
|
|
||
Income taxes recoverable
|
(16,088
|
)
|
|
—
|
|
||
Deferred tax asset
|
1,390
|
|
|
—
|
|
||
Accrued investment income
|
1,059
|
|
|
3,431
|
|
||
Other assets
|
38,400
|
|
|
30,125
|
|
||
Reserve for losses and loss expenses
|
(55,889
|
)
|
|
(271,063
|
)
|
||
Unearned premiums
|
290,755
|
|
|
333,933
|
|
||
Reinsurance balances payable
|
(35,457
|
)
|
|
(12,836
|
)
|
||
Deferred tax liability
|
3,323
|
|
|
(7,385
|
)
|
||
Accounts payable and accrued expenses
|
(74,227
|
)
|
|
(70,809
|
)
|
||
Net cash provided by operating activities
|
51,878
|
|
|
148,851
|
|
||
|
|
|
|
||||
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
||
Proceeds on sales of investments
|
2,888,919
|
|
|
3,585,728
|
|
||
Proceeds on maturities of investments
|
260,179
|
|
|
466,872
|
|
||
Purchases of fixed maturities
|
(3,164,787
|
)
|
|
(3,160,512
|
)
|
||
Purchases of short-term investments, net
|
(639,211
|
)
|
|
(933,148
|
)
|
||
Purchases of other investments, net
|
(26,648
|
)
|
|
(47,752
|
)
|
||
Increase in securities lending collateral
|
(5,991
|
)
|
|
(5,664
|
)
|
||
Investment in operating affiliates
|
(10,400
|
)
|
|
—
|
|
||
Redemption from operating affiliates
|
57,402
|
|
|
58,547
|
|
||
Investment in investment affiliates
|
(19,086
|
)
|
|
—
|
|
||
Decrease (increase) in restricted cash
|
99,001
|
|
|
(7,856
|
)
|
||
Proceeds on sale of subsidiary, net of cash
|
—
|
|
|
16,459
|
|
||
Net cash used in investing activities
|
(560,622
|
)
|
|
(27,326
|
)
|
||
|
|
|
|
||||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
||
Proceeds on issuance of notes payable to AlphaCat investors
|
1,307,789
|
|
|
645,243
|
|
||
Repayments on notes payable to AlphaCat investors
|
(709,059
|
)
|
|
(602,068
|
)
|
||
Issuance (redemption) of common shares, net
|
16,735
|
|
|
(3,689
|
)
|
||
Purchases of common shares under share repurchase program
|
(203,917
|
)
|
|
(286,526
|
)
|
||
Dividends paid
|
(86,423
|
)
|
|
(89,719
|
)
|
||
Increase in securities lending payable
|
5,991
|
|
|
5,664
|
|
||
Third party investment in redeemable noncontrolling interest
|
55,700
|
|
|
61,200
|
|
||
Third party redemption of redeemable noncontrolling interest
|
(19,395
|
)
|
|
(10,496
|
)
|
||
Net cash provided by (used in) financing activities
|
367,421
|
|
|
(280,391
|
)
|
||
|
|
|
|
||||
Effect of foreign currency rate changes on cash and cash equivalents
|
(27,432
|
)
|
|
(11,293
|
)
|
||
|
|
|
|
||||
Net decrease in cash
|
(168,755
|
)
|
|
(170,159
|
)
|
||
|
|
|
|
||||
Cash and cash equivalents - beginning of period
|
$
|
577,240
|
|
|
$
|
734,148
|
|
|
|
|
|
||||
Cash and cash equivalents - end of period
|
$
|
408,485
|
|
|
$
|
563,989
|
|
|
|
|
|
||||
Taxes paid during the period
|
$
|
14,959
|
|
|
$
|
7,286
|
|
|
|
|
|
||||
Interest paid during the period
|
$
|
46,847
|
|
|
$
|
46,421
|
|
(a)
|
Fixed maturity, short-term and other investments
|
|
Amortized Cost (or Cost)
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
U.S. government and government agency
|
$
|
868,750
|
|
|
$
|
3,787
|
|
|
$
|
(609
|
)
|
|
$
|
871,928
|
|
Non-U.S. government and government agency
|
224,288
|
|
|
1,205
|
|
|
(2,529
|
)
|
|
222,964
|
|
||||
U.S. states, municipalities and political subdivisions
|
316,868
|
|
|
3,097
|
|
|
(439
|
)
|
|
319,526
|
|
||||
Agency residential mortgage-backed securities
|
488,827
|
|
|
9,503
|
|
|
(1,060
|
)
|
|
497,270
|
|
||||
Non-agency residential mortgage-backed securities
|
27,054
|
|
|
400
|
|
|
(400
|
)
|
|
27,054
|
|
||||
U.S. corporate
|
1,530,344
|
|
|
4,387
|
|
|
(8,837
|
)
|
|
1,525,894
|
|
||||
Non-U.S. corporate
|
472,736
|
|
|
1,628
|
|
|
(6,544
|
)
|
|
467,820
|
|
||||
Bank loans
|
517,129
|
|
|
642
|
|
|
(8,298
|
)
|
|
509,473
|
|
||||
Catastrophe bonds
|
160,835
|
|
|
908
|
|
|
(1,767
|
)
|
|
159,976
|
|
||||
Asset-backed securities
|
624,444
|
|
|
2,038
|
|
|
(1,234
|
)
|
|
625,248
|
|
||||
Commercial mortgage-backed securities
|
350,571
|
|
|
2,045
|
|
|
(913
|
)
|
|
351,703
|
|
||||
Total fixed maturities
|
5,581,846
|
|
|
29,640
|
|
|
(32,630
|
)
|
|
5,578,856
|
|
||||
Total short-term investments (a)
|
1,661,705
|
|
|
49
|
|
|
(67
|
)
|
|
1,661,687
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
2,378
|
|
|
—
|
|
|
(938
|
)
|
|
1,440
|
|
||||
Hedge funds (b)
|
559,737
|
|
|
43,541
|
|
|
(99,653
|
)
|
|
503,625
|
|
||||
Private equity investments
|
51,037
|
|
|
8,891
|
|
|
(2,305
|
)
|
|
57,623
|
|
||||
Investment funds
|
247,104
|
|
|
577
|
|
|
—
|
|
|
247,681
|
|
||||
Mutual funds
|
4,395
|
|
|
2,610
|
|
|
—
|
|
|
7,005
|
|
||||
Total other investments
|
864,651
|
|
|
55,619
|
|
|
(102,896
|
)
|
|
817,374
|
|
||||
Total investments including assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
8,108,202
|
|
|
$
|
85,308
|
|
|
$
|
(135,593
|
)
|
|
$
|
8,057,917
|
|
Assets managed on behalf of AlphaCat investors (a)
|
(1,364,692
|
)
|
|
—
|
|
|
—
|
|
|
(1,364,692
|
)
|
||||
Catastrophe bonds
|
(160,835
|
)
|
|
(908
|
)
|
|
1,767
|
|
|
(159,976
|
)
|
||||
Noncontrolling interest (b)
|
(491,204
|
)
|
|
(32,920
|
)
|
|
89,688
|
|
|
(434,436
|
)
|
||||
Total investments, excluding assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
6,091,471
|
|
|
$
|
51,480
|
|
|
$
|
(44,138
|
)
|
|
$
|
6,098,813
|
|
(a)
|
Included in the short-term investments balance are assets managed in support of AlphaCat's fully collateralized reinsurance transactions.
|
(b)
|
Included in the hedge funds balance are investments held by PaCRe in which the Company has an equity interest of
10%
. The remaining
90%
interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.
|
|
Amortized Cost (or Cost)
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
U.S. government and government agency
|
$
|
759,232
|
|
|
$
|
1,755
|
|
|
$
|
(901
|
)
|
|
$
|
760,086
|
|
Non-U.S. government and government agency
|
279,493
|
|
|
1,215
|
|
|
(1,980
|
)
|
|
278,728
|
|
||||
U.S. states, municipalities and political subdivisions
|
448,668
|
|
|
1,780
|
|
|
(825
|
)
|
|
449,623
|
|
||||
Agency residential mortgage-backed securities
|
520,685
|
|
|
9,697
|
|
|
(1,151
|
)
|
|
529,231
|
|
||||
Non-agency residential mortgage-backed securities
|
37,954
|
|
|
369
|
|
|
(516
|
)
|
|
37,807
|
|
||||
U.S. corporate
|
1,500,963
|
|
|
3,960
|
|
|
(5,217
|
)
|
|
1,499,706
|
|
||||
Non-U.S. corporate
|
564,386
|
|
|
2,765
|
|
|
(3,989
|
)
|
|
563,162
|
|
||||
Bank loans
|
457,537
|
|
|
200
|
|
|
(8,733
|
)
|
|
449,004
|
|
||||
Catastrophe bonds
|
75,822
|
|
|
768
|
|
|
(926
|
)
|
|
75,664
|
|
||||
Asset-backed securities
|
647,422
|
|
|
1,250
|
|
|
(1,190
|
)
|
|
647,482
|
|
||||
Commercial mortgage-backed securities
|
242,332
|
|
|
598
|
|
|
(692
|
)
|
|
242,238
|
|
||||
Total fixed maturities
|
5,534,494
|
|
|
24,357
|
|
|
(26,120
|
)
|
|
5,532,731
|
|
||||
Total short-term investments (a)
|
1,051,222
|
|
|
13
|
|
|
(161
|
)
|
|
1,051,074
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
2,570
|
|
|
125
|
|
|
(920
|
)
|
|
1,775
|
|
||||
Preferred stock
|
6,535
|
|
|
—
|
|
|
(201
|
)
|
|
6,334
|
|
||||
Hedge funds (b)
|
570,371
|
|
|
60,792
|
|
|
(134,203
|
)
|
|
496,960
|
|
||||
Private equity investments
|
48,995
|
|
|
4,987
|
|
|
(611
|
)
|
|
53,371
|
|
||||
Investment funds
|
244,506
|
|
|
437
|
|
|
(111
|
)
|
|
244,832
|
|
||||
Mutual funds
|
6,199
|
|
|
3,540
|
|
|
—
|
|
|
9,739
|
|
||||
Total other investments
|
879,176
|
|
|
69,881
|
|
|
(136,046
|
)
|
|
813,011
|
|
||||
Total investments including assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
7,464,892
|
|
|
$
|
94,251
|
|
|
$
|
(162,327
|
)
|
|
$
|
7,396,816
|
|
Assets managed on behalf of AlphaCat investors (a)
|
(696,924
|
)
|
|
—
|
|
|
—
|
|
|
(696,924
|
)
|
||||
Catastrophe bonds
|
(75,822
|
)
|
|
(768
|
)
|
|
926
|
|
|
(75,664
|
)
|
||||
Noncontrolling interest (b)
|
(502,830
|
)
|
|
(48,446
|
)
|
|
120,782
|
|
|
(430,494
|
)
|
||||
Total investments, excluding assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
6,189,316
|
|
|
$
|
45,037
|
|
|
$
|
(40,619
|
)
|
|
$
|
6,193,734
|
|
(a)
|
Included in the short-term investments balance are assets managed in support of AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by
one
AlphaCat ILS fund which was consolidated by the Company through May 31, 2015, but in which the Company had an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.
|
(b)
|
Included in the hedge funds balance are investments held by PaCRe in which the Company has an equity interest of
10%
. The remaining
90%
interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||
|
Estimated Fair Value
|
|
% of Total
|
|
Estimated Fair Value
|
|
% of Total
|
||||||
AAA
|
$
|
2,454,181
|
|
|
44.0
|
%
|
|
$
|
2,494,239
|
|
|
45.1
|
%
|
AA
|
530,473
|
|
|
9.5
|
%
|
|
848,226
|
|
|
15.4
|
%
|
||
A
|
1,145,331
|
|
|
20.5
|
%
|
|
1,086,091
|
|
|
19.6
|
%
|
||
BBB
|
674,489
|
|
|
12.1
|
%
|
|
505,208
|
|
|
9.1
|
%
|
||
Total investment-grade fixed maturities
|
4,804,474
|
|
|
86.1
|
%
|
|
4,933,764
|
|
|
89.2
|
%
|
||
|
|
|
|
|
|
|
|
||||||
BB
|
316,602
|
|
|
5.7
|
%
|
|
362,972
|
|
|
6.6
|
%
|
||
B
|
216,544
|
|
|
4.0
|
%
|
|
145,240
|
|
|
2.6
|
%
|
||
CCC
|
4,374
|
|
|
0.0
|
%
|
|
12,733
|
|
|
0.2
|
%
|
||
CC
|
1,002
|
|
|
0.0
|
%
|
|
3,926
|
|
|
0.1
|
%
|
||
C
|
—
|
|
|
0.0
|
%
|
|
1,344
|
|
|
0.0
|
%
|
||
D/NR
|
235,860
|
|
|
4.2
|
%
|
|
72,752
|
|
|
1.3
|
%
|
||
Total non-investment grade fixed maturities
|
774,382
|
|
|
13.9
|
%
|
|
598,967
|
|
|
10.8
|
%
|
||
Total fixed maturities
|
$
|
5,578,856
|
|
|
100.0
|
%
|
|
$
|
5,532,731
|
|
|
100.0
|
%
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||||||
Due in one year or less
|
$
|
342,554
|
|
|
$
|
343,201
|
|
|
$
|
312,843
|
|
|
$
|
313,248
|
|
Due after one year through five years
|
2,996,003
|
|
|
2,991,774
|
|
|
3,163,225
|
|
|
3,159,200
|
|
||||
Due after five years through ten years
|
566,908
|
|
|
560,971
|
|
|
497,175
|
|
|
491,870
|
|
||||
Due after ten years
|
185,485
|
|
|
181,635
|
|
|
112,858
|
|
|
111,655
|
|
||||
|
4,090,950
|
|
|
4,077,581
|
|
|
4,086,101
|
|
|
4,075,973
|
|
||||
Asset-backed and mortgage-backed securities
|
1,490,896
|
|
|
1,501,275
|
|
|
1,448,393
|
|
|
1,456,758
|
|
||||
Total fixed maturities
|
$
|
5,581,846
|
|
|
$
|
5,578,856
|
|
|
$
|
5,534,494
|
|
|
$
|
5,532,731
|
|
(b)
|
Net investment income
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2015
|
|
September 30, 2014
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||
Fixed maturities and short-term investments
|
$
|
28,117
|
|
|
$
|
22,544
|
|
|
$
|
88,519
|
|
|
$
|
68,048
|
|
Other investments
|
5,086
|
|
|
2,879
|
|
|
12,288
|
|
|
2,879
|
|
||||
Restricted cash and cash and cash equivalents
|
373
|
|
|
1,581
|
|
|
1,259
|
|
|
4,534
|
|
||||
Securities lending income
|
4
|
|
|
1
|
|
|
13
|
|
|
5
|
|
||||
Total gross investment income
|
33,580
|
|
|
27,005
|
|
|
102,079
|
|
|
75,466
|
|
||||
Investment expenses
|
(2,056
|
)
|
|
(1,744
|
)
|
|
(5,926
|
)
|
|
(5,557
|
)
|
||||
Total net investment income
|
$
|
31,524
|
|
|
$
|
25,261
|
|
|
$
|
96,153
|
|
|
$
|
69,909
|
|
(c)
|
Net realized (losses) gains and change in net unrealized (losses) gains on investments
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2015
|
|
September 30, 2014
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||
Fixed maturities, short-term and other investments
|
|
|
|
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
1,872
|
|
|
$
|
8,075
|
|
|
$
|
14,450
|
|
|
$
|
23,184
|
|
Gross realized (losses)
|
(43,778
|
)
|
|
(3,480
|
)
|
|
(49,943
|
)
|
|
(6,991
|
)
|
||||
Net realized (losses) gains on investments (a)
|
(41,906
|
)
|
|
4,595
|
|
|
(35,493
|
)
|
|
16,193
|
|
||||
Change in net unrealized (losses) gains on investments (a)
|
(34,908
|
)
|
|
(84,974
|
)
|
|
19,766
|
|
|
16,146
|
|
||||
Total net realized and change in net unrealized (losses) gains on investments including assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
(76,814
|
)
|
|
(80,379
|
)
|
|
(15,727
|
)
|
|
32,339
|
|
||||
Assets managed on behalf of AlphaCat investors
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Catastrophe bonds
|
(2,208
|
)
|
|
(201
|
)
|
|
701
|
|
|
1,787
|
|
||||
Noncontrolling interest (a)
|
71,589
|
|
|
52,595
|
|
|
21,078
|
|
|
(22,613
|
)
|
||||
Total net realized and change in net unrealized (losses) gains on investments excluding assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
(7,433
|
)
|
|
$
|
(27,985
|
)
|
|
$
|
6,052
|
|
|
$
|
11,513
|
|
(a)
|
Includes the net realized (losses) gains and change in net unrealized (losses) gains on investments held by PaCRe in which the Company has an equity interest of
10%
. The remaining
90%
interest is held by third party investors and is included in the Consolidated Statements of Comprehensive Income as net loss (income) attributable to noncontrolling interest.
|
(d)
|
Pledged investments
|
|
|
September 30, 2015
|
||||||||||
Description
|
|
Commitment
|
|
Issued and Outstanding
|
|
Investments and cash pledged as collateral
|
||||||
$400,000 syndicated unsecured letter of credit facility
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
$525,000 syndicated secured letter of credit facility
|
|
525,000
|
|
|
244,358
|
|
|
385,279
|
|
|||
$30,000 secured bi-lateral letter of credit facility
|
|
30,000
|
|
|
10,172
|
|
|
47,471
|
|
|||
Talbot FAL facility
|
|
25,000
|
|
|
25,000
|
|
|
31,318
|
|
|||
AlphaCat Re secured letter of credit facility
|
|
30,000
|
|
|
30,000
|
|
|
30,134
|
|
|||
IPC bi-lateral facility
|
|
25,000
|
|
|
10,782
|
|
|
—
|
|
|||
$230,000 Flagstone bi-lateral facility
|
|
230,000
|
|
|
205,593
|
|
|
381,302
|
|
|||
Total
|
|
$
|
1,265,000
|
|
|
$
|
525,905
|
|
|
$
|
875,504
|
|
|
|
December 31, 2014
|
||||||||||
Description
|
|
Commitment
|
|
Issued and Outstanding
|
|
Investments and cash pledged as collateral
|
||||||
$400,000 syndicated unsecured letter of credit facility
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
$525,000 syndicated secured letter of credit facility
|
|
525,000
|
|
|
276,455
|
|
|
395,750
|
|
|||
$200,000 secured bi-lateral letter of credit facility
|
|
200,000
|
|
|
15,649
|
|
|
35,645
|
|
|||
Talbot FAL facility
|
|
25,000
|
|
|
25,000
|
|
|
31,048
|
|
|||
PaCRe senior secured letter of credit facility
|
|
10,000
|
|
|
294
|
|
|
—
|
|
|||
AlphaCat Re secured letter of credit facility
|
|
30,000
|
|
|
30,000
|
|
|
30,078
|
|
|||
IPC bi-lateral facility
|
|
40,000
|
|
|
15,897
|
|
|
99,437
|
|
|||
$375,000 Flagstone bi-lateral facility
|
|
375,000
|
|
|
198,389
|
|
|
430,782
|
|
|||
Total
|
|
$
|
1,605,000
|
|
|
$
|
561,684
|
|
|
$
|
1,022,740
|
|
(a)
|
Classification within the fair value hierarchy
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
U.S. government and government agency
|
$
|
—
|
|
|
$
|
871,928
|
|
|
$
|
—
|
|
|
$
|
871,928
|
|
Non-U.S. government and government agency
|
—
|
|
|
222,964
|
|
|
—
|
|
|
222,964
|
|
||||
U.S. states, municipalities and political subdivisions
|
—
|
|
|
319,526
|
|
|
—
|
|
|
319,526
|
|
||||
Agency residential mortgage-backed securities
|
—
|
|
|
497,270
|
|
|
—
|
|
|
497,270
|
|
||||
Non-agency residential mortgage-backed securities
|
—
|
|
|
27,054
|
|
|
—
|
|
|
27,054
|
|
||||
U.S. corporate
|
—
|
|
|
1,525,894
|
|
|
—
|
|
|
1,525,894
|
|
||||
Non-U.S. corporate
|
—
|
|
|
467,820
|
|
|
—
|
|
|
467,820
|
|
||||
Bank loans
|
—
|
|
|
347,637
|
|
|
161,836
|
|
|
509,473
|
|
||||
Catastrophe bonds
|
—
|
|
|
158,976
|
|
|
1,000
|
|
|
159,976
|
|
||||
Asset-backed securities
|
—
|
|
|
625,248
|
|
|
—
|
|
|
625,248
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
351,703
|
|
|
—
|
|
|
351,703
|
|
||||
Total fixed maturities
|
—
|
|
|
5,416,020
|
|
|
162,836
|
|
|
5,578,856
|
|
||||
Total short-term investments (a)
|
1,652,981
|
|
|
8,706
|
|
|
—
|
|
|
1,661,687
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
—
|
|
|
—
|
|
|
1,440
|
|
|
1,440
|
|
||||
Hedge funds (b)
|
—
|
|
|
—
|
|
|
503,625
|
|
|
503,625
|
|
||||
Private equity investments
|
—
|
|
|
—
|
|
|
57,623
|
|
|
57,623
|
|
||||
Investment funds
|
—
|
|
|
80,470
|
|
|
167,211
|
|
|
247,681
|
|
||||
Mutual funds
|
—
|
|
|
7,005
|
|
|
—
|
|
|
7,005
|
|
||||
Total other investments
|
—
|
|
|
87,475
|
|
|
729,899
|
|
|
817,374
|
|
||||
Total investments including assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
1,652,981
|
|
|
$
|
5,512,201
|
|
|
$
|
892,735
|
|
|
$
|
8,057,917
|
|
Assets managed on behalf of AlphaCat investors (a)
|
(1,364,692
|
)
|
|
—
|
|
|
—
|
|
|
(1,364,692
|
)
|
||||
Catastrophe bonds
|
—
|
|
|
(158,976
|
)
|
|
(1,000
|
)
|
|
(159,976
|
)
|
||||
Noncontrolling interest (b)
|
—
|
|
|
—
|
|
|
(434,436
|
)
|
|
(434,436
|
)
|
||||
Total investments, excluding assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
288,289
|
|
|
$
|
5,353,225
|
|
|
$
|
457,299
|
|
|
$
|
6,098,813
|
|
(a)
|
Included in the short-term investments balance are assets managed in support of AlphaCat's fully collateralized reinsurance transactions.
|
(b)
|
Included in the hedge funds balance are investments held by PaCRe in which the Company has an equity interest of
10%
. The remaining
90%
interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
U.S. government and government agency
|
$
|
—
|
|
|
$
|
760,086
|
|
|
$
|
—
|
|
|
$
|
760,086
|
|
Non-U.S. government and government agency
|
—
|
|
|
278,728
|
|
|
—
|
|
|
278,728
|
|
||||
U.S. states, municipalities and political subdivisions
|
—
|
|
|
449,623
|
|
|
—
|
|
|
449,623
|
|
||||
Agency residential mortgage-backed securities
|
—
|
|
|
529,231
|
|
|
—
|
|
|
529,231
|
|
||||
Non-agency residential mortgage-backed securities
|
—
|
|
|
37,807
|
|
|
—
|
|
|
37,807
|
|
||||
U.S. corporate
|
—
|
|
|
1,499,706
|
|
|
—
|
|
|
1,499,706
|
|
||||
Non-U.S. corporate
|
—
|
|
|
563,162
|
|
|
—
|
|
|
563,162
|
|
||||
Bank loans
|
—
|
|
|
416,256
|
|
|
32,748
|
|
|
449,004
|
|
||||
Catastrophe bonds
|
—
|
|
|
70,664
|
|
|
5,000
|
|
|
75,664
|
|
||||
Asset-backed securities
|
—
|
|
|
647,482
|
|
|
—
|
|
|
647,482
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
242,238
|
|
|
—
|
|
|
242,238
|
|
||||
Total fixed maturities
|
—
|
|
|
5,494,983
|
|
|
37,748
|
|
|
5,532,731
|
|
||||
Total short-term investments (a)
|
942,716
|
|
|
108,358
|
|
|
—
|
|
|
1,051,074
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
—
|
|
|
—
|
|
|
1,775
|
|
|
1,775
|
|
||||
Preferred stock
|
—
|
|
|
6,334
|
|
|
—
|
|
|
6,334
|
|
||||
Hedge funds (b)
|
—
|
|
|
—
|
|
|
496,960
|
|
|
496,960
|
|
||||
Private equity investments
|
—
|
|
|
—
|
|
|
53,371
|
|
|
53,371
|
|
||||
Investment fund
|
—
|
|
|
140,045
|
|
|
104,787
|
|
|
244,832
|
|
||||
Mutual funds
|
—
|
|
|
9,739
|
|
|
—
|
|
|
9,739
|
|
||||
Total other investments
|
—
|
|
|
156,118
|
|
|
656,893
|
|
|
813,011
|
|
||||
Total investments including assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
942,716
|
|
|
$
|
5,759,459
|
|
|
$
|
694,641
|
|
|
$
|
7,396,816
|
|
Assets managed on behalf of AlphaCat investors (a)
|
(696,924
|
)
|
|
—
|
|
|
—
|
|
|
(696,924
|
)
|
||||
Catastrophe bonds
|
—
|
|
|
(70,664
|
)
|
|
(5,000
|
)
|
|
(75,664
|
)
|
||||
Noncontrolling interest (b)
|
—
|
|
|
—
|
|
|
(430,494
|
)
|
|
(430,494
|
)
|
||||
Total investments, excluding assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
245,792
|
|
|
$
|
5,688,795
|
|
|
$
|
259,147
|
|
|
$
|
6,193,734
|
|
(a)
|
Included in the short-term investments balance are assets managed in support of AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by
one
AlphaCat ILS fund which was consolidated by the Company through May 31, 2015, but in which the Company had an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.
|
(b)
|
Included in the hedge funds balance are investments held by PaCRe in which the Company has an equity interest of
10%
. The remaining
90%
interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.
|
(b)
|
Level 1 assets measured at fair value
|
(c)
|
Level 2 assets measured at fair value
|
(d)
|
Level 3 assets measured at fair value
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2015
|
|
September 30, 2014
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||
Level 3 investments - Beginning of period
|
$
|
931,649
|
|
|
$
|
746,396
|
|
|
$
|
694,641
|
|
|
$
|
576,871
|
|
Purchases
|
127,350
|
|
|
25,784
|
|
|
326,949
|
|
|
125,784
|
|
||||
Sales
|
(73,105
|
)
|
|
(24,175
|
)
|
|
(86,143
|
)
|
|
(49,508
|
)
|
||||
Settlements
|
(13,815
|
)
|
|
—
|
|
|
(22,013
|
)
|
|
(1,500
|
)
|
||||
Net realized (losses) gains
|
(40,721
|
)
|
|
2,554
|
|
|
(40,732
|
)
|
|
8,198
|
|
||||
Change in net unrealized (losses) gains
|
(38,623
|
)
|
|
(57,776
|
)
|
|
20,033
|
|
|
26,235
|
|
||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
6,703
|
|
||||
Level 3 investments - End of period
|
$
|
892,735
|
|
|
$
|
692,783
|
|
|
$
|
892,735
|
|
|
$
|
692,783
|
|
Catastrophe Bonds
|
(1,000
|
)
|
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
||||
Noncontrolling interest (a)
|
(434,436
|
)
|
|
(495,365
|
)
|
|
(434,436
|
)
|
|
(495,365
|
)
|
||||
Level 3 investments - End of period excluding catastrophe bonds and noncontrolling interest
|
$
|
457,299
|
|
|
$
|
197,418
|
|
|
$
|
457,299
|
|
|
$
|
197,418
|
|
(a)
|
Includes Level 3 investments held by PaCRe in which the Company has an equity interest of
10%
. The remaining
90%
interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
Investment affiliates
|
$
|
88,134
|
|
|
$
|
63,506
|
|
Operating affiliates
|
259,828
|
|
|
197,977
|
|
||
Investments in affiliates
|
$
|
347,962
|
|
|
$
|
261,483
|
|
(a)
|
Investment affiliate
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
Investment affiliates, beginning of period
|
$
|
89,681
|
|
|
$
|
40,627
|
|
|
$
|
63,506
|
|
|
$
|
34,500
|
|
Net capital (distributions) contributions
|
(4,029
|
)
|
|
—
|
|
|
19,086
|
|
|
—
|
|
||||
Income from investment affiliate
|
2,482
|
|
|
1,754
|
|
|
5,542
|
|
|
7,881
|
|
||||
Investment affiliates, end of period
|
$
|
88,134
|
|
|
$
|
42,381
|
|
|
$
|
88,134
|
|
|
$
|
42,381
|
|
|
Investment in investment affiliate
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity Ownership
|
|
Carrying Value
|
||||||
Aquiline Financial Services Fund II L.P.
|
$
|
55,098
|
|
|
—
|
%
|
|
8.1
|
%
|
|
$
|
74,341
|
|
Aquiline Financial Services Fund III L.P.
|
$
|
13,890
|
|
|
—
|
%
|
|
13.7
|
%
|
|
$
|
13,793
|
|
Total
|
$
|
68,988
|
|
|
|
|
|
|
$
|
88,134
|
|
|
Investment in investment affiliate
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity Ownership
|
|
Carrying Value
|
||||||
Aquiline Financial Services Fund II L.P.
|
$
|
51,001
|
|
|
—
|
%
|
|
8.1
|
%
|
|
$
|
63,506
|
|
(b)
|
Operating affiliates
|
|
Three Months Ended September 30, 2015
|
||||||||||||||||||||||||||
|
AlphaCat Re 2011
|
|
AlphaCat Re 2012
|
|
AlphaCat 2013
|
|
AlphaCat 2014
|
|
AlphaCat 2015
|
|
AlphaCat ILS funds
|
|
Total
|
||||||||||||||
As at June 30, 2015
|
$
|
4,601
|
|
|
$
|
707
|
|
|
$
|
1,043
|
|
|
$
|
723
|
|
|
$
|
30,598
|
|
|
$
|
246,768
|
|
|
$
|
284,440
|
|
Gain on redemption of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,761
|
)
|
|
(6,761
|
)
|
|||||||
Return of investment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,377
|
)
|
|
(23,377
|
)
|
|||||||
Income (loss) from operating affiliates
|
396
|
|
|
(8
|
)
|
|
(8
|
)
|
|
(12
|
)
|
|
1,077
|
|
|
4,081
|
|
|
5,526
|
|
|||||||
As at September 30, 2015
|
$
|
4,997
|
|
|
$
|
699
|
|
|
$
|
1,035
|
|
|
$
|
711
|
|
|
$
|
31,675
|
|
|
$
|
220,711
|
|
|
$
|
259,828
|
|
|
Three Months Ended September 30, 2014
|
||||||||||||||||||||||
|
AlphaCat Re 2011
|
|
AlphaCat Re 2012
|
|
AlphaCat 2013
|
|
AlphaCat 2014
|
|
AlphaCat ILS funds
|
|
Total
|
||||||||||||
As at June 30, 2014
|
$
|
4,172
|
|
|
$
|
2,204
|
|
|
$
|
2,580
|
|
|
$
|
25,014
|
|
|
$
|
139,022
|
|
|
$
|
172,992
|
|
Return of investment
|
—
|
|
|
(1,516
|
)
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(1,522
|
)
|
||||||
(Loss) income from operating affiliates
|
(5
|
)
|
|
(9
|
)
|
|
7
|
|
|
1,367
|
|
|
2,401
|
|
|
3,761
|
|
||||||
As at September 30, 2014
|
$
|
4,167
|
|
|
$
|
679
|
|
|
$
|
2,581
|
|
|
$
|
26,381
|
|
|
$
|
141,423
|
|
|
$
|
175,231
|
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||||||||||||||
|
AlphaCat Re 2011
|
|
AlphaCat Re 2012
|
|
AlphaCat 2013
|
|
AlphaCat 2014
|
|
AlphaCat 2015
|
|
AlphaCat ILS funds
|
|
Total
|
||||||||||||||
As at December 31, 2014
|
$
|
4,606
|
|
|
$
|
735
|
|
|
$
|
1,068
|
|
|
$
|
28,085
|
|
|
$
|
25,600
|
|
|
$
|
137,883
|
|
|
$
|
197,977
|
|
Purchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,400
|
|
|
8,000
|
|
|
10,400
|
|
|||||||
Gain on redemption of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,761
|
)
|
|
(6,761
|
)
|
|||||||
Return of investment
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,264
|
)
|
|
—
|
|
|
(23,377
|
)
|
|
(50,641
|
)
|
|||||||
Fair value of retained interest on deconsolidation of AlphaCat ILS fund
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,770
|
|
|
96,770
|
|
|||||||
Income (loss) from operating affiliates
|
391
|
|
|
(36
|
)
|
|
(33
|
)
|
|
(110
|
)
|
|
3,675
|
|
|
8,196
|
|
|
12,083
|
|
|||||||
As at September 30, 2015
|
$
|
4,997
|
|
|
$
|
699
|
|
|
$
|
1,035
|
|
|
$
|
711
|
|
|
$
|
31,675
|
|
|
$
|
220,711
|
|
|
$
|
259,828
|
|
|
Nine Months Ended September 30, 2014
|
||||||||||||||||||||||
|
AlphaCat Re 2011
|
|
AlphaCat Re 2012
|
|
AlphaCat 2013
|
|
AlphaCat 2014
|
|
AlphaCat ILS funds
|
|
Total
|
||||||||||||
As at December 31, 2013
|
$
|
9,809
|
|
|
$
|
1,313
|
|
|
$
|
51,744
|
|
|
$
|
21,982
|
|
|
$
|
21,895
|
|
|
$
|
106,743
|
|
Return of investment
|
(5,825
|
)
|
|
(1,516
|
)
|
|
(51,206
|
)
|
|
—
|
|
|
—
|
|
|
(58,547
|
)
|
||||||
Fair value of retained interest on deconsolidation of AlphaCat ILS fund
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113,455
|
|
|
113,455
|
|
||||||
Income from operating affiliates
|
183
|
|
|
882
|
|
|
2,043
|
|
|
4,399
|
|
|
6,073
|
|
|
13,580
|
|
||||||
As at September 30, 2014
|
$
|
4,167
|
|
|
$
|
679
|
|
|
$
|
2,581
|
|
|
$
|
26,381
|
|
|
$
|
141,423
|
|
|
$
|
175,231
|
|
|
Investment in operating affiliates
|
||||||||||||
|
Cost
|
|
Voting ownership %
|
|
Equity ownership %
|
|
Carrying value
|
||||||
AlphaCat Re 2011
|
$
|
4,997
|
|
|
43.7
|
%
|
|
22.3
|
%
|
|
$
|
4,997
|
|
AlphaCat Re 2012
|
699
|
|
|
49.0
|
%
|
|
37.9
|
%
|
|
699
|
|
||
AlphaCat 2013
|
1,035
|
|
|
40.9
|
%
|
|
19.7
|
%
|
|
1,035
|
|
||
AlphaCat 2014
|
711
|
|
|
42.3
|
%
|
|
19.6
|
%
|
|
711
|
|
||
AlphaCat 2015
|
28,000
|
|
|
40.0
|
%
|
|
20.0
|
%
|
|
31,675
|
|
||
AlphaCat ILS funds
|
214,484
|
|
|
n/a
|
|
|
(a)
|
|
|
220,711
|
|
||
Total
|
$
|
249,926
|
|
|
|
|
|
|
$
|
259,828
|
|
(a)
|
Equity ownership in the funds was
7.6%
,
19.4%
,
9.1%
and
32.5%
as at
September 30, 2015
.
|
|
Investment in operating affiliates
|
||||||||||||
|
Cost
|
|
Voting ownership %
|
|
Equity ownership %
|
|
Carrying value
|
||||||
AlphaCat Re 2011
|
$
|
4,606
|
|
|
43.7
|
%
|
|
22.3
|
%
|
|
$
|
4,606
|
|
AlphaCat Re 2012
|
735
|
|
|
49.0
|
%
|
|
37.9
|
%
|
|
735
|
|
||
AlphaCat 2013
|
1,068
|
|
|
40.9
|
%
|
|
19.7
|
%
|
|
1,068
|
|
||
AlphaCat 2014
|
22,000
|
|
|
42.3
|
%
|
|
19.6
|
%
|
|
28,085
|
|
||
AlphaCat 2015
|
25,600
|
|
|
40.0
|
%
|
|
20.0
|
%
|
|
25,600
|
|
||
AlphaCat ILS funds
|
133,091
|
|
|
n/a
|
|
|
(a)
|
|
|
137,883
|
|
||
Total
|
$
|
187,100
|
|
|
|
|
|
|
$
|
197,977
|
|
(a)
|
Equity ownership in the funds was
7.9%
,
39.7%
and
9.1%
as at December 31,
2014
.
