|
BERMUDA
|
98-0501001
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Title of Each Class:
|
|
Name of Each Exchange on Which Registered:
|
Common Shares, $0.175 par value per share
|
|
New York Stock Exchange
|
5.875% Preferred Shares, Series A, $0.175 par value per share
|
|
New York Stock Exchange
|
Large accelerated filer
ý
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if a
smaller reporting company)
|
|
Smaller reporting company
o
|
|
Table of Contents
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|||
|
|
|
|
|
|
||
|
|
|
|
|
|
•
|
Raising approximately $1.0 billion of initial equity capital in December 2005 and underwriting $217.4 million in gross premiums written for the January 2006 renewal season;
|
•
|
Building a risk analytics staff comprised of over 50 experts, many of whom have PhDs and Masters degrees in related fields;
|
•
|
Developing Validus Capital Allocation and Pricing System (“VCAPS”), a proprietary computer-based system for modeling, pricing, allocating capital and analyzing catastrophe-exposed risks;
|
•
|
Acquiring all of the outstanding shares of Talbot Holdings Ltd. (“Talbot”) on July 2, 2007;
|
•
|
Completing an initial public offering (“IPO”) on July 30, 2007;
|
•
|
Acquiring all of the outstanding shares of IPC Holdings Ltd. (“IPC”) on September 4, 2009;
|
•
|
Acquiring all of the outstanding shares of Flagstone Reinsurance Holdings, S.A. (“Flagstone”) on November 30, 2012;
|
•
|
Acquiring all of the outstanding shares of Western World Insurance Group, Inc. (“Western World”) on October 2, 2014;
|
•
|
Successfully launching a series of AlphaCat sidecars and ILS funds beginning on May 25, 2011 and managing third party capital of
$2.5 billion
as at January 1,
2017
;
|
•
|
Delivering an 11.6% compounded annual growth in book value per diluted common share plus accumulated dividends from formation to
December 31, 2016
;
|
•
|
Repurchasing approximately
80.5 million
common shares for an aggregate purchase price of approximately
$2,704.4 million
and paying an aggregate amount of
$1,175.5 million
in common share dividends from formation to
February 22, 2017
.
|
•
|
Raising $150.0 million of additional equity capital through the issuance of preferred shares in June 2016 and paying an aggregate amount of $4.5 million in preferred dividends to
February 22, 2017
.
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross
Premiums
Written
|
|
% of Total
|
|
Gross
Premiums
Written
|
|
% of Total
|
|
Gross
Premiums
Written
|
|
% of Total
|
|||||||||
Property
|
|
$
|
472,965
|
|
|
42.6
|
%
|
|
$
|
547,409
|
|
|
48.6
|
%
|
|
$
|
616,554
|
|
|
55.1
|
%
|
Marine
|
|
105,698
|
|
|
9.5
|
%
|
|
152,670
|
|
|
13.5
|
%
|
|
190,959
|
|
|
17.1
|
%
|
|||
Specialty
|
|
532,391
|
|
|
47.9
|
%
|
|
426,680
|
|
|
37.9
|
%
|
|
311,019
|
|
|
27.8
|
%
|
|||
Total
|
|
$
|
1,111,054
|
|
|
100.0
|
%
|
|
$
|
1,126,759
|
|
|
100.0
|
%
|
|
$
|
1,118,532
|
|
|
100.0
|
%
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross
Premiums
Written
|
|
% of Total
|
|
Gross
Premiums Written |
|
% of Total
|
|
Gross
Premiums
Written
|
|
% of Total
|
|||||||||
Property
|
|
$
|
317,085
|
|
|
32.7
|
%
|
|
$
|
327,122
|
|
|
32.2
|
%
|
|
$
|
337,210
|
|
|
30.6
|
%
|
Marine
|
|
261,940
|
|
|
27.0
|
%
|
|
327,539
|
|
|
32.1
|
%
|
|
392,701
|
|
|
35.6
|
%
|
|||
Specialty
|
|
391,677
|
|
|
40.3
|
%
|
|
364,174
|
|
|
35.7
|
%
|
|
371,859
|
|
|
33.8
|
%
|
|||
Total
|
|
$
|
970,702
|
|
|
100.0
|
%
|
|
$
|
1,018,835
|
|
|
100.0
|
%
|
|
$
|
1,101,770
|
|
|
100.0
|
%
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
(a)
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross
Premiums
Written
|
|
Gross
Premiums
Written (%)
|
|
Gross
Premiums Written |
|
Gross
Premiums Written (%) |
|
Gross
Premiums Written |
|
Gross
Premiums Written (%) |
|||||||||
Property
|
|
$
|
94,440
|
|
|
29.2
|
%
|
|
$
|
53,018
|
|
|
19.0
|
%
|
|
$
|
9,983
|
|
|
15.3
|
%
|
Liability
|
|
228,780
|
|
|
70.8
|
%
|
|
225,486
|
|
|
81.0
|
%
|
|
55,252
|
|
|
84.7
|
%
|
|||
Total
|
|
$
|
323,220
|
|
|
100.0
|
%
|
|
$
|
278,504
|
|
|
100.0
|
%
|
|
$
|
65,235
|
|
|
100.0
|
%
|
(a)
|
The results of Western World have been included in the Company’s consolidated results from the October 2, 2014 date of acquisition.
|
|
|
Assets Under Management
|
||||||
|
|
January 1,
|
||||||
(Dollars in thousands)
|
|
2017
|
|
2016
|
||||
Third party
|
|
$
|
2,498,597
|
|
|
$
|
2,059,519
|
|
Related party
|
|
242,715
|
|
|
326,643
|
|
||
Total
|
|
$
|
2,741,312
|
|
|
$
|
2,386,162
|
|
|
|
Revenues
|
||||||||||
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Third party
|
|
$
|
18,771
|
|
|
$
|
19,661
|
|
|
18,667
|
|
|
Related party
|
|
3,329
|
|
|
5,309
|
|
|
7,467
|
|
|||
Total
|
|
$
|
22,100
|
|
|
$
|
24,970
|
|
|
$
|
26,134
|
|
|
|
Investment income from AlphaCat funds and sidecars
(a)
|
|||||||||
|
|
Years Ended December 31,
|
|||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
|||||
Investment income from AlphaCat funds and sidecars
|
|
$
|
20,579
|
|
|
19,176
|
|
|
$
|
21,485
|
|
(a)
|
The investment income from the AlphaCat funds and sidecars is based on equity accounting.
|
|
|
Gross Premiums Written
|
||||||||||
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Gross premiums written
|
|
$
|
270,402
|
|
|
$
|
176,126
|
|
|
$
|
126,785
|
|
•
|
Establish the principles by which the Company can evaluate the risk/reward trade-offs associated with key strategic and tactical decisions.
|
•
|
Establish a risk governance structure that, in respect of all activities related to ERM, operates with clearly defined roles and responsibilities.
|
•
|
Establish minimum requirements that must be met by each of the Company’s segments.
|
•
|
Identify and assess all risks and causes of risks arising out of the Company’s strategic initiatives, internal processes and external environment.
|
•
|
Establish a set of responses to manage the Company’s risks within its stated risk appetite and risk tolerances.
|
•
|
Establish procedures through which near-miss and actual incidents, that either have the potential to impact or have impacted the Company, are reported and reviewed in order to inform the risk identification and assessment process.
|
•
|
Absolute maximum limits - these are defined based on the underlying peril or coverage and include measures such as zonal aggregates, which convey the maximum contractual loss exposure.
|
•
|
Probable maximum loss - these are defined where probabilistic event sets exist for underlying perils and are established for most natural catastrophe, aviation and upstream energy coverage, and convey an extreme but likely loss exposure.
|
•
|
Realistic disaster scenarios (“RDSs”) - these are either prescribed by third parties or developed internally and convey a more intuitive view of potential loss outcomes.
|
•
|
Lines of business that a particular underwriter is authorized to write;
|
•
|
Exposure limits by line of business;
|
•
|
Contractual exposures and limits requiring mandatory referrals; and
|
•
|
Levels of analysis to be performed by lines of business.
|
•
|
Seek high quality clients who have demonstrated superior performance over an extended period;
|
•
|
Evaluate our clients’ exposures and make adjustments where their exposure is not adequately reflected;
|
•
|
Apply the comprehensive knowledge and experience of our entire underwriting team to make progressive and cohesive decisions about the business they underwrite; and
|
•
|
Employ our well-founded and carefully maintained market contacts within the Company to enhance our robust distribution capabilities.
|
•
|
Ceding companies may often report insufficient data and many reinsurers may not be sufficiently critical in their analysis of this data. The Company generally scrutinizes data for anomalies that may indicate insufficient data quality. These circumstances are addressed by either declining the program or, if the variances are manageable, by modifying the model inputs and outputs, and ultimately, pricing to reflect insufficient data quality;
|
•
|
Performing independent checks on the accuracy of reported building characteristics through third-party tools and the use of licensed data sources;
|
•
|
Prior to making overall adjustments for changes in variable metrics, the Company carefully examines the adjustment against the latest scientific studies and technology available to ensure its impact to the business is thoroughly evaluated before adopting it into its systems; and
|
•
|
To properly quantify risk, the Company frequently adjusts vendor models in advance of their updates based on the latest scientific studies and claims data from recent events.
|
•
|
VCAPS takes into account annual limits, event/franchise/annual aggregate deductibles, and reinstatement premiums. This allows for more accurate evaluation of treaties with a broad range of features, including both common (reinstatement premium and annual limits) and complex features (second or third event coverage, aggregate excess of loss, attritional loss components, covers with varying attachment across different geographical zones or lines of businesses and covers with complicated structures); and
|
•
|
VCAPS use of 100,000-year simulations enables robust pricing of catastrophe-exposed business. This is possible in real-time operation because the Company has designed a computing hardware platform and software environment to accommodate the significant computing needs.
|
•
|
budgeted underwriting activity for the coming year;
|
•
|
loss experience from prior years;
|
•
|
loss information from the coming year’s individual capital assessment calculations;
|
•
|
expected changes to risk limits and aggregation limits and any other changes to Talbot’s risk tolerance;
|
•
|
scenario planning;
|
•
|
changes to capital requirements; and
|
•
|
RDSs prescribed by Lloyd’s.
|
|
|
Gross Premiums Written
|
|||||||||||||||||||||||||
|
|
Year Ended December 31, 2016
|
|||||||||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
|
% of Total
|
|||||||||||||
Name of Broker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Marsh & McLennan Companies, Inc.
|
|
$
|
478,199
|
|
|
$
|
183,669
|
|
|
$
|
255
|
|
|
$
|
100,098
|
|
|
$
|
21
|
|
|
$
|
762,242
|
|
|
28.8
|
%
|
Aon Benfield Group Ltd.
|
|
243,947
|
|
|
126,600
|
|
|
271
|
|
|
79,163
|
|
|
(19,855
|
)
|
|
430,126
|
|
|
16.2
|
%
|
||||||
Willis Towers Watson plc
|
|
189,313
|
|
|
118,092
|
|
|
305
|
|
|
66,954
|
|
|
(1,883
|
)
|
|
372,781
|
|
|
14.1
|
%
|
||||||
Sub-total
|
|
911,459
|
|
|
428,361
|
|
|
831
|
|
|
246,215
|
|
|
(21,717
|
)
|
|
1,565,149
|
|
|
59.1
|
%
|
||||||
All Others/Direct
|
|
199,595
|
|
|
542,341
|
|
|
322,389
|
|
|
24,187
|
|
|
(4,956
|
)
|
|
1,083,556
|
|
|
40.9
|
%
|
||||||
Total
|
|
$
|
1,111,054
|
|
|
$
|
970,702
|
|
|
$
|
323,220
|
|
|
$
|
270,402
|
|
|
$
|
(26,673
|
)
|
|
$
|
2,648,705
|
|
|
100.0
|
%
|
•
|
Communicate and align the Company’s investment philosophy and goals;
|
•
|
Provide transparency regarding investment policies, procedures and controls;
|
•
|
Set expectations and priorities of our third party investment managers;
|
•
|
Establish a framework for integrating investment management into our overall ERM process;
|
•
|
Mandate our investment parameters, including permissible asset classes and portfolio constraints, and governance structure for portfolio oversight and management;
|
•
|
Establish formalized criteria to measure, monitor, and evaluate investment performance and risk exposures on a regular basis; and
|
•
|
Ensure assets are invested in accordance with the overall financial goals and risk tolerances of the Company.
|
•
|
Allied World Assurance Company Holdings, Limited., Arch Capital Group, Limited., Argo Group International Holdings, Ltd., Aspen Insurance Holdings Limited, AXIS Capital Holdings Limited, Endurance Specialty Holdings Ltd., Everest Re Group Limited and RenaissanceRe Holdings Ltd.;
|
•
|
MS Amlin plc, Beazley plc, Brit plc, Hiscox Ltd., Novae Group plc and others in the Lloyd’s market;
|
•
|
Scottsdale Insurance Company, Burlington Insurance Company, Nautilus Insurance Company, Essex Insurance Company, Penn-America Group, Inc., Colony Specialty Insurance Company, RSUI Group, Inc., and others in the U.S. excess and surplus market;
|
•
|
Asset managers and reinsurers who provide collateralized reinsurance and retrocessional coverage;
|
•
|
Treaty and direct insurers, in not only the London but also the global market, that compete with Lloyd’s on a worldwide basis;
|
•
|
Various capital markets participants who access insurance and reinsurance business in securitized form, including through special purpose entities or derivative transactions; and
|
•
|
Government-sponsored insurers and reinsurers.
|
•
|
premiums charged and other terms and conditions offered;
|
•
|
services provided;
|
•
|
financial ratings assigned by independent rating agencies;
|
•
|
speed of claims payment;
|
•
|
reputation;
|
•
|
perceived financial strength; and
|
•
|
the experience of the underwriter in the line of insurance or reinsurance written.
|
Location
|
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Corporate
|
|
Total
|
|
%
|
|||||||
London, United Kingdom
|
|
—
|
|
|
284
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
350
|
|
|
39.5
|
%
|
Parsippany, New Jersey
|
|
7
|
|
|
—
|
|
|
183
|
|
|
2
|
|
|
6
|
|
|
198
|
|
|
22.3
|
%
|
Pembroke, Bermuda
|
|
69
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
57
|
|
|
136
|
|
|
15.3
|
%
|
New York, New York
|
|
2
|
|
|
13
|
|
|
9
|
|
|
—
|
|
|
21
|
|
|
45
|
|
|
5.1
|
%
|
Republic of Singapore
|
|
12
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
4.2
|
%
|
Waterloo, Canada
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
29
|
|
|
3.3
|
%
|
Miami, Florida
|
|
14
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
25
|
|
|
2.8
|
%
|
Other U.S. locations
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
6
|
|
|
25
|
|
|
2.8
|
%
|
Dubai, United Arab Emirates
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
1.4
|
%
|
Santiago, Chile
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
0.9
|
%
|
Toronto, Canada
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
0.7
|
%
|
Sydney, Australia
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
0.7
|
%
|
Zurich, Switzerland
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
0.7
|
%
|
Shanghai, China
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
0.2
|
%
|
Dublin, Ireland
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
0.1
|
%
|
Total
|
|
112
|
|
|
359
|
|
|
211
|
|
|
12
|
|
|
192
|
|
|
886
|
|
|
100.0
|
%
|
Name
|
|
Age
|
|
Position
|
Edward J. Noonan
|
|
58
|
|
Chairman of the Board of Directors and Chief Executive Officer of the Validus Group
|
Jeffrey D. Sangster
|
|
44
|
|
Executive Vice President and Chief Financial Officer
|
Peter Bilsby
|
|
47
|
|
Chief Executive Officer of the Talbot Group
|
Patrick Boisvert
|
|
43
|
|
Executive Vice President and Chief Accounting Officer
|
Kean D. Driscoll
|
|
43
|
|
Chief Executive Officer of Validus Reinsurance, Ltd.
|
John J. Hendrickson
|
|
56
|
|
Director of Strategy, Risk Management and Corporate Development
|
Andrew E. Kudera
|
|
57
|
|
Executive Vice President and Chief Actuary
|
Robert F. Kuzloski
|
|
53
|
|
Executive Vice President and General Counsel
|
Michael R. Moore
|
|
47
|
|
Executive Vice President and Chief Operating Officer
|
Romel Salam
|
|
50
|
|
Executive Vice President and Chief Risk Officer
|
Jonathan P. Ritz
|
|
49
|
|
Chief Executive Officer of Validus Specialty
|
Lixin Zeng
|
|
48
|
|
Chief Executive Officer of AlphaCat Managers Ltd.
|
•
|
integrating financial and operational reporting systems;
|
•
|
integration into new geographical regions;
|
•
|
establishing satisfactory budgetary and other financial controls;
|
•
|
funding increased capital needs and overhead expenses;
|
•
|
retaining management personnel required for existing operations;
|
•
|
obtaining management personnel required for expanded operations;
|
•
|
obtaining necessary regulatory permissions;
|
•
|
funding cash flow shortages that may occur if anticipated revenues are not realized or are delayed, whether by general economic or market conditions or unforeseen internal difficulties;
|
•
|
the value of assets related to acquisitions or new ventures may be lower than expected or may diminish due to credit defaults or changes in interest rates and liabilities assumed may be greater than expected;
|
•
|
the assets and liabilities related to acquisitions or new ventures may be subject to foreign currency exchange rate fluctuation; and
|
•
|
financial exposures in the event that the sellers of the entities we acquire are unable or unwilling to meet their indemnification, reinsurance and other obligations to us.
|
Legal entity
|
|
Location
|
|
Expiration date
|
Validus Holdings, Ltd.
|
|
Pembroke, Bermuda
|
|
December 31, 2021
|
Validus Research Inc.
|
|
Waterloo, Canada
|
|
March 31, 2020
|
Validus Specialty, Inc.
|
|
New York, New York, USA
|
|
June 30, 2032
|
Talbot Holdings Ltd. and Talbot Underwriting Services Ltd.
|
|
London, England
|
|
June 22, 2024
|
Validus Reinsurance (Switzerland) Ltd
|
|
Zurich, Switzerland
|
|
January 31, 2019
|
Western World Insurance Group, Inc.
|
|
Parsippany, New Jersey, USA
|
|
March 31, 2030
|
|
|
2016
|
|
2015
|
||||||||||||
Period
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
1
st
Quarter
|
|
$
|
47.58
|
|
|
$
|
41.73
|
|
|
$
|
42.34
|
|
|
$
|
38.88
|
|
2
nd
Quarter
|
|
$
|
48.77
|
|
|
$
|
44.23
|
|
|
$
|
45.50
|
|
|
$
|
41.50
|
|
3
rd
Quarter
|
|
$
|
51.43
|
|
|
$
|
47.14
|
|
|
$
|
47.49
|
|
|
$
|
42.81
|
|
4
th
Quarter
|
|
$
|
56.41
|
|
|
$
|
48.77
|
|
|
$
|
48.49
|
|
|
$
|
42.00
|
|
|
|
Total shares repurchased under publicly announced repurchase program
|
|||||||||||||
(Dollars in thousands, except share and per share amounts)
|
|
Total number of shares repurchased
|
|
Aggregate Purchase
Price
(a)
|
|
Average Price per Share
(a)
|
|
Approximate dollar value of shares that may yet be purchased under the Program
|
|||||||
Cumulative inception-to-date to December 31, 2015
|
|
76,031,280
|
|
|
$
|
2,491,731
|
|
|
$
|
32.77
|
|
|
$
|
532,670
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cumulative for the nine months ended September 30, 2016
|
|
4,160,168
|
|
|
196,015
|
|
|
$
|
47.12
|
|
|
$
|
336,655
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
October 1 - 31, 2016
|
|
81,174
|
|
|
4,029
|
|
|
$
|
49.63
|
|
|
$
|
332,626
|
|
|
November 1 - 30, 2016
|
|
174,734
|
|
|
9,250
|
|
|
$
|
52.94
|
|
|
$
|
323,376
|
|
|
December 1 - 31, 2016
|
|
61,493
|
|
|
3,381
|
|
|
$
|
54.98
|
|
|
$
|
319,995
|
|
|
Cumulative for the three months ended December 31, 2016
|
|
317,401
|
|
|
16,660
|
|
|
$
|
52.49
|
|
|
|
|||
Cumulative for the year ended December 31, 2016
|
|
4,477,569
|
|
|
212,675
|
|
|
$
|
47.50
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Cumulative inception-to-date to December 31, 2016
|
|
80,508,849
|
|
|
$
|
2,704,406
|
|
|
$
|
33.59
|
|
|
$
|
319,995
|
|
|
|
|
|
|
|
|
|
|
|||||||
Repurchases made subsequent to year-end:
|
|
|
|
|
|
|
|
|
|||||||
January 1 - 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
319,995
|
|
February 1 - 22, 2017
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
319,995
|
|
(a)
|
Share transactions are on a trade date basis through
February 22, 2017
and are inclusive of commissions. Average share price is rounded to two decimal places.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross premiums written
|
|
$
|
2,648,705
|
|
|
$
|
2,557,506
|
|
|
$
|
2,358,865
|
|
|
$
|
2,388,446
|
|
|
$
|
2,284,917
|
|
Reinsurance premiums ceded
|
|
(289,705
|
)
|
|
(328,681
|
)
|
|
(313,208
|
)
|
|
(375,800
|
)
|
|
(307,506
|
)
|
|||||
Net premiums written
|
|
2,359,000
|
|
|
2,228,825
|
|
|
2,045,657
|
|
|
2,012,646
|
|
|
1,977,411
|
|
|||||
Change in unearned premiums
|
|
(109,835
|
)
|
|
18,064
|
|
|
(52,602
|
)
|
|
86,149
|
|
|
14,315
|
|
|||||
Net premiums earned
|
|
2,249,165
|
|
|
2,246,889
|
|
|
1,993,055
|
|
|
2,098,795
|
|
|
1,991,726
|
|
|||||
Gain on bargain purchase, net of expenses
(a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,701
|
|
|||||
Net investment income
|
|
150,385
|
|
|
127,824
|
|
|
100,086
|
|
|
96,089
|
|
|
107,947
|
|
|||||
Net realized gains (losses) on investments
|
|
15,757
|
|
|
2,298
|
|
|
14,917
|
|
|
(764
|
)
|
|
18,233
|
|
|||||
Change in net unrealized gains (losses) on investments
|
|
16,871
|
|
|
(32,395
|
)
|
|
(2,842
|
)
|
|
(52,419
|
)
|
|
36,766
|
|
|||||
(Loss) income from investment affiliate
|
|
(2,083
|
)
|
|
4,281
|
|
|
8,411
|
|
|
4,790
|
|
|
(964
|
)
|
|||||
Other insurance related income and other income (loss)
|
|
2,195
|
|
|
5,111
|
|
|
1,229
|
|
|
(6,607
|
)
|
|
22,362
|
|
|||||
Foreign exchange gains (losses)
|
|
10,864
|
|
|
(8,731
|
)
|
|
(12,181
|
)
|
|
3,949
|
|
|
5,084
|
|
|||||
Total revenues
|
|
2,443,154
|
|
|
2,345,277
|
|
|
2,102,675
|
|
|
2,143,833
|
|
|
2,198,855
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expenses
|
|
1,065,097
|
|
|
977,833
|
|
|
765,015
|
|
|
776,796
|
|
|
1,035,390
|
|
|||||
Policy acquisition costs
|
|
449,482
|
|
|
410,058
|
|
|
339,467
|
|
|
360,403
|
|
|
349,766
|
|
|||||
General and administrative expenses
|
|
336,294
|
|
|
363,709
|
|
|
329,362
|
|
|
316,008
|
|
|
276,092
|
|
|||||
Share compensation expenses
|
|
42,907
|
|
|
38,341
|
|
|
33,073
|
|
|
27,630
|
|
|
26,709
|
|
|||||
Finance expenses
|
|
58,520
|
|
|
74,742
|
|
|
68,324
|
|
|
68,007
|
|
|
59,710
|
|
|||||
Transaction expenses
(b)
|
|
—
|
|
|
—
|
|
|
8,096
|
|
|
—
|
|
|
—
|
|
|||||
Total expenses
|
|
1,952,300
|
|
|
1,864,683
|
|
|
1,543,337
|
|
|
1,548,844
|
|
|
1,747,667
|
|
|||||
Income before taxes, (loss) income from operating affiliate and (income) attributable to AlphaCat investors
|
|
490,854
|
|
|
480,594
|
|
|
559,338
|
|
|
594,989
|
|
|
451,188
|
|
|||||
Tax benefit (expense)
|
|
19,729
|
|
|
(6,376
|
)
|
|
(155
|
)
|
|
(383
|
)
|
|
(2,501
|
)
|
|||||
(Loss) income from operating affiliate
|
|
(23
|
)
|
|
(3,949
|
)
|
|
(4,340
|
)
|
|
542
|
|
|
(1,758
|
)
|
|||||
(Income) attributable to AlphaCat investors
|
|
(23,358
|
)
|
|
(2,412
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
|
487,202
|
|
|
467,857
|
|
|
554,843
|
|
|
595,148
|
|
|
446,929
|
|
|||||
Net (income) attributable to noncontrolling interests
|
|
(123,363
|
)
|
|
(92,964
|
)
|
|
(74,880
|
)
|
|
(62,482
|
)
|
|
(38,491
|
)
|
|||||
Net income available to Validus
|
|
363,839
|
|
|
374,893
|
|
|
479,963
|
|
|
532,666
|
|
|
408,438
|
|
|||||
Dividends on preferred shares
|
|
(4,455
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income available to Validus common shareholders
|
|
$
|
359,384
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
|
$
|
532,666
|
|
|
$
|
408,438
|
|
(a)
|
The gain on bargain purchase, net of expenses, arose from the acquisition of Flagstone on November 30, 2012 and is net of transaction related expenses.
|
(b)
|
Transaction expenses incurred during 2014 relate to the acquisition of Western World. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Earnings per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average number of common shares and common share equivalents outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
81,041,974
|
|
|
83,107,236
|
|
|
90,354,745
|
|
|
102,202,274
|
|
|
97,184,110
|
|
|||||
Diluted
|
82,359,460
|
|
|
86,426,760
|
|
|
94,690,271
|
|
|
103,970,289
|
|
|
102,384,923
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share available to common shareholders
|
$
|
4.43
|
|
|
$
|
4.47
|
|
|
$
|
5.24
|
|
|
$
|
5.02
|
|
|
$
|
4.13
|
|
Earnings per diluted share available to common shareholders
|
$
|
4.36
|
|
|
$
|
4.34
|
|
|
$
|
5.07
|
|
|
$
|
4.94
|
|
|
$
|
3.99
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per share
|
$
|
1.40
|
|
|
$
|
1.28
|
|
|
$
|
1.20
|
|
|
$
|
3.20
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selected financial ratios:
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss expense ratio
(a)
|
47.4
|
%
|
|
43.5
|
%
|
|
38.4
|
%
|
|
37.0
|
%
|
|
52.0
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Policy acquisition cost ratio
(b)
|
20.0
|
%
|
|
18.3
|
%
|
|
17.0
|
%
|
|
17.1
|
%
|
|
17.6
|
%
|
|||||
General and administrative expense ratio
(c)
|
16.8
|
%
|
|
17.9
|
%
|
|
18.2
|
%
|
|
16.4
|
%
|
|
13.8
|
%
|
|||||
Expense ratio
(d)
|
36.8
|
%
|
|
36.2
|
%
|
|
35.2
|
%
|
|
33.5
|
%
|
|
31.4
|
%
|
|||||
Combined ratio
(e)
|
84.2
|
%
|
|
79.7
|
%
|
|
73.6
|
%
|
|
70.5
|
%
|
|
83.4
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on average equity
(f)
|
9.7
|
%
|
|
10.3
|
%
|
|
13.0
|
%
|
|
14.0
|
%
|
|
11.3
|
%
|
(a)
|
The losses and loss expense ratio is calculated by dividing losses and loss expenses by net premiums earned.
|
(b)
|
The policy acquisition cost ratio is calculated by dividing policy acquisition costs by net premiums earned.
|
(c)
|
The general and administrative expense ratio is calculated by dividing the sum of general and administrative expenses and share compensation expenses by net premiums earned.
|
(d)
|
The expense ratio is calculated by combining the policy acquisition cost ratio and the general and administrative expense ratio.
|
(e)
|
The combined ratio is calculated by combining the losses and loss expense ratio, the policy acquisition cost ratio and the general and administrative expense ratio.
|
(f)
|
Return on average equity is calculated by dividing the net income available to Validus common shareholders for the period by the average of the beginning, ending and intervening quarter end shareholders’ equity available to Validus common shareholders balances.
|
|
|
December 31,
|
||||||||||||||||||
(Dollars in thousands, except share and per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Investments at fair value
|
|
$
|
8,845,343
|
|
|
$
|
7,876,495
|
|
|
$
|
7,444,634
|
|
|
$
|
6,739,461
|
|
|
$
|
7,225,646
|
|
Cash and cash equivalents and restricted cash
|
|
490,932
|
|
|
796,379
|
|
|
723,404
|
|
|
929,825
|
|
|
1,138,096
|
|
|||||
Total assets
|
|
11,349,755
|
|
|
10,515,812
|
|
|
10,112,564
|
|
|
9,457,046
|
|
|
10,266,212
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reserve for losses and loss expenses
|
|
2,995,195
|
|
|
2,996,567
|
|
|
3,243,147
|
|
|
3,047,933
|
|
|
3,553,604
|
|
|||||
Unearned premiums
|
|
1,076,049
|
|
|
966,210
|
|
|
989,229
|
|
|
822,280
|
|
|
903,734
|
|
|||||
Senior notes payable
|
|
245,362
|
|
|
245,161
|
|
|
244,960
|
|
|
244,758
|
|
|
244,556
|
|
|||||
Debentures payable
|
|
537,226
|
|
|
537,668
|
|
|
539,277
|
|
|
541,416
|
|
|
540,709
|
|
|||||
Total shareholders’ equity available to Validus
|
|
$
|
3,838,291
|
|
|
$
|
3,638,975
|
|
|
$
|
3,586,586
|
|
|
$
|
3,704,094
|
|
|
$
|
4,020,827
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per common share
(a)
|
|
$
|
46.61
|
|
|
$
|
43.90
|
|
|
$
|
42.76
|
|
|
$
|
38.57
|
|
|
$
|
37.26
|
|
Book value per diluted common share
(b)
|
|
44.97
|
|
|
42.33
|
|
|
39.65
|
|
|
36.23
|
|
|
35.22
|
|
|||||
Tangible book value per common share
(c)
|
|
42.66
|
|
|
40.06
|
|
|
38.91
|
|
|
37.25
|
|
|
36.04
|
|
|||||
Tangible book value per diluted common share
(d)
|
|
$
|
41.16
|
|
|
$
|
38.63
|
|
|
$
|
36.19
|
|
|
$
|
35.03
|
|
|
$
|
34.11
|
|
(a)
|
Book value per common share is defined as total shareholders’ equity available to Validus common shareholders divided by the number of common shares outstanding as at the end of the period, giving no effect to dilutive securities.
|
(b)
|
Book value per diluted common share is calculated based on total shareholders’ equity available to Validus common shareholders plus the assumed proceeds from the exercise of outstanding options and warrants, divided by the sum of common shares, unvested restricted shares and options and warrants outstanding (assuming their exercise). Book value per diluted common share is a non-GAAP financial measure, which are described in the section entitled
“Non-GAAP Financial Measures.”
|
(c)
|
Tangible book value per common share is defined as total shareholders’ equity available to Validus common shareholders, less goodwill and other intangible assets, divided by the number of common shares outstanding as at the end of the period, giving no effect to dilutive securities. Tangible book value per common share is a non-GAAP financial measure, which are described in the section entitled “
Non-GAAP Financial Measures
.
”
|
(d)
|
Tangible book value per diluted common share is calculated based on total shareholders’ equity available to Validus common shareholders, less goodwill and other intangible assets, plus the assumed proceeds from the exercise of outstanding options and warrants, divided by the sum of common shares, unvested restricted shares and options outstanding and warrants (assuming their exercise). Tangible book value per diluted common share is a non-GAAP financial measure, which are described in the section entitled “
Non-GAAP Financial Measures.”
|
Table of Contents
|
||
Section
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
Validus Re segment premium
(a)
|
||||||||||||||||||||||
|
|
Property
|
|
Specialty
|
|
Marine
|
|
Total
|
||||||||||||||||
(Dollars in thousands)
|
|
U.S.
|
|
International
|
|
Casualty
|
|
Other Specialty
|
|
|||||||||||||||
2017
|
|
$
|
96,601
|
|
|
$
|
97,719
|
|
|
$
|
21,783
|
|
|
$
|
151,081
|
|
|
$
|
98,489
|
|
|
$
|
465,673
|
|
2016
|
|
$
|
93,782
|
|
|
$
|
92,302
|
|
|
$
|
22,643
|
|
|
$
|
137,942
|
|
|
$
|
95,310
|
|
|
$
|
441,979
|
|
Increase (Decrease)
|
|
3.0
|
%
|
|
5.9
|
%
|
|
(3.8
|
)%
|
|
9.5
|
%
|
|
3.3
|
%
|
|
5.4
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
AlphaCat segment premium
|
||||||||||||||||||||||
|
|
Property
|
|
Specialty
|
|
Marine
|
|
Total
|
||||||||||||||||
(Dollars in thousands)
|
|
U.S.
|
|
International
|
|
Casualty
|
|
Other Specialty
|
|
|||||||||||||||
2017
|
|
$
|
136,574
|
|
|
$
|
21,538
|
|
|
$
|
—
|
|
|
$
|
5,128
|
|
|
$
|
—
|
|
|
$
|
163,240
|
|
2016
|
|
$
|
127,192
|
|
|
$
|
37,942
|
|
|
$
|
—
|
|
|
$
|
3,346
|
|
|
$
|
—
|
|
|
$
|
168,480
|
|
Increase (Decrease)
|
|
7.4
|
%
|
|
(43.2
|
)%
|
|
—
|
|
|
53.3
|
%
|
|
—
|
|
|
(3.1
|
)%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Validus Re and AlphaCat segments’ combined premium
(a)
|
||||||||||||||||||||||
|
|
Property
|
|
Specialty
|
|
Marine
|
|
Total
|
||||||||||||||||
(Dollars in thousands)
|
|
U.S.
|
|
International
|
|
Casualty
|
|
Other Specialty
|
|
|||||||||||||||
2017
|
|
$
|
233,175
|
|
|
$
|
119,257
|
|
|
$
|
21,783
|
|
|
$
|
156,209
|
|
|
$
|
98,489
|
|
|
$
|
628,913
|
|
2016
|
|
$
|
220,974
|
|
|
$
|
130,244
|
|
|
$
|
22,643
|
|
|
$
|
141,288
|
|
|
$
|
95,310
|
|
|
$
|
610,459
|
|
Increase (Decrease)
|
|
5.5
|
%
|
|
(8.4
|
)%
|
|
(3.8
|
)%
|
|
10.6
|
%
|
|
3.3
|
%
|
|
3.0
|
%
|
(a)
|
The renewal data above does not include intercompany eliminations between Validus Re and Talbot.
|
|
December 31, 2016
|
|
December 31, 2015
|
Book value per diluted common share plus accumulated dividends
(a)
|
$56.53
|
|
$52.49
|
Book value per diluted common share
(a)
|
$44.97
|
|
$42.33
|
Tangible book value per diluted common share
(a)
|
$41.16
|
|
$38.63
|
(a)
|
These are non-GAAP financial measures which are described in the section entitled
“Non-GAAP Financial Measures.”
|
|
|
Years Ended December 31,
|
||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
Underwriting income
(a)
|
|
$358,346
|
|
$463,061
|
|
$529,610
|
Net operating income available to Validus common shareholders
(a)
|
|
$319,198
|
|
$409,749
|
|
$480,762
|
Return on average equity
|
|
9.7%
|
|
10.3%
|
|
13.0%
|
Net operating return on average equity
(a)
|
|
8.6%
|
|
11.3%
|
|
13.1%
|
(a)
|
This is a non-GAAP financial measure which is described in the section entitled
“Non-GAAP Financial Measures.”
|
|
|
Three Months Ended December 31,
|
||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
||||
Underwriting revenues
|
|
|
|
|
||||
Gross premiums written
|
|
$
|
339,454
|
|
|
$
|
309,605
|
|
Reinsurance premiums ceded
|
|
(40,635
|
)
|
|
(33,128
|
)
|
||
Net premiums written
|
|
298,819
|
|
|
276,477
|
|
||
Change in unearned premiums
|
|
241,580
|
|
|
266,823
|
|
||
Net premiums earned
|
|
540,399
|
|
|
543,300
|
|
||
Other insurance related income
|
|
561
|
|
|
969
|
|
||
Total underwriting revenues
|
|
540,960
|
|
|
544,269
|
|
||
Underwriting deductions
|
|
|
|
|
||||
Losses and loss expenses
|
|
275,126
|
|
|
214,748
|
|
||
Policy acquisition costs
|
|
120,889
|
|
|
102,285
|
|
||
General and administrative expenses
|
|
77,955
|
|
|
98,563
|
|
||
Share compensation expenses
|
|
10,442
|
|
|
10,062
|
|
||
Total underwriting deductions
|
|
484,412
|
|
|
425,658
|
|
||
Underwriting income
(a)
|
|
$
|
56,548
|
|
|
$
|
118,611
|
|
Net investment income
|
|
38,153
|
|
|
31,612
|
|
||
Finance expenses
|
|
(14,630
|
)
|
|
(16,581
|
)
|
||
Dividends on preferred shares
|
|
(2,203
|
)
|
|
—
|
|
||
Tax benefit
|
|
21,147
|
|
|
756
|
|
||
Loss from operating affiliate
|
|
—
|
|
|
(1,708
|
)
|
||
(Income) attributable to AlphaCat investors
|
|
(7,080
|
)
|
|
(974
|
)
|
||
Net (income) attributable to noncontrolling interests
|
|
(27,612
|
)
|
|
(26,321
|
)
|
||
Net operating income available to Validus common shareholders
(a)
|
|
$
|
64,323
|
|
|
$
|
105,395
|
|
|
|
|
|
|
||||
Supplemental information:
|
|
|
|
|
||||
Losses and loss expenses:
|
|
|
|
|
||||
Current period excluding items below
|
|
$
|
269,301
|
|
|
$
|
272,889
|
|
Current period—notable loss events
|
|
52,310
|
|
|
(86
|
)
|
||
Current period—non-notable loss events
|
|
302
|
|
|
56
|
|
||
Change in prior accident years
|
|
(46,787
|
)
|
|
(58,111
|
)
|
||
Total losses and loss expenses
|
|
$
|
275,126
|
|
|
$
|
214,748
|
|
|
|
|
|
|
||||
Selected ratios:
|
|
|
|
|
||||
Ratio of net to gross premiums written
|
|
88.0
|
%
|
|
89.3
|
%
|
||
Losses and loss expense ratio:
|
|
|
|
|
||||
Current period excluding items below
|
|
49.8
|
%
|
|
50.2
|
%
|
||
Current period—notable loss events
|
|
9.7
|
%
|
|
—
|
%
|
||
Current period—non-notable loss events
|
|
0.1
|
%
|
|
—
|
%
|
||
Change in prior accident years
|
|
(8.7
|
)%
|
|
(10.7
|
)%
|
||
Losses and loss expense ratio
|
|
50.9
|
%
|
|
39.5
|
%
|
||
Policy acquisition cost ratio
|
|
22.4
|
%
|
|
18.8
|
%
|
||
General and administrative expense ratio
(b)
|
|
16.3
|
%
|
|
20.0
|
%
|
||
Expense ratio
|
|
38.7
|
%
|
|
38.8
|
%
|
||
Combined ratio
|
|
89.6
|
%
|
|
78.3
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written
for the
three months ended
December 31, 2016
were
$339.5 million
compared to
$309.6 million
for the
three months ended
December 31, 2015
,
an increase
of
$29.8 million
, or
9.6%
. The increase was primarily driven by increases in the Validus Re and Western World segments and was partially offset by decreases in the Talbot and AlphaCat segments.
|
•
|
Underwriting revenues
for the
three months ended
December 31, 2016
were
$541.0 million
compared to
$544.3 million
for the
three months ended
December 31, 2015
,
a decrease
of
$3.3 million
or
0.6%
.
|
•
|
Losses and loss expenses
for the
three months ended
December 31, 2016
were
$275.1 million
compared to
$214.7 million
for the
three months ended
December 31, 2015
,
an increase
of
$60.4 million
or
28.1%
. The increase was primarily driven by an increase in notable loss events during the
three months ended
December 31, 2016
.
|
•
|
The Company defines a notable loss event as an event whereby consolidated net losses and loss expenses aggregate to a threshold greater than or equal to $30.0 million. The Company defines a non-notable loss event as an event whereby consolidated net losses and loss expenses aggregate to a threshold greater than or equal to $15.0 million but less than $30.0 million.
|
•
|
There were no non-notable loss events occurring during the
three months ended
December 31, 2016
. There were no notable or non-notable loss events occurring during the
three months ended
December 31, 2015
. Losses and loss expenses incurred from notable loss events during the three months ended December 31, 2016 included losses and loss expenses from the fourth quarter 2016 notable loss events, Hurricane Matthew and the 2016 New Zealand earthquake, and were partially offset by a reduction on the second quarter 2016 notable loss event, the Canadian Wildfires, as follows:
|
|
|
Three Months Ended December 31, 2016
|
||||||||||||||
|
|
Notable Loss Events
|
|
Total
|
||||||||||||
(Dollars in thousands)
|
|
Hurricane Matthew
|
|
2016 New Zealand Earthquake
|
|
Canadian Wildfires
|
|
|||||||||
Net Losses and Loss Expenses
|
|
$
|
39,140
|
|
|
$
|
31,421
|
|
|
$
|
(18,251
|
)
|
|
$
|
52,310
|
|
Less: Net Losses and Loss Expenses Attributable to AlphaCat Third Party Investors and Noncontrolling Interests
|
|
(8,943
|
)
|
|
(9,068
|
)
|
|
2,726
|
|
|
(15,285
|
)
|
||||
Validus’ Share of Net Losses and Loss Expenses
|
|
30,197
|
|
|
22,353
|
|
|
(15,525
|
)
|
|
37,025
|
|
||||
Less: Reinstatement Premiums, net
|
|
(2,781
|
)
|
|
(65
|
)
|
|
2,136
|
|
|
(710
|
)
|
||||
Net Loss Attributable to Validus
|
|
$
|
27,416
|
|
|
$
|
22,288
|
|
|
$
|
(13,389
|
)
|
|
$
|
36,315
|
|
•
|
For the
three months ended
December 31, 2016
, losses and loss expenses from notable loss events were
$52.3 million
, or
9.7
percentage points of the loss ratio. Net of losses attributable to AlphaCat investors and noncontrolling interests of
$15.3 million
and reinstatement premiums of
$0.7 million
, the net loss attributable to the Company from these events was
$36.3 million
.
|
•
|
The loss ratio for the
three months ended
December 31, 2016
was
50.9%
, which included
$46.8 million
of
favorable
loss reserve development on prior accident years, benefiting the loss ratio by
8.7
percentage points compared to a loss ratio for the
three months ended
December 31, 2015
of
39.5%
, which included
$58.1 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
10.7
percentage points. The
favorable
loss reserve development on prior accident years of
$46.8 million
was primarily due to favorable development on attritional losses of $41.5 million and favorable development on events of $5.3 million. The favorable loss reserve development on prior accident years of
$58.1 million
was primarily due to favorable development of attritional losses of $48.1 million and favorable development on events of $10.0 million. The term “events” refers to aggregate notable and non-notable losses incurred.
|
•
|
The combined ratio for the
three months ended
December 31, 2016
was
89.6%
compared to
78.3%
for the
three months ended
December 31, 2015
,
an increase
of
11.3
percentage points.
|
•
|
Loss ratios by line of business for the
three months ended
December 31, 2016
and
2015
were as follows:
|
•
|
Policy acquisition costs
for the
three months ended
December 31, 2016
were
$120.9 million
compared to
$102.3 million
for the
three months ended
December 31, 2015
,
an increase
of
$18.6 million
or
18.2%
. The increase was primarily driven by an increase in the Validus Re segment as a result of profit commissions on agriculture business.
|
•
|
General and administrative expenses
for the
three months ended
December 31, 2016
were
$78.0 million
compared to
$98.6 million
for the
three months ended
December 31, 2015
,
a decrease
of
$20.6 million
or
20.9%
. The decrease was primarily driven by a decrease in the performance bonus accrual.
|
•
|
Underwriting income
for the
three months ended
December 31, 2016
was
$56.5 million
compared to
$118.6 million
for the
three months ended
December 31, 2015
,
a decrease
of
$62.1 million
or
52.3%
primarily as a result of the changes in underwriting revenues and deductions described above.
|
•
|
Net operating income available to Validus common shareholders
for the
three months ended
December 31, 2016
was
$64.3 million
compared to
$105.4 million
for the
three months ended
December 31, 2015
,
a decrease
of
$41.1 million
, or
39.0%
.
|
|
|
Three Months Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
|
$
|
10,533
|
|
|
$
|
(4,178
|
)
|
|
$
|
32,480
|
|
|
$38,835
|
|
$
|
15,563
|
|
|
$
|
(681
|
)
|
|
$
|
(533
|
)
|
|
$
|
14,349
|
|
||
Reinsurance premiums ceded
|
|
99
|
|
|
22
|
|
|
(27
|
)
|
|
94
|
|
|
(305
|
)
|
|
69
|
|
|
149
|
|
|
(87
|
)
|
||||||||
Net premiums written
|
|
10,632
|
|
|
(4,156
|
)
|
|
32,453
|
|
|
38,929
|
|
|
15,258
|
|
|
(612
|
)
|
|
(384
|
)
|
|
14,262
|
|
||||||||
Change in unearned premiums
|
|
87,112
|
|
|
28,203
|
|
|
70,269
|
|
|
185,584
|
|
|
92,252
|
|
|
34,938
|
|
|
90,462
|
|
|
217,652
|
|
||||||||
Net premiums earned
|
|
97,744
|
|
|
24,047
|
|
|
102,722
|
|
|
224,513
|
|
|
107,510
|
|
|
34,326
|
|
|
90,078
|
|
|
231,914
|
|
||||||||
Other insurance related income
|
|
|
|
|
|
|
|
52
|
|
|
|
|
|
|
|
|
257
|
|
||||||||||||||
Total underwriting revenues
|
|
|
|
|
|
|
|
224,565
|
|
|
|
|
|
|
|
|
232,171
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses
|
|
39,221
|
|
|
5,034
|
|
|
53,801
|
|
|
98,056
|
|
|
30,061
|
|
|
11,272
|
|
|
59,152
|
|
|
100,485
|
|
||||||||
Policy acquisition costs
|
|
17,207
|
|
|
5,459
|
|
|
30,714
|
|
|
53,380
|
|
|
16,601
|
|
|
6,766
|
|
|
14,111
|
|
|
37,478
|
|
||||||||
Total underwriting deductions before G&A
|
|
56,428
|
|
|
10,493
|
|
|
84,515
|
|
|
151,436
|
|
|
46,662
|
|
|
18,038
|
|
|
73,263
|
|
|
137,963
|
|
||||||||
Underwriting income before G&A
|
|
$
|
41,316
|
|
|
$
|
13,554
|
|
|
$
|
18,207
|
|
|
$
|
73,129
|
|
|
$
|
60,848
|
|
|
$
|
16,288
|
|
|
$
|
16,815
|
|
|
$
|
94,208
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
20,191
|
|
|
|
|
|
|
|
|
20,174
|
|
||||||||||||||
Share compensation expenses
|
|
|
|
|
|
|
|
2,663
|
|
|
|
|
|
|
|
|
2,685
|
|
||||||||||||||
Total underwriting deductions
|
|
|
|
|
|
|
|
174,290
|
|
|
|
|
|
|
|
|
160,822
|
|
||||||||||||||
Underwriting income
(a)
|
|
|
|
|
|
|
|
$
|
50,275
|
|
|
|
|
|
|
|
|
$
|
71,349
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
$
|
25,966
|
|
|
$
|
13,844
|
|
|
$
|
66,661
|
|
|
$
|
106,471
|
|
|
$
|
41,899
|
|
|
$
|
21,231
|
|
|
$
|
59,577
|
|
|
$
|
122,707
|
|
Current period—notable loss events
|
|
19,108
|
|
|
1,420
|
|
|
—
|
|
|
20,528
|
|
|
12
|
|
|
276
|
|
|
—
|
|
|
288
|
|
||||||||
Current period—non-notable loss events
|
|
(1
|
)
|
|
(762
|
)
|
|
759
|
|
|
(4
|
)
|
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
||||||||
Change in prior accident years
|
|
(5,852
|
)
|
|
(9,468
|
)
|
|
(13,619
|
)
|
|
(28,939
|
)
|
|
(11,906
|
)
|
|
(10,235
|
)
|
|
(425
|
)
|
|
(22,566
|
)
|
||||||||
Total losses and loss expenses
|
|
$
|
39,221
|
|
|
$
|
5,034
|
|
|
$
|
53,801
|
|
|
$
|
98,056
|
|
|
$
|
30,061
|
|
|
$
|
11,272
|
|
|
$
|
59,152
|
|
|
$
|
100,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratio of net to gross premiums written
|
|
100.9
|
%
|
|
99.5
|
%
|
|
99.9
|
%
|
|
100.2
|
%
|
|
98.0
|
%
|
|
89.9
|
%
|
|
72.0
|
%
|
|
99.4
|
%
|
||||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
26.6
|
%
|
|
57.6
|
%
|
|
65.0
|
%
|
|
47.5
|
%
|
|
39.0
|
%
|
|
61.9
|
%
|
|
66.2
|
%
|
|
52.9
|
%
|
||||||||
Current period—notable loss events
|
|
19.5
|
%
|
|
5.9
|
%
|
|
—
|
%
|
|
9.1
|
%
|
|
—
|
%
|
|
0.8
|
%
|
|
—
|
%
|
|
0.1
|
%
|
||||||||
Current period—non-notable loss events
|
|
—
|
%
|
|
(3.2
|
)%
|
|
0.7
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||||
Change in prior accident years
|
|
(6.0
|
)%
|
|
(39.4
|
)%
|
|
(13.3
|
)%
|
|
(12.9
|
)%
|
|
(11.1
|
)%
|
|
(29.8
|
)%
|
|
(0.5
|
)%
|
|
(9.7
|
)%
|
||||||||
Losses and loss expense ratio
|
|
40.1
|
%
|
|
20.9
|
%
|
|
52.4
|
%
|
|
43.7
|
%
|
|
28.0
|
%
|
|
32.9
|
%
|
|
65.7
|
%
|
|
43.3
|
%
|
||||||||
Policy acquisition cost ratio
|
|
17.6
|
%
|
|
22.7
|
%
|
|
29.9
|
%
|
|
23.8
|
%
|
|
15.4
|
%
|
|
19.7
|
%
|
|
15.7
|
%
|
|
16.1
|
%
|
||||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
9.9
|
%
|
||||||||||||||
Expense ratio
|
|
|
|
|
|
|
|
33.9
|
%
|
|
|
|
|
|
|
|
26.0
|
%
|
||||||||||||||
Combined ratio
|
|
|
|
|
|
|
|
77.6
|
%
|
|
|
|
|
|
|
|
69.3
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written for the
three months ended
December 31, 2016
were
$38.8 million
compared to
$14.3 million
for the
three months ended
December 31, 2015
,
an increase
of
$24.5 million
, or
170.6%
. Gross premiums written for the
three months ended
December 31, 2016
included
$10.5 million
of property premiums,
$(4.2) million
of marine premiums and
$32.5 million
of specialty premiums, compared to
$15.6 million
of property premiums,
$(0.7) million
of marine premiums and
$(0.5) million
of specialty premiums for the
three months ended
December 31, 2015
. The
increase
in the specialty lines of
$33.0 million
was primarily driven by new casualty business of
$24.9 million
and growth in the financial lines of
$9.3 million
. Partially offsetting this increase were decreases in the property and marine lines of
$5.0 million
and
$3.5 million
, respectively.
|
•
|
The loss ratio for the
three months ended
December 31, 2016
was
43.7%
, which included
$28.9 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
12.9
percentage points compared to a loss ratio for the
three months ended December 31, 2015
of
43.3%
, which included
$22.6 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
9.7
percentage points. The loss ratio for the
three months ended
December 31, 2016
included losses on fourth quarter 2016 notable loss events of $32.5 million, or 14.4 percentage points of the loss ratio. Partially offsetting these losses was a reduction on the second quarter 2016 notable loss event, the Canadian Wildfires, of
$12.0 million
, benefiting the loss ratio by
5.3
percentage points, for total notable losses of
$20.5 million
or
9.1
percentage points of the loss ratio. The favorable development of
$28.9 million
on prior accident years for the
three months ended
December 31, 2016
was primarily due to favorable development on attritional losses of $24.3 million and favorable development on events of $4.6 million.
|
•
|
Policy acquisition costs for the
three months ended
December 31, 2016
were
$53.4 million
compared to
$37.5 million
for the
three months ended
December 31, 2015
,
an increase
of
$15.9 million
or
42.4%
. The increase was primarily driven by an increase in the specialty lines as a result of profit commissions on agriculture business.
|
•
|
The combined ratio for the
three months ended
December 31, 2016
was
77.6%
compared to
69.3%
for the
three months ended
December 31, 2015
,
an increase
of
8.3
percentage points.
|
•
|
Underwriting income for the three months ended
December 31, 2016
was
$50.3 million
compared to
$71.3 million
for the
three months ended
December 31, 2015
,
a decrease
of
$21.1 million
, or
29.5%
.
