BERMUDA | 98-0501001 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. The following exhibits are filed herewith: |
Exhibit No. | Description | ||||
99.1 | Press Release dated April 28, 2016 announcing the earnings of Validus Holdings, Ltd. for the three months ended March 31, 2016. |
VALIDUS HOLDINGS, LTD. (Registrant) | ||||
By: | /s/ Jeffrey D. Sangster | |||
Name: | Jeffrey D. Sangster | |||
Title: | Executive Vice President and Chief Financial Officer |
Income available to Validus for the three months ended | |||||||
March 31, 2016 | March 31, 2015 | ||||||
(Expressed in millions of U.S. dollars, except per share information) | |||||||
Validus Re - Underwriting income (a) | $ | 98.3 | $ | 76.1 | |||
Talbot - Underwriting income (a) | 20.3 | 56.0 | |||||
Western World - Underwriting (loss) income (a) | (4.7 | ) | 2.2 | ||||
Validus' share of PaCRe, Ltd. | — | 4.0 | |||||
Validus' share of other AlphaCat income (a) | 8.8 | 3.8 | |||||
Validus' share of AlphaCat net income | 8.8 | 7.8 | |||||
Total segmental income | 122.7 | 142.1 | |||||
Net investment income (b) | 27.9 | 29.4 | |||||
Corporate operating expenses | (32.5 | ) | (36.4 | ) | |||
Eliminations and other | (0.7 | ) | 1.8 | ||||
Net operating income available to Validus (c) | $ | 117.4 | $ | 136.9 | |||
Net operating earnings per diluted common share available to Validus (c) | $ | 1.39 | $ | 1.56 | |||
Net income available to Validus (c) | $ | 166.8 | $ | 173.4 | |||
Net earnings per diluted common share available to Validus | $ | 1.98 | $ | 1.98 | |||
(a) Underwriting income and Validus' share of AlphaCat net income are non-GAAP measures. (b) Net investment income relates to our managed investment portfolio. Total net investment income, inclusive of AlphaCat's non-managed portfolio is $29.5 million and $31.0 million for the three months ended March 31, 2016 and 2015, respectively. (c) A reconciliation of net operating income available to Validus and underwriting income to net income available to Validus, the most directly comparable GAAP measure, is presented at the end of this release. |
• | Gross premiums written for the three months ended March 31, 2016 were $1,172.8 million compared to $1,119.2 million for the three months ended March 31, 2015, an increase of $53.6 million, or 4.8%. The increase was primarily due to increases at Western World and AlphaCat, and was partially offset by decreases at Validus Re and Talbot. |
• | The loss ratio for the three months ended March 31, 2016 was 39.3% which included $53.7 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.4 percentage points compared to a loss ratio for the three months ended March 31, 2015 of 41.8% which included $83.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 14.5 percentage points. The favorable development of $53.7 million for the three months ended March 31, 2016 was primarily due to favorable development on non-event reserves of $71.4 million; offset by unfavorable development on event specific reserves of $17.7 million. The unfavorable development was driven by reserves established following the receipt of a loss advice on an individual marine policy that incepted during the second half of 2015. |
• | The combined ratio for the three months ended March 31, 2016 and 2015 was 75.1%. |
• | Net operating income available to Validus for the three months ended March 31, 2016 was $117.4 million compared to $136.9 million for the three months ended March 31, 2015, a decrease of $19.5 million, or 14.2%. |
• | Net income available to Validus for the three months ended March 31, 2016 was $166.8 million compared to $173.4 million for the three months ended March 31, 2015, a decrease of $6.6 million, or 3.8%. |
• | Annualized return on average equity of 18.1% and annualized net operating return on average equity of 12.8% for the three months ended March 31, 2016 compared to 19.1% and 15.1%, respectively, for the three months ended March 31, 2015. |