|
(c)
|
Notes payable and (income) attributable to AlphaCat investors
|
|
Three Months Ended September 30, 2015
|
||||||||||||||||||
|
AlphaCat 2014
|
|
AlphaCat 2015
|
|
AlphaCat ILS funds
|
|
AlphaCat direct
|
|
Total
|
||||||||||
As at June 30, 2015
|
$
|
—
|
|
|
$
|
145,985
|
|
|
$
|
1,235,328
|
|
|
$
|
—
|
|
|
$
|
1,381,313
|
|
Issuance of notes payable to AlphaCat investors
|
—
|
|
|
8,491
|
|
|
68,244
|
|
|
75,770
|
|
|
152,505
|
|
|||||
Redemption of notes payable to AlphaCat investors
|
—
|
|
|
—
|
|
|
(87,615
|
)
|
|
—
|
|
|
(87,615
|
)
|
|||||
Foreign exchange gain
|
—
|
|
|
(143
|
)
|
|
(2,698
|
)
|
|
(164
|
)
|
|
(3,005
|
)
|
|||||
As at September 30, 2015
|
$
|
—
|
|
|
$
|
154,333
|
|
|
$
|
1,213,259
|
|
|
$
|
75,606
|
|
|
$
|
1,443,198
|
|
|
Three Months Ended September 30, 2014
|
||||||||||
|
AlphaCat 2014
|
|
AlphaCat ILS funds
|
|
Total
|
||||||
As at June 30, 2014
|
$
|
157,992
|
|
|
$
|
464,958
|
|
|
$
|
622,950
|
|
Issuance of notes payable to AlphaCat investors
|
—
|
|
|
53,498
|
|
|
53,498
|
|
|||
Redemption of notes payable to AlphaCat investors
|
—
|
|
|
(13,990
|
)
|
|
(13,990
|
)
|
|||
Foreign exchange gain
|
(410
|
)
|
|
(6,072
|
)
|
|
(6,482
|
)
|
|||
As at September 30, 2014
|
$
|
157,582
|
|
|
$
|
498,394
|
|
|
$
|
655,976
|
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||||||
|
AlphaCat 2014
|
|
AlphaCat 2015
|
|
AlphaCat ILS funds
|
|
AlphaCat direct
|
|
Total
|
||||||||||
As at December 31, 2014
|
$
|
157,384
|
|
|
$
|
—
|
|
|
$
|
514,081
|
|
|
$
|
—
|
|
|
$
|
671,465
|
|
Notes payable to AlphaCat investors recognized on deconsolidation of AlphaCat ILS fund
|
—
|
|
|
—
|
|
|
179,316
|
|
|
—
|
|
|
179,316
|
|
|||||
Issuance of notes payable to AlphaCat investors
|
—
|
|
|
154,358
|
|
|
1,077,661
|
|
|
75,770
|
|
|
1,307,789
|
|
|||||
Redemption of notes payable to AlphaCat investors
|
(157,074
|
)
|
|
—
|
|
|
(551,985
|
)
|
|
—
|
|
|
(709,059
|
)
|
|||||
Foreign exchange gain
|
(310
|
)
|
|
(25
|
)
|
|
(5,814
|
)
|
|
(164
|
)
|
|
(6,313
|
)
|
|||||
As at September 30, 2015
|
$
|
—
|
|
|
$
|
154,333
|
|
|
$
|
1,213,259
|
|
|
$
|
75,606
|
|
|
$
|
1,443,198
|
|
|
Nine Months Ended September 30, 2014
|
||||||||||||||
|
AlphaCat 2013
|
|
AlphaCat 2014
|
|
AlphaCat ILS funds
|
|
Total
|
||||||||
As at December 31, 2013
|
$
|
223,809
|
|
|
$
|
—
|
|
|
$
|
215,463
|
|
|
$
|
439,272
|
|
Notes payable to AlphaCat investors recognized on deconsolidation of AlphaCat ILS fund
|
—
|
|
|
—
|
|
|
178,837
|
|
|
178,837
|
|
||||
Issuance of notes payable to AlphaCat investors
|
—
|
|
|
157,914
|
|
|
487,329
|
|
|
645,243
|
|
||||
Redemption of notes payable to AlphaCat investors
|
(223,512
|
)
|
|
—
|
|
|
(378,556
|
)
|
|
(602,068
|
)
|
||||
Foreign exchange gain
|
(297
|
)
|
|
(332
|
)
|
|
(4,679
|
)
|
|
(5,308
|
)
|
||||
As at September 30, 2014
|
$
|
—
|
|
|
$
|
157,582
|
|
|
$
|
498,394
|
|
|
$
|
655,976
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
AlphaCat 2013
|
$
|
—
|
|
|
$
|
(98
|
)
|
|
$
|
—
|
|
|
$
|
(14,218
|
)
|
AlphaCat 2014
|
—
|
|
|
(11,309
|
)
|
|
(255
|
)
|
|
(32,990
|
)
|
||||
AlphaCat 2015
|
(8,862
|
)
|
|
—
|
|
|
(27,446
|
)
|
|
—
|
|
||||
AlphaCat ILS funds
|
(29,956
|
)
|
|
(14,400
|
)
|
|
(65,202
|
)
|
|
(35,625
|
)
|
||||
AlphaCat direct
|
(1,438
|
)
|
|
—
|
|
|
(1,438
|
)
|
|
—
|
|
||||
(Income) attributable to AlphaCat investors
|
$
|
(40,256
|
)
|
|
$
|
(25,807
|
)
|
|
$
|
(94,341
|
)
|
|
$
|
(82,833
|
)
|
|
Three Months Ended September 30, 2015
|
||||||||||
|
Redeemable noncontrolling interest
|
|
Noncontrolling interest
|
|
Total
|
||||||
As at June 30, 2015
|
$
|
—
|
|
|
$
|
510,090
|
|
|
$
|
510,090
|
|
Loss attributable to noncontrolling interest
|
—
|
|
|
(71,663
|
)
|
|
(71,663
|
)
|
|||
As at September 30, 2015
|
$
|
—
|
|
|
$
|
438,427
|
|
|
$
|
438,427
|
|
|
Three Months Ended September 30, 2014
|
||||||||||
|
Redeemable noncontrolling interest
|
|
Noncontrolling interest
|
|
Total
|
||||||
As at June 30, 2014
|
$
|
66,282
|
|
|
$
|
575,347
|
|
|
$
|
641,629
|
|
Issuance of shares
|
4,200
|
|
|
—
|
|
|
4,200
|
|
|||
Loss attributable to noncontrolling interest
|
(9
|
)
|
|
(53,060
|
)
|
|
(53,069
|
)
|
|||
As at September 30, 2014
|
$
|
70,473
|
|
|
$
|
522,287
|
|
|
$
|
592,760
|
|
|
Nine Months Ended September 30, 2015
|
||||||||||
|
Redeemable noncontrolling interest
|
|
Noncontrolling interest
|
|
Total
|
||||||
As at December 31, 2014
|
$
|
79,956
|
|
|
$
|
458,595
|
|
|
$
|
538,551
|
|
Issuance of shares
|
55,700
|
|
|
—
|
|
|
55,700
|
|
|||
Income (loss) attributable to noncontrolling interest
|
5,126
|
|
|
(20,168
|
)
|
|
(15,042
|
)
|
|||
Adjustment to noncontrolling interest as a result of deconsolidation
|
(121,387
|
)
|
|
—
|
|
|
(121,387
|
)
|
|||
Redemption of shares
|
(19,395
|
)
|
|
—
|
|
|
(19,395
|
)
|
|||
As at September 30, 2015
|
$
|
—
|
|
|
$
|
438,427
|
|
|
$
|
438,427
|
|
|
Nine Months Ended September 30, 2014
|
||||||||||
|
Redeemable noncontrolling interest
|
|
Noncontrolling interest
|
|
Total
|
||||||
As at December 31, 2013
|
$
|
86,512
|
|
|
$
|
497,657
|
|
|
$
|
584,169
|
|
Issuance of shares
|
61,200
|
|
|
—
|
|
|
61,200
|
|
|||
Income attributable to noncontrolling interest
|
1,115
|
|
|
24,630
|
|
|
25,745
|
|
|||
Adjustment to noncontrolling interest as a result of deconsolidation
|
(78,354
|
)
|
|
—
|
|
|
(78,354
|
)
|
|||
As at September 30, 2014
|
$
|
70,473
|
|
|
$
|
522,287
|
|
|
$
|
592,760
|
|
|
|
As at September 30, 2015
|
|
As at December 31, 2014
|
||||||||||||||||||||
Derivatives not designated as hedging instruments:
|
|
Net Notional Exposure
|
|
Asset Derivative at Fair Value (a)
|
|
Liability Derivative at Fair Value (a)
|
|
Net Notional Exposure
|
|
Asset Derivative at Fair Value (a)
|
|
Liability Derivative at Fair Value (a)
|
||||||||||||
Foreign currency forward contracts
|
|
$
|
23,346
|
|
|
$
|
174
|
|
|
$
|
—
|
|
|
$
|
26,755
|
|
|
$
|
1,685
|
|
|
$
|
—
|
|
(a)
|
Asset and liability derivatives are classified within other assets and accounts payable and accrued expenses respectively on the Consolidated Balance Sheets. The net impact on earnings during the
three and nine months ended
September 30, 2015
, recognized in income within other income, relating to the foreign currency forward contract that was not designated as a hedging instrument was
($184)
and
($311)
, respectively (
2014
:
$nil
and
$nil
).
|
|
|
As at September 30, 2015
|
|
As at December 31, 2014
|
||||||||||||||||||||
Derivatives designated as hedging instruments:
|
|
Net Notional Exposure
|
|
Asset Derivative at Fair Value (a)
|
|
Liability Derivative at Fair Value (a)
|
|
Net Notional Exposure
|
|
Asset Derivative at Fair Value (a)
|
|
Liability Derivative at Fair Value (a)
|
||||||||||||
Foreign currency forward contracts
|
|
$
|
188,691
|
|
|
$
|
1,390
|
|
|
$
|
4,918
|
|
|
$
|
189,026
|
|
|
$
|
401
|
|
|
$
|
3,136
|
|
Interest rate swap contracts
|
|
$
|
552,263
|
|
|
$
|
21
|
|
|
$
|
1,444
|
|
|
$
|
552,263
|
|
|
$
|
25
|
|
|
$
|
1,169
|
|
(a)
|
Asset and liability derivatives are classified within other assets and accounts payable and accrued expenses, respectively on the Consolidated Balance Sheets.
|
(a)
|
Classification within the fair value hierarchy
|
(b)
|
Derivative instruments designated as a fair value hedge
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Foreign currency forward contracts
|
|
September 30, 2015
|
|
September 30, 2014
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||
Amount of loss recognized in income on derivative
|
|
$
|
(4,175
|
)
|
|
$
|
(14,817
|
)
|
|
$
|
(21,965
|
)
|
|
$
|
(9,979
|
)
|
Amount of gain on hedged item recognized in income attributable to risk being hedged
|
|
$
|
4,175
|
|
|
$
|
14,817
|
|
|
$
|
21,965
|
|
|
$
|
9,979
|
|
Amount of gain (loss) recognized in income on derivative (ineffective portion)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(c)
|
Derivative instruments designated as a cash flow hedge
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Interest rate swap contracts
|
|
September 30, 2015
|
|
September 30, 2014
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||
Amount of effective portion recognized in other comprehensive income
|
|
$
|
3,178
|
|
|
$
|
3,302
|
|
|
$
|
10,064
|
|
|
$
|
9,762
|
|
Amount of effective portion subsequently reclassified to earnings
|
|
$
|
(3,253
|
)
|
|
$
|
(3,302
|
)
|
|
$
|
(9,728
|
)
|
|
$
|
(9,762
|
)
|
Amount of ineffective portion excluded from effectiveness testing
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
(336
|
)
|
|
$
|
—
|
|
(d)
|
Balance sheet offsetting
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
Reserve for losses and loss expenses, beginning of period
|
$
|
3,187,177
|
|
|
$
|
2,867,307
|
|
|
$
|
3,234,394
|
|
|
$
|
3,030,399
|
|
Losses and loss expenses recoverable
|
(376,665
|
)
|
|
(338,734
|
)
|
|
(377,466
|
)
|
|
(370,154
|
)
|
||||
Net reserves for losses and loss expenses, beginning of period
|
2,810,512
|
|
|
2,528,573
|
|
|
2,856,928
|
|
|
2,660,245
|
|
||||
Increase (decrease) in net reserves for losses and loss expenses in respect of losses occurring in:
|
|
|
|
|
|
|
|
||||||||
Current year
|
349,759
|
|
|
279,690
|
|
|
1,011,111
|
|
|
713,177
|
|
||||
Prior years (a)
|
(91,501
|
)
|
|
(55,565
|
)
|
|
(245,778
|
)
|
|
(167,636
|
)
|
||||
Total incurred losses and loss expenses (a)
|
258,258
|
|
|
224,125
|
|
|
765,333
|
|
|
545,541
|
|
||||
Less net losses and loss expenses paid in respect of losses occurring in:
|
|
|
|
|
|
|
|
||||||||
Current year
|
(63,151
|
)
|
|
(74,618
|
)
|
|
(105,216
|
)
|
|
(99,326
|
)
|
||||
Prior years
|
(207,514
|
)
|
|
(183,697
|
)
|
|
(700,507
|
)
|
|
(633,048
|
)
|
||||
Total net paid losses
|
(270,665
|
)
|
|
(258,315
|
)
|
|
(805,723
|
)
|
|
(732,374
|
)
|
||||
Foreign exchange gain
|
(13,983
|
)
|
|
(40,717
|
)
|
|
(32,416
|
)
|
|
(19,746
|
)
|
||||
Net reserve for losses and loss expenses, end of period
|
2,784,122
|
|
|
2,453,666
|
|
|
2,784,122
|
|
|
2,453,666
|
|
||||
Losses and loss expenses recoverable
|
385,212
|
|
|
298,502
|
|
|
385,212
|
|
|
298,502
|
|
||||
Reserve for losses and loss expenses, end of period
|
$
|
3,169,334
|
|
|
$
|
2,752,168
|
|
|
$
|
3,169,334
|
|
|
$
|
2,752,168
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
Gross losses and loss expenses (a)
|
$
|
285,871
|
|
|
$
|
222,356
|
|
|
$
|
854,438
|
|
|
$
|
587,111
|
|
Reinsurance recoverable
|
(27,613
|
)
|
|
1,769
|
|
|
(89,105
|
)
|
|
(41,570
|
)
|
||||
Net incurred losses and loss expenses (a)
|
$
|
258,258
|
|
|
$
|
224,125
|
|
|
$
|
765,333
|
|
|
$
|
545,541
|
|
(a)
|
Upon closing the acquisition of Western World, an adjustment of
$15,586
was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of
$2,524
and
$8,639
during the
three and nine months ended
September 30, 2015
, respectively. The remaining fair value adjustment of
$2,340
will be amortized during the remainder of 2015.
|
|
Three Months Ended September 30, 2015
|
||||||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Liability
|
|
Total (a)
|
||||||||||
Validus Re
|
$
|
(27,613
|
)
|
|
$
|
(13,556
|
)
|
|
$
|
(9,306
|
)
|
|
$
|
—
|
|
|
$
|
(50,475
|
)
|
Talbot
|
(9,706
|
)
|
|
(14,854
|
)
|
|
(11,412
|
)
|
|
—
|
|
|
(35,972
|
)
|
|||||
Western World (b)
|
(1,054
|
)
|
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
|
(5,054
|
)
|
|||||
Net favorable development (b)
|
$
|
(38,373
|
)
|
|
$
|
(28,410
|
)
|
|
$
|
(20,718
|
)
|
|
$
|
(4,000
|
)
|
|
$
|
(91,501
|
)
|
(a)
|
AlphaCat has not had any development on prior accident years.
|
(b)
|
Upon closing the acquisition of Western World, an adjustment of
$15,586
was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of
$2,524
during the
three months ended
September 30, 2015
. The remaining fair value adjustment of
$2,340
will be amortized during the remainder of 2015.
|
|
Three Months Ended September 30, 2014
|
||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Total (a)
|
||||||||
Validus Re
|
$
|
(16,384
|
)
|
|
$
|
(2,843
|
)
|
|
$
|
(913
|
)
|
|
$
|
(20,140
|
)
|
Talbot
|
(13,285
|
)
|
|
(11,922
|
)
|
|
(10,218
|
)
|
|
(35,425
|
)
|
||||
Net favorable development
|
$
|
(29,669
|
)
|
|
$
|
(14,765
|
)
|
|
$
|
(11,131
|
)
|
|
$
|
(55,565
|
)
|
(a)
|
AlphaCat has not had any development on prior accident years.
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Liability
|
|
Total
|
||||||||||
Validus Re
|
$
|
(58,437
|
)
|
|
$
|
(29,225
|
)
|
|
$
|
(18,388
|
)
|
|
$
|
—
|
|
|
$
|
(106,050
|
)
|
AlphaCat
|
(844
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(844
|
)
|
|||||
Talbot
|
(47,141
|
)
|
|
(51,178
|
)
|
|
(24,926
|
)
|
|
—
|
|
|
(123,245
|
)
|
|||||
Western World (a)
|
(4,648
|
)
|
|
—
|
|
|
—
|
|
|
(10,991
|
)
|
|
(15,639
|
)
|
|||||
Net favorable development (a)
|
$
|
(111,070
|
)
|
|
$
|
(80,403
|
)
|
|
$
|
(43,314
|
)
|
|
$
|
(10,991
|
)
|
|
$
|
(245,778
|
)
|
(a)
|
Upon closing the acquisition of Western World, an adjustment of
$15,586
was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of
$8,639
during the
nine months ended
September 30, 2015
. The remaining fair value adjustment of
$2,340
will be amortized during the remainder of 2015.
|
|
Nine Months Ended September 30, 2014
|
||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
Validus Re
|
$
|
(50,598
|
)
|
|
$
|
(5,213
|
)
|
|
$
|
(1,025
|
)
|
|
$
|
(56,836
|
)
|
AlphaCat
|
(11,608
|
)
|
|
—
|
|
|
—
|
|
|
(11,608
|
)
|
||||
Talbot
|
(43,905
|
)
|
|
(18,191
|
)
|
|
(37,096
|
)
|
|
(99,192
|
)
|
||||
Net favorable development
|
$
|
(106,111
|
)
|
|
$
|
(23,404
|
)
|
|
$
|
(38,121
|
)
|
|
$
|
(167,636
|
)
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||
|
Reinsurance Recoverable
|
|
% of Total
|
|
Reinsurance Recoverable
|
|
% of Total
|
||||||
Top 10 reinsurers
|
$
|
330,550
|
|
|
81.2
|
%
|
|
$
|
312,205
|
|
|
75.1
|
%
|
Other reinsurers’ balances > $1 million
|
67,209
|
|
|
16.5
|
%
|
|
94,247
|
|
|
22.7
|
%
|
||
Other reinsurers’ balances < $1 million
|
9,134
|
|
|
2.3
|
%
|
|
9,092
|
|
|
2.2
|
%
|
||
Total
|
$
|
406,893
|
|
|
100.0
|
%
|
|
$
|
415,544
|
|
|
100.0
|
%
|
|
|
September 30, 2015
|
|||||||
Top 10 Reinsurers
|
|
Rating
|
|
Reinsurance Recoverable
|
|
% of Total
|
|||
Swiss Re
|
|
AA-
|
|
$
|
78,548
|
|
|
19.3
|
%
|
Lloyd's Syndicates
|
|
A+
|
|
71,085
|
|
|
17.5
|
%
|
|
Everest Re
|
|
A+
|
|
47,395
|
|
|
11.6
|
%
|
|
Hannover Re
|
|
AA-
|
|
42,706
|
|
|
10.5
|
%
|
|
Fully Collateralized
|
|
NR
|
|
27,604
|
|
|
6.8
|
%
|
|
Munich Re
|
|
AA-
|
|
19,063
|
|
|
4.7
|
%
|
|
Hamilton Re
|
|
A-
|
|
12,613
|
|
|
3.1
|
%
|
|
Transatlantic Re
|
|
A+
|
|
11,921
|
|
|
2.9
|
%
|
|
National Indemnity Company
|
|
AA+
|
|
10,293
|
|
|
2.5
|
%
|
|
XL Re
|
|
A+
|
|
9,322
|
|
|
2.3
|
%
|
|
Total
|
|
|
|
$
|
330,550
|
|
|
81.2
|
%
|
|
|
December 31, 2014
|
|||||||
Top 10 Reinsurers
|
|
Rating
|
|
Reinsurance Recoverable
|
|
% of Total
|
|||
Swiss Re
|
|
AA-
|
|
$
|
70,848
|
|
|
17.0
|
%
|
Lloyd's Syndicates
|
|
A+
|
|
62,318
|
|
|
15.0
|
%
|
|
Everest Re
|
|
A+
|
|
51,425
|
|
|
12.4
|
%
|
|
Hannover Re
|
|
AA-
|
|
40,927
|
|
|
9.8
|
%
|
|
Fully Collateralized
|
|
NR
|
|
23,315
|
|
|
5.6
|
%
|
|
Munich Re
|
|
AA-
|
|
19,384
|
|
|
4.7
|
%
|
|
Transatlantic Re
|
|
A+
|
|
12,418
|
|
|
3.0
|
%
|
|
XL Re
|
|
A+
|
|
11,114
|
|
|
2.7
|
%
|
|
Berkshire Hathaway Homestate
|
|
AA+
|
|
10,372
|
|
|
2.5
|
%
|
|
Merrimack Mutual Fire Insurance
|
|
A+
|
|
10,084
|
|
|
2.4
|
%
|
|
Total
|
|
|
|
$
|
312,205
|
|
|
75.1
|
%
|
(a)
|
Authorized and issued
|
|
Common Shares
|
|
Common shares issued, December 31, 2014
|
155,554,224
|
|
Restricted share awards vested, net of shares withheld
|
610,714
|
|
Restricted share units vested, net of shares withheld
|
13,260
|
|
Options exercised
|
782,465
|
|
Warrants exercised
|
1,461,715
|
|
Direct issuance of common stock
|
639
|
|
Performance share awards vested, net of shares withheld
|
11,524
|
|
Common shares issued, September 30, 2015
|
158,434,541
|
|
Treasury shares, September 30, 2015
|
(76,436,650
|
)
|
Common shares outstanding, September 30, 2015
|
81,997,891
|
|
|
Common Shares
|
|
Common shares issued, December 31, 2013
|
154,488,497
|
|
Restricted share awards vested, net of shares withheld
|
594,582
|
|
Restricted share units vested, net of shares withheld
|
10,265
|
|
Options exercised
|
133,385
|
|
Direct issuance of common stock
|
1,060
|
|
Performance share awards vested, net of shares withheld
|
25,767
|
|
Common shares issued, September 30, 2014
|
155,253,556
|
|
Treasury shares, September 30, 2014
|
(66,141,285
|
)
|
Common shares outstanding, September 30, 2014
|
89,112,271
|
|
(b)
|
Warrants
|
(c)
|
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, 2014
|
1,160,057
|
|
|
$
|
7.12
|
|
|
$
|
17.74
|
|
Options exercised
|
(1,094,656
|
)
|
|
7.09
|
|
|
17.60
|
|
||
Options outstanding, September 30, 2015
|
65,401
|
|
|
$
|
7.74
|
|
|
$
|
20.17
|
|
|
Options
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Grant Date Exercise Price
|
|||||
Options outstanding, December 31, 2013
|
1,572,713
|
|
|
$
|
6.66
|
|
|
$
|
18.88
|
|
Options exercised
|
(133,385
|
)
|
|
3.81
|
|
|
25.10
|
|
||
Options outstanding, September 30, 2014
|
1,439,328
|
|
|
$
|
6.93
|
|
|
$
|
18.30
|
|
ii.
|
Restricted share awards
|
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share awards outstanding, December 31, 2014
|
2,858,711
|
|
|
$
|
35.81
|
|
Restricted share awards granted
|
706,341
|
|
|
43.58
|
|
|
Restricted share awards vested
|
(783,704
|
)
|
|
34.40
|
|
|
Restricted share awards forfeited
|
(52,642
|
)
|
|
38.03
|
|
|
Restricted share awards outstanding, September 30, 2015
|
2,728,706
|
|
|
$
|
38.19
|
|
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share awards outstanding, December 31, 2013
|
2,684,745
|
|
|
$
|
33.74
|
|
Restricted share awards granted
|
925,610
|
|
|
37.33
|
|
|
Restricted share awards vested
|
(769,971
|
)
|
|
31.47
|
|
|
Restricted share awards forfeited
|
(69,117
|
)
|
|
36.28
|
|
|
Restricted share awards outstanding, September 30, 2014
|
2,771,267
|
|
|
$
|
35.50
|
|
iii.
|
Restricted share units
|
|
Restricted Share Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share units outstanding, December 31, 2014
|
103,484
|
|
|
$
|
36.54
|
|
Restricted share units granted
|
28,057
|
|
|
42.91
|
|
|
Restricted share units vested
|
(19,455
|
)
|
|
34.58
|
|
|
Restricted share units issued in lieu of cash dividends
|
2,337
|
|
|
37.21
|
|
|
Restricted share units forfeited
|
(892
|
)
|
|
35.42
|
|
|
Restricted share units outstanding, September 30, 2015
|
113,531
|
|
|
$
|
38.47
|
|
|
Restricted
Share Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Restricted share units outstanding, December 31, 2013
|
66,518
|
|
|
$
|
33.74
|
|
Restricted share units granted
|
53,025
|
|
|
38.10
|
|
|
Restricted share units vested
|
(18,325
|
)
|
|
30.71
|
|
|
Restricted share units issued in lieu of cash dividends
|
1,479
|
|
|
34.19
|
|
|
Restricted share units outstanding, September 30, 2014
|
102,697
|
|
|
$
|
36.54
|
|
iv.
|
Performance share awards
|
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Performance share awards outstanding, December 31, 2014
|
106,369
|
|
|
$
|
36.03
|
|
Performance share awards granted
|
81,569
|
|
|
45.03
|
|
|
Performance share awards vested
|
(15,344
|
)
|
|
31.38
|
|
|
Performance share awards outstanding, September 30, 2015
|
172,594
|
|
|
$
|
40.70
|
|
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Performance share awards outstanding, December 31, 2013
|
101,820
|
|
|
$
|
33.56
|
|
Performance share awards granted
|
52,639
|
|
|
37.33
|
|
|
Performance share awards vested
|
(32,746
|
)
|
|
32.62
|
|
|
Performance share awards conversion adjustment
|
(15,344
|
)
|
|
$
|
31.38
|
|
Performance share awards outstanding, September 30, 2014
|
106,369
|
|
|
$
|
36.03
|
|
(b)
|
Total share compensation expenses
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
Restricted share awards
|
$
|
9,081
|
|
|
$
|
8,180
|
|
|
26,213
|
|
|
23,101
|
|
||
Restricted share units
|
310
|
|
|
269
|
|
|
851
|
|
|
602
|
|
||||
Performance share awards
|
592
|
|
|
315
|
|
|
1,215
|
|
|
549
|
|
||||
Total
|
$
|
9,983
|
|
|
$
|
8,764
|
|
|
$
|
28,279
|
|
|
$
|
24,252
|
|
(a)
|
Financing structure
|
|
Commitment
|
|
Issued and 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
|
|
|||
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
134,504
|
|
|
134,504
|
|
|
134,504
|
|
|||
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
113,750
|
|
|
113,750
|
|
|
113,750
|
|
|||
Total debentures payable
|
598,254
|
|
|
538,054
|
|
|
538,054
|
|
|||
2010 Senior Notes due 2040
|
250,000
|
|
|
250,000
|
|
|
247,387
|
|
|||
Total debentures and senior notes payable
|
848,254
|
|
|
788,054
|
|
|
785,441
|
|
|||
$400,000 syndicated unsecured letter of credit facility
|
400,000
|
|
|
—
|
|
|
—
|
|
|||
$525,000 syndicated secured letter of credit facility
|
525,000
|
|
|
244,358
|
|
|
—
|
|
|||
$30,000 secured bi-lateral letter of credit facility
|
30,000
|
|
|
10,172
|
|
|
—
|
|
|||
Talbot FAL facility
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|||
AlphaCat Re secured letter of credit facility
|
30,000
|
|
|
30,000
|
|
|
—
|
|
|||
IPC bi-lateral facility
|
25,000
|
|
|
10,782
|
|
|
—
|
|
|||
$230,000 Flagstone bi-lateral facility
|
230,000
|
|
|
205,593
|
|
|
—
|
|
|||
Total credit and other facilities
|
1,265,000
|
|
|
525,905
|
|
|
—
|
|
|||
Total debt and financing arrangements
|
$
|
2,113,254
|
|
|
$
|
1,313,959
|
|
|
$
|
785,441
|
|
|
Commitment
|
|
Issued and 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
|
|
|||
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
135,727
|
|
|
135,727
|
|
|
135,727
|
|
|||
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
113,750
|
|
|
113,750
|
|
|
113,750
|
|
|||
Total debentures payable
|
599,477
|
|
|
539,277
|
|
|
539,277
|
|
|||
2010 Senior Notes due 2040
|
250,000
|
|
|
250,000
|
|
|
247,306
|
|
|||
Total debentures and senior notes payable
|
849,477
|
|
|
789,277
|
|
|
786,583
|
|
|||
$400,000 syndicated unsecured letter of credit facility
|
400,000
|
|
|
—
|
|
|
—
|
|
|||
$525,000 syndicated secured letter of credit facility
|
525,000
|
|
|
276,455
|
|
|
—
|
|
|||
$200,000 secured bi-lateral letter of credit facility
|
200,000
|
|
|
15,649
|
|
|
—
|
|
|||
Talbot FAL facility
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|||
PaCRe senior secured letter of credit facility
|
10,000
|
|
|
294
|
|
|
—
|
|
|||
AlphaCat Re secured letter of credit facility
|
30,000
|
|
|
30,000
|
|
|
—
|
|
|||
IPC bi-lateral facility
|
40,000
|
|
|
15,897
|
|
|
—
|
|
|||
$375,000 Flagstone bi-lateral facility
|
375,000
|
|
|
198,389
|
|
|
—
|
|
|||
Total credit and other facilities
|
1,605,000
|
|
|
561,684
|
|
|
—
|
|
|||
Total debt and financing arrangements
|
$
|
2,454,477
|
|
|
$
|
1,350,961
|
|
|
$
|
786,583
|
|
(a)
|
Indicates utilization of commitment amount, not necessarily drawn borrowings.
|
(b)
|
Senior notes and junior subordinated deferrable debentures
|
Description
|
Issuance date
|
Commitment
|
Maturity date
|
Fixed/Spread
|
|
Interest payments due
|
|||
2006 Junior Subordinated Deferrable Debentures
|
June 15, 2006
|
$
|
150,000
|
|
June 15, 2036
|
9.069
|
%
|
(a)
|
Quarterly
|
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
August 23, 2006
|
$
|
134,504
|
|
September 15, 2036
|
3.540
|
%
|
(b)
|
Quarterly
|
2007 Junior Subordinated Deferrable Debentures
|
June 21, 2007
|
$
|
200,000
|
|
June 15, 2037
|
8.480
|
%
|
(a)
|
Quarterly
|
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
June 8, 2007
|
$
|
88,750
|
|
July 30, 2037
|
3.000
|
%
|
(b)
|
Quarterly
|
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
September 20, 2007
|
$
|
25,000
|
|
September 15, 2037
|
3.100
|
%
|
(b)
|
Quarterly
|
2010 Senior Notes due 2040
|
January 26, 2010
|
$
|
250,000
|
|
January 26, 2040
|
8.875
|
%
|
(a)
|
Semi-annually in arrears
|
(a)
|
Fixed interest rate.
|
(b)
|
Variable interest rate is the three-month LIBOR, reset quarterly, plus spread as noted in the table.
|
Description
|
Issuance date
|
Commitment
|
Maturity date
|
Fixed/Spread
|
|
Interest payments due
|
|||
2006 Junior Subordinated Deferrable Debentures
|
June 15, 2006
|
$
|
150,000
|
|
June 15, 2036
|
5.831
|
%
|
(b)
|
Quarterly
|
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
August 23, 2006
|
$
|
134,482
|
|
September 15, 2036
|
6.463
|
%
|
(b)
|
Quarterly
|
2007 Junior Subordinated Deferrable Debentures
|
June 21, 2007
|
$
|
200,000
|
|
June 15, 2037
|
5.180
|
%
|
(b)
|
Quarterly
|
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
June 8, 2007
|
$
|
88,750
|
|
July 30, 2037
|
5.900
|
%
|
(b)
|
Quarterly
|
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
September 20, 2007
|
$
|
25,000
|
|
September 15, 2037
|
5.983
|
%
|
(b)
|
Quarterly
|
2010 Senior Notes due 2040
|
January 26, 2010
|
$
|
250,000
|
|
January 26, 2040
|
8.875
|
%
|
(a)
|
Semi-annually in arrears
|
(a)
|
Fixed interest rate.
|
(b)
|
Interest rate has been fixed as a result of interest rate swap contracts entered into by the Company.
|
(c)
|
Credit facilities
|
i.
|
$400,000
syndicated unsecured letter of credit facility and
$525,000
syndicated secured letter of credit facility
|
ii.
|
$25,000
Talbot FAL facility
|
iii.
|
$25,000
IPC bi-lateral facility
|
iv.
|
$30,000
secured bi-lateral letter of credit facility
|
v.
|
$10,000
PaCRe senior secured letter of credit facility
|
vi.
|
$30,000
AlphaCat Re secured letter of credit facility
|
vii.
|
$230,000
Flagstone bi-lateral facility
|
(d)
|
Finance expenses
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
2006 Junior Subordinated Deferrable Debentures
|
$
|
2,235
|
|
|
$
|
2,235
|
|
|
$
|
6,633
|
|
|
$
|
6,633
|
|
2007 Junior Subordinated Deferrable Debentures
|
1,848
|
|
|
1,848
|
|
|
5,492
|
|
|
5,492
|
|
||||
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
2,274
|
|
|
2,269
|
|
|
6,735
|
|
|
6,736
|
|
||||
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
1,807
|
|
|
1,807
|
|
|
5,335
|
|
|
5,335
|
|
||||
2010 Senior Notes due 2040
|
5,597
|
|
|
5,597
|
|
|
16,791
|
|
|
16,791
|
|
||||
Credit facilities
|
1,293
|
|
|
1,295
|
|
|
4,193
|
|
|
4,225
|
|
||||
Bank charges
|
76
|
|
|
88
|
|
|
337
|
|
|
303
|
|
||||
AlphaCat fees (a)
|
2,348
|
|
|
384
|
|
|
9,456
|
|
|
2,030
|
|
||||
Talbot FAL Facility
|
20
|
|
|
(169
|
)
|
|
113
|
|
|
(165
|
)
|
||||
Total finance expenses
|
$
|
17,498
|
|
|
$
|
15,354
|
|
|
$
|
55,085
|
|
|
$
|
47,380
|
|
(a)
|
Includes finance expenses incurred by AlphaCat Managers, Ltd. in relation to fund raising for AlphaCat direct, the AlphaCat ILS funds, AlphaCat 2015 and AlphaCat 2014.