|
|
|
Three Months Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
|
$
|
71,371
|
|
|
$
|
39,635
|
|
|
$
|
107,638
|
|
|
$218,644
|
|
$
|
73,926
|
|
|
$
|
60,648
|
|
|
$
|
95,113
|
|
|
$
|
229,687
|
|
||
Reinsurance premiums ceded
|
|
(20,022
|
)
|
|
(3,049
|
)
|
|
(15,162
|
)
|
|
(38,233
|
)
|
|
(21,957
|
)
|
|
(1,921
|
)
|
|
(10,874
|
)
|
|
(34,752
|
)
|
||||||||
Net premiums written
|
|
51,349
|
|
|
36,586
|
|
|
92,476
|
|
|
180,411
|
|
|
51,969
|
|
|
58,727
|
|
|
84,239
|
|
|
194,935
|
|
||||||||
Change in unearned premiums
|
|
3,381
|
|
|
15,605
|
|
|
(24,877
|
)
|
|
(5,891
|
)
|
|
2,834
|
|
|
14,192
|
|
|
(8,041
|
)
|
|
8,985
|
|
||||||||
Net premiums earned
|
|
54,730
|
|
|
52,191
|
|
|
67,599
|
|
|
174,520
|
|
|
54,803
|
|
|
72,919
|
|
|
76,198
|
|
|
203,920
|
|
||||||||
Other insurance related income
|
|
|
|
|
|
|
|
66
|
|
|
|
|
|
|
|
|
287
|
|
||||||||||||||
Total underwriting revenues
|
|
|
|
|
|
|
|
174,586
|
|
|
|
|
|
|
|
|
204,207
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses
|
|
46,028
|
|
|
33,053
|
|
|
26,594
|
|
|
105,675
|
|
|
21,911
|
|
|
25,941
|
|
|
30,958
|
|
|
78,810
|
|
||||||||
Policy acquisition costs
|
|
9,132
|
|
|
14,816
|
|
|
18,735
|
|
|
42,683
|
|
|
8,474
|
|
|
18,504
|
|
|
19,219
|
|
|
46,197
|
|
||||||||
Total underwriting deductions before G&A
|
|
55,160
|
|
|
47,869
|
|
|
45,329
|
|
|
148,358
|
|
|
30,385
|
|
|
44,445
|
|
|
50,177
|
|
|
125,007
|
|
||||||||
Underwriting (loss) income before G&A
|
|
$
|
(430
|
)
|
|
$
|
4,322
|
|
|
$
|
22,270
|
|
|
$
|
26,228
|
|
|
$
|
24,418
|
|
|
$
|
28,474
|
|
|
$
|
26,021
|
|
|
$
|
79,200
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
24,550
|
|
|
|
|
|
|
|
|
39,965
|
|
||||||||||||||
Share compensation expenses
|
|
|
|
|
|
|
|
3,123
|
|
|
|
|
|
|
|
|
3,178
|
|
||||||||||||||
Total underwriting deductions
|
|
|
|
|
|
|
|
176,031
|
|
|
|
|
|
|
|
|
168,150
|
|
||||||||||||||
Underwriting (loss) income
(a)
|
|
|
|
|
|
|
|
$
|
(1,445
|
)
|
|
|
|
|
|
|
|
$
|
36,057
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
$
|
44,917
|
|
|
$
|
30,865
|
|
|
$
|
33,431
|
|
|
$
|
109,213
|
|
|
$
|
27,028
|
|
|
$
|
39,192
|
|
|
$
|
36,076
|
|
|
$
|
102,296
|
|
Current period—notable loss events
|
|
8,379
|
|
|
3,414
|
|
|
608
|
|
|
12,401
|
|
|
135
|
|
|
(509
|
)
|
|
—
|
|
|
(374
|
)
|
||||||||
Current period—non-notable loss events
|
|
131
|
|
|
1
|
|
|
—
|
|
|
132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Change in prior accident years
|
|
(7,399
|
)
|
|
(1,227
|
)
|
|
(7,445
|
)
|
|
(16,071
|
)
|
|
(5,252
|
)
|
|
(12,742
|
)
|
|
(5,118
|
)
|
|
(23,112
|
)
|
||||||||
Total losses and loss expenses
|
|
$
|
46,028
|
|
|
$
|
33,053
|
|
|
$
|
26,594
|
|
|
$
|
105,675
|
|
|
$
|
21,911
|
|
|
$
|
25,941
|
|
|
$
|
30,958
|
|
|
$
|
78,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratio of net to gross premiums written
|
|
71.9
|
%
|
|
92.3
|
%
|
|
85.9
|
%
|
|
82.5
|
%
|
|
70.3
|
%
|
|
96.8
|
%
|
|
88.6
|
%
|
|
84.9
|
%
|
||||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
82.1
|
%
|
|
59.2
|
%
|
|
49.4
|
%
|
|
62.6
|
%
|
|
49.4
|
%
|
|
53.8
|
%
|
|
47.3
|
%
|
|
50.1
|
%
|
||||||||
Current period—notable loss events
|
|
15.3
|
%
|
|
6.5
|
%
|
|
0.9
|
%
|
|
7.1
|
%
|
|
0.2
|
%
|
|
(0.7
|
)%
|
|
—
|
%
|
|
(0.2
|
)%
|
||||||||
Current period—non-notable loss events
|
|
0.2
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||||
Change in prior accident years
|
|
(13.5
|
)%
|
|
(2.4
|
)%
|
|
(11.0
|
)%
|
|
(9.2
|
)%
|
|
(9.6
|
)%
|
|
(17.5
|
)%
|
|
(6.7
|
)%
|
|
(11.3
|
)%
|
||||||||
Losses and loss expense ratio
|
|
84.1
|
%
|
|
63.3
|
%
|
|
39.3
|
%
|
|
60.6
|
%
|
|
40.0
|
%
|
|
35.6
|
%
|
|
40.6
|
%
|
|
38.6
|
%
|
||||||||
Policy acquisition cost ratio
|
|
16.7
|
%
|
|
28.4
|
%
|
|
27.7
|
%
|
|
24.5
|
%
|
|
15.5
|
%
|
|
25.4
|
%
|
|
25.2
|
%
|
|
22.7
|
%
|
||||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
|
|
15.8
|
%
|
|
|
|
|
|
|
|
21.2
|
%
|
||||||||||||||
Expense ratio
|
|
|
|
|
|
|
|
40.3
|
%
|
|
|
|
|
|
|
|
43.9
|
%
|
||||||||||||||
Combined ratio
|
|
|
|
|
|
|
|
100.9
|
%
|
|
|
|
|
|
|
|
82.5
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written for the
three months ended
December 31, 2016
were
$218.6 million
compared to
$229.7 million
for the
three months ended
December 31, 2015
,
a decrease
of
$11.0 million
, or
4.8%
. Gross premiums written for the
three months ended
December 31, 2016
included
$71.4 million
of property premiums,
$39.6 million
of marine premiums and
$107.6 million
of specialty premiums compared to
$73.9 million
of property premiums,
$60.6 million
of marine premiums and
$95.1 million
of specialty premiums for the
three months ended
December 31, 2015
. The
decrease
in the marine lines of
$21.0 million
was primarily driven by decreases in the upstream energy and cargo classes as a result of reductions in our participation and non-renewals on various programs due to the current rate environment and premium adjustments on prior year policies. This decrease was partially offset by an
increase
in gross premiums written in the specialty lines of
$12.5 million
, primarily due to increases in the contingency, political lines and financial lines classes of
$10.0 million
,
$7.6 million
and
$4.1 million
, respectively.
|
•
|
Net premiums earned for the
three months ended
December 31, 2016
were
$174.5 million
compared to
$203.9 million
for the
three months ended
December 31, 2015
,
a decrease
of
$29.4 million
or
14.4%
. The decrease was driven primarily by the decline in gross premiums written in the marine lines and slower earnings patterns on longer-term contracts in the specialty lines during the twelve months ended December 31, 2016. Also contributing to the decrease was the impact of reinstatement premiums payable during the
three months ended
December 31, 2016
.
|
•
|
The loss ratio for the
three months ended
December 31, 2016
was
60.6%
, which included
$16.1 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
9.2
percentage points compared to a loss ratio for the
three months ended December 31, 2015
of
38.6%
, which included
$23.1 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
11.3
percentage points. The loss ratio for the
three months ended
December 31, 2016
included losses on fourth quarter 2016 notable loss events of $14.6 million, or 8.4 percentage points of the loss ratio. Partially offsetting these losses was a reduction on the second quarter 2016 notable loss event, the Canadian Wildfires, of
$2.2 million
, benefiting the loss ratio by
1.3
percentage points, for total notable losses of
$12.4 million
or
7.1
percentage points of the loss ratio. The favorable development of
$16.1 million
on prior accident years for the
three months ended
December 31, 2016
is primarily due to favorable development on attritional losses.
|
•
|
General and administrative expenses for the
three months ended
December 31, 2016
were
$24.6 million
compared to
$40.0 million
for the
three months ended
December 31, 2015
,
a decrease
of
$15.4 million
, or
38.6%
. The decrease was primarily due to the impact of foreign exchange and a reduction in the performance bonus accrual.
|
•
|
The combined ratio for the
three months ended
December 31, 2016
was
100.9%
compared to
82.5%
for the
three months ended
December 31, 2015
, an
increase
of
18.4
percentage points.
|
•
|
Underwriting loss for the three months ended
December 31, 2016
was
$1.4 million
compared to income of
$36.1 million
for the
three months ended
December 31, 2015
,
a decrease
of
$37.5 million
, or
104.0%
.
|
|
|
Three Months Ended December 31,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Liability
|
|
Total
|
|
Property
|
|
Liability
|
|
Total
|
||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gross premiums written
|
|
$
|
29,039
|
|
|
$
|
57,991
|
|
|
$87,030
|
|
$
|
13,884
|
|
|
$
|
57,248
|
|
|
$
|
71,132
|
|
||
Reinsurance premiums ceded
|
|
(3,675
|
)
|
|
(3,612
|
)
|
|
(7,287
|
)
|
|
(1,167
|
)
|
|
(4,320
|
)
|
|
(5,487
|
)
|
||||||
Net premiums written
|
|
25,364
|
|
|
54,379
|
|
|
79,743
|
|
|
12,717
|
|
|
52,928
|
|
|
65,645
|
|
||||||
Change in unearned premiums
|
|
(5,280
|
)
|
|
816
|
|
|
(4,464
|
)
|
|
(1,139
|
)
|
|
(2,786
|
)
|
|
(3,925
|
)
|
||||||
Net premiums earned
|
|
20,084
|
|
|
55,195
|
|
|
75,279
|
|
|
11,578
|
|
|
50,142
|
|
|
61,720
|
|
||||||
Other insurance related income
|
|
|
|
|
|
216
|
|
|
|
|
|
|
257
|
|
||||||||||
Total underwriting revenues
|
|
|
|
|
|
75,495
|
|
|
|
|
|
|
61,977
|
|
||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses
|
|
16,634
|
|
|
37,555
|
|
|
54,189
|
|
|
2,787
|
|
|
30,993
|
|
|
33,780
|
|
||||||
Policy acquisition costs
|
|
5,175
|
|
|
12,563
|
|
|
17,738
|
|
|
2,886
|
|
|
11,412
|
|
|
14,298
|
|
||||||
Total underwriting deductions before G&A
|
|
21,809
|
|
|
50,118
|
|
|
71,927
|
|
|
5,673
|
|
|
42,405
|
|
|
48,078
|
|
||||||
Underwriting (loss) income before G&A
|
|
$
|
(1,725
|
)
|
|
$
|
5,077
|
|
|
$
|
3,568
|
|
|
$
|
5,905
|
|
|
$
|
7,737
|
|
|
$
|
13,899
|
|
General and administrative expenses
|
|
|
|
|
|
9,576
|
|
|
|
|
|
|
9,578
|
|
||||||||||
Share compensation expenses
|
|
|
|
|
|
718
|
|
|
|
|
|
|
558
|
|
||||||||||
Total underwriting deductions
|
|
|
|
|
|
82,221
|
|
|
|
|
|
|
58,214
|
|
||||||||||
Underwriting (loss) income
(a)
|
|
|
|
|
|
$
|
(6,726
|
)
|
|
|
|
|
|
$
|
3,763
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current period excluding items below
|
|
$
|
13,297
|
|
|
$
|
38,078
|
|
|
$
|
51,375
|
|
|
$
|
4,184
|
|
|
$
|
36,924
|
|
|
$
|
41,108
|
|
Current period—notable loss events
|
|
3,400
|
|
|
—
|
|
|
3,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Current period—non-notable loss events
|
|
62
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Change in prior accident years
|
|
(125
|
)
|
|
(523
|
)
|
|
(648
|
)
|
|
(1,397
|
)
|
|
(5,931
|
)
|
|
(7,328
|
)
|
||||||
Total losses and loss expenses
|
|
$
|
16,634
|
|
|
$
|
37,555
|
|
|
$
|
54,189
|
|
|
$
|
2,787
|
|
|
$
|
30,993
|
|
|
$
|
33,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of net to gross premiums written
|
|
87.3
|
%
|
|
93.8
|
%
|
|
91.6
|
%
|
|
91.6
|
%
|
|
92.5
|
%
|
|
92.3
|
%
|
||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current period excluding items below
|
|
66.2
|
%
|
|
68.9
|
%
|
|
68.3
|
%
|
|
36.2
|
%
|
|
73.6
|
%
|
|
66.6
|
%
|
||||||
Current period—notable loss events
|
|
16.9
|
%
|
|
—
|
%
|
|
4.5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||
Current period—non-notable loss events
|
|
0.3
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||
Change in prior accident years
|
|
(0.6
|
)%
|
|
(0.9
|
)%
|
|
(0.9
|
)%
|
|
(12.1
|
)%
|
|
(11.8
|
)%
|
|
(11.9
|
)%
|
||||||
Losses and loss expense ratio
|
|
82.8
|
%
|
|
68.0
|
%
|
|
72.0
|
%
|
|
24.1
|
%
|
|
61.8
|
%
|
|
54.7
|
%
|
||||||
Policy acquisition cost ratio
|
|
25.8
|
%
|
|
22.8
|
%
|
|
23.5
|
%
|
|
24.9
|
%
|
|
22.8
|
%
|
|
23.2
|
%
|
||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
13.7
|
%
|
|
|
|
|
|
16.4
|
%
|
||||||||||
Expense ratio
|
|
|
|
|
|
37.2
|
%
|
|
|
|
|
|
39.6
|
%
|
||||||||||
Combined ratio
|
|
|
|
|
|
109.2
|
%
|
|
|
|
|
|
94.3
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written for the
three months ended
December 31, 2016
were
$87.0 million
compared to
$71.1 million
for the
three months ended
December 31, 2015
,
an increase
of
$15.9 million
, or
22.3%
. Gross premiums written for the
three months ended
December 31, 2016
included
$29.0 million
of property premiums and
$58.0 million
of liability premiums, compared to
$13.9 million
of property premiums and
$57.2 million
of liability premiums for the
three months ended
December 31, 2015
. The
increase
in gross premiums written in the property lines of
$15.2 million
was primarily due to additional business written in the programs property, commercial package property, and brokerage property classes of $5.6 million, $3.9 million, and $3.1 million, respectively, as a result of the continued build out of the underwriting platform in short-tail lines.
|
•
|
The loss ratio for the
three months ended
December 31, 2016
was
72.0%
, which included
$0.6 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
0.9
percentage points compared to a loss ratio for the
three months ended December 31, 2015
of
54.7%
, which included
$7.3 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
11.9
percentage points. The loss ratio for the
three months ended
December 31, 2016
included losses on fourth quarter 2016 notable loss events of
$3.4 million
, or
4.5
percentage points of the loss ratio and other U.S.-based weather losses of $2.8 million, or 3.7 percentage points of the loss ratio. The favorable development of
$7.3 million
on prior accident years for the
three months ended December 31, 2015
is primarily due to favorable development on attritional losses and the amortization of the risk premium adjustment accounted for at the time of the acquisition of Western World.
|
•
|
The combined ratio for the
three months ended
December 31, 2016
was
109.2%
compared to
94.3%
for the
three months ended
December 31, 2015
, an
increase
of
14.9
percentage points. The increase was driven by lower favorable development on prior accident years and higher losses and loss expenses on notable loss events and U.S.-based weather losses during the three months ended December 31, 2016.
|
•
|
Underwriting loss for the
three months ended
December 31, 2016
was
$6.7 million
compared to income of
$3.8 million
for the
three months ended
December 31, 2015
,
a decrease
of
$10.5 million
.
|
|
|
Three Months Ended December 31,
|
||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
|
||||
Third party
|
|
$
|
3,928
|
|
|
$
|
5,039
|
|
Related party
|
|
737
|
|
|
1,251
|
|
||
Total revenues
|
|
4,665
|
|
|
6,290
|
|
||
|
|
|
|
|
||||
Expenses
|
|
|
|
|
||||
General and administrative expenses
|
|
2,676
|
|
|
3,232
|
|
||
Share compensation expenses
|
|
82
|
|
|
140
|
|
||
Finance expenses
|
|
33
|
|
|
53
|
|
||
Tax expenses
|
|
90
|
|
|
—
|
|
||
Foreign exchange losses (gains)
|
|
2
|
|
|
(7
|
)
|
||
Total expenses
|
|
2,883
|
|
|
3,418
|
|
||
Income before investment income from AlphaCat Funds and Sidecars
|
|
$
|
1,782
|
|
|
$
|
2,872
|
|
|
|
|
|
|
||||
Investment income (loss) from AlphaCat Funds and Sidecars
(b)
|
|
|
|
|
||||
AlphaCat Sidecars
|
|
14
|
|
|
1,618
|
|
||
AlphaCat ILS Funds - Lower Risk
(c)
|
|
1,998
|
|
|
2,037
|
|
||
AlphaCat ILS Funds - Higher Risk
(c)
|
|
1,864
|
|
|
1,820
|
|
||
BetaCat ILS Funds
|
|
644
|
|
|
461
|
|
||
PaCRe
|
|
—
|
|
|
(1,708
|
)
|
||
Total investment income from AlphaCat Funds and Sidecars
|
|
4,520
|
|
|
4,228
|
|
||
Validus’ share of AlphaCat segment income
|
|
$
|
6,302
|
|
|
$
|
7,100
|
|
|
|
|
|
|
||||
Supplemental information:
|
|
|
|
|
||||
Gross premiums written
|
|
|
|
|
||||
AlphaCat Sidecars
|
|
$
|
(163
|
)
|
|
$
|
329
|
|
AlphaCat ILS Funds - Lower Risk
(c)
|
|
(19
|
)
|
|
1,275
|
|
||
AlphaCat ILS Funds - Higher Risk
(c)
|
|
(105
|
)
|
|
36
|
|
||
AlphaCat Direct
(d)
|
|
23
|
|
|
(5
|
)
|
||
Total
|
|
$
|
(264
|
)
|
|
$
|
1,635
|
|
(a)
|
In presenting the Company’s results, management has included and discussed the results of AlphaCat, which are presented on an asset manager basis. Validus’ share of AlphaCat income is a non-GAAP measure and is not calculated under standards or rules that comprise U.S. GAAP. Further discussion of these measures is presented in the section entitled
“Non-GAAP Financial Measures.”
|
(b)
|
The investment income from the AlphaCat funds and sidecars is based on equity accounting.
|
(c)
|
Lower risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of less than 7%, whereas higher risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of greater than 7%. Expected loss represents the average annual loss over the set of simulation scenarios divided by the total limit.
|
(d)
|
AlphaCat Direct includes direct investments from third party investors in AlphaCat Re.
|
•
|
AlphaCat’s assets under management increased during the fourth quarter 2016 to
$2,741.3 million
as at
January 1, 2017
, compared to
$2,615.1 million
as at
October 1, 2016
. Third party assets under management were
$2,498.6 million
as at
January 1, 2017
, compared to
$2,292.6 million
as at
October 1, 2016
.
|
•
|
Revenues earned for the
three months ended
December 31, 2016
were
$4.7 million
, of which
$3.9 million
were earned from third parties, compared to
$6.3 million
for the
three months ended
December 31, 2015
, of which
$5.0 million
were earned from third parties. The decrease in revenues earned from third parties of
$1.1 million
was driven by a decrease in performance fees earned as a result of the notable loss events incurred during the
three months ended
December 31, 2016
.
|
•
|
Total expenses for the
three months ended
December 31, 2016
were
$2.9 million
, compared to
$3.4 million
for the
three months ended
December 31, 2015
,
a decrease
of
$0.5 million
, or
15.7%
.
|
•
|
Income before investment income from AlphaCat Funds and Sidecars for the
three months ended
December 31, 2016
was
$1.8 million
, compared to
$2.9 million
for the
three months ended
December 31, 2015
,
a decrease
of
$1.1 million
, or
38.0%
.
|
•
|
Investment income from AlphaCat Funds and Sidecars, excluding PaCRe which was off-risk effective January 1, 2016, for the
three months ended
December 31, 2016
was
$4.5 million
, compared to
$5.9 million
for the
three months ended
December 31, 2015
,
a decrease
of
$1.4 million
or
23.9%
. The decrease was driven by the notable loss events incurred during the
three months ended
December 31, 2016
.
|
•
|
Validus’ share of AlphaCat income, excluding PaCRe, for the
three months ended
December 31, 2016
was
$6.3 million
, compared to
$8.8 million
for the
three months ended
December 31, 2015
,
a decrease
of
$2.5 million
, or
28.5%
.
|
|
|
Three Months Ended December 31,
|
||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
||||
Investment income
|
|
|
|
|
||||
Managed net investment income
(a)
|
|
$
|
35,875
|
|
|
$
|
29,885
|
|
|
|
|
|
|
||||
Operating expenses
|
|
|
|
|
||||
General and administrative expenses
|
|
19,973
|
|
|
24,222
|
|
||
Share compensation expenses
|
|
3,856
|
|
|
3,501
|
|
||
Finance expenses
(a)
|
|
14,546
|
|
|
15,448
|
|
||
Dividends on preferred shares
|
|
2,203
|
|
|
—
|
|
||
Tax benefit
(a)
|
|
(21,237
|
)
|
|
(756
|
)
|
||
Total operating expenses
|
|
19,341
|
|
|
42,415
|
|
||
|
|
|
|
|
||||
Other items
|
|
|
|
|
||||
Net realized gains (losses) on managed investments
(a)
|
|
9,166
|
|
|
(3,353
|
)
|
||
Change in net unrealized losses on managed investments
(a)
|
|
(67,676
|
)
|
|
(34,515
|
)
|
||
Income (loss) from investment affiliates
|
|
2,166
|
|
|
(1,261
|
)
|
||
Foreign exchange (losses) gains
(a)
|
|
(850
|
)
|
|
852
|
|
||
Other income
|
|
7
|
|
|
1,576
|
|
||
Total other items
|
|
(57,187
|
)
|
|
(36,701
|
)
|
||
Total Corporate and Investments
|
|
$
|
(40,653
|
)
|
|
$
|
(49,231
|
)
|
(a)
|
These items exclude the components which are included in the Company’s share of AlphaCat and amounts which are consolidated from VIEs.
|
•
|
Net investment income from managed investments for the
three months ended
December 31, 2016
was
$35.9 million
compared to
$29.9 million
for the
three months ended
December 31, 2015
,
an increase
of
$6.0 million
, or
20.0%
. The increase was primarily driven by returns on the Company’s portfolio of structured securities, of which $4.0 million was generated from a single fixed income fund. Annualized effective yield for the
three months ended
December 31, 2016
was
2.25%
, compared to
1.90%
for the
three months ended
December 31, 2015
, an
increase
of
35
basis points.
|
•
|
Net realized gains on managed investments for the
three months ended December 31, 2016
were
$9.2 million
compared to losses of
$3.4 million
for the
three months ended December 31, 2015
,
a favorable movement
of
$12.5 million
. The favorable movement primarily resulted from realized gains on the termination of two interest rate swap contracts which were entered into in the third quarter of 2016 to partially offset the impact of interest rate increases on the Company’s fixed maturity portfolio.
|
•
|
The change in net unrealized losses on managed investments for the
three months ended December 31, 2016
was
$67.7 million
compared to
$34.5 million
for the
three months ended December 31, 2015
,
an unfavorable
movement of
$33.2 million
, or
96.1%
. The unfavorable movement was primarily driven by an increase in interest rates during the
three months ended December 31, 2016
.
|
•
|
General and administrative expenses for the
three months ended
December 31, 2016
were
$20.0 million
compared to
$24.2 million
for the
three months ended
December 31, 2015
,
a decrease
of
$4.2 million
or
17.5%
primarily due to a reduction in the performance bonus accrual during the
three months ended
December 31, 2016
.
|
•
|
Share compensation expenses for the
three months ended
December 31, 2016
were
$3.9 million
compared to
$3.5 million
for the
three months ended
December 31, 2015
,
an increase
of
$0.4 million
or
10.1%
.
|
•
|
Finance expenses, excluding the Company’s share of AlphaCat finance expenses from consolidated variable interest entities, for the
three months ended December 31, 2016
were
$14.5 million
compared to
$15.4 million
for the
three months ended December 31, 2015
,
a decrease
of
$0.9 million
or
5.8%
.
|
•
|
The Company issued $150.0 million of preferred shares in June 2016. Dividends paid on preferred shares were
$2.2 million
for the
three months ended December 31, 2016
.
|
•
|
Tax benefit for the
three months ended
December 31, 2016
was
$21.2 million
compared to
$0.8 million
for the
three months ended
December 31, 2015
, a favorable movement of
$20.5 million
. The favorable movement was primarily due to a partial release of a valuation allowance which had been applied against a deferred tax asset related to net operating losses acquired as part of the Flagstone acquisition. The Company believes it is now more-likely-than-not that it will have sufficient future taxable income to realize a portion of that deferred tax asset over the next three years and in accordance with U.S. GAAP, the Company was required to record a tax benefit of $18.4 million in the quarter.
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Underwriting revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
2,648,705
|
|
|
$
|
2,557,506
|
|
|
$
|
2,358,865
|
|
Reinsurance premiums ceded
|
|
(289,705
|
)
|
|
(328,681
|
)
|
|
(313,208
|
)
|
|||
Net premiums written
|
|
2,359,000
|
|
|
2,228,825
|
|
|
2,045,657
|
|
|||
Change in unearned premiums
|
|
(109,835
|
)
|
|
18,064
|
|
|
(52,602
|
)
|
|||
Net premiums earned
|
|
2,249,165
|
|
|
2,246,889
|
|
|
1,993,055
|
|
|||
Other insurance related income
|
|
2,961
|
|
|
6,113
|
|
|
3,472
|
|
|||
Total underwriting revenues
|
|
2,252,126
|
|
|
2,253,002
|
|
|
1,996,527
|
|
|||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
1,065,097
|
|
|
977,833
|
|
|
765,015
|
|
|||
Policy acquisition costs
|
|
449,482
|
|
|
410,058
|
|
|
339,467
|
|
|||
General and administrative expenses
|
|
336,294
|
|
|
363,709
|
|
|
329,362
|
|
|||
Share compensation expenses
|
|
42,907
|
|
|
38,341
|
|
|
33,073
|
|
|||
Total underwriting deductions
|
|
1,893,780
|
|
|
1,789,941
|
|
|
1,466,917
|
|
|||
Underwriting income
(a)
|
|
$
|
358,346
|
|
|
$
|
463,061
|
|
|
$
|
529,610
|
|
|
|
|
|
|
|
|
||||||
Net investment income
|
|
150,385
|
|
|
127,824
|
|
|
100,086
|
|
|||
Finance expenses
|
|
(58,520
|
)
|
|
(74,742
|
)
|
|
(68,324
|
)
|
|||
Dividends on preferred shares
|
|
(4,455
|
)
|
|
—
|
|
|
—
|
|
|||
Tax benefit (expense)
|
|
19,729
|
|
|
(6,376
|
)
|
|
(155
|
)
|
|||
Loss from operating affiliate
|
|
(23
|
)
|
|
(3,949
|
)
|
|
(4,340
|
)
|
|||
(Income) attributable to AlphaCat investors
|
|
(23,358
|
)
|
|
(2,412
|
)
|
|
—
|
|
|||
Net (income) attributable to noncontrolling interests
|
|
(122,906
|
)
|
|
(93,657
|
)
|
|
(76,115
|
)
|
|||
Net operating income available to Validus common shareholders
(a)
|
|
$
|
319,198
|
|
|
$
|
409,749
|
|
|
$
|
480,762
|
|
|
|
|
|
|
|
|
||||||
Supplemental information:
|
|
|
|
|
|
|
||||||
Losses and loss expenses:
|
|
|
|
|
|
|
||||||
Current period excluding items below
|
|
$
|
1,120,841
|
|
|
$
|
1,164,775
|
|
|
$
|
954,644
|
|
Current period—notable loss events
|
|
90,211
|
|
|
96,964
|
|
|
34,944
|
|
|||
Current period—non-notable loss events
|
|
70,237
|
|
|
22,231
|
|
|
34,668
|
|
|||
Change in prior accident years
|
|
(216,192
|
)
|
|
(306,137
|
)
|
|
(259,241
|
)
|
|||
Total losses and loss expenses
|
|
$
|
1,065,097
|
|
|
$
|
977,833
|
|
|
$
|
765,015
|
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
||||||
Ratio of net to gross premiums written
|
|
89.1
|
%
|
|
87.1
|
%
|
|
86.7
|
%
|
|||
Losses and loss expense ratio:
|
|
|
|
|
|
|
||||||
Current period excluding items below
|
|
49.9
|
%
|
|
51.8
|
%
|
|
47.9
|
%
|
|||
Current period—notable loss events
|
|
4.0
|
%
|
|
4.3
|
%
|
|
1.8
|
%
|
|||
Current period—non-notable loss events
|
|
3.1
|
%
|
|
1.0
|
%
|
|
1.7
|
%
|
|||
Change in prior accident years
|
|
(9.6
|
)%
|
|
(13.6
|
)%
|
|
(13.0
|
)%
|
|||
Losses and loss expense ratio
|
|
47.4
|
%
|
|
43.5
|
%
|
|
38.4
|
%
|
|||
Policy acquisition cost ratio
|
|
20.0
|
%
|
|
18.3
|
%
|
|
17.0
|
%
|
|||
General and administrative expense ratio
(b)
|
|
16.8
|
%
|
|
17.9
|
%
|
|
18.2
|
%
|
|||
Expense ratio
|
|
36.8
|
%
|
|
36.2
|
%
|
|
35.2
|
%
|
|||
Combined ratio
|
|
84.2
|
%
|
|
79.7
|
%
|
|
73.6
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written
for the
year ended
December 31, 2016
were
$2,648.7 million
compared to
$2,557.5 million
for the
year ended
December 31, 2015
,
an increase
of
$91.2 million
, or
3.6%
. The increase in gross premiums written was primarily driven by an increase in the AlphaCat and Western World segments and was partially offset by a decrease in the Validus Re and Talbot segments.
|
•
|
Gross premiums written
for the
year ended
December 31, 2015
were
$2,557.5 million
compared to
$2,358.9 million
for the
year ended
December 31, 2014
,
an increase
of
$198.6 million
, or
8.4%
. The increase in gross premiums written was primarily driven by an increase in the Western World, AlphaCat and Validus Re segments and was partially offset by a decrease in the Talbot segment.
|
•
|
Underwriting revenues
for the years ended
December 31, 2016
,
2015
and
2014
were
$2,252.1 million
,
$2,253.0 million
, and
$1,996.5 million
, respectively.
|
•
|
Losses and loss expenses
for the years ended
December 31, 2016
,
2015
and
2014
were
$1,065.1 million
,
$977.8 million
and
$765.0 million
, respectively.
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||||||
|
|
Notable Loss Events
|
|
Non-notable Loss Events
|
|
Total
|
||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Canadian Wildfires
|
|
Hurricane Matthew
|
|
2016 New Zealand Earthquake
|
|
Texas Hailstorms
|
|
Kumamoto Earthquake
|
|
Jubilee Oil
|
|
SpaceX
|
|
|||||||||||||||||
Net Losses and Loss Expenses
|
|
$
|
19,650
|
|
|
$
|
39,140
|
|
|
$
|
31,421
|
|
|
$
|
19,305
|
|
|
$
|
15,480
|
|
|
$
|
15,213
|
|
|
$
|
20,239
|
|
|
$
|
160,448
|
|
Less: Net Losses and Loss Expenses Attributable to AlphaCat Third Party Investors and Noncontrolling Interests
|
|
(3,696
|
)
|
|
(8,943
|
)
|
|
(9,068
|
)
|
|
(5,638
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,345
|
)
|
||||||||
Validus’ Share of Net Losses and Loss Expenses
|
|
15,954
|
|
|
30,197
|
|
|
22,353
|
|
|
13,667
|
|
|
15,480
|
|
|
15,213
|
|
|
20,239
|
|
|
133,103
|
|
||||||||
Less: Reinstatement Premiums, net
|
|
(1,496
|
)
|
|
(2,781
|
)
|
|
(65
|
)
|
|
(2,108
|
)
|
|
—
|
|
|
(8,942
|
)
|
|
(1,510
|
)
|
|
(16,902
|
)
|
||||||||
Net Loss Attributable to Validus
|
|
$
|
14,458
|
|
|
$
|
27,416
|
|
|
$
|
22,288
|
|
|
$
|
11,559
|
|
|
$
|
15,480
|
|
|
$
|
6,271
|
|
|
$
|
18,729
|
|
|
$
|
116,201
|
|
•
|
For the
year ended
December 31, 2016
, losses and loss expenses from the three notable loss events were
$90.2 million
, or
4.0
percentage points of the loss ratio. Net of losses attributable to AlphaCat investors and noncontrolling interests of $21.7 million and reinstatement premiums of $4.3 million, the net loss attributable to the Company from these notable loss events was $64.2 million. Losses and loss expenses from the four non-notable loss events were
$70.2 million
, or
3.1
percentage points of the loss ratio. Net of losses attributable to AlphaCat investors and noncontrolling interests of $5.6 million and reinstatement premiums of $12.6 million, the net loss attributable to the Company from these non-notable loss events was $52.0 million.
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
|
Notable Loss Events
|
|
Non-notable Loss Event
|
|
Total
|
||||||||||
(Dollars in thousands)
|
|
Tianjin
|
|
Pemex
|
|
2015 Chilean Earthquake
|
|
|||||||||
Net Losses and Loss Expenses
|
|
$
|
47,427
|
|
|
$
|
49,537
|
|
|
$
|
22,231
|
|
|
$
|
119,195
|
|
Less: Reinstatement Premiums, net
|
|
(3,896
|
)
|
|
2,130
|
|
|
(2,200
|
)
|
|
(3,966
|
)
|
||||
Net Loss Attributable to Validus
|
|
$
|
43,531
|
|
|
$
|
51,667
|
|
|
$
|
20,031
|
|
|
$
|
115,229
|
|
•
|
For the
year ended
December 31, 2015
, losses and loss expenses from the two notable loss events were
$97.0 million
, or
4.3
percentage points of the loss ratio. Net of reinstatement premiums of $1.8 million, the net loss attributable to the Company
|
|
|
Year Ended December 31, 2014
|
||||||||||||||
|
|
Notable Loss Event
|
|
Non-notable Loss Events
|
|
Total
|
||||||||||
(Dollars in thousands)
|
|
Tripoli Airport
|
|
Japanese Snowstorm
|
|
2014 Chilean Earthquake
|
|
|||||||||
Net Losses and Loss Expenses
|
|
$
|
34,944
|
|
|
$
|
16,256
|
|
|
$
|
18,412
|
|
|
$
|
69,612
|
|
Less: Reinstatement Premiums, net
|
|
(3,816
|
)
|
|
(2,239
|
)
|
|
(496
|
)
|
|
(6,551
|
)
|
||||
Net Loss Attributable to Validus
|
|
$
|
31,128
|
|
|
$
|
14,017
|
|
|
$
|
17,916
|
|
|
$
|
63,061
|
|
•
|
For the
year ended
December 31, 2014
, losses and loss expenses from a single notable loss event were
$34.9 million
, or
1.8
percentage points of the loss ratio. Net of reinstatement premiums of $3.8 million, the net loss attributable to the Company from this notable loss event was $31.1 million. Losses and loss expenses from the two non-notable loss events were
$34.7 million
, or
1.7
percentage points of the loss ratio. Net of reinstatement premiums of $2.7 million, the net loss attributable to the Company from these non-notable loss events was $32.0 million.
|
•
|
Loss reserve development on prior years was as follows:
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
(Favorable) development on events
|
|
$
|
(14,394
|
)
|
|
$
|
(52,196
|
)
|
|
$
|
(50,884
|
)
|
(Favorable) development on attritional losses
|
|
(201,797
|
)
|
|
(253,941
|
)
|
|
(208,357
|
)
|
|||
Change in prior accident years
|
|
$
|
(216,191
|
)
|
|
$
|
(306,137
|
)
|
|
$
|
(259,241
|
)
|
•
|
Loss ratios by line of business were as follows:
|
•
|
Policy acquisition costs
for the years ended
December 31, 2016
,
2015
and
2014
were
$449.5 million
,
$410.1 million
and
$339.5 million
, respectively.
|
•
|
General and administrative expenses
for the years ended
December 31, 2016
,
2015
and
2014
were
$336.3 million
,
$363.7 million
and
$329.4 million
, respectively.
|
•
|
Underwriting income
for the years ended
December 31, 2016
,
2015
and
2014
was
$358.3 million
,
$463.1 million
and
$529.6 million
, respectively.
|
•
|
Net operating income available to Validus common shareholders
for the years ended
December 31, 2016
,
2015
and
2014
was
$319.2 million
,
$409.7 million
and
$480.8 million
, respectively.
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
|
$
|
472,965
|
|
|
$
|
105,698
|
|
|
$
|
532,391
|
|
|
$
|
1,111,054
|
|
|
$
|
547,409
|
|
|
$
|
152,670
|
|
|
$
|
426,680
|
|
|
$
|
1,126,759
|
|
Reinsurance premiums ceded
|
|
(86,646
|
)
|
|
(12,546
|
)
|
|
(12,372
|
)
|
|
(111,564
|
)
|
|
(121,518
|
)
|
|
(17,127
|
)
|
|
(10,443
|
)
|
|
(149,088
|
)
|
||||||||
Net premiums written
|
|
386,319
|
|
|
93,152
|
|
|
520,019
|
|
|
999,490
|
|
|
425,891
|
|
|
135,543
|
|
|
416,237
|
|
|
977,671
|
|
||||||||
Change in unearned premiums
|
|
12,499
|
|
|
18,020
|
|
|
(86,064
|
)
|
|
(55,545
|
)
|
|
5,235
|
|
|
12,022
|
|
|
(4,715
|
)
|
|
12,542
|
|
||||||||
Net premiums earned
|
|
398,818
|
|
|
111,172
|
|
|
433,955
|
|
|
943,945
|
|
|
431,126
|
|
|
147,565
|
|
|
411,522
|
|
|
990,213
|
|
||||||||
Other insurance related (loss) income
|
|
|
|
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
3,575
|
|
||||||||||||||
Total underwriting revenues
|
|
|
|
|
|
|
|
943,890
|
|
|
|
|
|
|
|
|
993,788
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses
|
|
97,859
|
|
|
45,595
|
|
|
268,034
|
|
|
411,488
|
|
|
86,232
|
|
|
91,306
|
|
|
280,438
|
|
|
457,976
|
|
||||||||
Policy acquisition costs
|
|
72,558
|
|
|
19,396
|
|
|
89,086
|
|
|
181,040
|
|
|
74,655
|
|
|
30,024
|
|
|
61,708
|
|
|
166,387
|
|
||||||||
Total underwriting deductions before G&A
|
|
170,417
|
|
|
64,991
|
|
|
357,120
|
|
|
592,528
|
|
|
160,887
|
|
|
121,330
|
|
|
342,146
|
|
|
624,363
|
|
||||||||
Underwriting income before G&A
|
|
$
|
228,401
|
|
|
$
|
46,181
|
|
|
$
|
76,835
|
|
|
$
|
351,362
|
|
|
$
|
270,239
|
|
|
$
|
26,235
|
|
|
$
|
69,376
|
|
|
$
|
369,425
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
72,770
|
|
|
|
|
|
|
|
|
78,428
|
|
||||||||||||||
Share compensation expenses
|
|
|
|
|
|
|
|
11,034
|
|
|
|
|
|
|
|
|
10,350
|
|
||||||||||||||
Total underwriting deductions
|
|
|
|
|
|
|
|
676,332
|
|
|
|
|
|
|
|
|
713,141
|
|
||||||||||||||
Underwriting income
(a)
|
|
|
|
|
|
|
|
$
|
267,558
|
|
|
|
|
|
|
|
|
$
|
280,647
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
$
|
96,671
|
|
|
$
|
58,353
|
|
|
$
|
293,778
|
|
|
$
|
448,802
|
|
|
$
|
115,825
|
|
|
$
|
83,271
|
|
|
$
|
297,470
|
|
|
$
|
496,566
|
|
Current period—notable loss events
|
|
36,992
|
|
|
1,420
|
|
|
—
|
|
|
38,412
|
|
|
23,310
|
|
|
47,495
|
|
|
1,665
|
|
|
72,470
|
|
||||||||
Current period—non-notable loss events
|
|
22,084
|
|
|
10,257
|
|
|
10,466
|
|
|
42,807
|
|
|
17,440
|
|
|
—
|
|
|
116
|
|
|
17,556
|
|
||||||||
Change in prior accident years
|
|
(57,888
|
)
|
|
(24,435
|
)
|
|
(36,210
|
)
|
|
(118,533
|
)
|
|
(70,343
|
)
|
|
(39,460
|
)
|
|
(18,813
|
)
|
|
(128,616
|
)
|
||||||||
Total losses and loss expenses
|
|
$
|
97,859
|
|
|
$
|
45,595
|
|
|
$
|
268,034
|
|
|
$
|
411,488
|
|
|
$
|
86,232
|
|
|
$
|
91,306
|
|
|
$
|
280,438
|
|
|
$
|
457,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratio of net to gross premiums written
|
|
81.7
|
%
|
|
88.1
|
%
|
|
97.7
|
%
|
|
90.0
|
%
|
|
77.8
|
%
|
|
88.8
|
%
|
|
97.6
|
%
|
|
86.8
|
%
|
||||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
24.2
|
%
|
|
52.5
|
%
|
|
67.7
|
%
|
|
47.6
|
%
|
|
26.9
|
%
|
|
56.4
|
%
|
|
72.3
|
%
|
|
50.1
|
%
|
||||||||
Current period—notable loss events
|
|
9.3
|
%
|
|
1.3
|
%
|
|
—
|
%
|
|
4.1
|
%
|
|
5.4
|
%
|
|
32.2
|
%
|
|
0.4
|
%
|
|
7.3
|
%
|
||||||||
Current period—non-notable loss events
|
|
5.5
|
%
|
|
9.2
|
%
|
|
2.4
|
%
|
|
4.5
|
%
|
|
4.0
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.8
|
%
|
||||||||
Change in prior accident years
|
|
(14.5
|
)%
|
|
(22.0
|
)%
|
|
(8.3
|
)%
|
|
(12.6
|
)%
|
|
(16.3
|
)%
|
|
(26.7
|
)%
|
|
(4.6
|
)%
|
|
(13.0
|
)%
|
||||||||
Losses and loss expense ratio
|
|
24.5
|
%
|
|
41.0
|
%
|
|
61.8
|
%
|
|
43.6
|
%
|
|
20.0
|
%
|
|
61.9
|
%
|
|
68.1
|
%
|
|
46.2
|
%
|
||||||||
Policy acquisition cost ratio
|
|
18.2
|
%
|
|
17.4
|
%
|
|
20.5
|
%
|
|
19.2
|
%
|
|
17.3
|
%
|
|
20.3
|
%
|
|
15.0
|
%
|
|
16.8
|
%
|
||||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
|
|
8.8
|
%
|
|
|
|
|
|
|
|
9.0
|
%
|
||||||||||||||
Expense ratio
|
|
|
|
|
|
|
|
28.0
|
%
|
|
|
|
|
|
|
|
25.8
|
%
|
||||||||||||||
Combined ratio
|
|
|
|
|
|
|
|
71.6
|
%
|
|
|
|
|
|
|
|
72.0
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written
for the
year ended
December 31, 2016
were
$1,111.1 million
compared to
$1,126.8 million
for the
year ended
December 31, 2015
,
a decrease
of
$15.7 million
, or
1.4%
. The decrease in gross premiums written was primarily driven by:
|
◦
|
A
decrease
in gross premiums written in the property lines of
$74.4 million
, primarily due to a reduction in business written in the catastrophe excess of loss lines driven by reductions in participation on various programs due to market conditions; and
|
◦
|
A
decrease
in gross premiums written in the marine lines of
$47.0 million
, primarily due to reductions in participation on various programs as a result of challenging market conditions and business historically written in marine lines being renewed in specialty lines; partially offset by
|
◦
|
An
increase
in gross premiums written in the specialty lines of
$105.7 million
, primarily due to new casualty lines written during the period of
$79.0 million
and business historically written in marine lines being renewed in specialty lines.
|
•
|
Reinsurance premiums ceded
for the
year ended
December 31, 2016
were
$111.6 million
compared to
$149.1 million
for the
year ended
December 31, 2015
,
a decrease
of
$37.5 million
, or
25.2%
. The decrease was primarily due to a reduction in the costs associated with the Company’s main proportional retrocession program during the
year ended
December 31, 2016
.
|
•
|
Net premiums earned
for the
year ended
December 31, 2016
were
$943.9 million
compared to
$990.2 million
for the
year ended
December 31, 2015
,
a decrease
of
$46.3 million
, or
4.7%
. The decrease was driven by decreases in the property and marine lines of
$32.3 million
and
$36.4 million
, respectively, as a result of lower gross premiums written during the
year ended
December 31, 2016
, offset by the earned impact of the reduction in reinsurance premiums ceded and was partially offset by an increase in net premiums earned in the specialty lines of
$22.4 million
, primarily due to the increase in gross premiums written as noted above, the impact of reinstatement premiums and adjustments to existing business.
|
•
|
Losses and loss expenses
for the
year ended
December 31, 2016
were
$411.5 million
compared to
$458.0 million
for the
year ended
December 31, 2015
,
a decrease
of
$46.5 million
or
10.2%
. The decrease was primarily as a result of lower losses and loss expenses from attritional losses and notable loss events during the
year ended
December 31, 2016
and was partially offset by higher losses and loss expenses from non-notable loss events.
|
◦
|
The loss ratio for the
year ended
December 31, 2016
was
43.6%
, which included
$118.5 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
12.6
percentage points compared to a loss ratio for the
year ended
December 31, 2015
of
46.2%
which included
$128.6 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
13.0
percentage points.
|
◦
|
During the
year ended
December 31, 2016
, there were three notable loss events and four non-notable loss events that impacted Validus Re as set out in the table below:
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||||||
|
|
Notable Loss Events
|
|
Non-notable Loss Events
|
|
Total
|
||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Canadian Wildfires
|
|
Hurricane Matthew
|
|
2016 New Zealand Earthquake
|
|
Texas Hailstorms
|
|
Kumamoto Earthquake
|
|
Jubilee Oil
|
|
SpaceX
|
|
|||||||||||||||||
Validus Re’s Share of Net Losses and Loss Expenses
|
|
$
|
5,930
|
|
|
$
|
13,580
|
|
|
$
|
18,902
|
|
|
$
|
6,891
|
|
|
$
|
15,195
|
|
|
$
|
10,376
|
|
|
$
|
10,345
|
|
|
$
|
81,219
|
|
Less: Reinstatement Premiums, net
|
|
(1,085
|
)
|
|
(2,781
|
)
|
|
(68
|
)
|
|
(2,077
|
)
|
|
—
|
|
|
(7,981
|
)
|
|
(2,393
|
)
|
|
(16,385
|
)
|
||||||||
Net Loss Attributable to Validus Re
|
|
$
|
4,845
|
|
|
$
|
10,799
|
|
|
$
|
18,834
|
|
|
$
|
4,814
|
|
|
$
|
15,195
|
|
|
$
|
2,395
|
|
|
$
|
7,952
|
|
|
$
|
64,834
|
|
◦
|
During the
year ended
December 31, 2015
, there were two notable loss events and one non-notable loss event that impacted Validus Re as set out in the table below:
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
|
Notable Loss Events
|
|
Non-notable Loss Event
|
|
Total
|
||||||||||
(Dollars in thousands)
|
|
Tianjin
|
|
Pemex
|
|
2015 Chilean Earthquake
|
|
|||||||||
Validus Re’s Share of Net Losses and Loss Expenses
|
|
$
|
35,818
|
|
|
$
|
36,652
|
|
|
$
|
17,556
|
|
|
$
|
90,026
|
|
Less: Reinstatement Premiums, net
|
|
(3,136
|
)
|
|
(8,940
|
)
|
|
(2,200
|
)
|
|
(14,276
|
)
|
||||
Net Loss Attributable to Validus Re
|
|
$
|
32,682
|
|
|
$
|
27,712
|
|
|
$
|
15,356
|
|
|
$
|
75,750
|
|
◦
|
For the
year ended
December 31, 2016
, losses and loss expenses from three notable loss events, the Canadian Wildfires, Hurricane Matthew and the 2016 New Zealand Earthquake were
$38.4 million
, or
4.1
percentage points of the loss ratio. Net of reinstatement premiums of $3.9 million, these events resulted in an aggregate reduction of underwriting income of $34.5 million. The losses and loss expenses of the 2016 notable loss events by line of business were as follows:
|
◦
|
For the
year ended
December 31, 2015
, losses and loss expenses from two notable loss events, Tianjin and Pemex, were
$72.5 million
, or
7.3
percentage points of the loss ratio. Net of reinstatement premiums of $12.1 million, these events resulted in an aggregate reduction of underwriting income of $60.4 million. The losses and loss expenses of the 2015 notable loss events by line of business were as follows:
|
◦
|
For the
year ended
December 31, 2016
, losses and loss expenses incurred from the 2016 non-notable loss events, the Texas Hailstorms, Kumamoto Earthquake, Jubilee Oil and SpaceX, were
$42.8 million
, or
4.5
percentage points of the loss ratio. Net of reinstatement premiums of $12.4 million, these events resulted in an aggregate reduction of underwriting income of $30.4 million. The losses and loss expenses of the 2016 non-notable loss events by line of business were as follows:
|
◦
|
For the
year ended
December 31, 2015
, losses and loss expenses from the 2015 Chilean Earthquake non-notable loss event were
$17.6 million
, or
1.8
percentage points of the loss ratio, and related primarily to Validus Re’s property lines. Net of reinstatement premiums of $2.2 million, this event resulted in an aggregate reduction of underwriting income of $15.4 million.
|
•
|
Loss reserve development by line of business for the years ended
December 31, 2016
and
2015
was as follows:
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
(Favorable) adverse development on events
|
|
$
|
(32,553
|
)
|
|
$
|
9,677
|
|
|
$
|
1,849
|
|
|
$
|
(21,027
|
)
|
(Favorable) development on attritional losses
|
|
(25,335
|
)
|
|
(34,112
|
)
|
|
(38,059
|
)
|
|
(97,506
|
)
|
||||
Change in prior accident years
|
|
$
|
(57,888
|
)
|
|
$
|
(24,435
|
)
|
|
$
|
(36,210
|
)
|
|
$
|
(118,533
|
)
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
(Favorable) adverse development on events
|
|
$
|
(32,408
|
)
|
|
$
|
23
|
|
|
$
|
240
|
|
|
$
|
(32,145
|
)
|
(Favorable) development on attritional losses
|
|
(37,935
|
)
|
|
(39,483
|
)
|
|
(19,053
|
)
|
|
(96,471
|
)
|
||||
Change in prior accident years
|
|
$
|
(70,343
|
)
|
|
$
|
(39,460
|
)
|
|
$
|
(18,813
|
)
|
|
$
|
(128,616
|
)
|
•
|
Policy acquisition costs
for the
year ended
December 31, 2016
were
$181.0 million
compared to
$166.4 million
for the
year ended
December 31, 2015
,
an increase
of
$14.7 million
, or
2.4
percentage points of the policy acquisition costs ratio. The increase was driven by an increase in the specialty lines due to profit commissions on agriculture business, as well as an increase in financial, trade credit and mortgage lines, along with new casualty business which carries higher costs and was partially offset by a decrease in the marine lines as a result of a reduction in proportional business along with adjustments to existing business.
|
•
|
General and administration expenses
for the
year ended
December 31, 2016
were
$72.8 million
compared to
$78.4 million
for the
year ended
December 31, 2015
,
a decrease
of
$5.7 million
, or
7.2%
. The decrease was primarily due to reductions in office related expenses, staff costs and the performance bonus accrual.