• | Gross premiums written for the three months ended March 31, 2016 were $691.7 million compared to $711.7 million for the three months ended March 31, 2015, a decrease of $20.0 million, or 2.8%. Gross premiums written for the three months ended March 31, 2016 included $192.6 million of property premiums, $106.6 million of marine premiums and $392.4 million of specialty premiums, compared to $219.8 million of property premiums, $133.4 million of marine premiums and $358.5 million of specialty premiums for the three months ended March 31, 2015. The decrease in the property lines of $27.2 million was primarily due to utilization of third party capital, along with reductions in our participation and non-renewals on various programs due to the current rate environment and was partially offset by an increase in the proportional lines of $11.4 million as a result of a new quota share program. The decrease in the marine lines of $26.8 million was primarily driven by reductions in our participation on various programs due to current market conditions. The decreases were partially offset by an increase in the specialty lines of $34.0 million primarily as a result of new casualty business of $23.6 million written during the three months ended March 31, 2016 and adjustments to premiums on existing business. |
• | The loss ratio for the three months ended March 31, 2016 was 34.0%, which included $25.7 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 10.5 percentage points compared to a loss ratio for the three months ended March 31, 2015 of 44.7% which included $24.7 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.8 percentage points. The favorable development of $25.7 million on prior accident years for the three months ended March 31, 2016 is primarily due to favorable development on non-event reserves of $28.1 million; offset by unfavorable development on event specific reserves of $2.4 million. |
• | The combined ratio for the three months ended March 31, 2016 was 59.6% compared to 70.1% for the three months ended March 31, 2015, a decrease of 10.5 percentage points. |
• | Underwriting income for the three months ended March 31, 2016 was $98.3 million compared to $76.1 million for the three months ended March 31, 2015, an increase of $22.2 million, or 29.2%. |
• | Gross premiums written for the three months ended March 31, 2016 were $266.3 million compared to $270.1 million for the three months ended March 31, 2015, a decrease of $3.8 million, or 1.4%. Gross premiums written for the three months ended March 31, 2016 included $69.8 million of property premiums, $88.2 million of marine premiums and $108.3 million of specialty premiums compared to $71.7 million of property premiums, $110.4 million of marine premiums and $88.0 million of specialty premiums for the three months ended March 31, 2015. The decrease in the marine lines of $22.1 million was driven by decreases in a number of classes, primarily the upstream energy, cargo, and marine and other treaty lines due to the timing of renewals of certain policies, a reduction in premium adjustments to prior years and ongoing market conditions which have reduced renewals, and was partially offset by an increase in premium estimates of $6.5 million, which had no impact on earned premium. The increase in gross premiums written in the specialty lines of $20.3 million included an increase in premium estimates of $15.8 million, which had no impact on earned premium. After the impact of these changes in estimate, the increase of $4.5 million was primarily due to new business in the political lines class and upwards premium adjustments on existing business. |
• | The loss ratio for the three months ended March 31, 2016 was 48.4%, which included $22.7 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 three months ended March 31, 2015 of 35.1% which included $51.7 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 23.2 percentage points. The favorable development of $22.7 million on prior accident years for the three months ended March 31, 2016 is primarily due to favorable development on non-event reserves of $38.0 million; offset by unfavorable development on event specific reserves of $15.3 million. |