|
Three Months Ended September 30, 2015
|
Foreign currency translation adjustment
|
|
Minimum pension liability
|
|
Cash flow hedge
|
|
Total
|
||||||||
Balance beginning of period, net of tax
|
$
|
(8,374
|
)
|
|
$
|
(53
|
)
|
|
$
|
(639
|
)
|
|
$
|
(9,066
|
)
|
Net current period other comprehensive (loss) income, net of tax
|
(1,850
|
)
|
|
(28
|
)
|
|
75
|
|
|
(1,803
|
)
|
||||
Balance end of period, net of tax
|
$
|
(10,224
|
)
|
|
$
|
(81
|
)
|
|
$
|
(564
|
)
|
|
$
|
(10,869
|
)
|
Three Months Ended September 30, 2014
|
Foreign currency translation adjustment
|
|
Total
|
||||
Balance beginning of period, net of tax
|
$
|
2,460
|
|
|
$
|
2,460
|
|
Net current period other comprehensive loss, net of tax
|
(5,198
|
)
|
|
(5,198
|
)
|
||
Balance end of period, net of tax
|
$
|
(2,738
|
)
|
|
$
|
(2,738
|
)
|
Nine Months Ended September 30, 2015
|
Foreign currency translation adjustment
|
|
Minimum pension liability
|
|
Cash flow hedge
|
|
Total
|
||||||||
Balance beginning of period, net of tax
|
$
|
(8,118
|
)
|
|
$
|
(210
|
)
|
|
$
|
(228
|
)
|
|
$
|
(8,556
|
)
|
Net current period other comprehensive (loss) income, net of tax
|
(2,106
|
)
|
|
129
|
|
|
(336
|
)
|
|
(2,313
|
)
|
||||
Balance end of period, net of tax
|
$
|
(10,224
|
)
|
|
$
|
(81
|
)
|
|
$
|
(564
|
)
|
|
$
|
(10,869
|
)
|
Nine Months Ended September 30, 2014
|
Foreign currency translation adjustment
|
|
Total
|
||||
Balance beginning of period, net of tax
|
$
|
(617
|
)
|
|
$
|
(617
|
)
|
Net current period other comprehensive loss, net of tax
|
(2,121
|
)
|
|
(2,121
|
)
|
||
Balance end of period, net of tax
|
$
|
(2,738
|
)
|
|
$
|
(2,738
|
)
|
(a)
|
Concentrations of credit risk
|
(b)
|
Funds at Lloyd's
|
|
2015 Underwriting Year
|
|
2014 Underwriting Year
|
||||
Talbot FAL facility
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Group funds
|
570,100
|
|
|
450,000
|
|
||
Total
|
$
|
595,100
|
|
|
$
|
475,000
|
|
(c)
|
Lloyd's Central Fund
|
(d)
|
Investment in affiliate commitments
|
(e)
|
Fixed maturity commitment
|
(f)
|
Other investment commitments
|
(g)
|
Multi-Beneficiary Reinsurance Trust ("MBRT")
|
(h)
|
Income tax examinations
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2015 |
|
September 30,
2014 |
|
September 30,
2015 |
|
September 30,
2014 |
||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(5,013
|
)
|
|
$
|
(13,397
|
)
|
|
$
|
289,032
|
|
|
$
|
381,172
|
|
Loss (income) attributable to noncontrolling interest
|
71,663
|
|
|
53,069
|
|
|
15,042
|
|
|
(25,745
|
)
|
||||
Net income available to Validus
|
66,650
|
|
|
39,672
|
|
|
304,074
|
|
|
355,427
|
|
||||
Less: Dividends and distributions declared on outstanding warrants
|
(1,080
|
)
|
|
(1,552
|
)
|
|
(3,566
|
)
|
|
(4,656
|
)
|
||||
Income available to common shareholders
|
$
|
65,570
|
|
|
$
|
38,120
|
|
|
$
|
300,508
|
|
|
$
|
350,771
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
82,635,316
|
|
|
90,593,329
|
|
|
83,296,703
|
|
|
91,665,950
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share available to common shareholders
|
$
|
0.79
|
|
|
$
|
0.42
|
|
|
$
|
3.61
|
|
|
$
|
3.83
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per diluted share
|
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(5,013
|
)
|
|
$
|
(13,397
|
)
|
|
$
|
289,032
|
|
|
$
|
381,172
|
|
Loss (income) attributable to noncontrolling interest
|
71,663
|
|
|
53,069
|
|
|
15,042
|
|
|
(25,745
|
)
|
||||
Net income available to Validus
|
66,650
|
|
|
39,672
|
|
|
304,074
|
|
|
355,427
|
|
||||
Less: Dividends and distributions declared on outstanding warrants
|
—
|
|
|
(1,552
|
)
|
|
—
|
|
|
—
|
|
||||
Income available to common shareholders
|
$
|
66,650
|
|
|
$
|
38,120
|
|
|
$
|
304,074
|
|
|
$
|
355,427
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
82,635,316
|
|
|
90,593,329
|
|
|
83,296,703
|
|
|
91,665,950
|
|
||||
Share equivalents:
|
|
|
|
|
|
|
|
||||||||
Warrants
|
2,054,378
|
|
|
—
|
|
|
2,290,892
|
|
|
2,747,399
|
|
||||
Stock options
|
47,702
|
|
|
760,267
|
|
|
190,429
|
|
|
752,145
|
|
||||
Unvested restricted shares
|
892,098
|
|
|
586,014
|
|
|
1,063,903
|
|
|
772,147
|
|
||||
Weighted average number of diluted common shares outstanding
|
85,629,494
|
|
|
91,939,610
|
|
|
86,841,927
|
|
|
95,937,641
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per diluted share available to common shareholders
|
$
|
0.78
|
|
|
$
|
0.41
|
|
|
$
|
3.50
|
|
|
$
|
3.70
|
|
Three Months Ended September 30, 2015
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Western World Segment
|
|
Corporate & Eliminations
|
|
Total
|
||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Gross premiums written
|
|
$
|
102,913
|
|
|
$
|
9,448
|
|
|
$
|
226,025
|
|
|
$
|
70,871
|
|
|
$
|
(7,576
|
)
|
|
$
|
401,681
|
|
Reinsurance premiums ceded
|
|
(15,462
|
)
|
|
—
|
|
|
(35,823
|
)
|
|
(4,716
|
)
|
|
7,576
|
|
|
(48,425
|
)
|
||||||
Net premiums written
|
|
87,451
|
|
|
9,448
|
|
|
190,202
|
|
|
66,155
|
|
|
—
|
|
|
353,256
|
|
||||||
Change in unearned premiums
|
|
153,210
|
|
|
35,276
|
|
|
15,942
|
|
|
(2,225
|
)
|
|
—
|
|
|
202,203
|
|
||||||
Net premiums earned
|
|
240,661
|
|
|
44,724
|
|
|
206,144
|
|
|
63,930
|
|
|
—
|
|
|
555,459
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses
|
|
120,958
|
|
|
2,076
|
|
|
94,414
|
|
|
40,810
|
|
|
—
|
|
|
258,258
|
|
||||||
Policy acquisition costs
|
|
42,989
|
|
|
4,658
|
|
|
44,575
|
|
|
13,214
|
|
|
(345
|
)
|
|
105,091
|
|
||||||
General and administrative expenses
|
|
19,964
|
|
|
4,674
|
|
|
43,292
|
|
|
9,587
|
|
|
18,482
|
|
|
95,999
|
|
||||||
Share compensation expenses
|
|
2,691
|
|
|
141
|
|
|
3,214
|
|
|
554
|
|
|
3,383
|
|
|
9,983
|
|
||||||
Total underwriting deductions
|
|
186,602
|
|
|
11,549
|
|
|
185,495
|
|
|
64,165
|
|
|
21,520
|
|
|
469,331
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Underwriting income (loss)
|
|
$
|
54,059
|
|
|
$
|
33,175
|
|
|
$
|
20,649
|
|
|
$
|
(235
|
)
|
|
$
|
(21,520
|
)
|
|
$
|
86,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income
|
|
18,362
|
|
|
1,533
|
|
|
6,457
|
|
|
5,634
|
|
|
(462
|
)
|
|
31,524
|
|
||||||
Other insurance related income (loss)
|
|
2,569
|
|
|
7,522
|
|
|
470
|
|
|
248
|
|
|
(652
|
)
|
|
10,157
|
|
||||||
Finance expenses
|
|
(3,624
|
)
|
|
(2,355
|
)
|
|
(57
|
)
|
|
—
|
|
|
(11,462
|
)
|
|
(17,498
|
)
|
||||||
Operating income (loss) before taxes, income from operating affiliates and (income) attributable to AlphaCat investors
|
|
71,366
|
|
|
39,875
|
|
|
27,519
|
|
|
5,647
|
|
|
(34,096
|
)
|
|
110,311
|
|
||||||
Tax benefit (expense)
|
|
851
|
|
|
—
|
|
|
(1,141
|
)
|
|
(2,431
|
)
|
|
703
|
|
|
(2,018
|
)
|
||||||
Income from operating affiliates
|
|
—
|
|
|
5,526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,526
|
|
||||||
(Income) attributable to AlphaCat investors
|
|
—
|
|
|
(40,256
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,256
|
)
|
||||||
Net operating income (loss)
|
|
$
|
72,217
|
|
|
$
|
5,145
|
|
|
$
|
26,378
|
|
|
$
|
3,216
|
|
|
$
|
(33,393
|
)
|
|
$
|
73,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net realized (losses) gains on investments
|
|
(1,512
|
)
|
|
(40,673
|
)
|
|
199
|
|
|
80
|
|
|
—
|
|
|
(41,906
|
)
|
||||||
Change in net unrealized (losses) gains on investments
|
|
(6,257
|
)
|
|
(36,673
|
)
|
|
1,263
|
|
|
6,406
|
|
|
353
|
|
|
(34,908
|
)
|
||||||
Income from investment affiliate
|
|
1,842
|
|
|
—
|
|
|
—
|
|
|
640
|
|
|
—
|
|
|
2,482
|
|
||||||
Foreign exchange (losses) gains
|
|
(441
|
)
|
|
57
|
|
|
(3,682
|
)
|
|
—
|
|
|
1,792
|
|
|
(2,274
|
)
|
||||||
Other loss
|
|
(1,970
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,970
|
)
|
||||||
Net income (loss)
|
|
$
|
63,879
|
|
|
$
|
(72,144
|
)
|
|
$
|
24,158
|
|
|
$
|
10,342
|
|
|
$
|
(31,248
|
)
|
|
$
|
(5,013
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss attributable to noncontrolling interest
|
|
—
|
|
|
71,663
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71,663
|
|
||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
63,879
|
|
|
$
|
(481
|
)
|
|
$
|
24,158
|
|
|
$
|
10,342
|
|
|
$
|
(31,248
|
)
|
|
$
|
66,650
|
|
Selected ratios (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net premiums written / Gross premiums written
|
|
85.0
|
%
|
|
100.0
|
%
|
|
84.2
|
%
|
|
93.3
|
%
|
|
|
|
87.9
|
%
|
|||||||
Losses and loss expenses
|
|
50.3
|
%
|
|
4.6
|
%
|
|
45.8
|
%
|
|
63.8
|
%
|
|
|
|
46.5
|
%
|
|||||||
Policy acquisition costs
|
|
17.9
|
%
|
|
10.4
|
%
|
|
21.6
|
%
|
|
20.7
|
%
|
|
|
|
18.9
|
%
|
|||||||
General and administrative expenses (b)
|
|
9.4
|
%
|
|
10.8
|
%
|
|
22.6
|
%
|
|
15.9
|
%
|
|
|
|
19.1
|
%
|
|||||||
Expense ratio
|
|
27.3
|
%
|
|
21.2
|
%
|
|
44.2
|
%
|
|
36.6
|
%
|
|
|
|
38.0
|
%
|
|||||||
Combined ratio
|
|
77.6
|
%
|
|
25.8
|
%
|
|
90.0
|
%
|
|
100.4
|
%
|
|
|
|
84.5
|
%
|
|||||||
Total assets
|
|
$
|
4,441,212
|
|
|
$
|
2,313,667
|
|
|
$
|
2,923,237
|
|
|
$
|
1,475,881
|
|
|
$
|
81,966
|
|
|
$
|
11,235,963
|
|
(a)
|
Ratios are based on net premiums earned.
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
Three Months Ended September 30, 2014
|
|
Validus Re Segment (c)
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Corporate & Eliminations (c)
|
|
Total
|
||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
114,380
|
|
|
$
|
6,936
|
|
|
$
|
245,685
|
|
|
$
|
(8,027
|
)
|
|
$
|
358,974
|
|
Reinsurance premiums ceded
|
|
(10,382
|
)
|
|
(648
|
)
|
|
(27,134
|
)
|
|
8,027
|
|
|
(30,137
|
)
|
|||||
Net premiums written
|
|
103,998
|
|
|
6,288
|
|
|
218,551
|
|
|
—
|
|
|
328,837
|
|
|||||
Change in unearned premiums
|
|
122,712
|
|
|
28,850
|
|
|
14,297
|
|
|
—
|
|
|
165,859
|
|
|||||
Net premiums earned
|
|
226,710
|
|
|
35,138
|
|
|
232,848
|
|
|
—
|
|
|
494,696
|
|
|||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
|
102,005
|
|
|
3,738
|
|
|
118,382
|
|
|
—
|
|
|
224,125
|
|
|||||
Policy acquisition costs
|
|
36,177
|
|
|
3,378
|
|
|
47,862
|
|
|
(1,013
|
)
|
|
86,404
|
|
|||||
General and administrative expenses
|
|
18,522
|
|
|
7,719
|
|
|
37,709
|
|
|
19,369
|
|
|
83,319
|
|
|||||
Share compensation expenses
|
|
2,582
|
|
|
179
|
|
|
2,990
|
|
|
3,013
|
|
|
8,764
|
|
|||||
Total underwriting deductions
|
|
159,286
|
|
|
15,014
|
|
|
206,943
|
|
|
21,369
|
|
|
402,612
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Underwriting income (loss)
|
|
$
|
67,424
|
|
|
$
|
20,124
|
|
|
$
|
25,905
|
|
|
$
|
(21,369
|
)
|
|
$
|
92,084
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net investment income
|
|
20,270
|
|
|
837
|
|
|
4,965
|
|
|
(811
|
)
|
|
25,261
|
|
|||||
Other insurance related income (loss)
|
|
863
|
|
|
5,980
|
|
|
109
|
|
|
(3,342
|
)
|
|
3,610
|
|
|||||
Finance expenses
|
|
(3,622
|
)
|
|
(385
|
)
|
|
162
|
|
|
(11,509
|
)
|
|
(15,354
|
)
|
|||||
Operating income (loss) before taxes, income from operating affiliates and (income) attributable to AlphaCat investors
|
|
84,935
|
|
|
26,556
|
|
|
31,141
|
|
|
(37,031
|
)
|
|
105,601
|
|
|||||
Tax benefit (expense)
|
|
1,058
|
|
|
—
|
|
|
332
|
|
|
(437
|
)
|
|
953
|
|
|||||
Income from operating affiliates
|
|
—
|
|
|
3,761
|
|
|
—
|
|
|
—
|
|
|
3,761
|
|
|||||
(Income) attributable to AlphaCat investors
|
|
—
|
|
|
(25,807
|
)
|
|
—
|
|
|
—
|
|
|
(25,807
|
)
|
|||||
Net operating income (loss)
|
|
$
|
85,993
|
|
|
$
|
4,510
|
|
|
$
|
31,473
|
|
|
$
|
(37,468
|
)
|
|
$
|
84,508
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net realized gains on investments
|
|
1,641
|
|
|
2,563
|
|
|
391
|
|
|
—
|
|
|
4,595
|
|
|||||
Change in net unrealized losses on investments
|
|
(21,624
|
)
|
|
(60,253
|
)
|
|
(3,097
|
)
|
|
—
|
|
|
(84,974
|
)
|
|||||
Income from investment affiliate
|
|
1,754
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,754
|
|
|||||
Foreign exchange (losses) gains
|
|
(6,056
|
)
|
|
(51
|
)
|
|
(7,114
|
)
|
|
1,780
|
|
|
(11,441
|
)
|
|||||
Other loss
|
|
(7,690
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,690
|
)
|
|||||
Transaction expenses (d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(149
|
)
|
|
(149
|
)
|
|||||
Net income (loss)
|
|
$
|
54,018
|
|
|
$
|
(53,231
|
)
|
|
$
|
21,653
|
|
|
$
|
(35,837
|
)
|
|
$
|
(13,397
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss attributable to noncontrolling interest
|
|
—
|
|
|
53,069
|
|
|
—
|
|
|
—
|
|
|
53,069
|
|
|||||
Net income (loss) available (attributable) to Validus
|
|
$
|
54,018
|
|
|
$
|
(162
|
)
|
|
$
|
21,653
|
|
|
$
|
(35,837
|
)
|
|
$
|
39,672
|
|
Selected ratios (a):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums written / Gross premiums written
|
|
90.9
|
%
|
|
90.7
|
%
|
|
89.0
|
%
|
|
|
|
91.6
|
%
|
||||||
Losses and loss expenses
|
|
45.0
|
%
|
|
10.6
|
%
|
|
50.8
|
%
|
|
|
|
45.3
|
%
|
||||||
Policy acquisition costs
|
|
16.0
|
%
|
|
9.6
|
%
|
|
20.6
|
%
|
|
|
|
17.5
|
%
|
||||||
General and administrative expenses (b)
|
|
9.3
|
%
|
|
22.5
|
%
|
|
17.5
|
%
|
|
|
|
18.6
|
%
|
||||||
Expense ratio
|
|
25.3
|
%
|
|
32.1
|
%
|
|
38.1
|
%
|
|
|
|
36.1
|
%
|
||||||
Combined ratio
|
|
70.3
|
%
|
|
42.7
|
%
|
|
88.9
|
%
|
|
|
|
81.4
|
%
|
||||||
Total assets
|
|
$
|
4,740,003
|
|
|
$
|
1,688,191
|
|
|
$
|
2,901,264
|
|
|
$
|
749,678
|
|
|
$
|
10,079,136
|
|
(a)
|
Ratios are based on net premiums earned.
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
(c)
|
Beginning in the first quarter of 2015, certain intercompany reinsurance transactions were presented on a net basis for segmental reporting purposes. As a result, gross premiums written and reinsurance premiums ceded for the Validus Re segment and Corporate & Eliminations were reduced by
$517
for the
three months ended September 30, 2014
for comparative purposes. There was no impact to total gross premiums written and reinsurance premiums ceded on a consolidated basis.
|
(d)
|
The transaction expenses relate to costs incurred in connection with the acquisition of Western World, which was completed on October 2, 2014. Western World results have not been included in the Company's consolidated results for the
three months ended September 30, 2014
. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
Nine Months Ended September 30, 2015
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Western World Segment
|
|
Corporate & Eliminations
|
|
Total
|
||||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Gross premiums written
|
|
$
|
1,111,020
|
|
|
$
|
176,129
|
|
|
$
|
789,148
|
|
|
$
|
207,372
|
|
|
$
|
(35,522
|
)
|
|
$
|
2,248,147
|
|
Reinsurance premiums ceded
|
|
(147,611
|
)
|
|
(4,538
|
)
|
|
(164,144
|
)
|
|
(13,390
|
)
|
|
35,522
|
|
|
(294,161
|
)
|
||||||
Net premiums written
|
|
963,409
|
|
|
171,591
|
|
|
625,004
|
|
|
193,982
|
|
|
—
|
|
|
1,953,986
|
|
||||||
Change in unearned premiums
|
|
(205,110
|
)
|
|
(54,196
|
)
|
|
9,167
|
|
|
2,948
|
|
|
—
|
|
|
(247,191
|
)
|
||||||
Net premiums earned
|
|
758,299
|
|
|
117,395
|
|
|
634,171
|
|
|
196,930
|
|
|
—
|
|
|
1,706,795
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses
|
|
357,491
|
|
|
1,232
|
|
|
268,512
|
|
|
138,098
|
|
|
—
|
|
|
765,333
|
|
||||||
Policy acquisition costs
|
|
128,909
|
|
|
12,162
|
|
|
141,338
|
|
|
27,110
|
|
|
(1,367
|
)
|
|
308,152
|
|
||||||
General and administrative expenses
|
|
58,254
|
|
|
12,202
|
|
|
115,341
|
|
|
29,137
|
|
|
49,056
|
|
|
263,990
|
|
||||||
Share compensation expenses
|
|
7,665
|
|
|
440
|
|
|
9,195
|
|
|
1,525
|
|
|
9,454
|
|
|
28,279
|
|
||||||
Total underwriting deductions
|
|
552,319
|
|
|
26,036
|
|
|
534,386
|
|
|
195,870
|
|
|
57,143
|
|
|
1,365,754
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Underwriting income (loss)
|
|
$
|
205,980
|
|
|
$
|
91,359
|
|
|
$
|
99,785
|
|
|
$
|
1,060
|
|
|
$
|
(57,143
|
)
|
|
$
|
341,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income
|
|
56,694
|
|
|
4,872
|
|
|
19,168
|
|
|
16,660
|
|
|
(1,241
|
)
|
|
96,153
|
|
||||||
Other insurance related income (loss)
|
|
3,318
|
|
|
17,048
|
|
|
564
|
|
|
787
|
|
|
(3,580
|
)
|
|
18,137
|
|
||||||
Finance expenses
|
|
(11,068
|
)
|
|
(9,462
|
)
|
|
(231
|
)
|
|
—
|
|
|
(34,324
|
)
|
|
(55,085
|
)
|
||||||
Operating income (loss) before taxes, income from operating affiliates and (income) attributable to AlphaCat investors
|
|
254,924
|
|
|
103,817
|
|
|
119,286
|
|
|
18,507
|
|
|
(96,288
|
)
|
|
400,246
|
|
||||||
Tax expense
|
|
(14
|
)
|
|
—
|
|
|
(4,286
|
)
|
|
(2,420
|
)
|
|
(412
|
)
|
|
(7,132
|
)
|
||||||
Income from operating affiliates
|
|
—
|
|
|
12,083
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,083
|
|
||||||
(Income) attributable to AlphaCat investors
|
|
—
|
|
|
(94,341
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94,341
|
)
|
||||||
Net operating income (loss)
|
|
$
|
254,910
|
|
|
$
|
21,559
|
|
|
$
|
115,000
|
|
|
$
|
16,087
|
|
|
$
|
(96,700
|
)
|
|
$
|
310,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net realized gains (losses) on investments
|
|
717
|
|
|
(40,544
|
)
|
|
2,140
|
|
|
2,194
|
|
|
—
|
|
|
(35,493
|
)
|
||||||
Change in net unrealized gains (losses) on investments
|
|
76
|
|
|
17,258
|
|
|
163
|
|
|
2,340
|
|
|
(71
|
)
|
|
19,766
|
|
||||||
Income from investment affiliate
|
|
4,204
|
|
|
—
|
|
|
—
|
|
|
1,338
|
|
|
—
|
|
|
5,542
|
|
||||||
Foreign exchange (losses) gains
|
|
(6,571
|
)
|
|
(37
|
)
|
|
(4,949
|
)
|
|
—
|
|
|
2,496
|
|
|
(9,061
|
)
|
||||||
Other loss
|
|
(2,578
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,578
|
)
|
||||||
Net income (loss)
|
|
$
|
250,758
|
|
|
$
|
(1,764
|
)
|
|
$
|
112,354
|
|
|
$
|
21,959
|
|
|
$
|
(94,275
|
)
|
|
$
|
289,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss attributable to noncontrolling interest
|
|
—
|
|
|
15,042
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,042
|
|
||||||
Net income (loss) available (attributable) to Validus
|
|
$
|
250,758
|
|
|
$
|
13,278
|
|
|
$
|
112,354
|
|
|
$
|
21,959
|
|
|
$
|
(94,275
|
)
|
|
$
|
304,074
|
|
Selected ratios (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net premiums written / Gross premiums written
|
|
86.7
|
%
|
|
97.4
|
%
|
|
79.2
|
%
|
|
93.5
|
%
|
|
|
|
86.9
|
%
|
|||||||
Losses and loss expenses
|
|
47.1
|
%
|
|
1.0
|
%
|
|
42.4
|
%
|
|
70.1
|
%
|
|
|
|
44.8
|
%
|
|||||||
Policy acquisition costs
|
|
17.0
|
%
|
|
10.4
|
%
|
|
22.3
|
%
|
|
13.8
|
%
|
|
|
|
18.1
|
%
|
|||||||
General and administrative expenses (b)
|
|
8.7
|
%
|
|
10.8
|
%
|
|
19.6
|
%
|
|
15.6
|
%
|
|
|
|
17.1
|
%
|
|||||||
Expense ratio
|
|
25.7
|
%
|
|
21.2
|
%
|
|
41.9
|
%
|
|
29.4
|
%
|
|
|
|
35.2
|
%
|
|||||||
Combined ratio
|
|
72.8
|
%
|
|
22.2
|
%
|
|
84.3
|
%
|
|
99.5
|
%
|
|
|
|
80.0
|
%
|
|||||||
Total assets
|
|
$
|
4,441,212
|
|
|
$
|
2,313,667
|
|
|
$
|
2,923,237
|
|
|
$
|
1,475,881
|
|
|
$
|
81,966
|
|
|
$
|
11,235,963
|
|
(a)
|
Ratios are based on net premiums earned.
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
Nine Months Ended September 30, 2014
|
|
Validus Re Segment (c)
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Corporate & Eliminations (c)
|
|
Total
|
||||||||||
Underwriting income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
1,081,816
|
|
|
$
|
135,073
|
|
|
$
|
854,324
|
|
|
$
|
(44,574
|
)
|
|
$
|
2,026,639
|
|
Reinsurance premiums ceded
|
|
(161,721
|
)
|
|
(4,348
|
)
|
|
(154,115
|
)
|
|
44,574
|
|
|
(275,610
|
)
|
|||||
Net premiums written
|
|
920,095
|
|
|
130,725
|
|
|
700,209
|
|
|
—
|
|
|
1,751,029
|
|
|||||
Change in unearned premiums
|
|
(233,271
|
)
|
|
(32,444
|
)
|
|
(41,658
|
)
|
|
—
|
|
|
(307,373
|
)
|
|||||
Net premiums earned
|
|
686,824
|
|
|
98,281
|
|
|
658,551
|
|
|
—
|
|
|
1,443,656
|
|
|||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
|
247,848
|
|
|
(7,155
|
)
|
|
304,848
|
|
|
—
|
|
|
545,541
|
|
|||||
Policy acquisition costs
|
|
106,547
|
|
|
9,414
|
|
|
138,383
|
|
|
(3,338
|
)
|
|
251,006
|
|
|||||
General and administrative expenses
|
|
53,757
|
|
|
15,627
|
|
|
107,031
|
|
|
55,191
|
|
|
231,606
|
|
|||||
Share compensation expenses
|
|
7,126
|
|
|
330
|
|
|
8,434
|
|
|
8,362
|
|
|
24,252
|
|
|||||
Total underwriting deductions
|
|
415,278
|
|
|
18,216
|
|
|
558,696
|
|
|
60,215
|
|
|
1,052,405
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Underwriting income (loss)
|
|
$
|
271,546
|
|
|
$
|
80,065
|
|
|
$
|
99,855
|
|
|
$
|
(60,215
|
)
|
|
$
|
391,251
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net investment income
|
|
54,810
|
|
|
2,546
|
|
|
14,322
|
|
|
(1,769
|
)
|
|
69,909
|
|
|||||
Other insurance related income (loss)
|
|
2,385
|
|
|
21,482
|
|
|
384
|
|
|
(7,793
|
)
|
|
16,458
|
|
|||||
Finance expenses
|
|
(11,131
|
)
|
|
(2,039
|
)
|
|
68
|
|
|
(34,278
|
)
|
|
(47,380
|
)
|
|||||
Operating income (loss) before taxes, income from operating affiliates and (income) attributable to AlphaCat investors
|
|
317,610
|
|
|
102,054
|
|
|
114,629
|
|
|
(104,055
|
)
|
|
430,238
|
|
|||||
Tax benefit (expense)
|
|
1,176
|
|
|
—
|
|
|
(902
|
)
|
|
(672
|
)
|
|
(398
|
)
|
|||||
Income from operating affiliates
|
|
—
|
|
|
13,580
|
|
|
—
|
|
|
—
|
|
|
13,580
|
|
|||||
(Income) attributable to AlphaCat investors
|
|
—
|
|
|
(82,833
|
)
|
|
—
|
|
|
—
|
|
|
(82,833
|
)
|
|||||
Net operating income (loss)
|
|
$
|
318,786
|
|
|
$
|
32,801
|
|
|
$
|
113,727
|
|
|
$
|
(104,727
|
)
|
|
$
|
360,587
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net realized gains on investments
|
|
5,411
|
|
|
10,230
|
|
|
552
|
|
|
—
|
|
|
16,193
|
|
|||||
Change in net unrealized (losses) gains on investments
|
|
(1,719
|
)
|
|
15,706
|
|
|
2,159
|
|
|
—
|
|
|
16,146
|
|
|||||
Income from investment affiliate
|
|
7,881
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,881
|
|
|||||
Foreign exchange (losses) gains
|
|
(9,384
|
)
|
|
(204
|
)
|
|
(5,897
|
)
|
|
724
|
|
|
(14,761
|
)
|
|||||
Other loss
|
|
(1,473
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,473
|
)
|
|||||
Transaction expenses (d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,401
|
)
|
|
(3,401
|
)
|
|||||
Net income (loss)
|
|
$
|
319,502
|
|
|
$
|
58,533
|
|
|
$
|
110,541
|
|
|
$
|
(107,404
|
)
|
|
$
|
381,172
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (income) attributable to noncontrolling interest
|
|
—
|
|
|
(25,745
|
)
|
|
—
|
|
|
—
|
|
|
(25,745
|
)
|
|||||
Net income (loss) available (attributable) to Validus
|
|
$
|
319,502
|
|
|
$
|
32,788
|
|
|
$
|
110,541
|
|
|
$
|
(107,404
|
)
|
|
$
|
355,427
|
|
Selected ratios (a):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums written / Gross premiums written
|
|
85.1
|
%
|
|
96.8
|
%
|
|
82.0
|
%
|
|
|
|
86.4
|
%
|
||||||
Losses and loss expenses
|
|
36.1
|
%
|
|
(7.3
|
)%
|
|
46.3
|
%
|
|
|
|
37.8
|
%
|
||||||
Policy acquisition costs
|
|
15.5
|
%
|
|
9.6
|
%
|
|
21.0
|
%
|
|
|
|
17.4
|
%
|
||||||
General and administrative expenses (b)
|
|
8.9
|
%
|
|
16.2
|
%
|
|
17.5
|
%
|
|
|
|
17.7
|
%
|
||||||
Expense ratio
|
|
24.4
|
%
|
|
25.8
|
%
|
|
38.5
|
%
|
|
|
|
35.1
|
%
|
||||||
Combined ratio
|
|
60.5
|
%
|
|
18.5
|
%
|
|
84.8
|
%
|
|
|
|
72.9
|
%
|
||||||
Total assets
|
|
$
|
4,740,003
|
|
|
$
|
1,688,191
|
|
|
$
|
2,901,264
|
|
|
$
|
749,678
|
|
|
$
|
10,079,136
|
|
(a)
|
Ratios are based on net premiums earned.
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
(c)
|
Beginning in the first quarter of 2015, certain intercompany reinsurance transactions were presented on a net basis for segmental reporting purposes. As a result, gross premiums written and reinsurance premiums ceded for the Validus Re segment and Corporate & Eliminations were reduced by
$22,353
for the
nine months ended September 30, 2014
for comparative purposes. There was no impact to total gross premiums written and reinsurance premiums ceded on a consolidated basis.
|
(d)
|
The transaction expenses relate to costs incurred in connection with the acquisition of Western World, which was completed on October 2, 2014. Western World results have not been included in the Company's consolidated results for the
nine months ended September 30, 2014
. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
|
Three Months Ended September 30, 2015
|
|||||||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Western World
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||||
United States
|
$
|
34,578
|
|
|
$
|
3,615
|
|
|
$
|
21,886
|
|
|
$
|
70,871
|
|
|
$
|
(296
|
)
|
|
$
|
130,654
|
|
|
32.5
|
%
|
Worldwide excluding
United States (a)
|
5,409
|
|
|
100
|
|
|
30,721
|
|
|
—
|
|
|
(139
|
)
|
|
36,091
|
|
|
9.0
|
%
|
||||||
Australia and New Zealand
|
480
|
|
|
—
|
|
|
3,520
|
|
|
—
|
|
|
(92
|
)
|
|
3,908
|
|
|
1.0
|
%
|
||||||
Europe
|
6,142
|
|
|
22
|
|
|
7,839
|
|
|
—
|
|
|
(78
|
)
|
|
13,925
|
|
|
3.5
|
%
|
||||||
Latin America and Caribbean
|
18,771
|
|
|
—
|
|
|
27,249
|
|
|
—
|
|
|
(3,717
|
)
|
|
42,303
|
|
|
10.5
|
%
|
||||||
Japan
|
—
|
|
|
—
|
|
|
1,149
|
|
|
—
|
|
|
(94
|
)
|
|
1,055
|
|
|
0.3
|
%
|
||||||
Canada
|
319
|
|
|
(30
|
)
|
|
1,455
|
|
|
—
|
|
|
(76
|
)
|
|
1,668
|
|
|
0.4
|
%
|
||||||
Rest of the world (b)
|
2,621
|
|
|
—
|
|
|
28,380
|
|
|
—
|
|
|
(499
|
)
|
|
30,502
|
|
|
7.6
|
%
|
||||||
Sub-total, non United States
|
33,742
|
|
|
92
|
|
|
100,313
|
|
|
—
|
|
|
(4,695
|
)
|
|
129,452
|
|
|
32.3
|
%
|
||||||
Worldwide including
United States (a)
|
8,057
|
|
|
4,949
|
|
|
20,296
|
|
|
—
|
|
|
(2,593
|
)
|
|
30,709
|
|
|
7.6
|
%
|
||||||
Other location non-specific (c)
|
26,536
|
|
|
792
|
|
|
83,530
|
|
|
—
|
|
|
8
|
|
|
110,866
|
|
|
27.6
|
%
|
||||||
Total
|
$
|
102,913
|
|
|
$
|
9,448
|
|
|
$
|
226,025
|
|
|
$
|
70,871
|
|
|
$
|
(7,576
|
)
|
|
$
|
401,681
|
|
|
100.0
|
%
|
|
Three Months Ended September 30, 2014
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
(d)
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations (d)
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
27,394
|
|
|
$
|
2,206
|
|
|
$
|
17,003
|
|
|
$
|
363
|
|
|
$
|
46,966
|
|
|
13.1
|
%
|
Worldwide excluding
United States (a)
|
9,167
|
|
|
(81
|
)
|
|
29,781
|
|
|
498
|
|
|
39,365
|
|
|
10.9
|
%
|
|||||
Australia and New Zealand
|
494
|
|
|
—
|
|
|
3,312
|
|
|
(23
|
)
|
|
3,783
|
|
|
1.1
|
%
|
|||||
Europe
|
7,540
|
|
|
312
|
|
|
9,821
|
|
|
708
|
|
|
18,381
|
|
|
5.1
|
%
|
|||||
Latin America and Caribbean
|
15,394
|
|
|
—
|
|
|
24,740
|
|
|
(3,268
|
)
|
|
36,866
|
|
|
10.3
|
%
|
|||||
Japan
|
1,635
|
|
|
22
|
|
|
1,274
|
|
|
(45
|
)
|
|
2,886
|
|
|
0.8
|
%
|
|||||
Canada
|
179
|
|
|
—
|
|
|
2,430
|
|
|
(71
|
)
|
|
2,538
|
|
|
0.7
|
%
|
|||||
Rest of the world (b)
|
(138
|
)
|
|
—
|
|
|
27,145
|
|
|
592
|
|
|
27,599
|
|
|
7.7
|
%
|
|||||
Sub-total, non United States
|
34,271
|
|
|
253
|
|
|
98,503
|
|
|
(1,609
|
)
|
|
131,418
|
|
|
36.6
|
%
|
|||||
Worldwide including
United States (a)
|
22,647
|
|
|
4,477
|
|
|
18,611
|
|
|
5,540
|
|
|
51,275
|
|
|
14.3
|
%
|
|||||
Other location non-specific (c)
|
30,068
|
|
|
—
|
|
|
111,568
|
|
|
(12,321
|
)
|
|
129,315
|
|
|
36.0
|
%
|
|||||
Total
|
$
|
114,380
|
|
|
$
|
6,936
|
|
|
$
|
245,685
|
|
|
$
|
(8,027
|
)
|
|
$
|
358,974
|
|
|
100.0
|
%
|
|
Nine Months Ended September 30, 2015
|
|||||||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||||||
|
Validus Re
|
|
AlphaCat
|
|
Talbot
|
|
Western World
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||||
United States
|
$
|
544,239
|
|
|
$
|
42,200
|
|
|
$
|
89,980
|
|
|
$
|
207,372
|
|
|
$
|
(2,417
|
)
|
|
$
|
881,374
|
|
|
39.2
|
%
|
Worldwide excluding
United States (a)
|
52,808
|
|
|
8,057
|
|
|
95,894
|
|
|
—
|
|
|
(1,183
|
)
|
|
155,576
|
|
|
6.9
|
%
|
||||||
Australia and New Zealand
|
12,002
|
|
|
624
|
|
|
6,569
|
|
|
—
|
|
|
(233
|
)
|
|
18,962
|
|
|
0.8
|
%
|
||||||
Europe
|
47,018
|
|
|
2,863
|
|
|
31,637
|
|
|
—
|
|
|
(1,093
|
)
|
|
80,425
|
|
|
3.6
|
%
|
||||||
Latin America and Caribbean
|
34,086
|
|
|
—
|
|
|
78,634
|
|
|
—
|
|
|
(9,913
|
)
|
|
102,807
|
|
|
4.6
|
%
|
||||||
Japan
|
39,191
|
|
|
1,671
|
|
|
4,746
|
|
|
—
|
|
|
(159
|
)
|
|
45,449
|
|
|
2.0
|
%
|
||||||
Canada
|
3,117
|
|
|
458
|
|
|
5,452
|
|
|
—
|
|
|
(216
|
)
|
|
8,811
|
|
|
0.4
|
%
|
||||||
Rest of the world (b)
|
24,615
|
|
|
—
|
|
|
76,368
|
|
|
—
|
|
|
(3,355
|
)
|
|
97,628
|
|
|
4.3
|
%
|
||||||
Sub-total, non United States
|
212,837
|
|
|
13,673
|
|
|
299,300
|
|
|
—
|
|
|
(16,152
|
)
|
|
509,658
|
|
|
22.6
|
%
|
||||||
Worldwide including
United States (a)
|
131,405
|
|
|
115,414
|
|
|
74,794
|
|
|
—
|
|
|
(16,946
|
)
|
|
304,667
|
|
|
13.6
|
%
|
||||||
Other location non-specific (c)
|
222,539
|
|
|
4,842
|
|
|
325,074
|
|
|
—
|
|
|
(7
|
)
|
|
552,448
|
|
|
24.6
|
%
|
||||||
Total
|
$
|
1,111,020
|
|
|
$
|
176,129
|
|
|
$
|
789,148
|
|
|
$
|
207,372
|
|
|
$
|
(35,522
|
)
|
|
$
|
2,248,147
|
|
|
100.0
|
%
|
|
Nine Months Ended September 30, 2014
|
|||||||||||||||||||||
|
Gross Premiums Written
|
|||||||||||||||||||||
|
Validus Re
(d)
|
|
AlphaCat
|
|
Talbot
|
|
Eliminations (d)
|
|
Total
|
|
%
|
|||||||||||
United States
|
$
|
444,325
|
|
|
$
|
31,160
|
|
|
$
|
85,465
|
|
|
$
|
(2,554
|
)
|
|
$
|
558,396
|
|
|
27.5
|
%
|
Worldwide excluding
United States (a)
|
74,516
|
|
|
7,331
|
|
|
105,397
|
|
|
(586
|
)
|
|
186,658
|
|
|
9.2
|
%
|
|||||
Australia and New Zealand
|
19,879
|
|
|
1,019
|
|
|
7,615
|
|
|
(245
|
)
|
|
28,268
|
|
|
1.4
|
%
|
|||||
Europe
|
54,263
|
|
|
3,005
|
|
|
36,110
|
|
|
(536
|
)
|
|
92,842
|
|
|
4.6
|
%
|
|||||
Latin America and Caribbean
|
35,965
|
|
|
—
|
|
|
86,111
|
|
|
(18,216
|
)
|
|
103,860
|
|
|
5.1
|
%
|
|||||
Japan
|
40,456
|
|
|
608
|
|
|
3,404
|
|
|
(103
|
)
|
|
44,365
|
|
|
2.2
|
%
|
|||||
Canada
|
3,174
|
|
|
215
|
|
|
8,325
|
|
|
(307
|
)
|
|
11,407
|
|
|
0.6
|
%
|
|||||
Rest of the world (b)
|
22,541
|
|
|
—
|
|
|
70,702
|
|
|
(2,298
|
)
|
|
90,945
|
|
|
4.5
|
%
|
|||||
Sub-total, non United States
|
250,794
|
|
|
12,178
|
|
|
317,664
|
|
|
(22,291
|
)
|
|
558,345
|
|
|
27.6
|
%
|
|||||
Worldwide including
United States (a)
|
161,366
|
|
|
91,735
|
|
|
71,147
|
|
|
(4,394
|
)
|
|
319,854
|
|
|
15.8
|
%
|
|||||
Other location non-specific (c)
|
225,331
|
|
|
—
|
|
|
380,048
|
|
|
(15,335
|
)
|
|
590,044
|
|
|
29.1
|
%
|
|||||
Total
|
$
|
1,081,816
|
|
|
$
|
135,073
|
|
|
$
|
854,324
|
|
|
$
|
(44,574
|
)
|
|
$
|
2,026,639
|
|
|
100.0
|
%
|
(a)
|
Represents risks in two or more geographic zones.
|
(b)
|
Represents risks in one geographic zone.
|
(c)
|
The Other locations non-specific category refers to business for which an analysis of exposure by geographic zone is not applicable, such as marine and aerospace risks, since these exposures can span multiple geographic areas and, in some instances, are not fixed locations.
|
(d)
|
During the first quarter of 2015, certain intercompany reinsurance transactions were presented on a net basis for segmental reporting purposes. As a result, gross premiums written for the Validus Re segment and Corporate & Eliminations were reduced by
$517
and
$22,353
for the three and
nine months ended September 30, 2014
, respectively, for comparative purposes. There was no impact to total gross premiums written on a consolidated basis.
|
Condensed Consolidating Balance Sheet As at September 30, 2015
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd.