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
|
$
|
547,409
|
|
|
$
|
152,670
|
|
|
$
|
426,680
|
|
|
$1,126,759
|
|
$
|
616,554
|
|
|
$
|
190,959
|
|
|
$
|
311,019
|
|
|
$
|
1,118,532
|
|
||
Reinsurance premiums ceded
|
|
(121,518
|
)
|
|
(17,127
|
)
|
|
(10,443
|
)
|
|
(149,088
|
)
|
|
(139,656
|
)
|
|
(16,524
|
)
|
|
(7,498
|
)
|
|
(163,678
|
)
|
||||||||
Net premiums written
|
|
425,891
|
|
|
135,543
|
|
|
416,237
|
|
|
977,671
|
|
|
476,898
|
|
|
174,435
|
|
|
303,521
|
|
|
954,854
|
|
||||||||
Change in unearned premiums
|
|
5,235
|
|
|
12,022
|
|
|
(4,715
|
)
|
|
12,542
|
|
|
(6,603
|
)
|
|
(7,179
|
)
|
|
(23,788
|
)
|
|
(37,570
|
)
|
||||||||
Net premiums earned
|
|
431,126
|
|
|
147,565
|
|
|
411,522
|
|
|
990,213
|
|
|
470,295
|
|
|
167,256
|
|
|
279,733
|
|
|
917,284
|
|
||||||||
Other insurance related income
|
|
|
|
|
|
|
|
3,575
|
|
|
|
|
|
|
|
|
3,159
|
|
||||||||||||||
Total underwriting revenues
|
|
|
|
|
|
|
|
993,788
|
|
|
|
|
|
|
|
|
920,443
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses
|
|
86,232
|
|
|
91,306
|
|
|
280,438
|
|
|
457,976
|
|
|
41,689
|
|
|
58,960
|
|
|
206,641
|
|
|
307,290
|
|
||||||||
Policy acquisition costs
|
|
74,655
|
|
|
30,024
|
|
|
61,708
|
|
|
166,387
|
|
|
76,955
|
|
|
26,724
|
|
|
37,991
|
|
|
141,670
|
|
||||||||
Total underwriting deductions before G&A
|
|
160,887
|
|
|
121,330
|
|
|
342,146
|
|
|
624,363
|
|
|
118,644
|
|
|
85,684
|
|
|
244,632
|
|
|
448,960
|
|
||||||||
Underwriting income before G&A
|
|
$
|
270,239
|
|
|
$
|
26,235
|
|
|
$
|
69,376
|
|
|
$
|
369,425
|
|
|
$
|
351,651
|
|
|
$
|
81,572
|
|
|
$
|
35,101
|
|
|
$
|
471,483
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
78,428
|
|
|
|
|
|
|
|
|
74,739
|
|
||||||||||||||
Share compensation expenses
|
|
|
|
|
|
|
|
10,350
|
|
|
|
|
|
|
|
|
9,739
|
|
||||||||||||||
Total underwriting deductions
|
|
|
|
|
|
|
|
713,141
|
|
|
|
|
|
|
|
|
533,438
|
|
||||||||||||||
Underwriting income
(a)
|
|
|
|
|
|
|
|
$
|
280,647
|
|
|
|
|
|
|
|
|
$
|
387,005
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
$
|
115,825
|
|
|
$
|
83,271
|
|
|
$
|
297,470
|
|
|
$
|
496,566
|
|
|
$
|
87,870
|
|
|
$
|
65,749
|
|
|
$
|
188,919
|
|
|
$
|
342,538
|
|
Current period—notable loss events
|
|
23,310
|
|
|
47,495
|
|
|
1,665
|
|
|
72,470
|
|
|
—
|
|
|
41
|
|
|
22,428
|
|
|
22,469
|
|
||||||||
Current period—non-notable loss events
|
|
17,440
|
|
|
—
|
|
|
116
|
|
|
17,556
|
|
|
29,883
|
|
|
—
|
|
|
—
|
|
|
29,883
|
|
||||||||
Change in prior accident years
|
|
(70,343
|
)
|
|
(39,460
|
)
|
|
(18,813
|
)
|
|
(128,616
|
)
|
|
(76,064
|
)
|
|
(6,830
|
)
|
|
(4,706
|
)
|
|
(87,600
|
)
|
||||||||
Total losses and loss expenses
|
|
$
|
86,232
|
|
|
$
|
91,306
|
|
|
$
|
280,438
|
|
|
$
|
457,976
|
|
|
$
|
41,689
|
|
|
$
|
58,960
|
|
|
$
|
206,641
|
|
|
$
|
307,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratio of net to gross premiums written
|
|
77.8
|
%
|
|
88.8
|
%
|
|
97.6
|
%
|
|
86.8
|
%
|
|
77.3
|
%
|
|
91.3
|
%
|
|
97.6
|
%
|
|
85.4
|
%
|
||||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
26.9
|
%
|
|
56.4
|
%
|
|
72.3
|
%
|
|
50.1
|
%
|
|
18.7
|
%
|
|
39.3
|
%
|
|
67.6
|
%
|
|
37.3
|
%
|
||||||||
Current period—notable loss events
|
|
5.4
|
%
|
|
32.2
|
%
|
|
0.4
|
%
|
|
7.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
8.0
|
%
|
|
2.4
|
%
|
||||||||
Current period—non-notable loss events
|
|
4.0
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.8
|
%
|
|
6.4
|
%
|
|
—
|
%
|
|
—
|
%
|
|
3.3
|
%
|
||||||||
Change in prior accident years
|
|
(16.3
|
)%
|
|
(26.7
|
)%
|
|
(4.6
|
)%
|
|
(13.0
|
)%
|
|
(16.2
|
)%
|
|
(4.1
|
)%
|
|
(1.7
|
)%
|
|
(9.5
|
)%
|
||||||||
Losses and loss expense ratio
|
|
20.0
|
%
|
|
61.9
|
%
|
|
68.1
|
%
|
|
46.2
|
%
|
|
8.9
|
%
|
|
35.2
|
%
|
|
73.9
|
%
|
|
33.5
|
%
|
||||||||
Policy acquisition cost ratio
|
|
17.3
|
%
|
|
20.3
|
%
|
|
15.0
|
%
|
|
16.8
|
%
|
|
16.4
|
%
|
|
16.0
|
%
|
|
13.6
|
%
|
|
15.5
|
%
|
||||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
|
|
9.0
|
%
|
|
|
|
|
|
|
|
9.2
|
%
|
||||||||||||||
Expense ratio
|
|
|
|
|
|
|
|
25.8
|
%
|
|
|
|
|
|
|
|
24.7
|
%
|
||||||||||||||
Combined ratio
|
|
|
|
|
|
|
|
72.0
|
%
|
|
|
|
|
|
|
|
58.2
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written
for the
year ended
December 31, 2015
were
$1,126.8 million
compared to
$1,118.5 million
for the
year ended
December 31, 2014
,
an increase
of
$8.2 million
, or
0.7%
. The increase in gross premiums written was primarily driven by:
|
◦
|
An
increase
in gross premiums written in the specialty lines of
$115.7 million
, primarily due to a significant new agriculture deal and new casualty business of
$7.1 million
which was written during the three months ended December 31, 2015, partially offset by various non-renewals; and
|
◦
|
A
decrease
in gross premiums written in the property lines of
$69.1 million
, primarily due to a reduction in business written in the catastrophe excess of loss lines of $76.8 million, driven by reductions in participation on various programs due to market conditions; and
|
◦
|
A
decrease
in gross premiums written in the marine lines of
$38.3 million
, primarily due to non-renewals as a result of difficult market conditions and business historically written in marine lines being renewed in specialty lines. Further contributing to the decrease was a gain on the commutation of a Flagstone contract with a Lloyd’s counterparty which occurred in the three months ended December 31, 2014.
|
•
|
Reinsurance premiums ceded
for the
year ended
December 31, 2015
were
$149.1 million
compared to
$163.7 million
for the
year ended
December 31, 2014
, a decrease of
$14.6 million
, or
8.9%
. The decrease was due to a reduction in the property lines of
$18.1 million
primarily due to a reduction in the costs associated with the Company’s main proportional retrocession program during the
year ended
December 31, 2015
and was partially offset by an increase in the specialty lines of
$2.9 million
.
|
•
|
Net premiums earned
for the
year ended
December 31, 2015
were
$990.2 million
compared to
$917.3 million
for the
year ended
December 31, 2014
,
an increase
of
$72.9 million
, or
8.0%
. The increase was primarily due to an increase in the specialty lines of
$131.8 million
as a result of the increase in gross premiums written as described above and was partially offset by decreases in the property and marine lines of
$39.2 million
and
$19.7 million
, respectively, as a result of lower gross premiums written during the
year ended
December 31, 2015
compared to the
year ended
December 31, 2014
.
|
•
|
Losses and loss expenses
for the
year ended
December 31, 2015
were
$458.0 million
compared to
$307.3 million
for the
year ended
December 31, 2014
,
an increase
of
$150.7 million
or
49.0%
, primarily as a result of an increase in attritional losses and losses from notable loss events during the
year ended
December 31, 2015
.
|
◦
|
The loss ratio for the
year ended
December 31, 2015
was
46.2%
, which included
$128.6 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
13.0
percentage points compared to a loss ratio for the
year ended
December 31, 2014
of
33.5%
which included
$87.6 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
9.5
percentage points.
|
◦
|
During the
year ended
December 31, 2014
, there was one notable loss event and two non-notable loss events that impacted Validus Re as set out in the table below:
|
|
|
Year Ended December 31, 2014
|
||||||||||||||
|
|
Notable Loss Event
|
|
Non-notable Loss Events
|
|
Total
|
||||||||||
(Dollars in thousands)
|
|
Tripoli Airport
|
|
Japanese Snowstorm
|
|
2014 Chilean Earthquake
|
|
|||||||||
Validus Re’s Share of Net Losses and Loss Expenses
|
|
$
|
22,469
|
|
|
$
|
16,256
|
|
|
$
|
13,627
|
|
|
$
|
52,352
|
|
Less: Reinstatement Premiums, net
|
|
(3,007
|
)
|
|
(2,239
|
)
|
|
(221
|
)
|
|
(5,467
|
)
|
||||
Net Loss Attributable to Validus Re
|
|
$
|
19,462
|
|
|
$
|
14,017
|
|
|
$
|
13,406
|
|
|
$
|
46,885
|
|
◦
|
For the
year ended
December 31, 2014
, losses and loss expenses from a single notable loss event, Tripoli Airport, were
$22.5 million
, or
2.4
percentage points of the loss ratio and primarily related to the specialty lines. Net of reinstatement premiums of
$3.0 million
, this event resulted in an aggregate reduction of underwriting income of
$19.5 million
.
|
◦
|
For the
year ended
December 31, 2014
, losses and loss expenses incurred from two non-notable loss events, the Japanese Snowstorm and the 2014 Chilean Earthquake, were
$29.9 million
, or
3.3
percentage points of the loss ratio and related solely to the property lines. Net of reinstatement premiums of $2.5 million, these events resulted in an aggregate reduction of underwriting income of $27.4 million.
|
•
|
Loss reserve development by line of business for the year ended
December 31, 2014
was as follows:
|
|
|
Year Ended December 31, 2014
|
||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
(Favorable) adverse development on events
|
|
$
|
(28,831
|
)
|
|
$
|
12,104
|
|
|
$
|
1,258
|
|
|
$
|
(15,469
|
)
|
(Favorable) development on attritional losses
|
|
(47,233
|
)
|
|
(18,934
|
)
|
|
(5,964
|
)
|
|
(72,131
|
)
|
||||
Change in prior accident years
|
|
$
|
(76,064
|
)
|
|
$
|
(6,830
|
)
|
|
$
|
(4,706
|
)
|
|
$
|
(87,600
|
)
|
•
|
Policy acquisition costs
for the
year ended
December 31, 2015
were
$166.4 million
compared to
$141.7 million
for the
year ended
December 31, 2014
,
an increase
of
$24.7 million
, or
1.3
percentage points of the policy acquisition costs ratio. The increase was primarily due to an increase in the policy acquisition costs ratio in the marine and specialty lines of 4.3 and 1.4 percentage points, respectively, as a result of the impact of premium adjustments and profit commissions, respectively.
|
•
|
General and administration expenses
for the
year ended
December 31, 2015
were
$78.4 million
compared to
$74.7 million
for the
year ended
December 31, 2014
,
an increase
of
$3.7 million
, or
4.9%
. The increase was primarily due to a greater retention of costs within the segment and an increase in staff costs related to overseas underwriting operations during the year ended December 31, 2015. This increase was partially offset by a reduction in office and infrastructure costs in the current year related to entities that are no longer in use as a result of efficiencies achieved through rationalization of historical Flagstone entities.
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
|
$
|
317,085
|
|
|
$
|
261,940
|
|
|
$
|
391,677
|
|
|
$
|
970,702
|
|
|
$
|
327,122
|
|
|
$
|
327,539
|
|
|
$
|
364,174
|
|
|
$
|
1,018,835
|
|
Reinsurance premiums ceded
|
|
(86,308
|
)
|
|
(29,502
|
)
|
|
(59,919
|
)
|
|
(175,729
|
)
|
|
(103,677
|
)
|
|
(34,087
|
)
|
|
(61,132
|
)
|
|
(198,896
|
)
|
||||||||
Net premiums written
|
|
230,777
|
|
|
232,438
|
|
|
331,758
|
|
|
794,973
|
|
|
223,445
|
|
|
293,452
|
|
|
303,042
|
|
|
819,939
|
|
||||||||
Change in unearned premiums
|
|
(2,923
|
)
|
|
27,782
|
|
|
(37,916
|
)
|
|
(13,057
|
)
|
|
(2,142
|
)
|
|
25,506
|
|
|
(5,212
|
)
|
|
18,152
|
|
||||||||
Net premiums earned
|
|
227,854
|
|
|
260,220
|
|
|
293,842
|
|
|
781,916
|
|
|
221,303
|
|
|
318,958
|
|
|
297,830
|
|
|
838,091
|
|
||||||||
Other insurance related income
|
|
|
|
|
|
|
|
455
|
|
|
|
|
|
|
|
|
851
|
|
||||||||||||||
Total underwriting revenues
|
|
|
|
|
|
|
|
782,371
|
|
|
|
|
|
|
|
|
838,942
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses
|
|
142,669
|
|
|
147,158
|
|
|
135,119
|
|
|
424,946
|
|
|
86,807
|
|
|
130,521
|
|
|
129,994
|
|
|
347,322
|
|
||||||||
Policy acquisition costs
|
|
37,082
|
|
|
68,593
|
|
|
71,452
|
|
|
177,127
|
|
|
32,768
|
|
|
82,705
|
|
|
72,062
|
|
|
187,535
|
|
||||||||
Total underwriting deductions before G&A
|
|
179,751
|
|
|
215,751
|
|
|
206,571
|
|
|
602,073
|
|
|
119,575
|
|
|
213,226
|
|
|
202,056
|
|
|
534,857
|
|
||||||||
Underwriting income before G&A
|
|
$
|
48,103
|
|
|
$
|
44,469
|
|
|
$
|
87,271
|
|
|
$
|
180,298
|
|
|
$
|
101,728
|
|
|
$
|
105,732
|
|
|
$
|
95,774
|
|
|
$
|
304,085
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
134,479
|
|
|
|
|
|
|
|
|
155,306
|
|
||||||||||||||
Share compensation expenses
|
|
|
|
|
|
|
|
13,078
|
|
|
|
|
|
|
|
|
12,373
|
|
||||||||||||||
Total underwriting deductions
|
|
|
|
|
|
|
|
749,630
|
|
|
|
|
|
|
|
|
702,536
|
|
||||||||||||||
Underwriting income
(a)
|
|
|
|
|
|
|
|
$
|
32,741
|
|
|
|
|
|
|
|
|
$
|
136,406
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
$
|
155,175
|
|
|
$
|
140,750
|
|
|
$
|
170,215
|
|
|
$
|
466,140
|
|
|
$
|
131,298
|
|
|
$
|
173,174
|
|
|
$
|
160,038
|
|
|
$
|
464,510
|
|
Current period—notable loss events
|
|
20,082
|
|
|
3,414
|
|
|
608
|
|
|
24,104
|
|
|
3,727
|
|
|
20,767
|
|
|
—
|
|
|
24,494
|
|
||||||||
Current period—non-notable loss events
|
|
5,780
|
|
|
14,732
|
|
|
—
|
|
|
20,512
|
|
|
4,175
|
|
|
500
|
|
|
—
|
|
|
4,675
|
|
||||||||
Change in prior accident years
|
|
(38,368
|
)
|
|
(11,738
|
)
|
|
(35,704
|
)
|
|
(85,810
|
)
|
|
(52,393
|
)
|
|
(63,920
|
)
|
|
(30,044
|
)
|
|
(146,357
|
)
|
||||||||
Total losses and loss expenses
|
|
$
|
142,669
|
|
|
$
|
147,158
|
|
|
$
|
135,119
|
|
|
$
|
424,946
|
|
|
$
|
86,807
|
|
|
$
|
130,521
|
|
|
$
|
129,994
|
|
|
$
|
347,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratio of net to gross premiums written
|
|
72.8
|
%
|
|
88.7
|
%
|
|
84.7
|
%
|
|
81.9
|
%
|
|
68.3
|
%
|
|
89.6
|
%
|
|
83.2
|
%
|
|
80.5
|
%
|
||||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
68.1
|
%
|
|
54.1
|
%
|
|
58.0
|
%
|
|
59.6
|
%
|
|
59.3
|
%
|
|
54.2
|
%
|
|
53.7
|
%
|
|
55.4
|
%
|
||||||||
Current period—notable loss events
|
|
8.8
|
%
|
|
1.3
|
%
|
|
0.2
|
%
|
|
3.1
|
%
|
|
1.7
|
%
|
|
6.5
|
%
|
|
—
|
%
|
|
2.9
|
%
|
||||||||
Current period—non-notable loss events
|
|
2.5
|
%
|
|
5.7
|
%
|
|
—
|
%
|
|
2.6
|
%
|
|
1.9
|
%
|
|
0.2
|
%
|
|
—
|
%
|
|
0.6
|
%
|
||||||||
Change in prior accident years
|
|
(16.8
|
)%
|
|
(4.5
|
)%
|
|
(12.2
|
)%
|
|
(11.0
|
)%
|
|
(23.7
|
)%
|
|
(20.0
|
)%
|
|
(10.1
|
)%
|
|
(17.5
|
)%
|
||||||||
Losses and loss expense ratio
|
|
62.6
|
%
|
|
56.6
|
%
|
|
46.0
|
%
|
|
54.3
|
%
|
|
39.2
|
%
|
|
40.9
|
%
|
|
43.6
|
%
|
|
41.4
|
%
|
||||||||
Policy acquisition cost ratio
|
|
16.3
|
%
|
|
26.4
|
%
|
|
24.3
|
%
|
|
22.7
|
%
|
|
14.8
|
%
|
|
25.9
|
%
|
|
24.2
|
%
|
|
22.4
|
%
|
||||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
|
|
18.9
|
%
|
|
|
|
|
|
|
|
20.0
|
%
|
||||||||||||||
Expense ratio
|
|
|
|
|
|
|
|
41.6
|
%
|
|
|
|
|
|
|
|
42.4
|
%
|
||||||||||||||
Combined ratio
|
|
|
|
|
|
|
|
95.9
|
%
|
|
|
|
|
|
|
|
83.8
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written
for the
year ended
December 31, 2016
were
$970.7 million
compared to
$1,018.8 million
for the
year ended
December 31, 2015
,
a decrease
of
$48.1 million
, or
4.7%
. The decrease in gross premiums written was primarily driven by:
|
◦
|
A
decrease
in gross premiums written in the property lines of
$10.0 million
. The
decrease
includes an increase in premium estimates of $5.2 million, which had no impact on earned premium. After the impact of these changes in estimates, the
decrease
was primarily driven by decreases in the downstream energy and power and property treaty classes as a result of the timing of renewals, the non-renewal of various programs due to the current rate environment and reduced premium adjustments in the current year; and
|
◦
|
A
decrease
in gross premiums written in the marine lines of
$65.6 million
, which includes an increase in premium estimates of $4.2 million, which had no impact on earned premium. After the impact of these changes in estimates, the
decrease
was primarily driven by decreases in the upstream energy and cargo classes as a result of reductions in our participation and non-renewals on various programs due to continued pressure on rates from the lack of activity and lower prices in the oil and gas sector; partially offset by,
|
◦
|
An
increase
in gross premiums written in the specialty lines of
$27.5 million
. The
increase
includes an increase in premium estimates of $17.0 million, which had no impact on earned premium. After the impact of these changes in estimates, the
increase
was primarily driven by increases in the contingency and political violence classes as a result of premium adjustments on prior period policies and an increase in the financial lines as a result of new business written during the year. The increases were partially offset by a decrease in the aviation direct class as a result of non-renewals on various programs due to continued pressure on rates.
|
•
|
Reinsurance premiums ceded
for the
year ended
December 31, 2016
were
$175.7 million
compared to
$198.9 million
for the
year ended
December 31, 2015
,
a decrease
of
$23.2 million
, or
11.6%
. The decrease was primarily due to a decrease in the property lines of
$17.4 million
as a result of lower quota share ceded premiums during the
year ended
December 31, 2016
compared to the
year ended
December 31, 2015
and a decrease in the marine lines of
$4.6 million
as a result of higher reinstatement premiums during the
year ended
December 31, 2015
, which was primarily attributable to
$11.1 million
of reinstatement premiums from Pemex, a 2015 notable loss event.
|
•
|
Net premiums earned
for the
year ended
December 31, 2016
were
$781.9 million
compared to
$838.1 million
for the
year ended
December 31, 2015
,
a decrease
of
$56.2 million
, or
6.7%
. Excluding the impact of the changes in estimates noted above on gross premiums written, which had no impact on earned premium, the decrease was primarily driven by the overall reduction in net premiums written in the marine lines and slower earnings patterns on longer-term contracts in the specialty lines during the year ended December 31, 2016 compared to the
year ended
December 31, 2015
.
|
•
|
Losses and loss expenses
for the
year ended
December 31, 2016
were
$424.9 million
compared to
$347.3 million
for the
year ended
December 31, 2015
,
an increase
of
$77.6 million
or
22.3%
, primarily as a result of lower favorable development on prior accident years and higher losses from non-notable loss events during the
year ended
December 31, 2016
.
|
◦
|
The loss ratio for the
year ended
December 31, 2016
was
54.3%
, which included
$85.8 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
11.0
percentage points compared to a loss ratio for the
year ended
December 31, 2015
of
41.4%
, which included
$146.4 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
17.5
percentage points.
|
◦
|
During the
year ended
December 31, 2016
, there were three notable loss events and four non-notable loss events that impacted Talbot as set out in the table below:
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||||||
|
|
Notable Loss Events
|
|
Non-notable Loss Events
|
|
Total
|
||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Canadian Wildfires
|
|
Hurricane Matthew
|
|
2016 New Zealand Earthquake
|
|
Texas Hailstorms
|
|
Kumamoto Earthquake
|
|
Jubilee Oil
|
|
SpaceX
|
|
|||||||||||||||||
Talbot’s Share of Net Losses and Loss Expenses
|
|
$
|
9,517
|
|
|
$
|
12,337
|
|
|
$
|
2,250
|
|
|
$
|
5,496
|
|
|
$
|
285
|
|
|
$
|
4,837
|
|
|
$
|
9,894
|
|
|
$
|
44,616
|
|
Less: Reinstatement Premiums, net
|
|
(411
|
)
|
|
—
|
|
|
3
|
|
|
(31
|
)
|
|
—
|
|
|
(961
|
)
|
|
883
|
|
|
(517
|
)
|
||||||||
Net Loss Attributable to Talbot
|
|
$
|
9,106
|
|
|
$
|
12,337
|
|
|
$
|
2,253
|
|
|
$
|
5,465
|
|
|
$
|
285
|
|
|
$
|
3,876
|
|
|
$
|
10,777
|
|
|
$
|
44,099
|
|
◦
|
During the
year ended
December 31, 2015
, there were two notable loss events and one non-notable loss event that impacted Talbot as set out in the table below:
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
|
Notable Loss Events
|
|
Non-notable Loss Event
|
|
Total
|
||||||||||
(Dollars in thousands)
|
|
Tianjin
|
|
Pemex
|
|
2015 Chilean Earthquake
|
|
|||||||||
Talbot’s Share of Net Losses and Loss Expenses
|
|
$
|
11,609
|
|
|
$
|
12,885
|
|
|
$
|
4,675
|
|
|
$
|
29,169
|
|
Less: Reinstatement Premiums, net
|
|
(760
|
)
|
|
11,070
|
|
|
—
|
|
|
10,310
|
|
||||
Net Loss Attributable to Talbot
|
|
$
|
10,849
|
|
|
$
|
23,955
|
|
|
$
|
4,675
|
|
|
$
|
39,479
|
|
◦
|
For the
year ended
December 31, 2016
, losses and loss expenses from three notable loss events, the Canadian Wildfires, Hurricane Matthew and the 2016 New Zealand Earthquake were
$24.1 million
, or
3.1
percentage points of the loss ratio. Net of reinstatement premiums of $0.4 million, these events resulted in an aggregate reduction of underwriting income of $23.7 million. The losses and loss expenses of the 2016 notable loss events by line of business were as follows:
|
▪
|
Hurricane Matthew - property, marine and specialty lines of $8.5 million, $3.4 million and $0.4 million, respectively; and
|
◦
|
For the
year ended
December 31, 2015
, losses and loss expenses from two notable loss events, Tianjin and Pemex, were
$24.5 million
, or
2.9
percentage points of the loss ratio. Including reinstatement premiums of $10.3 million, these events resulted in an aggregate reduction of underwriting income of $34.8 million. The losses and loss expenses of the 2015 notable loss events by line of business were as follows:
|
◦
|
For the
year ended
December 31, 2016
, losses and loss expenses incurred from the 2016 non-notable loss events, the Texas Hailstorms, Kumamoto Earthquake, Jubilee Oil and SpaceX, were
$20.5 million
, or
2.6
percentage points of the loss ratio. Net of reinstatement premiums of $0.1 million, these events resulted in an aggregate reduction of underwriting income of $20.4 million. The losses and loss expenses of the 2016 non-notable loss events by line of business were as follows:
|
◦
|
For the
year ended
December 31, 2015
, losses and loss expenses from the 2015 Chilean earthquake non-notable loss event were
$4.7 million
, or
0.6
percentage points of the loss ratio, and related primarily to Talbot’s property lines.
|
•
|
Loss reserve development by line of business was as follows:
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
(Favorable) adverse development on events
|
|
$
|
(9,206
|
)
|
|
$
|
18,169
|
|
|
$
|
(2,129
|
)
|
|
$
|
6,834
|
|
(Favorable) development on attritional losses
|
|
(29,162
|
)
|
|
(29,907
|
)
|
|
(33,575
|
)
|
|
(92,644
|
)
|
||||
Change in prior accident years
|
|
$
|
(38,368
|
)
|
|
$
|
(11,738
|
)
|
|
$
|
(35,704
|
)
|
|
$
|
(85,810
|
)
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
(Favorable) adverse development on events
|
|
$
|
(7,947
|
)
|
|
$
|
286
|
|
|
$
|
(8,217
|
)
|
|
$
|
(15,878
|
)
|
(Favorable) development on attritional losses
|
|
(44,446
|
)
|
|
(64,206
|
)
|
|
(21,827
|
)
|
|
(130,479
|
)
|
||||
Change in prior accident years
|
|
$
|
(52,393
|
)
|
|
$
|
(63,920
|
)
|
|
$
|
(30,044
|
)
|
|
$
|
(146,357
|
)
|
•
|
Policy acquisition costs
for the
year ended
December 31, 2016
were
$177.1 million
compared to
$187.5 million
for the
year ended
December 31, 2015
,
a decrease
of
$10.4 million
, or
0.3
percentage points of the policy acquisition costs ratio.
|
•
|
General and administration expenses
for the
year ended
December 31, 2016
were
$134.5 million
compared to
$155.3 million
for the
year ended
December 31, 2015
,
a decrease
of
$20.8 million
, or
13.4%
. The decrease was primarily due to the impact of foreign exchange and a reduction in the performance bonus accrual.
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
|
$
|
327,122
|
|
|
$
|
327,539
|
|
|
$
|
364,174
|
|
|
$
|
1,018,835
|
|
|
$
|
337,210
|
|
|
$
|
392,701
|
|
|
$
|
371,859
|
|
|
$
|
1,101,770
|
|
Reinsurance premiums ceded
|
|
(103,677
|
)
|
|
(34,087
|
)
|
|
(61,132
|
)
|
|
(198,896
|
)
|
|
(111,948
|
)
|
|
(24,928
|
)
|
|
(55,335
|
)
|
|
(192,211
|
)
|
||||||||
Net premiums written
|
|
223,445
|
|
|
293,452
|
|
|
303,042
|
|
|
819,939
|
|
|
225,262
|
|
|
367,773
|
|
|
316,524
|
|
|
909,559
|
|
||||||||
Change in unearned premiums
|
|
(2,142
|
)
|
|
25,506
|
|
|
(5,212
|
)
|
|
18,152
|
|
|
(16,486
|
)
|
|
(1,435
|
)
|
|
(11,864
|
)
|
|
(29,785
|
)
|
||||||||
Net premiums earned
|
|
221,303
|
|
|
318,958
|
|
|
297,830
|
|
|
838,091
|
|
|
208,776
|
|
|
366,338
|
|
|
304,660
|
|
|
879,774
|
|
||||||||
Other insurance related income
|
|
|
|
|
|
|
|
851
|
|
|
|
|
|
|
|
|
1,095
|
|
||||||||||||||
Total underwriting revenues
|
|
|
|
|
|
|
|
838,942
|
|
|
|
|
|
|
|
|
880,869
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses
|
|
86,807
|
|
|
130,521
|
|
|
129,994
|
|
|
347,322
|
|
|
98,678
|
|
|
157,177
|
|
|
167,539
|
|
|
423,394
|
|
||||||||
Policy acquisition costs
|
|
32,768
|
|
|
82,705
|
|
|
72,062
|
|
|
187,535
|
|
|
27,549
|
|
|
88,079
|
|
|
71,534
|
|
|
187,162
|
|
||||||||
Total underwriting deductions before G&A
|
|
119,575
|
|
|
213,226
|
|
|
202,056
|
|
|
534,857
|
|
|
126,227
|
|
|
245,256
|
|
|
239,073
|
|
|
610,556
|
|
||||||||
Underwriting income before G&A
|
|
$
|
101,728
|
|
|
$
|
105,732
|
|
|
$
|
95,774
|
|
|
$
|
304,085
|
|
|
$
|
82,549
|
|
|
$
|
121,082
|
|
|
$
|
65,587
|
|
|
$
|
270,313
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
155,306
|
|
|
|
|
|
|
|
|
150,828
|
|
||||||||||||||
Share compensation expenses
|
|
|
|
|
|
|
|
12,373
|
|
|
|
|
|
|
|
|
11,346
|
|
||||||||||||||
Total underwriting deductions
|
|
|
|
|
|
|
|
702,536
|
|
|
|
|
|
|
|
|
772,730
|
|
||||||||||||||
Underwriting income
(a)
|
|
|
|
|
|
|
|
$
|
136,406
|
|
|
|
|
|
|
|
|
$
|
108,139
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
$
|
131,298
|
|
|
$
|
173,174
|
|
|
$
|
160,038
|
|
|
$
|
464,510
|
|
|
$
|
147,672
|
|
|
$
|
188,383
|
|
|
$
|
211,245
|
|
|
$
|
547,300
|
|
Current period—notable loss events
|
|
3,727
|
|
|
20,767
|
|
|
—
|
|
|
24,494
|
|
|
—
|
|
|
191
|
|
|
12,284
|
|
|
12,475
|
|
||||||||
Current period—non-notable loss events
|
|
4,175
|
|
|
500
|
|
|
—
|
|
|
4,675
|
|
|
4,785
|
|
|
—
|
|
|
—
|
|
|
4,785
|
|
||||||||
Change in prior accident years
|
|
(52,393
|
)
|
|
(63,920
|
)
|
|
(30,044
|
)
|
|
(146,357
|
)
|
|
(53,779
|
)
|
|
(31,397
|
)
|
|
(55,990
|
)
|
|
(141,166
|
)
|
||||||||
Total losses and loss expenses
|
|
$
|
86,807
|
|
|
$
|
130,521
|
|
|
$
|
129,994
|
|
|
$
|
347,322
|
|
|
$
|
98,678
|
|
|
$
|
157,177
|
|
|
$
|
167,539
|
|
|
$
|
423,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratio of net to gross premiums written
|
|
68.3
|
%
|
|
89.6
|
%
|
|
83.2
|
%
|
|
80.5
|
%
|
|
66.8
|
%
|
|
93.7
|
%
|
|
85.1
|
%
|
|
82.6
|
%
|
||||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current period excluding items below
|
|
59.3
|
%
|
|
54.2
|
%
|
|
53.7
|
%
|
|
55.4
|
%
|
|
70.8
|
%
|
|
51.4
|
%
|
|
69.4
|
%
|
|
62.3
|
%
|
||||||||
Current period—notable loss events
|
|
1.7
|
%
|
|
6.5
|
%
|
|
—
|
%
|
|
2.9
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
4.0
|
%
|
|
1.4
|
%
|
||||||||
Current period—non-notable loss events
|
|
1.9
|
%
|
|
0.2
|
%
|
|
—
|
%
|
|
0.6
|
%
|
|
2.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.5
|
%
|
||||||||
Change in prior accident years
|
|
(23.7
|
)%
|
|
(20.0
|
)%
|
|
(10.1
|
)%
|
|
(17.5
|
)%
|
|
(25.8
|
)%
|
|
(8.6
|
)%
|
|
(18.4
|
)%
|
|
(16.1
|
)%
|
||||||||
Losses and loss expense ratio
|
|
39.2
|
%
|
|
40.9
|
%
|
|
43.6
|
%
|
|
41.4
|
%
|
|
47.3
|
%
|
|
42.9
|
%
|
|
55.0
|
%
|
|
48.1
|
%
|
||||||||
Policy acquisition cost ratio
|
|
14.8
|
%
|
|
25.9
|
%
|
|
24.2
|
%
|
|
22.4
|
%
|
|
13.2
|
%
|
|
24.0
|
%
|
|
23.5
|
%
|
|
21.3
|
%
|
||||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
|
|
20.0
|
%
|
|
|
|
|
|
|
|
18.4
|
%
|
||||||||||||||
Expense ratio
|
|
|
|
|
|
|
|
42.4
|
%
|
|
|
|
|
|
|
|
39.7
|
%
|
||||||||||||||
Combined ratio
|
|
|
|
|
|
|
|
83.8
|
%
|
|
|
|
|
|
|
|
87.8
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written
for the
year ended
December 31, 2015
were
$1,018.8 million
compared to
$1,101.8 million
for the
year ended
December 31, 2014
,
a decrease
of
$82.9 million
or
7.5%
. The decrease in gross premiums written was primarily driven by:
|
◦
|
A
decrease
in gross premiums written in the property lines of
$10.1 million
, primarily due to a decrease in the property treaty lines of $9.3 million which related primarily to Latin American business being written directly by Validus Re Swiss. In addition, renewed business in the downstream energy and power international lines has decreased due to unfavorable market conditions. These decreases were partially offset by an increase in the construction lines as a result of new projects and amendments to existing contracts; and
|
◦
|
A
decrease
in gross premiums written in the marine lines of
$65.2 million
, primarily driven by a decrease in the upstream energy and cargo lines due to ongoing market conditions and economic factors, including the worldwide reduction in oil prices, which have reduced new business and renewals. Also contributing to the decrease was a decrease in the marine hull lines primarily as a result of 18-month policies written during the year ended December 31, 2014 which were not yet due for renewal; and
|
◦
|
A
decrease
in gross premiums written in the specialty lines of
$7.7 million
, primarily driven by a decrease in the aviation treaty lines as a result of a higher level of reinstatement premiums and adjustments to prior year policies during the year ended December 31, 2014.
|
•
|
Reinsurance premiums ceded
for the
year ended
December 31, 2015
were
$198.9 million
compared to
$192.2 million
for the
year ended
December 31, 2014
, an increase of
$6.7 million
, or
3.5%
. The increase was primarily due to an increase in the marine and specialty lines of
$9.2 million
and
$5.8 million
, respectively, primarily due to increased reinstatement premiums across a number of classes and was partially offset by a decrease in the property lines of
$8.3 million
due to lower quota share premiums as a result of the Latin American business being written directly by Validus Re Swiss and due to a decrease in reinstatement premiums in the year ended December 31, 2015.
|
•
|
Net premiums earned
for the
year ended
December 31, 2015
were
$838.1 million
compared to
$879.8 million
for the
year ended
December 31, 2014
,
a decrease
of
$41.7 million
, or
4.7%
. The decrease was consistent with the pattern of gross premiums written and reinsurance premiums ceded as discussed above.
|
•
|
Losses and loss expenses
for the
year ended
December 31, 2015
were
$347.3 million
compared to
$423.4 million
for the
year ended
December 31, 2014
,
a decrease
of
$76.1 million
or
18.0%
, primarily as a result of lower attritional losses during the
year ended
December 31, 2015
.
|
◦
|
The loss ratio for the
year ended
December 31, 2015
was
41.4%
, which included
$146.4 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
17.5
percentage points compared to a loss ratio for the
year ended
December 31, 2014
of
48.1%
which included
$141.2 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
16.1
percentage points.
|
◦
|
During the
year ended
December 31, 2014
, there was one notable loss event and one non-notable loss event that impacted Talbot as set out in the table below:
|
|
|
Year Ended December 31, 2014
|
||||||||||
|
|
Notable Loss Event
|
|
Non-Notable Loss Event
|
|
Total
|
||||||
(Dollars in thousands)
|
|
Tripoli Airport
|
|
2014 Chilean Earthquake
|
|
|||||||
Talbot’s Share of Net Losses and Loss Expenses
|
|
$
|
12,475
|
|
|
$
|
4,785
|
|
|
$
|
17,260
|
|
Less: Reinstatement Premiums, net
|
|
(808
|
)
|
|
(275
|
)
|
|
(1,083
|
)
|
|||
Net Loss Attributable to Talbot
|
|
$
|
11,667
|
|
|
$
|
4,510
|
|
|
$
|
16,177
|
|
◦
|
For the
year ended
December 31, 2014
, losses and loss expenses from a single notable loss event, Tripoli Airport, were
$12.5 million
, or
1.4
percentage points of the loss ratio and primarily related to the specialty lines. Net of reinstatement premiums of
$0.8 million
, this event resulted in an aggregate reduction of underwriting income of
$11.7 million
.
|
◦
|
For the
year ended
December 31, 2014
, losses and loss expenses incurred from a single non-notable loss event, the 2014 Chilean Earthquake, were
$4.8 million
, or
0.5
percentage points of the loss ratio and related solely to the property lines. Net of reinstatement premiums of
$0.3 million
, this event resulted in an aggregate reduction of underwriting income of
$4.5 million
.
|
•
|
Loss reserve development by line of business for the year ended
December 31, 2014
was as follows:
|
|
|
Year Ended December 31, 2014
|
||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Marine
|
|
Specialty
|
|
Total
|
||||||||
(Favorable) development on events
|
|
$
|
(18,266
|
)
|
|
$
|
(5,733
|
)
|
|
$
|
(4,051
|
)
|
|
$
|
(28,050
|
)
|
(Favorable) development on attritional losses
|
|
(35,513
|
)
|
|
(25,664
|
)
|
|
(51,939
|
)
|
|
(113,116
|
)
|
||||
Change in prior accident years
|
|
$
|
(53,779
|
)
|
|
$
|
(31,397
|
)
|
|
$
|
(55,990
|
)
|
|
$
|
(141,166
|
)
|
•
|
Policy acquisition costs
for the
year ended
December 31, 2015
were
$187.5 million
compared to
$187.2 million
for the
year ended
December 31, 2014
,
an increase
of
$0.4 million
, or
1.1
percentage points of the policy acquisition costs ratio.
|
•
|
General and administration expenses
for the
year ended
December 31, 2015
were
$155.3 million
compared to
$150.8 million
for the
year ended
December 31, 2014
,
an increase
of
$4.5 million
, or
3.0%
. The increase was primarily due to a greater retention of costs within the segment and an increase in the performance bonus accrual.
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Liability
|
|
Total
|
|
Property
|
|
Liability
|
|
Total
|
||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gross premiums written
|
|
$
|
94,440
|
|
|
$
|
228,780
|
|
|
$
|
323,220
|
|
|
$
|
53,018
|
|
|
$
|
225,486
|
|
|
$
|
278,504
|
|
Reinsurance premiums ceded
|
|
(10,070
|
)
|
|
(12,564
|
)
|
|
(22,634
|
)
|
|
(4,347
|
)
|
|
(14,530
|
)
|
|
(18,877
|
)
|
||||||
Net premiums written
|
|
84,370
|
|
|
216,216
|
|
|
300,586
|
|
|
48,671
|
|
|
210,956
|
|
|
259,627
|
|
||||||
Change in unearned premiums
|
|
(21,216
|
)
|
|
(6,138
|
)
|
|
(27,354
|
)
|
|
(4,588
|
)
|
|
3,611
|
|
|
(977
|
)
|
||||||
Net premiums earned
|
|
63,154
|
|
|
210,078
|
|
|
273,232
|
|
|
44,083
|
|
|
214,567
|
|
|
258,650
|
|
||||||
Other insurance related income
|
|
|
|
|
|
912
|
|
|
|
|
|
|
1,044
|
|
||||||||||
Total underwriting revenues
|
|
|
|
|
|
274,144
|
|
|
|
|
|
|
259,694
|
|
||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses
|
|
45,469
|
|
|
138,343
|
|
|
183,812
|
|
|
23,104
|
|
|
148,774
|
|
|
171,878
|
|
||||||
Policy acquisition costs
|
|
15,840
|
|
|
48,602
|
|
|
64,442
|
|
|
6,948
|
|
|
34,460
|
|
|
41,408
|
|
||||||
Total underwriting deductions before G&A
|
|
61,309
|
|
|
186,945
|
|
|
248,254
|
|
|
30,052
|
|
|
183,234
|
|
|
213,286
|
|
||||||
Underwriting income before G&A
|
|
$
|
1,845
|
|
|
$
|
23,133
|
|
|
$
|
25,890
|
|
|
$
|
14,031
|
|
|
$
|
31,333
|
|
|
$
|
46,408
|
|
General and administrative expenses
|
|
|
|
|
|
43,280
|
|
|
|
|
|
|
38,715
|
|
||||||||||
Share compensation expenses
|
|
|
|
|
|
2,543
|
|
|
|
|
|
|
2,083
|
|
||||||||||
Total underwriting deductions
|
|
|
|
|
|
294,077
|
|
|
|
|
|
|
254,084
|
|
||||||||||
Underwriting (loss) income
(a)
|
|
|
|
|
|
$
|
(19,933
|
)
|
|
|
|
|
|
$
|
5,610
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current period excluding items below
|
|
$
|
44,065
|
|
|
$
|
144,754
|
|
|
$
|
188,819
|
|
|
$
|
29,149
|
|
|
$
|
165,696
|
|
|
$
|
194,845
|
|
Current period—notable loss events
|
|
3,400
|
|
|
—
|
|
|
3,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Current period—non-notable loss events
|
|
705
|
|
|
—
|
|
|
705
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Change in prior accident years
|
|
(2,701
|
)
|
|
(6,411
|
)
|
|
(9,112
|
)
|
|
(6,045
|
)
|
|
(16,922
|
)
|
|
(22,967
|
)
|
||||||
Total losses and loss expenses
|
|
$
|
45,469
|
|
|
$
|
138,343
|
|
|
$
|
183,812
|
|
|
$
|
23,104
|
|
|
$
|
148,774
|
|
|
$
|
171,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of net to gross premiums written
|
|
89.3
|
%
|
|
94.5
|
%
|
|
93.0
|
%
|
|
91.8
|
%
|
|
93.6
|
%
|
|
93.2
|
%
|
||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current period excluding items below
|
|
69.8
|
%
|
|
69.0
|
%
|
|
69.1
|
%
|
|
66.1
|
%
|
|
77.2
|
%
|
|
75.3
|
%
|
||||||
Current period—notable loss events
|
|
5.4
|
%
|
|
—
|
%
|
|
1.2
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||
Current period—non-notable loss events
|
|
1.1
|
%
|
|
—
|
%
|
|
0.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||
Change in prior accident years
|
|
(4.3
|
)%
|
|
(3.1
|
)%
|
|
(3.3
|
)%
|
|
(13.7
|
)%
|
|
(7.9
|
)%
|
|
(8.9
|
)%
|
||||||
Losses and loss expense ratio
|
|
72.0
|
%
|
|
65.9
|
%
|
|
67.3
|
%
|
|
52.4
|
%
|
|
69.3
|
%
|
|
66.4
|
%
|
||||||
Policy acquisition cost ratio
|
|
25.1
|
%
|
|
23.1
|
%
|
|
23.5
|
%
|
|
15.8
|
%
|
|
16.1
|
%
|
|
16.0
|
%
|
||||||
General and administrative expense ratio
(b)
|
|
|
|
|
|
16.8
|
%
|
|
|
|
|
|
15.8
|
%
|
||||||||||
Expense ratio
|
|
|
|
|
|
40.3
|
%
|
|
|
|
|
|
31.8
|
%
|
||||||||||
Combined ratio
|
|
|
|
|
|
107.6
|
%
|
|
|
|
|
|
98.2
|
%
|
(a)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. 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.
|
•
|
Gross premiums written
for the
year ended
December 31, 2016
were
$323.2 million
compared to
$278.5 million
for the
year ended
December 31, 2015
,
an increase
of
$44.7 million
, or
16.1%
. The increase in gross premiums written was primarily driven by:
|
◦
|
An
increase
in gross premiums written in the property lines of
$41.4 million
primarily due to increases in the brokerage property, contract commercial package property, monoline property and program flood classes of $12.5 million, $12.2 million, $6.9 million and $6.4 million, respectively, as a result of the continued build out of the underwriting platform in short tail lines.
|
◦
|
An
increase
in gross premiums written in the liability lines of
$3.3 million
. The
increase
was driven by increases in the contract liability and brokerage professional lines of $12.2 million and $6.3 million, respectively, and was partially offset by decreases arising from the discontinuation of underperforming programs and brokerage general liability lines.
|
•
|
Reinsurance premiums ceded
for the
year ended
December 31, 2016
were
$22.6 million
compared to
$18.9 million
for the
year ended
December 31, 2015
,
an increase
of
$3.8 million
, or
19.9%
and were driven by the factors highlighted above in respect of gross premiums written.
|
•
|
Net premiums earned
for the
year ended
December 31, 2016
were
$273.2 million
compared to
$258.7 million
for the
year ended
December 31, 2015
,
an increase
of
$14.6 million
, or
5.6%
. The increase was primarily driven by the increase in gross premiums written in the property lines and was partially offset by the discontinuation of various liability lines as discussed above.
|
•
|
Losses and loss expenses
for the
year ended
December 31, 2016
were
$183.8 million
compared to
$171.9 million
for the
year ended
December 31, 2015
,
an increase
of
$11.9 million
or
6.9%
, primarily as a result of losses incurred from notable loss events during the
year ended
December 31, 2016
and lower favorable development on prior accident years as discussed below. Included as part of current year losses and loss expenses for the
year ended
December 31, 2016
are $14.3 million, or 5.2 percentage points of the loss ratio, of losses from other U.S.-based weather losses.
|
◦
|
The loss ratio for the
year ended
December 31, 2016
was
67.3%
, which included
$9.1 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
3.3
percentage points compared to a loss ratio for the
year ended
December 31, 2015
of
66.4%
which included
$23.0 million
of favorable loss reserve development on prior accident years, benefiting the loss ratio by
8.9
percentage points. The favorable development of
$23.0 million
on prior accident years for the
year ended
December 31, 2015
primarily relates to favorable development on attritional losses and also includes the amortization of the risk premium adjustment accounted for at the time of the acquisition of Western World. This adjustment was fully amortized to income through a reduction in losses and loss expenses of $11.0 million during the year ended December 31, 2015, benefiting the loss ratio by 4.2 percentage points.
|
◦
|
During the
year ended
December 31, 2016
, there was one notable and one non-notable loss event that impacted Western World as set out in the table below:
|
|
|
Year Ended December 31, 2016
|
||||||||||
|
|
Notable Loss Event
|
|
Non-notable Loss Event
|
|
Total
|
||||||
(Dollars in thousands)
|
|
Hurricane Matthew
|
|
Texas Hailstorms
|
|
|||||||
Western World’s Share of Net Losses and Loss Expenses
|
|
$
|
3,400
|
|
|
$
|
705
|
|
|
$
|
4,105
|
|
Less: Reinstatement Premiums, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net Loss Attributable to Western World
|
|
$
|
3,400
|
|
|
$
|
705
|
|
|
$
|
4,105
|
|
◦
|
For the
year ended
December 31, 2016
, losses and loss expenses from a single notable loss event, Hurricane Matthew, were
$3.4 million
, or
1.2
percentage points of the loss ratio and solely impacted Western World’s property lines.
|
◦
|
For the
year ended
December 31, 2016
, losses and loss expenses incurred from a single non-notable loss event, the Texas Hailstorms, were
$0.7 million
, or
0.3
percentage points of the loss ratio and solely impacted Western World’s property lines.
|
•
|
Policy acquisition costs
for the
year ended
December 31, 2016
were
$64.4 million
compared to
$41.4 million
for the
year ended
December 31, 2015
,
an increase
of
$23.0 million
, or
7.5
percentage points of the policy acquisition costs ratio. The increase was primarily a result of an adjustment made upon the acquisition of Western World to reduce deferred acquisition costs to reflect fair value. These deferred acquisition costs would otherwise have been expensed in the amount of
$21.8 million
during the
year ended
December 31, 2015
, benefiting the policy acquisition costs ratio by
8.4
percentage points.
|
•
|
General and administration expenses
for the
year ended
December 31, 2016
were
$43.3 million
compared to
$38.7 million
for the
year ended
December 31, 2015
,
an increase
of
$4.6 million
, or
11.8%
. The increase was primarily due to increases in staff costs associated with the opening of new offices in Scottsdale, Atlanta, and New York.
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
(a)
|
||||||||||||||||||||
(Dollars in thousands)
|
|
Property
|
|
Liability
|
|
Total
|
|
Property
|
|
Liability
|
|
Total
|
||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gross premiums written
|
|
$
|
53,018
|
|
|
$
|
225,486
|
|
|
$
|
278,504
|
|
|
$
|
9,983
|
|
|
$
|
55,252
|
|
|
$
|
65,235
|
|
Reinsurance premiums ceded
|
|
(4,347
|
)
|
|
(14,530
|
)
|
|
(18,877
|
)
|
|
(1,535
|
)
|
|
(4,893
|
)
|
|
(6,428
|
)
|
||||||
Net premiums written
|
|
48,671
|
|
|
210,956
|
|
|
259,627
|
|
|
8,448
|
|
|
50,359
|
|
|
58,807
|
|
||||||
Change in unearned premiums
|
|
(4,588
|
)
|
|
3,611
|
|
|
(977
|
)
|
|
2,806
|
|
|
11,383
|
|
|
14,189
|
|
||||||
Net premiums earned
|
|
44,083
|
|
|
214,567
|
|
|
258,650
|
|
|
11,254
|
|
|
61,742
|
|
|
72,996
|
|
||||||
Other insurance related income
|
|
|
|
|
|
1,044
|
|
|
|
|
|
|
264
|
|
||||||||||
Total underwriting revenues
|
|
|
|
|
|
259,694
|
|
|
|
|
|
|
73,260
|
|
||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses
|
|
23,104
|
|
|
148,774
|
|
|
171,878
|
|
|
8,883
|
|
|
42,152
|
|
|
51,035
|
|
||||||
Policy acquisition costs
|
|
6,948
|
|
|
34,460
|
|
|
41,408
|
|
|
609
|
|
|
2,560
|
|
|
3,169
|
|
||||||
Total underwriting deductions before G&A
|
|
30,052
|
|
|
183,234
|
|
|
213,286
|
|
|
9,492
|
|
|
44,712
|
|
|
54,204
|
|
||||||
Underwriting income before G&A
|
|
$
|
14,031
|
|
|
$
|
31,333
|
|
|
$
|
46,408
|
|
|
$
|
1,762
|
|
|
$
|
17,030
|
|
|
$
|
19,056
|
|
General and administrative expenses
|
|
|
|
|
|
38,715
|
|
|
|
|
|
|
11,121
|
|
||||||||||
Share compensation expenses
|
|
|
|
|
|
2,083
|
|
|
|
|
|
|
135
|
|
||||||||||
Total underwriting deductions
|
|
|
|
|
|
254,084
|
|
|
|
|
|
|
65,460
|
|
||||||||||
Underwriting income
(b)
|
|
|
|
|
|
$
|
5,610
|
|
|
|
|
|
|
$
|
7,800
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current period excluding items below
|
|
$
|
29,149
|
|
|
$
|
165,696
|
|
|
$
|
194,845
|
|
|
$
|
7,860
|
|
|
$
|
54,415
|
|
|
$
|
62,275
|
|
Current period—notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Current period—non-notable loss events
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Change in prior accident years
|
|
(6,045
|
)
|
|
(16,922
|
)
|
|
(22,967
|
)
|
|
1,023
|
|
|
(12,263
|
)
|
|
(11,240
|
)
|
||||||
Total losses and loss expenses
|
|
$
|
23,104
|
|
|
$
|
148,774
|
|
|
$
|
171,878
|
|
|
$
|
8,883
|
|
|
$
|
42,152
|
|
|
$
|
51,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selected ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of net to gross premiums written
|
|
91.8
|
%
|
|
93.6
|
%
|
|
93.2
|
%
|
|
84.6
|
%
|
|
91.1
|
%
|
|
90.1
|
%
|
||||||
Losses and loss expense ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current period excluding items below
|
|
66.1
|
%
|
|
77.2
|
%
|
|
75.3
|
%
|
|
69.8
|
%
|
|
88.2
|
%
|
|
85.3
|
%
|
||||||
Current period—notable loss events
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||
Current period—non-notable loss events
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||||
Change in prior accident years
|
|
(13.7
|
)%
|
|
(7.9
|
)%
|
|
(8.9
|
)%
|
|
9.1
|
%
|
|
(19.9
|
)%
|
|
(15.4
|
)%
|
||||||
Losses and loss expense ratio
|
|
52.4
|
%
|
|
69.3
|
%
|
|
66.4
|
%
|
|
78.9
|
%
|
|
68.3
|
%
|
|
69.9
|
%
|
||||||
Policy acquisition cost ratio
|
|
15.8
|
%
|
|
16.1
|
%
|
|
16.0
|
%
|
|
5.4
|
%
|
|
4.1
|
%
|
|
4.4
|
%
|
||||||
General and administrative expense ratio
(c)
|
|
|
|
|
|
15.8
|
%
|
|
|
|
|
|
15.4
|
%
|
||||||||||
Expense ratio
|
|
|
|
|
|
31.8
|
%
|
|
|
|
|
|
19.8
|
%
|
||||||||||
Combined ratio
|
|
|
|
|
|
98.2
|
%
|
|
|
|
|
|
89.7
|
%
|
(a)
|
The results of Western World have been included in the Company’s consolidated results from the October 2, 2014 date of acquisition.
|
(b)
|
Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income that is not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Further discussion of these measures is presented in the section entitled
“Non-GAAP Financial Measures.”
|
(c)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Third party
|
|
$
|
18,771
|
|
|
$
|
19,661
|
|
|
$
|
18,667
|
|
Related party
|
|
3,329
|
|
|
5,309
|
|
|
7,467
|
|
|||
Total revenues
|
|
22,100
|
|
|
24,970
|
|
|
26,134
|
|
|||
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
|
10,233
|
|
|
12,115
|
|
|
10,134
|
|
|||
Share compensation expenses
|
|
249
|
|
|
580
|
|
|
501
|
|
|||
Finance expenses
|
|
947
|
|
|
9,312
|
|
|
3,417
|
|
|||
Tax expenses
|
|
90
|
|
|
—
|
|
|
—
|
|
|||
Foreign exchange losses (gains)
|
|
19
|
|
|
(16
|
)
|
|
(20
|
)
|
|||
Total expenses
|
|
11,538
|
|
|
21,991
|
|
|
14,032
|
|
|||
Income before investment income from AlphaCat Funds and Sidecars
|
|
10,562
|
|
|
2,979
|
|
|
12,102
|
|
|||
|
|
|
|
|
|
|
||||||
Investment income (loss) from AlphaCat Funds and Sidecars
(b)
|
|
|
|
|
|
|
||||||
AlphaCat Re & Master Fund
|
|
—
|
|
|
—
|
|
|
(1,377
|
)
|
|||
AlphaCat Sidecars
|
|
607
|
|
|
5,504
|
|
|
10,525
|
|
|||
AlphaCat ILS Funds - Lower Risk
(c)
|
|
8,901
|
|
|
7,491
|
|
|
7,974
|
|
|||
AlphaCat ILS Funds - Higher Risk
(c)
|
|
7,471
|
|
|
8,428
|
|
|
8,754
|
|
|||
BetaCat ILS Funds
|
|
3,623
|
|
|
1,702
|
|
|
(51
|
)
|
|||
PaCRe
|
|
(23
|
)
|
|
(3,949
|
)
|
|
(4,340
|
)
|
|||
Total investment income from AlphaCat Funds and Sidecars
|
|
20,579
|
|
|
19,176
|
|
|
21,485
|
|
|||
Validus’ share of AlphaCat income
|
|
$
|
31,141
|
|
|
$
|
22,155
|
|
|
$
|
33,587
|
|
|
|
|
|
|
|
|
||||||
Supplemental information:
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
|
|
|
|
|
||||||
AlphaCat Sidecars
|
|
$
|
(341
|
)
|
|
$
|
45,755
|
|
|
$
|
50,023
|
|
AlphaCat ILS Funds - Lower Risk
(c)
|
|
112,222
|
|
|
91,363
|
|
|
52,264
|
|
|||
AlphaCat ILS Funds - Higher Risk
(c)
|
|
140,022
|
|
|
34,228
|
|
|
24,498
|
|
|||
AlphaCat Direct
(d)
|
|
18,499
|
|
|
4,780
|
|
|
—
|
|
|||
Total
|
|
$
|
270,402
|
|
|
$
|
176,126
|
|
|
$
|
126,785
|
|
(a)
|
In presenting the Company’s results, management has included and discussed the results of AlphaCat, which are presented on an asset manager basis. Validus’ share of AlphaCat income is a non-GAAP measure and is not calculated under standards or rules that comprise U.S. GAAP. Further discussion of these measures is presented in the section entitled
“Non-GAAP Financial Measures.”
|
(b)
|
The investment income from the AlphaCat funds and sidecars is based on equity accounting.
|
(c)
|
Lower risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of less than 7%, whereas higher risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of greater than 7%. Expected loss represents the average annual loss over the set of simulation scenarios divided by the total limit.
|
(d)
|
AlphaCat Direct includes direct investments from third party investors in AlphaCat Re.
|
|
|
Assets Under Management
(a)
|
||||||
|
|
January 1,
|
||||||
(Dollars in thousands)
|
|
2017
|
|
2016
|
||||
Assets Under Management - Related Party
|
|
|
|
|
||||
AlphaCat Sidecars
|
|
$
|
7,729
|
|
|
$
|
35,416
|
|
AlphaCat ILS Funds - Lower Risk
|
|
124,297
|
|
|
164,014
|
|
||
AlphaCat ILS Funds - Higher Risk
|
|
83,881
|
|
|
65,464
|
|
||
AlphaCat Direct
(c)
|
|
—
|
|
|
—
|
|
||
BetaCat ILS Funds
|
|
26,808
|
|
|
61,749
|
|
||
Total
|
|
$
|
242,715
|
|
|
$
|
326,643
|
|
|
|
|
|
|
||||
Assets Under Management - Third Party
|
|
|
|
|
||||
AlphaCat Sidecars
|
|
$
|
28,829
|
|
|
$
|
154,386
|
|
AlphaCat ILS Funds - Lower Risk
|
|
1,257,287
|
|
|
1,102,462
|
|
||
AlphaCat ILS Funds - Higher Risk
|
|
738,813
|
|
|
434,851
|
|
||
AlphaCat Direct
(b)
|
|
444,668
|
|
|
367,820
|
|
||
BetaCat ILS Funds
|
|
29,000
|
|
|
—
|
|
||
Total
|
|
2,498,597
|
|
|
2,059,519
|
|
||
Total Assets Under Management
|
|
$
|
2,741,312
|
|
|
$
|
2,386,162
|
|
(a)
|
The Company’s assets under management are based on NAV and are represented by investments made by related parties and third parties in the feeder funds and on a direct basis.
|
(b)
|
AlphaCat Direct includes direct investments from third party investors in AlphaCat Re.