• | The combined ratio for the three months ended March 31, 2016 was 90.2% compared to 74.9% for the three months ended March 31, 2015, an increase of 15.3 percentage points. |
• | Underwriting income for the three months ended March 31, 2016 was $20.3 million compared to $56.0 million for the three months ended March 31, 2015, a decrease of $35.7 million. |
• | Gross premiums written for the three months ended March 31, 2016 were $64.0 million compared to $56.9 million for the three months ended March 31, 2015, an increase of $7.0 million, or 12.3%. Gross premiums written for the three months ended March 31, 2016 included $15.4 million of property premiums and $48.5 million of liability premiums, compared to $9.4 million of property premiums and $47.6 million of liability premiums for the three months ended March 31, 2015. The increase in gross premiums written in the property lines of $6.0 million was primarily a result of$5.0 million of additional business written in the brokerage property and commercial package property classes as a result of continued enhancements in the coastal wind property program. |
• | The loss ratio for the three months ended March 31, 2016 was 64.5%, which included $4.4 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 7.2 percentage points compared to a loss ratio for the three months ended March 31, 2015 of 74.4% which included $6.3 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.3 percentage points. The loss ratio for the three months ended March 31, 2016 included catastrophe losses totaling $2.0 million, or 3.3 percentage points. Of the 2015 incurred losses, $3.2 million or 4.7 percentage points arose from 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 March 31, 2016 was 108.1% compared to 97.1% for the three months ended March 31, 2015, an increase of 11.0 percentage points, primarily due to the amortization of the fair value adjustment accounted for at the time of the acquisition of Western World, which benefited the policy acquisition cost ratio by 15.3 percentage points during the three months ended March 31, 2015. |
• | Underwriting loss for the three months ended March 31, 2016 was $4.7 million compared to income of $2.2 million for the three months ended March 31, 2015, a decrease of $7.0 million. |
• | AlphaCat's assets under management were $2,318.0 million as at April 1, 2016, compared to $2,386.2 million as at January 1, 2016. Third party assets under management were $2,010.4 million as at April 1, 2016, compared to $2,059.5 million as at January 1, 2016. During the three months ended April 1, 2016, a total of $49.2 million of capital was raised, of which $45.8 million was raised from third parties. During the three months ended April 1, 2016, $146.5 million was returned to Sidecar investors upon expiration of the risk period. Of this, $120.2 million was returned to third party investors. |
• | Management fees earned for the three months ended March 31, 2016 were $5.6 million, of which $0.9 million were earned from related parties, compared to $5.7 million for the three months ended March 31, 2015, of which $1.2 million were earned from related parties. |
• | Total expenses for the three months ended March 31, 2016 were $2.4 million, compared to $7.0 million for the three months ended March 31, 2015, a decrease of $4.6 million. The decrease was primarily due to reduced placement fees incurred in relation to raising new capital during the three months ended March 31, 2016. |
• | Income available to Validus before investment income from AlphaCat Funds and Sidecars for the three months ended March 31, 2016 was $3.2 million, compared to a loss of $1.3 million for the three months ended March 31, 2015, an increase of $4.4 million. |
• | Investment income available to Validus from AlphaCat Funds and Sidecars for the three months ended March 31, 2016 was $5.6 million, compared to $5.1 million for the three months ended March 31, 2015, an increase of $0.6 million. |
