Validus reports 2017 loss but bullish renewals ahead of AIG takeover

Validus Holdings made a loss in 2017 but it enjoyed solid growth and, as the company prepares for life  owned by AIG, its CEO said it has been able to take advantage of rate increases while reducing its peak US hurricane exposure.

The Bermuda re/insurer made a net loss of $63.5 million in 2017 compared with a profit of $359.4 million in 2016. It made a net operating loss of $85 million in the period compared with an operating profit of $320.9 million a year earlier.

The company enjoyed steady growth last year. Its gross premiums written in 2017 were $2.95 billion, an increase of $302.2 million, or 11.4 percent on 2016.

Its combined ratio in 2017 was 122.6 percent – a big increase on the 84.2 percent it posted a year earlier because of the high levels of cat losses.

The company also reported a bullish renewal in January 2018. It said that its reinsurance and asset management segments underwrote $921.2 million in gross premiums written, an increase of 41.6 percent from the January 2017 renewal period.

The reinsurance segment alone underwrote $646.8 million in gross premiums written (excluding agriculture premiums), an increase of $159.6 million, or 32.8 percent from the 2017 renewal season.

It said the increase was primarily driven by an increase in the specialty and other lines of $72.2 million as a result of the continued build out of the company’s casualty portfolio and the timing of renewals; and an increase in US property renewals of $39.8 million.

Its asset management segment underwrote $274.4 million in gross premiums written during the January 2018 renewal season, an increase of $111.2 million from the 2017 renewal season. The increase was primarily driven by significant rate increases in the retrocession component of the portfolio and an increase in assets under management.

Ed Noonan, CEO of Validus, said: “We continue to position the company well, utilizing both traditional retro and the Validus-sponsored Tailwind Re catastrophe bond to improve the risk return characteristics of our portfolio.

“Through portfolio optimization we were able to take advantage of rate increases while reducing our peak US hurricane PML’s, which are down 65 percent since their height in 2013. Looking ahead, we are very excited to become part of the AIG Group at closing and are looking forward to being able to continue to serve our clients and brokers in new and exciting ways.”

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