Subsidiaries
(Non-guarantor Subsidiaries) (a)
|
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities, at fair value
|
$
|
28,757
|
|
|
$
|
—
|
|
|
$
|
5,610,299
|
|
|
$
|
(60,200
|
)
|
|
$
|
5,578,856
|
|
Short-term investments, at fair value
|
—
|
|
|
—
|
|
|
1,661,687
|
|
|
—
|
|
|
1,661,687
|
|
|||||
Other investments, at fair value
|
—
|
|
|
—
|
|
|
891,238
|
|
|
(73,864
|
)
|
|
817,374
|
|
|||||
Cash and cash equivalents
|
10,789
|
|
|
20
|
|
|
397,676
|
|
|
—
|
|
|
408,485
|
|
|||||
Restricted cash
|
—
|
|
|
—
|
|
|
74,002
|
|
|
—
|
|
|
74,002
|
|
|||||
Total investments and cash
|
39,546
|
|
|
20
|
|
|
8,634,902
|
|
|
(134,064
|
)
|
|
8,540,404
|
|
|||||
Investment in affiliates
|
—
|
|
|
—
|
|
|
347,962
|
|
|
—
|
|
|
347,962
|
|
|||||
Investment in subsidiaries on an equity basis
|
4,173,423
|
|
|
697,014
|
|
|
—
|
|
|
(4,870,437
|
)
|
|
—
|
|
|||||
Premiums receivable
|
—
|
|
|
—
|
|
|
1,062,654
|
|
|
—
|
|
|
1,062,654
|
|
|||||
Deferred acquisition costs
|
—
|
|
|
—
|
|
|
225,065
|
|
|
—
|
|
|
225,065
|
|
|||||
Prepaid reinsurance premiums
|
—
|
|
|
—
|
|
|
125,547
|
|
|
—
|
|
|
125,547
|
|
|||||
Securities lending collateral
|
—
|
|
|
—
|
|
|
6,461
|
|
|
—
|
|
|
6,461
|
|
|||||
Loss reserves recoverable
|
—
|
|
|
—
|
|
|
385,212
|
|
|
—
|
|
|
385,212
|
|
|||||
Paid losses recoverable
|
—
|
|
|
—
|
|
|
21,681
|
|
|
—
|
|
|
21,681
|
|
|||||
Income taxes recoverable
|
—
|
|
|
—
|
|
|
15,870
|
|
|
—
|
|
|
15,870
|
|
|||||
Deferred tax asset
|
—
|
|
|
—
|
|
|
22,352
|
|
|
—
|
|
|
22,352
|
|
|||||
Receivable for investments sold
|
—
|
|
|
—
|
|
|
15,055
|
|
|
—
|
|
|
15,055
|
|
|||||
Intangible assets
|
—
|
|
|
—
|
|
|
122,676
|
|
|
—
|
|
|
122,676
|
|
|||||
Goodwill
|
—
|
|
|
—
|
|
|
196,758
|
|
|
—
|
|
|
196,758
|
|
|||||
Accrued investment income
|
115
|
|
|
—
|
|
|
23,640
|
|
|
—
|
|
|
23,755
|
|
|||||
Intercompany receivable
|
45,270
|
|
|
—
|
|
|
158
|
|
|
(45,428
|
)
|
|
—
|
|
|||||
Other assets
|
3,294
|
|
|
—
|
|
|
121,217
|
|
|
—
|
|
|
124,511
|
|
|||||
Total assets
|
$
|
4,261,648
|
|
|
$
|
697,034
|
|
|
$
|
11,327,210
|
|
|
$
|
(5,049,929
|
)
|
|
$
|
11,235,963
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Reserve for losses and loss expenses
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,169,334
|
|
|
$
|
—
|
|
|
$
|
3,169,334
|
|
Unearned premiums
|
—
|
|
|
—
|
|
|
1,281,319
|
|
|
—
|
|
|
1,281,319
|
|
|||||
Reinsurance balances payable
|
—
|
|
|
—
|
|
|
90,838
|
|
|
—
|
|
|
90,838
|
|
|||||
Securities lending payable
|
—
|
|
|
—
|
|
|
6,927
|
|
|
—
|
|
|
6,927
|
|
|||||
Deferred tax liability
|
—
|
|
|
—
|
|
|
8,921
|
|
|
—
|
|
|
8,921
|
|
|||||
Payable for investments purchased
|
—
|
|
|
—
|
|
|
118,164
|
|
|
—
|
|
|
118,164
|
|
|||||
Accounts payable and accrued expenses
|
19,701
|
|
|
—
|
|
|
229,133
|
|
|
—
|
|
|
248,834
|
|
|||||
Intercompany payable
|
—
|
|
|
158
|
|
|
45,270
|
|
|
(45,428
|
)
|
|
—
|
|
|||||
Notes payable to AlphaCat investors
|
—
|
|
|
—
|
|
|
1,443,198
|
|
|
—
|
|
|
1,443,198
|
|
|||||
Senior notes payable
|
247,387
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247,387
|
|
|||||
Debentures payable
|
350,000
|
|
|
—
|
|
|
248,254
|
|
|
(60,200
|
)
|
|
538,054
|
|
|||||
Total liabilities
|
$
|
617,088
|
|
|
$
|
158
|
|
|
$
|
6,641,358
|
|
|
$
|
(105,628
|
)
|
|
$
|
7,152,976
|
|
Total shareholders' equity available to Validus
|
3,644,560
|
|
|
696,876
|
|
|
4,247,425
|
|
|
(4,944,301
|
)
|
|
3,644,560
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
438,427
|
|
|
—
|
|
|
438,427
|
|
|||||
Total liabilities, noncontrolling interests and shareholders' equity
|
$
|
4,261,648
|
|
|
$
|
697,034
|
|
|
$
|
11,327,210
|
|
|
$
|
(5,049,929
|
)
|
|
$
|
11,235,963
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
Condensed Consolidating Balance Sheet As at December 31, 2014
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd.
Subsidiaries
(Non-guarantor Subsidiaries) (a)
|
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities, at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,592,931
|
|
|
$
|
(60,200
|
)
|
|
$
|
5,532,731
|
|
Short-term investments, at fair value
|
—
|
|
|
—
|
|
|
1,051,074
|
|
|
—
|
|
|
$
|
1,051,074
|
|
||||
Other investments, at fair value
|
—
|
|
|
—
|
|
|
881,123
|
|
|
(68,112
|
)
|
|
$
|
813,011
|
|
||||
Cash and cash equivalents
|
29,798
|
|
|
81
|
|
|
547,361
|
|
|
—
|
|
|
$
|
577,240
|
|
||||
Restricted cash
|
—
|
|
|
—
|
|
|
173,003
|
|
|
—
|
|
|
173,003
|
|
|||||
Total investments and cash
|
29,798
|
|
|
81
|
|
|
8,245,492
|
|
|
(128,312
|
)
|
|
8,147,059
|
|
|||||
Investment in affiliates
|
—
|
|
|
—
|
|
|
261,483
|
|
|
—
|
|
|
261,483
|
|
|||||
Investment in subsidiaries on an equity basis
|
4,140,770
|
|
|
656,738
|
|
|
—
|
|
|
(4,797,508
|
)
|
|
—
|
|
|||||
Premiums receivable
|
—
|
|
|
—
|
|
|
707,647
|
|
|
—
|
|
|
707,647
|
|
|||||
Deferred acquisition costs
|
—
|
|
|
—
|
|
|
161,295
|
|
|
—
|
|
|
161,295
|
|
|||||
Prepaid reinsurance premiums
|
—
|
|
|
—
|
|
|
81,983
|
|
|
—
|
|
|
81,983
|
|
|||||
Securities lending collateral
|
—
|
|
|
—
|
|
|
470
|
|
|
—
|
|
|
470
|
|
|||||
Loss reserves recoverable
|
—
|
|
|
—
|
|
|
377,466
|
|
|
—
|
|
|
377,466
|
|
|||||
Paid losses recoverable
|
—
|
|
|
—
|
|
|
38,078
|
|
|
—
|
|
|
38,078
|
|
|||||
Deferred tax asset
|
—
|
|
|
—
|
|
|
23,821
|
|
|
—
|
|
|
23,821
|
|
|||||
Receivable for investments sold
|
—
|
|
|
—
|
|
|
18,318
|
|
|
—
|
|
|
18,318
|
|
|||||
Intangible assets
|
—
|
|
|
—
|
|
|
126,924
|
|
|
—
|
|
|
126,924
|
|
|||||
Goodwill
|
—
|
|
|
—
|
|
|
195,897
|
|
|
—
|
|
|
195,897
|
|
|||||
Accrued investment income
|
—
|
|
|
—
|
|
|
24,865
|
|
|
—
|
|
|
24,865
|
|
|||||
Intercompany receivable
|
41,078
|
|
|
—
|
|
|
20
|
|
|
(41,098
|
)
|
|
—
|
|
|||||
Other assets
|
3,239
|
|
|
—
|
|
|
161,394
|
|
|
—
|
|
|
164,633
|
|
|||||
Total assets
|
$
|
4,214,885
|
|
|
$
|
656,819
|
|
|
$
|
10,425,153
|
|
|
$
|
(4,966,918
|
)
|
|
$
|
10,329,939
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Reserve for losses and loss expenses
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,234,394
|
|
|
$
|
—
|
|
|
$
|
3,234,394
|
|
Unearned premiums
|
—
|
|
|
—
|
|
|
990,564
|
|
|
—
|
|
|
990,564
|
|
|||||
Reinsurance balances payable
|
—
|
|
|
—
|
|
|
127,128
|
|
|
—
|
|
|
127,128
|
|
|||||
Securities lending payable
|
—
|
|
|
—
|
|
|
936
|
|
|
—
|
|
|
936
|
|
|||||
Deferred tax liability
|
—
|
|
|
—
|
|
|
5,541
|
|
|
—
|
|
|
5,541
|
|
|||||
Payable for investments purchased
|
—
|
|
|
—
|
|
|
68,574
|
|
|
—
|
|
|
68,574
|
|
|||||
Accounts payable and accrued expenses
|
29,621
|
|
|
96
|
|
|
288,528
|
|
|
—
|
|
|
318,245
|
|
|||||
Intercompany payable
|
—
|
|
|
20
|
|
|
41,078
|
|
|
(41,098
|
)
|
|
—
|
|
|||||
Notes payable to AlphaCat investors
|
—
|
|
|
—
|
|
|
671,465
|
|
|
—
|
|
|
671,465
|
|
|||||
Senior notes payable
|
247,306
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247,306
|
|
|||||
Debentures payable
|
350,000
|
|
|
—
|
|
|
249,477
|
|
|
(60,200
|
)
|
|
539,277
|
|
|||||
Total liabilities
|
$
|
626,927
|
|
|
$
|
116
|
|
|
$
|
5,677,685
|
|
|
$
|
(101,298
|
)
|
|
$
|
6,203,430
|
|
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
79,956
|
|
|
—
|
|
|
79,956
|
|
|||||
Total shareholders' equity available to Validus
|
3,587,958
|
|
|
656,703
|
|
|
4,208,917
|
|
|
(4,865,620
|
)
|
|
3,587,958
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
458,595
|
|
|
—
|
|
|
458,595
|
|
|||||
Total liabilities, noncontrolling interests and shareholders' equity
|
$
|
4,214,885
|
|
|
$
|
656,819
|
|
|
$
|
10,425,153
|
|
|
$
|
(4,966,918
|
)
|
|
$
|
10,329,939
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
Condensed Consolidating Statement of Comprehensive Income For the Three Months Ended September 30, 2015
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd. Subsidiaries (Non-guarantor Subsidiaries) (a) |
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated |
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
555,459
|
|
|
$
|
—
|
|
|
$
|
555,459
|
|
Net investment income
|
86
|
|
|
—
|
|
|
32,462
|
|
|
(1,024
|
)
|
|
31,524
|
|
|||||
Net realized (losses) on investments
|
—
|
|
|
—
|
|
|
(41,906
|
)
|
|
—
|
|
|
(41,906
|
)
|
|||||
Change in net unrealized gains (losses) on investments
|
353
|
|
|
—
|
|
|
(33,491
|
)
|
|
(1,770
|
)
|
|
(34,908
|
)
|
|||||
Income from investment affiliate
|
—
|
|
|
—
|
|
|
2,482
|
|
|
—
|
|
|
2,482
|
|
|||||
Other insurance related income and other (loss)
|
—
|
|
|
—
|
|
|
22,319
|
|
|
(14,132
|
)
|
|
8,187
|
|
|||||
Foreign exchange gains (losses)
|
562
|
|
|
—
|
|
|
(2,836
|
)
|
|
—
|
|
|
(2,274
|
)
|
|||||
Total revenues
|
$
|
1,001
|
|
|
$
|
—
|
|
|
$
|
534,489
|
|
|
$
|
(16,926
|
)
|
|
$
|
518,564
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
258,258
|
|
|
—
|
|
|
258,258
|
|
|||||
Policy acquisition costs
|
—
|
|
|
—
|
|
|
105,091
|
|
|
—
|
|
|
105,091
|
|
|||||
General and administrative expenses
|
19,526
|
|
|
—
|
|
|
90,605
|
|
|
(14,132
|
)
|
|
95,999
|
|
|||||
Share compensation expenses
|
1,834
|
|
|
—
|
|
|
8,149
|
|
|
—
|
|
|
9,983
|
|
|||||
Finance expenses
|
11,985
|
|
|
—
|
|
|
6,013
|
|
|
(500
|
)
|
|
17,498
|
|
|||||
Total expenses
|
$
|
33,345
|
|
|
$
|
—
|
|
|
$
|
468,116
|
|
|
$
|
(14,632
|
)
|
|
$
|
486,829
|
|
(Loss) income before taxes, income from operating affiliates, (income) attributable to AlphaCat investors and equity in net earnings (losses) of subsidiaries
|
(32,344
|
)
|
|
—
|
|
|
66,373
|
|
|
(2,294
|
)
|
|
31,735
|
|
|||||
Tax expense
|
—
|
|
|
—
|
|
|
(2,018
|
)
|
|
—
|
|
|
(2,018
|
)
|
|||||
Income from operating affiliates
|
—
|
|
|
—
|
|
|
5,526
|
|
|
—
|
|
|
5,526
|
|
|||||
(Income) attributable to AlphaCat investors
|
—
|
|
|
—
|
|
|
(40,256
|
)
|
|
—
|
|
|
(40,256
|
)
|
|||||
Equity in net earnings (losses) of subsidiaries
|
98,994
|
|
|
14,139
|
|
|
(170,000
|
)
|
|
56,867
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
66,650
|
|
|
$
|
14,139
|
|
|
$
|
(140,375
|
)
|
|
$
|
54,573
|
|
|
$
|
(5,013
|
)
|
Net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
71,663
|
|
|
—
|
|
|
71,663
|
|
|||||
Net income (loss) available (attributable) to Validus
|
$
|
66,650
|
|
|
$
|
14,139
|
|
|
$
|
(68,712
|
)
|
|
$
|
54,573
|
|
|
$
|
66,650
|
|
Other comprehensive (loss) income
|
(1,803
|
)
|
|
—
|
|
|
(1,878
|
)
|
|
1,878
|
|
|
(1,803
|
)
|
|||||
Comprehensive income (loss) available (attributable) to Validus
|
$
|
64,847
|
|
|
$
|
14,139
|
|
|
$
|
(70,590
|
)
|
|
$
|
56,451
|
|
|
$
|
64,847
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
Condensed Consolidating Statement of Comprehensive Income For the Three Months Ended September 30, 2014
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd. Subsidiaries (Non-guarantor Subsidiaries) (a) |
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated |
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
494,696
|
|
|
$
|
—
|
|
|
$
|
494,696
|
|
Net investment income
|
4
|
|
|
—
|
|
|
26,238
|
|
|
(981
|
)
|
|
25,261
|
|
|||||
Net realized gains on investments
|
—
|
|
|
—
|
|
|
4,595
|
|
|
—
|
|
|
4,595
|
|
|||||
Change in net unrealized losses on investments
|
—
|
|
|
—
|
|
|
(83,499
|
)
|
|
(1,475
|
)
|
|
(84,974
|
)
|
|||||
Income from investment affiliate
|
—
|
|
|
—
|
|
|
1,754
|
|
|
—
|
|
|
1,754
|
|
|||||
Other insurance related income and other (loss)
|
—
|
|
|
—
|
|
|
13,161
|
|
|
(17,241
|
)
|
|
(4,080
|
)
|
|||||
Foreign exchange gains (losses)
|
819
|
|
|
1
|
|
|
(12,261
|
)
|
|
—
|
|
|
(11,441
|
)
|
|||||
Total revenues
|
$
|
823
|
|
|
$
|
1
|
|
|
$
|
444,684
|
|
|
$
|
(19,697
|
)
|
|
$
|
425,811
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
224,125
|
|
|
—
|
|
|
224,125
|
|
|||||
Policy acquisition costs
|
—
|
|
|
—
|
|
|
86,404
|
|
|
—
|
|
|
86,404
|
|
|||||
General and administrative expenses
|
22,347
|
|
|
—
|
|
|
78,213
|
|
|
(17,241
|
)
|
|
83,319
|
|
|||||
Share compensation expenses
|
1,650
|
|
|
—
|
|
|
7,114
|
|
|
—
|
|
|
8,764
|
|
|||||
Finance expenses
|
11,979
|
|
|
—
|
|
|
3,864
|
|
|
(489
|
)
|
|
15,354
|
|
|||||
Transaction expenses
|
—
|
|
|
—
|
|
|
149
|
|
|
—
|
|
|
149
|
|
|||||
Total expenses
|
$
|
35,976
|
|
|
$
|
—
|
|
|
$
|
399,869
|
|
|
$
|
(17,730
|
)
|
|
$
|
418,115
|
|
(Loss) income before taxes, income from operating affiliates, (income) attributable to AlphaCat investors and equity in net earnings (losses) of subsidiaries
|
(35,153
|
)
|
|
1
|
|
|
44,815
|
|
|
(1,967
|
)
|
|
7,696
|
|
|||||
Tax benefit
|
—
|
|
|
—
|
|
|
953
|
|
|
—
|
|
|
953
|
|
|||||
Income from operating affiliates
|
—
|
|
|
—
|
|
|
3,761
|
|
|
—
|
|
|
3,761
|
|
|||||
(Income) attributable to AlphaCat investors
|
—
|
|
|
—
|
|
|
(25,807
|
)
|
|
—
|
|
|
(25,807
|
)
|
|||||
Equity in net earnings (losses) of subsidiaries
|
74,825
|
|
|
(951
|
)
|
|
—
|
|
|
(73,874
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
39,672
|
|
|
$
|
(950
|
)
|
|
$
|
23,722
|
|
|
$
|
(75,841
|
)
|
|
$
|
(13,397
|
)
|
Net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
53,069
|
|
|
—
|
|
|
53,069
|
|
|||||
Net income (loss) available (attributable) to Validus
|
$
|
39,672
|
|
|
$
|
(950
|
)
|
|
$
|
76,791
|
|
|
$
|
(75,841
|
)
|
|
$
|
39,672
|
|
Other comprehensive (loss) income
|
(5,198
|
)
|
|
—
|
|
|
(5,198
|
)
|
|
5,198
|
|
|
(5,198
|
)
|
|||||
Comprehensive income (loss) available (attributable) to Validus
|
$
|
34,474
|
|
|
$
|
(950
|
)
|
|
$
|
71,593
|
|
|
$
|
(70,643
|
)
|
|
$
|
34,474
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
Condensed Consolidating Statement of Comprehensive Income For the Nine Months Ended September 30, 2015
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd. Subsidiaries (Non-guarantor Subsidiaries) (a) |
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated |
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,706,795
|
|
|
$
|
—
|
|
|
$
|
1,706,795
|
|
Net investment income
|
230
|
|
|
—
|
|
|
98,967
|
|
|
(3,044
|
)
|
|
96,153
|
|
|||||
Net realized (losses) on investments
|
—
|
|
|
—
|
|
|
(35,493
|
)
|
|
—
|
|
|
(35,493
|
)
|
|||||
Change in net unrealized (losses) gains on investments
|
(71
|
)
|
|
—
|
|
|
25,589
|
|
|
(5,752
|
)
|
|
19,766
|
|
|||||
Income from investment affiliate
|
—
|
|
|
—
|
|
|
5,542
|
|
|
—
|
|
|
5,542
|
|
|||||
Other insurance related income and other (loss)
|
—
|
|
|
—
|
|
|
61,428
|
|
|
(45,869
|
)
|
|
15,559
|
|
|||||
Foreign exchange gains (losses)
|
325
|
|
|
(1
|
)
|
|
(9,385
|
)
|
|
—
|
|
|
(9,061
|
)
|
|||||
Total revenues
|
$
|
484
|
|
|
$
|
(1
|
)
|
|
$
|
1,853,443
|
|
|
$
|
(54,665
|
)
|
|
$
|
1,799,261
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
765,333
|
|
|
—
|
|
|
765,333
|
|
|||||
Policy acquisition costs
|
—
|
|
|
—
|
|
|
308,152
|
|
|
—
|
|
|
308,152
|
|
|||||
General and administrative expenses
|
55,933
|
|
|
2
|
|
|
253,924
|
|
|
(45,869
|
)
|
|
263,990
|
|
|||||
Share compensation expenses
|
5,385
|
|
|
—
|
|
|
22,894
|
|
|
—
|
|
|
28,279
|
|
|||||
Finance expenses
|
35,757
|
|
|
—
|
|
|
20,799
|
|
|
(1,471
|
)
|
|
55,085
|
|
|||||
Total expenses
|
$
|
97,075
|
|
|
$
|
2
|
|
|
$
|
1,371,102
|
|
|
$
|
(47,340
|
)
|
|
$
|
1,420,839
|
|
(Loss) income before taxes, income from operating affiliates, (income) attributable to AlphaCat investors and equity in net earnings (losses) of subsidiaries
|
(96,591
|
)
|
|
(3
|
)
|
|
482,341
|
|
|
(7,325
|
)
|
|
378,422
|
|
|||||
Tax expense
|
—
|
|
|
—
|
|
|
(7,132
|
)
|
|
—
|
|
|
(7,132
|
)
|
|||||
Income from operating affiliates
|
—
|
|
|
—
|
|
|
12,083
|
|
|
—
|
|
|
12,083
|
|
|||||
(Income) attributable to AlphaCat investors
|
—
|
|
|
—
|
|
|
(94,341
|
)
|
|
—
|
|
|
(94,341
|
)
|
|||||
Equity in net earnings (losses) of subsidiaries
|
400,665
|
|
|
36,248
|
|
|
(170,000
|
)
|
|
(266,913
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
304,074
|
|
|
$
|
36,245
|
|
|
$
|
222,951
|
|
|
$
|
(274,238
|
)
|
|
$
|
289,032
|
|
Net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
15,042
|
|
|
—
|
|
|
15,042
|
|
|||||
Net income (loss) available (attributable) to Validus
|
$
|
304,074
|
|
|
$
|
36,245
|
|
|
$
|
237,993
|
|
|
$
|
(274,238
|
)
|
|
$
|
304,074
|
|
Other comprehensive (loss) income
|
(2,313
|
)
|
|
—
|
|
|
(1,977
|
)
|
|
1,977
|
|
|
(2,313
|
)
|
|||||
Comprehensive income (loss) available (attributable) to Validus
|
$
|
301,761
|
|
|
$
|
36,245
|
|
|
$
|
236,016
|
|
|
$
|
(272,261
|
)
|
|
$
|
301,761
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
Condensed Consolidating Statement of Comprehensive Income For the Nine Months Ended September 30, 2014
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd. Subsidiaries (Non-guarantor Subsidiaries) (a) |
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated |
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,443,656
|
|
|
$
|
—
|
|
|
$
|
1,443,656
|
|
Net investment income
|
11
|
|
|
—
|
|
|
72,827
|
|
|
(2,929
|
)
|
|
69,909
|
|
|||||
Net realized gains on investments
|
—
|
|
|
—
|
|
|
16,193
|
|
|
—
|
|
|
16,193
|
|
|||||
Change in net unrealized gains on investments
|
—
|
|
|
—
|
|
|
14,261
|
|
|
1,885
|
|
|
16,146
|
|
|||||
Income from investment affiliate
|
—
|
|
|
—
|
|
|
7,881
|
|
|
—
|
|
|
7,881
|
|
|||||
Other insurance related income and other (loss)
|
—
|
|
|
—
|
|
|
66,630
|
|
|
(51,645
|
)
|
|
14,985
|
|
|||||
Foreign exchange gains (losses)
|
106
|
|
|
1
|
|
|
(14,868
|
)
|
|
—
|
|
|
(14,761
|
)
|
|||||
Total revenues
|
$
|
117
|
|
|
$
|
1
|
|
|
$
|
1,606,580
|
|
|
$
|
(52,689
|
)
|
|
$
|
1,554,009
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
545,541
|
|
|
—
|
|
|
545,541
|
|
|||||
Policy acquisition costs
|
—
|
|
|
—
|
|
|
251,006
|
|
|
—
|
|
|
251,006
|
|
|||||
General and administrative expenses
|
66,425
|
|
|
21
|
|
|
216,805
|
|
|
(51,645
|
)
|
|
231,606
|
|
|||||
Share compensation expenses
|
4,769
|
|
|
—
|
|
|
19,483
|
|
|
—
|
|
|
24,252
|
|
|||||
Finance expenses
|
35,697
|
|
|
—
|
|
|
13,137
|
|
|
(1,454
|
)
|
|
47,380
|
|
|||||
Transaction expenses
|
—
|
|
|
—
|
|
|
3,401
|
|
|
—
|
|
|
3,401
|
|
|||||
Total expenses
|
$
|
106,891
|
|
|
$
|
21
|
|
|
$
|
1,049,373
|
|
|
$
|
(53,099
|
)
|
|
$
|
1,103,186
|
|
(Loss) income before taxes, income from operating affiliates, (income) attributable to AlphaCat investors and equity in net earnings (losses) of subsidiaries
|
(106,774
|
)
|
|
(20
|
)
|
|
557,207
|
|
|
410
|
|
|
450,823
|
|
|||||
Tax expense
|
—
|
|
|
—
|
|
|
(398
|
)
|
|
—
|
|
|
(398
|
)
|
|||||
Income from operating affiliates
|
—
|
|
|
—
|
|
|
13,580
|
|
|
—
|
|
|
13,580
|
|
|||||
(Income) attributable to AlphaCat investors
|
—
|
|
|
—
|
|
|
(82,833
|
)
|
|
—
|
|
|
(82,833
|
)
|
|||||
Equity in net earnings (losses) of subsidiaries
|
462,201
|
|
|
(2,617
|
)
|
|
—
|
|
|
(459,584
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
355,427
|
|
|
$
|
(2,637
|
)
|
|
$
|
487,556
|
|
|
$
|
(459,174
|
)
|
|
$
|
381,172
|
|
Net (income) attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(25,745
|
)
|
|
—
|
|
|
(25,745
|
)
|
|||||
Net income (loss) available (attributable) to Validus
|
$
|
355,427
|
|
|
$
|
(2,637
|
)
|
|
$
|
461,811
|
|
|
$
|
(459,174
|
)
|
|
$
|
355,427
|
|
Other comprehensive (loss) income
|
(2,121
|
)
|
|
—
|
|
|
(2,121
|
)
|
|
2,121
|
|
|
(2,121
|
)
|
|||||
Comprehensive income (loss) available (attributable) to Validus
|
$
|
353,306
|
|
|
$
|
(2,637
|
)
|
|
$
|
459,690
|
|
|
$
|
(457,053
|
)
|
|
$
|
353,306
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
Condensed Consolidating Statement of Cash Flows For The Nine Months Ended September 30, 2015
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd. Subsidiaries (Non-guarantor Subsidiaries) (a) |
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated |
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(21,503
|
)
|
|
$
|
(61
|
)
|
|
$
|
158,442
|
|
|
$
|
(85,000
|
)
|
|
$
|
51,878
|
|
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds on sales of investments
|
—
|
|
|
—
|
|
|
2,888,919
|
|
|
—
|
|
|
2,888,919
|
|
|||||
Proceeds on maturities of investments
|
—
|
|
|
—
|
|
|
260,179
|
|
|
—
|
|
|
260,179
|
|
|||||
Purchases of fixed maturities
|
(28,901
|
)
|
|
—
|
|
|
(3,135,886
|
)
|
|
—
|
|
|
(3,164,787
|
)
|
|||||
Purchases of short-term investments, net
|
—
|
|
|
—
|
|
|
(639,211
|
)
|
|
—
|
|
|
(639,211
|
)
|
|||||
Purchases of other investments, net
|
—
|
|
|
—
|
|
|
(26,648
|
)
|
|
—
|
|
|
(26,648
|
)
|
|||||
Increase in securities lending collateral
|
—
|
|
|
—
|
|
|
(5,991
|
)
|
|
—
|
|
|
(5,991
|
)
|
|||||
Investment in operating affiliates
|
—
|
|
|
—
|
|
|
(10,400
|
)
|
|
—
|
|
|
(10,400
|
)
|
|||||
Redemption from operating affiliates
|
—
|
|
|
—
|
|
|
57,402
|
|
|
—
|
|
|
57,402
|
|
|||||
Investment in investment affiliates
|
—
|
|
|
—
|
|
|
(19,086
|
)
|
|
—
|
|
|
(19,086
|
)
|
|||||
Decrease in restricted cash
|
—
|
|
|
—
|
|
|
99,001
|
|
|
—
|
|
|
99,001
|
|
|||||
Return of capital from subsidiaries
|
305,000
|
|
|
—
|
|
|
—
|
|
|
(305,000
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
276,099
|
|
|
—
|
|
|
(531,721
|
)
|
|
(305,000
|
)
|
|
(560,622
|
)
|
|||||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds on issuance of notes payable to AlphaCat investors
|
—
|
|
|
—
|
|
|
1,307,789
|
|
|
—
|
|
|
1,307,789
|
|
|||||
Repayments on notes payable to AlphaCat investors
|
—
|
|
|
—
|
|
|
(709,059
|
)
|
|
—
|
|
|
(709,059
|
)
|
|||||
Issuance of common shares, net
|
16,735
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,735
|
|
|||||
Purchases of common shares under share repurchase program
|
(203,917
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(203,917
|
)
|
|||||
Dividends paid
|
(86,423
|
)
|
|
—
|
|
|
(85,000
|
)
|
|
85,000
|
|
|
(86,423
|
)
|
|||||
Increase in securities lending payable
|
—
|
|
|
—
|
|
|
5,991
|
|
|
—
|
|
|
5,991
|
|
|||||
Third party investment in redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
55,700
|
|
|
—
|
|
|
55,700
|
|
|||||
Third party redemption of redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
(19,395
|
)
|
|
—
|
|
|
(19,395
|
)
|
|||||
Return of capital to parent
|
—
|
|
|
—
|
|
|
(305,000
|
)
|
|
305,000
|
|
|
—
|
|
|||||
Net cash (used in) provided by financing activities
|
(273,605
|
)
|
|
—
|
|
|
251,026
|
|
|
390,000
|
|
|
367,421
|
|
|||||
Effect of foreign currency rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(27,432
|
)
|
|
—
|
|
|
(27,432
|
)
|
|||||
Net decrease in cash
|
(19,009
|
)
|
|
(61
|
)
|
|
(149,685
|
)
|
|
—
|
|
|
(168,755
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
29,798
|
|
|
81
|
|
|
547,361
|
|
|
—
|
|
|
577,240
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
10,789
|
|
|
$
|
20
|
|
|
$
|
397,676
|
|
|
$
|
—
|
|
|
$
|
408,485
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
Condensed Consolidating Statement of Cash Flows For The Nine Months Ended September 30, 2014
|
Validus Holdings, Ltd.
(Parent Guarantor)
|
|
Validus Holdings
(UK) plc
(Subsidiary Issuer)
|
|
Other
Validus Holdings, Ltd. Subsidiaries (Non-guarantor Subsidiaries) (a) |
|
Consolidating Adjustments (b)
|
|
Validus Holdings, Ltd.
