VALIDUS HOLDINGS LTD Reports Operating Results (10-Q)
Validus Holdings Ltd has a market cap of $3.28 billion; its shares were traded at around $29.57 with a P/E ratio of 11 and P/S ratio of 1.8. The dividend yield of Validus Holdings Ltd stocks is 3%.VR is in the portfolios of Chuck Royce of Royce& Associates, Richard Pzena of Pzena Investment Management LLC, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations: The decrease in annualized return on average equity for the three months ended September 30, 2010 was driven primarily by the absence of the $303.0 million gain on bargain purchase, net of expenses relating to the IPC Acquisition. Net operating income for the three months ended September 30, 2010 increased by $27.4 million, or 18.8% compared to the three months ended September 30, 2009.
Diluted book value per common share is considered by management to be an appropriate measure of our returns to common shareholders, as we believe growth in our book value on a diluted basis ultimately translates into growth of our stock price. Diluted book value per common share increased by $1.72, or 5.7%, from $30.30 at June 30, 2010 to $32.02 at September 30, 2010. The increase was substantially due to the earnings generated in the three months ended September 30, 2010, partially offset by dividends of $0.22 per share and per share equivalent paid in the period. Diluted book value per common share is a Non-GAAP financial measure. The most comparable U.S. GAAP financial measure is book value per common share. Diluted book value per common share is calculated based on total shareholders equity plus the assumed proceeds from the exercise of outstanding options and warrants, divided by the sum of common shares, unvested restricted shares, options and warrants outstanding (assuming their exercise). A reconciliation of diluted book value per common share to book value per common share is presented below in the section entitled Non-GAAP Financial Measures.
Cash dividends per common share are an integral part of the value created for shareholders. On November 3, 2010, the Company announced a quarterly cash dividend of $0.22 per each common share and $0.22 per common share equivalent for which each outstanding warrant is then exercisable, payable on December 31, 2010 to holders of record on December 15, 2010.
Underwriting income measures the performance of the Companys core underwriting function, excluding revenues and expenses such as net investment income (loss), other income, finance expenses, net realized and unrealized gains (losses) on investments, foreign exchange gains (losses) and gain on bargain purchase, net of expenses. The Company believes the reporting of underwriting income enhances the understanding of our results by highlighting the underlying profitability of the Companys core insurance and reinsurance operations. Underwriting income for the three months ended September 30, 2010 and 2009 was $150.2 million and $124.4 million, respectively. Underwriting income is a Non-GAAP financial measure as described in detail and reconciled in the section below entitled Underwriting Income.
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