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VALIDUS HOLDINGS LTD Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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VALIDUS HOLDINGS LTD (VR) filed Quarterly Report for the period ended 2012-09-30.

Validus Holdings, Inc. has a market cap of $3.36 billion; its shares were traded at around $35.01 with a P/E ratio of 8 and P/S ratio of 1.8. The dividend yield of Validus Holdings, Inc. stocks is 2.8%.

Highlight of Business Operations:

On April 2, 2012, the Company capitalized PaCRe, a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance. PaCRe was funded with $500.0 million of contributed capital. Validus invested $50.0 million in PaCRe's common equity. The Company will underwrite business for PaCRe, for which it will be paid a profit commission based on the company's underwriting results. As Validus Re holds a majority of PaCRe's outstanding voting rights, the financial statements of PaCRe are included in the consolidated financial statements for the Company. The portion of PaCRe's earnings attributable to third party investors for three and nine months ended September 30, 2012 is recorded in the consolidated Statements of Comprehensive Income (Loss) as "Net (income) loss attributable to noncontrolling interest."

Underwriting income (loss) measures the performance of the Company s 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, income (loss) from investment and operating affiliates, foreign exchange gains (losses) and transaction expenses. The Company believes the reporting of underwriting income enhances the understanding of our results by highlighting the underlying profitability of the Company s core insurance and reinsurance operations. The most comparable U.S. GAAP financial measure is net income. Underwriting income for the three months ended September 30, 2012 and 2011 was $143.1 million and $111.8 million, respectively. Underwriting income (loss) is a non-GAAP financial measure as described in detail and reconciled in the section below entitled “Underwriting Income.”

AlphaCat. AlphaCat general and administrative expenses for the three months ended September 30, 2012 were $2.1 million as compared to $2.2 million for the three months ended September 30, 2011, a decrease of $0.1 million or 3.7%. General and administrative expenses have decreased primarily due to a decrease in professional fees offset by an increase in salaries and benefits and performance bonus expense. AlphaCat's general and administrative expenses as a percent of net premiums earned for the three months ended September 30, 2012 and 2011 were 37.8% and 7.8%, respectively. The AlphaCat segment's general and administrative ratio has been impacted by the reduction in net premiums earned as a greater proportion of the segment's revenues are generated in equity earnings from operating affiliates which is not included in the ratio calculation.

Income from operating affiliates for the three months ended September 30, 2012 was $6.2 million, compared to for the three months ended September 30, 2011, an increase of $6.2 million or 100%. For the three months ended June 30, 2012, income from operating affiliates includes $4.1 million in equity earnings relating to AlphaCat Re 2011 and $2.2 million in equity earnings relating to AlphaCat Re 2012.

Income from operating affiliates for the nine months ended September 30, 2012, was $13.2 million compared to for the nine months ended September 30, 2011, an increase of $13.2 million or 100%. For the nine months ended September 30, 2012 income from operating affiliates includes $10.3 million in equity earnings relating to AlphaCat Re 2011 and $2.9 million in equity earnings relating to AlphaCat Re 2012.

Read the The complete Report

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