• | Validus' share of AlphaCat's net income for the three months ended March 31, 2016 was $8.8 million, compared to $7.8 million for the three months ended March 31, 2015, an increase of $1.0 million. Validus' share of AlphaCat net income for the three months ended March 31, 2016 was $8.8 million, compared to $3.8 million excluding Validus' share of PaCRe's net income for the three months ended March 31, 2015, an increase of $5.0 million. |
• | Net investment income for the three months ended March 31, 2016 was $27.9 million compared to $29.4 million for the three months ended March 31, 2015, a decrease of $1.5 million, or 5.1%. Annualized effective yield for the three months ended March 31, 2016 was 1.79%, compared to 1.83% for the three months ended March 31, 2015, a decrease of 4.0 basis points. |
• | Net realized losses on investments for the three months ended March 31, 2016 were $1.1 million compared to gains of $4.2 million for the three months ended March 31, 2015, a decrease of $5.3 million, or 126.0%. |
• | The change in net unrealized gains on investments for the three months ended March 31, 2016 was $47.1 million compared to $34.7 million for the three months ended March 31, 2015, an increase of $12.4 million, primarily as a result of a falling interest rate environment during the three months ended March 31, 2016 compared to the three months ended March 31, 2015. |
• | General and administrative expenses for the three months ended March 31, 2016, were $16.2 million compared to $15.6 million for the three months ended March 31, 2015, an increase of $0.6 million or 3.7%. |
• | Share compensation expenses for the three months ended March 31, 2016 were $4.1 million compared to $2.9 million for the three months ended March 31, 2015, an increase of $1.2 million or 41.4% primarily due to performance share award adjustments. |
• | Tax benefits for the three months ended March 31, 2016 were $2.1 million compared to expenses of $2.6 million for the three months ended March 31, 2015, a decrease of $4.7 million, primarily relating to a partial drawdown of valuation allowances on net operating losses. |
Share Repurchase Activity (Expressed in thousands of U.S. dollars except for share and per share information) | ||||||||||||||||||||
As at December 31, 2015 | Quarter ended | |||||||||||||||||||
Effect of share repurchases: | (cumulative) | January | February | March | March 31, 2016 | |||||||||||||||
Aggregate purchase price (a) | $ | 2,491,731 | $ | 18,377 | $ | 28,677 | $ | 13,313 | $ | 60,367 | ||||||||||
Shares repurchased | 76,031,280 | 419,668 | 647,030 | 289,938 | 1,356,636 | |||||||||||||||
Average price (a) | $ | 32.77 | $ | 43.79 | $ | 44.32 | $ | 45.92 | $ | 44.50 |
Share Repurchase Activity (Expressed in thousands of U.S. dollars except for share and per share information) | ||||||||||||
Effect of share repurchases: | As at March 31, 2016 | As at April 27, 2016 | Cumulative to Date Effect | |||||||||
Aggregate purchase price (a) | $ | 2,552,098 | $ | — | $ | 2,552,098 | ||||||
Shares repurchased | 77,387,916 | — | 77,387,916 | |||||||||
Average price (a) | $ | 32.98 | $ | — | $ | 32.98 |
(a) | Share transactions are on a trade date basis through April 27, 2016 and are inclusive of commissions. Average share price is rounded to two decimal places. |
Investors: | Media: |
Validus Holdings, Ltd. | Brunswick Group |
Investor.Relations@validusholdings.com | Laura Pietruszki / Josh Gerth |
+1-441-278-9000 | +1-212-333-3810 |
March 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Fixed maturities trading, at fair value (amortized cost: 2016—$5,478,317; 2015—$5,556,900) | $ | 5,481,304 | $ | 5,510,331 | |||
Short-term investments trading, at fair value (amortized cost: 2016—$2,107,714; 2015—$1,941,615) | 2,108,199 | 1,941,635 | |||||
Other investments, at fair value (cost: 2016—$323,196; 2015—$315,963) | 344,151 | 336,856 | |||||
Cash and cash equivalents | 569,774 | 723,109 | |||||
Restricted cash | 108,395 | 73,270 | |||||
Total investments and cash | 8,611,823 | 8,585,201 | |||||
Investments in affiliates, equity method (cost: 2016—$70,761; 2015—$70,186) | 84,504 | 88,065 | |||||
Premiums receivable | 1,176,684 | 658,682 | |||||
Deferred acquisition costs | 262,675 | 181,002 | |||||
Prepaid reinsurance premiums | 181,255 | 77,992 | |||||