Consolidated |
||||||||||
Net cash provided by (used in) operating activities
|
$
|
12,557
|
|
|
$
|
—
|
|
|
$
|
236,294
|
|
|
$
|
(100,000
|
)
|
|
$
|
148,851
|
|
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds on sales of investments
|
—
|
|
|
—
|
|
|
3,585,728
|
|
|
—
|
|
|
3,585,728
|
|
|||||
Proceeds on maturities of investments
|
—
|
|
|
—
|
|
|
466,872
|
|
|
—
|
|
|
466,872
|
|
|||||
Purchases of fixed maturities
|
—
|
|
|
—
|
|
|
(3,160,512
|
)
|
|
—
|
|
|
(3,160,512
|
)
|
|||||
Purchases of short-term investments, net
|
—
|
|
|
—
|
|
|
(933,148
|
)
|
|
—
|
|
|
(933,148
|
)
|
|||||
Purchases of other investments, net
|
—
|
|
|
—
|
|
|
(47,752
|
)
|
|
—
|
|
|
(47,752
|
)
|
|||||
Increase in securities lending collateral
|
—
|
|
|
—
|
|
|
(5,664
|
)
|
|
—
|
|
|
(5,664
|
)
|
|||||
Redemption from operating affiliates
|
—
|
|
|
—
|
|
|
58,547
|
|
|
—
|
|
|
58,547
|
|
|||||
Increase in restricted cash
|
—
|
|
|
—
|
|
|
(7,856
|
)
|
|
—
|
|
|
(7,856
|
)
|
|||||
Proceeds on sale of subsidiary, net of cash
|
—
|
|
|
—
|
|
|
16,459
|
|
|
—
|
|
|
16,459
|
|
|||||
Return of capital from subsidiaries
|
373,966
|
|
|
—
|
|
|
—
|
|
|
(373,966
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
373,966
|
|
|
—
|
|
|
(27,326
|
)
|
|
(373,966
|
)
|
|
(27,326
|
)
|
|||||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds on issuance of notes payable to AlphaCat investors
|
—
|
|
|
—
|
|
|
645,243
|
|
|
—
|
|
|
645,243
|
|
|||||
Repayments on notes payable to AlphaCat investors
|
—
|
|
|
—
|
|
|
(602,068
|
)
|
|
—
|
|
|
(602,068
|
)
|
|||||
Redemption of common shares, net
|
(3,689
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,689
|
)
|
|||||
Purchases of common shares under share repurchase program
|
(286,526
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(286,526
|
)
|
|||||
Dividends paid
|
(89,719
|
)
|
|
—
|
|
|
(100,000
|
)
|
|
100,000
|
|
|
(89,719
|
)
|
|||||
Increase in securities lending payable
|
—
|
|
|
—
|
|
|
5,664
|
|
|
—
|
|
|
5,664
|
|
|||||
Return of capital to parent
|
—
|
|
|
—
|
|
|
(373,966
|
)
|
|
373,966
|
|
|
—
|
|
|||||
Third party investment in redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
61,200
|
|
|
—
|
|
|
61,200
|
|
|||||
Third party redemption of redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
(10,496
|
)
|
|
—
|
|
|
(10,496
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(379,934
|
)
|
|
—
|
|
|
(374,423
|
)
|
|
473,966
|
|
|
(280,391
|
)
|
|||||
Effect of foreign currency rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(11,293
|
)
|
|
—
|
|
|
(11,293
|
)
|
|||||
Net increase (decrease) in cash
|
6,589
|
|
|
—
|
|
|
(176,748
|
)
|
|
—
|
|
|
(170,159
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
20,385
|
|
|
—
|
|
|
713,763
|
|
|
—
|
|
|
734,148
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
26,974
|
|
|
$
|
—
|
|
|
$
|
537,015
|
|
|
$
|
—
|
|
|
$
|
563,989
|
|
(a)
|
Amounts include an aggregation of the non-guarantor subsidiaries and include consolidating adjustments between these subsidiaries.
|
(b)
|
Amounts include consolidating adjustments between the Parent Guarantor, the Subsidiary Issuer and the non-guarantor subsidiaries.
|
|
As at, or for the
|
||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2014
|
Book value per diluted common share plus accumulated dividends
|
$51.73
|
|
$47.28
|
|
$51.73
|
|
$47.28
|
|
$48.54
|
Book value per diluted common share
|
41.89
|
|
38.70
|
|
41.89
|
|
38.70
|
|
39.66
|
Underwriting income
|
86,128
|
|
92,084
|
|
341,041
|
|
391,251
|
|
526,934
|
Net operating income available to Validus
|
73,626
|
|
84,946
|
|
304,809
|
|
357,427
|
|
486,464
|
Annualized return on average equity
|
7.3%
|
|
4.2%
|
|
11.1%
|
|
12.8%
|
|
13.1%
|
•
|
Gross premiums written for the
three months ended
September 30, 2015
were
$401.7 million
compared to
$359.0 million
for the
three months ended
September 30, 2014
,
an increase
of
$42.7 million
, or
11.9%
.
|
•
|
Net premiums earned for the
three months ended
September 30, 2015
were
$555.5 million
compared to
$494.7 million
for the
three months ended
September 30, 2014
,
an increase
of
$60.8 million
, or
12.3%
.
|
•
|
Underwriting income for the
three months ended
September 30, 2015
was
$86.1 million
compared to
$92.1 million
for the
three months ended
September 30, 2014
,
a decrease
of
$6.0 million
, or
6.5%
.
|
•
|
Combined ratio for the
three months ended
September 30, 2015
of
84.5%
which included
$91.5 million
of
favorable
loss reserve development on prior accident years,
benefiting
the loss ratio by
16.5
percentage points compared to a combined ratio for the
three months ended
September 30, 2014
of
81.4%
which included
$55.6 million
of
favorable
loss reserve development on prior accident years,
benefiting
the loss ratio by
11.2
percentage points. The
favorable
development of
$91.5 million
for the
three months ended
September 30, 2015
was primarily from non-event reserves in the amount of $60.8 million. Favorable development on prior years from event specific reserves was $30.7 million.
|
•
|
Loss ratio for the
three months ended
September 30, 2015
was
46.5%
compared to
45.3%
for the
three months ended
September 30, 2014
,
an increase
of
1.2
percentage points. Incurred losses for the
three months ended
September 30, 2015
were
$258.3 million
, compared to
$224.1 million
for the
three months ended
September 30, 2014
,
an increase
of
$34.1 million
or
15.2%
.
|
•
|
Loss ratios by line of business are as follows:
|
•
|
Losses and loss expenses from notable loss events, including development on these events, for the
three months ended
September 30, 2015
were
$49.0 million
compared to
$28.1 million
for the
three months ended
September 30, 2014
. Notable loss events are defined as consolidated losses from a single event which aggregate to a threshold greater than or equal to $30.0 million. The notable loss event for the
three months ended
September 30, 2015
was the August 12th port explosion in Tianjin, China which resulted in an estimated loss to the Company of
$47.8 million
or
8.6
percentage points of the loss ratio. Net of
$3.9 million
of reinstatement premiums, the net loss was
$43.9 million
. During the
three months ended
September 30, 2014
, the Company incurred a loss of
$28.1 million
or
5.7
percentage points of the loss ratio, related to Tripoli airport which subsequently developed into a notable loss event during the three months ended December 31, 2014.
|
•
|
Losses and loss expenses from non-notable loss events, including development on these events, for the
three months ended
September 30, 2015
were
$22.2 million
compared to
$3.2 million
for the
three months ended
September 30, 2014
. Non-notable loss events are defined as consolidated losses from a single event which aggregate to a threshold greater than or equal to $15.0 million but less than $30.0 million. The non-notable loss event for the
three months ended
September 30, 2015
was the Chilean earthquake, which resulted in an estimated loss to the Company of
$22.2 million
or
4.0
percentage points of the loss ratio. Net of $2.2 million of reinstatement premiums, the net loss was $20.0 million.
|
•
|
Net investment income for the
three months ended
September 30, 2015
was
$31.5 million
compared to
$25.3 million
for the
three months ended
September 30, 2014
,
an increase
of
$6.3 million
, or
24.8%
.
|
•
|
Investment yield for the
three months ended
September 30, 2015
was
1.92%
compared to
1.53%
for the
three months ended
September 30, 2014
.
|
•
|
Net operating income available to Validus for the
three months ended
September 30, 2015
was
$73.6 million
compared to
$84.9 million
for the
three months ended
September 30, 2014
,
a decrease
of
$11.3 million
, or
13.3%
.
|
•
|
Net income available to Validus for the
three months ended
September 30, 2015
was
$66.7 million
, or
$0.78
per diluted common share compared to
$39.7 million
or
$0.41
per diluted common share for the
three months ended
September 30, 2014
.
|
•
|
Annualized return on average equity and annualized net operating return on average equity for the
three months ended
September 30, 2015
were
7.3%
and
8.1%
, respectively, compared to
4.2%
and
9.1%
for the
three months ended
September 30, 2014
.
|
|
|
Increase (decrease) to net operating income available to Validus
over the three months ended September 30,
|
||||||||
|
|
2015 compared to 2014
|
||||||||
(Dollars in thousands)
|
|
Validus Holdings, Ltd. Consolidated
|
Western World Segment
|
Validus Holdings, Ltd. Consolidated excluding the Western World Segment
|
||||||
Net premiums earned
|
|
$
|
60,763
|
|
$
|
63,930
|
|
$
|
(3,167
|
)
|
Notable loss events (a)
|
|
(20,842
|
)
|
—
|
|
(20,842
|
)
|
|||
Non-notable loss events (b)
|
|
(18,999
|
)
|
—
|
|
(18,999
|
)
|
|||
Incurred current year losses, excluding notable and non-notable loss events
|
|
(30,228
|
)
|
(45,864
|
)
|
15,636
|
|
|||
Prior period loss development
|
|
35,936
|
|
5,054
|
|
30,882
|
|
|||
Other underwriting deductions (c)
|
|
(32,586
|
)
|
(23,355
|
)
|
(9,231
|
)
|
|||
Underwriting income (d)
|
|
(5,956
|
)
|
(235
|
)
|
(5,721
|
)
|
|||
(Income) attributable to AlphaCat investors
|
|
(14,449
|
)
|
—
|
|
(14,449
|
)
|
|||
Other operating expenses and income, net (e)
|
|
9,460
|
|
3,451
|
|
6,009
|
|
|||
Net operating income (d)
|
|
(10,945
|
)
|
3,216
|
|
(14,161
|
)
|
|||
Net operating (income) attributable to noncontrolling interest
|
|
(375
|
)
|
—
|
|
(375
|
)
|
|||
Net operating income available to Validus (d)
|
|
$
|
(11,320
|
)
|
$
|
3,216
|
|
$
|
(14,536
|
)
|
(a)
|
Losses and loss expenses from notable loss events for the
three months ended
September 30, 2015
were
$49.0 million
compared to
$28.1 million
for the
three months ended
September 30, 2014
.
|
(b)
|
Losses and loss expenses from non-notable loss events for the three months ended September 30, 2015 were
$22.2 million
compared to
$3.2 million
for the
three months ended
September 30, 2014
.
|
(c)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(e)
|
Other operating expenses and income, net, consists of net investment income, other insurance related income, finance expenses, taxes and income (loss) from operating affiliates.
|
•
|
An increase in (income) attributable to AlphaCat investors of
$14.4 million
; and
|
•
|
An increase in other underwriting deductions of
$9.2 million
; offset by,
|
•
|
A
decrease
in losses and loss expenses of
$6.7 million
, comprised of:
|
◦
|
an increase in favorable prior period development of
$30.9 million
: and
|
◦
|
a decrease in incurred current year losses, excluding notable and non-notable losses of
$15.6 million
; offset by,
|
◦
|
an increase in losses and loss expenses from notable and non-notable loss events of
$20.8 million
and
$19.0 million
, respectively.
|
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Underwriting income
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
102,913
|
|
|
$
|
114,380
|
|
|
$
|
(11,467
|
)
|
Reinsurance premiums ceded
|
|
(15,462
|
)
|
|
(10,382
|
)
|
|
(5,080
|
)
|
|||
Net premiums written
|
|
87,451
|
|
|
103,998
|
|
|
(16,547
|
)
|
|||
Change in unearned premiums
|
|
153,210
|
|
|
122,712
|
|
|
30,498
|
|
|||
Net premiums earned
|
|
240,661
|
|
|
226,710
|
|
|
13,951
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
120,958
|
|
|
102,005
|
|
|
18,953
|
|
|||
Policy acquisition costs
|
|
42,989
|
|
|
36,177
|
|
|
6,812
|
|
|||
General and administrative expenses
|
|
19,964
|
|
|
18,522
|
|
|
1,442
|
|
|||
Share compensation expenses
|
|
2,691
|
|
|
2,582
|
|
|
109
|
|
|||
Total underwriting deductions
|
|
186,602
|
|
|
159,286
|
|
|
27,316
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting income (a)
|
|
54,059
|
|
|
67,424
|
|
|
(13,365
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net investment income
|
|
18,362
|
|
|
20,270
|
|
|
(1,908
|
)
|
|||
Other insurance related income
|
|
2,569
|
|
|
863
|
|
|
1,706
|
|
|||
Finance expenses
|
|
(3,624
|
)
|
|
(3,622
|
)
|
|
(2
|
)
|
|||
|
|
|
|
|
|
|
||||||
Operating income before taxes
|
|
71,366
|
|
|
84,935
|
|
|
(13,569
|
)
|
|||
Tax benefit
|
|
851
|
|
|
1,058
|
|
|
(207
|
)
|
|||
Net operating income (a)
|
|
$
|
72,217
|
|
|
$
|
85,993
|
|
|
$
|
(13,776
|
)
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written / Gross premiums written
|
|
85.0
|
%
|
|
90.9
|
%
|
|
(5.9
|
)
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
50.3
|
%
|
|
45.0
|
%
|
|
5.3
|
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition costs
|
|
17.9
|
%
|
|
16.0
|
%
|
|
1.9
|
|
|||
General and administrative expenses (b)
|
|
9.4
|
%
|
|
9.3
|
%
|
|
0.1
|
|
|||
Expense ratio
|
|
27.3
|
%
|
|
25.3
|
%
|
|
2.0
|
|
|||
Combined ratio
|
|
77.6
|
%
|
|
70.3
|
%
|
|
7.3
|
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Increase (decrease) to net operating income over the three months ended September 30,
|
||
(Dollars in thousands)
|
|
2015 compared to 2014
|
||
Net premiums earned
|
|
$
|
13,951
|
|
Notable loss events (a)
|
|
(21,334
|
)
|
|
Non-notable loss events (b)
|
|
(14,324
|
)
|
|
Incurred current year losses, excluding notable and non-notable loss events
|
|
(13,630
|
)
|
|
Prior period loss development
|
|
30,335
|
|
|
Other underwriting deductions (c)
|
|
(8,363
|
)
|
|
Underwriting income (d)
|
|
(13,365
|
)
|
|
Other operating income and expenses, net (e)
|
|
(411
|
)
|
|
Net operating income (d)
|
|
$
|
(13,776
|
)
|
(a)
|
Losses and loss expenses from notable loss events for the
three months ended
September 30, 2015
were
$37.0 million
compared to
$15.7 million
for the
three months ended
September 30, 2014
.
|
(b)
|
Losses and loss expenses from non-notable loss events for the
three months ended
September 30, 2015
were
$17.5 million
compared to
$3.2 million
for the
three months ended
September 30, 2014
.
|
(c)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.
|
(e)
|
Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses and taxes.
|
|
|
Business Mix - Ratio of Gross Premiums Written by Line of Business to Total Gross Premiums Written
|
|||||||||||||||||||
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|||||||||
Property
|
|
$
|
65,010
|
|
|
63.2
|
%
|
|
$
|
70,078
|
|
|
61.2
|
%
|
|
$
|
(5,068
|
)
|
|
2.0
|
|
Marine
|
|
13,406
|
|
|
13.0
|
%
|
|
22,960
|
|
|
20.1
|
%
|
|
(9,554
|
)
|
|
(7.1
|
)
|
|||
Specialty
|
|
24,497
|
|
|
23.8
|
%
|
|
21,342
|
|
|
18.7
|
%
|
|
3,155
|
|
|
5.1
|
|
|||
Total
|
|
$
|
102,913
|
|
|
100.0
|
%
|
|
$
|
114,380
|
|
|
100.0
|
%
|
|
$
|
(11,467
|
)
|
|
0.0
|
|
|
|
Reinsurance Premiums Ceded
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
5,730
|
|
|
$
|
2,988
|
|
|
$
|
2,742
|
|
Marine
|
|
10,431
|
|
|
7,070
|
|
|
3,361
|
|
|||
Specialty
|
|
(699
|
)
|
|
324
|
|
|
(1,023
|
)
|
|||
Total
|
|
$
|
15,462
|
|
|
$
|
10,382
|
|
|
$
|
5,080
|
|
|
|
Net Retention - Ratio of Net Premiums Written to Gross Premiums Written
|
|||||||||||||||||||
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|||||||||
Property
|
|
$
|
59,280
|
|
|
91.2
|
%
|
|
$
|
67,090
|
|
|
95.7
|
%
|
|
$
|
(7,810
|
)
|
|
(4.5
|
)
|
Marine
|
|
2,975
|
|
|
22.2
|
%
|
|
15,890
|
|
|
69.2
|
%
|
|
(12,915
|
)
|
|
(47.0
|
)
|
|||
Specialty
|
|
25,196
|
|
|
102.9
|
%
|
|
21,018
|
|
|
98.5
|
%
|
|
4,178
|
|
|
4.4
|
|
|||
Total
|
|
$
|
87,451
|
|
|
85.0
|
%
|
|
$
|
103,998
|
|
|
90.9
|
%
|
|
$
|
(16,547
|
)
|
|
(5.9
|
)
|
|
|
Net Premiums Earned
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
106,086
|
|
|
$
|
114,414
|
|
|
$
|
(8,328
|
)
|
Marine
|
|
30,592
|
|
|
35,826
|
|
|
(5,234
|
)
|
|||
Specialty
|
|
103,983
|
|
|
76,470
|
|
|
27,513
|
|
|||
Total
|
|
$
|
240,661
|
|
|
$
|
226,710
|
|
|
$
|
13,951
|
|
|
Losses and Loss Expense Ratio - All Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
All lines—current period excluding items below
|
48.6
|
%
|
|
45.6
|
%
|
|
3.0
|
|
All lines—current period—notable loss events
|
15.4
|
%
|
|
6.9
|
%
|
|
8.5
|
|
All lines—current period—non-notable loss events
|
7.3
|
%
|
|
1.4
|
%
|
|
5.9
|
|
All lines—change in prior accident years
|
(21.0
|
)%
|
|
(8.9
|
)%
|
|
(12.1
|
)
|
All lines—loss ratio
|
50.3
|
%
|
|
45.0
|
%
|
|
5.3
|
|
|
|
Losses and Loss Expenses - All Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
All lines—current period excluding items below
|
|
$
|
116,940
|
|
|
$
|
103,310
|
|
|
$
|
13,630
|
|
All lines—current period—notable loss events
|
|
36,993
|
|
|
15,659
|
|
|
21,334
|
|
|||
All lines—current period—non-notable loss events
|
|
17,500
|
|
|
3,176
|
|
|
14,324
|
|
|||
All lines—change in prior accident years
|
|
(50,475
|
)
|
|
(20,140
|
)
|
|
(30,335
|
)
|
|||
All lines—losses and loss expenses
|
|
$
|
120,958
|
|
|
$
|
102,005
|
|
|
$
|
18,953
|
|
|
Losses and Loss Expense Ratio - Property Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Property—current period excluding items below
|
22.9
|
%
|
|
23.4
|
%
|
|
(0.5
|
)
|
Property—current period—notable loss events
|
22.0
|
%
|
|
0.0
|
%
|
|
22.0
|
|
Property—current period—non-notable loss events
|
16.4
|
%
|
|
2.8
|
%
|
|
13.6
|
|
Property—change in prior accident years
|
(26.0)
|
%
|
|
(14.3)
|
%
|
|
(11.7
|
)
|
Property—loss ratio
|
35.3
|
%
|
|
11.9
|
%
|
|
23.4
|
|
|
|
Losses and Loss Expenses - Property Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property—current period excluding items below
|
|
$
|
24,398
|
|
|
$
|
26,758
|
|
|
$
|
(2,360
|
)
|
Property—current period—notable loss events
|
|
23,298
|
|
|
—
|
|
|
23,298
|
|
|||
Property—current period—non-notable loss events
|
|
17,384
|
|
|
3,176
|
|
|
14,208
|
|
|||
Property—change in prior accident years
|
|
(27,613
|
)
|
|
(16,384
|
)
|
|
(11,229
|
)
|
|||
Property—losses and loss expenses
|
|
$
|
37,467
|
|
|
$
|
13,550
|
|
|
$
|
23,917
|
|
|
Losses and Loss Expense Ratio - Marine Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Marine—current period excluding items below
|
51.5
|
%
|
|
48.1
|
%
|
|
3.4
|
|
Marine—current period—notable loss events
|
44.8
|
%
|
|
1.1
|
%
|
|
43.7
|
|
Marine—current period—non-notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Marine—change in prior accident years
|
(44.3
|
)%
|
|
(7.9
|
)%
|
|
(36.4
|
)
|
Marine—loss ratio
|
52.0
|
%
|
|
41.3
|
%
|
|
10.7
|
|
|
|
Losses and Loss Expenses - Marine Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Marine—current period excluding items below
|
|
$
|
15,768
|
|
|
$
|
17,237
|
|
|
$
|
(1,469
|
)
|
Marine—current period—notable loss events
|
|
13,695
|
|
|
400
|
|
|
13,295
|
|
|||
Marine—current period—non-notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Marine—change in prior accident years
|
|
(13,556
|
)
|
|
(2,843
|
)
|
|
(10,713
|
)
|
|||
Marine—losses and loss expenses
|
|
$
|
15,907
|
|
|
$
|
14,794
|
|
|
$
|
1,113
|
|
|
|
Losses and Loss Expenses - Specialty Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Specialty—current period excluding items below
|
|
$
|
76,774
|
|
|
$
|
59,315
|
|
|
$
|
17,459
|
|
Specialty—current period—notable loss events
|
|
—
|
|
|
15,259
|
|
|
(15,259
|
)
|
|||
Specialty—current period—non-notable loss events
|
|
116
|
|
|
—
|
|
|
116
|
|
|||
Specialty—change in prior accident years
|
|
(9,306
|
)
|
|
(913
|
)
|
|
(8,393
|
)
|
|||
Specialty—losses and loss expenses
|
|
$
|
67,584
|
|
|
$
|
73,661
|
|
|
$
|
(6,077
|
)
|
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|||||||||
Property
|
|
$
|
21,378
|
|
|
20.2
|
%
|
|
$
|
19,868
|
|
|
17.4
|
%
|
|
$
|
1,510
|
|
|
2.8
|
|
Marine
|
|
7,652
|
|
|
25.0
|
%
|
|
5,966
|
|
|
16.7
|
%
|
|
1,686
|
|
|
8.3
|
|
|||
Specialty
|
|
13,959
|
|
|
13.4
|
%
|
|
10,343
|
|
|
13.5
|
%
|
|
3,616
|
|
|
(0.1
|
)
|
|||
Total
|
|
$
|
42,989
|
|
|
17.9
|
%
|
|
$
|
36,177
|
|
|
16.0
|
%
|
|
$
|
6,812
|
|
|
1.9
|
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
||||||||
General and administrative expenses
|
|
$
|
19,964
|
|
|
8.3
|
%
|
|
$
|
18,522
|
|
|
8.2
|
%
|
|
$
|
1,442
|
|
|
0.1
|
Share compensation expenses
|
|
2,691
|
|
|
1.1
|
%
|
|
2,582
|
|
|
1.1
|
%
|
|
109
|
|
|
—
|
|||
Total
|
|
$
|
22,655
|
|
|
9.4
|
%
|
|
$
|
21,104
|
|
|
9.3
|
%
|
|
$
|
1,551
|
|
|
0.1
|
|
Three Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
|
Change
|
||
Losses and loss expense ratio
|
50.3
|
%
|
|
45.0
|
%
|
|
5.3
|
Policy acquisition cost ratio
|
17.9
|
%
|
|
16.0
|
%
|
|
1.9
|
General and administrative expense ratio (a)
|
9.4
|
%
|
|
9.3
|
%
|
|
0.1
|
Expense ratio
|
27.3
|
%
|
|
25.3
|
%
|
|
2.0
|
Combined ratio
|
77.6
|
%
|
|
70.3
|
%
|
|
7.3
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Fixed maturities and short-term investments
|
|
$
|
15,579
|
|
|
$
|
17,538
|
|
|
$
|
(1,959
|
)
|
Other investments
|
|
4,082
|
|
|
2,879
|
|
|
1,203
|
|
|||
Restricted cash and cash and cash equivalents
|
|
(60
|
)
|
|
1,202
|
|
|
(1,262
|
)
|
|||
Securities lending income
|
|
4
|
|
|
1
|
|
|
3
|
|
|||
Total gross investment income
|
|
19,605
|
|
|
21,620
|
|
|
(2,015
|
)
|
|||
Investment expenses
|
|
(1,243
|
)
|
|
(1,350
|
)
|
|
107
|
|
|||
Total net investment income
|
|
$
|
18,362
|
|
|
$
|
20,270
|
|
|
$
|
(1,908
|
)
|
|
|
Other Insurance Related Income
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Other insurance related income
|
|
$
|
2,569
|
|
|
$
|
863
|
|
|
$
|
1,706
|
|
|
|
Finance Expenses
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Finance expenses
|
|
$
|
3,624
|
|
|
$
|
3,622
|
|
|
$
|
2
|
|
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Underwriting income
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
9,448
|
|
|
$
|
6,936
|
|
|
$
|
2,512
|
|
Reinsurance premiums ceded
|
|
—
|
|
|
(648
|
)
|
|
648
|
|
|||
Net premiums written
|
|
9,448
|
|
|
6,288
|
|
|
3,160
|
|
|||
Change in unearned premiums
|
|
35,276
|
|
|
28,850
|
|
|
6,426
|
|
|||
Net premiums earned
|
|
44,724
|
|
|
35,138
|
|
|
9,586
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
2,076
|
|
|
3,738
|
|
|
(1,662
|
)
|
|||
Policy acquisition costs
|
|
4,658
|
|
|
3,378
|
|
|
1,280
|
|
|||
General and administrative expenses
|
|
4,674
|
|
|
7,719
|
|
|
(3,045
|
)
|
|||
Share compensation expenses
|
|
141
|
|
|
179
|
|
|
(38
|
)
|
|||
Total underwriting deductions
|
|
11,549
|
|
|
15,014
|
|
|
(3,465
|
)
|
|||
|
|
|
|
|
|
|
||||||
Underwriting income (a)
|
|
33,175
|
|
|
20,124
|
|
|
13,051
|
|
|||
|
|
|
|
|
|
|
||||||
Net investment income
|
|
1,533
|
|
|
837
|
|
|
696
|
|
|||
Other insurance related income
|
|
7,522
|
|
|
5,980
|
|
|
1,542
|
|
|||
Finance expenses
|
|
(2,355
|
)
|
|
(385
|
)
|
|
(1,970
|
)
|
|||
|
|
|
|
|
|
|
||||||
Operating income before income from operating affiliates and (income) attributable to AlphaCat investors
|
|
39,875
|
|
|
26,556
|
|
|
13,319
|
|
|||
Income from operating affiliates
|
|
5,526
|
|
|
3,761
|
|
|
1,765
|
|
|||
(Income) attributable to AlphaCat investors
|
|
(40,256
|
)
|
|
(25,807
|
)
|
|
(14,449
|
)
|
|||
Net operating income (a)
|
|
5,145
|
|
|
4,510
|
|
|
635
|
|
|||
Net operating loss attributable to noncontrolling interest
|
|
63
|
|
|
438
|
|
|
(375
|
)
|
|||
Net operating income available to Validus (a)
|
|
$
|
5,208
|
|
|
$
|
4,948
|
|
|
$
|
260
|
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written / Gross premiums written
|
|
100.0
|
%
|
|
90.7
|
%
|
|
9.3
|
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
4.6
|
%
|
|
10.6
|
%
|
|
(6.0
|
)
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition costs
|
|
10.4
|
%
|
|
9.6
|
%
|
|
0.8
|
|
|||
General and administrative expenses (b)
|
|
10.8
|
%
|
|
22.5
|
%
|
|
(11.7
|
)
|
|||
Expense ratio
|
|
21.2
|
%
|
|
32.1
|
%
|
|
(10.9
|
)
|
|||
Combined ratio
|
|
25.8
|
%
|
|
42.7
|
%
|
|
(16.9
|
)
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Increase (decrease) to net operating income available to Validus
over the three months ended September 30, |
||
(Dollars in thousands)
|
|
2015 compared to 2014
|
||
Net premiums earned
|
|
$
|
9,586
|
|
Notable and non-notable loss events (a)
|
|
—
|
|
|
Incurred current year losses, excluding notable and non-notable loss events
|
|
1,662
|
|
|
Prior period loss development
|
|
—
|
|
|
Other underwriting deductions (b)
|
|
1,803
|
|
|
Underwriting income (c)
|
|
13,051
|
|
|
(Income) attributable to AlphaCat investors
|
|
(14,449
|
)
|
|
Other operating income and expenses, net (d)
|
|
2,033
|
|
|
Net operating income (c)
|
|
635
|
|
|
Net operating (income) attributable to noncontrolling interest
|
|
(375
|
)
|
|
Net operating income available to Validus (c)
|
|
$
|
260
|
|
(a)
|
There were no losses and loss expenses from notable or non-notable loss events for either of the
three months ended September 30, 2015
and
2014
.
|
(b)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(c)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.
|
(d)
|
Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses, and income from operating affiliates.
|
|
|
Gross Premiums Written
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
9,448
|
|
|
$
|
6,936
|
|
|
$
|
2,512
|
|
|
|
Net Premiums Written
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
9,448
|
|
|
$
|
6,288
|
|
|
$
|
3,160
|
|
|
|
Net Premiums Earned
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
44,724
|
|
|
$
|
35,138
|
|
|
$
|
9,586
|
|
|
Losses and Loss Expense Ratio - Property Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Property—current period excluding items below
|
4.6
|
%
|
|
10.6
|
%
|
|
(6.0
|
)
|
Property—current period—notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Property—current period—non-notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Property—change in prior accident years
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Property—loss ratio
|
4.6
|
%
|
|
10.6
|
%
|
|
(6.0
|
)
|
|
|
Losses and Loss Expenses - Property Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property—current period excluding items below
|
|
$
|
2,076
|
|
|
$
|
3,738
|
|
|
$
|
(1,662
|
)
|
Property—current period—notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Property—current period—non-notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Property—change in prior accident years
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Property—losses and loss expenses
|
|
$
|
2,076
|
|
|
$
|
3,738
|
|
|
$
|
(1,662
|
)
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
||||||||
Property
|
|
$
|
4,658
|
|
|
10.4
|
%
|
|
$
|
3,378
|
|
|
9.6
|
%
|
|
$
|
1,280
|
|
|
0.8
|
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|||||||||
General and administrative expenses
|
|
$
|
4,674
|
|
|
10.5
|
%
|
|
$
|
7,719
|
|
|
22.0
|
%
|
|
$
|
(3,045
|
)
|
|
(11.5
|
)
|
Share compensation expenses
|
|
141
|
|
|
0.3
|
%
|
|
179
|
|
|
0.5
|
%
|
|
(38
|
)
|
|
(0.2
|
)
|
|||
Total
|
|
$
|
4,815
|
|
|
10.8
|
%
|
|
$
|
7,898
|
|
|
22.5
|
%
|
|
$
|
(3,083
|
)
|
|
(11.7
|
)
|
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Losses and loss expense ratio
|
4.6
|
%
|
|
10.6
|
%
|
|
(6.0
|
)
|
Policy acquisition cost ratio
|
10.4
|
%
|
|
9.6
|
%
|
|
0.8
|
|
General and administrative expense ratio (a)
|
10.8
|
%
|
|
22.5
|
%
|
|
(11.7
|
)
|
Expense ratio
|
21.2
|
%
|
|
32.1
|
%
|
|
(10.9
|
)
|
Combined ratio
|
25.8
|
%
|
|
42.7
|
%
|
|
(16.9
|
)
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Fixed maturities and short-term investments
|
|
$
|
1,496
|
|
|
$
|
818
|
|
|
$
|
678
|
|
Restricted cash and cash and cash equivalents
|
|
37
|
|
|
19
|
|
|
18
|
|
|||
Total net investment income
|
|
$
|
1,533
|
|
|
$
|
837
|
|
|
$
|
696
|
|
|
|
Other Insurance Related Income
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Other insurance related income
|
|
$
|
7,522
|
|
|
$
|
5,980
|
|
|
$
|
1,542
|
|
|
|
Finance Expenses
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Finance expenses
|
|
$
|
2,355
|
|
|
$
|
385
|
|
|
$
|
1,970
|
|
|
|
Income from Operating Affiliates
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
AlphaCat Re 2011
|
|
$
|
396
|
|
|
$
|
(5
|
)
|
|
$
|
401
|
|
AlphaCat Re 2012
|
|
(8
|
)
|
|
(9
|
)
|
|
1
|
|
|||
AlphaCat 2013
|
|
(8
|
)
|
|
7
|
|
|
(15
|
)
|
|||
AlphaCat 2014
|
|
(12
|
)
|
|
1,367
|
|
|
(1,379
|
)
|
|||
AlphaCat 2015
|
|
1,077
|
|
|
—
|
|
|
1,077
|
|
|||
AlphaCat ILS funds
|
|
4,081
|
|
|
2,401
|
|
|
1,680
|
|
|||
Total
|
|
$
|
5,526
|
|
|
$
|
3,761
|
|
|
$
|
1,765
|
|
|
|
(Income) Attributable to AlphaCat Investors
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
(Income) attributable to AlphaCat investors
|
|
$
|
(40,256
|
)
|
|
$
|
(25,807
|
)
|
|
$
|
(14,449
|
)
|
|
|
Net Operating Loss Attributable to Noncontrolling Interest
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Net operating loss attributable to noncontrolling interest
|
|
$
|
63
|
|
|
$
|
438
|
|
|
$
|
(375
|
)
|
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Underwriting income
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
226,025
|
|
|
$
|
245,685
|
|
|
$
|
(19,660
|
)
|
Reinsurance premiums ceded
|
|
(35,823
|
)
|
|
(27,134
|
)
|
|
(8,689
|
)
|
|||
Net premiums written
|
|
190,202
|
|
|
218,551
|
|
|
(28,349
|
)
|
|||
Change in unearned premiums
|
|
15,942
|
|
|
14,297
|
|
|
1,645
|
|
|||
Net premiums earned
|
|
206,144
|
|
|
232,848
|
|
|
(26,704
|
)
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
94,414
|
|
|
118,382
|
|
|
(23,968
|
)
|
|||
Policy acquisition costs
|
|
44,575
|
|
|
47,862
|
|
|
(3,287
|
)
|
|||
General and administrative expenses
|
|
43,292
|
|
|
37,709
|
|
|
5,583
|
|
|||
Share compensation expenses
|
|
3,214
|
|
|
2,990
|
|
|
224
|
|
|||
Total underwriting deductions
|
|
185,495
|
|
|
206,943
|
|
|
(21,448
|
)
|
|||
|
|
|
|
|
|
|
||||||
Underwriting income (a)
|
|
20,649
|
|
|
25,905
|
|
|
(5,256
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net investment income
|
|
6,457
|
|
|
4,965
|
|
|
1,492
|
|
|||
Other insurance related income
|
|
470
|
|
|
109
|
|
|
361
|
|
|||
Finance expenses
|
|
(57
|
)
|
|
162
|
|
|
(219
|
)
|
|||
|
|
|
|
|
|
|
||||||
Operating income before taxes
|
|
27,519
|
|
|
31,141
|
|
|
(3,622
|
)
|
|||
Tax (expense) benefit
|
|
(1,141
|
)
|
|
332
|
|
|
(1,473
|
)
|
|||
Net operating income (a)
|
|
$
|
26,378
|
|
|
$
|
31,473
|
|
|
$
|
(5,095
|
)
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written / Gross premiums written
|
|
84.2
|
%
|
|
89.0
|
%
|
|
(4.8
|
)
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
45.8
|
%
|
|
50.8
|
%
|
|
(5.0
|
)
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition costs
|
|
21.6
|
%
|
|
20.6
|
%
|
|
1.0
|
|
|||
General and administrative expenses (b)
|
|
22.6
|
%
|
|
17.5
|
%
|
|
5.1
|
|
|||
Expense ratio
|
|
44.2
|
%
|
|
38.1
|
%
|
|
6.1
|
|
|||
Combined ratio
|
|
90.0
|
%
|
|
88.9
|
%
|
|
1.1
|
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Increase (decrease) to net operating income over the three months ended September 30,
|
||
(Dollars in thousands)
|
|
2015 compared to 2014
|
||
Net premiums earned
|
|
$
|
(26,704
|
)
|
Notable loss events (a)
|
|
492
|
|
|
Non-notable loss events (b)
|
|
(4,675
|
)
|
|
Incurred current year losses, excluding notable and non-notable loss events
|
|
27,604
|
|
|
Prior period loss development
|
|
547
|
|
|
Other underwriting deductions (c)
|
|
(2,520
|
)
|
|
Underwriting income (d)
|
|
(5,256
|
)
|
|
Other operating income and expenses, net (e)
|
|
161
|
|
|
Net operating income (d)
|
|
$
|
(5,095
|
)
|
(a)
|
Losses and loss expenses from notable loss events for the
three months ended
September 30, 2015
were
$12.0 million
compared to
$12.5 million
for the
three months ended
September 30, 2014
.
|
(b)
|
Losses and loss expenses from non-notable loss events for the
three months ended September 30, 2015
were
$4.7 million
compared to
$nil
for the
three months ended September 30, 2014
.
|
(c)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.
|
(e)
|
Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses and taxes.