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Investment income
|
|
|
|
|
|
|
||||||
Managed net investment income
(a)
|
|
$
|
141,718
|
|
|
$
|
121,166
|
|
|
$
|
95,800
|
|
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
|
72,249
|
|
|
75,724
|
|
|
80,210
|
|
|||
Share compensation expenses
|
|
16,003
|
|
|
12,955
|
|
|
11,352
|
|
|||
Finance expenses
(a)
|
|
57,183
|
|
|
61,071
|
|
|
60,309
|
|
|||
Dividends on preferred shares
|
|
4,455
|
|
|
—
|
|
|
—
|
|
|||
Tax (benefit) expense
|
|
(19,819
|
)
|
|
6,376
|
|
|
155
|
|
|||
Total operating expenses
|
|
130,071
|
|
|
156,126
|
|
|
152,026
|
|
|||
|
|
|
|
|
|
|
||||||
Other items
|
|
|
|
|
|
|
||||||
Net realized gains on managed investments
(a)
|
|
14,680
|
|
|
1,698
|
|
|
12,160
|
|
|||
Change in net unrealized gains (losses) on managed investments
(a)
|
|
14,106
|
|
|
(32,007
|
)
|
|
(1,030
|
)
|
|||
(Loss) income from investment affiliates
|
|
(2,083
|
)
|
|
4,281
|
|
|
8,411
|
|
|||
Foreign exchange gains (losses)
(a)
|
|
10,778
|
|
|
(8,172
|
)
|
|
(10,700
|
)
|
|||
Other loss
|
|
(766
|
)
|
|
(1,002
|
)
|
|
(2,243
|
)
|
|||
Transaction expenses
(b)
|
|
—
|
|
|
—
|
|
|
(8,096
|
)
|
|||
Total other items
|
|
36,715
|
|
|
(35,202
|
)
|
|
(1,498
|
)
|
|||
Total Corporate and Investments
|
|
$
|
48,362
|
|
|
$
|
(70,162
|
)
|
|
$
|
(57,724
|
)
|
(a)
|
These items exclude the components which are included in the Company’s share of AlphaCat and amounts which are consolidated from VIEs.
|
(b)
|
The transaction expenses relate to costs incurred in connection with the acquisition of Western World and are primarily comprised of legal, financial advisory, and audit related services.
|
|
|
Managed Net Investment Income
|
||||||||||
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Managed net investment income
|
|
|
|
|
|
|
||||||
Fixed maturities and short-term investments
|
|
$
|
119,085
|
|
|
$
|
113,627
|
|
|
$
|
93,044
|
|
Other investments
|
|
27,860
|
|
|
13,307
|
|
|
5,111
|
|
|||
Cash and cash equivalents and restricted cash
|
|
2,939
|
|
|
1,911
|
|
|
5,106
|
|
|||
Securities lending income
|
|
55
|
|
|
16
|
|
|
11
|
|
|||
Total gross managed net investment income
|
|
149,939
|
|
|
128,861
|
|
|
103,272
|
|
|||
Investment expenses
|
|
(8,221
|
)
|
|
(7,695
|
)
|
|
(7,472
|
)
|
|||
Total managed net investment income
|
|
$
|
141,718
|
|
|
$
|
121,166
|
|
|
$
|
95,800
|
|
|
|
Years Ended December 31,
|
|||||||
U.S. dollar (weakened) strengthened against:
|
|
2016
|
|
2015
|
|
2014
|
|||
British Pound sterling
|
|
19.8
|
%
|
|
5.4
|
%
|
|
6.3
|
%
|
Euro
|
|
3.2
|
%
|
|
11.4
|
%
|
|
13.5
|
%
|
Canadian dollar
|
|
(3.0
|
)%
|
|
19.2
|
%
|
|
9.4
|
%
|
Swiss franc
|
|
1.8
|
%
|
|
0.7
|
%
|
|
11.3
|
%
|
Australian dollar
|
|
1.4
|
%
|
|
11.8
|
%
|
|
9.1
|
%
|
New Zealand dollar
|
|
(1.4
|
)%
|
|
14.2
|
%
|
|
5.5
|
%
|
Singapore dollar
|
|
2.5
|
%
|
|
6.5
|
%
|
|
5.0
|
%
|
Japanese yen
|
|
(3.1
|
)%
|
|
0.8
|
%
|
|
13.7
|
%
|
South African rand
|
|
(11.5
|
)%
|
|
34.3
|
%
|
|
10.4
|
%
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
||||||||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Net income available to Validus common shareholders
|
|
$
|
7,767
|
|
|
$
|
69,042
|
|
|
$
|
359,384
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net realized (gains) losses on investments
|
|
(9,220
|
)
|
|
2,928
|
|
|
(15,757
|
)
|
|
(2,298
|
)
|
|
(14,917
|
)
|
|||||
Change in net unrealized losses (gains) on investments
|
|
67,460
|
|
|
34,862
|
|
|
(16,871
|
)
|
|
32,395
|
|
|
2,842
|
|
|||||
(Income) loss from investment affiliates
|
|
(2,166
|
)
|
|
1,261
|
|
|
2,083
|
|
|
(4,281
|
)
|
|
(8,411
|
)
|
|||||
Foreign exchange losses (gains)
|
|
901
|
|
|
(797
|
)
|
|
(10,864
|
)
|
|
8,731
|
|
|
12,181
|
|
|||||
Other (income) loss
|
|
(7
|
)
|
|
(1,576
|
)
|
|
766
|
|
|
1,002
|
|
|
2,243
|
|
|||||
Transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,096
|
|
|||||
Net (loss) income attributable to noncontrolling interests
|
|
(412
|
)
|
|
(325
|
)
|
|
457
|
|
|
(693
|
)
|
|
(1,235
|
)
|
|||||
Net operating income available to Validus common shareholders
|
|
$
|
64,323
|
|
|
$
|
105,395
|
|
|
$
|
319,198
|
|
|
$
|
409,749
|
|
|
$
|
480,762
|
|
Net investment income
|
|
(38,153
|
)
|
|
(31,612
|
)
|
|
(150,385
|
)
|
|
(127,824
|
)
|
|
(100,086
|
)
|
|||||
Finance expenses
|
|
14,630
|
|
|
16,581
|
|
|
58,520
|
|
|
74,742
|
|
|
68,324
|
|
|||||
Dividends on preferred shares
|
|
2,203
|
|
|
—
|
|
|
4,455
|
|
|
—
|
|
|
—
|
|
|||||
Tax (benefit) expense
|
|
(21,147
|
)
|
|
(756
|
)
|
|
(19,729
|
)
|
|
6,376
|
|
|
155
|
|
|||||
Loss from operating affiliate
|
|
—
|
|
|
1,708
|
|
|
23
|
|
|
3,949
|
|
|
4,340
|
|
|||||
Income attributable to AlphaCat investors
|
|
7,080
|
|
|
974
|
|
|
23,358
|
|
|
2,412
|
|
|
—
|
|
|||||
Net operating income attributable to noncontrolling interests
|
|
27,612
|
|
|
26,321
|
|
|
122,906
|
|
|
93,657
|
|
|
76,115
|
|
|||||
Underwriting income
|
|
$
|
56,548
|
|
|
$
|
118,611
|
|
|
$
|
358,346
|
|
|
$
|
463,061
|
|
|
$
|
529,610
|
|
|
|
December 31, 2016
|
|||||||||||||
(Dollars in thousands, except share and per share amounts)
|
|
Equity Amount
|
|
Shares
|
|
Exercise Price
(a)
|
|
Book Value Per
Share
|
|||||||
Book value per common share
|
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity available to Validus common shareholders
(b)
|
|
$
|
3,688,291
|
|
|
79,132,252
|
|
|
|
|
$
|
46.61
|
|
||
|
|
|
|
|
|
|
|
|
|||||||
Tangible book value per common share
|
|
|
|
|
|
|
|
$
|
42.66
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Book value per diluted common share
|
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity available to Validus common shareholders
(b)
|
|
3,688,291
|
|
|
79,132,252
|
|
|
|
|
|
|||||
Assumed exercise of outstanding stock options
(c)
|
|
614
|
|
|
26,136
|
|
|
$
|
23.48
|
|
|
|
|||
Unvested restricted shares
|
|
—
|
|
|
2,868,610
|
|
|
|
|
|
|||||
Book value per diluted common share
|
|
$
|
3,688,905
|
|
|
82,026,998
|
|
|
|
|
$
|
44.97
|
|
||
Adjustment for accumulated dividends
|
|
|
|
|
|
|
|
11.56
|
|
||||||
Book value per diluted common share plus accumulated dividends
|
|
|
|
|
|
|
|
$
|
56.53
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Tangible book value per diluted common share
|
|
|
|
|
|
|
|
$
|
41.16
|
|
|
|
December 31, 2015
|
|||||||||||||
(Dollars in thousands, except share and per share amounts)
|
|
Equity Amount
|
|
Shares
|
|
Exercise Price
(a)
|
|
Book Value Per
Share
|
|||||||
Book value per common share
|
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity available to Validus common shareholders
(b)
|
|
$
|
3,638,975
|
|
|
82,900,617
|
|
|
|
|
$
|
43.90
|
|
||
|
|
|
|
|
|
|
|
|
|||||||
Tangible book value per common share
|
|
|
|
|
|
|
|
$
|
40.06
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Book value per diluted common share
|
|
|
|
|
|
|
|
|
|||||||
Total shareholders’ equity available to Validus common shareholders
(b)
|
|
3,638,975
|
|
|
82,900,617
|
|
|
|
|
|
|||||
Assumed exercise of outstanding stock options
(c)
|
|
1,319
|
|
|
65,401
|
|
|
$
|
20.17
|
|
|
|
|||
Unvested restricted shares
|
|
—
|
|
|
3,026,376
|
|
|
|
|
|
|||||
Book value per diluted common share
|
|
$
|
3,640,294
|
|
|
85,992,394
|
|
|
|
|
$
|
42.33
|
|
||
Adjustment for accumulated dividends
|
|
|
|
|
|
|
|
10.16
|
|
||||||
Book value per diluted common share plus accumulated dividends
|
|
|
|
|
|
|
|
$
|
52.49
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Tangible book value per diluted common share
|
|
|
|
|
|
|
|
$
|
38.63
|
|
(a)
|
Weighted average exercise price for those stock options that have an exercise price lower than book value per share.
|
(b)
|
Total shareholders’ equity available to Validus common shareholders excludes the liquidation value of the preferred shares of $150,000.
|
(c)
|
Using the “as-if-converted” method, assuming all proceeds received upon exercise of stock options will be retained by the Company and the resulting common shares from exercise remain outstanding.
|
|
Fair Value
|
||||||
|
December 31, 2016
|
|
December 31, 2015
|
||||
Managed investments, cash and cash equivalents and restricted cash
|
|
|
|
||||
Fixed maturities
|
|
|
|
||||
U.S. government and government agency
|
$
|
804,126
|
|
|
$
|
937,202
|
|
Non-U.S. government and government agency
|
240,791
|
|
|
237,968
|
|
||
U.S. states, municipalities and political subdivisions
|
271,830
|
|
|
301,289
|
|
||
Agency residential mortgage-backed securities
|
679,595
|
|
|
610,582
|
|
||
Non-agency residential mortgage-backed securities
|
15,477
|
|
|
26,920
|
|
||
U.S. corporate
|
1,534,508
|
|
|
1,489,951
|
|
||
Non-U.S. corporate
|
410,227
|
|
|
446,570
|
|
||
Bank loans
|
570,399
|
|
|
576,211
|
|
||
Asset-backed securities
|
526,814
|
|
|
437,124
|
|
||
Commercial mortgage-backed securities
|
330,932
|
|
|
260,135
|
|
||
Total fixed maturities
|
5,384,699
|
|
|
5,323,952
|
|
||
Short-term investments
|
228,386
|
|
|
237,369
|
|
||
Other investments
|
|
|
|
||||
Fund of hedge funds
|
955
|
|
|
1,417
|
|
||
Hedge funds
|
17,381
|
|
|
20,980
|
|
||
Private equity investments
|
89,809
|
|
|
63,771
|
|
||
Fixed income investment funds
|
242,093
|
|
|
188,721
|
|
||
Overseas deposits
|
50,106
|
|
|
54,484
|
|
||
Mutual funds
|
5,368
|
|
|
7,483
|
|
||
Total other investments
|
405,712
|
|
|
336,856
|
|
||
Investment in investment affiliate
|
100,431
|
|
|
87,673
|
|
||
Cash and cash equivalents
|
415,419
|
|
|
537,636
|
|
||
Restricted cash
|
15,000
|
|
|
—
|
|
||
Total managed investments, cash and cash equivalents and restricted cash
|
$
|
6,549,647
|
|
|
$
|
6,523,486
|
|
|
|
|
|
||||
Non-managed investments, cash and cash equivalents and restricted cash
|
|
|
|
||||
Catastrophe bonds
|
$
|
158,331
|
|
|
$
|
186,379
|
|
Short-term investments
|
2,567,784
|
|
|
1,704,266
|
|
||
Cash and cash equivalents
|
4,557
|
|
|
185,473
|
|
||
Restricted cash
|
55,956
|
|
|
73,270
|
|
||
Total non-managed investments, cash and cash equivalents and restricted cash
|
2,786,628
|
|
|
2,149,388
|
|
||
Total investments and cash
|
$
|
9,336,275
|
|
|
$
|
8,672,874
|
|
|
|
December 31, 2016
|
|||||
(Dollars in thousands)
|
|
Fair Value
|
|
% of Total
|
|||
Germany
|
|
$
|
66,886
|
|
|
10.3
|
%
|
Supranational
|
|
41,502
|
|
|
6.4
|
%
|
|
United Kingdom
|
|
36,178
|
|
|
5.6
|
%
|
|
Canada
|
|
15,836
|
|
|
2.4
|
%
|
|
Province of Ontario
|
|
12,387
|
|
|
1.9
|
%
|
|
Norway
|
|
12,085
|
|
|
1.9
|
%
|
|
France
|
|
10,360
|
|
|
1.6
|
%
|
|
Jordan
|
|
10,080
|
|
|
1.5
|
%
|
|
Other (individual jurisdictions below $10,000)
|
|
35,477
|
|
|
5.4
|
%
|
|
Total Managed Non-U.S. Government Securities
|
|
240,791
|
|
|
37.0
|
%
|
|
European Corporate Securities
|
|
173,326
|
|
|
26.6
|
%
|
|
United Kingdom Corporate Securities
|
|
96,425
|
|
|
14.8
|
%
|
|
Other Non-U.S. Corporate Securities
|
|
140,476
|
|
|
21.6
|
%
|
|
Total Managed Non-U.S. Fixed Maturity Portfolio
|
|
$
|
651,018
|
|
|
100.0
|
%
|
|
|
December 31, 2015
|
|||||
(Dollars in thousands)
|
|
Fair Value
|
|
% of Total
|
|||
Germany
|
|
$
|
53,259
|
|
|
7.8
|
%
|
United Kingdom
|
|
48,254
|
|
|
7.1
|
%
|
|
Supranational
|
|
33,019
|
|
|
4.8
|
%
|
|
France
|
|
21,075
|
|
|
3.1
|
%
|
|
Province of Ontario
|
|
15,896
|
|
|
2.3
|
%
|
|
Norway
|
|
15,861
|
|
|
2.3
|
%
|
|
Province of Manitoba
|
|
12,981
|
|
|
1.9
|
%
|
|
Jordan
|
|
10,073
|
|
|
1.5
|
%
|
|
Other (individual jurisdictions below $10,000)
|
|
27,550
|
|
|
4.0
|
%
|
|
Total Managed Non-U.S. Government Securities
|
|
237,968
|
|
|
34.8
|
%
|
|
European Corporate Securities
|
|
183,501
|
|
|
26.8
|
%
|
|
United Kingdom Corporate Securities
|
|
131,656
|
|
|
19.2
|
%
|
|
Other Non-U.S. Corporate Securities
|
|
131,413
|
|
|
19.2
|
%
|
|
Total Managed Non-U.S. Fixed Maturity Portfolio
|
|
$
|
684,538
|
|
|
100.0
|
%
|
|
|
December 31, 2016
|
|||||||
Issuer
(a)
|
|
Fair Value
(c)
|
|
S&P Rating
(b)
|
|
% of Managed Investments and Cash
|
|||
JPMorgan Chase & Co
|
|
$
|
66,827
|
|
|
BBB+
|
|
1.0
|
%
|
Citigroup Inc
|
|
52,737
|
|
|
BBB
|
|
0.8
|
%
|
|
Bank of America Corp
|
|
50,280
|
|
|
BBB+
|
|
0.8
|
%
|
|
Morgan Stanley
|
|
48,273
|
|
|
BBB+
|
|
0.7
|
%
|
|
Goldman Sachs Group
|
|
46,261
|
|
|
BBB+
|
|
0.7
|
%
|
|
Wells Fargo & Company
|
|
44,596
|
|
|
A
|
|
0.7
|
%
|
|
Anheuser-Busch Inbev NV
|
|
39,674
|
|
|
A-
|
|
0.6
|
%
|
|
Bank of New York Mellon Corp
|
|
34,619
|
|
|
A
|
|
0.5
|
%
|
|
HSBC Holdings plc
|
|
29,411
|
|
|
A
|
|
0.4
|
%
|
|
US Bancorp
|
|
28,175
|
|
|
AA-
|
|
0.4
|
%
|
|
Total
|
|
$
|
440,853
|
|
|
|
|
6.6
|
%
|
|
|
December 31, 2015
|
|||||||
Issuer
(a)
|
|
Fair Value
(c)
|
|
S&P Rating
(b)
|
|
% of Managed Investments and Cash
|
|||
JPMorgan Chase & Co
|
|
$
|
56,421
|
|
|
A-
|
|
0.9
|
%
|
HSBC Holdings plc
|
|
54,172
|
|
|
A
|
|
0.8
|
%
|
|
Morgan Stanley
|
|
47,242
|
|
|
BBB+
|
|
0.7
|
%
|
|
Bank of America Corp
|
|
43,274
|
|
|
BBB
|
|
0.7
|
%
|
|
Goldman Sachs Group
|
|
43,173
|
|
|
BBB+
|
|
0.7
|
%
|
|
Citigroup Inc
|
|
41,984
|
|
|
BBB
|
|
0.6
|
%
|
|
Wells Fargo & Company
|
|
39,604
|
|
|
BBB+
|
|
0.6
|
%
|
|
US Bancorp
|
|
34,294
|
|
|
AA-
|
|
0.5
|
%
|
|
Bank of New York Mellon Corp
|
|
33,492
|
|
|
A
|
|
0.5
|
%
|
|
UBS Group AG
|
|
31,495
|
|
|
A-
|
|
0.5
|
%
|
|
Total
|
|
$
|
425,151
|
|
|
|
|
6.5
|
%
|
(a)
|
Issuers exclude government-backed government-sponsored enterprises and cash and cash equivalents.
|
(b)
|
Investment ratings are the median of Moody’s, Standard & Poor’s and Fitch. For investments where three ratings are unavailable, the lower of the ratings shall apply. All investment ratings are presented as the Standard & Poor’s equivalent rating.
|
(c)
|
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.
|
|
|
December 31, 2016
|
||||||||||
(Dollars in thousands)
|
|
Gross Case Reserves
|
|
Gross IBNR
|
|
Total Gross Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
390,141
|
|
|
$
|
440,531
|
|
|
$
|
830,672
|
|
Marine
|
|
389,614
|
|
|
471,845
|
|
|
861,459
|
|
|||
Specialty
|
|
259,251
|
|
|
473,656
|
|
|
732,907
|
|
|||
Liability
|
|
198,766
|
|
|
371,391
|
|
|
570,157
|
|
|||
Total
|
|
$
|
1,237,772
|
|
|
$
|
1,757,423
|
|
|
$
|
2,995,195
|
|
|
|
December 31, 2016
|
||||||||||
(Dollars in thousands)
|
|
Net Case Reserves
|
|
Net IBNR
|
|
Total Net Reserve for
Losses and Loss Expenses
|
||||||
Property
|
|
$
|
330,213
|
|
|
$
|
392,886
|
|
|
$
|
723,099
|
|
Marine
|
|
337,550
|
|
|
369,908
|
|
|
707,458
|
|
|||
Specialty
|
|
222,496
|
|
|
428,864
|
|
|
651,360
|
|
|||
Liability
|
|
182,185
|
|
|
300,672
|
|
|
482,857
|
|
|||
Total
|
|
$
|
1,072,444
|
|
|
$
|
1,492,330
|
|
|
$
|
2,564,774
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||
(Dollars in thousands)
|
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
||||||||||||
Reserve for losses and loss expenses, beginning of year
|
|
$
|
1,146,869
|
|
|
$
|
1,302,635
|
|
|
$
|
600,331
|
|
|
$
|
11,013
|
|
|
$
|
(64,281
|
)
|
|
$
|
2,996,567
|
|
Loss reserves recoverable
|
|
(36,055
|
)
|
|
(293,662
|
)
|
|
(85,150
|
)
|
|
—
|
|
|
64,281
|
|
|
(350,586
|
)
|
||||||
Net reserves for losses and loss expenses, beginning of year
|
|
1,110,814
|
|
|
1,008,973
|
|
|
515,181
|
|
|
11,013
|
|
|
—
|
|
|
2,645,981
|
|
||||||
Increase (decrease) in net reserves for losses and loss expenses in respect of losses occurring in:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current year
|
|
530,021
|
|
|
510,756
|
|
|
192,924
|
|
|
47,588
|
|
|
—
|
|
|
1,281,289
|
|
||||||
Prior years
|
|
(118,533
|
)
|
|
(85,810
|
)
|
|
(9,112
|
)
|
|
(2,737
|
)
|
|
—
|
|
|
(216,192
|
)
|
||||||
Total net incurred losses and loss expenses
|
|
411,488
|
|
|
424,946
|
|
|
183,812
|
|
|
44,851
|
|
|
—
|
|
|
1,065,097
|
|
||||||
Less net losses and loss expenses paid in respect of losses occurring in:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current year
|
|
(192,527
|
)
|
|
(146,742
|
)
|
|
(43,316
|
)
|
|
(6,649
|
)
|
|
—
|
|
|
(389,234
|
)
|
||||||
Prior years
|
|
(312,546
|
)
|
|
(258,713
|
)
|
|
(153,664
|
)
|
|
(245
|
)
|
|
—
|
|
|
(725,168
|
)
|
||||||
Total net paid losses
|
|
(505,073
|
)
|
|
(405,455
|
)
|
|
(196,980
|
)
|
|
(6,894
|
)
|
|
—
|
|
|
(1,114,402
|
)
|
||||||
Foreign exchange loss (gain)
|
|
1,519
|
|
|
(32,985
|
)
|
|
—
|
|
|
(436
|
)
|
|
—
|
|
|
(31,902
|
)
|
||||||
Net reserves for losses and loss expenses, end of year
|
|
1,018,748
|
|
|
995,479
|
|
|
502,013
|
|
|
48,534
|
|
|
—
|
|
|
2,564,774
|
|
||||||
Loss reserves recoverable
|
|
98,005
|
|
|
306,038
|
|
|
87,487
|
|
|
—
|
|
|
(61,109
|
)
|
|
430,421
|
|
||||||
Reserve for losses and loss expenses, end of year
|
|
$
|
1,116,753
|
|
|
$
|
1,301,517
|
|
|
$
|
589,500
|
|
|
$
|
48,534
|
|
|
$
|
(61,109
|
)
|
|
$
|
2,995,195
|
|
(a)
|
Includes paid losses, case reserves and IBNR reserves.
|
(b)
|
Excludes impact of movements in foreign exchange rates.
|
(c)
|
Closing Reserve for the period equals Closing Estimate for the period less cumulative paid losses (recovery).
|
(d)
|
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.
|
(Dollars in thousands)
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Validus Reinsurance, Ltd. (excluding capital supporting FAL)
(a) (b)
|
|
$
|
3,720,595
|
|
|
$
|
3,562,458
|
|
Talbot Holdings, Ltd. (including capital supporting FAL)
(b)
|
|
914,442
|
|
|
887,249
|
|
||
Other, net
|
|
(14,158
|
)
|
|
(27,903
|
)
|
||
Redeemable noncontrolling interests in AlphaCat
|
|
1,528,001
|
|
|
1,111,714
|
|
||
Noncontrolling interests in AlphaCat
|
|
165,977
|
|
|
154,662
|
|
||
Total consolidated capitalization
|
|
6,314,857
|
|
|
5,688,180
|
|
||
Senior notes payable
|
|
(245,362
|
)
|
|
(245,161
|
)
|
||
Debentures payable
|
|
(537,226
|
)
|
|
(537,668
|
)
|
||
Redeemable noncontrolling interests in AlphaCat
|
|
(1,528,001
|
)
|
|
(1,111,714
|
)
|
||
Total shareholders’ equity
|
|
4,004,268
|
|
|
3,793,637
|
|
||
Preferred shares
(c)
|
|
(150,000
|
)
|
|
—
|
|
||
Noncontrolling interests in AlphaCat
|
|
(165,977
|
)
|
|
(154,662
|
)
|
||
Total shareholders’ equity available to Validus common shareholders
(c)
|
|
$
|
3,688,291
|
|
|
$
|
3,638,975
|
|
(a)
|
Validus Reinsurance, Ltd. (excluding capital supporting FAL) includes capital of
$639,113
(
2015
:
$640,684
) relating to Western World Insurance Group, Inc.
|
(b)
|
Validus Reinsurance, Ltd. (excluding capital supporting FAL) excludes capital of
$723,888
(
2015
:
$586,393
) which supports Talbot’s FAL. This capital was included in Talbot Holdings, Ltd. (including capital supporting FAL).
|
(c)
|
Total shareholders’ equity available to Validus common shareholders excludes the liquidation value of the preferred shares of $150,000.
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by operating activities
|
|
$
|
410,203
|
|
|
$
|
334,506
|
|
|
$
|
340,161
|
|
Net cash used in investing activities
|
|
(991,793
|
)
|
|
(370,834
|
)
|
|
(162,681
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
301,089
|
|
|
226,641
|
|
|
(331,102
|
)
|
|||
Effect of foreign currency rate changes on cash and cash equivalents
|
|
(22,632
|
)
|
|
(17,605
|
)
|
|
(25,310
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(303,133
|
)
|
|
$
|
172,708
|
|
|
$
|
(178,932
|
)
|
(Dollars in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Senior Notes
(a)
|
$
|
245,362
|
|
|
$
|
245,161
|
|
Junior Subordinated Deferrable Debentures (JSDs)
(a)
|
289,800
|
|
|
289,800
|
|
||
Flagstone Junior Subordinated Deferrable Debentures (JSDs)
(a)
|
247,426
|
|
|
247,868
|
|
||
Total debt
|
$
|
782,588
|
|
|
$
|
782,829
|
|
|
|
|
|
||||
Redeemable noncontrolling interests
|
$
|
1,528,001
|
|
|
$
|
1,111,714
|
|
|
|
|
|
||||
Preferred shares, liquidation value
(b)
|
$
|
150,000
|
|
|
$
|
—
|
|
Ordinary shares, capital and surplus available to Validus common shareholders
|
3,711,507
|
|
|
3,651,544
|
|
||
Accumulated other comprehensive loss
|
(23,216
|
)
|
|
(12,569
|
)
|
||
Noncontrolling interests
|
165,977
|
|
|
154,662
|
|
||
Total shareholders’ equity
|
$
|
4,004,268
|
|
|
$
|
3,793,637
|
|
|
|
|
|
||||
Total capitalization
(c)
|
$
|
6,314,857
|
|
|
$
|
5,688,180
|
|
|
|
|
|
||||
Total capitalization available to Validus
(d)
|
$
|
4,620,879
|
|
|
$
|
4,421,804
|
|
|
|
|
|
||||
Debt to total capitalization
|
12.4
|
%
|
|
13.8
|
%
|
||
Debt (excluding JSDs) to total capitalization
|
3.9
|
%
|
|
4.3
|
%
|
||
Debt and preferred shares to total capitalization
|
14.8
|
%
|
|
13.8
|
%
|
||
|
|
|
|
||||
Debt to total capitalization available to Validus
|
16.9
|
%
|
|
17.7
|
%
|
||
Debt (excluding JSDs) to total capitalization available to Validus
|
5.3
|
%
|
|
5.5
|
%
|
||
Debt and preferred shares to total capitalization available to Validus
|
20.2
|
%
|
|
17.7
|
%
|
(a)
|
Refer to Part II, Item 8, Note
20
to the Consolidated Financial Statements, “
Debt and financing arrangements,”
for further details and discussion on the debt and financing arrangements of the Company.
|
(b)
|
Refer to Part II, Item 8, Note
17
to the Consolidated Financial Statements, “
Share capital
,”
for further details and discussion on the Company’s preferred shares.
|
(c)
|
Total capitalization equals total shareholders’ equity plus redeemable noncontrolling interests and total debt.
|
(d)
|
Total capitalization available to Validus equals total capitalization (as per (c)) less redeemable noncontrolling interests and noncontrolling interests.
|
|
|
Payment Due by Period
|
||||||||||||||||||
(Dollars in thousands)
|
|
Total
|
|
Less Than
1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More Than
5 Years
|
||||||||||
Reserve for losses and loss expenses
(a)
|
|
$
|
2,995,195
|
|
|
$
|
1,310,644
|
|
|
$
|
1,081,899
|
|
|
$
|
381,438
|
|
|
$
|
221,214
|
|
Long term debt obligations
(b)
|
|
1,925,578
|
|
|
53,548
|
|
|
107,096
|
|
|
107,096
|
|
|
1,657,838
|
|
|||||
Projected pension benefit obligation
(c)
|
|
16,979
|
|
|
2,570
|
|
|
6,720
|
|
|
2,578
|
|
|
5,111
|
|
|||||
Operating lease obligations
|
|
103,843
|
|
|
11,878
|
|
|
24,172
|
|
|
21,375
|
|
|
46,418
|
|
|||||
Private equity and investment commitments
(d)
|
|
248,704
|
|
|
248,704
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other commitments
(e)
|
|
291,388
|
|
|
291,388
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations and commitments
|
|
$
|
5,581,687
|
|
|
$
|
1,918,732
|
|
|
$
|
1,219,887
|
|
|
$
|
512,487
|
|
|
$
|
1,930,581
|
|
(a)
|
The reserve for losses and loss expenses represents an estimate, including actuarial and statistical projections at a given point in time of an insurer’s or reinsurer’s expectations of the ultimate settlement and administration costs of claims incurred. As such, the actual payment of the reserve for losses and loss expenses will differ from estimated payouts. Refer to Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates”
for further details and discussion on the Company’s reserve for losses and loss expenses.
|
(b)
|
The amounts in the table above reflect the Company’s contractual obligations with respect to the principal and interest payments on the Company’s Senior Notes and JSDs. The Company has entered into interest rate swaps which fix the rates of interest on the JSDs. The terms of the swaps are matched to the maturity date of the JSDs. Refer to Part II, Item 8, Note
20
to the Consolidated Financial Statements, “
Debt and financing arrangements,”
for further details and discussion on the debt and financing arrangements of the Company.
|
(c)
|
Refer to Part II, Item 8, Note
19
to the Consolidated Financial Statements,
“
Retirement and pension plans
,
”
for further details describing the projected pension benefit obligation.
|
(d)
|
The private equity and investment commitments do not have a defined contractual commitment date and are therefore included in the less than one year category. Refer to Part II, Item 8, Note
23
to the Consolidated Financial Statements,
“Commitments and contingencies,”
for further details describing these contractual obligations and commitments.
|
(e)
|
Other commitments include commitments related the Company’s structured settlements, AlphaCat ILS funds and notes payable to AlphaCat investors. Refer to Part II, Item 8, Note
23
to the Consolidated Financial Statements,
“Commitments and contingencies,”
for further details describing these contractual obligations and commitments.
|
|
A.M. Best
|
|
S&P
|
|
Moody’s
|
|
Fitch
|
Validus Holdings, Ltd.
|
|
|
|
|
|
|
|
Issuer credit rating
|
bbb
|
|
BBB+
|
|
Baa1
|
|
A-
|
Senior debt
|
bbb
|
|
BBB+
|
|
Baa1
|
|
BBB+
|
Subordinated debt
|
bbb-
|
|
—
|
|
Baa2
|
|
BBB
|
Preferred stock
|
bb+
|
|
BBB-
|
|
Baa3
|
|
BBB
|
Outlook on ratings
|
Positive
|
|
Stable
|
|
Stable
|
|
Stable
|
|
|
|
|
|
|
|
|
Validus Reinsurance, Ltd.
|
|
|
|
|
|
|
|
Financial strength rating
|
A
|
|
A
|
|
A2
|
|
A
|
Outlook on ratings
|
Stable
|
|
Stable
|
|
Stable
|
|
Stable
|
|
|
|
|
|
|
|
|
Lloyd’s of London
|
|
|
|
|
|
|
|
Financial strength rating applicable to all Lloyd’s syndicates
|
A
|
|
A+
|
|
—
|
|
AA-
|
Outlook on ratings
|
Stable
|
|
Stable
|
|
—
|
|
Stable
|
|
|
|
|
|
|
|
|
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
|
|
—
|
|
—
|
|
—
|
|
|
December 31, 2016
|
||||||||||
(Dollars in thousands)
|
|
Gross Case
Reserves
|
|
Gross
IBNR
|
|
Total Gross
Reserve for
Losses and
Loss Expenses
|
||||||
Validus Re
|
|
$
|
447,982
|
|
|
$
|
668,771
|
|
|
$
|
1,116,753
|
|
Talbot
|
|
603,447
|
|
|
698,070
|
|
|
1,301,517
|
|
|||
Western World
|
|
208,157
|
|
|
381,343
|
|
|
589,500
|
|
|||
AlphaCat
|
|
9,106
|
|
|
39,428
|
|
|
48,534
|
|
|||
Eliminations
|
|
(30,920
|
)
|
|
(30,189
|
)
|
|
(61,109
|
)
|
|||
Total
|
|
$
|
1,237,772
|
|
|
$
|
1,757,423
|
|
|
$
|
2,995,195
|
|
|
|
December 31, 2015
|
||||||||||
(Dollars in thousands)
|
|
Gross Case
Reserves
|
|
Gross
IBNR
|
|
Total Gross
Reserve for
Losses and
Loss Expenses
|
||||||
Validus Re
|
|
$
|
508,275
|
|
|
$
|
638,594
|
|
|
$
|
1,146,869
|
|
Talbot
|
|
616,459
|
|
|
686,176
|
|
|
1,302,635
|
|
|||
Western World
|
|
188,477
|
|
|
411,854
|
|
|
600,331
|
|
|||
AlphaCat
|
|
595
|
|
|
10,418
|
|
|
11,013
|
|
|||
Eliminations
|
|
(35,109
|
)
|
|
(29,172
|
)
|
|
(64,281
|
)
|
|||
Total
|
|
$
|
1,278,697
|
|
|
$
|
1,717,870
|
|
|
$
|
2,996,567
|
|
|
|
December 31, 2016
|
||
(Dollars in thousands)
|
|
Reserve for losses and loss expenses
|
||
Change in assumption
|
|
|
||
Six month acceleration
|
|
$
|
2,261,310
|
|
Three month acceleration
|
|
$
|
2,405,367
|
|
No change (selected)
|
|
$
|
2,564,774
|
|
Three month deceleration
|
|
$
|
2,735,327
|
|
Six month deceleration
|
|
$
|
2,884,735
|
|
|
|
December 31, 2016
|
||
(Dollars in thousands)
|
|
Reserve for losses and loss expenses
|
||
Change in assumption
|
|
|
||
10% favorable
|
|
$
|
2,370,162
|
|
5% favorable
|
|
$
|
2,467,654
|
|
No change (selected)
|
|
$
|
2,564,774
|
|
5% unfavorable
|
|
$
|
2,662,639
|
|
10% unfavorable
|
|
$
|
2,760,131
|
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
(a)
|
|||||||||||||||
(Dollars in thousands)
|
|
Gross
Premiums Written
|
|
% of Total
|
|
Gross
Premiums Written
|
|
% of Total
|
|
Gross
Premiums Written
|
|
% of Total
|
|||||||||
Proportional
|
|
$
|
767,922
|
|
|
29.0
|
%
|
|
$
|
725,135
|
|
|
28.4
|
%
|
|
$
|
600,537
|
|
|
25.5
|
%
|
Non-proportional
|
|
1,880,783
|
|
|
71.0
|
%
|
|
1,832,371
|
|
|
71.6
|
%
|
|
1,758,328
|
|
|
74.5
|
%
|
|||
Total
|
|
$
|
2,648,705
|
|
|
100.0
|
%
|
|
$
|
2,557,506
|
|
|
100.0
|
%
|
|
$
|
2,358,865
|
|
|
100.0
|
%
|
(a)
|
The results of operations for Western World are consolidated from the October 2, 2014 date of acquisition.
|
•
|
unpredictability and severity of catastrophic events;
|
•
|
our ability to obtain and maintain ratings, which may affect by our ability to raise additional equity or debt financings, as well as other factors described herein;
|
•
|
adequacy of the Company’s risk management and loss limitation methods;
|
•
|
cyclicality of demand and pricing in the insurance and reinsurance markets;
|
•
|
the Company’s ability to implement its business strategy during “soft” as well as “hard” markets;
|
•
|
adequacy of the Company’s loss reserves;
|
•
|
continued availability of capital and financing;
|
•
|
the Company’s ability to identify, hire and retain, on a timely and unimpeded basis and on anticipated economic and other terms, experienced and capable senior management, as well as underwriters, claims professionals and support staff;
|
•
|
acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and (re)insureds;
|
•
|
competition, including increased competition, on the basis of pricing, capacity, coverage terms or other factors;
|
•
|
potential loss of business from one or more major insurance or reinsurance brokers;
|
•
|
the Company’s ability to implement, successfully and on a timely basis, complex infrastructure, distribution capabilities, systems, procedures and internal controls, and to develop accurate actuarial data to support the business and regulatory and reporting requirements;
|
•
|
general economic and market conditions (including inflation, volatility in the credit and capital markets, interest rates and foreign currency exchange rates) and conditions specific to the insurance and reinsurance markets in which we operate;
|
•
|
the integration of businesses we may acquire or new business ventures, including overseas offices, we may start and the risk associated with implementing our business strategies and initiatives with respect to the new business ventures;
|
•
|
accuracy of those estimates and judgments used in the preparation of our financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, taxes, contingencies, litigation and any determination to use the deposit method of accounting, which, for a relatively new insurance and reinsurance company like our company, are even more difficult to make than those made in a mature company because of limited historical information;
|
•
|
the effect on the Company’s investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and other factors;
|
•
|
acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events;
|
•
|
availability and cost of reinsurance and retrocession coverage;
|
•
|
the failure of reinsurers, retrocessionaires, producers or others to meet their obligations to us;
|
•
|
the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us;
|
•
|
changes in domestic or foreign laws or regulations, or their interpretations;
|
•
|
changes in accounting principles or the application of such principles by regulators;
|
•
|
statutory or regulatory or rating agency developments, including as to tax policy and reinsurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda based insurers or reinsurers; and
|
•
|
the other factors set forth herein under Part I Item 1A
“Risk Factors”
and under Part II Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and the other sections of this Annual Report on Form 10-K for the year ended December 31,
2016
, 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.
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
(Dollars in thousands)
|
|
Increase (decrease) in fair value
|
|
Increase (decrease) in fair value
|
||||||||||
Immediate 100 basis point increase in market interest rates
|
|
$
|
(136,758
|
)
|
|
(2.4
|
)%
|
|
$
|
(126,908
|
)
|
|
(2.4
|
)%
|
Immediate 100 basis point decrease in market interest rates
|
|
$
|
137,213
|
|
|
2.4
|
%
|
|
$
|
127,976
|
|
|
2.4
|
%
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
(Dollars in thousands)
|
|
Balance
|
|
% of Total
|
|
Balance
|
|
% of Total
|
||||||
Total monetary assets held in foreign currencies
|
|
$
|
592,010
|
|
|
5.2
|
%
|
|
$
|
568,153
|
|
|
5.4
|
%
|
Total monetary liabilities held in foreign currencies
|
|
681,281
|
|
|
11.7
|
%
|
|
732,730
|
|
|
13.1
|
%
|
||
Total non-monetary assets that do not require revaluation
|
|
16,584
|
|
|
0.1
|
%
|
|
15,937
|
|
|
0.2
|
%
|
||
Total non-monetary liabilities that do not require revaluation
|
|
87,291
|
|
|
1.5
|
%
|
|
81,718
|
|
|
1.5
|
%
|
(Dollars in thousands)
|
|
Number of Securities to
be Issued Upon Exercise of
Outstanding Options and
Restricted Stock
|
|
Weighted-Average
Exercise Price of
Outstanding Options
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
compensation plans
|
||||
2005 Amended and Restated Long-Term Incentive Plan
|
|
2,894,746
|
|
|
$
|
23.48
|
|
|
1,251,411
|
|
Director Stock Compensation Plan
|
|
—
|
|
|
|
|
52,104
|
|
(a)
|
Financial Statements and Financial Statement Schedules: See pages F-1 to F-99.
|
(b)
|
The exhibits numbers followed by an asterisk (*) indicate exhibits physically filed with this Annual Report on Form 10-K. All other exhibit numbers indicate exhibits filed by incorporation by reference.
|
Exhibit
Number
|
|
Description of Document
|
2.1
|
|
Stock Purchase Agreement, dated as of June 23, 2014, by and among Western World Insurance Group, Inc., the shareholders of Western World Insurance Group, Inc., Validus Specialty, Inc., Validus Holdings, Ltd. (solely for purposes of Article I, Section 5.08, Section 6.08, Section 9.03 and Article XI), and Andrew S. Frazier (in his capacity as the Sellers’ Representative) (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on June 27, 2014)
|
|
|
|
3.1
|
|
Memorandum of Association dated October 10, 2005 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
3.2
|
|
Amended and Restated Bye-laws (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.1
|
|
Specimen Common Share Certificate (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.2
|
|
Certificate of Deposit of Memorandum of Increase of Share Capital dated October 28, 2005 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.3
|
|
Specimen 5.875% Non-Cumulative Preference Shares, Series A (Incorporated by reference to Exhibit 4.2 from the Company’s Current Report on Form 8-K filed on June 13, 2016)
|
|
|
|
4.4
|
|
Certificate of Designations of 5.875% Non-Cumulative Preference Shares, Series A, of Validus Holdings, Ltd. (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 13, 2016)
|
|
|
|
4.5
|
|
Form of depositary receipt (Incorporated by reference from Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on June 13, 2016)
|
|
|
|
4.6
|
|
9.069% Junior Subordinated Deferrable Debentures Indenture dated as of June 15, 2006 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.7
|
|
Form of 9.069% Junior Subordinated Deferrable Debentures (Included in Exhibit 4.5 hereto) (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.8
|
|
First Supplemental Indenture to the 9.069% Junior Subordinated Deferrable Debentures Indenture dated as of September 15, 2006 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.9
|
|
8.480% Junior Subordinated Deferrable Debentures Indenture dated as of June 29, 2007 (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.10
|
|
Form of 8.480% Junior Subordinated Deferrable Debentures (Included in Exhibit 4.8 hereto) (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
4.11
|
|
Senior Note Indenture, by and between Validus Holdings, Ltd. and The Bank of New York Mellon, dated January 26, 2010 (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2010)
|
|
|
|
4.12
|
|
8.875% Senior Notes Supplemental Indenture, by and between Validus Holdings, Ltd. and The Bank of New York Mellon, dated January 26, 2010 (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2010)
|
|
|
|
4.13
|
|
Form of 8.875% Senior Note (Included in Exhibit 4.10 hereto) (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2010)
|
|
|
|
4.14
|
|
Junior Subordinated Indenture dated as of August 23, 2006, between Flagstone Reinsurance Holdings Limited and JP Morgan Chase Bank, National Association, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.15
|
|
First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Reinsurance Holdings, S.A., Flagstone Reinsurance Holdings Limited and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.16
|
|
Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holding, S.A. and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.17
|
|
Third Supplemental Indenture, dated as of November 30, 2012, among Validus UPS, Ltd., Validus Holdings, Ltd. and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.18
|
|
Fourth Supplemental Indenture dated as of July 13, 2016 between Validus Reinsurance Ltd. and The Bank of New York Mellon Trust Company, National Association (as successor in interest to JPMorgan Chase Bank, National Association), as trustee (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
4.19
|
|
Junior Subordinated Indenture, dated as of September 20, 2007, between Flagstone Reinsurance Holdings Limited and The Bank of New York Trust Company, National Association, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.20
|
|
First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Reinsurance Holdings, S.A., Flagstone Reinsurance Holdings Limited and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.21
|
|
Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holdings, S.A. and The Bank of New York Mellon Trust Company, National Association, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.22
|
|
Third Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A., Validus UPS, Ltd., Validus Holdings, Ltd. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.23
|
|
Fourth Supplemental Indenture dated as of July 13, 2016 between Validus Reinsurance Ltd. and The Bank of New York Mellon Trust Company, National Association (as successor in interest to The Bank of New York Trust Company, National Association), as trustee (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
4.24
|
|
Junior Subordinated Indenture, dated as of June 8, 2007, among Flagstone Finance S.A., Flagstone Reinsurance Holdings Limited and Wilmington Trust Company, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.25
|
|
First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Finance S.A., Flagstone Reinsurance Holdings, S.A. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.26
|
|
Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A., Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holdings, S.A. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.27
|
|
Third Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A, Validus UPS, Ltd., Validus Holdings, Ltd. and Wilmington Trust Company, as trustee (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.28
|
|
Fourth Supplemental Indenture dated as of July 12, 2016 between Validus UPS, Ltd. and Wilmington Trust Company, a Delaware trust company, as trustee (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
4.29
|
|
Fifth Supplemental Indenture dated as of July 13, 2016 between Validus Reinsurance, Ltd. and Wilmington Trust Company, a Delaware trust company, as trustee (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
4.30
|
|
Note Purchase Agreement, dated as of August 23, 2006, between Flagstone Reinsurance Holdings Limited and Merrill Lynch International (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.31
|
|
Amendment No. 1, dated as of November 30, 2012, to the Note Purchase Agreement, among Flagstone Reinsurance Holding (Bermuda) Limited and the noteholders named therein (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.32
|
|
Amendment No. 2, dated as of November 30, 2012, to the Note Purchase Agreement, among Validus UPS, Ltd., Validus Holdings, Ltd. and the noteholders named therein (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2012)
|
|
|
|
4.33
|
|
Amendment No. 3 to Note Purchase Agreement dated as of July 13, 2016 between Validus Reinsurance, Ltd. and Validus Holdings, Ltd. as Guarantor and the noteholders named therein (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
10.1
|
|
Five-Year Unsecured Revolving Credit and Letter of Credit Facility, dated as of December 9, 2015, among Validus Holdings, Ltd., Validus Reinsurance, Ltd., the Lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and Lloyds Securities Inc., as syndication agent (Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 10, 2015)
|
|
|
|
10.2
|
|
Five-Year Secured Letter of Credit Facility, dated as of December 9, 2015, among Validus Holdings, Ltd., Validus Reinsurance, Ltd., the Lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and Lloyds Securities Inc., as syndication agent (Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 10, 2015)
|
|
|
|
10.3
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Lixin Zeng dated as of November 1, 2012 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2012 filed with the SEC on November 6. 2012)
|
|
|
|
10.3.1
|
|
Amendment No.1 to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Lixin Zeng dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.4
|
|
Amended and Restated Employment Agreement dated as of February 15, 2013 between Validus Holdings, Ltd. and Jeffrey D. Sangster (Incorporated by reference from the Company’s Annual Report on Form 10-K for year ended December 31, 2012, filed with the SEC on February 15, 2013).
|
|
|
|
10.4.1
|
|
Amendment to No. 1 to Amended and Restated Employment Agreement between Jeffrey D. Sangster and Validus Holdings, Ltd. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.5
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
10.5.1
|
|
Amendment No.1 to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2008, filed with the SEC on November 13, 2008)
|
|
|
|
10.5.2
|
|
Amendment No. 2 to Amended and Restated Employment Agreement between Edward J. Noonan and Validus Holdings, Ltd. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.6
|
|
Employment Agreement dated as of September 1, 2010 between Validus Holdings, Ltd. and Jonathan P. Ritz. (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on September 8, 2010)
|
|
|
|
10.6.1
|
|
Amendment No. 1 to Employment Agreement between Validus Holdings, Ltd. and Jonathan P. Ritz dated as of October 1, 2010 (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
10.6.2
|
|
Amendment No. 2 to Employment Agreement between Jonathan P. Ritz and Validus America, Inc. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.6.3
|
*
|
Amendment No. 3 to Employment Agreement between Validus America, Inc. and Jonathan P. Ritz dated as of November 3, 2016
|
|
|
|
10.7
|
*
|
Employment Agreement between Talbot Underwriting Services Ltd. and Peter A. Bilsby dated as of March 19, 2013 (as amended on March 1, 2016)
|
|
|
|
10.8
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Robert F. Kuzloski dated as of April 1, 2011 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed with the SEC on November 4, 2011)
|
|
|
|
10.8.1
|
|
Amendment No. 1 to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Robert F. Kuzloski dated as of August 1, 2012 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2012 filed with the SEC on November 6, 2012)
|
|
|
|
10.8.2
|
|
Amendment No. 2 to Amended and Restated Employment Agreement between Robert F. Kuzloski and Validus Holdings, Ltd. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.9
|
|
Employment Agreement between Validus Holdings, Ltd. and Andrew Kudera dated as of February 2, 2010 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed with the SEC on November 4, 2011)
|
|
|
|
10.9.1
|
|
Amendment No. 1 to Employment Agreement between Andrew E. Kudera and Validus Holdings, Ltd. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.10
|
|
Employment Agreement dated October 25 2012 between Validus America, Inc. and for purposes of Section 12.04, countersigned by Validus Holdings, Ltd. and John J. Hendrickson (Incorporated by reference from the Company’s Annual Report on Form 10-K for year ended December 31, 2012, filed with the SEC on February 15, 2013)
|
|
|
|
10.10.1
|
|
Amendment No. 1 to Employment Agreement between John J. Hendrickson and Validus America, Inc. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.11
|
|
Employment Agreement dated as of April 2, 2013 between Validus America, Inc. and Romel Salam (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013 filed with the SEC on May 6, 2013)
|
|
|
|
10.11.1
|
|
Amendment No. 1 to Employment Agreement between Validus America, Inc. and Romel Salam dated as of May 20, 2014 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014 filed with the SEC on August 7, 2014)
|
|
|
|
10.11.2
|
|
Amendment No. 2 to Employment Agreement between Romel Salam and Validus America, Inc. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.12
|
|
Amended and Restated Employment Agreement dated as of April 30, 2013 between Validus Services (Bermuda), Ltd. and Kean Driscoll (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013 filed with the SEC on May 6, 2013)
|
|
|
|
10.12.1
|
|
Amendment No. 1 to Amended and Restated Employment Agreement between Kean Driscoll and Validus Services (Bermuda) Ltd. dated as of March 12, 2015 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2015)
|
|
|
|
10.13
|
|
Amended and Restated Employment Agreement dated as of June 1, 2016, between Validus Holdings, Ltd. and Michael Moore (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
10.14
|
|
Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Patrick Boisvert dated as of May 18, 2016 (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
10.15
|
|
Amended and Restated Validus Holdings, Ltd. 2005 Long Term Incentive Plan (As Amended and Restated Effective May 7, 2015) (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on November 6, 2015)
|
|
|
|
10.16
|
|
Form of Amended Post-IPO Restricted Share Award Agreement for Validus Executive Officers (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
10.17
|
|
Form of Amended Restricted Share Agreement for Talbot Executive Officers (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
10.18
|
|
Amended and Restated Restricted Share Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
10.19
|
|
Stock Option Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
10.20
|
|
Form of Stock Option Agreement for Executive Officers commencing in 2008 (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 6, 2008)
|
|
|
|
10.21
|
|
Form of Performance Share Award Agreement for Validus Executive Officers (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
10.22
|
|
Form of Performance Share Award Agreement for Talbot Executive Officers (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
|
|
|
|
10.23
|
|
Nonqualified Supplemental Deferred Compensation Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
10.24
|
|
Validus Holdings, Ltd. Director Stock Compensation Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
|
|
|
|
10.25
|
|
Amendment No. 1 to Validus Holdings, Ltd. Directors Stock Compensation Plan dated as of January 5, 2009 (Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on February 27, 2009)
|
|
|
|
10.26
|
|
Subscription Agreement dated as of November 7, 2014 between Aquiline Capital Partners III GP (Offshore) Ltd. and Validus Reinsurance, Ltd. (Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 7, 2014)
|
|
|
|
10.27
|
|
Form of Amended Restricted Share Award Agreement for Talbot Executive Officers (Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)
|
|
|
|
12
|
*
|
Ratio of Earnings to Fixed Charges and Preferred Dividends
|
|
|
|
21
|
*
|
Subsidiaries of the Registrant
|
|
|
|
23
|
*
|
Consent of PricewaterhouseCoopers Ltd.