Securities lending collateral | 9,721 | 4,863 | |||||
Loss reserves recoverable | 370,689 | 350,586 | |||||
Paid losses recoverable | 25,001 | 23,071 | |||||
Income taxes recoverable | 7,146 | 16,228 | |||||
Deferred tax asset | 27,771 | 21,661 | |||||
Receivable for investments sold | 16,278 | 39,766 | |||||
Intangible assets | 119,842 | 121,258 | |||||
Goodwill | 196,758 | 196,758 | |||||
Accrued investment income | 22,298 | 23,897 | |||||
Other assets | 92,076 | 126,782 | |||||
Total assets | $ | 11,204,521 | $ | 10,515,812 | |||
Liabilities | |||||||
Reserve for losses and loss expenses | $ | 2,980,300 | $ | 2,996,567 | |||
Unearned premiums | 1,503,161 | 966,210 | |||||
Reinsurance balances payable | 96,685 | 75,380 | |||||
Securities lending payable | 10,187 | 5,329 | |||||
Deferred tax liability | 3,618 | 3,847 | |||||
Payable for investments purchased | 76,116 | 77,475 | |||||
Accounts payable and accrued expenses | 136,712 | 627,331 | |||||
Notes payable to AlphaCat investors | 323,510 | 75,493 | |||||
Senior notes payable | 245,211 | 245,161 | |||||
Debentures payable | 538,335 | 537,668 | |||||
Total liabilities | $ | 5,913,835 | $ | 5,610,461 | |||
Commitments and contingent liabilities | |||||||
Redeemable noncontrolling interest | 1,409,037 | 1,111,714 | |||||
Shareholders’ equity | |||||||
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2016—160,582,277; 2015—160,570,772; Outstanding: 2016—81,555,486; 2015—82,900,617) | $ | 28,102 | $ | 28,100 | |||
Treasury shares (2016—79,026,791; 2015—77,670,155) | (13,830 | ) | (13,592 | ) | |||
Additional paid-in-capital | 954,485 | 1,002,980 | |||||
Accumulated other comprehensive loss | (15,438 | ) | (12,569 | ) | |||
Retained earnings | 2,771,107 | 2,634,056 | |||||
Total shareholders’ equity available to Validus | 3,724,426 | 3,638,975 | |||||
Noncontrolling interest | 157,223 | 154,662 | |||||
Total shareholders’ equity | $ | 3,881,649 | $ | 3,793,637 | |||
Total liabilities, noncontrolling interests and shareholders’ equity | $ | 11,204,521 | $ | 10,515,812 |
Three Months Ended March 31, | ||||||||
(Dollars in thousands) | 2016 | 2015 | ||||||
Underwriting income | ||||||||
Gross premiums written | $ | 1,172,791 | $ | 1,119,224 | ||||
Reinsurance premiums ceded | (167,835 | ) | (191,325 | ) | ||||
Net premiums written | 1,004,956 | 927,899 | ||||||
Change in unearned premiums | (433,688 | ) | (352,009 | ) | ||||
Net premiums earned | 571,268 | 575,890 | ||||||
Other insurance related income | 736 | 940 | ||||||
Underwriting revenues | 572,004 | 576,830 | ||||||
Underwriting deductions | ||||||||
Losses and loss expenses | 224,447 | 240,929 | ||||||
Policy acquisition costs | 107,193 | 98,411 | ||||||
General and administrative expenses | 86,208 | 84,235 | ||||||
Share compensation expenses | 11,237 | 9,054 | ||||||
Total underwriting deductions | 429,085 | 432,629 | ||||||
Underwriting income | $ | 142,919 | $ | 144,201 | ||||
Net investment income | 29,461 | 31,029 | ||||||
Finance expenses | (15,203 | ) | (20,967 | ) | ||||
Operating income before taxes, income from operating affiliates and (income) attributable to AlphaCat investors | $ | 157,177 | $ | 154,263 | ||||
Tax benefit (expense) | 2,118 | (2,565 | ) | |||||
(Loss) income from operating affiliates | (23 | ) | 3,984 | |||||
(Income) attributable to AlphaCat investors | (4,600 | ) | — | |||||
Net operating income | $ | 154,672 | $ | 155,682 | ||||
Net realized (losses) gains on investments | (584 | ) | 4,169 | |||||
Change in net unrealized gains on investments | 47,444 | 33,227 | ||||||
(Loss) income from investment affiliate | (4,113 | ) | 2,776 | |||||
Foreign exchange gains (losses) | 6,245 | (4,265 | ) | |||||
Other income | 677 | — | ||||||
Net income | $ | 204,341 | $ | 191,589 | ||||
Net (income) attributable to noncontrolling interest | (37,531 | ) | (18,178 | ) | ||||
Net income available to Validus | $ | 166,810 | $ | 173,411 | ||||
Selected ratios: | ||||||||
Net premiums written / Gross premiums written | 85.7 | % | 82.9 | % | ||||
Losses and loss expenses | 39.3 | % | 41.8 | % | ||||
Policy acquisition costs | 18.8 | % | 17.1 | % | ||||