|
|
|
Business Mix - Ratio of Gross Premiums Written by Line of Business to Total Gross Premiums Written
|
|||||||||||||||||||
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|||||||||
Property
|
|
$
|
72,717
|
|
|
32.1
|
%
|
|
$
|
67,043
|
|
|
27.2
|
%
|
|
$
|
5,674
|
|
|
4.9
|
|
Marine
|
|
66,813
|
|
|
29.6
|
%
|
|
90,794
|
|
|
37.0
|
%
|
|
(23,981
|
)
|
|
(7.4
|
)
|
|||
Specialty
|
|
86,495
|
|
|
38.3
|
%
|
|
87,848
|
|
|
35.8
|
%
|
|
(1,353
|
)
|
|
2.5
|
|
|||
Total
|
|
$
|
226,025
|
|
|
100.0
|
%
|
|
$
|
245,685
|
|
|
100.0
|
%
|
|
$
|
(19,660
|
)
|
|
0.0
|
|
|
|
Reinsurance Premiums Ceded
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
19,143
|
|
|
$
|
17,235
|
|
|
$
|
1,908
|
|
Marine
|
|
3,488
|
|
|
(1,355
|
)
|
|
4,843
|
|
|||
Specialty
|
|
13,192
|
|
|
11,254
|
|
|
1,938
|
|
|||
Total
|
|
$
|
35,823
|
|
|
$
|
27,134
|
|
|
$
|
8,689
|
|
|
|
Net Retention - Ratio of Net Premiums Written to Gross Premiums Written
|
|||||||||||||||||||
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|||||||||
Property
|
|
$
|
53,574
|
|
|
73.7
|
%
|
|
$
|
49,808
|
|
|
74.3
|
%
|
|
$
|
3,766
|
|
|
(0.6
|
)
|
Marine
|
|
63,325
|
|
|
94.8
|
%
|
|
92,149
|
|
|
101.5
|
%
|
|
(28,824
|
)
|
|
(6.7
|
)
|
|||
Specialty
|
|
73,303
|
|
|
84.7
|
%
|
|
76,594
|
|
|
87.2
|
%
|
|
(3,291
|
)
|
|
(2.5
|
)
|
|||
Total
|
|
$
|
190,202
|
|
|
84.2
|
%
|
|
$
|
218,551
|
|
|
89.0
|
%
|
|
$
|
(28,349
|
)
|
|
(4.8
|
)
|
|
|
Net Premiums Earned
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
55,357
|
|
|
$
|
52,130
|
|
|
$
|
3,227
|
|
Marine
|
|
75,986
|
|
|
99,774
|
|
|
(23,788
|
)
|
|||
Specialty
|
|
74,801
|
|
|
80,944
|
|
|
(6,143
|
)
|
|||
Total
|
|
$
|
206,144
|
|
|
$
|
232,848
|
|
|
$
|
(26,704
|
)
|
|
Losses and Loss Expense Ratio - All Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
All lines—current period excluding items below
|
55.1
|
%
|
|
60.6
|
%
|
|
(5.5
|
)
|
All lines—current period—notable loss events
|
5.8
|
%
|
|
5.4
|
%
|
|
0.4
|
|
All lines—current period—non-notable loss events
|
2.3
|
%
|
|
0.0
|
%
|
|
2.3
|
|
All lines—change in prior accident years
|
(17.4)
|
%
|
|
(15.2)
|
%
|
|
(2.2
|
)
|
All lines—loss ratio
|
45.8
|
%
|
|
50.8
|
%
|
|
(5.0
|
)
|
|
|
Losses and Loss Expenses - All Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
All lines—current period excluding items below
|
|
$
|
113,728
|
|
|
$
|
141,332
|
|
|
$
|
(27,604
|
)
|
All lines—current period—notable loss events
|
|
11,983
|
|
|
12,475
|
|
|
(492
|
)
|
|||
All lines—current period—non-notable loss events
|
|
4,675
|
|
|
—
|
|
|
4,675
|
|
|||
All lines—change in prior accident years
|
|
(35,972
|
)
|
|
(35,425
|
)
|
|
(547
|
)
|
|||
All lines - losses and loss expenses
|
|
$
|
94,414
|
|
|
$
|
118,382
|
|
|
$
|
(23,968
|
)
|
|
Losses and Loss Expense Ratio - Property Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Property—current period excluding items below
|
61.6
|
%
|
|
65.9
|
%
|
|
(4.3
|
)
|
Property—current period—notable loss events
|
5.7
|
%
|
|
0.0
|
%
|
|
5.7
|
|
Property—current period—non-notable loss events
|
7.5
|
%
|
|
0.0
|
%
|
|
7.5
|
|
Property—change in prior accident years
|
(17.5)
|
%
|
|
(25.5)
|
%
|
|
8.0
|
|
Property—loss ratio
|
57.3
|
%
|
|
40.4
|
%
|
|
16.9
|
|
|
|
Losses and Loss Expenses - Property Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property—current period excluding items below
|
|
$
|
34,090
|
|
|
$
|
34,340
|
|
|
$
|
(250
|
)
|
Property—current period—notable loss events
|
|
3,166
|
|
|
—
|
|
|
3,166
|
|
|||
Property—current period—non-notable loss events
|
|
4,175
|
|
|
—
|
|
|
4,175
|
|
|||
Property—change in prior accident years
|
|
(9,706
|
)
|
|
(13,285
|
)
|
|
3,579
|
|
|||
Property—losses and loss expenses
|
|
$
|
31,725
|
|
|
$
|
21,055
|
|
|
$
|
10,670
|
|
|
Losses and Loss Expense Ratio - Marine Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Marine—current period excluding items below
|
61.8
|
%
|
|
46.2
|
%
|
|
15.6
|
|
Marine—current period—notable loss events
|
11.6
|
%
|
|
0.2
|
%
|
|
11.4
|
|
Marine—current period—non-notable loss events
|
0.7
|
%
|
|
0.0
|
%
|
|
0.7
|
|
Marine—change in prior accident years
|
(19.5
|
)%
|
|
(12.0
|
)%
|
|
(7.5
|
)
|
Marine—loss ratio
|
54.6
|
%
|
|
34.4
|
%
|
|
20.2
|
|
|
|
Losses and Loss Expenses - Marine Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Marine—current period excluding items below
|
|
$
|
46,995
|
|
|
$
|
46,087
|
|
|
$
|
908
|
|
Marine—current period—notable loss events
|
|
$
|
8,817
|
|
|
$
|
191
|
|
|
$
|
8,626
|
|
Marine—current period—non-notable loss events
|
|
500
|
|
|
—
|
|
|
500
|
|
|||
Marine—change in prior accident years
|
|
(14,854
|
)
|
|
(11,922
|
)
|
|
(2,932
|
)
|
|||
Marine—losses and loss expenses
|
|
$
|
41,458
|
|
|
$
|
34,356
|
|
|
$
|
7,102
|
|
|
Losses and Loss Expense Ratio - Specialty Lines
|
|||||||
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Specialty—current period excluding items below
|
43.7
|
%
|
|
75.2
|
%
|
|
(31.5
|
)
|
Specialty—current period—notable loss events
|
0.0
|
%
|
|
15.2
|
%
|
|
(15.2
|
)
|
Specialty—current period—non-notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Specialty—change in prior accident years
|
(15.3
|
)%
|
|
(12.6)
|
%
|
|
(2.7
|
)
|
Specialty—loss ratio
|
28.4
|
%
|
|
77.8
|
%
|
|
(49.4
|
)
|
|
|
Losses and Loss Expenses - Specialty Lines
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Specialty—current period excluding items below
|
|
$
|
32,643
|
|
|
$
|
60,905
|
|
|
$
|
(28,262
|
)
|
Specialty—current period—notable loss events
|
|
—
|
|
|
12,284
|
|
|
(12,284
|
)
|
|||
Specialty—current period—non-notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Specialty—change in prior accident years
|
|
(11,412
|
)
|
|
(10,218
|
)
|
|
(1,194
|
)
|
|||
Specialty—losses and loss expenses
|
|
$
|
21,231
|
|
|
$
|
62,971
|
|
|
$
|
(41,740
|
)
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
||||||||
Property
|
|
$
|
8,205
|
|
|
14.8
|
%
|
|
$
|
6,930
|
|
|
13.3
|
%
|
|
$
|
1,275
|
|
|
1.5
|
Marine
|
|
18,712
|
|
|
24.6
|
%
|
|
22,846
|
|
|
22.9
|
%
|
|
(4,134
|
)
|
|
1.7
|
|||
Specialty
|
|
17,658
|
|
|
23.6
|
%
|
|
18,086
|
|
|
22.3
|
%
|
|
(428
|
)
|
|
1.3
|
|||
Total
|
|
$
|
44,575
|
|
|
21.6
|
%
|
|
$
|
47,862
|
|
|
20.6
|
%
|
|
$
|
(3,287
|
)
|
|
1.0
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
||||||||
General and administrative expenses
|
|
43,292
|
|
|
21.0
|
%
|
|
37,709
|
|
|
16.2
|
%
|
|
5,583
|
|
|
4.8
|
|||
Share compensation expenses
|
|
3,214
|
|
|
1.6
|
%
|
|
2,990
|
|
|
1.3
|
%
|
|
224
|
|
|
0.3
|
|||
Total
|
|
$
|
46,506
|
|
|
22.6
|
%
|
|
$
|
40,699
|
|
|
17.5
|
%
|
|
$
|
5,807
|
|
|
5.1
|
|
Three Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Losses and loss expense ratio
|
45.8
|
%
|
|
50.8
|
%
|
|
(5.0
|
)
|
Policy acquisition cost ratio
|
21.6
|
%
|
|
20.6
|
%
|
|
1.0
|
|
General and administrative expense ratio (a)
|
22.6
|
%
|
|
17.5
|
%
|
|
5.1
|
|
Expense ratio
|
44.2
|
%
|
|
38.1
|
%
|
|
6.1
|
|
Combined ratio
|
90.0
|
%
|
|
88.9
|
%
|
|
1.1
|
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Fixed maturities and short-term investments
|
|
$
|
6,507
|
|
|
$
|
4,999
|
|
|
$
|
1,508
|
|
Restricted cash and cash and cash equivalents
|
|
388
|
|
|
360
|
|
|
28
|
|
|||
Total gross investment income
|
|
6,895
|
|
|
5,359
|
|
|
1,536
|
|
|||
Investment expenses
|
|
(438
|
)
|
|
(394
|
)
|
|
(44
|
)
|
|||
Total net investment income
|
|
$
|
6,457
|
|
|
$
|
4,965
|
|
|
$
|
1,492
|
|
|
|
Three Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Underwriting income
|
|
|
||
Gross premiums written
|
|
$
|
70,871
|
|
Reinsurance premiums ceded
|
|
(4,716
|
)
|
|
Net premiums written
|
|
66,155
|
|
|
Change in unearned premiums
|
|
(2,225
|
)
|
|
Net premiums earned
|
|
63,930
|
|
|
|
|
|
||
Underwriting deductions
|
|
|
||
Losses and loss expenses
|
|
40,810
|
|
|
Policy acquisition costs
|
|
13,214
|
|
|
General and administrative expenses
|
|
9,587
|
|
|
Share compensation expenses
|
|
554
|
|
|
Total underwriting deductions
|
|
64,165
|
|
|
|
|
|
||
Underwriting income (a)
|
|
(235
|
)
|
|
|
|
|
||
Net investment income
|
|
5,634
|
|
|
Other insurance related income
|
|
248
|
|
|
Operating income before taxes
|
|
5,647
|
|
|
Tax expense
|
|
(2,431
|
)
|
|
Net operating income (a)
|
|
$
|
3,216
|
|
|
|
|
||
Selected ratios:
|
|
|
||
Net premiums written / Gross premiums written
|
|
93.3
|
%
|
|
|
|
|
||
Losses and loss expenses
|
|
63.8
|
%
|
|
|
|
|
||
Policy acquisition costs
|
|
20.7
|
%
|
|
General and administrative expense (b)
|
|
15.9
|
%
|
|
Expense ratio
|
|
36.6
|
%
|
|
Combined ratio
|
|
100.4
|
%
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Business Mix - Ratio of Gross Premiums Written by Line of Business to Total Gross Premiums Written
|
|||||
|
|
Three Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
% of Total
|
|||
Property
|
|
$
|
13,862
|
|
|
19.6
|
%
|
Liability
|
|
57,009
|
|
|
80.4
|
%
|
|
Total
|
|
$
|
70,871
|
|
|
100.0
|
%
|
|
|
Reinsurance Premiums Ceded
|
||
|
|
Three Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Property
|
|
$
|
1,243
|
|
Liability
|
|
3,473
|
|
|
Total
|
|
$
|
4,716
|
|
|
|
Net Retention - Ratio of Net Premiums Written to Gross Premiums Written
|
|||||
|
|
Three Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|||
Property
|
|
$
|
12,619
|
|
|
91.0
|
%
|
Liability
|
|
53,536
|
|
|
93.9
|
%
|
|
Total
|
|
$
|
66,155
|
|
|
93.3
|
%
|
|
|
Net Premiums Earned
|
||
|
|
Three Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Property
|
|
$
|
11,083
|
|
Liability
|
|
52,847
|
|
|
Total
|
|
$
|
63,930
|
|
|
|
Losses and Loss Expense Ratio -
All Lines
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2015
|
|
All lines—current period excluding items below
|
|
71.7
|
%
|
All lines—current period—notable loss events
|
|
0.0
|
%
|
All lines—current period—non-notable loss events
|
|
0.0
|
%
|
All lines—change in prior accident years (a)
|
|
(7.9
|
)%
|
All lines—loss ratio (a)
|
|
63.8
|
%
|
|
|
Losses and Loss Expenses - All Lines
|
||
|
|
Three Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
All lines—current period excluding items below
|
|
$
|
45,864
|
|
All lines—current period—notable loss events
|
|
—
|
|
|
All lines—current period—non-notable loss events
|
|
—
|
|
|
All lines—change in prior accident years (a)
|
|
(5,054
|
)
|
|
All lines
—
losses and loss expenses (a)
|
|
$
|
40,810
|
|
(a)
|
Upon closing the acquisition, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of
$2,524
during the
three months ended September 30, 2015
, benefiting the loss ratio by
3.9
percentage points. The remaining fair value adjustment of
$2,340
will be amortized during the remainder of 2015.
|
|
|
Losses and Loss Expense Ratio - Property Lines
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2015
|
|
Property—current period excluding items below
|
|
60.0
|
%
|
Property—current period—notable loss events
|
|
0.0
|
%
|
Property—current period—non-notable loss events
|
|
0.0
|
%
|
Property—change in prior accident years (a)
|
|
(9.5
|
)%
|
Property—loss ratio (a)
|
|
50.5
|
%
|
|
|
Losses and Loss Expenses - Property Lines
|
||
|
|
Three Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Property—current period excluding items below
|
|
$
|
6,652
|
|
Property—current period—notable loss events
|
|
—
|
|
|
Property—current period—non-notable loss events
|
|
—
|
|
|
Property—change in prior accident years (a)
|
|
(1,054
|
)
|
|
Property—losses and loss expenses (a)
|
|
$
|
5,598
|
|
(a)
|
Upon closing the acquisition, an adjustment of $409 was made to decrease net reserves to reflect fair value. This adjustment was amortized to income through an increase in losses and loss expenses of
$66
during the
three months ended September 30, 2015
, increasing the loss ratio by
0.6
percentage points. The remaining fair value adjustment of
$61
will be amortized during the remainder of 2015.
|
|
|
Losses and Loss Expense Ratio - Liability Lines
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2015
|
|
Liability—current period excluding items below
|
|
74.2
|
%
|
Liability—current period—notable loss events
|
|
0.0
|
%
|
Liability—current period—non-notable loss events
|
|
0.0
|
%
|
Liability—change in prior accident years (a)
|
|
(7.6
|
)%
|
Liability—loss ratio (a)
|
|
66.6
|
%
|
|
|
Losses and Loss Expenses - Liability Lines
|
||
|
|
Three Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Liability—current period excluding items below
|
|
$
|
39,212
|
|
Liability—current period—notable loss events
|
|
—
|
|
|
Liability—current period—non-notable loss events
|
|
—
|
|
|
Liability—change in prior accident years (a)
|
|
(4,000
|
)
|
|
Liability—losses and loss expenses (a)
|
|
$
|
35,212
|
|
(a)
|
Upon closing the acquisition, an adjustment of $15,995 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of
$2,590
during the
three months ended September 30, 2015
, benefiting the loss ratio by
4.9
percentage points. The remaining fair value adjustment of
$2,401
will be amortized during the remainder of 2015.
|
|
|
Three Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|||
Property
|
|
$
|
2,513
|
|
|
22.7
|
%
|
Liability
|
|
10,701
|
|
|
20.2
|
%
|
|
Total (a)
|
|
$
|
13,214
|
|
|
20.7
|
%
|
(a)
|
Upon closing the acquisition, an adjustment of
$34,736
was made to reduce deferred acquisition costs to reflect fair value. These deferred acquisition costs would otherwise have been expensed in the amount of
$2,925
during the
three months ended September 30, 2015
, benefiting the policy acquisition cost ratio by
4.6
percentage points.
|
|
|
Three Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|||
General and administrative expenses
|
|
$
|
9,587
|
|
|
15.0
|
%
|
Share compensation expenses
|
|
554
|
|
|
0.9
|
%
|
|
Total
|
|
$
|
10,141
|
|
|
15.9
|
%
|
|
Three Months Ended September 30,
|
|
|
2015
|
|
Losses and loss expense ratio
|
63.8
|
%
|
Policy acquisition cost ratio
|
20.7
|
%
|
General and administrative expense ratio (a)
|
15.9
|
%
|
Expense ratio
|
36.6
|
%
|
Combined ratio
|
100.4
|
%
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||
|
|
Three Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Fixed maturities and short-term investments
|
|
$
|
4,997
|
|
Other investments
|
|
1,004
|
|
|
Restricted cash and cash and cash equivalents
|
|
8
|
|
|
Total gross investment income
|
|
6,009
|
|
|
Investment expenses
|
|
(375
|
)
|
|
Total net investment income
|
|
$
|
5,634
|
|
|
|
Net Realized and Change in Net Unrealized Losses on Investments
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Net realized (losses) gains on investments
|
|
$
|
(41,906
|
)
|
|
$
|
4,595
|
|
|
$
|
(46,501
|
)
|
Change in net unrealized losses on investments
|
|
(34,908
|
)
|
|
(84,974
|
)
|
|
50,066
|
|
|||
Net realized and change in net unrealized losses on investments
|
|
$
|
(76,814
|
)
|
|
$
|
(80,379
|
)
|
|
$
|
3,565
|
|
|
|
Income From Investment Affiliate
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Income from investment affiliate
|
|
$
|
2,482
|
|
|
$
|
1,754
|
|
|
$
|
728
|
|
|
Three Months Ended September 30,
|
||||
U.S. dollar strengthened (weakened) against:
|
2015
|
|
2014
|
||
British Pound sterling
|
3.7
|
%
|
|
5.6
|
%
|
Euro
|
(0.2
|
)%
|
|
8.5
|
%
|
Canadian dollar
|
6.4
|
%
|
|
5.1
|
%
|
Swiss franc
|
4.4
|
%
|
|
7.8
|
%
|
Australian dollar
|
9.5
|
%
|
|
8.5
|
%
|
New Zealand dollar
|
5.9
|
%
|
|
12.7
|
%
|
Singapore dollar
|
5.6
|
%
|
|
2.5
|
%
|
Japanese yen
|
(2.0
|
)%
|
|
8.3
|
%
|
South African rand
|
13.7
|
%
|
|
6.4
|
%
|
|
|
Foreign Exchange Losses
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Foreign exchange losses
|
|
$
|
(2,274
|
)
|
|
$
|
(11,441
|
)
|
|
$
|
9,167
|
|
|
|
Other Loss
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Other loss
|
|
$
|
(1,970
|
)
|
|
$
|
(7,690
|
)
|
|
$
|
5,720
|
|
|
|
Net Loss Attributable to Noncontrolling Interest
|
||||||||||
|
|
Three Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Net loss attributable to noncontrolling interest
|
|
$
|
71,663
|
|
|
$
|
53,069
|
|
|
$
|
18,594
|
|
•
|
Gross premiums written for the
nine months ended
September 30, 2015
were
$2,248.1 million
compared to
$2,026.6 million
for the
nine months ended
September 30, 2014
,
an increase
of
$221.5 million
, or
10.9%
.
|
•
|
Net premiums earned for the
nine months ended
September 30, 2015
were
$1,706.8 million
compared to
$1,443.7 million
for the
nine months ended
September 30, 2014
,
an increase
of
$263.1 million
, or
18.2%
.
|
•
|
Underwriting income for the
nine months ended
September 30, 2015
was
$341.0 million
compared to
$391.3 million
for the
nine months ended
September 30, 2014
,
a decrease
of
$50.2 million
, or
12.8%
.
|
•
|
Combined ratio for the
nine months ended
September 30, 2015
of
80.0%
which included
$245.8 million
of
favorable
loss reserve development on prior accident years,
benefiting
the loss ratio by
14.4
percentage points compared to a combined ratio for the
nine months ended
September 30, 2014
of
72.9%
which included
$167.6 million
of
favorable
loss reserve development on prior accident years,
benefiting
the loss ratio by
11.6
percentage points. The favorable loss reserve development was primarily due to lower than expected development on attritional losses.
|
•
|
Loss ratio for the
nine months ended
September 30, 2015
of
44.8%
compared to
37.8%
for the
nine months ended
September 30, 2014
,
an increase
of
7.0
percentage points. Incurred losses for the
nine months ended
September 30, 2015
were
$765.3 million
, compared to
$545.5 million
for the
nine months ended
September 30, 2014
,
an increase
of
$219.8 million
or
40.3%
.
|
•
|
Loss ratios by line of business are as follows:
|
(a)
|
The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.
|
•
|
Losses and loss expenses from notable loss events, including development on these events, for the
nine months ended
September 30, 2015
were
$97.1 million
compared to
$28.1 million
for the
nine months ended
September 30, 2014
. Notable loss events are defined as consolidated losses from a single event which aggregate to a threshold greater than or equal to $30.0 million. Notable loss events for the
nine months ended
September 30, 2015
were the August 12th port explosion in Tianjin, China and Pemex, an offshore rig explosion. The port explosion in Tianjin resulted in estimated loss to the Company of
$47.8 million
or
2.8
percentage points of the loss ratio. Net of
$3.9 million
of reinstatement premiums, the net loss was
$43.9 million
. The offshore rig explosion, Pemex resulted in estimated loss to the Company of
$49.3 million
or
2.9
percentage points of the loss ratio. Including reinstatement premiums payable, the net loss was
$51.4 million
. During the
nine months ended
September 30, 2014
, the Company incurred a loss of
$28.1 million
or
1.9
percentage points of the loss ratio, related to Tripoli Airport which subsequently developed into a notable loss event during the three months ended December 31, 2014.
|
•
|
Losses and loss expenses from non-notable loss events, including development on these events, for the
nine months ended
September 30, 2015
were
$22.2 million
compared to
$25.1 million
for the
nine months ended
September 30, 2014
. Non-notable loss events are defined as consolidated losses from a single event which aggregate to a threshold greater than or equal to $15.0 million but less than $30.0 million. The non-notable loss event for the
nine months ended
September 30, 2015
was the Chilean earthquake, which resulted in an estimated loss to the Company of
$22.2 million
or
1.3
percentage points of the loss ratio. Net of $2.2 million of reinstatement premiums, the net loss was $20.0 million.
|
•
|
Net investment income for the
nine months ended
September 30, 2015
was
$96.2 million
compared to
$69.9 million
for the
nine months ended
September 30, 2014
,
an increase
of
$26.2 million
, or
37.5%
.
|
•
|
Investment yield for the
nine months ended
September 30, 2015
was
1.92%
compared to
1.41%
for the
nine months ended
September 30, 2014
.
|
•
|
Net operating income available to Validus for the
nine months ended
September 30, 2015
was
$304.8 million
compared to
$357.4 million
for the
nine months ended
September 30, 2014
,
a decrease
of
$52.6 million
, or
14.7%
.
|
•
|
Net income available to Validus for the
nine months ended
September 30, 2015
was
$304.1 million
, or
$3.50
per diluted common share compared to
$355.4 million
or
$3.70
per diluted common share for the
nine months ended
September 30, 2014
.
|
•
|
Annualized return on average equity and annualized net operating return on average equity for the
nine months ended
September 30, 2015
were
11.1%
and
11.2%
, respectively, compared to
12.8%
and
12.9%
for the
nine months ended
September 30, 2014
.
|
•
|
Total investments and cash as at
September 30, 2015
was
$8.5 billion
compared to
$8.1 billion
as at
December 31, 2014
.
|
•
|
AlphaCat's assets under management as at October 1, 2015 was
$2.2 billion
compared to
$1.9 billion
as at January 1, 2015.
|
|
|
Increase (decrease) to net operating income available to Validus
over the nine months ended September 30,
|
||||||||
|
|
2015 compared to 2014
|
||||||||
(Dollars in thousands)
|
|
Validus Holdings, Ltd. Consolidated
|
Western World Segment
|
Validus Holdings, Ltd. Consolidated excluding the Western World Segment
|
||||||
Net premiums earned
|
|
$
|
263,139
|
|
$
|
196,930
|
|
$
|
66,209
|
|
Notable loss events (a)
|
|
(68,916
|
)
|
—
|
|
(68,916
|
)
|
|||
Non-notable loss events (b)
|
|
2,947
|
|
—
|
|
2,947
|
|
|||
Incurred current year losses, excluding notable and non-notable loss events
|
|
(231,965
|
)
|
(153,737
|
)
|
(78,228
|
)
|
|||
Prior period loss development
|
|
78,142
|
|
15,639
|
|
62,503
|
|
|||
Other underwriting deductions (c)
|
|
(93,557
|
)
|
(57,772
|
)
|
(35,785
|
)
|
|||
Underwriting income (d)
|
|
(50,210
|
)
|
1,060
|
|
(51,270
|
)
|
|||
(Income) attributable to AlphaCat investors
|
|
(11,508
|
)
|
—
|
|
(11,508
|
)
|
|||
Other operating expenses and income, net (e)
|
|
11,987
|
|
15,027
|
|
(3,040
|
)
|
|||
Net operating income (d)
|
|
(49,731
|
)
|
16,087
|
|
(65,818
|
)
|
|||
Net operating (income) loss attributable to noncontrolling interest
|
|
(2,887
|
)
|
—
|
|
(2,887
|
)
|
|||
Net operating income available to Validus (d)
|
|
$
|
(52,618
|
)
|
$
|
16,087
|
|
$
|
(68,705
|
)
|
(a)
|
Loss and loss expenses from notable loss events for the
nine months ended September 30, 2015
were
$97.1 million
compared to
$28.1 million
nine months ended September 30, 2014
.
|
(b)
|
Losses and loss expenses from non-notable loss events for the
nine months ended September 30, 2015
were
$22.2 million
compared to
$25.1 million
for the
nine months ended September 30, 2014
.
|
(c)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(e)
|
Other operating expenses and income, net, consists of net investment income, other insurance related income, finance expenses, taxes and income (loss) from operating affiliates.
|
•
|
An increase in losses and loss expenses of
$81.7 million
, comprised of:
|
◦
|
an increase in incurred current year losses, excluding notable and non-notable losses of
$78.2 million
; and
|
◦
|
an increase in notable loss events of
$68.9 million
; offset by,
|
◦
|
an increase in favorable prior period development of
$62.5 million
; and
|
◦
|
a decrease in non-notable loss events of
$2.9 million
;
|
•
|
An increase in policy acquisition costs of
$30.0 million
primarily due to new agricultural business written in the Validus Re segment; and
|
•
|
An increase in (income) attributable to AlphaCat investors of
$11.5 million
; offset by,
|
•
|
An increase in net premiums earned of
$66.2 million
, primarily due to new agriculture business written in the Validus Re segment.
|
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Underwriting income
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
1,111,020
|
|
|
$
|
1,081,816
|
|
|
$
|
29,204
|
|
Reinsurance premiums ceded
|
|
(147,611
|
)
|
|
(161,721
|
)
|
|
14,110
|
|
|||
Net premiums written
|
|
963,409
|
|
|
920,095
|
|
|
43,314
|
|
|||
Change in unearned premiums
|
|
(205,110
|
)
|
|
(233,271
|
)
|
|
28,161
|
|
|||
Net premiums earned
|
|
758,299
|
|
|
686,824
|
|
|
71,475
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
357,491
|
|
|
247,848
|
|
|
109,643
|
|
|||
Policy acquisition costs
|
|
128,909
|
|
|
106,547
|
|
|
22,362
|
|
|||
General and administrative expenses
|
|
58,254
|
|
|
53,757
|
|
|
4,497
|
|
|||
Share compensation expenses
|
|
7,665
|
|
|
7,126
|
|
|
539
|
|
|||
Total underwriting deductions
|
|
552,319
|
|
|
415,278
|
|
|
137,041
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting income (a)
|
|
205,980
|
|
|
271,546
|
|
|
(65,566
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net investment income
|
|
56,694
|
|
|
54,810
|
|
|
1,884
|
|
|||
Other insurance related income
|
|
3,318
|
|
|
2,385
|
|
|
933
|
|
|||
Finance expenses
|
|
(11,068
|
)
|
|
(11,131
|
)
|
|
63
|
|
|||
|
|
|
|
|
|
|
||||||
Operating income before taxes
|
|
254,924
|
|
|
317,610
|
|
|
(62,686
|
)
|
|||
Tax (expense) benefit
|
|
(14
|
)
|
|
1,176
|
|
|
(1,190
|
)
|
|||
Net operating income (a)
|
|
$
|
254,910
|
|
|
$
|
318,786
|
|
|
$
|
(63,876
|
)
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written / Gross premiums written
|
|
86.7
|
%
|
|
85.1
|
%
|
|
1.6
|
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
47.1
|
%
|
|
36.1
|
%
|
|
11.0
|
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition costs
|
|
17.0
|
%
|
|
15.5
|
%
|
|
1.5
|
|
|||
General and administrative expenses (b)
|
|
8.7
|
%
|
|
8.9
|
%
|
|
(0.2
|
)
|
|||
Expense ratio
|
|
25.7
|
%
|
|
24.4
|
%
|
|
1.3
|
|
|||
Combined ratio
|
|
72.8
|
%
|
|
60.5
|
%
|
|
12.3
|
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Increase (decrease) to net operating income over the nine months ended September 30,
|
||
(Dollars in thousands)
|
|
2015 compared to 2014
|
||
Net premiums earned
|
|
$
|
71,475
|
|
Notable loss events (a)
|
|
(56,523
|
)
|
|
Non-notable loss events (b)
|
|
2,837
|
|
|
Incurred current year losses, excluding notable and non-notable loss events
|
|
(105,171
|
)
|
|
Prior period loss development
|
|
49,214
|
|
|
Other underwriting deductions (c)
|
|
(27,398
|
)
|
|
Underwriting income (d)
|
|
(65,566
|
)
|
|
Other operating income and expenses, net (e)
|
|
1,690
|
|
|
Net operating income (d)
|
|
$
|
(63,876
|
)
|
(a)
|
Losses and loss expenses from notable loss events for the
nine months ended September 30, 2015
were
$72.2 million
compared to
$15.7 million
for the
nine months ended September 30, 2014
.
|
(b)
|
Losses and loss expenses from non-notable loss events for the
nine months ended September 30, 2015
were
$17.5 million
compared to
$20.3 million
for the
nine months ended September 30, 2014
.
|
(c)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.
|
(e)
|
Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses and taxes.