|
|
|
|
24
|
|
Power of attorney (Incorporated by Reference from signature page)
|
|
|
|
31
|
*
|
Rule 13a-14(a)/15d-14(a) Certifications
|
|
|
|
32
|
*
|
Section 1350 Certification
|
|
|
|
101.INS
|
*
|
XBRL Instance Document
|
|
|
|
101.SCH
|
*
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Validus Holdings, Ltd.
|
||
|
|
|
|
|
By:
|
/s/ EDWARD J. NOONAN
|
|
|
|
Name:
|
Edward J. Noonan
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
|
|
By:
|
/s/ JEFFREY D. SANGSTER
|
|
|
|
Name:
|
Jeffrey D. Sangster
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ EDWARD J. NOONAN
|
|
Chairman of the Board of Directors
|
|
February 23, 2017
|
Name: Edward J. Noonan
|
|
and Chief Executive Officer
(Principal Executive Officer)
|
|
|
/s/ JEFFREY D. SANGSTER
|
|
Executive Vice President
|
|
February 23, 2017
|
Name: Jeffrey D. Sangster
|
|
and Chief Financial Officer (Principal Finance Officer)
|
|
|
/s/ PATRICK BOISVERT
|
|
Executive Vice President
|
|
February 23, 2017
|
Name: Patrick Boisvert
|
|
and Chief Accounting Officer (Principal Accounting Officer)
|
|
|
/s/ MAHMOUD ABDALLAH
|
|
Director
|
|
February 23, 2017
|
Name: Mahmoud Abdallah
|
|
|
|
|
/s/ MICHAEL E. A. CARPENTER
|
|
Director
|
|
February 23, 2017
|
Name: Michael E. A. Carpenter
|
|
|
|
|
/s/ MATTHEW J. GRAYSON
|
|
Director
|
|
February 23, 2017
|
Name: Matthew J. Grayson
|
|
|
|
|
/s/ JOHN J. HENDRICKSON
|
|
Director
|
|
February 23, 2017
|
Name: John J. Hendrickson
|
|
|
|
|
/s/ MANDAKINI PURI
|
|
Director
|
|
February 23, 2017
|
Name: Mandakini Puri
|
|
|
|
|
/s/ GAIL ROSS
|
|
Director
|
|
February 23, 2017
|
Name: Gail Ross
|
|
|
|
|
/s/ DR. THERESE M. (TERRI) VAUGHAN
|
|
Director
|
|
February 23, 2017
|
Name: Dr. Therese M. (Terri) Vaughan
|
|
|
|
|
|
Page No.
|
Consolidated Financial Statements:
|
|
|
|
Financial Statement Schedules:
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
||||
Fixed maturities trading, at fair value (amortized cost: 2016—$5,584,599; 2015—$5,556,900)
|
$
|
5,543,030
|
|
|
$
|
5,510,331
|
|
Short-term investments trading, at fair value (amortized cost: 2016—$2,796,358; 2015—$1,941,615)
|
2,796,170
|
|
|
1,941,635
|
|
||
Other investments, at fair value (cost: 2016—$380,130; 2015—$315,963)
|
405,712
|
|
|
336,856
|
|
||
Investments in investment affiliates, equity method (cost: 2016—$84,840; 2015—$69,794)
|
100,431
|
|
|
87,673
|
|
||
Cash and cash equivalents
|
419,976
|
|
|
723,109
|
|
||
Restricted cash
|
70,956
|
|
|
73,270
|
|
||
Total investments and cash
|
9,336,275
|
|
|
8,672,874
|
|
||
Investment in operating affiliate, equity method (cost: 2016—$nil; 2015—$392)
|
—
|
|
|
392
|
|
||
Premiums receivable
|
725,390
|
|
|
658,682
|
|
||
Deferred acquisition costs
|
209,227
|
|
|
181,002
|
|
||
Prepaid reinsurance premiums
|
77,996
|
|
|
77,992
|
|
||
Securities lending collateral
|
9,779
|
|
|
4,863
|
|
||
Loss reserves recoverable
|
430,421
|
|
|
350,586
|
|
||
Paid losses recoverable
|
35,247
|
|
|
23,071
|
|
||
Income taxes recoverable
|
4,870
|
|
|
16,228
|
|
||
Deferred tax asset
|
43,529
|
|
|
21,661
|
|
||
Receivable for investments sold
|
3,901
|
|
|
39,766
|
|
||
Intangible assets
|
115,592
|
|
|
121,258
|
|
||
Goodwill
|
196,758
|
|
|
196,758
|
|
||
Accrued investment income
|
26,488
|
|
|
23,897
|
|
||
Other assets
|
134,282
|
|
|
126,782
|
|
||
Total assets
|
$
|
11,349,755
|
|
|
$
|
10,515,812
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
||
Reserve for losses and loss expenses
|
$
|
2,995,195
|
|
|
$
|
2,996,567
|
|
Unearned premiums
|
1,076,049
|
|
|
966,210
|
|
||
Reinsurance balances payable
|
54,781
|
|
|
75,380
|
|
||
Securities lending payable
|
10,245
|
|
|
5,329
|
|
||
Deferred tax liability
|
3,331
|
|
|
3,847
|
|
||
Payable for investments purchased
|
29,447
|
|
|
77,475
|
|
||
Accounts payable and accrued expenses
|
587,648
|
|
|
627,331
|
|
||
Notes payable to AlphaCat investors
|
278,202
|
|
|
75,493
|
|
||
Senior notes payable
|
245,362
|
|
|
245,161
|
|
||
Debentures payable
|
537,226
|
|
|
537,668
|
|
||
Total liabilities
|
5,817,486
|
|
|
5,610,461
|
|
||
Commitments and contingent liabilities
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
1,528,001
|
|
|
1,111,714
|
|
||
Shareholders’ equity
|
|
|
|
||||
Preferred shares (Issued and Outstanding: 2016—6,000; 2015—nil)
|
150,000
|
|
|
—
|
|
||
Common shares (Issued: 2016—161,279,976; 2015—160,570,772; Outstanding: 2016—79,132,252; 2015—82,900,617)
|
28,224
|
|
|
28,100
|
|
||
Treasury shares (2016—82,147,724; 2015—77,670,155)
|
(14,376
|
)
|
|
(13,592
|
)
|
||
Additional paid-in capital
|
821,023
|
|
|
1,002,980
|
|
||
Accumulated other comprehensive loss
|
(23,216
|
)
|
|
(12,569
|
)
|
||
Retained earnings
|
2,876,636
|
|
|
2,634,056
|
|
||
Total shareholders’ equity available to Validus
|
3,838,291
|
|
|
3,638,975
|
|
||
Noncontrolling interests
|
165,977
|
|
|
154,662
|
|
||
Total shareholders’ equity
|
4,004,268
|
|
|
3,793,637
|
|
||
Total liabilities, noncontrolling interests and shareholders’ equity
|
$
|
11,349,755
|
|
|
$
|
10,515,812
|
|
|
December 31,
2016 |
|
December 31,
2015 |
|
December 31,
2014 |
||||||
Revenues
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
2,648,705
|
|
|
$
|
2,557,506
|
|
|
$
|
2,358,865
|
|
Reinsurance premiums ceded
|
(289,705
|
)
|
|
(328,681
|
)
|
|
(313,208
|
)
|
|||
Net premiums written
|
2,359,000
|
|
|
2,228,825
|
|
|
2,045,657
|
|
|||
Change in unearned premiums
|
(109,835
|
)
|
|
18,064
|
|
|
(52,602
|
)
|
|||
Net premiums earned
|
2,249,165
|
|
|
2,246,889
|
|
|
1,993,055
|
|
|||
Net investment income
|
150,385
|
|
|
127,824
|
|
|
100,086
|
|
|||
Net realized gains on investments
|
15,757
|
|
|
2,298
|
|
|
14,917
|
|
|||
Change in net unrealized gains (losses) on investments
|
16,871
|
|
|
(32,395
|
)
|
|
(2,842
|
)
|
|||
(Loss) income from investment affiliates
|
(2,083
|
)
|
|
4,281
|
|
|
8,411
|
|
|||
Other insurance related income and other income
|
2,195
|
|
|
5,111
|
|
|
1,229
|
|
|||
Foreign exchange gains (losses)
|
10,864
|
|
|
(8,731
|
)
|
|
(12,181
|
)
|
|||
Total revenues
|
2,443,154
|
|
|
2,345,277
|
|
|
2,102,675
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Losses and loss expenses
|
1,065,097
|
|
|
977,833
|
|
|
765,015
|
|
|||
Policy acquisition costs
|
449,482
|
|
|
410,058
|
|
|
339,467
|
|
|||
General and administrative expenses
|
336,294
|
|
|
363,709
|
|
|
329,362
|
|
|||
Share compensation expenses
|
42,907
|
|
|
38,341
|
|
|
33,073
|
|
|||
Finance expenses
|
58,520
|
|
|
74,742
|
|
|
68,324
|
|
|||
Transaction expenses
|
—
|
|
|
—
|
|
|
8,096
|
|
|||
Total expenses
|
1,952,300
|
|
|
1,864,683
|
|
|
1,543,337
|
|
|||
Income before taxes, loss from operating affiliate and (income) attributable to AlphaCat investors
|
490,854
|
|
|
480,594
|
|
|
559,338
|
|
|||
Tax benefit (expense)
|
19,729
|
|
|
(6,376
|
)
|
|
(155
|
)
|
|||
Loss from operating affiliate
|
(23
|
)
|
|
(3,949
|
)
|
|
(4,340
|
)
|
|||
(Income) attributable to AlphaCat investors
|
(23,358
|
)
|
|
(2,412
|
)
|
|
—
|
|
|||
Net income
|
487,202
|
|
|
467,857
|
|
|
554,843
|
|
|||
Net (income) attributable to noncontrolling interests
|
(123,363
|
)
|
|
(92,964
|
)
|
|
(74,880
|
)
|
|||
Net income available to Validus
|
363,839
|
|
|
374,893
|
|
|
479,963
|
|
|||
Dividends on preferred shares
|
(4,455
|
)
|
|
—
|
|
|
—
|
|
|||
Net income available to Validus common shareholders
|
$
|
359,384
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
|
|
|
|
|
|
||||||
Comprehensive income:
|
|
|
|
|
|
||||||
Net income
|
$
|
487,202
|
|
|
$
|
467,857
|
|
|
$
|
554,843
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Change in foreign currency translation adjustments
|
(10,440
|
)
|
|
(3,716
|
)
|
|
(7,501
|
)
|
|||
Change in minimum pension liability, net of tax
|
(484
|
)
|
|
544
|
|
|
(210
|
)
|
|||
Change in fair value of cash flow hedge
|
277
|
|
|
(841
|
)
|
|
(228
|
)
|
|||
Other comprehensive (loss), net of tax
|
(10,647
|
)
|
|
(4,013
|
)
|
|
(7,939
|
)
|
|||
Comprehensive (income) attributable to noncontrolling interests
|
(123,363
|
)
|
|
(92,964
|
)
|
|
(74,880
|
)
|
|||
Comprehensive income available to Validus
|
$
|
353,192
|
|
|
$
|
370,880
|
|
|
$
|
472,024
|
|
|
|
|
|
|
|
||||||
Earnings per share
|
|
|
|
|
|
||||||
Basic earnings per share available to Validus common shareholders
|
$
|
4.43
|
|
|
$
|
4.47
|
|
|
$
|
5.24
|
|
Earnings per diluted share available to Validus common shareholders
|
$
|
4.36
|
|
|
$
|
4.34
|
|
|
$
|
5.07
|
|
|
|
|
|
|
|
||||||
Cash dividends declared per common share
|
$
|
1.40
|
|
|
$
|
1.28
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares and common share equivalents outstanding:
|
|
|
|
|
|||||||
Basic
|
81,041,974
|
|
|
83,107,236
|
|
|
90,354,745
|
|
|||
Diluted
|
82,359,460
|
|
|
86,426,760
|
|
|
94,690,271
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
Preferred shares
|
|
|
|
|
|
||||||
Balance - beginning of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Preferred shares issued
|
150,000
|
|
|
—
|
|
|
—
|
|
|||
Balance - end of year
|
$
|
150,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Common shares
|
|
|
|
|
|
||||||
Balance - beginning of year
|
$
|
28,100
|
|
|
$
|
27,222
|
|
|
$
|
27,036
|
|
Common shares issued, net
|
124
|
|
|
878
|
|
|
186
|
|
|||
Balance - end of year
|
$
|
28,224
|
|
|
$
|
28,100
|
|
|
$
|
27,222
|
|
|
|
|
|
|
|
||||||
Treasury shares
|
|
|
|
|
|
||||||
Balance - beginning of year
|
$
|
(13,592
|
)
|
|
$
|
(12,545
|
)
|
|
$
|
(10,228
|
)
|
Repurchase of common shares
|
(784
|
)
|
|
(1,047
|
)
|
|
(2,317
|
)
|
|||
Balance - end of year
|
$
|
(14,376
|
)
|
|
$
|
(13,592
|
)
|
|
$
|
(12,545
|
)
|
|
|
|
|
|
|
||||||
Additional paid-in capital
|
|
|
|
|
|
||||||
Balance - beginning of year
|
$
|
1,002,980
|
|
|
$
|
1,207,493
|
|
|
$
|
1,677,894
|
|
Offering expenses on preferred shares
|
(5,148
|
)
|
|
—
|
|
|
—
|
|
|||
Common shares (redeemed) issued, net
|
(7,825
|
)
|
|
16,529
|
|
|
5,161
|
|
|||
Repurchase of common shares
|
(211,891
|
)
|
|
(259,383
|
)
|
|
(508,635
|
)
|
|||
Share compensation expenses
|
42,907
|
|
|
38,341
|
|
|
33,073
|
|
|||
Balance - end of year
|
$
|
821,023
|
|
|
$
|
1,002,980
|
|
|
$
|
1,207,493
|
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive loss
|
|
|
|
|
|
||||||
Balance - beginning of year
|
$
|
(12,569
|
)
|
|
$
|
(8,556
|
)
|
|
$
|
(617
|
)
|
Other comprehensive loss
|
(10,647
|
)
|
|
(4,013
|
)
|
|
(7,939
|
)
|
|||
Balance - end of year
|
$
|
(23,216
|
)
|
|
$
|
(12,569
|
)
|
|
$
|
(8,556
|
)
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
|
|
|
|
||||||
Balance - beginning of year
|
$
|
2,634,056
|
|
|
$
|
2,372,972
|
|
|
$
|
2,010,009
|
|
Net income
|
487,202
|
|
|
467,857
|
|
|
554,843
|
|
|||
Net (income) attributable to noncontrolling interests
|
(123,363
|
)
|
|
(92,964
|
)
|
|
(74,880
|
)
|
|||
Dividends on common shares
|
(116,804
|
)
|
|
(113,809
|
)
|
|
(117,000
|
)
|
|||
Dividends on preferred shares
|
(4,455
|
)
|
|
—
|
|
|
—
|
|
|||
Balance - end of year
|
$
|
2,876,636
|
|
|
$
|
2,634,056
|
|
|
$
|
2,372,972
|
|
|
|
|
|
|
|
||||||
Total shareholders’ equity available to Validus
|
$
|
3,838,291
|
|
|
$
|
3,638,975
|
|
|
$
|
3,586,586
|
|
|
|
|
|
|
|
||||||
Noncontrolling interests
|
$
|
165,977
|
|
|
$
|
154,662
|
|
|
$
|
292,274
|
|
|
|
|
|
|
|
||||||
Total shareholders’ equity
|
$
|
4,004,268
|
|
|
$
|
3,793,637
|
|
|
$
|
3,878,860
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
Cash flows provided by (used in) operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
487,202
|
|
|
$
|
467,857
|
|
|
$
|
554,843
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||||||
Share compensation expenses
|
42,907
|
|
|
38,341
|
|
|
33,073
|
|
|||
Gain on sale of subsidiary
|
—
|
|
|
—
|
|
|
(709
|
)
|
|||
Amortization of discount on senior notes
|
108
|
|
|
108
|
|
|
108
|
|
|||
Loss (income) from investment and operating affiliates
|
2,106
|
|
|
(332
|
)
|
|
(4,071
|
)
|
|||
Net realized and change in net unrealized (gains) losses on investments
|
(32,628
|
)
|
|
30,097
|
|
|
(12,075
|
)
|
|||
Amortization of intangible assets
|
5,666
|
|
|
5,666
|
|
|
4,538
|
|
|||
Foreign exchange losses included in net income
|
3,043
|
|
|
18,907
|
|
|
23,591
|
|
|||
Amortization of premium on fixed maturity investments
|
17,961
|
|
|
23,075
|
|
|
19,107
|
|
|||
Change in operational balance sheet items:
|
|
|
|
|
|
||||||
Premiums receivable
|
(76,659
|
)
|
|
44,154
|
|
|
22,034
|
|
|||
Deferred acquisition costs
|
(28,225
|
)
|
|
(19,980
|
)
|
|
(27,131
|
)
|
|||
Prepaid reinsurance premiums
|
(4
|
)
|
|
4,955
|
|
|
34,443
|
|
|||
Loss reserves recoverable
|
(85,264
|
)
|
|
24,659
|
|
|
81,824
|
|
|||
Paid losses recoverable
|
(11,932
|
)
|
|
15,111
|
|
|
43,580
|
|
|||
Reserve for losses and loss expenses
|
37,042
|
|
|
(231,345
|
)
|
|
(404,280
|
)
|
|||
Unearned premiums
|
109,839
|
|
|
(23,019
|
)
|
|
18,161
|
|
|||
Reinsurance balances payable
|
(18,487
|
)
|
|
(52,785
|
)
|
|
(32,262
|
)
|
|||
Other operational balance sheet items, net
|
(42,472
|
)
|
|
(10,963
|
)
|
|
(14,613
|
)
|
|||
Net cash provided by operating activities
|
410,203
|
|
|
334,506
|
|
|
340,161
|
|
|||
|
|
|
|
|
|
||||||
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
||||||
Proceeds on sales of fixed maturity investments
|
2,671,226
|
|
|
3,842,408
|
|
|
4,756,555
|
|
|||
Proceeds on maturities of fixed maturity investments
|
349,722
|
|
|
332,410
|
|
|
554,619
|
|
|||
Purchases of fixed maturity investments
|
(3,074,703
|
)
|
|
(4,225,031
|
)
|
|
(4,391,814
|
)
|
|||
Purchases of short-term investments, net
|
(856,021
|
)
|
|
(436,690
|
)
|
|
(329,301
|
)
|
|||
Purchases of other investments, net
|
(64,943
|
)
|
|
(5,988
|
)
|
|
(143,597
|
)
|
|||
(Increase) decrease in securities lending collateral
|
(4,916
|
)
|
|
(4,393
|
)
|
|
2,922
|
|
|||
Distributions from operating affiliates
|
369
|
|
|
46,603
|
|
|
—
|
|
|||
Investments in investment affiliates, net
|
(14,841
|
)
|
|
(19,886
|
)
|
|
(12,468
|
)
|
|||
Decrease in restricted cash
|
2,314
|
|
|
99,733
|
|
|
27,489
|
|
|||
Proceeds on sale of subsidiary, net of cash
|
—
|
|
|
—
|
|
|
16,459
|
|
|||
Purchase of subsidiary, net of cash
|
—
|
|
|
—
|
|
|
(643,545
|
)
|
|||
Net cash used in investing activities
|
(991,793
|
)
|
|
(370,834
|
)
|
|
(162,681
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
||||||
Net proceeds on issuance of notes payable to AlphaCat investors
|
296,325
|
|
|
75,493
|
|
|
—
|
|
|||
Net proceeds on issuance of preferred shares
|
144,852
|
|
|
—
|
|
|
—
|
|
|||
(Redemption) issuance of common shares, net
|
(7,701
|
)
|
|
17,407
|
|
|
5,347
|
|
|||
Purchases of common shares under share repurchase program
|
(212,675
|
)
|
|
(260,430
|
)
|
|
(510,952
|
)
|
|||
Dividends paid on preferred shares
|
(4,455
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends paid on common shares
|
(115,625
|
)
|
|
(112,967
|
)
|
|
(117,043
|
)
|
|||
Increase (decrease) in securities lending payable
|
4,916
|
|
|
4,393
|
|
|
(2,922
|
)
|
|||
Third party investments in redeemable noncontrolling interests
|
393,450
|
|
|
499,200
|
|
|
300,200
|
|
|||
Third party redemptions of redeemable noncontrolling interests
|
(17,285
|
)
|
|
(86,933
|
)
|
|
(13,192
|
)
|
|||
Third party investments in noncontrolling interests
|
171,674
|
|
|
9,600
|
|
|
117,243
|
|
|||
Third party distributions of noncontrolling interests
|
(127,103
|
)
|
|
(168,758
|
)
|
|
(237,183
|
)
|
|||
Third party subscriptions (deployed) received on AlphaCat Funds and Sidecars
|
(225,284
|
)
|
|
249,636
|
|
|
127,400
|
|
|||
Net cash provided by (used in) financing activities
|
301,089
|
|
|
226,641
|
|
|
(331,102
|
)
|
|||
|
|
|
|
|
|
||||||
Effect of foreign currency rate changes on cash and cash equivalents
|
(22,632
|
)
|
|
(17,605
|
)
|
|
(25,310
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(303,133
|
)
|
|
172,708
|
|
|
(178,932
|
)
|
|||
Cash and cash equivalents—beginning of year
|
723,109
|
|
|
550,401
|
|
|
729,333
|
|
|||
Cash and cash equivalents—end of year
|
$
|
419,976
|
|
|
$
|
723,109
|
|
|
$
|
550,401
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Taxes paid during the year
|
$
|
6,034
|
|
|
$
|
16,050
|
|
|
$
|
42,689
|
|
Interest paid during the year
|
$
|
54,638
|
|
|
$
|
55,047
|
|
|
$
|
54,526
|
|
(a)
|
Premiums
|
(b)
|
Policy acquisition costs
|
(c)
|
Reserve for losses and loss expenses
|
(d)
|
Reinsurance
|
(e)
|
Investments
|
(f)
|
Fair value of financial instruments
|
(g)
|
Derivative instruments
|
(h)
|
Cash and cash equivalents
|
(i)
|
Foreign exchange
|
(j)
|
Stock plans
|
(k)
|
Warrants
|
(l)
|
Earnings per share
|
(m)
|
Income taxes and uncertain tax provisions
|
(n)
|
Business combinations, goodwill and other intangible assets
|
(n)
|
Variable interest entities
|
(o)
|
Noncontrolling interests
|
(a)
|
Accounting Standards Adopted in 2016
|
(b)
|
Recently Issued Accounting Standards Not Yet Adopted
|
Total purchase price
|
|
$
|
692,305
|
|
|||
Assets acquired
|
|
|
|||||
|
Cash and cash equivalents
|
$
|
48,760
|
|
|
||
|
Investments
|
1,126,185
|
|
|
|||
|
Receivables
|
37,848
|
|
|
|||
|
Other assets
|
19,418
|
|
|
|||
|
Tangible assets acquired
|
|
1,232,211
|
|
|||
|
Intangible asset - State licenses
|
$
|
12,325
|
|
|
||
|
Intangible asset - Brand name
|
5,756
|
|
|
|||
|
Intangible asset - Distribution network
|
4,651
|
|
|
|||
|
Intangible asset - Technology
|
2,323
|
|
|
|||
|
Intangible assets acquired
|
|
$
|
25,055
|
|
||
Liabilities acquired
|
|
|
|||||
|
Net loss reserves and paid losses recoverable
|
$
|
523,315
|
|
|
||
|
Unearned premiums, net of expenses
|
135,686
|
|
|
|||
|
Other liabilities
|
81,464
|
|
|
|||
|
Liabilities acquired
|
|
740,465
|
|
|||
Excess purchase price (goodwill) as at December 31, 2014
|
|
$
|
175,504
|
|
|||
Measurement period adjustments
(a)
|
|
861
|
|
||||
Excess purchase price (goodwill) as at December 31, 2015
|
|
$
|
176,365
|
|
(a)
|
During the year ended December 31, 2015, measurement period adjustments of
$861
were made to certain other assets, net of taxes.
|
|
|
Year Ended December 31,
|
||
|
|
2014
|
||
(Dollars in thousands)
|
|
Unaudited
|
||
Net premiums earned
|
|
$
|
2,216,349
|
|
Net operating income
|
|
$
|
481,179
|
|
Net income
|
|
$
|
448,071
|
|
|
|
From Acquisition Date to
|
||
(Dollars in thousands)
|
|
December 31, 2014
|
||
Net premiums written
|
|
$
|
58,807
|
|
Total revenue
|
|
78,325
|
|
|
Total expenses
|
|
(66,882
|
)
|
|
Net income
|
|
$
|
11,443
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||
|
Goodwill
|
|
Other Intangible Assets
|
||||||||||||||||||||
|
Talbot
|
|
Western World
|
|
Total
|
|
With a Finite Life
|
|
With an Indefinite Life
|
|
Total
|
||||||||||||
Balance, beginning of year
|
$
|
20,393
|
|
|
$
|
176,365
|
|
|
$
|
196,758
|
|
|
$
|
17,090
|
|
|
$
|
104,168
|
|
|
$
|
121,258
|
|
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,666
|
)
|
|
—
|
|
|
(5,666
|
)
|
||||||
Balance, end of year
|
$
|
20,393
|
|
|
$
|
176,365
|
|
|
$
|
196,758
|
|
|
$
|
11,424
|
|
|
$
|
104,168
|
|
|
$
|
115,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Year Ended December 31, 2015
|
||||||||||||||||||||||
|
Goodwill
|
|
Other Intangible Assets
|
||||||||||||||||||||
|
Talbot
|
|
Western World
|
|
Total
|
|
With a Finite Life
|
|
With an Indefinite Life
|
|
Total
|
||||||||||||
Balance, beginning of year
|
$
|
20,393
|
|
|
$
|
175,504
|
|
|
$
|
195,897
|
|
|
$
|
22,756
|
|
|
$
|
104,168
|
|
|
$
|
126,924
|
|
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,666
|
)
|
|
—
|
|
|
(5,666
|
)
|
||||||
Measurement period adjustments
|
—
|
|
|
861
|
|
|
861
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, end of year
|
$
|
20,393
|
|
|
$
|
176,365
|
|
|
$
|
196,758
|
|
|
$
|
17,090
|
|
|
$
|
104,168
|
|
|
$
|
121,258
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Other intangible assets with a finite life
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade name and customer relationships
|
$
|
18,189
|
|
|
$
|
(13,406
|
)
|
|
$
|
4,783
|
|
|
$
|
18,189
|
|
|
$
|
(12,187
|
)
|
|
$
|
6,002
|
|
Distribution network
|
39,831
|
|
|
(34,468
|
)
|
|
5,363
|
|
|
39,831
|
|
|
(30,485
|
)
|
|
9,346
|
|
||||||
Technology
|
2,323
|
|
|
(1,045
|
)
|
|
1,278
|
|
|
2,323
|
|
|
(581
|
)
|
|
1,742
|
|
||||||
Total
|
$
|
60,343
|
|
|
$
|
(48,919
|
)
|
|
$
|
11,424
|
|
|
$
|
60,343
|
|
|
$
|
(43,253
|
)
|
|
$
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other intangible assets with an indefinite life
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Syndicate capacity
|
$
|
91,843
|
|
|
n/a
|
|
$
|
91,843
|
|
|
$
|
91,843
|
|
|
n/a
|
|
$
|
91,843
|
|
||||
State licenses
|
12,325
|
|
|
n/a
|
|
12,325
|
|
|
12,325
|
|
|
n/a
|
|
12,325
|
|
||||||||
Total
|
$
|
104,168
|
|
|
|
|
$
|
104,168
|
|
|
$
|
104,168
|
|
|
|
|
$
|
104,168
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Amortized
Cost or Cost
|
|
Fair Value
|
|
Amortized
Cost or Cost |
|
Fair Value
|
||||||||
Managed investments
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency
|
$
|
809,392
|
|
|
$
|
804,126
|
|
|
$
|
940,428
|
|
|
$
|
937,202
|
|
Non-U.S. government and government agency
|
245,651
|
|
|
240,791
|
|
|
241,549
|
|
|
237,968
|
|
||||
U.S. states, municipalities and political subdivisions
|
271,742
|
|
|
271,830
|
|
|
299,929
|
|
|
301,289
|
|
||||
Agency residential mortgage-backed securities
|
684,490
|
|
|
679,595
|
|
|
606,676
|
|
|
610,582
|
|
||||
Non-agency residential mortgage-backed securities
|
15,858
|
|
|
15,477
|
|
|
27,025
|
|
|
26,920
|
|
||||
U.S. corporate
|
1,540,036
|
|
|
1,534,508
|
|
|
1,503,614
|
|
|
1,489,951
|
|
||||
Non-U.S. corporate
|
418,520
|
|
|
410,227
|
|
|
453,178
|
|
|
446,570
|
|
||||
Bank loans
|
579,121
|
|
|
570,399
|
|
|
592,981
|
|
|
576,211
|
|
||||
Asset-backed securities
|
528,563
|
|
|
526,814
|
|
|
440,363
|
|
|
437,124
|
|
||||
Commercial mortgage-backed securities
|
333,740
|
|
|
330,932
|
|
|
263,310
|
|
|
260,135
|
|
||||
Total fixed maturities
|
5,427,113
|
|
|
5,384,699
|
|
|
5,369,053
|
|
|
5,323,952
|
|
||||
Short-term investments
|
228,574
|
|
|
228,386
|
|
|
237,349
|
|
|
237,369
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Fund of hedge funds
|
1,457
|
|
|
955
|
|
|
1,457
|
|
|
1,417
|
|
||||
Hedge funds
|
11,292
|
|
|
17,381
|
|
|
14,018
|
|
|
20,980
|
|
||||
Private equity investments
|
72,814
|
|
|
89,809
|
|
|
53,489
|
|
|
63,771
|
|
||||
Fixed income investment funds
|
241,536
|
|
|
242,093
|
|
|
188,121
|
|
|
188,721
|
|
||||
Overseas deposits
|
50,106
|
|
|
50,106
|
|
|
54,484
|
|
|
54,484
|
|
||||
Mutual funds
|
2,925
|
|
|
5,368
|
|
|
4,394
|
|
|
7,483
|
|
||||
Total other investments
|
380,130
|
|
|
405,712
|
|
|
315,963
|
|
|
336,856
|
|
||||
Investments in investment affiliates
(a)
|
84,840
|
|
|
100,431
|
|
|
69,794
|
|
|
87,673
|
|
||||
Total managed investments
|
$
|
6,120,657
|
|
|
$
|
6,119,228
|
|
|
$
|
5,992,159
|
|
|
$
|
5,985,850
|
|
Non-managed investments
|
|
|
|
|
|
|
|
||||||||
Catastrophe bonds
|
$
|
157,486
|
|
|
$
|
158,331
|
|
|
$
|
187,847
|
|
|
$
|
186,379
|
|
Short-term investments
|
2,567,784
|
|
|
2,567,784
|
|
|
1,704,266
|
|
|
1,704,266
|
|
||||
Total non-managed investments
|
2,725,270
|
|
|
2,726,115
|
|
|
1,892,113
|
|
|
1,890,645
|
|
||||
Total investments
|
$
|
8,845,927
|
|
|
$
|
8,845,343
|
|
|
$
|
7,884,272
|
|
|
$
|
7,876,495
|
|
(a)
|
The Company’s investments in investment affiliates have been treated as equity method investments with the corresponding gains and losses recorded in
|
(a)
|
Fixed maturity investments
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
|
Fair Value
|
|
% of Total
|
|
Fair Value
|
|
% of Total
|
||||||
Managed fixed maturities
|
|
|
|
|
|
|
|
||||||
AAA
|
$
|
2,405,597
|
|
|
43.4
|
%
|
|
$
|
2,367,642
|
|
|
43.0
|
%
|
AA
|
538,289
|
|
|
9.7
|
%
|
|
569,386
|
|
|
10.3
|
%
|
||
A
|
1,081,949
|
|
|
19.5
|
%
|
|
1,031,326
|
|
|
18.7
|
%
|
||
BBB
|
740,861
|
|
|
13.4
|
%
|
|
691,538
|
|
|
12.6
|
%
|
||
Total investment grade managed fixed maturities
|
4,766,696
|
|
|
86.0
|
%
|
|
4,659,892
|
|
|
84.6
|
%
|
||
|
|
|
|
|
|
|
|
||||||
BB
|
213,568
|
|
|
3.9
|
%
|
|
235,724
|
|
|
4.3
|
%
|
||
B
|
177,737
|
|
|
3.2
|
%
|
|
179,069
|
|
|
3.2
|
%
|
||
CCC
|
13,371
|
|
|
0.2
|
%
|
|
5,706
|
|
|
0.1
|
%
|
||
CC
|
—
|
|
|
0.0
|
%
|
|
1,015
|
|
|
0.0
|
%
|
||
NR
|
213,327
|
|
|
3.8
|
%
|
|
242,546
|
|
|
4.4
|
%
|
||
Total non-investment grade managed fixed maturities
|
618,003
|
|
|
11.1
|
%
|
|
664,060
|
|
|
12.0
|
%
|
||
Total managed fixed maturities
|
$
|
5,384,699
|
|
|
97.1
|
%
|
|
$
|
5,323,952
|
|
|
96.6
|
%
|
|
|
|
|
|
|
|
|
||||||
Non-managed fixed maturities
|
|
|
|
|
|
|
|
||||||
BBB
|
$
|
—
|
|
|
0.0
|
%
|
|
$
|
1,911
|
|
|
0.0
|
%
|
Total investment grade non-managed catastrophe bonds
|
—
|
|
|
0.0
|
%
|
|
1,911
|
|
|
0.0
|
%
|
||
|
|
|
|
|
|
|
|
||||||
BB
|
29,731
|
|
|
0.6
|
%
|
|
70,962
|
|
|
1.3
|
%
|
||
B
|
4,524
|
|
|
0.1
|
%
|
|
30,698
|
|
|
0.6
|
%
|
||
NR
|
124,076
|
|
|
2.2
|
%
|
|
82,808
|
|
|
1.5
|
%
|
||
Total non-investment grade non-managed catastrophe bonds
|
158,331
|
|
|
2.9
|
%
|
|
184,468
|
|
|
3.4
|
%
|
||
Total non-managed fixed maturities
|
158,331
|
|
|
2.9
|
%
|
|
186,379
|
|
|
3.4
|
%
|
||
Total fixed maturities
|
$
|
5,543,030
|
|
|
100.0
|
%
|
|
$
|
5,510,331
|
|
|
100.0
|
%
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
||||||||
Managed fixed maturities
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
350,733
|
|
|
$
|
346,161
|
|
|
$
|
367,132
|
|
|
$
|
366,019
|
|
Due after one year through five years
|
2,954,856
|
|
|
2,933,146
|
|
|
2,965,920
|
|
|
2,936,053
|
|
||||
Due after five years through ten years
|
430,365
|
|
|
426,647
|
|
|
548,183
|
|
|
539,083
|
|
||||
Due after ten years
|
128,508
|
|
|
125,927
|
|
|
150,444
|
|
|
148,036
|
|
||||
|
3,864,462
|
|
|
3,831,881
|
|
|
4,031,679
|
|
|
3,989,191
|
|
||||
Asset-backed and mortgage-backed securities
|
1,562,651
|
|
|
1,552,818
|
|
|
1,337,374
|
|
|
1,334,761
|
|
||||
Total managed fixed maturities
|
$
|
5,427,113
|
|
|
$
|
5,384,699
|
|
|
$
|
5,369,053
|
|
|
$
|
5,323,952
|
|
|
|
|
|
|
|
|
|
||||||||
Non-managed catastrophe bonds
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
43,664
|
|
|
$
|
45,418
|
|
|
$
|
7,504
|
|
|
$
|
7,544
|
|
Due after one year through five years
|
112,572
|
|
|
111,656
|
|
|
165,093
|
|
|
163,575
|
|
||||
Due after five years through ten years
|
1,250
|
|
|
1,257
|
|
|
15,250
|
|
|
15,260
|
|
||||
Due after ten years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total non-managed fixed maturities
|
157,486
|
|
|
158,331
|
|
|
187,847
|
|
|
186,379
|
|
||||
Total fixed maturities
|
$
|
5,584,599
|
|
|
$
|
5,543,030
|
|
|
$
|
5,556,900
|
|
|
$
|
5,510,331
|
|
(b)
|
Other investments
|
|
|
December 31, 2016
|
||||||||||||||
|
|
Fair Value
|
|
Investments with redemption restrictions
|
|
Investments without redemption restrictions
|
|
Redemption frequency
(a)
|
|
Redemption notice period
(a)
|
||||||
Fund of hedge funds
|
|
$
|
955
|
|
|
$
|
955
|
|
|
$
|
—
|
|
|
|
|
|
Hedge funds
|
|
17,381
|
|
|
17,381
|
|
|
—
|
|
|
|
|
|
|||
Private equity investments
|
|
89,809
|
|
|
89,809
|
|
|
—
|
|
|
|
|
|
|||
Fixed income investment funds
|
|
242,093
|
|
|
211,151
|
|
|
30,942
|
|
|
Daily
|
|
2 days
|
|||
Overseas deposits
|
|
50,106
|
|
|
50,106
|
|
|
—
|
|
|
|
|
|
|||
Mutual funds
|
|
5,368
|
|
|
—
|
|
|
5,368
|
|
|
Daily
|
|
Daily
|
|||
Total other investments
|
|
$
|
405,712
|
|
|
$
|
369,402
|
|
|
$
|
36,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2015
|
||||||||||||||
|
|
Fair Value
|
|
Investments with redemption restrictions
|
|
Investments without redemption restrictions
|
|
Redemption frequency
(a)
|
|
Redemption notice period
(a)
|
||||||
Fund of hedge funds
|
|
$
|
1,417
|
|
|
$
|
1,417
|
|
|
$
|
—
|
|
|
|
|
|
Hedge funds
|
|
20,980
|
|
|
20,980
|
|
|
—
|
|
|
|
|
|
|||
Private equity investments
|
|
63,771
|
|
|
63,771
|
|
|
—
|
|
|
|
|
|
|||
Fixed income investment funds
|
|
188,721
|
|
|
167,910
|
|
|
20,811
|
|
|
Daily
|
|
2 days
|
|||
Overseas deposits
|
|
54,484
|
|
|
54,484
|
|
|
—
|
|
|
|
|
|
|||
Mutual funds
|
|
7,483
|
|
|
—
|
|
|
7,483
|
|
|
Daily
|
|
Daily
|
|||
Total other investments
|
|
$
|
336,856
|
|
|
$
|
308,562
|
|
|
$
|
28,294
|
|
|
|
|
|
(c)
|
Investments in investment affiliates
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Investment affiliates, beginning of year
|
$
|
87,673
|
|
|
$
|
63,506
|
|
Net capital contributions
|
14,841
|
|
|
19,886
|
|
||
(Loss) income from investment affiliate
|
(2,083
|
)
|
|
4,281
|
|
||
Investment affiliates, end of year
|
$
|
100,431
|
|
|
$
|
87,673
|
|
|
December 31, 2016
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity ownership %
|
|
Carrying value
|
||||||
Aquiline II Partnership
|
$
|
46,871
|
|
|
—
|
%
|
|
8.1
|
%
|
|
$
|
61,999
|
|
Aquiline III Partnership
|
37,969
|
|
|
—
|
%
|
|
9.0
|
%
|
|
38,432
|
|
||
Total
|
$
|
84,840
|
|
|
|
|
|
|
$
|
100,431
|
|
||
|
|
|
|
|
|
|
|
||||||
|
December 31, 2015
|
||||||||||||
|
Investment at cost
|
|
Voting ownership %
|
|
Equity ownership %
|
|
Carrying value
|
||||||
Aquiline II Partnership
|
$
|
55,904
|
|
|
—
|
%
|
|
8.1
|
%
|
|
$
|
73,880
|
|
Aquiline III Partnership
|
13,890
|
|
|
—
|
%
|
|
13.7
|
%
|
|
13,793
|
|
||
Total
|
$
|
69,794
|
|
|
|
|
|
|
$
|
87,673
|
|
(d)
|
Net investment income
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Managed investments
|
|
|
|
|
|
||||||
Fixed maturities and short-term investments
|
$
|
119,085
|
|
|
$
|
113,627
|
|
|
$
|
93,044
|
|
Other investments
|
27,860
|
|
|
13,307
|
|
|
5,111
|
|
|||
Cash and cash equivalents and restricted cash
|
2,939
|
|
|
1,911
|
|
|
5,106
|
|
|||
Securities lending income
|
55
|
|
|
16
|
|
|
11
|
|
|||
Total gross investment income
|
149,939
|
|
|
128,861
|
|
|
103,272
|
|
|||
Investment expenses
|
(8,221
|
)
|
|
(7,695
|
)
|
|
(7,472
|
)
|
|||
Total managed net investment income
|
$
|
141,718
|
|
|
$
|
121,166
|
|
|
$
|
95,800
|
|
Non managed investments
|
|
|
|
|
|
||||||
Fixed maturities and short-term investments
|
$
|
6,931
|
|
|
$
|
6,528
|
|
|
$
|
4,204
|
|
Cash and cash equivalents and restricted cash
|
1,736
|
|
|
130
|
|
|
82
|
|
|||
Total non-managed net investment income
|
8,667
|
|
|
6,658
|
|
|
4,286
|
|
|||
Total net investment income
|
$
|
150,385
|
|
|
$
|
127,824
|
|
|
$
|
100,086
|
|
(e)
|
Net realized gains and change in net unrealized gains (losses) on investments
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Managed fixed maturities, short-term and other investments
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
22,491
|
|
|
$
|
15,678
|
|
|
$
|
20,201
|
|
Gross realized (losses)
|
(7,811
|
)
|
|
(13,980
|
)
|
|
(8,041
|
)
|
|||
Net realized gains on investments
|
14,680
|
|
|
1,698
|
|
|
12,160
|
|
|||
Change in net unrealized gains (losses) on investments
|
14,106
|
|
|
(32,007
|
)
|
|
(1,030
|
)
|
|||
Total net realized and change in net unrealized gains (losses) on managed investments
|
$
|
28,786
|
|
|
$
|
(30,309
|
)
|
|
$
|
11,130
|
|
Non-managed fixed maturities, short-term and other investments
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
1,086
|
|
|
$
|
611
|
|
|
$
|
2,757
|
|
Gross realized (losses)
|
(9
|
)
|
|
(11
|
)
|
|
—
|
|
|||
Net realized gains on investments
|
1,077
|
|
|
600
|
|
|
2,757
|
|
|||
Change in net unrealized gains (losses) on investments
|
2,765
|
|
|
(388
|
)
|
|
(1,812
|
)
|
|||
Total net realized and change in net unrealized gains on non-managed investments
|
3,842
|
|
|
212
|
|
|
945
|
|
|||
Total net realized and change in net unrealized gains (losses) on total investments
|
$
|
32,628
|
|
|
$
|
(30,097
|
)
|
|
$
|
12,075
|
|
(f)
|
Pledged investments and cash
|
(g)
|
Securities lending
|
(a)
|
Classification within the fair value hierarchy
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair value based on NAV practical expedient
|
|
Total
|
||||||||||
Managed investments
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency
|
$
|
—
|
|
|
$
|
804,126
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
804,126
|
|
Non-U.S. government and government agency
|
—
|
|
|
240,791
|
|
|
—
|
|
|
—
|
|
|
240,791
|
|
|||||
U.S. states, municipalities and political subdivisions
|
—
|
|
|
271,830
|
|
|
—
|
|
|
—
|
|
|
271,830
|
|
|||||
Agency residential mortgage-backed securities
|
—
|
|
|
679,595
|
|
|
—
|
|
|
—
|
|
|
679,595
|
|
|||||
Non-agency residential mortgage-backed securities
|
—
|
|
|
15,477
|
|
|
—
|
|
|
—
|
|
|
15,477
|
|
|||||
U.S. corporate
|
—
|
|
|
1,534,508
|
|
|
—
|
|
|
—
|
|
|
1,534,508
|
|
|||||
Non-U.S. corporate
|
—
|
|
|
410,227
|
|
|
—
|
|
|
—
|
|
|
410,227
|
|
|||||
Bank loans
|
—
|
|
|
323,903
|
|
|
246,496
|
|
|
—
|
|
|
570,399
|
|
|||||
Asset-backed securities
|
—
|
|
|
502,883
|
|
|
23,931
|
|
|
—
|
|
|
526,814
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
330,932
|
|
|
—
|
|
|
—
|
|
|
330,932
|
|
|||||
Total fixed maturities
|
—
|
|
|
5,114,272
|
|
|
270,427
|
|
|
—
|
|
|
5,384,699
|
|
|||||
Short-term investments
|
209,651
|
|
|
18,735
|
|
|
—
|
|
|
—
|
|
|
228,386
|
|
|||||
Other investments
|
|
|
|
|
|
|
|
|
|
||||||||||
Fund of hedge funds
|
—
|
|
|
—
|
|
|
—
|
|
|
955
|
|
|
955
|
|
|||||
Hedge funds
|
—
|
|
|
—
|
|
|
—
|
|
|
17,381
|
|
|
17,381
|
|
|||||
Private equity investments
|
—
|
|
|
—
|
|
|
—
|
|
|
89,809
|
|
|
89,809
|
|
|||||
Fixed income investment funds
|
—
|
|
|
30,941
|
|
|
12,168
|
|
|
198,984
|
|
|
242,093
|
|
|||||
Overseas deposits
|
—
|
|
|
—
|
|
|
—
|
|
|
50,106
|
|
|
50,106
|
|
|||||
Mutual funds
|
—
|
|
|
5,368
|
|
|
—
|
|
|
—
|
|
|
5,368
|
|
|||||
Total other investments
|
—
|
|
|
36,309
|
|
|
12,168
|
|
|
357,235
|
|
|
405,712
|
|
|||||
Investments in investment affiliates
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,431
|
|
|||||
Total managed investments
|
$
|
209,651
|
|
|
$
|
5,169,316
|
|
|
$
|
282,595
|
|
|
$
|
357,235
|
|
|
$
|
6,119,228
|
|
Non-managed investments
|
|
|
|
|
|
|
|
|
|
||||||||||
Catastrophe bonds
|
$
|
—
|
|
|
$
|
109,956
|
|
|
$
|
48,375
|
|
|
$
|
—
|
|
|
$
|
158,331
|
|
Short-term investments
|
2,567,784
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,567,784
|
|
|||||
Total non-managed investments
|
2,567,784
|
|
|
109,956
|
|
|
48,375
|
|
|
—
|
|
|
2,726,115
|
|
|||||
Total investments
|
$
|
2,777,435
|
|
|
$
|
5,279,272
|
|
|
$
|
330,970
|
|
|
$
|
357,235
|
|
|
$
|
8,845,343
|
|
(a)
|
In accordance with ASC Topic 825
“Financial Instruments,”
the Company’s investments in investment affiliates have not been classified in the fair value hierarchy.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair value based on NAV practical expedient
|
|
Total
|
||||||||||
Managed investments
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency
|
$
|
—
|
|
|
$
|
937,202
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
937,202
|
|
Non-U.S. government and government agency
|
—
|
|
|
237,968
|
|
|
—
|
|
|
—
|
|
|
237,968
|
|
|||||
U.S. states, municipalities and political subdivisions
|
—
|
|
|
301,289
|
|
|
—
|
|
|
—
|
|
|
301,289
|
|
|||||
Agency residential mortgage-backed securities
|
—
|
|
|
610,582
|
|
|
—
|
|
|
—
|
|
|
610,582
|
|
|||||
Non-agency residential mortgage-backed securities
|
—
|
|
|
26,920
|
|
|
—
|
|
|
—
|
|
|
26,920
|
|
|||||
U.S. corporate
|
—
|
|
|
1,489,951
|
|
|
—
|
|
|
—
|
|
|
1,489,951
|
|
|||||
Non-U.S. corporate
|
—
|
|
|
446,570
|
|
|
—
|
|
|
—
|
|
|
446,570
|
|
|||||
Bank loans
|
—
|
|
|
343,874
|
|
|
232,337
|
|
|
—
|
|
|
576,211
|
|
|||||
Asset-backed securities
|
—
|
|
|
437,124
|
|
|
—
|
|
|
—
|
|
|
437,124
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
260,135
|
|
|
—
|
|
|
—
|
|
|
260,135
|
|
|||||
Total fixed maturities
|
—
|
|
|
5,091,615
|
|
|
232,337
|
|
|
—
|
|
|
5,323,952
|
|
|||||
Short-term investments
|
222,678
|
|
|
14,691
|
|
|
—
|
|
|
—
|
|
|
237,369
|
|
|||||
Other investments
|
|
|
|
|
|
|
|
|
|
||||||||||
Fund of hedge funds
|
—
|
|
|
—
|
|
|
—
|
|
|
1,417
|
|
|
1,417
|
|
|||||
Hedge funds
|
—
|
|
|
—
|
|
|
—
|
|
|
20,980
|
|
|
20,980
|
|
|||||
Private equity investments
|
—
|
|
|
—
|
|
|
—
|
|
|
63,771
|
|
|
63,771
|
|
|||||
Fixed income investment funds
|
—
|
|
|
20,811
|
|
|
—
|
|
|
167,910
|
|
|
188,721
|
|
|||||
Overseas deposits
|
—
|
|
|
—
|
|
|
—
|
|
|
54,484
|
|
|
54,484
|
|
|||||
Mutual funds
|
—
|
|
|
7,483
|
|
|
—
|
|
|
—
|
|
|
7,483
|
|
|||||
Total other investments
|
—
|
|
|
28,294
|
|
|
—
|
|
|
308,562
|
|
|
336,856
|
|
|||||
Investments in investment affiliates
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,673
|
|
|||||
Total managed investments
|
$
|
222,678
|
|
|
$
|
5,134,600
|
|
|
$
|
232,337
|
|
|
$
|
308,562
|
|
|
$
|
5,985,850
|
|
Non-managed investments
|
|
|
|
|
|
|
|
|
|
||||||||||
Catastrophe bonds
|
$
|
—
|
|
|
$
|
172,879
|
|
|
$
|
13,500
|
|
|
$
|
—
|
|
|
$
|
186,379
|
|
Short-term investments
|
1,704,266
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,704,266
|
|
|||||
Total non-managed investments
|
1,704,266
|
|
|
172,879
|
|
|
13,500
|
|
|
—
|
|
|
1,890,645
|
|
|||||
Total investments
|
$
|
1,926,944
|
|
|
$
|
5,307,479
|
|
|
$
|
245,837
|
|
|
$
|
308,562
|
|
|
$
|
7,876,495
|
|
(a)
|
In accordance with ASC Topic 825
“Financial Instruments,”
the Company’s investments in investment affiliates have not been classified in the fair value hierarchy.
|
(b)
|
Valuation techniques
|
(c)
|
Level 3 investments
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
Bank Loans
|
|
Catastrophe Bonds
|
|
Fixed Income Investment Funds
|
|
Asset Backed Securities
|
|
Total
|
||||||||||
Level 3 investments, beginning of year
|
$
|
232,337
|
|
|
$
|
13,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
245,837
|
|
Purchases
|
87,345
|
|
|
33,272
|
|
|
12,168
|
|
|
23,896
|
|
|
156,681
|
|
|||||
Sales
|
(2,389
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,389
|
)
|
|||||
Settlements
|
(69,496
|
)
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|
(69,621
|
)
|
|||||
Change in net unrealized (losses) gains
|
(1,301
|
)
|
|
1,728
|
|
|
—
|
|
|
35
|
|
|
462
|
|
|||||
Level 3 investments, end of year
|
$
|
246,496
|
|
|
$
|
48,375
|
|
|
$
|
12,168
|
|
|
$
|
23,931
|
|
|
$
|
330,970
|
|
|
Year Ended December 31, 2015
|
||||||||||
|
Bank Loans
|
|
Catastrophe Bonds
|
|
Total
|
||||||
Level 3 investments, beginning of year
|
$
|
32,748
|
|
|
$
|
17,500
|
|
|
$
|
50,248
|
|
Purchases
|
230,070
|
|
|
—
|
|
|
230,070
|
|
|||
Sales
|
(1,036
|
)
|
|
(3,989
|
)
|
|
(5,025
|
)
|
|||
Settlements
|
(27,429
|
)
|
|
—
|
|
|
(27,429
|
)
|
|||
Net realized losses
|
—
|
|
|
(11
|
)
|
|
(11
|
)
|
|||
Change in net unrealized losses
|
(2,016
|
)
|
|
—
|
|
|
(2,016
|
)
|
|||
Level 3 investments, end of year
|
$
|
232,337
|
|
|
$
|
13,500
|
|
|
$
|
245,837
|
|
(d)
|
Financial instruments not carried at fair value
|
(a)
|
Consolidated VIEs
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Total Assets
|
|
Total Liabilities
|
|
Total Assets
|
|
Total Liabilities
|
||||||||
AlphaCat sidecars
|
$
|
40,041
|
|
|
$
|
3,206
|
|
|
$
|
206,581
|
|
|
$
|
14,804
|
|
AlphaCat ILS funds - Lower Risk
|
$
|
1,498,276
|
|
|
$
|
42,457
|
|
|
$
|
1,268,070
|
|
|
$
|
143,371
|
|
AlphaCat ILS funds - Higher Risk
|
$
|
972,633
|
|
|
$
|
381,332
|
|
|
$
|
522,867
|
|
|
$
|
300,122
|
|
AlphaCat Re and AlphaCat Master Fund
|
$
|
2,510,415
|
|
|
$
|
2,510,245
|
|
|
$
|
1,615,779
|
|
|
$
|
1,615,609
|
|
BetaCat ILS funds
|
$
|
82,471
|
|
|
$
|
30,663
|
|
|
$
|
64,221
|
|
|
$
|
2,472
|
|
(b)
|
Non-Consolidated VIEs
|
|
Redeemable
Noncontrolling Interests
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||||
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Balance, beginning of year
|
$
|
1,111,714
|
|
|
$
|
617,791
|
|
|
$
|
154,662
|
|
|
$
|
292,274
|
|
|
$
|
1,266,376
|
|
|
$
|
910,065
|
|
Issuance of shares
|
393,450
|
|
|
499,200
|
|
|
171,674
|
|
|
9,600
|
|
|
565,124
|
|
|
508,800
|
|
||||||
Income attributable to noncontrolling interests
|
100,852
|
|
|
71,418
|
|
|
22,511
|
|
|
21,546
|
|
|
123,363
|
|
|
92,964
|
|
||||||
Redemption of shares / Distributions
|
(78,015
|
)
|
|
(76,695
|
)
|
|
(182,870
|
)
|
|
(168,758
|
)
|
|
(260,885
|
)
|
|
(245,453
|
)
|
||||||
Balance, end of year
|
$
|
1,528,001
|
|
|
$
|
1,111,714
|
|
|
$
|
165,977
|
|
|
$
|
154,662
|
|
|
$
|
1,693,978
|
|
|
$
|
1,266,376
|
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Operating affiliate, beginning of year
|
$
|
392
|
|
|
$
|
50,944
|
|
Return of investment
|
(369
|
)
|
|
(46,603
|
)
|
||
Loss from operating affiliate
|
(23
|
)
|
|
(3,949
|
)
|
||
Operating affiliate, end of year
|
$
|
—
|
|
|
$
|
392
|
|
|
Investment at cost
|
|
Voting ownership %
|
|
Equity ownership %
|
|
Carrying value
|
||||||
Investment in PaCRe
|
$
|
392
|
|
|
100.0
|
%
|
|
10.0
|
%
|
|
$
|
392
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
Derivatives not designated as hedging instruments
|
|
Notional Exposure
|
|
Asset Derivative at Fair Value
(a)
|
|
Liability Derivative at Fair Value
(a)
|
|
Notional Exposure
|
|
Asset Derivative at Fair Value
(a)
|
|
Liability Derivative at Fair Value
(a)
|
||||||||||||
Foreign currency forward contracts
|
|
$
|
181,375
|
|
|
$
|
2,351
|
|
|
$
|
3,421
|
|
|
$
|
255,840
|
|
|
$
|
2,601
|
|
|
$
|
3,211
|
|
(a)
|
Asset and liability derivatives are classified within other assets and accounts payable and accrued expenses, respectively, within the Company’s Consolidated Balance Sheets.
|
Derivatives not designated as hedging instruments
|
|
Classification of gains (losses) recognized in earnings
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Foreign currency forward contracts
|
|
Foreign exchange gains losses
|
|
$
|
(1,667
|
)
|
|
$
|
(610
|
)
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
Other insurance related income and other income
|
|
$
|
142
|
|
|
$
|
139
|
|
|
$
|
(133
|
)
|
Interest rate swap contracts
(a)
|
|
Net realized gains on investments
|
|
$
|
8,518
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(a)
|
Relates to net realized gains on
two
interest rate swap contracts which were entered into and terminated during the year ended December 31, 2016 to partially offset the impact of interest rate increases on the Company’s fixed maturity investment portfolio.