General and administrative expenses (a) | 17.0 | % | 16.2 | % | ||||
Expense ratio | 35.8 | % | 33.3 | % | ||||
Combined ratio | 75.1 | % | 75.1 | % |
(a) | The general and administrative expense ratio includes share compensation expenses. |
Validus Re Segment | Three Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Underwriting income | |||||||
Gross premiums written | $ | 691,668 | $ | 711,693 | |||
Reinsurance premiums ceded | (92,495 | ) | (113,777 | ) | |||
Net premiums written | 599,173 | 597,916 | |||||
Change in unearned premiums | (355,342 | ) | (344,828 | ) | |||
Net premiums earned | 243,831 | 253,088 | |||||
Other insurance related (loss) income | (315 | ) | 315 | ||||
Underwriting revenues | 243,516 | 253,403 | |||||
Underwriting deductions | |||||||
Losses and loss expenses | 82,868 | 113,128 | |||||
Policy acquisition costs | 42,259 | 42,094 | |||||
General and administrative expenses | 17,179 | 19,509 | |||||
Share compensation expenses | 2,901 | 2,578 | |||||
Total underwriting deductions | 145,207 | 177,309 | |||||
Underwriting income | $ | 98,309 | $ | 76,094 |
Talbot Segment | Three Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Underwriting income | |||||||
Gross premiums written | $ | 266,317 | $ | 270,077 | |||
Reinsurance premiums ceded | (87,458 | ) | (91,075 | ) | |||
Net premiums written | 178,859 | 179,002 | |||||
Change in unearned premiums | 27,933 | 43,587 | |||||
Net premiums earned | 206,792 | 222,589 | |||||
Other insurance related income | 11 | 54 | |||||
Underwriting revenues | 206,803 | 222,643 | |||||
Underwriting deductions | |||||||
Losses and loss expenses | 100,101 | 78,128 | |||||
Policy acquisition costs | 44,343 | 49,104 | |||||
General and administrative expenses | 38,535 | 36,494 | |||||
Share compensation expenses | 3,522 | 2,957 | |||||
Total underwriting deductions | 186,501 | 166,683 | |||||
Underwriting income | $ | 20,302 | $ | 55,960 |
Western World Segment | Three Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Underwriting income | |||||||
Gross premiums written | $ | 63,959 | $ | 56,947 | |||
Reinsurance premiums ceded | (4,139 | ) | (3,233 | ) | |||
Net premiums written | 59,820 | 53,714 | |||||
Change in unearned premiums | 1,679 | 14,168 | |||||
Net premiums earned | 61,499 | 67,882 | |||||
Other insurance related income | 288 | 263 | |||||
Underwriting revenues | 61,787 | 68,145 | |||||
Underwriting deductions | |||||||
Losses and loss expenses | 39,646 | 50,517 | |||||
Policy acquisition costs | 14,200 | 4,279 | |||||
General and administrative expenses | 12,075 | 10,627 | |||||
Share compensation expenses | 581 | 477 | |||||
Total underwriting deductions | 66,502 | 65,900 | |||||
Underwriting (loss) income | $ | (4,715 | ) | $ | 2,245 |
AlphaCat Segment | Three Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Revenue - management fees | |||||||
Third party | $ | 4,727 | $ | 4,537 | |||
Related party | 891 | 1,186 | |||||
Total revenue | 5,618 | 5,723 | |||||
Expenses | |||||||
General and administrative expenses | 1,482 | 2,429 | |||||
Share compensation expenses | 141 | 149 | |||||
Finance expenses | 808 | 4,428 | |||||
Foreign exchange losses (gains) | 8 | (13 | ) | ||||
Total expenses | 2,439 | 6,993 | |||||
Income (loss) before investments from AlphaCat Funds and Sidecars | 3,179 | (1,270 | ) | ||||
Investment income (loss) from AlphaCat Funds and Sidecars (a) | |||||||
AlphaCat Sidecars | 124 | 1,168 | |||||
AlphaCat ILS Funds - Lower Risk (b) | 2,507 | 1,286 | |||||
AlphaCat ILS Funds - Higher Risk (b) | 2,436 | 2,425 | |||||
BetaCat ILS Funds | 563 | 174 | |||||
PaCRe | (23 | ) | 3,984 | ||||
Total investment income from AlphaCat Funds and Sidecars | 5,607 | 9,037 | |||||
Validus' share of AlphaCat income | $ | 8,786 | $ | 7,767 |
(a) | The investment income from the AlphaCat funds and sidecars is based on equity accounting. |
(b) | 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. |
Corporate and Investments | Three Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Investment income | |||||||
Net investment income (a) | $ | 27,923 | $ | 29,436 | |||