|
|
|
Business Mix - Ratio of Gross Premiums Written by Line of Business to Total Gross Premiums Written
|
|||||||||||||||||||
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|||||||||
Property
|
|
$
|
530,456
|
|
|
47.7
|
%
|
|
$
|
598,570
|
|
|
55.4
|
%
|
|
$
|
(68,114
|
)
|
|
(7.7
|
)
|
Marine
|
|
153,351
|
|
|
13.8
|
%
|
|
175,706
|
|
|
16.2
|
%
|
|
(22,355
|
)
|
|
(2.4
|
)
|
|||
Specialty
|
|
427,213
|
|
|
38.5
|
%
|
|
307,540
|
|
|
28.4
|
%
|
|
119,673
|
|
|
10.1
|
|
|||
Total
|
|
$
|
1,111,020
|
|
|
100.0
|
%
|
|
$
|
1,081,816
|
|
|
100.0
|
%
|
|
$
|
29,204
|
|
|
0.0
|
|
|
|
Reinsurance Premiums Ceded
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
119,823
|
|
|
$
|
135,443
|
|
|
$
|
(15,620
|
)
|
Marine
|
|
17,196
|
|
|
21,002
|
|
|
(3,806
|
)
|
|||
Specialty
|
|
10,592
|
|
|
5,276
|
|
|
5,316
|
|
|||
Total
|
|
$
|
147,611
|
|
|
$
|
161,721
|
|
|
$
|
(14,110
|
)
|
|
|
Net Retention - Ratio of Net Premiums Written to Gross Premiums Written
|
|||||||||||||||||||
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|||||||||
Property
|
|
$
|
410,633
|
|
|
77.4
|
%
|
|
$
|
463,127
|
|
|
77.4
|
%
|
|
$
|
(52,494
|
)
|
|
0.0
|
|
Marine
|
|
136,155
|
|
|
88.8
|
%
|
|
154,704
|
|
|
88.0
|
%
|
|
(18,549
|
)
|
|
0.8
|
|
|||
Specialty
|
|
416,621
|
|
|
97.5
|
%
|
|
302,264
|
|
|
98.3
|
%
|
|
114,357
|
|
|
(0.8
|
)
|
|||
Total
|
|
$
|
963,409
|
|
|
86.7
|
%
|
|
$
|
920,095
|
|
|
85.1
|
%
|
|
$
|
43,314
|
|
|
1.6
|
|
|
|
Net Premiums Earned
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
323,616
|
|
|
$
|
354,061
|
|
|
$
|
(30,445
|
)
|
Marine
|
|
113,239
|
|
|
117,521
|
|
|
(4,282
|
)
|
|||
Specialty
|
|
321,444
|
|
|
215,242
|
|
|
106,202
|
|
|||
Total
|
|
$
|
758,299
|
|
|
$
|
686,824
|
|
|
$
|
71,475
|
|
|
Losses and Loss Expense Ratio - All Lines
|
|||||||
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
All lines—current period excluding items below
|
49.3
|
%
|
|
39.1
|
%
|
|
10.2
|
|
All lines—current period—notable loss events
|
9.5
|
%
|
|
2.3
|
%
|
|
7.2
|
|
All lines—current period—non-notable loss events
|
2.3
|
%
|
|
3.0
|
%
|
|
(0.7
|
)
|
All lines—change in prior accident years
|
(14.0
|
)%
|
|
(8.3
|
)%
|
|
(5.7
|
)
|
All lines—loss ratio
|
47.1
|
%
|
|
36.1
|
%
|
|
11.0
|
|
|
|
Losses and Loss Expenses - All Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
All lines—current period excluding items below
|
|
$
|
373,859
|
|
|
$
|
268,688
|
|
|
$
|
105,171
|
|
All lines—current period—notable loss events
|
|
72,182
|
|
|
15,659
|
|
|
56,523
|
|
|||
All lines—current period—non-notable loss events
|
|
17,500
|
|
|
20,337
|
|
|
(2,837
|
)
|
|||
All lines—change in prior accident years
|
|
(106,050
|
)
|
|
(56,836
|
)
|
|
(49,214
|
)
|
|||
All lines
—
losses and loss expenses
|
|
$
|
357,491
|
|
|
$
|
247,848
|
|
|
$
|
109,643
|
|
|
|
Losses and Loss Expenses - Property Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property—current period excluding items below
|
|
$
|
73,926
|
|
|
$
|
63,924
|
|
|
$
|
10,002
|
|
Property—current period—notable loss events
|
|
23,298
|
|
|
—
|
|
|
23,298
|
|
|||
Property—current period—non-notable loss events
|
|
17,384
|
|
|
20,337
|
|
|
(2,953
|
)
|
|||
Property—change in prior accident years
|
|
(58,437
|
)
|
|
(50,598
|
)
|
|
(7,839
|
)
|
|||
Property—losses and loss expenses
|
|
$
|
56,171
|
|
|
$
|
33,663
|
|
|
$
|
22,508
|
|
|
Losses and Loss Expense Ratio - Marine Lines
|
|||||||
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Marine—current period excluding items below
|
54.8
|
%
|
|
46.6
|
%
|
|
8.2
|
|
Marine—current period—notable loss events
|
41.7
|
%
|
|
0.3
|
%
|
|
41.4
|
|
Marine—current period—non-notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Marine—change in prior accident years
|
(25.8
|
)%
|
|
(4.4
|
)%
|
|
(21.4
|
)
|
Marine—loss ratio
|
70.7
|
%
|
|
42.5
|
%
|
|
28.2
|
|
|
|
Losses and Loss Expenses - Marine Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Marine—current period excluding items below
|
|
$
|
62,040
|
|
|
$
|
54,731
|
|
|
$
|
7,309
|
|
Marine—current period—notable loss events
|
|
47,219
|
|
|
400
|
|
|
46,819
|
|
|||
Marine—current period—non-notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Marine—change in prior accident years
|
|
(29,225
|
)
|
|
(5,213
|
)
|
|
(24,012
|
)
|
|||
Marine—losses and loss expenses
|
|
$
|
80,034
|
|
|
$
|
49,918
|
|
|
$
|
30,116
|
|
|
|
Losses and Loss Expenses - Specialty Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Specialty—current period excluding items below
|
|
$
|
237,893
|
|
|
$
|
150,033
|
|
|
$
|
87,860
|
|
Specialty—current period—notable loss events
|
|
1,665
|
|
|
15,259
|
|
|
(13,594
|
)
|
|||
Specialty—current period—non-notable loss events
|
|
116
|
|
|
—
|
|
|
116
|
|
|||
Specialty—change in prior accident years
|
|
(18,388
|
)
|
|
(1,025
|
)
|
|
(17,363
|
)
|
|||
Specialty—losses and loss expenses
|
|
$
|
221,286
|
|
|
$
|
164,267
|
|
|
$
|
57,019
|
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
||||||||
Property
|
|
$
|
58,054
|
|
|
17.9
|
%
|
|
$
|
59,665
|
|
|
16.9
|
%
|
|
$
|
(1,611
|
)
|
|
1.0
|
Marine
|
|
23,258
|
|
|
20.5
|
%
|
|
19,825
|
|
|
16.9
|
%
|
|
3,433
|
|
|
3.6
|
|||
Specialty
|
|
47,597
|
|
|
14.8
|
%
|
|
27,057
|
|
|
12.6
|
%
|
|
20,540
|
|
|
2.2
|
|||
Total
|
|
$
|
128,909
|
|
|
17.0
|
%
|
|
$
|
106,547
|
|
|
15.5
|
%
|
|
$
|
22,362
|
|
|
1.5
|
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|||||||||
General and administrative expenses
|
|
$
|
58,254
|
|
|
7.7
|
%
|
|
$
|
53,757
|
|
|
7.8
|
%
|
|
$
|
4,497
|
|
|
(0.1
|
)
|
Share compensation expenses
|
|
7,665
|
|
|
1.0
|
%
|
|
7,126
|
|
|
1.1
|
%
|
|
539
|
|
|
(0.1
|
)
|
|||
Total
|
|
$
|
65,919
|
|
|
8.7
|
%
|
|
$
|
60,883
|
|
|
8.9
|
%
|
|
$
|
5,036
|
|
|
(0.2
|
)
|
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Losses and loss expense ratio
|
47.1
|
%
|
|
36.1
|
%
|
|
11.0
|
|
Policy acquisition cost ratio
|
17.0
|
%
|
|
15.5
|
%
|
|
1.5
|
|
General and administrative expense ratio (a)
|
8.7
|
%
|
|
8.9
|
%
|
|
(0.2
|
)
|
Expense ratio
|
25.7
|
%
|
|
24.4
|
%
|
|
1.3
|
|
Combined ratio
|
72.8
|
%
|
|
60.5
|
%
|
|
12.3
|
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Fixed maturities and short-term investments
|
|
$
|
51,486
|
|
|
$
|
52,871
|
|
|
$
|
(1,385
|
)
|
Other investments
|
|
8,668
|
|
|
2,879
|
|
|
5,789
|
|
|||
Restricted cash and cash and cash equivalents
|
|
51
|
|
|
3,465
|
|
|
(3,414
|
)
|
|||
Securities lending income
|
|
13
|
|
|
5
|
|
|
8
|
|
|||
Total gross investment income
|
|
60,218
|
|
|
59,220
|
|
|
998
|
|
|||
Investment expenses
|
|
(3,524
|
)
|
|
(4,410
|
)
|
|
886
|
|
|||
Total net investment income
|
|
$
|
56,694
|
|
|
$
|
54,810
|
|
|
$
|
1,884
|
|
|
|
Other Insurance Related Income
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Other insurance related income
|
|
$
|
3,318
|
|
|
$
|
2,385
|
|
|
$
|
933
|
|
|
|
Finance Expenses
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Finance expenses
|
|
$
|
11,068
|
|
|
$
|
11,131
|
|
|
$
|
(63
|
)
|
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Underwriting income
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
176,129
|
|
|
$
|
135,073
|
|
|
$
|
41,056
|
|
Reinsurance premiums ceded
|
|
(4,538
|
)
|
|
(4,348
|
)
|
|
(190
|
)
|
|||
Net premiums written
|
|
171,591
|
|
|
130,725
|
|
|
40,866
|
|
|||
Change in unearned premiums
|
|
(54,196
|
)
|
|
(32,444
|
)
|
|
(21,752
|
)
|
|||
Net premiums earned
|
|
117,395
|
|
|
98,281
|
|
|
19,114
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
1,232
|
|
|
(7,155
|
)
|
|
8,387
|
|
|||
Policy acquisition costs
|
|
12,162
|
|
|
9,414
|
|
|
2,748
|
|
|||
General and administrative expenses
|
|
12,202
|
|
|
15,627
|
|
|
(3,425
|
)
|
|||
Share compensation expenses
|
|
440
|
|
|
330
|
|
|
110
|
|
|||
Total underwriting deductions
|
|
26,036
|
|
|
18,216
|
|
|
7,820
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting income (a)
|
|
91,359
|
|
|
80,065
|
|
|
11,294
|
|
|||
|
|
|
|
|
|
|
||||||
Net investment income
|
|
4,872
|
|
|
2,546
|
|
|
2,326
|
|
|||
Other insurance related income
|
|
17,048
|
|
|
21,482
|
|
|
(4,434
|
)
|
|||
Finance expenses
|
|
(9,462
|
)
|
|
(2,039
|
)
|
|
(7,423
|
)
|
|||
|
|
|
|
|
|
|
||||||
Operating income before income from operating affiliates and (income) attributable to AlphaCat investors
|
|
103,817
|
|
|
102,054
|
|
|
1,763
|
|
|||
Income from operating affiliates
|
|
12,083
|
|
|
13,580
|
|
|
(1,497
|
)
|
|||
(Income) attributable to AlphaCat investors
|
|
(94,341
|
)
|
|
(82,833
|
)
|
|
(11,508
|
)
|
|||
Net operating income (a)
|
|
21,559
|
|
|
32,801
|
|
|
(11,242
|
)
|
|||
Net operating (income) attributable to noncontrolling interest
|
|
(6,047
|
)
|
|
(3,160
|
)
|
|
(2,887
|
)
|
|||
Net operating income available to Validus (a)
|
|
$
|
15,512
|
|
|
$
|
29,641
|
|
|
$
|
(14,129
|
)
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written / Gross premiums written
|
|
97.4
|
%
|
|
96.8
|
%
|
|
0.6
|
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
1.0
|
%
|
|
(7.3
|
)%
|
|
8.3
|
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition costs
|
|
10.4
|
%
|
|
9.6
|
%
|
|
0.8
|
|
|||
General and administrative expenses (b)
|
|
10.8
|
%
|
|
16.2
|
%
|
|
(5.4
|
)
|
|||
Expense ratio
|
|
21.2
|
%
|
|
25.8
|
%
|
|
(4.6
|
)
|
|||
Combined ratio
|
|
22.2
|
%
|
|
18.5
|
%
|
|
3.7
|
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Increase (decrease) to net operating income available to Validus
over the nine months ended September 30, |
||
(Dollars in thousands)
|
|
2015 compared to 2014
|
||
Net premiums earned
|
|
$
|
19,114
|
|
Notable and non-notable loss events (a)
|
|
—
|
|
|
Incurred current year losses, excluding notable and non-notable loss events
|
|
2,377
|
|
|
Prior period loss development
|
|
(10,764
|
)
|
|
Other underwriting deductions (b)
|
|
567
|
|
|
Underwriting income (c)
|
|
11,294
|
|
|
(Income) attributable to AlphaCat investors
|
|
(11,508
|
)
|
|
Other operating income and expenses, net (d)
|
|
(11,028
|
)
|
|
Net operating income (c)
|
|
(11,242
|
)
|
|
Net operating income attributable to noncontrolling interest
|
|
(2,887
|
)
|
|
Net operating income available to Validus (c)
|
|
$
|
(14,129
|
)
|
(a)
|
There were no losses and loss expenses from notable or non-notable loss events for either of the
nine months ended September 30, 2015
or 2014.
|
(b)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(c)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.
|
(d)
|
Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses and income (loss) from operating affiliates.
|
|
|
Gross Premiums Written
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
176,129
|
|
|
$
|
135,073
|
|
|
$
|
41,056
|
|
|
|
Net Premiums Written
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
171,591
|
|
|
$
|
130,725
|
|
|
$
|
40,866
|
|
|
|
Net Premiums Earned
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
117,395
|
|
|
$
|
98,281
|
|
|
$
|
19,114
|
|
|
Losses and Loss Expense Ratio - Property Lines
|
|||||||
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Property—current period excluding items below
|
1.7
|
%
|
|
4.5
|
%
|
|
(2.8
|
)
|
Property—current period—notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Property—current period—non-notable loss events
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
|
Property—change in prior accident years
|
(0.7
|
)%
|
|
(11.8
|
)%
|
|
11.1
|
|
Property—loss ratio
|
1.0
|
%
|
|
(7.3
|
)%
|
|
8.3
|
|
|
|
Losses and Loss Expenses - Property Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property—current period excluding items below
|
|
$
|
2,076
|
|
|
$
|
4,453
|
|
|
$
|
(2,377
|
)
|
Property—current period—notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Property—current period—non-notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Property—change in prior accident years
|
|
(844
|
)
|
|
(11,608
|
)
|
|
10,764
|
|
|||
Property - losses and loss expenses
|
|
$
|
1,232
|
|
|
$
|
(7,155
|
)
|
|
$
|
8,387
|
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
||||||||
Property
|
|
$
|
12,162
|
|
|
10.4
|
%
|
|
$
|
9,414
|
|
|
9.6
|
%
|
|
$
|
2,748
|
|
|
0.8
|
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|||||||||
General and administrative expenses
|
|
$
|
12,202
|
|
|
10.4
|
%
|
|
$
|
15,627
|
|
|
15.9
|
%
|
|
$
|
(3,425
|
)
|
|
(5.5
|
)
|
Share compensation expenses
|
|
440
|
|
|
0.4
|
%
|
|
330
|
|
|
0.3
|
%
|
|
110
|
|
|
0.1
|
|
|||
Total
|
|
$
|
12,642
|
|
|
10.8
|
%
|
|
$
|
15,957
|
|
|
16.2
|
%
|
|
$
|
(3,315
|
)
|
|
(5.4
|
)
|
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Losses and loss expense ratio
|
1.0
|
%
|
|
(7.3)
|
%
|
|
8.3
|
|
Policy acquisition cost ratio
|
10.4
|
%
|
|
9.6
|
%
|
|
0.8
|
|
General and administrative expense ratio (a)
|
10.8
|
%
|
|
16.2
|
%
|
|
(5.4
|
)
|
Expense ratio
|
21.2
|
%
|
|
25.8
|
%
|
|
(4.6
|
)
|
Combined ratio
|
22.2
|
%
|
|
18.5
|
%
|
|
3.7
|
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Fixed maturities and short-term investments
|
|
$
|
4,792
|
|
|
$
|
2,493
|
|
|
$
|
2,299
|
|
Restricted cash and cash and cash equivalents
|
|
80
|
|
|
53
|
|
|
27
|
|
|||
Total net investment income
|
|
$
|
4,872
|
|
|
$
|
2,546
|
|
|
$
|
2,326
|
|
|
|
Other Insurance Related Income
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Other insurance related income
|
|
$
|
17,048
|
|
|
$
|
21,482
|
|
|
$
|
(4,434
|
)
|
|
|
Finance Expenses
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Finance expenses
|
|
$
|
9,462
|
|
|
$
|
2,039
|
|
|
$
|
7,423
|
|
|
|
Income from Operating Affiliates
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
AlphaCat Re 2011
|
|
$
|
391
|
|
|
$
|
183
|
|
|
$
|
208
|
|
AlphaCat Re 2012
|
|
(36
|
)
|
|
882
|
|
|
(918
|
)
|
|||
AlphaCat 2013
|
|
(33
|
)
|
|
2,043
|
|
|
(2,076
|
)
|
|||
AlphaCat 2014
|
|
(110
|
)
|
|
4,399
|
|
|
(4,509
|
)
|
|||
AlphaCat 2015
|
|
3,675
|
|
|
—
|
|
|
3,675
|
|
|||
AlphaCat ILS funds
|
|
8,196
|
|
|
6,073
|
|
|
2,123
|
|
|||
Total
|
|
$
|
12,083
|
|
|
$
|
13,580
|
|
|
$
|
(1,497
|
)
|
|
|
(Income) Attributable to AlphaCat Investors
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
(Income) attributable to AlphaCat investors
|
|
$
|
(94,341
|
)
|
|
$
|
(82,833
|
)
|
|
$
|
(11,508
|
)
|
|
|
Net Operating (Income) Attributable to Noncontrolling Interest
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Net operating (income) attributable to noncontrolling interest
|
|
$
|
(6,047
|
)
|
|
$
|
(3,160
|
)
|
|
$
|
(2,887
|
)
|
|
|
Assets Under Management
|
||||||
(Dollars in thousands)
|
|
As at October 1, 2015
|
|
As at January 1, 2015
|
||||
Related party
|
|
$
|
361,216
|
|
|
$
|
346,907
|
|
Third party
|
|
1,877,422
|
|
|
1,533,840
|
|
||
Total
|
|
$
|
2,238,638
|
|
|
$
|
1,880,747
|
|
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Underwriting income
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
789,148
|
|
|
$
|
854,324
|
|
|
$
|
(65,176
|
)
|
Reinsurance premiums ceded
|
|
(164,144
|
)
|
|
(154,115
|
)
|
|
(10,029
|
)
|
|||
Net premiums written
|
|
625,004
|
|
|
700,209
|
|
|
(75,205
|
)
|
|||
Change in unearned premiums
|
|
9,167
|
|
|
(41,658
|
)
|
|
50,825
|
|
|||
Net premiums earned
|
|
634,171
|
|
|
658,551
|
|
|
(24,380
|
)
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
268,512
|
|
|
304,848
|
|
|
(36,336
|
)
|
|||
Policy acquisition costs
|
|
141,338
|
|
|
138,383
|
|
|
2,955
|
|
|||
General and administrative expenses
|
|
115,341
|
|
|
107,031
|
|
|
8,310
|
|
|||
Share compensation expenses
|
|
9,195
|
|
|
8,434
|
|
|
761
|
|
|||
Total underwriting deductions
|
|
534,386
|
|
|
558,696
|
|
|
(24,310
|
)
|
|||
|
|
|
|
|
|
|
||||||
Underwriting income (a)
|
|
99,785
|
|
|
99,855
|
|
|
(70
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net investment income
|
|
19,168
|
|
|
14,322
|
|
|
4,846
|
|
|||
Other insurance related income
|
|
564
|
|
|
384
|
|
|
180
|
|
|||
Finance expenses
|
|
(231
|
)
|
|
68
|
|
|
(299
|
)
|
|||
|
|
|
|
|
|
|
||||||
Operating income before taxes
|
|
119,286
|
|
|
114,629
|
|
|
4,657
|
|
|||
Tax expense
|
|
(4,286
|
)
|
|
(902
|
)
|
|
(3,384
|
)
|
|||
Net operating income (a)
|
|
$
|
115,000
|
|
|
$
|
113,727
|
|
|
$
|
1,273
|
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written / Gross premiums written
|
|
79.2
|
%
|
|
82.0
|
%
|
|
(2.8
|
)
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
42.4
|
%
|
|
46.3
|
%
|
|
(3.9
|
)
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition costs
|
|
22.3
|
%
|
|
21.0
|
%
|
|
1.3
|
|
|||
General and administrative expenses (b)
|
|
19.6
|
%
|
|
17.5
|
%
|
|
2.1
|
|
|||
Expense ratio
|
|
41.9
|
%
|
|
38.5
|
%
|
|
3.4
|
|
|||
Combined ratio
|
|
84.3
|
%
|
|
84.8
|
%
|
|
(0.5
|
)
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Increase (decrease) to net operating income over the nine months ended September 30,
|
||
(Dollars in thousands)
|
|
2015 compared to 2014
|
||
Net premiums earned
|
|
$
|
(24,380
|
)
|
Notable loss events (a)
|
|
(12,393
|
)
|
|
Non-notable loss events (b)
|
|
110
|
|
|
Incurred current year losses, excluding notable and non-notable loss events
|
|
24,566
|
|
|
Prior period loss development
|
|
24,053
|
|
|
Other underwriting deductions (c)
|
|
(12,026
|
)
|
|
Underwriting income (d)
|
|
(70
|
)
|
|
Other operating income and expenses, net (e)
|
|
1,343
|
|
|
Net operating income (d)
|
|
$
|
1,273
|
|
(a)
|
Losses and loss expenses from notable loss events for the
nine months ended September 30, 2015
were
$24.9 million
compared to
$12.5 million
for the
nine months ended September 30, 2014
.
|
(b)
|
Losses and loss expenses from non-notable loss events for the
nine months ended September 30, 2015
were
$4.7 million
compared to
$4.8 million
for the
nine months ended September 30, 2014
.
|
(c)
|
Other underwriting deductions consist of policy acquisition costs, general & administrative expenses and share compensation expenses.
|
(d)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.
|
(e)
|
Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses and taxes.
|
|
|
Business Mix - Ratio of Gross Premiums Written by Line of Business to Total Gross Premiums Written
|
|||||||||||||||||||
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|
Gross Premiums Written
|
|
% of Total
|
|||||||||
Property
|
|
$
|
253,196
|
|
|
32.1
|
%
|
|
$
|
261,100
|
|
|
30.6
|
%
|
|
$
|
(7,904
|
)
|
|
1.5
|
|
Marine
|
|
266,891
|
|
|
33.8
|
%
|
|
319,805
|
|
|
37.4
|
%
|
|
(52,914
|
)
|
|
(3.6
|
)
|
|||
Specialty
|
|
269,061
|
|
|
34.1
|
%
|
|
273,419
|
|
|
32.0
|
%
|
|
(4,358
|
)
|
|
2.1
|
|
|||
Total
|
|
$
|
789,148
|
|
|
100.0
|
%
|
|
$
|
854,324
|
|
|
100.0
|
%
|
|
$
|
(65,176
|
)
|
|
0.0
|
|
|
|
Reinsurance Premiums Ceded
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
81,720
|
|
|
$
|
91,332
|
|
|
$
|
(9,612
|
)
|
Marine
|
|
32,166
|
|
|
20,621
|
|
|
11,545
|
|
|||
Specialty
|
|
50,258
|
|
|
42,162
|
|
|
8,096
|
|
|||
Total
|
|
$
|
164,144
|
|
|
$
|
154,115
|
|
|
$
|
10,029
|
|
|
|
Net Retention - Ratio of Net Premiums Written to Gross Premiums Written
|
|||||||||||||||||||
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|||||||||
Property
|
|
$
|
171,476
|
|
|
67.7
|
%
|
|
$
|
169,768
|
|
|
65.0
|
%
|
|
$
|
1,708
|
|
|
2.7
|
|
Marine
|
|
234,725
|
|
|
87.9
|
%
|
|
299,184
|
|
|
93.6
|
%
|
|
(64,459
|
)
|
|
(5.7
|
)
|
|||
Specialty
|
|
218,803
|
|
|
81.3
|
%
|
|
231,257
|
|
|
84.6
|
%
|
|
(12,454
|
)
|
|
(3.3
|
)
|
|||
Total
|
|
$
|
625,004
|
|
|
79.2
|
%
|
|
$
|
700,209
|
|
|
82.0
|
%
|
|
$
|
(75,205
|
)
|
|
(2.8
|
)
|
|
|
Net Premiums Earned
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property
|
|
$
|
166,500
|
|
|
$
|
153,766
|
|
|
$
|
12,734
|
|
Marine
|
|
246,039
|
|
|
275,793
|
|
|
(29,754
|
)
|
|||
Specialty
|
|
221,632
|
|
|
228,992
|
|
|
(7,360
|
)
|
|||
Total
|
|
$
|
634,171
|
|
|
$
|
658,551
|
|
|
$
|
(24,380
|
)
|
|
Losses and Loss Expense Ratio - All Lines
|
|||||||
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
All lines—current period excluding items below
|
57.2
|
%
|
|
58.8
|
%
|
|
(1.6
|
)
|
All lines—current period—notable loss events
|
3.9
|
%
|
|
1.9
|
%
|
|
2.0
|
|
All lines—current period—non-notable loss events
|
0.7
|
%
|
|
0.7
|
%
|
|
0.0
|
|
All lines—change in prior accident years
|
(19.4
|
)%
|
|
(15.1
|
)%
|
|
(4.3
|
)
|
All lines—loss ratio
|
42.4
|
%
|
|
46.3
|
%
|
|
(3.9
|
)
|
|
|
Losses and Loss Expenses - All Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
All lines—current period excluding items below
|
|
$
|
362,214
|
|
|
$
|
386,780
|
|
|
$
|
(24,566
|
)
|
All lines—current period—notable loss events
|
|
24,868
|
|
|
12,475
|
|
|
12,393
|
|
|||
All lines—current period—non-notable loss events
|
|
4,675
|
|
|
4,785
|
|
|
(110
|
)
|
|||
All lines—change in prior accident years
|
|
(123,245
|
)
|
|
(99,192
|
)
|
|
(24,053
|
)
|
|||
All lines - losses and loss expenses
|
|
$
|
268,512
|
|
|
$
|
304,848
|
|
|
$
|
(36,336
|
)
|
|
|
Losses and Loss Expenses - Property Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Property—current period excluding items below
|
|
$
|
104,270
|
|
|
$
|
99,740
|
|
|
$
|
4,530
|
|
Property—current period—notable loss events
|
|
3,592
|
|
|
—
|
|
|
3,592
|
|
|||
Property—current period—non-notable loss events
|
|
4,175
|
|
|
4,785
|
|
|
(610
|
)
|
|||
Property—change in prior accident years
|
|
(47,141
|
)
|
|
(43,905
|
)
|
|
(3,236
|
)
|
|||
Property - losses and loss expenses
|
|
$
|
64,896
|
|
|
$
|
60,620
|
|
|
$
|
4,276
|
|
|
Losses and Loss Expense Ratio - Marine Lines
|
|||||||
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Marine—current period excluding items below
|
54.5
|
%
|
|
52.3
|
%
|
|
2.2
|
|
Marine—current period—notable loss events
|
8.6
|
%
|
|
0.1
|
%
|
|
8.5
|
|
Marine—current period—non-notable loss events
|
0.2
|
%
|
|
0.0
|
%
|
|
0.2
|
|
Marine—change in prior accident years
|
(20.8
|
)%
|
|
(6.6
|
)%
|
|
(14.2
|
)
|
Marine—loss ratio
|
42.5
|
%
|
|
45.8
|
%
|
|
(3.3
|
)
|
|
|
Losses and Loss Expenses - Marine Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Marine—current period excluding items below
|
|
$
|
133,982
|
|
|
$
|
144,348
|
|
|
$
|
(10,366
|
)
|
Marine—current period—notable loss events
|
|
21,276
|
|
|
191
|
|
|
21,085
|
|
|||
Marine—current period—non-notable loss events
|
|
500
|
|
|
—
|
|
|
500
|
|
|||
Marine—change in prior accident years
|
|
(51,178
|
)
|
|
(18,191
|
)
|
|
(32,987
|
)
|
|||
Marine - losses and loss expenses
|
|
$
|
104,580
|
|
|
$
|
126,348
|
|
|
$
|
(21,768
|
)
|
|
|
Losses and Loss Expenses - Specialty Lines
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Specialty—current period excluding items below
|
|
$
|
123,962
|
|
|
$
|
142,692
|
|
|
$
|
(18,730
|
)
|
Specialty—current period—notable loss events
|
|
—
|
|
|
12,284
|
|
|
(12,284
|
)
|
|||
Specialty—current period—non-notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Specialty—change in prior accident years
|
|
(24,926
|
)
|
|
(37,096
|
)
|
|
12,170
|
|
|||
Specialty - losses and loss expenses
|
|
$
|
99,036
|
|
|
$
|
117,880
|
|
|
$
|
(18,844
|
)
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
||||||||
Property
|
|
$
|
24,294
|
|
|
14.6
|
%
|
|
$
|
20,028
|
|
|
13.0
|
%
|
|
$
|
4,266
|
|
|
1.6
|
Marine
|
|
64,201
|
|
|
26.1
|
%
|
|
65,568
|
|
|
23.8
|
%
|
|
(1,367
|
)
|
|
2.3
|
|||
Specialty
|
|
52,843
|
|
|
23.8
|
%
|
|
52,787
|
|
|
23.1
|
%
|
|
56
|
|
|
0.7
|
|||
Total
|
|
$
|
141,338
|
|
|
22.3
|
%
|
|
$
|
138,383
|
|
|
21.0
|
%
|
|
$
|
2,955
|
|
|
1.3
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
|
Expenses
|
|
% of Net Premiums Earned
|
||||||||
General and administrative expenses
|
|
$
|
115,341
|
|
|
18.2
|
%
|
|
$
|
107,031
|
|
|
16.2
|
%
|
|
$
|
8,310
|
|
|
2.0
|
Share compensation expenses
|
|
9,195
|
|
|
1.4
|
%
|
|
8,434
|
|
|
1.3
|
%
|
|
761
|
|
|
0.1
|
|||
Total
|
|
$
|
124,536
|
|
|
19.6
|
%
|
|
$
|
115,465
|
|
|
17.5
|
%
|
|
$
|
9,071
|
|
|
2.1
|
|
Nine Months Ended September 30,
|
|||||||
|
2015
|
|
2014
|
|
Change
|
|||
Losses and loss expense ratio
|
42.4
|
%
|
|
46.3
|
%
|
|
(3.9
|
)
|
Policy acquisition cost ratio
|
22.3
|
%
|
|
21.0
|
%
|
|
1.3
|
|
General and administrative expense ratio (a)
|
19.6
|
%
|
|
17.5
|
%
|
|
2.1
|
|
Expense ratio
|
41.9
|
%
|
|
38.5
|
%
|
|
3.4
|
|
Combined ratio
|
84.3
|
%
|
|
84.8
|
%
|
|
(0.5
|
)
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Fixed maturities and short-term investments
|
|
$
|
19,330
|
|
|
$
|
14,453
|
|
|
$
|
4,877
|
|
Restricted cash and cash and cash equivalents
|
|
1,115
|
|
|
1,016
|
|
|
99
|
|
|||
Total gross investment income
|
|
20,445
|
|
|
15,469
|
|
|
4,976
|
|
|||
Investment expenses
|
|
(1,277
|
)
|
|
(1,147
|
)
|
|
(130
|
)
|
|||
Total net investment income
|
|
$
|
19,168
|
|
|
$
|
14,322
|
|
|
$
|
4,846
|
|
|
|
Nine Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Underwriting income
|
|
|
||
Gross premiums written
|
|
$
|
207,372
|
|
Reinsurance premiums ceded
|
|
(13,390
|
)
|
|
Net premiums written
|
|
193,982
|
|
|
Change in unearned premiums
|
|
2,948
|
|
|
Net premiums earned
|
|
196,930
|
|
|
|
|
|
||
Underwriting deductions
|
|
|
||
Losses and loss expenses
|
|
138,098
|
|
|
Policy acquisition costs
|
|
27,110
|
|
|
General and administrative expenses
|
|
29,137
|
|
|
Share compensation expenses
|
|
1,525
|
|
|
Total underwriting deductions
|
|
195,870
|
|
|
|
|
|
||
Underwriting income (a)
|
|
1,060
|
|
|
|
|
|
||
Net investment income
|
|
16,660
|
|
|
Other insurance related income
|
|
787
|
|
|
Operating income before taxes
|
|
18,507
|
|
|
Tax expense
|
|
(2,420
|
)
|
|
Net operating income (a)
|
|
$
|
16,087
|
|
|
|
|
||
Selected ratios:
|
|
|
||
Net premiums written / Gross premiums written
|
|
93.5
|
%
|
|
|
|
|
||
Losses and loss expenses
|
|
70.1
|
%
|
|
|
|
|
||
Policy acquisition costs
|
|
13.8
|
%
|
|
General and administrative expense (b)
|
|
15.6
|
%
|
|
Expense ratio
|
|
29.4
|
%
|
|
Combined ratio
|
|
99.5
|
%
|
(a)
|
Non-GAAP Financial Measures: In presenting the Company's results, management has included and discussed underwriting income and net operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Business Mix - Ratio of Gross Premiums Written by Line of Business to Total Gross Premiums Written
|
|||||
|
|
Nine Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Gross Premiums Written
|
|
% of Total
|
|||
Property
|
|
$
|
39,134
|
|
|
18.9
|
%
|
Liability
|
|
168,238
|
|
|
81.1
|
%
|
|
Total
|
|
$
|
207,372
|
|
|
100.0
|
%
|
|
|
Reinsurance Premiums Ceded
|
||
|
|
Nine Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Property
|
|
$
|
3,180
|
|
Liability
|
|
10,210
|
|
|
Total
|
|
$
|
13,390
|
|
|
|
Net Retention - Ratio of Net Premiums Written to Gross Premiums Written
|
|||||
|
|
Nine Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Net Premiums
Written
|
|
% of Gross Premiums Written
|
|||
Property
|
|
$
|
35,954
|
|
|
91.9
|
%
|
Liability
|
|
158,028
|
|
|
93.9
|
%
|
|
Total
|
|
$
|
193,982
|
|
|
93.5
|
%
|
|
|
Net Premiums Earned
|
||
|
|
Nine Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Property
|
|
$
|
32,505
|
|
Liability
|
|
164,425
|
|
|
Total
|
|
$
|
196,930
|
|
|
|
Losses and Loss Expense Ratio -
All Lines
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2015
|
|
All lines—current period excluding items below
|
|
78.1
|
%
|
All lines—current period—notable loss events
|
|
0.0
|
%
|
All lines—current period—non-notable loss events
|
|
0.0
|
%
|
All lines—change in prior accident years (a)
|
|
(8.0
|
)%
|
All lines—loss ratio (a)
|
|
70.1
|
%
|
|
|
Losses and Loss Expenses - All Lines
|
||
|
|
Nine Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
All lines—current period excluding items below
|
|
$
|
153,737
|
|
All lines—current period—notable loss events
|
|
—
|
|
|
All lines—current period—non-notable loss events
|
|
—
|
|
|
All lines—change in prior accident years (a)
|
|
(15,639
|
)
|
|
All lines
—
losses and loss expenses (a)
|
|
$
|
138,098
|
|
(a)
|
Upon closing the acquisition, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of
$8,639
during the
nine months ended
September 30, 2015
, benefiting the loss ratio by
4.4%
percentage points. The remaining fair value adjustment of
$2,340
will be amortized during the remainder of 2015.
|
|
|
Losses and Loss Expense Ratio - Property Lines
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2015
|
|
Property—current period excluding items below
|
|
76.8
|
%
|
Property—current period—notable loss events
|
|
0.0
|
%
|
Property—current period—non-notable loss events
|
|
0.0
|
%
|
Property—change in prior accident years (a)
|
|
(14.3
|
)%
|
Property—loss ratio (a)
|
|
62.5
|
%
|
|
|
Losses and Loss Expenses - Property Lines
|
||
|
|
Nine Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Property—current period excluding items below
|
|
$
|
24,965
|
|
Property—current period—notable loss events
|
|
—
|
|
|
Property—current period—non-notable loss events
|
|
—
|
|
|
Property—change in prior accident years (a)
|
|
(4,648
|
)
|
|
Property—losses and loss expenses (a)
|
|
$
|
20,317
|
|
(a)
|
Upon closing the acquisition, an adjustment of $409 was made to decrease net reserves to reflect fair value. This adjustment was amortized to income through an increase in losses and loss expenses of
$227
during the
nine months ended
September 30, 2015
, increasing the loss ratio by
0.7%
percentage points. The remaining fair value adjustment of
$61
will be amortized during the remainder of 2015.
|
|
|
Losses and Loss Expense Ratio - Liability Lines
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2015
|
|
Liability—current period excluding items below
|
|
78.3
|
%
|
Liability—current period—notable loss events
|
|
0.0
|
%
|
Liability—current period—non-notable loss events
|
|
0.0
|
%
|
Liability—change in prior accident years (a)
|
|
(6.7
|
)%
|
Liability—loss ratio (a)
|
|
71.6
|
%
|
|
|
Losses and Loss Expenses - Liability Lines
|
||
|
|
Nine Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Liability—current period excluding items below
|
|
$
|
128,772
|
|
Liability—current period—notable loss events
|
|
—
|
|
|
Liability—current period—non-notable loss events
|
|
—
|
|
|
Liability—change in prior accident years (a)
|
|
(10,991
|
)
|
|
Liability—losses and loss expenses (a)
|
|
$
|
117,781
|
|
(a)
|
Upon closing the acquisition, an adjustment of $15,995 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of
$8,866
during the
nine months ended
September 30, 2015
, benefiting the loss ratio by
5.4%
percentage points. The remaining fair value adjustment of
$2,401
will be amortized during the remainder of 2015.
|
|
|
Nine Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Policy Acquisition Costs
|
|
% of Net Premiums Earned
|
|||
Property
|
|
$
|
4,062
|
|
|
12.5
|
%
|
Liability
|
|
23,048
|
|
|
14.0
|
%
|
|
Total (a)
|
|
$
|
27,110
|
|
|
13.8
|
%
|
(a)
|
Upon closing the acquisition, an adjustment of
$34,736
was made to reduce deferred acquisition costs to reflect fair value. These deferred acquisition costs would otherwise have been expensed in the amount of
$19,917
during the
nine months ended
September 30, 2015
, benefiting the policy acquisition cost ratio by
10.1%
percentage points.