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
Derivatives designated as hedging instruments
|
|
Notional Exposure
|
|
Asset Derivative at Fair Value
(a)
|
|
Liability Derivative at Fair Value
(a)
|
|
Notional Exposure
|
|
Asset Derivative at Fair Value
(a)
|
|
Liability Derivative at Fair Value
(a)
|
||||||||||||
Interest rate swap contracts
|
|
$
|
552,263
|
|
|
$
|
20
|
|
|
$
|
1,479
|
|
|
$
|
552,263
|
|
|
$
|
21
|
|
|
$
|
1,942
|
|
(a)
|
Asset and liability derivatives are classified within other assets and accounts payable and accrued expenses, respectively, within the Company’s Consolidated Balance Sheets.
|
|
|
Years Ended December 31,
|
||||||||||
Foreign currency forward contracts
|
|
2016
|
|
2015
|
|
2014
|
||||||
Amount of loss recognized in income on derivative
|
|
$
|
—
|
|
|
$
|
(12,279
|
)
|
|
$
|
(9,651
|
)
|
Amount of gain on hedged item recognized in income attributable to risk being hedged
|
|
$
|
—
|
|
|
$
|
12,279
|
|
|
$
|
9,651
|
|
Amount of gain recognized in income on derivative (ineffective portion)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Years Ended December 31,
|
||||||||||
Interest rate swap contracts
|
|
2016
|
|
2015
|
|
2014
|
||||||
Amount of effective portion recognized in other comprehensive income
|
|
$
|
10,584
|
|
|
$
|
13,740
|
|
|
$
|
13,302
|
|
Amount of effective portion subsequently reclassified to earnings
|
|
$
|
(10,861
|
)
|
|
$
|
(12,899
|
)
|
|
$
|
(13,074
|
)
|
Amount of ineffective portion excluded from effectiveness testing
|
|
$
|
277
|
|
|
$
|
(841
|
)
|
|
$
|
(228
|
)
|
|
Year Ended December 31, 2016
|
||||||||||
|
Premiums
in course
of collection
|
|
Premiums
accrued
but unbilled
|
|
Total
|
||||||
Premiums receivable, beginning of year
|
$
|
95,152
|
|
|
$
|
563,530
|
|
|
$
|
658,682
|
|
Change during year
|
6,250
|
|
|
60,458
|
|
|
66,708
|
|
|||
Premiums receivable, end of year
|
$
|
101,402
|
|
|
$
|
623,988
|
|
|
$
|
725,390
|
|
|
Year Ended December 31, 2015
|
||||||||||
|
Premiums
in course
of collection
|
|
Premiums
accrued
but unbilled
|
|
Total
|
||||||
Premiums receivable, beginning of year
|
$
|
84,901
|
|
|
$
|
621,566
|
|
|
$
|
706,467
|
|
Change during year
|
10,251
|
|
|
(58,036
|
)
|
|
(47,785
|
)
|
|||
Premiums receivable, end of year
|
$
|
95,152
|
|
|
$
|
563,530
|
|
|
$
|
658,682
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Case reserves
|
$
|
1,237,772
|
|
|
$
|
1,278,697
|
|
IBNR
|
1,757,423
|
|
|
1,717,870
|
|
||
Total reserve for losses and loss expenses
|
$
|
2,995,195
|
|
|
$
|
2,996,567
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Reserve for losses and loss expenses, beginning of year
|
$
|
2,996,567
|
|
|
$
|
3,243,147
|
|
|
$
|
3,047,933
|
|
Loss reserves recoverable
|
(350,586
|
)
|
|
(377,466
|
)
|
|
(370,154
|
)
|
|||
Net reserves for losses and loss expenses, beginning of year
|
2,645,981
|
|
|
2,865,681
|
|
|
2,677,779
|
|
|||
Net reserves acquired
|
—
|
|
|
—
|
|
|
525,091
|
|
|||
Increase (decrease) in net reserves for losses and loss expenses in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
1,281,289
|
|
|
1,283,970
|
|
|
1,024,256
|
|
|||
Prior years
(a)
|
(216,192
|
)
|
|
(306,137
|
)
|
|
(259,241
|
)
|
|||
Total incurred losses and loss expenses
(a)
|
1,065,097
|
|
|
977,833
|
|
|
765,015
|
|
|||
Less net losses and loss expenses paid in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
(389,234
|
)
|
|
(326,167
|
)
|
|
(245,084
|
)
|
|||
Prior years
|
(725,168
|
)
|
|
(841,672
|
)
|
|
(818,569
|
)
|
|||
Total net paid losses
|
(1,114,402
|
)
|
|
(1,167,839
|
)
|
|
(1,063,653
|
)
|
|||
Foreign exchange gain
|
(31,902
|
)
|
|
(29,694
|
)
|
|
(38,551
|
)
|
|||
Net reserve for losses and loss expenses, end of year
|
2,564,774
|
|
|
2,645,981
|
|
|
2,865,681
|
|
|||
Loss reserves recoverable
|
430,421
|
|
|
350,586
|
|
|
377,466
|
|
|||
Reserve for losses and loss expenses, end of year
|
$
|
2,995,195
|
|
|
$
|
2,996,567
|
|
|
$
|
3,243,147
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Gross losses and loss expenses
(a)
|
$
|
1,257,054
|
|
|
$
|
1,083,695
|
|
|
$
|
826,826
|
|
Reinsurance balances recoverable
|
(191,957
|
)
|
|
(105,862
|
)
|
|
(61,811
|
)
|
|||
Net incurred losses and loss expenses
(a)
|
$
|
1,065,097
|
|
|
$
|
977,833
|
|
|
$
|
765,015
|
|
(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 fully amortized to income through a reduction in losses and loss expenses of
$10,979
and
$4,607
during the years ended December 31, 2015 and 2014, respectively.
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Liability
|
|
Total
|
||||||||||
Validus Re
|
$
|
(57,888
|
)
|
|
$
|
(24,435
|
)
|
|
$
|
(36,210
|
)
|
|
$
|
—
|
|
|
$
|
(118,533
|
)
|
Talbot
|
(38,368
|
)
|
|
(11,738
|
)
|
|
(35,704
|
)
|
|
—
|
|
|
(85,810
|
)
|
|||||
Western World
|
(2,701
|
)
|
|
—
|
|
|
—
|
|
|
(6,411
|
)
|
|
(9,112
|
)
|
|||||
AlphaCat
|
(1,858
|
)
|
|
—
|
|
|
(879
|
)
|
|
—
|
|
|
(2,737
|
)
|
|||||
Net favorable development
|
$
|
(100,815
|
)
|
|
$
|
(36,173
|
)
|
|
$
|
(72,793
|
)
|
|
$
|
(6,411
|
)
|
|
$
|
(216,192
|
)
|
|
Year Ended December 31, 2015
|
||||||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Liability
|
|
Total
(a)
|
||||||||||
Validus Re
|
$
|
(70,343
|
)
|
|
$
|
(39,460
|
)
|
|
$
|
(18,813
|
)
|
|
$
|
—
|
|
|
$
|
(128,616
|
)
|
Talbot
|
(52,393
|
)
|
|
(63,920
|
)
|
|
(30,044
|
)
|
|
—
|
|
|
(146,357
|
)
|
|||||
Western World
(a)
|
(6,045
|
)
|
|
—
|
|
|
—
|
|
|
(16,922
|
)
|
|
(22,967
|
)
|
|||||
AlphaCat
|
(8,197
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,197
|
)
|
|||||
Net favorable development
(a)
|
$
|
(136,978
|
)
|
|
$
|
(103,380
|
)
|
|
$
|
(48,857
|
)
|
|
$
|
(16,922
|
)
|
|
$
|
(306,137
|
)
|
|
Year Ended December 31, 2014
|
||||||||||||||||||
|
Property
|
|
Marine
|
|
Specialty
|
|
Liability
|
|
Total
|
||||||||||
Validus Re
|
$
|
(76,064
|
)
|
|
$
|
(6,830
|
)
|
|
$
|
(4,706
|
)
|
|
$
|
—
|
|
|
$
|
(87,600
|
)
|
Talbot
|
(53,779
|
)
|
|
(31,397
|
)
|
|
(55,990
|
)
|
|
—
|
|
|
(141,166
|
)
|
|||||
Western World
(a)
|
1,023
|
|
|
—
|
|
|
—
|
|
|
(12,263
|
)
|
|
(11,240
|
)
|
|||||
AlphaCat
|
(19,235
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,235
|
)
|
|||||
Net favorable development
(a)
|
$
|
(148,055
|
)
|
|
$
|
(38,227
|
)
|
|
$
|
(60,696
|
)
|
|
$
|
(12,263
|
)
|
|
$
|
(259,241
|
)
|
(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 fully amortized to income through a reduction in losses and loss expenses of
$10,979
and
$4,607
during the years ended December 31, 2015 and 2014, respectively.
|
(a)
|
Loss Development Tables
|
Validus Re - Property
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Incurred Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
December 31, 2016
|
||||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Total of IBNR Reserves Plus Expected Development on Reported Losses
|
|
Cumulative Reported Claims Count
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
397,635
|
|
|
$
|
321,956
|
|
|
$
|
309,344
|
|
|
$
|
282,517
|
|
|
$
|
280,411
|
|
|
$
|
19,108
|
|
|
n/a
|
2013
|
|
|
|
174,722
|
|
|
156,233
|
|
|
141,203
|
|
|
132,830
|
|
|
7,233
|
|
|
n/a
|
|||||||
2014
|
|
|
|
|
|
108,206
|
|
|
102,273
|
|
|
95,392
|
|
|
6,757
|
|
|
n/a
|
||||||||
2015
|
|
|
|
|
|
|
|
154,923
|
|
|
118,484
|
|
|
41,177
|
|
|
n/a
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
149,263
|
|
|
86,564
|
|
|
n/a
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
776,380
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Cumulative Paid Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
|
|
|
||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
67,004
|
|
|
149,433
|
|
|
202,141
|
|
|
225,518
|
|
|
234,256
|
|
|
|
|
|
|||||||
2013
|
|
|
|
17,325
|
|
|
63,974
|
|
|
101,158
|
|
|
114,263
|
|
|
|
|
|
||||||||
2014
|
|
|
|
|
|
25,346
|
|
|
63,415
|
|
|
78,509
|
|
|
|
|
|
|||||||||
2015
|
|
|
|
|
|
|
|
16,029
|
|
|
57,882
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
26,522
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
511,432
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reserves for losses and loss expenses, before 2012, net of reinsurance
(a)
|
|
|
$
|
154,539
|
|
|
|
|
|
|||||||||||||||||
|
|
Reserves for losses and loss expenses, net of reinsurance
|
|
|
$
|
419,487
|
|
|
|
|
|
(a)
|
Includes reserves for losses and loss expenses, net of reinsurance, of
$77,790
and
$10,614
related to Flagstone and IPC, respectively.
|
Validus Re - Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Incurred Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
December 31, 2016
|
||||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Total of IBNR Reserves Plus Expected Development on Reported Losses
|
|
Cumulative Reported Claims Count
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
195,163
|
|
|
$
|
226,817
|
|
|
$
|
225,131
|
|
|
$
|
218,734
|
|
|
$
|
216,673
|
|
|
$
|
19,725
|
|
|
n/a
|
2013
|
|
|
|
76,776
|
|
|
74,022
|
|
|
63,630
|
|
|
61,210
|
|
|
7,347
|
|
|
n/a
|
|||||||
2014
|
|
|
|
|
|
63,732
|
|
|
42,991
|
|
|
35,910
|
|
|
7,418
|
|
|
n/a
|
||||||||
2015
|
|
|
|
|
|
|
|
129,864
|
|
|
119,490
|
|
|
55,557
|
|
|
n/a
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
68,531
|
|
|
49,619
|
|
|
n/a
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
501,814
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Cumulative Paid Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
|
|
|
||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
11,356
|
|
|
94,052
|
|
|
148,628
|
|
|
169,420
|
|
|
178,172
|
|
|
|
|
|
|||||||
2013
|
|
|
|
11,784
|
|
|
28,996
|
|
|
39,493
|
|
|
44,512
|
|
|
|
|
|
||||||||
2014
|
|
|
|
|
|
7,013
|
|
|
11,749
|
|
|
17,383
|
|
|
|
|
|
|||||||||
2015
|
|
|
|
|
|
|
|
3,723
|
|
|
16,180
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
8,801
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
265,048
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reserves for losses and loss expenses, before 2012, net of reinsurance
(a)
|
|
|
$
|
64,750
|
|
|
|
|
|
|||||||||||||||||
|
|
Reserves for losses and loss expenses, net of reinsurance
|
|
|
$
|
301,516
|
|
|
|
|
|
(a)
|
Includes reserves for losses and loss expenses, net of reinsurance, of
$15,178
and
$1,537
related to Flagstone and IPC, respectively.
|
(a)
|
Includes reserves for losses and loss expenses, net of reinsurance, of
$41,091
and
$5,743
related to Flagstone and IPC, respectively.
|
Talbot - Property
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Incurred Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
December 31, 2016
|
||||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Total of IBNR Reserves Plus Expected Development on Reported Losses
|
|
Cumulative Reported Claims Count
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
135,923
|
|
|
$
|
112,488
|
|
|
$
|
100,748
|
|
|
$
|
101,387
|
|
|
$
|
100,773
|
|
|
$
|
2,413
|
|
|
n/a
|
2013
|
|
|
|
118,167
|
|
|
96,814
|
|
|
83,426
|
|
|
81,004
|
|
|
605
|
|
|
n/a
|
|||||||
2014
|
|
|
|
|
|
147,259
|
|
|
121,260
|
|
|
114,852
|
|
|
5,528
|
|
|
n/a
|
||||||||
2015
|
|
|
|
|
|
|
|
138,087
|
|
|
109,608
|
|
|
12,696
|
|
|
n/a
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
177,771
|
|
|
76,755
|
|
|
n/a
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
584,008
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Cumulative Paid Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
|
|
|
||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
13,051
|
|
|
$
|
61,490
|
|
|
$
|
83,824
|
|
|
$
|
88,150
|
|
|
$
|
92,512
|
|
|
|
|
|
||
2013
|
|
|
|
12,813
|
|
|
48,231
|
|
|
67,328
|
|
|
73,267
|
|
|
|
|
|
||||||||
2014
|
|
|
|
|
|
21,249
|
|
|
74,493
|
|
|
95,945
|
|
|
|
|
|
|||||||||
2015
|
|
|
|
|
|
|
|
24,537
|
|
|
63,437
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
37,880
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
363,041
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reserves for losses and loss expenses, before 2012, net of reinsurance
|
|
|
$
|
12,180
|
|
|
|
|
|
|||||||||||||||||
|
|
Reserves for losses and loss expenses, net of reinsurance
|
|
|
$
|
233,147
|
|
|
|
|
|
Talbot - Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Incurred Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
December 31, 2016
|
||||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Total of IBNR Reserves Plus Expected Development on Reported Losses
|
|
Cumulative Reported Claims Count
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
208,883
|
|
|
$
|
203,855
|
|
|
$
|
186,278
|
|
|
$
|
182,283
|
|
|
$
|
178,839
|
|
|
$
|
5,154
|
|
|
n/a
|
2013
|
|
|
|
189,091
|
|
|
188,991
|
|
|
168,203
|
|
|
161,839
|
|
|
11,372
|
|
|
n/a
|
|||||||
2014
|
|
|
|
|
|
180,401
|
|
|
155,361
|
|
|
154,105
|
|
|
13,671
|
|
|
n/a
|
||||||||
2015
|
|
|
|
|
|
|
|
187,790
|
|
|
192,818
|
|
|
54,285
|
|
|
n/a
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
159,153
|
|
|
89,536
|
|
|
n/a
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
846,754
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Cumulative Paid Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
|
|
|
||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
36,491
|
|
|
$
|
105,600
|
|
|
$
|
136,335
|
|
|
$
|
153,550
|
|
|
$
|
157,475
|
|
|
|
|
|
||
2013
|
|
|
|
38,416
|
|
|
88,494
|
|
|
112,781
|
|
|
125,037
|
|
|
|
|
|
||||||||
2014
|
|
|
|
|
|
24,433
|
|
|
74,547
|
|
|
102,788
|
|
|
|
|
|
|||||||||
2015
|
|
|
|
|
|
|
|
25,300
|
|
|
73,957
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
35,105
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
494,362
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reserves for losses and loss expenses, before 2012, net of reinsurance
|
|
|
$
|
44,753
|
|
|
|
|
|
|||||||||||||||||
|
|
Reserves for losses and loss expenses, net of reinsurance
|
|
|
$
|
397,145
|
|
|
|
|
|
Talbot - Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Incurred Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
December 31, 2016
|
||||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Total of IBNR Reserves Plus Expected Development on Reported Losses
|
|
Cumulative Reported Claims Count
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
151,306
|
|
|
$
|
132,735
|
|
|
$
|
122,760
|
|
|
$
|
120,621
|
|
|
$
|
118,869
|
|
|
$
|
5,886
|
|
|
n/a
|
2013
|
|
|
|
166,450
|
|
|
145,905
|
|
|
132,797
|
|
|
124,208
|
|
|
8,724
|
|
|
n/a
|
|||||||
2014
|
|
|
|
|
|
215,960
|
|
|
214,962
|
|
|
198,653
|
|
|
39,248
|
|
|
n/a
|
||||||||
2015
|
|
|
|
|
|
|
|
152,907
|
|
|
149,031
|
|
|
39,447
|
|
|
n/a
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
166,604
|
|
|
105,142
|
|
|
n/a
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
757,365
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Cumulative Paid Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||
|
|
Years Ended December 31,
|
|
|
|
|
||||||||||||||||||||
Accident Year
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
|
||||||||||||
|
|
<-------------------------- Unaudited --------------------------->
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
$
|
25,591
|
|
|
$
|
57,906
|
|
|
$
|
83,201
|
|
|
$
|
87,753
|
|
|
$
|
105,888
|
|
|
|
|
|
||
2013
|
|
|
|
42,325
|
|
|
77,428
|
|
|
91,940
|
|
|
100,213
|
|
|
|
|
|
||||||||
2014
|
|
|
|
|
|
41,183
|
|
|
107,882
|
|
|
135,526
|
|
|
|
|
|
|||||||||
2015
|
|
|
|
|
|
|
|
35,724
|
|
|
85,397
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
33,468
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
460,492
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reserves for losses and loss expenses, before 2012, net of reinsurance
|
|
|
$
|
45,486
|
|
|
|
|
|
|||||||||||||||||
|
|
Reserves for losses and loss expenses, net of reinsurance
|
|
|
$
|
342,359
|
|
|
|
|
|
Western World - Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Incurred Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
|
Years Ended December 31,
|
|
December 31, 2016
|
|||||||||||||||||||||||||||||||||
Accident Year
|
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Total of IBNR Reserves Plus Expected Development on Reported Losses
|
|
Cumulative Reported Claims Count
|
||||||||||||||||||||||
|
|
<------------------------------------------------- Unaudited -------------------------------------------------->
|
|
|
|
|
|
||||||||||||||||||||||||||||||
2007
|
|
$
|
8,520
|
|
$
|
8,161
|
|
$
|
8,218
|
|
$
|
8,209
|
|
$
|
8,209
|
|
$
|
8,206
|
|
$
|
8,206
|
|
$
|
8,207
|
|
$
|
8,207
|
|
$
|
8,207
|
|
|
$
|
—
|
|
|
841
|
2008
|
|
|
12,094
|
|
11,615
|
|
11,805
|
|
11,762
|
|
11,729
|
|
11,721
|
|
11,724
|
|
11,724
|
|
11,724
|
|
|
—
|
|
|
412
|
||||||||||||
2009
|
|
|
|
10,300
|
|
10,005
|
|
10,039
|
|
10,034
|
|
10,060
|
|
10,060
|
|
10,060
|
|
10,060
|
|
|
—
|
|
|
784
|
|||||||||||||
2010
|
|
|
|
|
11,846
|
|
11,573
|
|
11,507
|
|
11,414
|
|
11,448
|
|
11,438
|
|
11,332
|
|
|
—
|
|
|
974
|
||||||||||||||
2011
|
|
|
|
|
|
12,588
|
|
12,223
|
|
12,000
|
|
12,134
|
|
12,012
|
|
12,021
|
|
|
—
|
|
|
1,238
|
|||||||||||||||
2012
|
|
|
|
|
|
|
15,506
|
|
15,491
|
|
15,594
|
|
15,556
|
|
15,522
|
|
|
—
|
|
|
1,680
|
||||||||||||||||
2013
|
|
|
|
|
|
|
|
21,825
|
|
23,561
|
|
23,659
|
|
23,599
|
|
|
—
|
|
|
1,950
|
|||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
35,612
|
|
29,282
|
|
28,619
|
|
|
103
|
|
|
2,393
|
||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
27,879
|
|
26,002
|
|
|
135
|
|
|
1,788
|
|||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
46,636
|
|
|
9,324
|
|
|
1,587
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
193,722
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Cumulative Paid Losses and Loss Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||||||||||||
Accident Year
|
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
|
|
|
||||||||||||||||||||||
|
|
<------------------------------------------------- Unaudited -------------------------------------------------->
|
|
|
|
|
|
||||||||||||||||||||||||||||||
2007
|
|
$
|
5,418
|
|
$
|
7,968
|
|
$
|
8,192
|
|
$
|
8,206
|
|
$
|
8,206
|
|
$
|
8,206
|
|
$
|
8,206
|
|
$
|
8,207
|
|
$
|
8,207
|
|
$
|
8,207
|
|
|
|
|
|
||
2008
|
|
|
8,895
|
|
11,288
|
|
11,672
|
|
11,747
|
|
11,714
|
|
11,721
|
|
11,724
|
|
11,724
|
|
11,724
|
|
|
|
|
|
|||||||||||||
2009
|
|
|
|
8,096
|
|
9,948
|
|
9,942
|
|
10,003
|
|
10,060
|
|
10,060
|
|
10,060
|
|
10,060
|
|
|
|
|
|
||||||||||||||
2010
|
|
|
|
|
8,563
|
|
10,521
|
|
10,905
|
|
10,854
|
|
10,882
|
|
10,903
|
|
11,287
|
|
|
|
|
|
|||||||||||||||
2011
|
|
|
|
|
|
9,797
|
|
12,000
|
|
11,976
|
|
12,027
|
|
12,009
|
|
12,021
|
|
|
|
|
|
||||||||||||||||
2012
|
|
|
|
|
|
|
11,166
|
|
14,838
|
|
15,435
|
|
15,513
|
|
15,522
|
|
|
|
|
|
|||||||||||||||||
2013
|
|
|
|
|
|
|
|
15,568
|
|
22,647
|
|
23,104
|
|
23,561
|
|
|
|
|
|
||||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
21,913
|
|
27,211
|
|
27,606
|
|
|
|
|
|
|||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
18,981
|
|
25,302
|
|
|
|
|
|
||||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
29,666
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
174,956
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Reserves for losses and loss expenses, before 2007, net of reinsurance
|
|
$
|
—
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
Reserves for losses and loss expenses, net of reinsurance
|
|
$
|
18,766
|
|
|
|
|
|
(b)
|
Reconciliation of Loss Development Information to the Reserves for Losses and Loss Expenses
|
|
|
December 31, 2016
|
||
Reserves for losses and loss expenses, net of reinsurance
|
|
|
||
Validus Re - Property
|
|
$
|
419,487
|
|
Validus Re - Marine
|
|
301,516
|
|
|
Validus Re - Specialty
|
|
291,372
|
|
|
Talbot - Property
|
|
233,147
|
|
|
Talbot - Marine
|
|
397,145
|
|
|
Talbot - Specialty
|
|
342,359
|
|
|
Western World - Property
|
|
18,766
|
|
|
Western World - Liability
|
|
455,247
|
|
|
Total reserves for losses and loss expenses, net of reinsurance
|
|
2,459,039
|
|
|
|
|
|
||
Loss reserves recoverable
|
|
|
||
Validus Re - Property
|
|
42,873
|
|
|
Validus Re - Marine
|
|
52,970
|
|
|
Validus Re - Specialty
|
|
2,162
|
|
|
Talbot - Property
|
|
93,774
|
|
|
Talbot - Marine
|
|
125,677
|
|
|
Talbot - Specialty
|
|
86,587
|
|
|
Western World - Property
|
|
187
|
|
|
Western World - Liability
|
|
87,300
|
|
|
Elimination - Intercompany
|
|
(61,109
|
)
|
|
Total loss reserves recoverable
|
|
430,421
|
|
|
|
|
|
||
Unallocated loss adjustment expenses
|
|
51,990
|
|
|
Provisions for uncollectible reinsurance
|
|
5,153
|
|
|
Reserves for losses and loss expenses - AlphaCat segment
|
|
48,534
|
|
|
Other
|
|
58
|
|
|
Total reserves for losses and loss expenses
|
|
$
|
2,995,195
|
|
(c)
|
Historical Loss Duration
|
|
|
Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
|
|||||||||||||||||||
|
|
December 31, 2016
|
|||||||||||||||||||
|
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
||||||||||
Validus Re - Property
|
|
19.0
|
%
|
34.9
|
%
|
20.9
|
%
|
9.1
|
%
|
3.1
|
%
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
|||||
Validus Re - Marine
|
|
12.0
|
%
|
22.5
|
%
|
19.3
|
%
|
8.9
|
%
|
4.0
|
%
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
|||||
Validus Re - Specialty
|
|
51.4
|
%
|
34.4
|
%
|
5.7
|
%
|
1.7
|
%
|
0.8
|
%
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
|||||
Talbot - Property
|
|
18.2
|
%
|
43.4
|
%
|
21.5
|
%
|
5.8
|
%
|
4.3
|
%
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
|||||
Talbot - Marine
|
|
19.0
|
%
|
31.8
|
%
|
16.8
|
%
|
8.6
|
%
|
2.2
|
%
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
|||||
Talbot - Specialty
|
|
24.1
|
%
|
30.6
|
%
|
15.6
|
%
|
5.2
|
%
|
15.3
|
%
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
|||||
Western World - Property
|
|
73.1
|
%
|
22.4
|
%
|
2.0
|
%
|
0.5
|
%
|
0.1
|
%
|
0.1
|
%
|
0.9
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
Western World - Liability
|
|
8.1
|
%
|
18.9
|
%
|
22.9
|
%
|
20.1
|
%
|
12.0
|
%
|
7.2
|
%
|
3.7
|
%
|
1.8
|
%
|
1.5
|
%
|
0.1
|
%
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Accrued interest on debt
|
$
|
10,286
|
|
|
$
|
10,771
|
|
Subscriptions received in advance on AlphaCat ILS funds and sidecars
|
326,900
|
|
|
412,036
|
|
||
Redemptions/distributions payable to noncontrolling interests
|
87,674
|
|
|
10,800
|
|
||
Structured notes payable to AlphaCat investors
|
1,000
|
|
|
—
|
|
||
Accrued income attributable to AlphaCat investors
|
17,068
|
|
|
2,412
|
|
||
Income tax payable
|
1,036
|
|
|
8,856
|
|
||
Accrued pension liability
|
16,979
|
|
|
15,722
|
|
||
Trade and compensation payables
|
126,705
|
|
|
166,734
|
|
||
Total accounts payable and accrued expenses
|
$
|
587,648
|
|
|
$
|
627,331
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Loss reserves recoverable on unpaid:
|
|
|
|
||||
Case reserves
|
$
|
165,328
|
|
|
$
|
135,723
|
|
IBNR
|
265,093
|
|
|
214,863
|
|
||
Total loss reserves recoverable
|
430,421
|
|
|
350,586
|
|
||
Paid losses recoverable
|
35,247
|
|
|
23,071
|
|
||
Total reinsurance recoverable
|
$
|
465,668
|
|
|
$
|
373,657
|
|
(a)
|
Effects of reinsurance on premiums written and earned
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||||||||||||||||
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
||||||||||||||||||||||||||||||
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
||||||||||||||||||||||||
Treaty reinsurance
|
$
|
1,111,054
|
|
$
|
1,060,117
|
|
|
$
|
146,296
|
|
$
|
115,828
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
270,402
|
|
$
|
256,085
|
|
|
$
|
(26,673
|
)
|
$
|
(23,035
|
)
|
|
$
|
1,501,079
|
|
$
|
1,408,995
|
|
Facultative reinsurance
|
—
|
|
—
|
|
|
293,741
|
|
307,351
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
293,741
|
|
307,351
|
|
||||||||||||
Direct
|
—
|
|
—
|
|
|
530,665
|
|
529,265
|
|
|
323,220
|
|
294,376
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
853,885
|
|
823,641
|
|
||||||||||||
Ceded
|
(111,564
|
)
|
(116,172
|
)
|
|
(175,729
|
)
|
(170,528
|
)
|
|
(22,634
|
)
|
(21,144
|
)
|
|
(6,451
|
)
|
(6,013
|
)
|
|
26,673
|
|
23,035
|
|
|
(289,705
|
)
|
(290,822
|
)
|
||||||||||||
Total
|
$
|
999,490
|
|
$
|
943,945
|
|
|
$
|
794,973
|
|
$
|
781,916
|
|
|
$
|
300,586
|
|
$
|
273,232
|
|
|
$
|
263,951
|
|
$
|
250,072
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
2,359,000
|
|
$
|
2,249,165
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||||||||||||||||||||||
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
||||||||||||||||||||||||||||||
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
||||||||||||||||||||||||
Treaty reinsurance
|
$
|
1,126,759
|
|
$
|
1,141,184
|
|
|
$
|
133,273
|
|
$
|
136,796
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
176,126
|
|
$
|
164,544
|
|
|
$
|
(42,718
|
)
|
$
|
(45,115
|
)
|
|
$
|
1,393,440
|
|
$
|
1,397,409
|
|
Facultative reinsurance
|
—
|
|
—
|
|
|
325,311
|
|
330,472
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
325,311
|
|
330,472
|
|
||||||||||||
Direct
|
—
|
|
—
|
|
|
560,251
|
|
570,669
|
|
|
278,504
|
|
281,587
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
838,755
|
|
852,256
|
|
||||||||||||
Ceded
|
(149,088
|
)
|
(150,971
|
)
|
|
(198,896
|
)
|
(199,846
|
)
|
|
(18,877
|
)
|
(22,937
|
)
|
|
(4,538
|
)
|
(4,609
|
)
|
|
42,718
|
|
45,115
|
|
|
(328,681
|
)
|
(333,248
|
)
|
||||||||||||
Total
|
$
|
977,671
|
|
$
|
990,213
|
|
|
$
|
819,939
|
|
$
|
838,091
|
|
|
$
|
259,627
|
|
$
|
258,650
|
|
|
$
|
171,588
|
|
$
|
159,935
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
2,228,825
|
|
$
|
2,246,889
|
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||||||||||||||||||||||
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
||||||||||||||||||||||||||||||
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
|
Written
|
Earned
|
||||||||||||||||||||||||
Treaty reinsurance
|
$
|
1,118,532
|
|
$
|
1,109,659
|
|
|
$
|
149,079
|
|
$
|
163,382
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
126,785
|
|
$
|
126,534
|
|
|
$
|
(53,457
|
)
|
$
|
(60,912
|
)
|
|
$
|
1,340,939
|
|
$
|
1,338,663
|
|
Facultative reinsurance
|
—
|
|
—
|
|
|
334,898
|
|
345,252
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
334,898
|
|
345,252
|
|
||||||||||||
Direct
|
—
|
|
—
|
|
|
617,793
|
|
576,136
|
|
|
65,235
|
|
80,838
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
683,028
|
|
656,974
|
|
||||||||||||
Ceded
|
(163,678
|
)
|
(192,375
|
)
|
|
(192,211
|
)
|
(204,996
|
)
|
|
(6,428
|
)
|
(7,842
|
)
|
|
(4,348
|
)
|
(3,533
|
)
|
|
53,457
|
|
60,912
|
|
|
(313,208
|
)
|
(347,834
|
)
|
||||||||||||
Total
|
$
|
954,854
|
|
$
|
917,284
|
|
|
$
|
909,559
|
|
$
|
879,774
|
|
|
$
|
58,807
|
|
$
|
72,996
|
|
|
$
|
122,437
|
|
$
|
123,001
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
2,045,657
|
|
$
|
1,993,055
|
|
(b)
|
Credit risk
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
|
Reinsurance Recoverable
|
|
% of Total
|
|
Reinsurance Recoverable
|
|
% of Total
|
||||||
Top 10 reinsurers
|
$
|
395,308
|
|
|
84.9
|
%
|
|
$
|
303,108
|
|
|
81.1
|
%
|
Other reinsurers’ balances > $1 million
|
66,944
|
|
|
14.4
|
%
|
|
61,222
|
|
|
16.4
|
%
|
||
Other reinsurers’ balances < $1 million
|
3,416
|
|
|
0.7
|
%
|
|
9,327
|
|
|
2.5
|
%
|
||
Total
|
$
|
465,668
|
|
|
100.0
|
%
|
|
$
|
373,657
|
|
|
100.0
|
%
|
|
|
December 31, 2016
|
|||||||
Top 10 Reinsurers
|
|
Rating
|
|
Reinsurance Recoverable
|
|
% of Total
|
|||
Lloyd's Syndicates
|
|
A+
|
|
$
|
84,419
|
|
|
18.2
|
%
|
Swiss Re
|
|
AA-
|
|
84,044
|
|
|
18.1
|
%
|
|
Fully collateralized reinsurers
|
|
NR
|
|
83,088
|
|
|
17.8
|
%
|
|
Hannover Re
|
|
AA-
|
|
50,603
|
|
|
10.9
|
%
|
|
Everest Re
|
|
A+
|
|
36,912
|
|
|
7.9
|
%
|
|
Munich Re
|
|
AA-
|
|
18,214
|
|
|
3.9
|
%
|
|
Transatlantic Re
|
|
A+
|
|
10,593
|
|
|
2.3
|
%
|
|
Hamilton Re
|
|
A-
|
|
10,343
|
|
|
2.2
|
%
|
|
Toa Re
|
|
A+
|
|
9,510
|
|
|
2.0
|
%
|
|
National Indemnity Company
|
|
AA+
|
|
7,582
|
|
|
1.6
|
%
|
|
Total
|
|
|
|
$
|
395,308
|
|
|
84.9
|
%
|
|
|
December 31, 2015
|
|||||||
Top 10 Reinsurers
|
|
Rating
|
|
Reinsurance Recoverable
|
|
% of Total
|
|||
Swiss Re
|
|
AA-
|
|
$
|
83,048
|
|
|
22.2
|
%
|
Lloyd's Syndicates
|
|
A+
|
|
66,356
|
|
|
17.8
|
%
|
|
Hannover Re
|
|
AA-
|
|
43,765
|
|
|
11.7
|
%
|
|
Everest Re
|
|
A+
|
|
43,060
|
|
|
11.5
|
%
|
|
Munich Re
|
|
AA-
|
|
18,707
|
|
|
5.0
|
%
|
|
Transatlantic Re
|
|
A+
|
|
11,923
|
|
|
3.2
|
%
|
|
Hamilton Re
|
|
A-
|
|
10,898
|
|
|
2.9
|
%
|
|
National Indemnity Company
|
|
AA+
|
|
10,293
|
|
|
2.8
|
%
|
|
XL Re
|
|
A+
|
|
8,728
|
|
|
2.3
|
%
|
|
Toa Re
|
|
A+
|
|
6,330
|
|
|
1.7
|
%
|
|
Total
|
|
|
|
$
|
303,108
|
|
|
81.1
|
%
|
(a)
|
Preferred shares
|
|
Preferred Shares
|
|
Preferred shares issued and outstanding, beginning of year
|
—
|
|
Preferred shares issued
|
6,000
|
|
Preferred shares issued and outstanding, end of year
|
6,000
|
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Common shares issued, beginning of year
|
160,570,772
|
|
|
155,554,224
|
|
|
154,488,497
|
|
Restricted share awards vested, net of shares withheld
|
612,100
|
|
|
614,945
|
|
|
615,659
|
|
Restricted share units vested, net of shares withheld
|
18,486
|
|
|
13,260
|
|
|
10,265
|
|
Options exercised
|
30,530
|
|
|
782,465
|
|
|
412,656
|
|
Warrants exercised
|
—
|
|
|
3,593,715
|
|
|
—
|
|
Direct issuance of common stock
|
—
|
|
|
639
|
|
|
1,380
|
|
Performance shares vested, net of shares withheld
|
48,088
|
|
|
11,524
|
|
|
25,767
|
|
Common shares issued, end of year
|
161,279,976
|
|
|
160,570,772
|
|
|
155,554,224
|
|
Treasury shares, end of year
|
(82,147,724
|
)
|
|
(77,670,155
|
)
|
|
(71,684,379
|
)
|
Common shares outstanding, end of year
|
79,132,252
|
|
|
82,900,617
|
|
|
83,869,845
|
|
(a)
|
Long Term Incentive Plan
|
|
Options
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Grant Date Exercise Price
|
|
Total
Intrinsic Value
(a)
|
|
Company Proceeds Received
|
|||||||||
Options outstanding, beginning of year
|
65,401
|
|
|
$
|
7.74
|
|
|
$
|
20.17
|
|
|
|
|
|
||||
Options exercised
|
(39,265
|
)
|
|
8.37
|
|
|
17.96
|
|
|
$
|
1,260
|
|
|
$
|
277
|
|
||
Options outstanding, end of year
|
26,136
|
|
|
$
|
6.78
|
|
|
$
|
23.48
|
|
|
|
|
|
|
Options
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Grant Date Exercise Price
|
|
Total
Intrinsic Value
(a)
|
|
Company Proceeds Received
|
|||||||||
Options outstanding, beginning of year
|
1,160,057
|
|
|
$
|
7.12
|
|
|
$
|
17.74
|
|
|
|
|
|
||||
Options exercised
|
(1,094,656
|
)
|
|
7.09
|
|
|
17.60
|
|
|
$
|
26,367
|
|
|
$
|
6,277
|
|
||
Options outstanding, end of year
|
65,401
|
|
|
$
|
7.74
|
|
|
$
|
20.17
|
|
|
|
|
|
(a)
|
The total intrinsic value in the tables above represent the amount by which the market price of the Company’s common stock is greater than the option strike price multiplied by the number of options exercised during the year.
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|
Restricted Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Restricted share awards outstanding, beginning of year
|
2,739,446
|
|
|
$
|
38.25
|
|
|
2,858,711
|
|
|
$
|
35.81
|
|
|
2,684,745
|
|
|
$
|
33.74
|
|
Restricted share awards granted
|
564,345
|
|
|
48.83
|
|
|
724,357
|
|
|
43.67
|
|
|
1,051,348
|
|
|
37.81
|
|
|||
Restricted share awards vested
|
(796,716
|
)
|
|
37.40
|
|
|
(788,758
|
)
|
|
34.41
|
|
|
(797,446
|
)
|
|
31.44
|
|
|||
Restricted share awards forfeited
|
(37,093
|
)
|
|
41.27
|
|
|
(54,864
|
)
|
|
38.14
|
|
|
(79,936
|
)
|
|
36.09
|
|
|||
Restricted share awards outstanding, end of year
|
2,469,982
|
|
|
$
|
40.89
|
|
|
2,739,446
|
|
|
$
|
38.25
|
|
|
2,858,711
|
|
|
$
|
35.81
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Restricted Share Units
|
|
Weighted Average Grant Date Fair Value
|
|
Restricted Share Units
|
|
Weighted Average Grant Date Fair Value
|
|
Restricted Share Units
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Restricted share units outstanding, beginning of year
|
114,337
|
|
|
$
|
38.47
|
|
|
103,484
|
|
|
$
|
36.54
|
|
|
66,518
|
|
|
$
|
33.74
|
|
Restricted share units granted
|
27,609
|
|
|
50.03
|
|
|
28,057
|
|
|
42.91
|
|
|
53,025
|
|
|
38.10
|
|
|||
Restricted share units vested
|
(23,982
|
)
|
|
38.18
|
|
|
(19,455
|
)
|
|
34.58
|
|
|
(18,325
|
)
|
|
30.71
|
|
|||
Restricted share units issued in lieu of cash dividends
|
3,182
|
|
|
39.36
|
|
|
3,143
|
|
|
37.53
|
|
|
2,266
|
|
|
35.00
|
|
|||
Restricted share units forfeited
|
(8,338
|
)
|
|
44.34
|
|
|
(892
|
)
|
|
35.42
|
|
|
—
|
|
|
—
|
|
|||
Restricted share units outstanding, end of year
|
112,808
|
|
|
$
|
40.95
|
|
|
114,337
|
|
|
$
|
38.47
|
|
|
103,484
|
|
|
$
|
36.54
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|
Performance Share Awards
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Performance share awards outstanding, beginning of year
|
172,594
|
|
|
$
|
40.70
|
|
|
106,369
|
|
|
$
|
36.03
|
|
|
101,820
|
|
|
$
|
33.56
|
|
Performance share awards granted
|
125,290
|
|
|
48.75
|
|
|
81,569
|
|
|
45.03
|
|
|
52,639
|
|
|
37.33
|
|
|||
Performance share awards vested
|
(57,581
|
)
|
|
36.11
|
|
|
(15,344
|
)
|
|
31.38
|
|
|
(32,746
|
)
|
|
32.62
|
|
|||
Performance share awards conversion adjustment
|
45,517
|
|
|
36.82
|
|
|
—
|
|
|
—
|
|
|
(15,344
|
)
|
|
31.38
|
|
|||
Performance share awards outstanding, end of year
|
285,820
|
|
|
$
|
44.53
|
|
|
172,594
|
|
|
$
|
40.70
|
|
|
106,369
|
|
|
$
|
36.03
|
|
(b)
|
Total share compensation expenses
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Restricted share awards
|
$
|
36,887
|
|
|
$
|
35,386
|
|
|
$
|
31,335
|
|
Restricted share units
|
1,285
|
|
|
1,160
|
|
|
876
|
|
|||
Performance share awards
|
4,735
|
|
|
1,795
|
|
|
862
|
|
|||
Total
|
$
|
42,907
|
|
|
$
|
38,341
|
|
|
$
|
33,073
|
|
(a)
|
Defined benefit plans
|
|
Years Ended December 31,
|
||||
|
2016
|
|
2015
|
||
Discount rate
|
3.50
|
%
|
|
2.75
|
%
|
Increase in compensation levels rate
|
5.00
|
%
|
|
5.00
|
%
|
|
December 31, 2016
|
|
December 31, 2015
|
||
Discount rate
|
4.00
|
%
|
|
4.00
|
%
|
Increase in compensation levels rate
|
5.00
|
%
|
|
5.00
|
%
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Change in benefit obligation
|
|
|
|
||||
Projected benefit obligation, beginning of year
|
$
|
15,722
|
|
|
$
|
16,493
|
|
Service cost
|
1,026
|
|
|
1,024
|
|
||
Interest cost
|
594
|
|
|
434
|
|
||
Actuarial losses (gains)
|
1,473
|
|
|
(46
|
)
|
||
Benefit payments
|
(98
|
)
|
|
(98
|
)
|
||
Settlements
|
(1,738
|
)
|
|
(2,085
|
)
|
||
Projected benefit obligation, end of year
|
$
|
16,979
|
|
|
$
|
15,722
|
|
|
|
|
|
||||
Change in plan assets
|
|
|
|
||||
Fair value of plan assets, beginning of year
|
$
|
—
|
|
|
$
|
—
|
|
Employer contributions
|
1,836
|
|
|
2,186
|
|
||
Benefit payments
|
(98
|
)
|
|
(98
|
)
|
||
Settlements
|
(1,738
|
)
|
|
(2,088
|
)
|
||
Fair value of plan assets, end of year
|
—
|
|
|
—
|
|
||
Funded status at end of year
|
$
|
(16,979
|
)
|
|
$
|
(15,722
|
)
|
|
|
|
|
||||
Net amount recognized in accounts payable and accrued expenses
|
$
|
(16,979
|
)
|
|
$
|
(15,722
|
)
|
|
|
|
|
||||
Amounts recognized in accumulated other comprehensive loss consist of
|
|
|
|
||||
Net loss (gain)
|
$
|
226
|
|
|
$
|
(517
|
)
|
Prior service credit
|
6
|
|
|
4
|
|
||
Net amount recognized
|
$
|
232
|
|
|
$
|
(513
|
)
|
|
|
|
|
||||
|
December 31, 2016
|
|
December 31, 2015
|
||||
Projected benefit obligation
|
$
|
16,979
|
|
|
$
|
15,722
|
|
Accumulated benefit obligation
|
$
|
13,480
|
|
|
$
|
13,308
|
|
Fair value of plan assets
|
$
|
—
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Service cost
|
$
|
1,026
|
|
|
$
|
1,024
|
|
Interest cost
|
594
|
|
|
434
|
|
||
Amortization of prior service cost
|
(2
|
)
|
|
(2
|
)
|
||
Amortization of net loss
|
374
|
|
|
312
|
|
||
Net periodic benefit cost
|
1,992
|
|
|
1,768
|
|
||
Settlement loss
|
356
|
|
|
484
|
|
||
Net periodic pension expense
|
$
|
2,348
|
|
|
$
|
2,252
|
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Net loss (gain)
|
$
|
1,473
|
|
|
$
|
(43
|
)
|
Amortization of loss
|
(374
|
)
|
|
(312
|
)
|
||
Amortization of prior service cost
|
2
|
|
|
2
|
|
||
Settlement loss
|
(356
|
)
|
|
(484
|
)
|
||
Total recognized in other comprehensive loss
|
$
|
745
|
|
|
$
|
(837
|
)
|
Total recognized in net pension expense and other comprehensive loss (before tax effects)
|
$
|
3,093
|
|
|
$
|
1,415
|
|
|
|
December 31, 2016
|
||
2017
|
|
$
|
2,740
|
|
2018
|
|
7,072
|
|
|
2019
|
|
92
|
|
|
2020
|
|
2,665
|
|
|
2021
|
|
83
|
|
|
2022-2026
|
|
5,449
|
|
|
Total benefit payments required
|
|
$
|
18,101
|
|
(b)
|
Other pension plans
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Deferrable debentures
|
|
|
|
||||
2006 Junior Subordinated
|
$
|
150,000
|
|
|
$
|
150,000
|
|
2007 Junior Subordinated
|
139,800
|
|
|
139,800
|
|
||
Flagstone 2006 Junior Subordinated
|
133,676
|
|
|
134,118
|
|
||
Flagstone 2007 Junior Subordinated
|
113,750
|
|
|
113,750
|
|
||
Total debentures payable
|
537,226
|
|
|
537,668
|
|
||
2010 Senior notes payable
|
250,000
|
|
|
250,000
|
|
||
Less: Unamortized debt issuance costs
|
(4,638
|
)
|
|
(4,839
|
)
|
||
Total senior notes payable
|
245,362
|
|
|
245,161
|
|
||
Total debentures and senior notes payable
|
$
|
782,588
|
|
|
$
|
782,829
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Commitment
|
|
Drawn and outstanding
|
|
Commitment
|
|
Drawn and outstanding
|
||||||||
Credit and other facilities
|
|
|
|
|
|
|
|
||||||||
$85,000 syndicated unsecured letter of credit facility
|
$
|
85,000
|
|
|
$
|
—
|
|
|
$
|
85,000
|
|
|
$
|
—
|
|
$300,000 syndicated secured letter of credit facility
|
300,000
|
|
|
90,252
|
|
|
300,000
|
|
|
235,540
|
|
||||
$24,000 secured bi-lateral letter of credit facility
|
24,000
|
|
|
4,553
|
|
|
24,000
|
|
|
10,543
|
|
||||
$20,000 AlphaCat Re secured letter of credit facility
|
20,000
|
|
|
20,000
|
|
|
30,000
|
|
|
30,000
|
|
||||
$25,000 IPC bi-lateral facility
|
25,000
|
|
|
5,842
|
|
|
25,000
|
|
|
9,241
|
|
||||
$236,000 Flagstone bi-lateral facility
|
236,000
|
|
|
144,392
|
|
|
236,000
|
|
|
193,764
|
|
||||
Total credit and other facilities
|
$
|
690,000
|
|
|
$
|
265,039
|
|
|
$
|
700,000
|
|
|
$
|
479,088
|
|
(a)
|
Senior notes and junior subordinated deferrable debentures
|
Description
|
|
Issuance date
|
|
Amount
|
|
Maturity date
|
|
Interest Rate as at
|
|
Interest payments due
|
||||||||
|
Issuance Date
|
|
December 31, 2016
|
|
||||||||||||||
2006 Junior Subordinated Deferrable Debentures
|
|
June 15, 2006
|
|
$
|
150,000
|
|
|
June 15, 2036
|
|
9.069
|
%
|
(a)
|
|
5.831
|
%
|
(e)
|
|
Quarterly
|
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
|
August 23, 2006
|
|
$
|
133,676
|
|
|
September 15, 2036
|
|
3.540
|
%
|
(b)
|
|
6.463
|
%
|
(e)
|
|
Quarterly
|
2007 Junior Subordinated Deferrable Debentures
|
|
June 21, 2007
|
|
$
|
200,000
|
|
|
June 15, 2037
|
|
8.480
|
%
|
(c)
|
|
5.180
|
%
|
(e)
|
|
Quarterly
|
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
|
June 8, 2007
|
|
$
|
88,750
|
|
|
July 30, 2037
|
|
3.000
|
%
|
(b)
|
|
5.900
|
%
|
(e)
|
|
Quarterly
|
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
|
September 20, 2007
|
|
$
|
25,000
|
|
|
September 15, 2037
|
|
3.100
|
%
|
(b)
|
|
5.983
|
%
|
(e)
|
|
Quarterly
|
2010 Senior Notes due 2040
|
|
January 26, 2010
|
|
$
|
250,000
|
|
|
January 26, 2040
|
|
8.875
|
%
|
(d)
|
|
8.875
|
%
|
(d)
|
|
Semi-annually in arrears
|
(a)
|
Fixed interest rate for
5 years
, floating interest rate of three-month LIBOR plus
3.550%
thereafter, reset quarterly.
|
(b)
|
Floating interest rate of three-month LIBOR plus amount stated, reset quarterly.
|
(c)
|
Fixed interest rate for
5 years
, floating interest rate of three-month LIBOR plus
2.950%
thereafter, reset quarterly.
|
(d)
|
Fixed interest rate.
|
(e)
|
Fixed interest rate as a result of interest rate swap contracts entered into by the Company.
|
(b)
|
Credit facilities
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
$300,000 syndicated secured letter of credit facility
|
|
$
|
157,597
|
|
|
$
|
370,909
|
|
$24,000 secured bi-lateral letter of credit facility
|
|
48,097
|
|
|
47,607
|
|
||
$20,000 AlphaCat Re secured letter of credit facility
|
|
20,032
|
|
|
30,153
|
|
||
$236,000 Flagstone bi-lateral facility
|
|
216,458
|
|
|
377,866
|
|
||
Total
|
|
$
|
442,184
|
|
|
$
|
826,535
|
|
(c)
|
Finance expenses
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
2006 Junior Subordinated Deferrable Debentures
|
|
$
|
8,893
|
|
|
$
|
8,868
|
|
|
$
|
8,868
|
|
2007 Junior Subordinated Deferrable Debentures
|
|
7,362
|
|
|
7,341
|
|
|
7,341
|
|
|||
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
|
9,028
|
|
|
8,989
|
|
|
9,001
|
|
|||
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
|
7,100
|
|
|
7,123
|
|
|
7,129
|
|
|||
2010 Senior Notes due 2040
|
|
22,388
|
|
|
22,388
|
|
|
22,388
|
|
|||
Credit facilities
|
|
2,060
|
|
|
6,006
|
|
|
5,516
|
|
|||
Bank charges, Talbot FAL facility and other charges
(a)
|
|
504
|
|
|
4,592
|
|
|
4,536
|
|
|||
AlphaCat fees
(b)
|
|
1,185
|
|
|
9,435
|
|
|
3,545
|
|
|||
Total finance expenses
|
|
$
|
58,520
|
|
|
$
|
74,742
|
|
|
$
|
68,324
|
|
(a)
|
On November 30, 2015, the Company terminated its Talbot FAL Facility provided and arranged by Lloyds Bank plc and ING Bank N.V., London Branch.
|
(b)
|
Includes finance expenses incurred by AlphaCat Managers in relation to fund raising for the AlphaCat sidecars, the AlphaCat ILS funds and AlphaCat direct.