Operating expenses | |||||||
General and administrative expenses | 16,183 | 15,606 | |||||
Share compensation expenses | 4,092 | 2,893 | |||||
Finance expenses (a) | 14,341 | 15,336 | |||||
Tax (benefit) expense | (2,118 | ) | 2,565 | ||||
Total operating expenses | 32,498 | 36,400 | |||||
Other items | |||||||
Net realized (losses) gains on investments (a) | (1,086 | ) | 4,180 | ||||
Change in net unrealized gains on investments (a) | 47,078 | 34,669 | |||||
(Loss) income from investment affiliate | (4,113 | ) | 2,776 | ||||
Foreign exchange gains (losses) (a) | 6,074 | (3,456 | ) | ||||
Other income | 677 | — | |||||
Total other items | 48,630 | 38,169 | |||||
Total Corporate and Investments | $ | 44,055 | $ | 31,205 |
(a) | These items exclude the components which are included in Validus' share of AlphaCat and amounts which are consolidated from variable interest entities. |
March 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 | $ | 3,724,426 | 81,555,486 | $ | 45.67 | ||||||||||
Tangible book value per common share | $ | 41.79 | |||||||||||||
Book value per diluted common share | |||||||||||||||
Total shareholders' equity available to Validus | 3,724,426 | 81,555,486 | |||||||||||||
Assumed exercise of outstanding stock options (b) | 1,319 | 65,401 | $ | 20.17 | |||||||||||
Unvested restricted shares | — | 3,049,761 | |||||||||||||
Book value per diluted common share | $ | 3,725,745 | 84,670,648 | $ | 44.00 | ||||||||||
Adjustment for accumulated dividends | 10.51 | ||||||||||||||
Book value per diluted common share plus accumulated dividends | $ | 54.51 | |||||||||||||
Tangible book value per diluted common share | $ | 40.26 |
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 | $ | 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 | 3,638,975 | 82,900,617 | |||||||||||||
Assumed exercise of outstanding stock options (b) | 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) | 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. |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Net income available to Validus | $ | 166,810 | $ | 173,411 | |||
Adjustments for: | |||||||
Net realized losses (gains) on investments | 584 | (4,169 | ) | ||||
Change in net unrealized gains on investments | (47,444 | ) | (33,227 | ) | |||
Loss (income) from investment affiliate | 4,113 | (2,776 | ) | ||||
Foreign exchange (gains) losses | (6,245 | ) | 4,265 | ||||
Other income | (677 | ) | — | ||||
Net income (loss) attributable to noncontrolling interest | 237 | (630 | ) | ||||
Net operating income available to Validus | $ | 117,378 | $ | 136,874 | |||
Net investment income | (29,461 | ) | (31,029 | ) | |||
Finance expenses | 15,203 | 20,967 | |||||
Tax (benefit) expense | (2,118 | ) | 2,565 | ||||
Loss (income) from operating affiliates | 23 | (3,984 | ) | ||||
Income attributable to AlphaCat investors | 4,600 | — | |||||
Net operating income attributable to noncontrolling interest | 37,294 | 18,808 | |||||
Underwriting income | $ | 142,919 | $ | 144,201 | |||
Net operating income available to Validus | 117,378 | 136,874 | |||||
Less: Dividends and distributions declared on outstanding warrants | — | (1,405 | ) | ||||
Net operating income available to Validus, adjusted | $ | 117,378 | $ | 135,469 | |||
Net income per share available to Validus - diluted | $ | 1.98 | $ | 1.98 | |||
Adjustments for: | |||||||
Net realized losses (gains) on investments | — | (0.05 | ) | ||||
Change in net unrealized gains on investments | (0.56 | ) | (0.38 | ) | |||
Loss (income) from investment affiliate | 0.05 | (0.03 | ) | ||||
Foreign exchange (gains) losses | (0.07 | ) | 0.05 | ||||
Other income | (0.01 | ) | — | ||||
Net income (loss) attributable to noncontrolling interest | — | (0.01 | ) | ||||
Net operating income per share available to Validus - diluted | $ | 1.39 | $ | 1.56 | |||
Weighted average number of common shares and common share equivalents | 84,198,315 | 87,583,129 | |||||
Average shareholders' equity available to Validus | $ | 3,681,701 | $ | 3,634,162 | |||
Annualized net operating return on average equity | 12.8 | % | 15.1 | % |