|
|
|
Nine Months Ended September 30,
|
|||||
|
|
2015
|
|||||
(Dollars in thousands)
|
|
Expenses
|
|
% of Net Premiums Earned
|
|||
General and administrative expenses
|
|
$
|
29,137
|
|
|
14.8
|
%
|
Share compensation expenses
|
|
1,525
|
|
|
0.8
|
%
|
|
Total
|
|
$
|
30,662
|
|
|
15.6
|
%
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
Losses and loss expense ratio
|
70.1
|
%
|
Policy acquisition cost ratio
|
13.8
|
%
|
General and administrative expense ratio (a)
|
15.6
|
%
|
Expense ratio
|
29.4
|
%
|
Combined ratio
|
99.5
|
%
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Net Investment Income
|
||
|
|
Nine Months Ended September 30,
|
||
(Dollars in thousands)
|
|
2015
|
||
Fixed maturities and short-term investments
|
|
$
|
14,152
|
|
Other investments
|
|
3,620
|
|
|
Restricted cash and cash and cash equivalents
|
|
13
|
|
|
Total gross investment income
|
|
17,785
|
|
|
Investment expenses
|
|
(1,125
|
)
|
|
Total net investment income
|
|
$
|
16,660
|
|
|
|
Net Realized and Change in Net Unrealized (Losses) Gains on Investments
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Net realized (losses) gains on investments
|
|
$
|
(35,493
|
)
|
|
$
|
16,193
|
|
|
$
|
(51,686
|
)
|
Change in net unrealized gains on investments
|
|
19,766
|
|
|
16,146
|
|
|
3,620
|
|
|||
Net realized and change in net unrealized (losses) gains on investments
|
|
$
|
(15,727
|
)
|
|
$
|
32,339
|
|
|
$
|
(48,066
|
)
|
|
|
Income From Investment Affiliate
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Income from investment affiliate
|
|
$
|
5,542
|
|
|
$
|
7,881
|
|
|
$
|
(2,339
|
)
|
|
|
Nine Months Ended September 30,
|
||||
U.S. dollar strengthened (weakened) against:
|
|
2015
|
|
2014
|
||
British Pound sterling
|
|
2.9
|
%
|
|
2.3
|
%
|
Euro
|
|
8.4
|
%
|
|
8.9
|
%
|
Canadian dollar
|
|
14.5
|
%
|
|
5.5
|
%
|
Swiss franc
|
|
(1.9
|
)%
|
|
7.0
|
%
|
Australian dollar
|
|
15.9
|
%
|
|
2.5
|
%
|
New Zealand dollar
|
|
21.6
|
%
|
|
5.7
|
%
|
Singapore dollar
|
|
7.3
|
%
|
|
1.1
|
%
|
Japanese yen
|
|
0.3
|
%
|
|
4.3
|
%
|
South African rand
|
|
19.6
|
%
|
|
8.0
|
%
|
|
|
Foreign Exchange Losses
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Foreign exchange losses
|
|
$
|
(9,061
|
)
|
|
$
|
(14,761
|
)
|
|
$
|
5,700
|
|
|
|
Other Loss
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Other loss
|
|
$
|
(2,578
|
)
|
|
$
|
(1,473
|
)
|
|
$
|
(1,105
|
)
|
|
|
Net Loss (Income) Attributable to Noncontrolling Interest
|
||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Net loss (income) attributable to noncontrolling interest
|
|
$
|
15,042
|
|
|
$
|
(25,745
|
)
|
|
$
|
40,787
|
|
(Dollars in thousands)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2015
|
|
September 30, 2014
|
|
September 30, 2015
|
|
September 30, 2014
|
|||||||||
Net operating income
|
|
$
|
73,563
|
|
|
$
|
84,508
|
|
|
$
|
310,856
|
|
|
$
|
360,587
|
|
Net realized (losses) gains on investments
|
|
(41,906
|
)
|
|
4,595
|
|
|
(35,493
|
)
|
|
16,193
|
|
||||
Change in net unrealized (losses) gains on investments
|
|
(34,908
|
)
|
|
(84,974
|
)
|
|
19,766
|
|
|
16,146
|
|
||||
Income from investment affiliate
|
|
2,482
|
|
|
1,754
|
|
|
5,542
|
|
|
7,881
|
|
||||
Foreign exchange losses
|
|
(2,274
|
)
|
|
(11,441
|
)
|
|
(9,061
|
)
|
|
(14,761
|
)
|
||||
Other loss
|
|
(1,970
|
)
|
|
(7,690
|
)
|
|
(2,578
|
)
|
|
(1,473
|
)
|
||||
Transaction expenses
|
|
—
|
|
|
(149
|
)
|
|
—
|
|
|
(3,401
|
)
|
||||
Net (loss) income
|
|
$
|
(5,013
|
)
|
|
$
|
(13,397
|
)
|
|
$
|
289,032
|
|
|
$
|
381,172
|
|
(Dollars in thousands, except share and per share amounts)
|
As at September 30, 2015
|
|||||||||||||
Equity Amount
|
|
Shares
|
|
Exercise Price
|
|
Book Value Per
Share
|
||||||||
Book value per common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders' equity available to Validus
|
$
|
3,644,560
|
|
|
81,997,891
|
|
|
|
|
$
|
44.45
|
|
||
|
|
|
|
|
|
|
|
|||||||
Book value per diluted common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders' equity available to Validus
|
3,644,560
|
|
|
81,997,891
|
|
|
|
|
|
|||||
Assumed exercise of outstanding warrants
|
59,506
|
|
|
3,377,320
|
|
|
$
|
17.62
|
|
|
|
|||
Assumed exercise of outstanding stock options
|
1,319
|
|
|
65,401
|
|
|
$
|
20.17
|
|
|
|
|||
Unvested restricted shares
|
—
|
|
|
3,014,830
|
|
|
|
|
|
|||||
Book value per diluted common share
|
$
|
3,705,385
|
|
|
88,455,442
|
|
|
|
|
$
|
41.89
|
|
||
Adjustment for accumulated dividends
|
|
|
|
|
|
|
$
|
9.84
|
|
|||||
Book value per diluted common share plus accumulated dividends
|
|
|
|
|
|
|
$
|
51.73
|
|
(Dollars in thousands, except share and per share amounts)
|
As at December 31, 2014
|
|||||||||||||
Equity Amount
|
|
Shares
|
|
Exercise Price
|
|
Book Value Per
Share
|
||||||||
Book value per common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders' equity available to Validus
|
$
|
3,587,958
|
|
|
83,869,845
|
|
|
|
|
$
|
42.78
|
|
||
|
|
|
|
|
|
|
|
|||||||
Book value per diluted common share
|
|
|
|
|
|
|
|
|||||||
Total shareholders' equity available to Validus
|
3,587,958
|
|
|
83,869,845
|
|
|
|
|
|
|||||
Assumed exercise of outstanding warrants
|
90,950
|
|
|
5,174,114
|
|
|
$
|
17.58
|
|
|
|
|||
Assumed exercise of outstanding stock options
|
20,581
|
|
|
1,160,057
|
|
|
$
|
17.74
|
|
|
|
|||
Unvested restricted shares
|
—
|
|
|
3,068,564
|
|
|
|
|
|
|||||
Book value per diluted common share
|
$
|
3,699,489
|
|
|
93,272,580
|
|
|
|
|
$
|
39.66
|
|
||
Adjustment for accumulated dividends
|
|
|
|
|
|
|
$
|
8.88
|
|
|||||
Book value per diluted common share plus accumulated dividends
|
|
|
|
|
|
|
$
|
48.54
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||
(Dollars in thousands)
|
Estimated Fair Value
|
|
% of Total Investments
|
|
Estimated Fair Value
|
|
% of Total Investments
|
||||||
U.S. government and government agency
|
$
|
871,928
|
|
|
14.2
|
%
|
|
$
|
760,086
|
|
|
12.3
|
%
|
Non-U.S. government and government agency
|
222,964
|
|
|
3.7
|
%
|
|
278,728
|
|
|
4.5
|
%
|
||
U.S. states, municipalities and political subdivisions
|
319,526
|
|
|
5.2
|
%
|
|
449,623
|
|
|
7.3
|
%
|
||
Agency residential mortgage-backed securities
|
497,270
|
|
|
8.2
|
%
|
|
529,231
|
|
|
8.5
|
%
|
||
Non-agency residential mortgage-backed securities
|
27,054
|
|
|
0.4
|
%
|
|
37,807
|
|
|
0.6
|
%
|
||
U.S. corporate
|
1,525,894
|
|
|
25.0
|
%
|
|
1,499,706
|
|
|
24.2
|
%
|
||
Non-U.S. corporate
|
467,820
|
|
|
7.7
|
%
|
|
563,162
|
|
|
9.1
|
%
|
||
Bank loans
|
509,473
|
|
|
8.4
|
%
|
|
449,004
|
|
|
7.2
|
%
|
||
Catastrophe bonds
|
159,976
|
|
|
2.6
|
%
|
|
75,664
|
|
|
1.2
|
%
|
||
Asset-backed securities
|
625,248
|
|
|
10.3
|
%
|
|
647,482
|
|
|
10.5
|
%
|
||
Commercial mortgage-backed securities
|
351,703
|
|
|
5.8
|
%
|
|
242,238
|
|
|
3.9
|
%
|
||
Total fixed maturities
|
5,578,856
|
|
|
91.5
|
%
|
|
5,532,731
|
|
|
89.3
|
%
|
||
Total short-term investments (a)
|
1,661,687
|
|
|
27.2
|
%
|
|
1,051,074
|
|
|
17.1
|
%
|
||
Total other investments (b)
|
817,374
|
|
|
13.4
|
%
|
|
813,011
|
|
|
13.1
|
%
|
||
Total investments including assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
8,057,917
|
|
|
132.1
|
%
|
|
7,396,816
|
|
|
119.5
|
%
|
||
Assets managed on behalf of AlphaCat investors (a)
|
(1,364,692
|
)
|
|
(22.4
|
)%
|
|
(696,924
|
)
|
|
(11.3
|
)%
|
||
Catastrophe bonds
|
(159,976
|
)
|
|
(2.6
|
)%
|
|
(75,664
|
)
|
|
(1.2
|
)%
|
||
Noncontrolling interest (b)
|
(434,436
|
)
|
|
(7.1
|
)%
|
|
(430,494
|
)
|
|
(7.0
|
)%
|
||
Total investments, excluding assets managed on behalf of AlphaCat investors, catastrophe bonds and noncontrolling interest
|
$
|
6,098,813
|
|
|
100.0
|
%
|
|
$
|
6,193,734
|
|
|
100.0
|
%
|
(a)
|
Included in the short-term investments balance are assets managed in support of AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by
one
AlphaCat ILS fund which was consolidated by the Company through May 31, 2015, but in which the Company had an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.
|
(b)
|
Included in the other investments balance are investments held by PaCRe in which the Company has an equity interest of
10%
. The remaining
90%
interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.
|
|
September 30, 2015
|
|||||
(Dollars in thousands)
|
Fair Value
|
|
% of Total
|
|||
Germany
|
$
|
47,659
|
|
|
7.0
|
%
|
United Kingdom
|
34,316
|
|
|
5.0
|
%
|
|
Supranational
|
32,334
|
|
|
4.8
|
%
|
|
France
|
18,244
|
|
|
2.7
|
%
|
|
Province of Ontario
|
16,069
|
|
|
2.4
|
%
|
|
Norway
|
15,964
|
|
|
2.3
|
%
|
|
Jordan
|
10,163
|
|
|
1.5
|
%
|
|
Province of Manitoba
|
10,068
|
|
|
1.5
|
%
|
|
Denmark
|
10,033
|
|
|
1.5
|
%
|
|
Other (individual jurisdictions below $10,000)
|
28,114
|
|
|
4.1
|
%
|
|
Total Non-U.S. Government Securities
|
222,964
|
|
|
32.8
|
%
|
|
European Corporate Securities
|
187,551
|
|
|
27.5
|
%
|
|
United Kingdom Corporate Securities
|
143,665
|
|
|
21.1
|
%
|
|
Other Non-U.S. Corporate Securities
|
126,604
|
|
|
18.6
|
%
|
|
Total Non-U.S. Fixed Income Portfolio
|
$
|
680,784
|
|
|
100.0
|
%
|
(Dollars in thousands)
|
|
September 30, 2015
|
|||||||
Issuer (a)
|
|
Fair Value (b)
|
|
S&P Rating (c)
|
|
% of Total Cash and Investments
|
|||
HSBC Holdings Plc
|
|
$
|
58,174
|
|
|
A
|
|
0.7
|
%
|
JPMorgan Chase & Co
|
|
56,053
|
|
|
A-
|
|
0.7
|
%
|
|
Morgan Stanley
|
|
55,170
|
|
|
BBB+
|
|
0.6
|
%
|
|
Citigroup Inc
|
|
49,109
|
|
|
BBB+
|
|
0.6
|
%
|
|
Bank of America Corp
|
|
45,996
|
|
|
BBB+
|
|
0.5
|
%
|
|
Goldman Sachs Group
|
|
45,803
|
|
|
BBB+
|
|
0.5
|
%
|
|
Wells Fargo & Company
|
|
41,375
|
|
|
A-
|
|
0.5
|
%
|
|
Bank of New York Mellon Corp
|
|
34,666
|
|
|
A
|
|
0.4
|
%
|
|
US Bancorp
|
|
34,427
|
|
|
AA-
|
|
0.4
|
%
|
|
Apple Inc
|
|
32,015
|
|
|
AA+
|
|
0.4
|
%
|
|
Total
|
|
$
|
452,788
|
|
|
|
|
5.3
|
%
|
(a)
|
Issuers exclude government-backed, government-sponsored enterprises and cash and cash equivalents.
|
(b)
|
Credit exposures represent only direct exposure to fixed maturities and short-term investments of the parent issuer and its major subsidiaries. These exposures exclude asset and mortgage backed securities that were issued, sponsored or serviced by the parent.
|
(c)
|
Investment ratings are the median of Moody's, Standard & Poor's and Fitch, presented in Standard & Poor's equivalent rating. For investments where three ratings are unavailable, the lower of the ratings shall apply, presented in Standard & Poor's equivalent rating.
|
|
September 30, 2015
|
||||||||||||
(Dollars in thousands)
|
Investment at cost
|
|
Voting ownership
|
|
Equity ownership
|
|
Carrying value
|
||||||
AlphaCat Re 2011
|
$
|
4,997
|
|
|
43.7
|
%
|
|
22.3
|
%
|
|
$
|
4,997
|
|
AlphaCat Re 2012
|
699
|
|
|
49.0
|
%
|
|
37.9
|
%
|
|
699
|
|
||
AlphaCat 2013
|
1,035
|
|
|
40.9
|
%
|
|
19.7
|
%
|
|
1,035
|
|
||
AlphaCat 2014
|
711
|
|
|
42.3
|
%
|
|
19.6
|
%
|
|
711
|
|
||
AlphaCat 2015
|
28,000
|
|
|
40.0
|
%
|
|
20.0
|
%
|
|
31,675
|
|
||
AlphaCat ILS funds
|
214,484
|
|
|
n/a
|
|
|
(a)
|
|
|
220,711
|
|
||
Aquiline Financial Services Fund II L.P.
|
55,098
|
|
|
n/a
|
|
|
8.1
|
%
|
|
74,341
|
|
||
Aquiline Financial Services Fund III L.P.
|
13,890
|
|
|
n/a
|
|
|
13.7
|
%
|
|
13,793
|
|
||
Total
|
$
|
318,914
|
|
|
|
|
|
|
$
|
347,962
|
|
(a)
|
Equity ownership in the AlphaCat ILS funds was
7.6%
,
19.4%
,
9.1%
and
32.5%
as at
September 30, 2015
.
|
|
December 31, 2014
|
||||||||||||
(Dollars in thousands)
|
Investment at cost
|
|
Voting ownership
|
|
Equity ownership
|
|
Carrying value
|
||||||
AlphaCat Re 2011
|
$
|
4,606
|
|
|
43.7
|
%
|
|
22.3
|
%
|
|
$
|
4,606
|
|
AlphaCat Re 2012
|
735
|
|
|
49.0
|
%
|
|
37.9
|
%
|
|
735
|
|
||
AlphaCat 2013
|
1,068
|
|
|
40.9
|
%
|
|
19.7
|
%
|
|
1,068
|
|
||
AlphaCat 2014
|
22,000
|
|
|
42.3
|
%
|
|
19.6
|
%
|
|
28,085
|
|
||
AlphaCat 2015
|
25,600
|
|
|
40.0
|
%
|
|
20.0
|
%
|
|
25,600
|
|
||
AlphaCat ILS funds
|
133,091
|
|
|
n/a
|
|
|
(a)
|
|
|
137,883
|
|
||
Aquiline Financial Services Fund II L.P.
|
51,001
|
|
|
n/a
|
|
|
8.1
|
%
|
|
63,506
|
|
||
Total
|
$
|
238,101
|
|
|
|
|
|
|
$
|
261,483
|
|
(a)
|
Equity ownership in the AlphaCat ILS funds was
7.9%
,
39.7%
and
9.1%
as at December 31,
2014
.
|
|
|
As at September 30, 2015
|
||||||||||
(Dollars in thousands)
|
|
Gross Case Reserves
|
|
Gross IBNR
|
|
Total Gross Reserve for Losses and Loss Expenses
|
||||||
Property
|
|
$
|
448,881
|
|
|
$
|
441,252
|
|
|
$
|
890,133
|
|
Marine
|
|
379,373
|
|
|
442,181
|
|
|
821,554
|
|
|||
Specialty
|
|
281,084
|
|
|
574,477
|
|
|
855,561
|
|
|||
Liability
|
|
186,135
|
|
|
415,951
|
|
|
602,086
|
|
|||
Total
|
|
$
|
1,295,473
|
|
|
$
|
1,873,861
|
|
|
$
|
3,169,334
|
|
|
|
As at September 30, 2015
|
||||||||||
(Dollars in thousands)
|
|
Net Case Reserves
|
|
Net IBNR
|
|
Total Net Reserve for Losses and Loss Expenses
|
||||||
Property
|
|
$
|
390,731
|
|
|
$
|
376,503
|
|
|
$
|
767,234
|
|
Marine
|
|
344,051
|
|
|
393,174
|
|
|
737,225
|
|
|||
Specialty
|
|
241,820
|
|
|
521,197
|
|
|
763,017
|
|
|||
Liability
|
|
174,942
|
|
|
341,704
|
|
|
516,646
|
|
|||
Total
|
|
$
|
1,151,544
|
|
|
$
|
1,632,578
|
|
|
$
|
2,784,122
|
|
|
|
Three Months Ended September 30, 2015
|
||||||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Western World Segment
|
|
Eliminations
|
|
Total
|
||||||||||||
Reserve for losses and loss expenses, beginning of period
|
|
$
|
1,295,816
|
|
|
$
|
4,869
|
|
|
$
|
1,330,810
|
|
|
$
|
621,108
|
|
|
$
|
(65,426
|
)
|
|
$
|
3,187,177
|
|
Losses and loss expenses recoverable
|
|
(58,904
|
)
|
|
—
|
|
|
(293,578
|
)
|
|
(89,609
|
)
|
|
65,426
|
|
|
(376,665
|
)
|
||||||
Net reserves for losses and loss expenses, beginning of period
|
|
1,236,912
|
|
|
4,869
|
|
|
1,037,232
|
|
|
531,499
|
|
|
—
|
|
|
2,810,512
|
|
||||||
Increase (decrease) in net reserves for losses and loss expenses in respect of losses occurring in:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current year
|
|
171,433
|
|
|
2,076
|
|
|
130,386
|
|
|
45,864
|
|
|
—
|
|
|
349,759
|
|
||||||
Prior years
|
|
(50,475
|
)
|
|
—
|
|
|
(35,972
|
)
|
|
(5,054
|
)
|
|
—
|
|
|
(91,501
|
)
|
||||||
Total incurred losses and loss expenses
|
|
120,958
|
|
|
2,076
|
|
|
94,414
|
|
|
40,810
|
|
|
—
|
|
|
258,258
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net paid losses
|
|
(123,594
|
)
|
|
(238
|
)
|
|
(105,223
|
)
|
|
(41,610
|
)
|
|
—
|
|
|
(270,665
|
)
|
||||||
Foreign exchange gain
|
|
(6,265
|
)
|
|
—
|
|
|
(7,718
|
)
|
|
—
|
|
|
—
|
|
|
(13,983
|
)
|
||||||
Net reserve for losses and loss expenses, end of period
|
|
1,228,011
|
|
|
6,707
|
|
|
1,018,705
|
|
|
530,699
|
|
|
—
|
|
|
2,784,122
|
|
||||||
Losses and loss expenses recoverable
|
|
60,785
|
|
|
—
|
|
|
298,836
|
|
|
85,823
|
|
|
(60,232
|
)
|
|
385,212
|
|
||||||
Reserve for losses and loss expenses, end of period
|
|
$
|
1,288,796
|
|
|
$
|
6,707
|
|
|
$
|
1,317,541
|
|
|
$
|
616,522
|
|
|
$
|
(60,232
|
)
|
|
$
|
3,169,334
|
|
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re Segment
|
|
AlphaCat Segment
|
|
Talbot Segment
|
|
Western World Segment
|
|
Eliminations
|
|
Total
|
||||||||||||
Reserve for losses and loss expenses, beginning of period
|
|
$
|
1,333,878
|
|
|
$
|
6,525
|
|
|
$
|
1,352,056
|
|
|
$
|
613,551
|
|
|
$
|
(71,616
|
)
|
|
$
|
3,234,394
|
|
Losses and loss expenses recoverable
|
|
(70,279
|
)
|
|
—
|
|
|
(290,581
|
)
|
|
(88,222
|
)
|
|
71,616
|
|
|
(377,466
|
)
|
||||||
Net reserves for losses and loss expenses, beginning of period
|
|
1,263,599
|
|
|
6,525
|
|
|
1,061,475
|
|
|
525,329
|
|
|
—
|
|
|
2,856,928
|
|
||||||
Increase (decrease) in net reserves for losses and loss expenses in respect of losses occurring in:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current year
|
|
463,541
|
|
|
2,076
|
|
|
391,757
|
|
|
153,737
|
|
|
—
|
|
|
1,011,111
|
|
||||||
Prior years
|
|
(106,050
|
)
|
|
(844
|
)
|
|
(123,245
|
)
|
|
(15,639
|
)
|
|
—
|
|
|
(245,778
|
)
|
||||||
Total incurred losses and loss expenses
|
|
357,491
|
|
|
1,232
|
|
|
268,512
|
|
|
138,098
|
|
|
—
|
|
|
765,333
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net paid losses
|
|
(368,493
|
)
|
|
(1,025
|
)
|
|
(303,477
|
)
|
|
(132,728
|
)
|
|
—
|
|
|
(805,723
|
)
|
||||||
Foreign exchange gain
|
|
(24,586
|
)
|
|
(25
|
)
|
|
(7,805
|
)
|
|
—
|
|
|
—
|
|
|
(32,416
|
)
|
||||||
Net reserve for losses and loss expenses, end of period
|
|
1,228,011
|
|
|
6,707
|
|
|
1,018,705
|
|
|
530,699
|
|
|
—
|
|
|
2,784,122
|
|
||||||
Losses and loss expenses recoverable
|
|
60,785
|
|
|
—
|
|
|
298,836
|
|
|
85,823
|
|
|
(60,232
|
)
|
|
385,212
|
|
||||||
Reserve for losses and loss expenses, end of period
|
|
$
|
1,288,796
|
|
|
$
|
6,707
|
|
|
$
|
1,317,541
|
|
|
$
|
616,522
|
|
|
$
|
(60,232
|
)
|
|
$
|
3,169,334
|
|
(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 (Recovery).
|
(e)
|
As at September 30, 2014, the initial estimate for Tripoli Airport was below the $30.0 million notable loss event threshold; however, during the fourth quarter of 2014 adverse development caused this event to exceed the notable loss event threshold.
|
|
|
Capital at
|
||
(Dollars in thousands)
|
|
September 30, 2015
|
||
Western World Insurance Group, Inc. (consolidated)
|
|
$
|
672,217
|
|
Validus Reinsurance, Ltd.
|
|
2,896,718
|
|
|
Validus Reinsurance, Ltd. (consolidated)
|
|
3,568,935
|
|
|
Noncontrolling interest in PaCRe, Ltd.
|
|
438,427
|
|
|
Talbot Holdings, Ltd. (consolidated)
|
|
852,698
|
|
|
Other, net
|
|
8,368
|
|
|
Total consolidated capitalization
|
|
4,868,428
|
|
|
Senior notes payable
|
|
(247,387
|
)
|
|
Debentures payable
|
|
(538,054
|
)
|
|
Total shareholders’ equity
|
|
$
|
4,082,987
|
|
|
|
Nine Months Ended September 30,
|
||||||||||
(Dollars in thousands)
|
|
2015
|
|
2014
|
|
Change
|
||||||
Net cash provided by operating activities
|
|
$
|
51,878
|
|
|
$
|
148,851
|
|
|
$
|
(96,973
|
)
|
Net cash used in investing activities
|
|
(560,622
|
)
|
|
(27,326
|
)
|
|
(533,296
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
367,421
|
|
|
(280,391
|
)
|
|
647,812
|
|
|||
Effect of foreign currency rate changes on cash and cash equivalents
|
|
(27,432
|
)
|
|
(11,293
|
)
|
|
(16,139
|
)
|
|||
Net decrease in cash
|
|
$
|
(168,755
|
)
|
|
$
|
(170,159
|
)
|
|
$
|
1,404
|
|
Capitalization (Dollars in thousands)
|
September 30, 2015
|
|
December 31, 2014
|
||||
Senior Notes (a)
|
$
|
247,387
|
|
|
$
|
247,306
|
|
Junior Subordinated Deferrable Debentures (JSDs) (b)
|
289,800
|
|
|
289,800
|
|
||
Flagstone Junior Subordinated Deferrable Debentures (JSDs) (c)
|
248,254
|
|
|
249,477
|
|
||
Total debt
|
785,441
|
|
|
786,583
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interest
|
—
|
|
|
79,956
|
|
||
|
|
|
|
||||
Ordinary shares, capital and surplus available to Validus
|
3,655,429
|
|
|
3,596,514
|
|
||
Accumulated other comprehensive loss
|
(10,869
|
)
|
|
(8,556
|
)
|
||
Noncontrolling interest
|
438,427
|
|
|
458,595
|
|
||
Total shareholders' equity (d)
|
4,082,987
|
|
|
4,046,553
|
|
||
|
|
|
|
||||
Total capitalization (d) (f)
|
4,868,428
|
|
|
4,913,092
|
|
||
Total capitalization available to Validus (e) (f)
|
$
|
4,430,001
|
|
|
$
|
4,374,541
|
|
|
|
|
|
||||
Debt to total capitalization
|
16.1
|
%
|
|
16.0
|
%
|
||
Debt (excluding JSDs) to total capitalization
|
5.1
|
%
|
|
5.0
|
%
|
(a)
|
On
January 21, 2010
, the Company offered and sold $250.0 million of Senior Notes due 2040 (the “2010 Senior Notes”) in a registered public offering. The 2010 Senior Notes mature on
January 26, 2040
, and are redeemable at the Company’s option in whole any time or in part from time to time at a make-whole redemption price. The net proceeds of
$244.0 million
from the sale of the 2010 Senior Notes, after the deduction of commissions paid to the underwriters in the transaction and other expenses, was used by the Company for general corporate purposes, which included the repurchase of our outstanding capital stock and dividends to our shareholders.
|
(b)
|
$150.0 million of Junior Subordinated Deferrable Debentures (the "2006 Junior Subordinated Deferrable Debentures") were issued on
June 15, 2006
, mature on
June 15, 2036
and have been redeemable at the Company's option at par since June 15, 2011. $200.0 million of Junior Subordinated Deferrable Debentures ("2007 Junior Subordinated Deferrable Debentures") were issued on
June 21, 2007
, mature on
June 15, 2037
and have been redeemable at the Company's option at par since
June 15, 2012
. During 2008 and 2009, the Company repurchased $60.2 million principal amount of its 2007 Junior Subordinated Deferrable Debentures due 2037 from an unaffiliated financial institution.
|
(c)
|
As part of the acquisition of Flagstone Reinsurance Holdings, S.A., the Company assumed
$134.5 million
of junior subordinated deferrable interest debentures due 2036 (the “Flagstone 2006 Junior Subordinated Deferrable Debentures”). The Flagstone 2006 Junior Subordinated Deferrable Debentures mature on September 15, 2036 and have been redeemable at the Company's option at par since September 15, 2011. In addition, the Company assumed $113.8 million of junior subordinated deferrable interest debentures due 2037 (the “Flagstone 2007 Junior Subordinated Deferrable Debentures”). $88.8 million of the Flagstone 2007 Junior Subordinated Deferrable Debentures mature on July 30, 2037 and have been redeemable at the Company's option at par since July 30, 2012. $25.0 million of the Flagstone 2007 Junior Subordinated Deferrable Debentures mature on September 15, 2037 and have been redeemable at the Company's option at par since September 15, 2012.
|
(d)
|
Total capitalization equals total shareholders' equity plus redeemable noncontrolling interest, Senior Notes and Junior Subordinated Deferrable Debentures.
|
(e)
|
Total capitalization available to Validus equals total shareholder's equity less noncontrolling interest plus Senior Notes and Junior Subordinated Deferrable Debentures.
|
(f)
|
The Company does not include notes payable to AlphaCat investors within total capitalization, since these are issued to some of the Company's operating affiliates specifically for the purpose of purchasing capital market products and writing collateralized reinsurance.
|
(Dollars in thousands)
|
Maturity Date /
Term (a)
|
Commitments
|
|
Issued and Outstanding (b)
|
||||
2006 Junior Subordinated Deferrable Debentures
|
June 15, 2036
|
$
|
150,000
|
|
|
$
|
150,000
|
|
2007 Junior Subordinated Deferrable Debentures
|
June 15, 2037
|
200,000
|
|
|
139,800
|
|
||
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
September 15, 2036
|
134,504
|
|
|
134,504
|
|
||
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
September 15, 2037
|
113,750
|
|
|
113,750
|
|
||
Total debentures payable
|
|
598,254
|
|
|
538,054
|
|
||
2010 Senior Notes due 2040
|
January 26, 2040
|
250,000
|
|
|
250,000
|
|
||
Total debentures and senior notes payable
|
|
848,254
|
|
|
788,054
|
|
||
$400,000 syndicated unsecured letter of credit facility
|
March 9, 2016
|
400,000
|
|
|
—
|
|
||
$525,000 syndicated secured letter of credit facility
|
March 9, 2016
|
525,000
|
|
|
244,358
|
|
||
$30,000 secured bi-lateral letter of credit facility
|
Evergreen
|
30,000
|
|
|
10,172
|
|
||
Talbot FAL facility
|
December 31, 2017
|
25,000
|
|
|
25,000
|
|
||
AlphaCat Re secured letter of credit facility
|
Evergreen
|
30,000
|
|
|
30,000
|
|
||
IPC bi-lateral facility
|
Evergreen
|
25,000
|
|
|
10,782
|
|
||
$230,000 Flagstone bi-lateral facility
|
Evergreen
|
230,000
|
|
|
205,593
|
|
||
Total credit and other facilities
|
|
1,265,000
|
|
|
525,905
|
|
||
Total debt and financing arrangements
|
|
$
|
2,113,254
|
|
|
$
|
1,313,959
|
|
(a)
|
The arrangement is indicated as evergreen if, unless written notice to the contrary is given, it automatically renews on a regular basis.
|
(b)
|
Indicates utilization of commitment amount, not necessarily drawn borrowings.
|
|
A.M. Best (a)
|
|
S&P (b)
|
|
Moody’s (c)
|
|
Fitch (d)
|
Validus Holdings, Ltd.
|
|
|
|
|
|
|
|
Issuer credit rating
|
bbb
|
|
BBB+
|
|
Baa2
|
|
A-
|
Senior debt
|
bbb
|
|
BBB+
|
|
Baa2
|
|
BBB+
|
Subordinated debt
|
bbb-
|
|
—
|
|
Baa3
|
|
BBB
|
Preferred stock
|
bb+
|
|
BBB-
|
|
Ba1
|
|
—
|
Outlook on ratings
|
Stable
|
|
Stable
|
|
Positive
|
|
Stable
|
|
|
|
|
|
|
|
|
Validus Reinsurance, Ltd.
|
|
|
|
|
|
|
|
Financial strength rating
|
A
|
|
A
|
|
A3
|
|
A
|
Outlook on ratings
|
Stable
|
|
Stable
|
|
Positive
|
|
Stable
|
|
|
|
|
|
|
|
|
Lloyd's of London
|
|
|
|
|
|
|
|
Financial strength rating applicable to all Lloyd's syndicates
|
A
|
|
A+
|
|
—
|
|
AA-
|
Outlook on ratings
|
Positive
|
|
Stable
|
|
—
|
|
Stable
|
|
|
|
|
|
|
|
|
Talbot Syndicate 1183
|
|
|
|
|
|
|
|
Financial strength rating
|
A
|
|
—
|
|
—
|
|
—
|
Outlook on ratings
|
Positive
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Validus Reinsurance (Switzerland), Ltd.
|
|
|
|
|
|
|
|
Financial strength rating
|
A
|
|
A
|
|
—
|
|
—
|
Outlook on ratings
|
Stable
|
|
Stable
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Western World Insurance Company
|
|
|
|
|
|
|
|
Financial strength rating
|
A
|
|
—
|
|
—
|
|
—
|
Outlook on ratings
|
Stable
|
|
—
|
|
—
|
|
—
|
(a)
|
The A.M. Best ratings were most recently affirmed on
March 12, 2015
for Validus Holdings, Ltd, Validus Reinsurance, Ltd and Validus Reinsurance (Switzerland) Ltd. The A.M. Best rating for Lloyd's was most recently affirmed on July 22, 2015. The A.M. Best rating for Talbot Syndicate 1183 was most recently affirmed on June 12, 2015. The A.M. Best rating for Western World Insurance Company was downgraded from A+ to A on November 6, 2014.
|
(b)
|
On October 29, 2015, the S&P rating for Validus Reinsurance (Switzerland), Ltd. was upgraded from A- to A and the ratings for Validus Reinsurance, Ltd. and Validus Holdings, Ltd. were affirmed. On October 13, 2014, the S&P rating for Lloyd's was affirmed and the outlook was revised from positive to stable.
|
(c)
|
The Moody’s ratings were most recently affirmed on
June 25, 2014
for Validus Holdings, Ltd and Validus Reinsurance, Ltd.
|
(d)
|
The Fitch ratings were most recently affirmed on
August 17, 2015
for Validus Holdings, Ltd. and Validus Reinsurance, Ltd. On
August 17, 2015
, Fitch upgraded the Company's subordinated debt to BBB from BBB- due to the application of updated notching criteria for hybrid ratings. The Fitch rating for Lloyd's was most recently affirmed on June 30, 2015.
|
•
|
Reserve for losses and loss expenses;
|
•
|
Premium estimates for business written on a line slip or proportional basis;
|
•
|
The valuation of goodwill and intangible assets;
|
•
|
Reinsurance premiums ceded and reinsurance recoverable balances including the provision for uncollectible amounts; and
|
•
|
Investment valuation of financial assets.
|
•
|
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 under Part I Item 1A "Risk Factors" and under Part II Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the other sections of the Company's Annual Report on Form 10-K for the year ended
December 31, 2014
, 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
|
|
|
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
September 15, 2036
|
|
134,504
|
|
|
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
September 15, 2037
|
|
113,750
|
|
|
Total debentures payable
|
|
|
538,054
|
|
|
2010 Senior Notes due 2040
|
January 26, 2040
|
|
250,000
|
|
|
Total debentures and senior notes payable
|
|
|
788,054
|
|
|
$400,000 syndicated unsecured letter of credit facility
|
March 9, 2016
|
|
—
|
|
|
$525,000 syndicated secured letter of credit facility
|
March 9, 2016
|
|
244,358
|
|
|
$30,000 secured bi-lateral letter of credit facility
|
Evergreen
|
|
10,172
|
|
|
Talbot FAL facility
|
December 31, 2017
|
|
25,000
|
|
|
AlphaCat Re secured letter of credit facility
|
Evergreen
|
|
30,000
|
|
|
IPC bi-lateral facility
|
Evergreen
|
|
10,782
|
|
|
$230,000 Flagstone bi-lateral facility
|
Evergreen
|
|
205,593
|
|
|
Total credit and other facilities
|
|
|
525,905
|
|
|
Total debt and financing arrangements
|
|
|
$
|
1,313,959
|
|
|
|
Share Repurchase Activity
(Expressed in thousands of U.S. dollars except for share and per share information)
|
||||||||||||||||||
|
|
As at June 30, 2015
|
|
|
|
|
|
|
|
Quarter ended
|
||||||||||
Effect of share repurchases:
|
|
(cumulative)
|
|
July
|
|
August
|
|
September
|
|
September 30, 2015
|
||||||||||
Aggregate purchase price (a)
|
|
$
|
2,374,524
|
|
|
$
|
22,741
|
|
|
$
|
15,328
|
|
|
$
|
22,625
|
|
|
$
|
60,694
|
|
Shares repurchased
|
|
73,444,835
|
|
|
503,600
|
|
|
340,771
|
|
|
508,569
|
|
|
1,352,940
|
|
|||||
Average price (a)
|
|
$
|
32.33
|
|
|
$
|
45.16
|
|
|
$
|
44.98
|
|
|
$
|
44.49
|
|
|
$
|
44.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Repurchase Activity
(Expressed in thousands of U.S. dollars except for share and per share information)
|
||||||||||||||||||
Effect of share repurchases:
|
|
As at September 30, 2015 (cumulative)
|
|
October
|
|
November
|
|
As at November 4, 2015
|
|
Cumulative to Date Effect
|
||||||||||
Aggregate purchase price (a)
|
|
$
|
2,435,218
|
|
|
$
|
—
|
|
|
$
|
3,446
|
|
|
$
|
3,446
|
|
|
$
|
2,438,664
|
|
Shares repurchased
|
|
74,797,775
|
|
|
—
|
|
|
77,177
|
|
|
77,177
|
|
|
74,874,952
|
|
|||||
Average price (a)
|
|
$
|
32.56
|
|
|
$
|
—
|
|
|
$
|
44.65
|
|
|
$
|
44.65
|
|
|
$
|
32.57
|
|
(a)
|
Share transactions are on a trade date basis through
November 4, 2015
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 from 2009 at the inception of the share repurchase program through to 2013 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 earnings per diluted 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 earnings per diluted share.
|
Exhibit
|
Description
|
|
|
Exhibit 10.1*
|
Amended and Restated Validus Holdings, Ltd. 2005 Long Term Incentive Plan (As Amended and Restated Effective May 7, 2015)
|
|
|
Exhibit 31.1*
|
Certification of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
Exhibit 31.2*
|
Certification of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
Exhibit 32*
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
|
|
|
Exhibit 101.1 INS*
|
XBRL Instance Document
|
|
|
Exhibit 101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
|
|
Exhibit 101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
Exhibit 101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
Exhibit 101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
Exhibit 101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
VALIDUS HOLDINGS, LTD.
|
|
|
(Registrant)
|
|
|
|
Date:
|
November 6, 2015
|
/s/ Edward J. Noonan
|
|
|
Edward J. Noonan
|
|
|
Chief Executive Officer
|
|
|
|
Date:
|
November 6, 2015
|
/s/ Jeffrey D. Sangster
|
|
|
Jeffrey D. Sangster
|
|
|
Executive Vice President and Chief Financial Officer
|
1.
|
Purposes
.
|
2.
|
Definitions
.
|
3.
|
Administration
.
|
4.
|
Shares Subject to the Plan
.
|
5.
|
Specific Terms of Awards
.
|
6.
|
Certain Provisions Applicable to Awards
.
|
8.
|
General Provisions
.
|
1.
|
I have reviewed this
Quarterly Report on Form 10-Q
of Validus Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
/s/ EDWARD J. NOONAN
|
|
|
Edward J. Noonan
Chief Executive Officer
|
1.
|
I have reviewed this
Quarterly Report on Form 10-Q
of Validus Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
/s/ JEFFREY D. SANGSTER
|
|
|
Jeffrey D. Sangster
Executive Vice President and Chief Financial Officer
|
|
|
/s/ EDWARD J. NOONAN
|
|
|
Edward J. Noonan
Chief Executive Officer
Validus Holdings, Ltd.
|
|
|
/s/ JEFFREY D. SANGSTER
|
|
|
Jeffrey D. Sangster
Executive Vice President and Chief Financial Officer
Validus Holdings, Ltd.
|