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Domestic
|
|
|
|
|
|
||||||
Bermuda
|
$
|
447,257
|
|
|
$
|
470,454
|
|
|
$
|
518,476
|
|
Foreign
|
|
|
|
|
|
||||||
U.K.
|
4,308
|
|
|
13,621
|
|
|
10,824
|
|
|||
U.S.
|
4,038
|
|
|
(4,176
|
)
|
|
(11,752
|
)
|
|||
Switzerland
|
(1,084
|
)
|
|
2,276
|
|
|
9,941
|
|
|||
Canada
|
2,599
|
|
|
493
|
|
|
2,773
|
|
|||
Other
|
33,736
|
|
|
(2,074
|
)
|
|
29,076
|
|
|||
Total income before income taxes
|
$
|
490,854
|
|
|
$
|
480,594
|
|
|
$
|
559,338
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current income tax expense
|
|
|
|
|
|
||||||
U.S.
|
$
|
2,042
|
|
|
$
|
739
|
|
|
$
|
21,257
|
|
Non-U.S.
|
711
|
|
|
6,028
|
|
|
26,179
|
|
|||
Total current income tax expense
|
$
|
2,753
|
|
|
$
|
6,767
|
|
|
$
|
47,436
|
|
|
|
|
|
|
|
||||||
Deferred income tax (benefit) expense
|
|
|
|
|
|
||||||
U.S.
|
$
|
(3,487
|
)
|
|
$
|
1,360
|
|
|
$
|
(24,998
|
)
|
Non-U.S.
|
(18,995
|
)
|
|
(1,751
|
)
|
|
(22,283
|
)
|
|||
Total deferred income tax benefit
|
$
|
(22,482
|
)
|
|
$
|
(391
|
)
|
|
$
|
(47,281
|
)
|
|
|
|
|
|
|
||||||
Total income tax (benefit) expense
|
|
|
|
|
|
||||||
U.S.
|
$
|
(1,445
|
)
|
|
$
|
2,099
|
|
|
$
|
(3,741
|
)
|
Non-U.S.
|
(18,284
|
)
|
|
4,277
|
|
|
3,896
|
|
|||
Total income tax (benefit) expense
|
$
|
(19,729
|
)
|
|
$
|
6,376
|
|
|
$
|
155
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Expected tax expense at Bermuda statutory rate of 0%
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign tax rate differential
|
11,394
|
|
|
6,462
|
|
|
7,993
|
|
|||
Changes in valuation allowance
|
(36,990
|
)
|
|
9,830
|
|
|
(7,284
|
)
|
|||
Tax exempt income and expenses not deductible
|
(1,960
|
)
|
|
393
|
|
|
(6,055
|
)
|
|||
Share compensation tax windfall
|
1,203
|
|
|
906
|
|
|
3,513
|
|
|||
Impact of enacted changes in tax rates
|
8,931
|
|
|
69
|
|
|
250
|
|
|||
Prior years tax adjustments
|
(5,199
|
)
|
|
(12,272
|
)
|
|
666
|
|
|||
Other
|
2,892
|
|
|
988
|
|
|
1,072
|
|
|||
Actual income tax (benefit) expense
|
$
|
(19,729
|
)
|
|
$
|
6,376
|
|
|
$
|
155
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Deferred tax asset
|
|
|
|
||||
Tax losses carried forward
|
$
|
116,416
|
|
|
$
|
167,929
|
|
Deferred compensation
|
6,915
|
|
|
7,504
|
|
||
Deferred interest expense
|
2,039
|
|
|
2,047
|
|
||
Tax credits carried forward
|
5,469
|
|
|
2,761
|
|
||
Discounting of loss reserves
|
9,938
|
|
|
11,882
|
|
||
Unearned premiums reserve
|
6,647
|
|
|
4,291
|
|
||
Pension
|
5,943
|
|
|
5,503
|
|
||
Lloyd’s underwriting loss deductible in future periods
|
581
|
|
|
47
|
|
||
Other
|
4,943
|
|
|
4,111
|
|
||
Deferred tax asset, gross of valuation allowance
|
158,891
|
|
|
206,075
|
|
||
Valuation allowance
|
(98,065
|
)
|
|
(167,929
|
)
|
||
Net deferred tax asset
|
$
|
60,826
|
|
|
$
|
38,146
|
|
|
|
|
|
||||
Deferred tax liability
|
|
|
|
||||
Deferred acquisition costs
|
4,633
|
|
|
1,989
|
|
||
Intangibles
|
7,583
|
|
|
8,111
|
|
||
Unrealized appreciation on investments
|
3,179
|
|
|
7,073
|
|
||
Properties and fixed assets
|
2,593
|
|
|
2,044
|
|
||
Other
|
2,640
|
|
|
1,115
|
|
||
Deferred tax liability
|
20,628
|
|
|
20,332
|
|
||
Net deferred tax asset
|
$
|
40,198
|
|
|
$
|
17,814
|
|
|
|
Deferred Tax Asset on Tax Losses Carried Forward
|
|
Valuation Allowance
|
||||
Balance as at December 31, 2015
|
|
$
|
167,929
|
|
|
$
|
(167,929
|
)
|
Movement due to use of tax losses carried forward
|
|
(10,990
|
)
|
|
10,990
|
|
||
Movement due to provision to return adjustments
|
|
1,108
|
|
|
(1,108
|
)
|
||
Movement due to changes in enacted tax rates
|
|
(8,757
|
)
|
|
8,757
|
|
||
Movement due to change in assessment of deferred tax asset recoverability
|
|
—
|
|
|
18,351
|
|
||
Forfeiture of tax losses carried forward
|
|
(32,927
|
)
|
|
32,927
|
|
||
Other
|
|
53
|
|
|
(53
|
)
|
||
Balance as at December 31, 2016
|
|
$
|
116,416
|
|
|
$
|
(98,065
|
)
|
Tax Jurisdiction
|
|
Losses carried forward
|
|
Tax effect
|
|
Expiration
|
||||
U.S.
|
|
$
|
11,195
|
|
|
$
|
3,918
|
|
|
2029 - 2035
|
Switzerland
|
|
$
|
157,512
|
|
|
$
|
33,078
|
|
|
2018 - 2020
|
Luxembourg
|
|
$
|
300,121
|
|
|
$
|
78,310
|
|
|
None
|
Singapore
|
|
$
|
11,090
|
|
|
$
|
1,109
|
|
|
None
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
Foreign currency translation adjustment
|
|
Minimum pension liability
|
|
Cash flow hedge
|
|
Total
|
||||||||
Balance, net of tax, beginning of year
|
$
|
(11,834
|
)
|
|
$
|
334
|
|
|
$
|
(1,069
|
)
|
|
$
|
(12,569
|
)
|
Other comprehensive (loss) gain, net of tax
|
(10,440
|
)
|
|
(484
|
)
|
|
277
|
|
|
(10,647
|
)
|
||||
Balance, net of tax, end of year
|
$
|
(22,274
|
)
|
|
$
|
(150
|
)
|
|
$
|
(792
|
)
|
|
$
|
(23,216
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Year Ended December 31, 2015
|
||||||||||||||
|
Foreign currency translation adjustment
|
|
Minimum pension liability
|
|
Cash flow hedge
|
|
Total
|
||||||||
Balance, net of tax, beginning of year
|
$
|
(8,118
|
)
|
|
$
|
(210
|
)
|
|
$
|
(228
|
)
|
|
$
|
(8,556
|
)
|
Other comprehensive (loss) gain, net of tax
|
(3,716
|
)
|
|
544
|
|
|
(841
|
)
|
|
(4,013
|
)
|
||||
Balance, net of tax, end of year
|
$
|
(11,834
|
)
|
|
$
|
334
|
|
|
$
|
(1,069
|
)
|
|
$
|
(12,569
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Year Ended December 31, 2014
|
||||||||||||||
|
Foreign currency translation adjustment
|
|
Minimum pension liability
|
|
Cash flow hedge
|
|
Total
|
||||||||
Balance, net of tax, beginning of year
|
$
|
(617
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(617
|
)
|
Other comprehensive loss, net of tax
|
(7,501
|
)
|
|
(210
|
)
|
|
(228
|
)
|
|
(7,939
|
)
|
||||
Balance, net of tax, end of year
|
$
|
(8,118
|
)
|
|
$
|
(210
|
)
|
|
$
|
(228
|
)
|
|
$
|
(8,556
|
)
|
(a)
|
Concentrations of credit risk
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Marsh & McLennan Companies, Inc.
|
28.8
|
%
|
|
28.2
|
%
|
|
28.5
|
%
|
Aon Benfield Group Ltd.
|
16.2
|
%
|
|
15.5
|
%
|
|
20.0
|
%
|
Willis Towers Watson plc
|
14.1
|
%
|
|
14.3
|
%
|
|
18.0
|
%
|
(b)
|
Employment agreements
|
(c)
|
Operating leases
|
|
December 31, 2016
|
||
2017
|
$
|
11,878
|
|
2018
|
12,214
|
|
|
2019
|
11,958
|
|
|
2020
|
11,059
|
|
|
2021
|
10,316
|
|
|
2022 and thereafter
|
46,418
|
|
|
Total
|
$
|
103,843
|
|
(d)
|
Funds at Lloyd’s
|
(e)
|
Lloyd’s Central Fund
|
(f)
|
Investment affiliate commitments
|
(g)
|
AlphaCat commitments
|
(h)
|
Fixed maturity commitments
|
(i)
|
Other investment commitments
|
(j)
|
Structured settlements
|
(a)
|
Aquiline Capital Partners LLC (“Aquiline Capital”)
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Basic earnings per share
|
|
|
|
|
|
||||||
Net income available to Validus common shareholders
|
$
|
359,384
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
Less: Dividends on outstanding warrants
|
—
|
|
|
(3,566
|
)
|
|
(6,208
|
)
|
|||
Net income allocated to Validus common shareholders
|
$
|
359,384
|
|
|
$
|
371,327
|
|
|
$
|
473,755
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding
|
81,041,974
|
|
|
83,107,236
|
|
|
90,354,745
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share available to Validus common shareholders
|
$
|
4.43
|
|
|
$
|
4.47
|
|
|
$
|
5.24
|
|
|
|
|
|
|
|
||||||
Earnings per diluted share
|
|
|
|
|
|
||||||
Net income available to Validus common shareholders
|
$
|
359,384
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
Less: Dividends on outstanding warrants
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income allocated to Validus common shareholders
|
$
|
359,384
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding
|
81,041,974
|
|
|
83,107,236
|
|
|
90,354,745
|
|
|||
Share equivalents:
|
|
|
|
|
|
||||||
Warrants
|
—
|
|
|
2,090,248
|
|
|
2,789,032
|
|
|||
Stock options
|
28,196
|
|
|
151,867
|
|
|
745,561
|
|
|||
Unvested restricted shares
|
1,289,290
|
|
|
1,077,409
|
|
|
800,933
|
|
|||
Weighted average number of diluted common shares outstanding
|
82,359,460
|
|
|
86,426,760
|
|
|
94,690,271
|
|
|||
|
|
|
|
|
|
||||||
Earnings per diluted share available to Validus common shareholders
|
$
|
4.36
|
|
|
$
|
4.34
|
|
|
$
|
5.07
|
|
|
|
Years Ended December 31,
|
||||||||||
Validus Re Segment Information
|
|
2016
|
|
2015
|
|
2014
|
||||||
Underwriting revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
1,111,054
|
|
|
$
|
1,126,759
|
|
|
$
|
1,118,532
|
|
Reinsurance premiums ceded
|
|
(111,564
|
)
|
|
(149,088
|
)
|
|
(163,678
|
)
|
|||
Net premiums written
|
|
999,490
|
|
|
977,671
|
|
|
954,854
|
|
|||
Change in unearned premiums
|
|
(55,545
|
)
|
|
12,542
|
|
|
(37,570
|
)
|
|||
Net premiums earned
|
|
943,945
|
|
|
990,213
|
|
|
917,284
|
|
|||
Other insurance related (loss) income
|
|
(55
|
)
|
|
3,575
|
|
|
3,159
|
|
|||
Total underwriting revenues
|
|
943,890
|
|
|
993,788
|
|
|
920,443
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
411,488
|
|
|
457,976
|
|
|
307,290
|
|
|||
Policy acquisition costs
|
|
181,040
|
|
|
166,387
|
|
|
141,670
|
|
|||
General and administrative expenses
|
|
72,770
|
|
|
78,428
|
|
|
74,739
|
|
|||
Share compensation expenses
|
|
11,034
|
|
|
10,350
|
|
|
9,739
|
|
|||
Total underwriting deductions
|
|
676,332
|
|
|
713,141
|
|
|
533,438
|
|
|||
Underwriting income
|
|
$
|
267,558
|
|
|
$
|
280,647
|
|
|
$
|
387,005
|
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
||||||
Ratio of net to gross premiums written
|
|
90.0
|
%
|
|
86.8
|
%
|
|
85.4
|
%
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expense ratio
|
|
43.6
|
%
|
|
46.2
|
%
|
|
33.5
|
%
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition cost ratio
|
|
19.2
|
%
|
|
16.8
|
%
|
|
15.5
|
%
|
|||
General and administrative expense ratio
(a)
|
|
8.8
|
%
|
|
9.0
|
%
|
|
9.2
|
%
|
|||
Expense ratio
|
|
28.0
|
%
|
|
25.8
|
%
|
|
24.7
|
%
|
|||
Combined ratio
|
|
71.6
|
%
|
|
72.0
|
%
|
|
58.2
|
%
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Years Ended December 31,
|
||||||||||
Talbot Segment Information
|
|
2016
|
|
2015
|
|
2014
|
||||||
Underwriting revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
970,702
|
|
|
$
|
1,018,835
|
|
|
$
|
1,101,770
|
|
Reinsurance premiums ceded
|
|
(175,729
|
)
|
|
(198,896
|
)
|
|
(192,211
|
)
|
|||
Net premiums written
|
|
794,973
|
|
|
819,939
|
|
|
909,559
|
|
|||
Change in unearned premiums
|
|
(13,057
|
)
|
|
18,152
|
|
|
(29,785
|
)
|
|||
Net premiums earned
|
|
781,916
|
|
|
838,091
|
|
|
879,774
|
|
|||
Other insurance related income
|
|
455
|
|
|
851
|
|
|
1,095
|
|
|||
Total underwriting revenues
|
|
782,371
|
|
|
838,942
|
|
|
880,869
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
424,946
|
|
|
347,322
|
|
|
423,394
|
|
|||
Policy acquisition costs
|
|
177,127
|
|
|
187,535
|
|
|
187,162
|
|
|||
General and administrative expenses
|
|
134,479
|
|
|
155,306
|
|
|
150,828
|
|
|||
Share compensation expenses
|
|
13,078
|
|
|
12,373
|
|
|
11,346
|
|
|||
Total underwriting deductions
|
|
749,630
|
|
|
702,536
|
|
|
772,730
|
|
|||
Underwriting income
|
|
$
|
32,741
|
|
|
$
|
136,406
|
|
|
$
|
108,139
|
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
||||||
Ratio of net to gross premiums written
|
|
81.9
|
%
|
|
80.5
|
%
|
|
82.6
|
%
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expense ratio
|
|
54.3
|
%
|
|
41.4
|
%
|
|
48.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition cost ratio
|
|
22.7
|
%
|
|
22.4
|
%
|
|
21.3
|
%
|
|||
General and administrative expense ratio
(a)
|
|
18.9
|
%
|
|
20.0
|
%
|
|
18.4
|
%
|
|||
Expense ratio
|
|
41.6
|
%
|
|
42.4
|
%
|
|
39.7
|
%
|
|||
Combined ratio
|
|
95.9
|
%
|
|
83.8
|
%
|
|
87.8
|
%
|
(a)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Years Ended December 31,
|
||||||||||
Western World Segment Information
|
|
2016
|
|
2015
|
|
2014
(a)
|
||||||
Underwriting revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
$
|
323,220
|
|
|
$
|
278,504
|
|
|
$
|
65,235
|
|
Reinsurance premiums ceded
|
|
(22,634
|
)
|
|
(18,877
|
)
|
|
(6,428
|
)
|
|||
Net premiums written
|
|
300,586
|
|
|
259,627
|
|
|
58,807
|
|
|||
Change in unearned premiums
|
|
(27,354
|
)
|
|
(977
|
)
|
|
14,189
|
|
|||
Net premiums earned
|
|
273,232
|
|
|
258,650
|
|
|
72,996
|
|
|||
Other insurance related income
|
|
912
|
|
|
1,044
|
|
|
264
|
|
|||
Total underwriting revenues
|
|
274,144
|
|
|
259,694
|
|
|
73,260
|
|
|||
|
|
|
|
|
|
|
||||||
Underwriting deductions
|
|
|
|
|
|
|
||||||
Losses and loss expenses
|
|
183,812
|
|
|
171,878
|
|
|
51,035
|
|
|||
Policy acquisition costs
|
|
64,442
|
|
|
41,408
|
|
|
3,169
|
|
|||
General and administrative expenses
|
|
43,280
|
|
|
38,715
|
|
|
11,121
|
|
|||
Share compensation expenses
|
|
2,543
|
|
|
2,083
|
|
|
135
|
|
|||
Total underwriting deductions
|
|
294,077
|
|
|
254,084
|
|
|
65,460
|
|
|||
Underwriting (loss) income
|
|
$
|
(19,933
|
)
|
|
$
|
5,610
|
|
|
$
|
7,800
|
|
|
|
|
|
|
|
|
||||||
Selected ratios:
|
|
|
|
|
|
|
||||||
Ratio of net to gross premiums written
|
|
93.0
|
%
|
|
93.2
|
%
|
|
90.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
Losses and loss expense ratio
|
|
67.3
|
%
|
|
66.4
|
%
|
|
69.9
|
%
|
|||
|
|
|
|
|
|
|
||||||
Policy acquisition cost ratio
|
|
23.5
|
%
|
|
16.0
|
%
|
|
4.4
|
%
|
|||
General and administrative expense ratio
(b)
|
|
16.8
|
%
|
|
15.8
|
%
|
|
15.4
|
%
|
|||
Expense ratio
|
|
40.3
|
%
|
|
31.8
|
%
|
|
19.8
|
%
|
|||
Combined ratio
|
|
107.6
|
%
|
|
98.2
|
%
|
|
89.7
|
%
|
(a)
|
The results of Western World have been included in the Company’s consolidated results from the October 2, 2014 date of acquisition.
|
(b)
|
The general and administrative expense ratio includes share compensation expenses.
|
|
|
Years Ended December 31,
|
||||||||||
AlphaCat Segment Information
(a)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Third party
|
|
$
|
18,771
|
|
|
$
|
19,661
|
|
|
$
|
18,667
|
|
Related party
|
|
3,329
|
|
|
5,309
|
|
|
7,467
|
|
|||
Total revenues
|
|
22,100
|
|
|
24,970
|
|
|
26,134
|
|
|||
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
|
10,233
|
|
|
12,115
|
|
|
10,134
|
|
|||
Share compensation expenses
|
|
249
|
|
|
580
|
|
|
501
|
|
|||
Finance expenses
|
|
947
|
|
|
9,312
|
|
|
3,417
|
|
|||
Tax expenses
|
|
90
|
|
|
—
|
|
|
—
|
|
|||
Foreign exchange losses (gains)
|
|
19
|
|
|
(16
|
)
|
|
(20
|
)
|
|||
Total expenses
|
|
11,538
|
|
|
21,991
|
|
|
14,032
|
|
|||
Income before investment income from AlphaCat Funds and Sidecars
|
|
10,562
|
|
|
2,979
|
|
|
12,102
|
|
|||
|
|
|
|
|
|
|
||||||
Investment income (loss) from AlphaCat Funds and Sidecars
(b)
|
|
|
|
|
|
|
||||||
AlphaCat Re & Master Fund
|
|
—
|
|
|
—
|
|
|
(1,377
|
)
|
|||
AlphaCat Sidecars
|
|
607
|
|
|
5,504
|
|
|
10,525
|
|
|||
AlphaCat ILS Funds - Lower Risk
|
|
8,901
|
|
|
7,491
|
|
|
7,974
|
|
|||
AlphaCat ILS Funds - Higher Risk
|
|
7,471
|
|
|
8,428
|
|
|
8,754
|
|
|||
BetaCat ILS Funds
|
|
3,623
|
|
|
1,702
|
|
|
(51
|
)
|
|||
PaCRe
|
|
(23
|
)
|
|
(3,949
|
)
|
|
(4,340
|
)
|
|||
Total investment income from AlphaCat Funds and Sidecars
|
|
20,579
|
|
|
19,176
|
|
|
21,485
|
|
|||
Validus’ share of AlphaCat income
|
|
$
|
31,141
|
|
|
$
|
22,155
|
|
|
$
|
33,587
|
|
|
|
|
|
|
|
|
||||||
Supplemental information:
|
|
|
|
|
|
|
||||||
Gross premiums written
|
|
|
|
|
|
|
||||||
AlphaCat Sidecars
|
|
$
|
(341
|
)
|
|
$
|
45,755
|
|
|
$
|
50,023
|
|
AlphaCat ILS Funds - Lower Risk
|
|
112,222
|
|
|
91,363
|
|
|
52,264
|
|
|||
AlphaCat ILS Funds - Higher Risk
|
|
140,022
|
|
|
34,228
|
|
|
24,498
|
|
|||
AlphaCat Direct
(c)
|
|
18,499
|
|
|
4,780
|
|
|
—
|
|
|||
Total gross premiums written
|
|
$
|
270,402
|
|
|
$
|
176,126
|
|
|
$
|
126,785
|
|
(a)
|
The results of AlphaCat are presented on an asset manager basis, which is non-GAAP. A reconciliation of Validus’ share of AlphaCat segment income to segmental income is presented in the tables below.
|
(b)
|
The investment income from the AlphaCat funds and sidecars is based on equity accounting.
|
(c)
|
AlphaCat Direct includes direct investments from third party investors in AlphaCat Re.
|
|
|
Years Ended December 31,
|
||||||||||
Corporate and Investments
|
|
2016
|
|
2015
|
|
2014
|
||||||
Investment income
|
|
|
|
|
|
|
||||||
Managed net investment income
(a)
|
|
$
|
141,718
|
|
|
$
|
121,166
|
|
|
$
|
95,800
|
|
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
|
72,249
|
|
|
75,724
|
|
|
80,210
|
|
|||
Share compensation expenses
|
|
16,003
|
|
|
12,955
|
|
|
11,352
|
|
|||
Finance expenses
(a)
|
|
57,183
|
|
|
61,071
|
|
|
60,309
|
|
|||
Dividends on preferred shares
|
|
4,455
|
|
|
—
|
|
|
—
|
|
|||
Tax (benefit) expense
(a)
|
|
(19,819
|
)
|
|
6,376
|
|
|
155
|
|
|||
Total operating expenses
|
|
130,071
|
|
|
156,126
|
|
|
152,026
|
|
|||
|
|
|
|
|
|
|
||||||
Other items
|
|
|
|
|
|
|
||||||
Net realized gains on managed investments
(a)
|
|
14,680
|
|
|
1,698
|
|
|
12,160
|
|
|||
Change in net unrealized gains (losses) on managed investments
(a)
|
|
14,106
|
|
|
(32,007
|
)
|
|
(1,030
|
)
|
|||
(Loss) income from investment affiliates
|
|
(2,083
|
)
|
|
4,281
|
|
|
8,411
|
|
|||
Foreign exchange gains (losses)
(a)
|
|
10,778
|
|
|
(8,172
|
)
|
|
(10,700
|
)
|
|||
Other loss
|
|
(766
|
)
|
|
(1,002
|
)
|
|
(2,243
|
)
|
|||
Transaction expenses
(b)
|
|
—
|
|
|
—
|
|
|
(8,096
|
)
|
|||
Total other items
|
|
36,715
|
|
|
(35,202
|
)
|
|
(1,498
|
)
|
|||
Total Corporate and Investments
|
|
$
|
48,362
|
|
|
$
|
(70,162
|
)
|
|
$
|
(57,724
|
)
|
(a)
|
These items exclude the components which are included in Validus’ share of AlphaCat and amounts which are consolidated from VIEs.
|
(b)
|
The transaction expenses relate to costs incurred in connection with the acquisition of Western World, which was completed on October 2, 2014. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||
|
Validus Re Segment
|
|
Talbot Segment
|
|
Western World Segment
|
|
AlphaCat Segment and Consolidated VIEs
|
|
Corporate and Investments
|
|
Eliminations
|
|
Total
|
||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gross premiums written
|
$
|
1,111,054
|
|
|
$
|
970,702
|
|
|
$
|
323,220
|
|
|
$
|
270,402
|
|
|
$
|
—
|
|
|
$
|
(26,673
|
)
|
|
$
|
2,648,705
|
|
Reinsurance premiums ceded
|
(111,564
|
)
|
|
(175,729
|
)
|
|
(22,634
|
)
|
|
(6,451
|
)
|
|
—
|
|
|
26,673
|
|
|
(289,705
|
)
|
|||||||
Net premiums written
|
999,490
|
|
|
794,973
|
|
|
300,586
|
|
|
263,951
|
|
|
—
|
|
|
—
|
|
|
2,359,000
|
|
|||||||
Change in unearned premiums
|
(55,545
|
)
|
|
(13,057
|
)
|
|
(27,354
|
)
|
|
(13,879
|
)
|
|
—
|
|
|
—
|
|
|
(109,835
|
)
|
|||||||
Net premiums earned
|
943,945
|
|
|
781,916
|
|
|
273,232
|
|
|
250,072
|
|
|
—
|
|
|
—
|
|
|
2,249,165
|
|
|||||||
Other insurance related (loss)
income |
(55
|
)
|
|
455
|
|
|
912
|
|
|
22,386
|
|
|
—
|
|
|
(20,737
|
)
|
|
2,961
|
|
|||||||
Total underwriting revenues
|
943,890
|
|
|
782,371
|
|
|
274,144
|
|
|
272,458
|
|
|
—
|
|
|
(20,737
|
)
|
|
2,252,126
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
411,488
|
|
|
424,946
|
|
|
183,812
|
|
|
44,851
|
|
|
—
|
|
|
—
|
|
|
1,065,097
|
|
|||||||
Policy acquisition costs
|
181,040
|
|
|
177,127
|
|
|
64,442
|
|
|
26,905
|
|
|
—
|
|
|
(32
|
)
|
|
449,482
|
|
|||||||
General and administrative expenses
|
72,770
|
|
|
134,479
|
|
|
43,280
|
|
|
34,333
|
|
|
72,249
|
|
|
(20,817
|
)
|
|
336,294
|
|
|||||||
Share compensation expenses
|
11,034
|
|
|
13,078
|
|
|
2,543
|
|
|
249
|
|
|
16,003
|
|
|
—
|
|
|
42,907
|
|
|||||||
Total underwriting deductions
|
676,332
|
|
|
749,630
|
|
|
294,077
|
|
|
106,338
|
|
|
88,252
|
|
|
(20,849
|
)
|
|
1,893,780
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting income (loss)
|
$
|
267,558
|
|
|
$
|
32,741
|
|
|
$
|
(19,933
|
)
|
|
$
|
166,120
|
|
|
$
|
(88,252
|
)
|
|
$
|
112
|
|
|
$
|
358,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Other items
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,478
|
|
|
(649
|
)
|
|
—
|
|
|
1,829
|
|
|||||||
Dividends on preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,455
|
)
|
|
—
|
|
|
(4,455
|
)
|
|||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
9,264
|
|
|
141,718
|
|
|
(597
|
)
|
|
150,385
|
|
|||||||
(Income) attributable to AlphaCat investors
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,358
|
)
|
|
—
|
|
|
—
|
|
|
(23,358
|
)
|
|||||||
Net (income) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(123,363
|
)
|
|
—
|
|
|
—
|
|
|
(123,363
|
)
|
|||||||
Segmental income (loss)
|
$
|
267,558
|
|
|
$
|
32,741
|
|
|
$
|
(19,933
|
)
|
|
$
|
31,141
|
|
|
$
|
48,362
|
|
|
$
|
(485
|
)
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income available to Validus common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
359,384
|
|
(a)
|
Other items includes finance expenses, tax (benefit) expense, foreign exchange gains (losses), net realized and change in net unrealized gains (losses) on investments, income from investment and operating affiliates and other income (loss).
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||||||||
|
Validus Re Segment
|
|
Talbot Segment
|
|
Western World Segment
|
|
AlphaCat Segment and Consolidated VIEs
|
|
Corporate and Investments
|
|
Eliminations
|
|
Total
|
||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gross premiums written
|
$
|
1,126,759
|
|
|
$
|
1,018,835
|
|
|
$
|
278,504
|
|
|
$
|
176,126
|
|
|
$
|
—
|
|
|
$
|
(42,718
|
)
|
|
$
|
2,557,506
|
|
Reinsurance premiums ceded
|
(149,088
|
)
|
|
(198,896
|
)
|
|
(18,877
|
)
|
|
(4,538
|
)
|
|
—
|
|
|
42,718
|
|
|
(328,681
|
)
|
|||||||
Net premiums written
|
977,671
|
|
|
819,939
|
|
|
259,627
|
|
|
171,588
|
|
|
—
|
|
|
—
|
|
|
2,228,825
|
|
|||||||
Change in unearned premiums
|
12,542
|
|
|
18,152
|
|
|
(977
|
)
|
|
(11,653
|
)
|
|
—
|
|
|
—
|
|
|
18,064
|
|
|||||||
Net premiums earned
|
990,213
|
|
|
838,091
|
|
|
258,650
|
|
|
159,935
|
|
|
—
|
|
|
—
|
|
|
2,246,889
|
|
|||||||
Other insurance related income
|
3,575
|
|
|
851
|
|
|
1,044
|
|
|
25,524
|
|
|
—
|
|
|
(24,881
|
)
|
|
6,113
|
|
|||||||
Total underwriting revenues
|
993,788
|
|
|
838,942
|
|
|
259,694
|
|
|
185,459
|
|
|
—
|
|
|
(24,881
|
)
|
|
2,253,002
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
457,976
|
|
|
347,322
|
|
|
171,878
|
|
|
657
|
|
|
—
|
|
|
—
|
|
|
977,833
|
|
|||||||
Policy acquisition costs
|
166,387
|
|
|
187,535
|
|
|
41,408
|
|
|
16,327
|
|
|
—
|
|
|
(1,599
|
)
|
|
410,058
|
|
|||||||
General and administrative expenses
|
78,428
|
|
|
155,306
|
|
|
38,715
|
|
|
39,055
|
|
|
75,724
|
|
|
(23,519
|
)
|
|
363,709
|
|
|||||||
Share compensation expenses
|
10,350
|
|
|
12,373
|
|
|
2,083
|
|
|
580
|
|
|
12,955
|
|
|
—
|
|
|
38,341
|
|
|||||||
Total underwriting deductions
|
713,141
|
|
|
702,536
|
|
|
254,084
|
|
|
56,619
|
|
|
88,679
|
|
|
(25,118
|
)
|
|
1,789,941
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting income
|
$
|
280,647
|
|
|
$
|
136,406
|
|
|
$
|
5,610
|
|
|
$
|
128,840
|
|
|
$
|
(88,679
|
)
|
|
$
|
237
|
|
|
$
|
463,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Other items
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,967
|
)
|
|
(102,649
|
)
|
|
—
|
|
|
(120,616
|
)
|
|||||||
Dividends on preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
6,658
|
|
|
121,166
|
|
|
—
|
|
|
127,824
|
|
|||||||
(Income) attributable to AlphaCat investors
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,412
|
)
|
|
—
|
|
|
—
|
|
|
(2,412
|
)
|
|||||||
Net (income) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(92,964
|
)
|
|
—
|
|
|
—
|
|
|
(92,964
|
)
|
|||||||
Segmental income
|
$
|
280,647
|
|
|
$
|
136,406
|
|
|
$
|
5,610
|
|
|
$
|
22,155
|
|
|
$
|
(70,162
|
)
|
|
$
|
237
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income available to Validus
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
374,893
|
|
(a)
|
Other items includes finance expenses, tax expenses, foreign exchange gains (losses), net realized and change in net unrealized gains (losses) on investments, income from investment and operating affiliates and other income (loss).
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||||||||
|
Validus Re Segment
|
|
Talbot Segment
|
|
Western World Segment
(c)
|
|
AlphaCat Segment and Consolidated VIEs
|
|
Corporate and Investments
|
|
Eliminations
|
|
Total
|
||||||||||||||
Underwriting revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gross premiums written
|
$
|
1,118,532
|
|
|
$
|
1,101,770
|
|
|
$
|
65,235
|
|
|
$
|
126,785
|
|
|
$
|
—
|
|
|
$
|
(53,457
|
)
|
|
$
|
2,358,865
|
|
Reinsurance premiums ceded
|
(163,678
|
)
|
|
(192,211
|
)
|
|
(6,428
|
)
|
|
(4,348
|
)
|
|
—
|
|
|
53,457
|
|
|
(313,208
|
)
|
|||||||
Net premiums written
|
954,854
|
|
|
909,559
|
|
|
58,807
|
|
|
122,437
|
|
|
—
|
|
|
—
|
|
|
2,045,657
|
|
|||||||
Change in unearned premiums
|
(37,570
|
)
|
|
(29,785
|
)
|
|
14,189
|
|
|
564
|
|
|
—
|
|
|
—
|
|
|
(52,602
|
)
|
|||||||
Net premiums earned
|
917,284
|
|
|
879,774
|
|
|
72,996
|
|
|
123,001
|
|
|
—
|
|
|
—
|
|
|
1,993,055
|
|
|||||||
Other insurance related income
|
3,159
|
|
|
1,095
|
|
|
264
|
|
|
25,750
|
|
|
—
|
|
|
(26,796
|
)
|
|
3,472
|
|
|||||||
Total underwriting revenues
|
920,443
|
|
|
880,869
|
|
|
73,260
|
|
|
148,751
|
|
|
—
|
|
|
(26,796
|
)
|
|
1,996,527
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss expenses
|
307,290
|
|
|
423,394
|
|
|
51,035
|
|
|
(16,704
|
)
|
|
—
|
|
|
—
|
|
|
765,015
|
|
|||||||
Policy acquisition costs
|
141,670
|
|
|
187,162
|
|
|
3,169
|
|
|
11,584
|
|
|
—
|
|
|
(4,118
|
)
|
|
339,467
|
|
|||||||
General and administrative expenses
|
74,739
|
|
|
150,828
|
|
|
11,121
|
|
|
36,298
|
|
|
80,210
|
|
|
(23,834
|
)
|
|
329,362
|
|
|||||||
Share compensation expenses
|
9,739
|
|
|
11,346
|
|
|
135
|
|
|
501
|
|
|
11,352
|
|
|
—
|
|
|
33,073
|
|
|||||||
Total underwriting deductions
|
533,438
|
|
|
772,730
|
|
|
65,460
|
|
|
31,679
|
|
|
91,562
|
|
|
(27,952
|
)
|
|
1,466,917
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Underwriting income
|
$
|
387,005
|
|
|
$
|
108,139
|
|
|
$
|
7,800
|
|
|
$
|
117,072
|
|
|
$
|
(91,562
|
)
|
|
$
|
1,156
|
|
|
$
|
529,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Other items
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,891
|
)
|
|
(53,866
|
)
|
|
—
|
|
|
(66,757
|
)
|
|||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
4,286
|
|
|
95,800
|
|
|
—
|
|
|
100,086
|
|
|||||||
Net (income) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(74,880
|
)
|
|
—
|
|
|
—
|
|
|
(74,880
|
)
|
|||||||
Transaction expenses
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,096
|
)
|
|
—
|
|
|
(8,096
|
)
|
|||||||
Segmental income
|
$
|
387,005
|
|
|
$
|
108,139
|
|
|
$
|
7,800
|
|
|
$
|
33,587
|
|
|
$
|
(57,724
|
)
|
|
$
|
1,156
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income available to Validus
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
479,963
|
|
(a)
|
Other items includes finance expenses, tax expenses, foreign exchange gains (losses), net realized and change in net unrealized gains (losses) on investments, income from investment and operating affiliates and other income (loss).
|
(b)
|
The transaction expenses relate to costs incurred in connection with the acquisition of Western World, which was completed on October 2, 2014. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
|
(c)
|
The results of Western World have been included in the Company’s consolidated results from the October 2, 2014 date of acquisition.
|
(a)
|
The results of Western World have been included in the Company’s consolidated results from the October 2, 2014 date of acquisition.
|
|
Gross Premiums Written
|
|||||||||||||||||||||||||
|
Year Ended December 31, 2016
|
|||||||||||||||||||||||||
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||||
United States
|
$
|
448,243
|
|
|
$
|
103,415
|
|
|
$
|
323,220
|
|
|
$
|
64,766
|
|
|
$
|
(2,057
|
)
|
|
$
|
937,587
|
|
|
35.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Worldwide excluding United States
(a)
|
51,902
|
|
|
148,347
|
|
|
—
|
|
|
22,206
|
|
|
(689
|
)
|
|
221,766
|
|
|
8.4
|
%
|
||||||
Australia and New Zealand
|
7,389
|
|
|
10,844
|
|
|
—
|
|
|
4,949
|
|
|
(133
|
)
|
|
23,049
|
|
|
0.9
|
%
|
||||||
Europe
|
28,967
|
|
|
34,264
|
|
|
—
|
|
|
3,245
|
|
|
(695
|
)
|
|
65,781
|
|
|
2.4
|
%
|
||||||
Latin America and Caribbean
|
47,586
|
|
|
102,293
|
|
|
—
|
|
|
—
|
|
|
(9,484
|
)
|
|
140,395
|
|
|
5.3
|
%
|
||||||
Japan
|
40,099
|
|
|
6,580
|
|
|
—
|
|
|
3,221
|
|
|
(33
|
)
|
|
49,867
|
|
|
1.9
|
%
|
||||||
Canada
|
3,349
|
|
|
6,834
|
|
|
—
|
|
|
207
|
|
|
(147
|
)
|
|
10,243
|
|
|
0.4
|
%
|
||||||
Rest of the world
(b)
|
22,595
|
|
|
107,106
|
|
|
—
|
|
|
—
|
|
|
(2,449
|
)
|
|
127,252
|
|
|
4.8
|
%
|
||||||
Sub-total, non United States
|
201,887
|
|
|
416,268
|
|
|
—
|
|
|
33,828
|
|
|
(13,630
|
)
|
|
638,353
|
|
|
24.1
|
%
|
||||||
Worldwide including United States
(a)
|
167,065
|
|
|
98,311
|
|
|
—
|
|
|
170,253
|
|
|
(10,983
|
)
|
|
424,646
|
|
|
16.0
|
%
|
||||||
Other locations non-specific
(c)
|
293,859
|
|
|
352,708
|
|
|
—
|
|
|
1,555
|
|
|
(3
|
)
|
|
648,119
|
|
|
24.5
|
%
|
||||||
Total
|
$
|
1,111,054
|
|
|
$
|
970,702
|
|
|
$
|
323,220
|
|
|
$
|
270,402
|
|
|
$
|
(26,673
|
)
|
|
$
|
2,648,705
|
|
|
100.0
|
%
|
|
Gross Premiums Written
|
|||||||||||||||||||||||||
|
Year Ended December 31, 2015
|
|||||||||||||||||||||||||
|
Validus Re
|
|
Talbot
|
|
Western World
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||||
United States
|
$
|
530,541
|
|
|
$
|
106,679
|
|
|
$
|
278,504
|
|
|
$
|
41,134
|
|
|
$
|
(2,547
|
)
|
|
$
|
954,311
|
|
|
37.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Worldwide excluding United States
(a)
|
52,860
|
|
|
127,540
|
|
|
—
|
|
|
8,107
|
|
|
(1,186
|
)
|
|
187,321
|
|
|
7.3
|
%
|
||||||
Australia and New Zealand
|
12,190
|
|
|
8,974
|
|
|
—
|
|
|
624
|
|
|
(244
|
)
|
|
21,544
|
|
|
0.8
|
%
|
||||||
Europe
|
48,240
|
|
|
38,657
|
|
|
—
|
|
|
2,504
|
|
|
(1,135
|
)
|
|
88,266
|
|
|
3.5
|
%
|
||||||
Latin America and Caribbean
|
46,258
|
|
|
103,318
|
|
|
—
|
|
|
38
|
|
|
(15,481
|
)
|
|
134,133
|
|
|
5.2
|
%
|
||||||
Japan
|
38,885
|
|
|
5,171
|
|
|
—
|
|
|
1,671
|
|
|
(109
|
)
|
|
45,618
|
|
|
1.8
|
%
|
||||||
Canada
|
3,129
|
|
|
6,666
|
|
|
—
|
|
|
458
|
|
|
(231
|
)
|
|
10,022
|
|
|
0.4
|
%
|
||||||
Rest of the world
(b)
|
21,498
|
|
|
103,237
|
|
|
—
|
|
|
—
|
|
|
(3,660
|
)
|
|
121,075
|
|
|
4.7
|
%
|
||||||
Sub-total, non United States
|
223,060
|
|
|
393,563
|
|
|
—
|
|
|
13,402
|
|
|
(22,046
|
)
|
|
607,979
|
|
|
23.7
|
%
|
||||||
Worldwide including United States
(a)
|
139,419
|
|
|
100,523
|
|
|
—
|
|
|
116,523
|
|
|
(18,120
|
)
|
|
338,345
|
|
|
13.2
|
%
|
||||||
Other locations non-specific
(c)
|
233,739
|
|
|
418,070
|
|
|
—
|
|
|
5,067
|
|
|
(5
|
)
|
|
656,871
|
|
|
25.7
|
%
|
||||||
Total
|
$
|
1,126,759
|
|
|
$
|
1,018,835
|
|
|
$
|
278,504
|
|
|
$
|
176,126
|
|
|
$
|
(42,718
|
)
|
|
$
|
2,557,506
|
|
|
100.0
|
%
|
|
Gross Premiums Written
|
|||||||||||||||||||||||||
|
Year Ended December 31, 2014
|
|||||||||||||||||||||||||
|
Validus Re
|
|
Talbot
|
|
Western World
(d)
|
|
AlphaCat
|
|
Eliminations
|
|
Total
|
|
%
|
|||||||||||||
United States
|
$
|
437,124
|
|
|
$
|
108,458
|
|
|
$
|
65,235
|
|
|
$
|
26,067
|
|
|
$
|
(3,664
|
)
|
|
$
|
633,220
|
|
|
26.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Worldwide excluding United States
(a)
|
76,370
|
|
|
139,570
|
|
|
—
|
|
|
6,727
|
|
|
(1,575
|
)
|
|
221,092
|
|
|
9.4
|
%
|
||||||
Australia and New Zealand
|
20,617
|
|
|
9,736
|
|
|
—
|
|
|
1,019
|
|
|
(360
|
)
|
|
31,012
|
|
|
1.3
|
%
|
||||||
Europe
|
57,223
|
|
|
45,615
|
|
|
—
|
|
|
2,305
|
|
|
(1,292
|
)
|
|
103,851
|
|
|
4.4
|
%
|
||||||
Latin America and Caribbean
|
56,102
|
|
|
116,281
|
|
|
—
|
|
|
—
|
|
|
(26,007
|
)
|
|
146,376
|
|
|
6.2
|
%
|
||||||
Japan
|
42,813
|
|
|
4,116
|
|
|
—
|
|
|
608
|
|
|
(111
|
)
|
|
47,426
|
|
|
2.0
|
%
|
||||||
Canada
|
3,793
|
|
|
10,194
|
|
|
—
|
|
|
214
|
|
|
(337
|
)
|
|
13,864
|
|
|
0.6
|
%
|
||||||
Rest of the world
(b)
|
25,272
|
|
|
93,012
|
|
|
—
|
|
|
—
|
|
|
(3,805
|
)
|
|
114,479
|
|
|
4.9
|
%
|
||||||
Sub-total, non United States
|
282,190
|
|
|
418,524
|
|
|
—
|
|
|
10,873
|
|
|
(33,487
|
)
|
|
678,100
|
|
|
28.8
|
%
|
||||||
Worldwide including United States
(a)
|
175,098
|
|
|
96,187
|
|
|
—
|
|
|
89,845
|
|
|
(16,196
|
)
|
|
344,934
|
|
|
14.6
|
%
|
||||||
Other locations non-specific
(c)
|
224,120
|
|
|
478,601
|
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
|
702,611
|
|
|
29.8
|
%
|
||||||
Total
|
$
|
1,118,532
|
|
|
$
|
1,101,770
|
|
|
$
|
65,235
|
|
|
$
|
126,785
|
|
|
$
|
(53,457
|
)
|
|
$
|
2,358,865
|
|
|
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 since these exposures can span multiple geographic areas and, in some instances, are not fixed locations.
|
(d)
|
The results of Western World have been included in the Company’s consolidated results from the October 2, 2014 date of acquisition.
|
|
|
Statutory Capital and Surplus
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Required
|
|
Actual
|
|
Statutory Net Income
|
||||||||||||||||||||||
|
|
December 31,
|
|
December 31,
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||
Bermuda
|
|
$
|
734,045
|
|
|
$
|
1,463,408
|
|
|
$
|
3,712,369
|
|
|
$
|
3,469,849
|
|
|
$
|
369,684
|
|
|
$
|
329,260
|
|
|
$
|
511,652
|
|
United States
|
|
78,342
|
|
|
80,047
|
|
|
416,746
|
|
|
421,047
|
|
|
7,795
|
|
|
32,255
|
|
|
105,210
|
|
|||||||
Switzerland
|
|
267,000
|
|
|
259,000
|
|
|
806,099
|
|
|
750,356
|
|
|
46,362
|
|
|
21,379
|
|
|
44,939
|
|
(a)
|
Bermuda
|
(b)
|
United Kingdom - Lloyd’s
|
(c)
|
United States
|
(d)
|
Switzerland
|
|
Quarters Ended
|
||||||||||||||
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30,
2016 |
|
March 31,
2016 |
||||||||
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
339,454
|
|
|
$
|
372,418
|
|
|
$
|
764,042
|
|
|
$
|
1,172,791
|
|
Reinsurance premiums ceded
|
(40,635
|
)
|
|
(45,006
|
)
|
|
(36,229
|
)
|
|
(167,835
|
)
|
||||
Net premiums written
|
298,819
|
|
|
327,412
|
|
|
727,813
|
|
|
1,004,956
|
|
||||
Change in unearned premiums
|
241,580
|
|
|
236,363
|
|
|
(154,090
|
)
|
|
(433,688
|
)
|
||||
Net premiums earned
|
540,399
|
|
|
563,775
|
|
|
573,723
|
|
|
571,268
|
|
||||
Net investment income
|
38,153
|
|
|
43,514
|
|
|
39,257
|
|
|
29,461
|
|
||||
Net realized gains (losses) on investments
|
9,220
|
|
|
4,397
|
|
|
2,724
|
|
|
(584
|
)
|
||||
Change in net unrealized (losses) gains on investments
|
(67,460
|
)
|
|
5,459
|
|
|
31,428
|
|
|
47,444
|
|
||||
Income (loss) from investment affiliates
|
2,166
|
|
|
453
|
|
|
(589
|
)
|
|
(4,113
|
)
|
||||
Other insurance related income (loss) and other income
|
568
|
|
|
(610
|
)
|
|
824
|
|
|
1,413
|
|
||||
Foreign exchange (losses) gains
|
(901
|
)
|
|
(766
|
)
|
|
6,286
|
|
|
6,245
|
|
||||
Total revenues
|
522,145
|
|
|
616,222
|
|
|
653,653
|
|
|
651,134
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
275,126
|
|
|
258,394
|
|
|
307,130
|
|
|
224,447
|
|
||||
Policy acquisition costs
|
120,889
|
|
|
113,434
|
|
|
107,966
|
|
|
107,193
|
|
||||
General and administrative expenses
|
77,955
|
|
|
82,443
|
|
|
89,688
|
|
|
86,208
|
|
||||
Share compensation expenses
|
10,442
|
|
|
10,501
|
|
|
10,727
|
|
|
11,237
|
|
||||
Finance expenses
|
14,630
|
|
|
14,521
|
|
|
14,166
|
|
|
15,203
|
|
||||
Total expenses
|
499,042
|
|
|
479,293
|
|
|
529,677
|
|
|
444,288
|
|
||||
Income before taxes, loss from operating affiliate and (income) attributable to AlphaCat investors
|
23,103
|
|
|
136,929
|
|
|
123,976
|
|
|
206,846
|
|
||||
Tax benefit (expense)
|
21,147
|
|
|
(1,830
|
)
|
|
(1,706
|
)
|
|
2,118
|
|
||||
Loss from operating affiliate
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
||||
(Income) attributable to AlphaCat investors
|
(7,080
|
)
|
|
(5,564
|
)
|
|
(6,114
|
)
|
|
(4,600
|
)
|
||||
Net income
|
$
|
37,170
|
|
|
$
|
129,535
|
|
|
$
|
116,156
|
|
|
$
|
204,341
|
|
Net (income) attributable to noncontrolling interests
|
(27,200
|
)
|
|
(37,439
|
)
|
|
(21,193
|
)
|
|
(37,531
|
)
|
||||
Net income available to Validus
|
9,970
|
|
|
92,096
|
|
|
94,963
|
|
|
166,810
|
|
||||
Dividends on preferred shares
|
(2,203
|
)
|
|
(2,252
|
)
|
|
—
|
|
|
—
|
|
||||
Net income available to Validus common shareholders
|
$
|
7,767
|
|
|
$
|
89,844
|
|
|
$
|
94,963
|
|
|
$
|
166,810
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share available to Validus common shareholders
|
$
|
0.10
|
|
|
$
|
1.12
|
|
|
$
|
1.16
|
|
|
$
|
2.01
|
|
Earnings per diluted share available to Validus common shareholders
|
$
|
0.10
|
|
|
$
|
1.11
|
|
|
$
|
1.14
|
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
Quarters Ended
|
||||||||||||||
|
December 31, 2015
|
|
September 30, 2015
|
|
June 30,
2015 |
|
March 31,
2015 |
||||||||
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
309,605
|
|
|
$
|
402,509
|
|
|
$
|
726,168
|
|
|
$
|
1,119,224
|
|
Reinsurance premiums ceded
|
(33,128
|
)
|
|
(48,810
|
)
|
|
(55,418
|
)
|
|
(191,325
|
)
|
||||
Net premiums written
|
276,477
|
|
|
353,699
|
|
|
670,750
|
|
|
927,899
|
|
||||
Change in unearned premiums
|
266,823
|
|
|
201,312
|
|
|
(98,062
|
)
|
|
(352,009
|
)
|
||||
Net premiums earned
|
543,300
|
|
|
555,011
|
|
|
572,688
|
|
|
575,890
|
|
||||
Net investment income
|
31,612
|
|
|
31,572
|
|
|
33,611
|
|
|
31,029
|
|
||||
Net realized (losses) gains on investments
|
(2,928
|
)
|
|
(1,187
|
)
|
|
2,244
|
|
|
4,169
|
|
||||
Change in net unrealized (losses) gains on investments
|
(34,862
|
)
|
|
3,916
|
|
|
(34,676
|
)
|
|
33,227
|
|
||||
(Loss) income from investment affiliates
|
(1,261
|
)
|
|
2,482
|
|
|
284
|
|
|
2,776
|
|
||||
Other insurance related income and other income
|
2,545
|
|
|
1,526
|
|
|
100
|
|
|
940
|
|
||||
Foreign exchange gains (losses)
|
797
|
|
|
(2,592
|
)
|
|
(2,671
|
)
|
|
(4,265
|
)
|
||||
Total revenues
|
539,203
|
|
|
590,728
|
|
|
571,580
|
|
|
643,766
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
214,748
|
|
|
256,010
|
|
|
266,146
|
|
|
240,929
|
|
||||
Policy acquisition costs
|
102,285
|
|
|
105,039
|
|
|
104,323
|
|
|
98,411
|
|
||||
General and administrative expenses
|
98,563
|
|
|
96,886
|
|
|
84,025
|
|
|
84,235
|
|
||||
Share compensation expenses
|
10,062
|
|
|
9,983
|
|
|
9,242
|
|
|
9,054
|
|
||||
Finance expenses
|
16,581
|
|
|
18,512
|
|
|
18,682
|
|
|
20,967
|
|
||||
Total expenses
|
442,239
|
|
|
486,430
|
|
|
482,418
|
|
|
453,596
|
|
||||
Income before taxes, loss from operating affiliate and (income) attributable to AlphaCat investors
|
96,964
|
|
|
104,298
|
|
|
89,162
|
|
|
190,170
|
|
||||
Tax benefit (expense)
|
756
|
|
|
(2,018
|
)
|
|
(2,549
|
)
|
|
(2,565
|
)
|
||||
(Loss) income from operating affiliate
|
(1,708
|
)
|
|
(7,963
|
)
|
|
1,738
|
|
|
3,984
|
|
||||
(Income) attributable to AlphaCat investors
|
(974
|
)
|
|
(1,438
|
)
|
|
—
|
|
|
—
|
|
||||
Net income
|
$
|
95,038
|
|
|
$
|
92,879
|
|
|
$
|
88,351
|
|
|
$
|
191,589
|
|
Net (income) attributable to noncontrolling interests
|
(25,996
|
)
|
|
(26,229
|
)
|
|
(22,561
|
)
|
|
(18,178
|
)
|
||||
Net income available to Validus
|
69,042
|
|
|
66,650
|
|
|
65,790
|
|
|
173,411
|
|
||||
Dividends on preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income available to Validus common shareholders
|
$
|
69,042
|
|
|
$
|
66,650
|
|
|
$
|
65,790
|
|
|
$
|
173,411
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share available to Validus common shareholders
|
$
|
0.84
|
|
|
$
|
0.79
|
|
|
$
|
0.77
|
|
|
$
|
2.07
|
|
Earnings per diluted share available to Validus common shareholders
|
$
|
0.81
|
|
|
$
|
0.78
|
|
|
$
|
0.75
|
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
Amortized
cost |
|
Fair
value |
|
Amount
shown on the Balance Sheet |
||||||
U.S. government and government agency
|
$
|
809,392
|
|
|
$
|
804,126
|
|
|
$
|
804,126
|
|
Non-U.S. government and government agency
|
245,651
|
|
|
240,791
|
|
|
240,791
|
|
|||
U.S. states, municipalities and political subdivisions
|
271,742
|
|
|
271,830
|
|
|
271,830
|
|
|||
Agency residential mortgage-backed securities
|
684,490
|
|
|
679,595
|
|
|
679,595
|
|
|||
Non-agency residential mortgage-backed securities
|
15,858
|
|
|
15,477
|
|
|
15,477
|
|
|||
U.S. corporate
|
1,540,036
|
|
|
1,534,508
|
|
|
1,534,508
|
|
|||
Non-U.S. corporate
|
418,520
|
|
|
410,227
|
|
|
410,227
|
|
|||
Bank loans
|
579,121
|
|
|
570,399
|
|
|
570,399
|
|
|||
Catastrophe bonds
|
157,486
|
|
|
158,331
|
|
|
158,331
|
|
|||
Asset-backed securities
|
528,563
|
|
|
526,814
|
|
|
526,814
|
|
|||
Commercial mortgage-backed securities
|
333,740
|
|
|
330,932
|
|
|
330,932
|
|
|||
Total fixed maturities
|
5,584,599
|
|
|
5,543,030
|
|
|
5,543,030
|
|
|||
Total short-term investments
|
2,796,358
|
|
|
2,796,170
|
|
|
2,796,170
|
|
|||
Total other investments
|
380,130
|
|
|
405,712
|
|
|
405,712
|
|
|||
Total
|
$
|
8,761,087
|
|
|
$
|
8,744,912
|
|
|
$
|
8,744,912
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Assets
|
|
|
|
||||
Fixed maturities trading, at fair value
|
$
|
92,197
|
|
|
$
|
28,403
|
|
Cash and cash equivalents
|
11,780
|
|
|
25,306
|
|
||
Investments in subsidiaries on an equity basis
|
4,383,800
|
|
|
4,198,809
|
|
||
Balances due from subsidiaries
|
—
|
|
|
10,389
|
|
||
Accrued investment income
|
239
|
|
|
49
|
|
||
Other assets
|
1,143
|
|
|
813
|
|
||
Total assets
|
$
|
4,489,159
|
|
|
$
|
4,263,769
|
|
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
26,884
|
|
|
$
|
29,633
|
|
Balances due to subsidiaries
|
28,622
|
|
|
—
|
|
||
Senior notes payable
|
245,362
|
|
|
245,161
|
|
||
Debentures payable
|
350,000
|
|
|
350,000
|
|
||
Total liabilities
|
$
|
650,868
|
|
|
$
|
624,794
|
|
Shareholders’ Equity
|
|
|
|
||||
Authorized 571,428,571 common and preferred shares, par value $0.175 per share:
|
|
|
|
||||
Preferred shares (Issued and Outstanding: 2016—6,000; 2015—nil)
|
$
|
150,000
|
|
|
$
|
—
|
|
Common shares (Issued: 2016—161,279,976; 2015—160,570,772; Outstanding: 2016—79,132,252; 2015—82,900,617)
|
28,224
|
|
|
28,100
|
|
||
Treasury shares (2016—82,147,724; 2015—77,670,155)
|
(14,376
|
)
|
|
(13,592
|
)
|
||
Additional paid-in capital
|
821,023
|
|
|
1,002,980
|
|
||
Accumulated other comprehensive loss
|
(23,216
|
)
|
|
(12,569
|
)
|
||
Retained earnings
|
2,876,636
|
|
|
2,634,056
|
|
||
Total shareholders’ equity
|
$
|
3,838,291
|
|
|
$
|
3,638,975
|
|
Total liabilities and shareholders’ equity
|
$
|
4,489,159
|
|
|
$
|
4,263,769
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
|
|
|
|
|
||||||
Net investment income
|
$
|
1,195
|
|
|
$
|
317
|
|
|
$
|
14
|
|
Net realized gains on investments
|
8,020
|
|
|
—
|
|
|
—
|
|
|||
Change in net unrealized losses on investments
|
(276
|
)
|
|
(395
|
)
|
|
—
|
|
|||
Foreign exchange gains
|
1,932
|
|
|
715
|
|
|
648
|
|
|||
Total revenues
|
10,871
|
|
|
637
|
|
|
662
|
|
|||
Expenses
|
|
|
|
|
|
||||||
General and administrative expenses
|
72,235
|
|
|
74,015
|
|
|
86,108
|
|
|||
Share compensation expenses
|
6,832
|
|
|
7,261
|
|
|
6,424
|
|
|||
Finance expenses
|
47,108
|
|
|
47,722
|
|
|
47,689
|
|
|||
Total expenses
|
126,175
|
|
|
128,998
|
|
|
140,221
|
|
|||
Loss before equity in net earnings of subsidiaries
|
(115,304
|
)
|
|
(128,361
|
)
|
|
(139,559
|
)
|
|||
Equity in net earnings of subsidiaries
|
479,143
|
|
|
503,254
|
|
|
619,522
|
|
|||
Net income available to Validus
|
363,839
|
|
|
374,893
|
|
|
479,963
|
|
|||
Dividends on preferred shares
|
(4,455
|
)
|
|
—
|
|
|
—
|
|
|||
Net income available to Validus common shareholders
|
$
|
359,384
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
|
|
|
|
|
|
||||||
Comprehensive income:
|
|
|
|
|
|
||||||
Net income available to Validus
|
$
|
363,839
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Change in foreign currency translation adjustments
|
(10,440
|
)
|
|
(3,716
|
)
|
|
(7,501
|
)
|
|||
Change in minimum pension liability, net of tax
|
(484
|
)
|
|
544
|
|
|
(210
|
)
|
|||
Change in fair value of cash flow hedge
|
277
|
|
|
(841
|
)
|
|
(228
|
)
|
|||
Other comprehensive loss
|
(10,647
|
)
|
|
(4,013
|
)
|
|
(7,939
|
)
|
|||
Comprehensive income available to Validus
|
$
|
353,192
|
|
|
$
|
370,880
|
|
|
$
|
472,024
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows provided by (used in) operating activities
|
|
|
|
|
|
||||||
Net income available to Validus
|
$
|
363,839
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Equity in net earnings of subsidiaries
|
(479,143
|
)
|
|
(503,254
|
)
|
|
(619,522
|
)
|
|||
Dividends received from subsidiaries
|
30,000
|
|
|
620,700
|
|
|
100,000
|
|
|||
Net realized gains on investments
|
(8,020
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of discount on senior notes
|
108
|
|
|
108
|
|
|
108
|
|
|||
Share compensation expenses
|
6,832
|
|
|
7,261
|
|
|
6,424
|
|
|||
Change in net unrealized losses on investments
|
276
|
|
|
395
|
|
|
—
|
|
|||
Amortization of premium on fixed maturity investments
|
115
|
|
|
105
|
|
|
—
|
|
|||
Change in:
|
|
|
|
|
|
||||||
Other assets
|
(238
|
)
|
|
173
|
|
|
528
|
|
|||
Accrued investment income
|
(190
|
)
|
|
(49
|
)
|
|
—
|
|
|||
Balances due from subsidiaries
|
10,389
|
|
|
30,689
|
|
|
(12,030
|
)
|
|||
Balances due to subsidiaries
|
28,622
|
|
|
—
|
|
|
—
|
|
|||
Accounts payable and accrued expenses
|
(4,348
|
)
|
|
5,080
|
|
|
2,624
|
|
|||
Net cash (used in) provided by operating activities
|
(51,758
|
)
|
|
536,101
|
|
|
(41,905
|
)
|
|||
Cash flows provided by (used in) investing activities
|
|
|
|
|
|
||||||
Purchases of fixed maturity investments
|
(56,164
|
)
|
|
(28,903
|
)
|
|
—
|
|
|||
Investments in subsidiaries
|
—
|
|
|
(555,700
|
)
|
|
—
|
|
|||
Return of capital from subsidiaries
|
290,000
|
|
|
400,000
|
|
|
673,966
|
|
|||
Net cash provided by (used in) investing activities
|
233,836
|
|
|
(184,603
|
)
|
|
673,966
|
|
|||
Cash flows provided by (used in) financing activities
|
|
|
|
|
|
||||||
Issuance of preferred shares, net
|
144,852
|
|
|
—
|
|
|
—
|
|
|||
Issuance of common shares, net
|
(7,701
|
)
|
|
17,407
|
|
|
5,347
|
|
|||
Purchases of common shares under repurchase program
|
(212,675
|
)
|
|
(260,430
|
)
|
|
(510,952
|
)
|
|||
Dividends paid on preferred shares
|
(4,455
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends paid on common shares
|
(115,625
|
)
|
|
(112,967
|
)
|
|
(117,043
|
)
|
|||
Net cash used in financing activities
|
(195,604
|
)
|
|
(355,990
|
)
|
|
(622,648
|
)
|
|||
|
|
|
|
|
|
||||||
Net (decrease) increase in cash
|
(13,526
|
)
|
|
(4,492
|
)
|
|
9,413
|
|
|||
Cash and cash equivalents—beginning of year
|
25,306
|
|
|
29,798
|
|
|
20,385
|
|
|||
Cash and cash equivalents—end of year
|
$
|
11,780
|
|
|
$
|
25,306
|
|
|
$
|
29,798
|
|
|
As at and for the year ended December 31, 2016
|
||||||||||||||||||||||||||||||||||
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
|
|
Losses
and Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
|
|
Net
Premiums
Written
|
||||||||||||||||||
Validus Re
|
$
|
79,588
|
|
|
$
|
1,116,753
|
|
|
$
|
352,646
|
|
|
$
|
943,945
|
|
|
$
|
—
|
|
|
$
|
411,488
|
|
|
$
|
181,040
|
|
|
$
|
83,804
|
|
|
$
|
999,490
|
|
Talbot
|
95,237
|
|
|
1,301,517
|
|
|
551,815
|
|
|
781,916
|
|
|
—
|
|
|
424,946
|
|
|
177,127
|
|
|
147,557
|
|
|
794,973
|
|
|||||||||
Western World
|
34,841
|
|
|
589,500
|
|
|
158,945
|
|
|
273,232
|
|
|
—
|
|
|
183,812
|
|
|
64,442
|
|
|
45,823
|
|
|
300,586
|
|
|||||||||
AlphaCat
|
4,060
|
|
|
48,534
|
|
|
38,961
|
|
|
250,072
|
|
|
—
|
|
|
44,851
|
|
|
26,905
|
|
|
34,582
|
|
|
263,951
|
|
|||||||||
Corporate & Investments and Eliminations
|
(4,499
|
)
|
|
(61,109
|
)
|
|
(26,318
|
)
|
|
—
|
|
|
150,385
|
|
|
—
|
|
|
(32
|
)
|
|
67,435
|
|
|
—
|
|
|||||||||
Total
|
$
|
209,227
|
|
|
$
|
2,995,195
|
|
|
$
|
1,076,049
|
|
|
$
|
2,249,165
|
|
|
$
|
150,385
|
|
|
$
|
1,065,097
|
|
|
$
|
449,482
|
|
|
$
|
379,201
|
|
|
$
|
2,359,000
|
|
|
As at and for the year ended December 31, 2015
|
||||||||||||||||||||||||||||||||||
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
|
|
Losses
and Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
|
|
Net
Premiums
Written
|
||||||||||||||||||
Validus Re
|
$
|
60,459
|
|
|
$
|
1,146,869
|
|
|
$
|
294,509
|
|
|
$
|
990,213
|
|
|
$
|
—
|
|
|
$
|
457,976
|
|
|
$
|
166,387
|
|
|
$
|
88,778
|
|
|
$
|
977,671
|
|
Talbot
|
92,095
|
|
|
1,302,635
|
|
|
533,558
|
|
|
838,091
|
|
|
—
|
|
|
347,322
|
|
|
187,535
|
|
|
167,679
|
|
|
819,939
|
|
|||||||||
Western World
|
28,622
|
|
|
600,331
|
|
|
130,101
|
|
|
258,650
|
|
|
—
|
|
|
171,878
|
|
|
41,408
|
|
|
40,798
|
|
|
259,627
|
|
|||||||||
AlphaCat
|
2,526
|
|
|
11,013
|
|
|
24,643
|
|
|
159,935
|
|
|
—
|
|
|
657
|
|
|
16,327
|
|
|
39,635
|
|
|
171,588
|
|
|||||||||
Corporate & Investments and Eliminations
|
(2,700
|
)
|
|
(64,281
|
)
|
|
(16,601
|
)
|
|
—
|
|
|
127,824
|
|
|
—
|
|
|
(1,599
|
)
|
|
65,160
|
|
|
—
|
|
|||||||||
Total
|
$
|
181,002
|
|
|
$
|
2,996,567
|
|
|
$
|
966,210
|
|
|
$
|
2,246,889
|
|
|
$
|
127,824
|
|
|
$
|
977,833
|
|
|
$
|
410,058
|
|
|
$
|
402,050
|
|
|
$
|
2,228,825
|
|
|
As at and for the year ended December 31, 2014
|
||||||||||||||||||||||||||||||||||
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
|
|
Losses
and Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
|
|
Net
Premiums
Written
|
||||||||||||||||||
Validus Re
|
$
|
59,091
|
|
|
$
|
1,333,878
|
|
|
$
|
305,138
|
|
|
$
|
917,284
|
|
|
$
|
—
|
|
|
$
|
307,290
|
|
|
$
|
141,670
|
|
|
$
|
84,478
|
|
|
$
|
954,854
|
|
Talbot
|
95,246
|
|
|
1,352,056
|
|
|
552,660
|
|
|
879,774
|
|
|
—
|
|
|
423,394
|
|
|
187,162
|
|
|
162,174
|
|
|
909,559
|
|
|||||||||
Western World
|
9,566
|
|
|
613,551
|
|
|
133,185
|
|
|
72,996
|
|
|
—
|
|
|
51,035
|
|
|
3,169
|
|
|
11,256
|
|
|
58,807
|
|
|||||||||
AlphaCat
|
1,281
|
|
|
15,278
|
|
|
13,060
|
|
|
123,001
|
|
|
—
|
|
|
(16,704
|
)
|
|
11,584
|
|
|
36,799
|
|
|
122,437
|
|
|||||||||
Corporate & Investments and Eliminations
|
(4,162
|
)
|
|
(71,616
|
)
|
|
(14,814
|
)
|
|
—
|
|
|
100,086
|
|
|
—
|
|
|
(4,118
|
)
|
|
67,728
|
|
|
—
|
|
|||||||||
Total
|
$
|
161,022
|
|
|
$
|
3,243,147
|
|
|
$
|
989,229
|
|
|
$
|
1,993,055
|
|
|
$
|
100,086
|
|
|
$
|
765,015
|
|
|
$
|
339,467
|
|
|
$
|
362,435
|
|
|
$
|
2,045,657
|
|
|
Direct gross
|
|
Ceded to
other companies |
|
Assumed
from other companies |
|
Net amount
|
|
Percentage
of amount assumed to net |
|||||||||
Year Ended December 31, 2016
|
$
|
853,885
|
|
|
$
|
289,705
|
|
|
$
|
1,794,820
|
|
|
$
|
2,359,000
|
|
|
76
|
%
|
Year Ended December 31, 2015
|
838,755
|
|
|
328,681
|
|
|
1,718,751
|
|
|
2,228,825
|
|
|
77
|
%
|
||||
Year Ended December 31, 2014
|
683,028
|
|
|
313,208
|
|
|
1,675,837
|
|
|
2,045,657
|
|
|
82
|
%
|
Affiliation with
registrant
|
|
Deferred
acquisition
costs
|
|
Reserves for
losses
and loss
expenses
|
|
Reserves for
unearned
premiums
|
|
Net
earned
premiums
|
|
Net
investment
income
|
|
Losses and loss
expenses
incurred related to
|
|
Net paid
losses
and loss
expenses
|
|
Amortization of
deferred
acquisition
costs
|
|
Net
premiums
written
|
||||||||||||||||||||||
Current
year
|
|
Prior
year
|
||||||||||||||||||||||||||||||||||||||
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
2016
|
|
$
|
209,227
|
|
|
$
|
2,995,195
|
|
|
$
|
1,076,049
|
|
|
$
|
2,249,165
|
|
|
$
|
150,385
|
|
|
$
|
1,281,289
|
|
|
$
|
(216,192
|
)
|
|
$
|
1,114,402
|
|
|
$
|
449,482
|
|
|
$
|
2,359,000
|
|
2015
|
|
181,002
|
|
|
2,996,567
|
|
|
966,210
|
|
|
2,246,889
|
|
|
127,824
|
|
|
1,283,970
|
|
|
(306,137
|
)
|
|
1,167,839
|
|
|
410,058
|
|
|
2,228,825
|
|
||||||||||
2014
|
|
161,022
|
|
|
3,243,147
|
|
|
989,229
|
|
|
1,993,055
|
|
|
100,086
|
|
|
1,024,256
|
|
|
(259,241
|
)
|
|
1,063,653
|
|
|
339,467
|
|
|
2,045,657
|
|
1.
|
The preamble to the Agreement is amended to change the definition of the “Company” to Validus Services, Inc., a Delaware corporation.
|
2.
|
Section 3.01 is amended to read in its entirety as follows:
|
3.
|
Section 3.02 is amended to read in its entirety as follows:
|
4.
|
Section 4.01 is amended to read in its entirety as follows:
|
5.
|
Section 4.02 is amended to read in its entirety as follows:
|
6.
|
Except as set forth herein, the Agreement shall continue in full force and effect in accordance with its terms.
|
7.
|
This Amendment may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all of which counterparts taken together will constitute one and the same agreement.
|
(1)
|
TALBOT UNDERWRITING SERVICES LTD (Company No. 03043304), whose registered office is 60 Threadneedle Street, London, EC2R 8HP
(the
Company
);
and
|
(2)
|
See Schedule 1
(the
Employee
)
|
1.
|
Definitions
|
Associated Company
|
means any company with which the Company is connected in accordance with section 839 of the Income and Corporation Taxes Act 1988.
|
Commencement Date
|
As set out in Schedule 1.
|
Schedule 1
|
means Schedule 1 to this Agreement
|
Termination Date
|
means the date of termination of the Employee's employment under this Agreement.
|
2.
|
Term of Appointment
|
2.1
|
Subject to the terms and conditions of this Agreement, the Employee shall be employed by the Company as set out in Schedule 1.
|
2.2
|
The Employee's employment commenced on the Commencement Date and shall continue, subject to the remaining terms of this Agreement, until terminated by either party giving the other not less than the written notice as specified in Schedule 1. The date of the Employee’s continuous period of employment is set out in Schedule 1.
|
(i)
|
Notwithstanding Clause 2.2, the Company may, in its sole and absolute discretion, terminate the Employee's employment with immediate effect by paying a sum in lieu of notice (
Payment in Lieu)
equal to the base salary (as at the Termination Date) which the Employee would have been entitled to receive under this Agreement during the notice period referred to at Clause 2.2 (or, if notice has already been given, during the remainder of the notice period) less applicable income tax and National Insurance contributions.
|
(ii)
|
Notwithstanding clause 2.2(i), the Employee shall not be entitled to a Payment in Lieu of Notice or part thereof in the event the Company would at any time have been entitled to terminate the employment of the Employee without notice in accordance with clause 18 regardless of when the Company becomes aware of this right. Further in such circumstances the Company shall be entitled to recover from the Employee any payment in Lieu or any part payment made to the Employee.
|
3.
|
Powers and Duties
|
3.1
|
The Employee's position is contained in Schedule 1. The Employee may be reasonably required by the Company to undertake such other duties within their range of experience and skills as may be necessary from time to time.
|
3.2.1
|
comply with all reasonable directions from, and all regulations of, the Company or, as appropriate, any Associated Company;
|
3.2.2
|
have a reporting line as provided in Schedule 1;
|
3.2.3
|
at all times promptly give to such person as the Company or any Associated Company may direct (in writing if so requested) all information, advice and explanations as they may reasonably require in connection with matters relating to their employment or in relation to the business of the Company or any Associated Company generally; and
|
3.2.4
|
devote the whole of their time, attention and abilities during their working hours to carrying out their duties under this Agreement in a proper, loyal and efficient manner; and
|
3.2.5
|
at all times promote the interests of and maintain the goodwill of the Company and any Associated Company and not knowingly do or willingly permit to be done anything that may result in loss, other than in the normal course of business, or harm to the Company or any Associated Company; and
|
3.2.6
|
not at any time make any untrue or misleading statement relating to the Company or any Associated Company; and
|
3.2.7
|
carry out his duties or perform such other duties as may be reasonable and report to any Associated Company (without any further remuneration) including accepting any position with any Associated Company as the Company may direct from time to time.
|
4.
|
Hours of Work
|
4.1
|
The Employee is normally required to work 40 hours per week including a daily lunch break of one hour. There will be no additional payment for hours worked in excess of the Employee's normal hours of work.
|
4.2
|
The normal hours of work are as specified in Schedule 1 or such other hours as may from time to time be notified to the Employee in writing or otherwise agreed with the Company.
|
4.3
|
The Employee may also be required to work such additional hours (without any further remuneration) as may be necessary for the proper performance of their duties.
|
4.4
|
The Employee agrees to exclude the right provided under regulation 4 of the Working Time Regulations 1998 (the Regulations) to limit their working hours to 48 hours per week. Pursuant to regulation 5 of the Regulations, the Employee may, at any time, revoke any agreement by giving three months’ notice in writing to the Company.
|
5.
|
Place of Work
|
5.1
|
The Employee’s normal place of work shall be 60 Threadneedle Street, London, EC2R 8HP or at such other place within London or such other place as reasonably required as the Company may from time to time determine.
|
5.2
|
In addition, the Employee shall, in the proper performance of their duties and for the purpose of business trips, travel to such places both within the United Kingdom and abroad as the Company may from time to time require. The Company does not envisage at the present time that the Employee will be required to work outside the United Kingdom for a continuous period of more than one month during their employment. The Employee will be given written notification if there is a change in this position.
|
6.
|
Probationary Period
|
6.1
|
The first three months of this employment will be probationary, unless otherwise agreed.
|
6.2
|
During the probationary period, this employment may be terminated as provided for in Schedule 1 by either the Employee or the Company, except that the Company may (without notice or payment in lieu of notice) dismiss the Employee summarily for serious misconduct. During the probationary period, the disciplinary procedure set out in the Staff Handbook may not apply to the Employee’s employment.
|
6.3
|
The Employee’s continued employment will be reviewed at the end of the probationary period, at which time the Company may at its discretion decide to extend the probationary period for such period as it considers appropriate, terminate employment or confirm the position of employment.
|
7.
|
Salary
|
7.1
|
The Employee shall receive a base salary as provided for in Schedule 1 payable in arrears by twelve monthly instalments by direct credit transfer to the Employee's bank account by no later than the 24th day of each month.
|
7.2
|
It is the policy of the Company to review salaries annually in April although there is no obligation on the Company to increase them. Any changes to salary will be notified in writing to the Employee.
|
7.3
|
The Employee may be eligible to be considered for a discretionary bonus at the sole discretion of the Board of directors of Validus Holdings, Ltd (Validus). The Employee shall not be entitled to receive any bonus, if, on the date such bonus is due to be paid, the Employee is under notice of termination (regardless of whether the Company or the Employee has given such notice), is subject to disciplinary proceedings which leads to disciplinary sanctions, is on garden leave pursuant to Clause 17 or if the employment has terminated. Any bonus award may be paid with a deferred period and
|
8.
|
Pension
|
8.1
|
During each year of the Employee’s employment, the Company shall contribute an amount equal to a percentage as per Schedule 1 of the Employee's base salary in equal monthly instalments in arrears to the Talbot Underwriting Services Ltd Group Personal Pension Plan or such other scheme that the Company may put in place from time to time. The Company's contributions to such scheme shall be subject to the rules of the scheme and the tax relief and exemptions available from HMRC, as amended from time to time.
|
8.2
|
No contracting out certificate under the Pensions Schemes Act 1993 is in force in respect of the Employee's employment under this Agreement.
|
9.
|
Other Benefits (excluding pension)
|
9.1
|
The Company seeks to maintain benefit cover for all its Employees as detailed below although it reserves the right at any time to change the provider and the terms of any such benefits. Further, should the Company reach the view that it can no longer justify the costs of providing all or some of such benefits or the provisions of all or part of the benefits is no longer possible then it reserves the right to withdraw all or part of the benefits it provides under this Agreement.
|
9.2
|
The Employee will be eligible to participate in the private medical insurance scheme operated by the Company which provides cover for the Employee, their spouse, civil partner or long term partner and dependent children, subject to cover being accepted by the insurance company and to any conditions that the insurance company may impose.
|
9.3
|
The Employee shall be entitled to participate in the Company's life assurance scheme which shall pay to the Employee's dependants, if the Employee dies during his employment, a sum equal to: four times the Employee's base salary if the Employee's marital status is single; or eight times the Employee's base salary if the Employee is married or has a civil partner or long term partner. Participation is subject to:
|
(i)
|
the terms of the Company's life assurance scheme, as amended from time to time;
|
(ii)
|
the rules of the insurance policy of the relevant insurance provider, as amended from time to time; and
|
(iii)
|
the Employee satisfying the normal underwriting requirements of the relevant insurance provider.
|
9.4
|
The Employee will be eligible to join the permanent health insurance plan operated by the Company from time to time and the premium in connection with such plan will be paid for by the Company. Benefit will be payable only in accordance with the terms of the plan. If benefit is refused by the insurer there will be no obligation on the Company to make any payment to the Employee. If the insurer accepts a claim under the terms of the plan from time to time in force, the Employee shall, from the date of such acceptance, no longer be eligible to receive any base salary but the Employee will continue to be eligible to participate in the private medical insurance scheme pursuant to Clause 9.1 above, subject to cover being accepted by the insurance company and to any conditions that the insurance company may impose. Further details are set out in the Staff Handbook.
|
9.5
|
Details of other benefits to which the Employee may be entitled are set out in the Staff Handbook.
|
10.
|
Expenses
|
10.1
|
The Company shall reimburse the Employee against production of receipts, if requested, all reasonable travelling (other than to and from the usual place of work), hotel, entertainment and other out‑of‑pocket expenses which the Employee may from time to time be authorised to incur in the execution of his duties under this agreement. Further details are set out in the Staff Handbook.
|
11.
|
Holidays
|
11.1
|
In addition to normal bank and public holidays applicable in England the Employee’s entitlement to paid holiday is set out in Schedule 1 which is to be taken at such time or times as may be approved by the Employee’s line manager as set out Schedule 1. If the Employee is working part-time, the amount of paid holiday will be calculated on a pro rata basis and notified to them.
|
11.2
|
The Company's holiday year runs from 1 January to 31 December.
|
11.3
|
Upon termination the Company may at its discretion require the Employee to take, during his notice period and any period of garden leave, any holiday entitlement which will have accrued by the Termination Date but which has not been taken.
|
11.4
|
If the Employee's employment commences or terminates part way through a holiday year, the Employee's entitlement to holiday during that year will be assessed on a pro rata basis. Subject to the Company's discretion, payment for holiday entitlement accrued but not taken will only be made on termination of employment. If, on termination, the Employee has taken more holiday than his accrued holiday entitlement, he will be required to reimburse to the Company in respect of the excess days taken and the Employee hereby authorises the Company to make deductions in respect of the same from his final salary payment. For the avoidance of doubt, a day's holiday pay is 1/260 of the Employee's base salary.
|
11.5
|
Further details regarding holidays are set out in the Staff Handbook.
|
12.
|
Confidential Information
|
(i)
|
trade secrets;
|
(ii)
|
any inventions or improvements which the Employee may from time to time make or discover in the course of his duties;
|
(iii)
|
details of clients of the Company or any Associated Company including insureds’ and reinsureds’ premiums charged to them and premiums paid to reinsurers, claims, account information, the services provided and the Company's or any Associated Company's terms of business with clients, brokers, coverholders and other agents;
|
(iv)
|
business marketing plans, budgets and accounts;
|
(v)
|
any proposals relating to the future of the Company or any Associated Company or its or their business or any part thereof;
|
(vi)
|
details of employees and officers of the Company or any Associated Company and of the remuneration and other benefits paid to them;
|
(vii)
|
information relating to business matters, corporate plans, management systems, finances, marketing or sales of any past, present or future products or services, processes, designs, know how, pitch lists, policy wordings, broker lists, intermediary lists, customer lists, analyses, data, spreadsheets, models, software, applications and technical information relating to the creation, production or supply of any past, present or future products or services of the Company or any Associated Company, any information given to the Company or any Associated Company in confidence by clients, insureds, reinsureds, brokers, agents, intermediaries, coverholders or other persons and any other information (whether or not recorded in documentary form, or on computer disk or tape) which is confidential or commercially sensitive and is not in the public domain; and
|
(viii)
|
any other information which is notified to the Employee as confidential.
|
12.2
|
The Employee shall not, either during his employment or thereafter, except in the proper course of his duties or as required by law or regulation/regulators, use for his own or another party's benefit, or divulge or disclose to any person any Confidential Information concerning the business or affairs of the Company or any Associated Company, or any of its or their clients, customers, insureds, reinsureds, brokers, agents, intermediaries or coverholders which may have come to his knowledge at any time during his employment by the Company or any Associated Company. This Clause will cease to apply to information which enters the public domain other than (directly or indirectly) through the acts or omissions of the Employee.
|
13.
|
Competitive Activities
|
13.1
|
During the term of this Agreement the Employee shall not (unless otherwise agreed in writing by the Company) undertake any other business or profession or be or become an employee or agent of any other firm, company or other person or assist, be concerned in or have any financial interest, whether directly or indirectly, in any other business or profession including a business that is not trading or that is not in competition with the Company or any Associated Company. The Employee may hold or acquire not more than 4%, by way of bona fide investment only, of the shares or other securities of any company in competition with the Company or any Associated Company which are listed or dealt in on any recognised Stock Exchange, provided that the Employee promptly discloses such holding or acquisition to the Company or Associated Company. The Company may require the Employee to divest of any investment in any particular case on the ground that such other company is or may be carrying on a business competing or intending to compete with the business of the Company or any Associated Company or may cause a conflict of interests between those of the Company or any Associated Company and those of such company or the Employee or may breach any law or regulation binding on the Company, any Associated Company or the Employee.
|
13.2
|
In addition the Employee shall be entitled to engage in such activities as may be appropriate in order to manage his personal investments in so far as such activities do not materially interfere or conflict with the Employee’s performance of his duties under this Agreement.
|
14.
|
Post-Termination Restrictions
|
14.1
|
The Employee will not within the Prohibited Area directly or indirectly or otherwise or on behalf of any other person, without the prior written consent of the Company, carry on, be engaged, concerned or otherwise interested for the Restricted Period in any business which is in competition with any Restricted Business.
|
14.2
|
The Employee will not, directly or otherwise or on behalf of any other person, without the prior written consent of the Company, for the Restricted Period, in respect of any business which is in competition with any Restricted Business;
|
(A)
|
solicit, interfere with, canvas, entice away or endeavour to solicit any Client or Prospective Client;
|
(B)
|
communicate with or accept the business of any Client or Prospective Client;
|
(C)
|
offer employment to or otherwise endeavour to entice away from the Company or any Associated Company any Restricted Employee; or
|
(D)
|
engage or otherwise work with any Restricted Employee in any business which is in competition with any Restricted Business.
|
14.3
|
The Employee agrees and acknowledges that before entering into this Agreement he had the opportunity to obtain independent legal advice on the restrictions in this Clause 14 that the restrictions set out above are no wider or more restrictive than is reasonably necessary for the protection of the legitimate business interests of the Company and any Associated Company and further that the effect of those restrictions is not such as to prevent the Employee from earning a living.
|
14.4
|
The Employee agrees that the restrictions contained in Clause 14 of this Agreement shall be read and construed independently of the others and that all such restrictions are considered reasonable by the parties to this Agreement. In the event that any such restriction shall be found or held to be void in circumstances where it would be valid if some part of it were deleted or the period scope or distance of application reduced the parties to this Agreement agree that such restriction shall apply with such modification as may be necessary to make it valid and effective and that any such modification shall not affect the validity of any other restriction contained in this Agreement.
|
14.5
|
Without prejudice to the Company’s right to enforce this Agreement in respect of any Associated Company it is agreed that the covenants contained in this Clause 14 shall inure for the benefit of any relevant Associated Company and that the same shall be enforceable against the Executive by that Associated Company as if it were a party to this Agreement.
|
15.
|
Return of Property
|
15.1
|
For the purposes of this Clause 15, Property means all property belonging to the Company and/or any Associated Company including but not limited to keys, computer equipment, all lists of clients or customers, correspondence and all other documents, papers and records (including, without limitation, any records stored by electronic means, together with any codes or implements necessary to give full access to such records), confidential information, system designs, software designs, software programmes (in whatever media), presentations, proposals or specifications which may have been prepared by the Employee or have come into their possession, custody or control in the course of their employment.
|
15.2
|
The Employee shall promptly whenever requested by the Company and in any event upon the termination of their employment or during any period of garden leave pursuant to Clause 17 deliver up to the Company all Property of the Company or any Associated Company and the Employee shall not be entitled to and shall not retain any copies thereof. The Employee shall also promptly provide any passwords whenever requested by a suitably authorised member of the Company.
|
16.
|
Sickness
|
16.1
|
If the Employee is unable to work due to illness or injury, they should inform the HR Department and/or their Line Manager by 9.30am on the first day of absence. The Employee must also comply with the absence procedures set out in the Staff Handbook.
|
16.2
|
Subject to the Employee complying with Clause 16.1, the number of working days for which the Company will pay their base salary while they are absent due to sickness or injury is set out in the Staff Handbook. Such remuneration shall include any sums the Company is obliged to pay to the Employee pursuant to any social security or sick pay legislation. The Company may reduce remuneration during incapacity by an amount equal to the benefit (excluding any lump sum benefit) which the Employee would be entitled to claim during such incapacity under the then current social security legislation (whether or not such benefit is claimed by the Employee).
|
(i)
|
becomes entitled to payment of benefit under the terms of any permanent health insurance scheme from time to time in force; or
|
(ii)
|
is refused benefit under that scheme,
|
16.4
|
If the Employee is unable to work due to illness or injury the Company may require the Employee from time to time to undergo a medical examination by a medical practitioner nominated by the Company. The Company shall bear the cost of any such examination. The Employee agrees that this Agreement shall be taken as the Employee's written authorisation to the nominated medical practitioner to disclose to and discuss with the Company the results of the examination and the matters which arise from it so that the Company can be notified of any matters it considers might impair the Employee's ability to properly discharge their duties. The Company undertakes that, where such information is disclosed to it, it shall be disclosed at the same time to the Employee. The Company shall keep such information confidential and shall limit disclosure of such medical information to only those officers and employees of the Company who have a proper and necessary need to be given the information.
|
16.5
|
The Company shall not be liable to pay the Employee any benefit under the permanent health insurance scheme unless it receives payment from the insurer. The Company also reserves the right to terminate the Employee’s employment on notice to the Employee at any time during any period of absence when the Employee is in receipt of permanent health insurance.
|
17.
|
Garden Leave
|
17.1
|
Once notice to terminate the Employee's employment has been given by the Company or the Employee pursuant to Clause 2.2, the Company shall be under no obligation to vest in or assign to the Employee any powers or duties or to provide any work for the Employee and may exclude the Employee from any premises of the Company or any Associated Company for all or any part of the notice period.
|
17.2
|
The Company reserves the right to withdraw any rights or duties assigned to the Employee and may require the Employee to carry out other projects which are outside the Employee’s normal duties but commensurate to the Employee’s position within the Company.
|
17.3
|
During any period of Garden Leave the Employee shall:
|
(i)
|
continue to receive their salary and all contractual benefits in the usual way subject to clause 7.3 and subject to the terms of any benefit arrangement;
|
(ii)
|
remain an employee of the Company and bound by the terms of this Agreement and the Staff handbook to the extent they apply;
|
(iii)
|
not, without the prior written consent of the Company, contact or deal with any insurance broker, consultant, client, customer, supplier, agent, distributor, shareholder, adviser or other business contact of the Company or any Associated Company;
|
(iv)
|
resign from the Board of the Company or any Associated Company to which the Employee may be employed as a director; and
|
(v)
|
keep HR reasonably informed of their whereabouts on a regular basis and how they can be contacted during the working week other than any day when it is agreed that they are on holiday.
|
18.
|
Summary Termination of Employment
|
18.1
|
The Company may terminate the employment of the Employee, without notice or payment in lieu of notice, if the Employee:
|
(i)
|
is convicted of any criminal offence (other than a motoring offence for which no custodial sentence is given to him) which in the reasonable opinion of the Company demonstrated unsuitability for further employment with the Company; or
|
(ii)
|
shall be or become prohibited by law from being a director (applicable only to directors); or
|
(iii)
|
shall be guilty of fraud, dishonesty or serious misconduct (which, for the avoidance of doubt, includes any conduct which may bring the Company or any Associated Company or the Employee into disrepute) or shall commit any serious or persistent breach of any of his obligations (for which warnings have been given to the Employee) to the Company or any Associated Company (under this Agreement); or
|
18.2
|
Any delay or forbearance by the Company in exercising any right of termination under this Clause shall not constitute a waiver of it.
|
18.3
|
In order to investigate a complaint of misconduct against the Employee the Company is entitled to suspend the Employee on full pay. The Company shall ensure that any suspension is kept for as short a time as is possible.
|
19.
|
Other Agreements
|
19.1
|
The Employee acknowledges and warrants that there are no agreements or arrangements whether written, oral or implied between the Company or any Associated Company and the Employee relating to the employment of the Employee other than those expressly set out in this Agreement, the Staff Handbook and the offer of employment letter and that the Employee is not entering into this Agreement in reliance on any representation not expressly set out in this Agreement, the Staff Handbook and the offer of employment letter. In the event of any conflict the terms in this Agreement shall take precedence.
|
20.
|
Waiver of Rights
|
(i)
|
by reason of liquidation of the Company for the purpose of amalgamation or reconstruction; or
|
(ii)
|
as part of any arrangement for the amalgamation of the undertaking of the Company not including liquidation or the transfer of the whole or part of the undertaking of the Company to any Associated Company; and
|
(iii)
|
the Employee is offered suitable alternative employment with the amalgamated or reconstructed company and on terms not generally less favourable to the Employee than the terms of this Agreement,
|
21.
|
Data Protection
|
21.1
|
The Employee consents to the Company or any Associated Company holding and processing both electronically and manually the data it collects which relates to the Employee for the purposes of the administration and management of its employees and its business and for compliance with applicable procedures, laws and regulations. The Employee also consents to the transfer of such personal information (including sensitive personal data) to other offices the Company may have or to an Associated Company or to other third parties whether or not outside the European Economic Area for administration purposes and other purposes in connection with the Employee’s employment where it is necessary or desirable for the Company to do so.
|
22.
|
Communications
|
22.1
|
Telephone calls made and received by the Employee using the Company’s or any Associated Company’s equipment and use of the Company’s or any Associated Company’s e‑mail system to send or receive personal correspondence may be recorded by the Company or any Associated Company on its communications systems. Any recordings made shall at all times remain the property of the Company or any Associated Company and, if necessary, will be used as evidence in the case of disputes with employees or clients.
|
23.
|
Severability
|
23.1
|
If any provision of this Agreement is determined to be void, invalid, unenforceable or against public policy, such provisions shall be deemed severable from the Agreement, and the remaining provisions of the Agreement will remain unaffected and in full force and effect.
|
24.
|
Confirmation of Agreement
|
24.1
|
The Employee represents and warrants that they have read and understood each and every provision of this Agreement, and that they have freely and voluntarily entered into this Agreement.
|
25.
|
Miscellaneous Matters
|
25.1
|
The Company's grievance procedures apply to the Employee and are outlined in the Staff Handbook. For the avoidance of doubt the procedures are not contractual.
|
25.2
|
The Company's disciplinary procedures apply to the Employee and are contained in the Staff Handbook. For the avoidance of doubt, these procedures are not contractual.
|
25.3
|
There are no collective agreements which directly affect the terms and conditions set out in this Agreement.
|
25.4
|
At any time during the period of this Agreement, and, in any event, upon the termination of the Employee’s employment (for whatever reason and howsoever arising) the Employee shall immediately repay all outstanding debts or loans due to the Company or any Associated Company and the Company is hereby authorised to deduct from any payment of wages due to the Employee a sum in repayment of all or any part of such debts or loans.
|
26.
|
References and Background Checking
|
26.1
|
The employment is subject always to receipt of references which the Company deems to be satisfactory and in the event that the Employee’s employment has commenced before all references have been obtained, the Company reserves the right to terminate the Employee’s employment with immediate effect in the event that any references obtained are unsatisfactory to the Company.
|
26.2
|
The Employee’s employment is subject always to receipt of satisfactory background checks. In the event that the employment has commenced before all checks have been carried out the Company reserves the right to terminate the Employee’s employment with immediate effect in the event that any information gained from the checks is unsatisfactory to the Company.
|
27.
|
Notices
|
27.1
|
Any notice may be given personally to the Employee or to the Secretary of the Company (as the case may be) or may be posted to the Company (for the attention of its Secretary) at its registered office for the time being or to the Employee either at the address given above or at their last known address. Any such notice sent by post shall be deemed served forty-eight hours after it is posted and in proving such service it shall be sufficient to prove that the notice was properly addressed and put in the post.
|
28.
|
Variation
|
28.1
|
The Company reserves the right, at any time and from time to time, to make reasonable non-material changes to any of the Employee's terms and conditions of employment.
|
28.2
|
The Employee will be notified of minor changes by way of a general written notice to all employees and any such changes will take effect from the date of the notice.
|
28.3
|
The Employee will be given not less than one month's notice of any significant changes. Such changes will be deemed to be accepted unless the Employee notifies the Company in writing of any objections before the expiry of that notice period.
|
29.
|
Governing Law
|
29.1
|
This Agreement shall be governed by and construed under English law and each of the parties hereby irrevocably agrees for the exclusive benefit of the Company that the Courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.
|
Name
|
Peter Bilsby
|
Address
|
17 Meadow Way, Farnborough Park, Locksbottom, Kent, BR6 8LN
|
Job Title
|
Chief Executive Officer
|
Department
|
Corporate
|
Line Manager
|
Chairman
|
Legal Entity
|
Talbot Underwriting Services Ltd
|
Salary
|
£400,000 per annum
|
Continuous service date
|
3
rd
September 2009
|
Notice period
|
Twelve Months
|
Post-Termination Restrictions Period
|
Twelve Months
|
Normal work days
|
Monday to Friday
|
Normal work hours
|
9.30am to 5.30pm
|
Employer pension contribution
|
20%
|
Holiday
|
30 days per annum
|
Date of Contract Amendment
|
1
st
March 2016
|
Signed by the employee
|
/s/ P.A. Bilsby
|
Signed on behalf of the company
|
/s/ Dominic Scarlett
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net income available to Validus
|
|
$
|
363,839
|
|
|
$
|
374,893
|
|
|
$
|
479,963
|
|
|
$
|
532,666
|
|
|
$
|
408,438
|
|
Tax (benefit) expense
|
|
(19,729
|
)
|
|
6,376
|
|
|
155
|
|
|
383
|
|
|
2,501
|
|
|||||
Pre-tax net income available to Validus
|
|
344,110
|
|
|
381,269
|
|
|
480,118
|
|
|
533,049
|
|
|
410,939
|
|
|||||
Distributed income from investment affiliates
|
|
11,089
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Distributed (losses) from operating affiliate
|
|
(761
|
)
|
|
(9,505
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss (income) from investment affiliates
|
|
2,083
|
|
|
(4,281
|
)
|
|
(8,411
|
)
|
|
(4,790
|
)
|
|
964
|
|
|||||
Loss (income) from operating affiliate
|
|
23
|
|
|
3,949
|
|
|
4,340
|
|
|
(542
|
)
|
|
1,758
|
|
|||||
Earnings before fixed charges
|
|
356,544
|
|
|
371,432
|
|
|
476,047
|
|
|
527,717
|
|
|
413,661
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Estimated interest component of rent expense
(a)
|
|
3,254
|
|
|
3,381
|
|
|
3,513
|
|
|
3,405
|
|
|
2,557
|
|
|||||
2006 Junior Subordinated Deferrable Debentures
|
|
8,893
|
|
|
8,868
|
|
|
8,868
|
|
|
8,868
|
|
|
6,964
|
|
|||||
2007 Junior Subordinated Deferrable Debentures
|
|
7,362
|
|
|
7,341
|
|
|
7,341
|
|
|
7,341
|
|
|
8,922
|
|
|||||
Flagstone 2006 Junior Subordinated Deferrable Debentures
|
|
9,028
|
|
|
8,989
|
|
|
9,001
|
|
|
8,259
|
|
|
459
|
|
|||||
Flagstone 2007 Junior Subordinated Deferrable Debentures
|
|
7,100
|
|
|
7,123
|
|
|
7,129
|
|
|
6,222
|
|
|
327
|
|
|||||
2010 Senior Notes due 2040
|
|
22,388
|
|
|
22,388
|
|
|
22,388
|
|
|
22,388
|
|
|
22,388
|
|
|||||
Other finance expenses
(b)
|
|
3,749
|
|
|
20,033
|
|
|
13,597
|
|
|
14,929
|
|
|
20,650
|
|
|||||
Fixed charges
|
|
61,774
|
|
|
78,123
|
|
|
71,837
|
|
|
71,412
|
|
|
62,267
|
|
|||||
Earnings available for fixed charges
|
|
$
|
418,318
|
|
|
$
|
449,555
|
|
|
$
|
547,884
|
|
|
$
|
599,129
|
|
|
$
|
475,928
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
6.77
|
|
5.75
|
|
7.63
|
|
8.39
|
|
7.64
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges
|
|
$
|
61,774
|
|
|
$
|
78,123
|
|
|
$
|
71,837
|
|
|
$
|
71,412
|
|
|
$
|
62,267
|
|
Preferred share dividends
(c)
|
|
4,455
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Fixed charges and preferred share dividends
|
|
$
|
66,229
|
|
|
78,123
|
|
|
$
|
71,837
|
|
|
$
|
71,412
|
|
|
$
|
62,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges and preferred share dividends
|
|
6.32
|
|
5.75
|
|
7.63
|
|
8.39
|
|
7.64
|
(a)
|
33.3% represents a reasonable approximation of the interest factor.
|
(b)
|
Other finance expenses consist of fees relating to credit facilities, bank charges, Talbot FAL facility and other charges as well as fees incurred by AlphaCat Managers Ltd. in relation to fund raising for the AlphaCat sidecars, the AlphaCat ILS funds and AlphaCat direct.
|
(d)
|
Dividends have been tax effected at a 0% rate as it is presumed they will be funded from a Bermuda entity.
|
|
|
Exhibit 21
|
|||
Validus Holdings, Ltd.
|
|||||
List of Subsidiaries
|
|||||
|
|
|
|
Ownership
Interest Held
By Immediate Parent
100% unless otherwise indicated
|
|
|
|
|
|
||
Subsidiary
|
|
Jurisdiction
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Validus Holdings, Ltd.
|
|
Bermuda
|
|
|
|
Validus Reinsurance, Ltd.
|
|
Bermuda
|
|
|
|
Validus Amalgamation Subsidiary, Ltd.
|
|
Bermuda
|
|
|
|
Underwriting Risk Services S.A.
|
|
Chile
|
|
99.0%
|
|
Validus Re Americas, Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Re 2011 Ltd.
|
|
Bermuda
|
|
22.3%
|
|
AlphaCat Re 2012 Ltd.
|
|
Bermuda
|
|
37.9%
|
|
AlphaCat 2013, Ltd.
|
|
Bermuda
|
|
19.7%
|
|
AlphaCat 2014, Ltd.
|
|
Bermuda
|
|
19.6%
|
|
AlphaCat 2015, Ltd.
|
|
Bermuda
|
|
20.0%
|
|
BetaCat Ltd.
|
|
Bermuda
|
|
|
|
Validus Holdings (UK) Plc
|
|
United Kingdom
|
|
|
|
Validus Specialty, Inc.
|
|
Delaware
|
|
|
|
AlphaCat Capital Inc.
|
|
Delaware
|
|
|
|
Validus Underwriters, Inc.
|
|
Massachusetts
|
|
|
|
Validus America, Inc.
|
|
Delaware
|
|
|
|
Validus Services, Inc.
|
|
Delaware
|
|
|
|
Validus Reaseguros, Inc.
|
|
Florida
|
|
|
|
Validus Re Americas, (New Jersey) Inc.
|
|
New Jersey
|
|
|
|
Talbot Underwriting Services (US), Ltd.
|
|
Delaware
|
|
|
|
Western World Insurance Group, Inc.
|
|
Delaware
|
|
|
|
Western World Insurance Company
|
|
New Hampshire
|
|
|
|
Stratford Insurance Company
|
|
New Hampshire
|
|
|
|
Tudor Insurance Company
|
|
New Hampshire
|
|
|
|
Westco Insurance Managers, Inc.
|
|
New Jersey
|
|
|
|
Westco Claims Management Services, Inc.
|
|
New Jersey
|
|
|
|
Flagstone Reinsurance (Luxembourg), SARL
|
|
Luxembourg
|
|
|
|
Validus Risk Services (Ireland) Limited
|
|
Ireland
|
|
|
|
Validus Research, Inc.
|
|
Ontario
|
|
|
|
IPCRe Limited
|
|
Bermuda
|
|
|
|
Validus UPS, Ltd.
|
|
Bermuda
|
|
|
|
Flagstone (Bermuda) Holdings Limited
|
|
Bermuda
|
|
|
|
IAL Leasing Ltd.
|
|
Bermuda
|
|
|
|
Mont Fort Re Ltd.
|
|
Bermuda
|
|
|
|
Flagstone (Mauritius) Limited
|
|
Mauritius
|
|
|
|
Flagstone Underwriting Support Services (India) Pvt Ltd.
|
|
India
|
|
99.0%
|
|
Flagstone Finance S.A.
|
|
Luxembourg
|
|
|
|
Validus Reinsurance (Switzerland) Ltd
|
|
Switzerland
|
|
|
|
L.P. Holdings Limited
|
|
Cyprus
|
|
|
|
Limassol Power Plant Limited
|
|
Cyprus
|
|
|
|
Flagstone Africa (Pty) Limited
|
|
South Africa
|
|
|
|
|
|
|
|
Ownership
Interest Held
By Immediate Parent
100% unless otherwise indicated
|
|
|
|
|
|
||
Subsidiary
|
|
Jurisdiction
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Validus Services (Bermuda), Ltd.
|
|
Bermuda
|
|
|
|
Validus Ventures Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Managers Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Advantage Fund Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Reinsurance Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Diversified Fund Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Master Fund Ltd.
|
|
Bermuda
|
|
|
|
BetaCat Fund Ltd.
|
|
Bermuda
|
|
|
|
BetaCat Feeder Fund I Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Prima Fund Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Soteria Fund Ltd.
|
|
Bermuda
|
|
|
|
AlphaCat Opportunities Ltd.
|
|
Bermuda
|
|
|
|
Talbot Holdings Ltd.
|
|
Bermuda
|
|
|
|
Talbot Capital Ltd.
|
|
Bermuda
|
|
|
|
Talbot 2002 Underwriting Capital Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Holdings Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Services, Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Underwriting (LATAM) S.A.
|
|
Chile
|
|
99.0%
|
|
Talbot Risk Services Pte, Ltd.
|
|
Singapore
|
|
|
|
Talbot Underwriting (MENA) Ltd.
|
|
Dubai
|
|
|
|
Talbot Risk Services (Labuan) Pte. Ltd.
|
|
Labuan
|
|
|
|
Talbot Underwriting Risk Services, Ltd.
|
|
United Kingdom
|
|
|
|
Talbot Insurance (Bermuda), Ltd.
|
|
Bermuda
|
|
|
|
Talbot Underwriting Capital Ltd.
|
|
United Kingdom
|
|
|
|
1.
|
I have reviewed this
Annual Report on Form 10-K
of Validus Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
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
Annual Report on Form 10-K
of Validus Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
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.
|