Business combination

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Business combination

Business combination

Western World Insurance Group, Inc.

On October 2, 2014, Validus Specialty, Inc., a wholly owned subsidiary of the Company, acquired all of the issued and outstanding capital stock of Western World for an aggregate purchase price of $692,305 in cash. The Western World acquisition was undertaken to enhance the Company’s access to the specialty U.S. commercial insurance market. Additional factors that added to the value of Western World included its State Licenses, Brand Name, Distribution Network and Technology. These factors resulted in a market value greater than the value of net tangible and intangible assets which resulted in the recognition of goodwill. This goodwill is reflective of the strategic benefits that a U.S. based insurer can provide to the Company.

For reporting purposes, the results of Western World’s operations have been included in the Consolidated Financial Statements as a separate segment from the acquisition date.

The estimates of fair values for tangible and intangible assets acquired and liabilities assumed were determined by management based on various market and income analyses. Significant judgment was required to arrive at these estimates of fair value and changes to assumptions used could have led to materially different results.

The fair value of net assets acquired, including pro forma U.S. GAAP adjustments, are summarized as follows:

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.

For details on the intangible assets acquired, refer to Note 6, “Goodwill and other intangible assets.”

The Company also incurred transaction expenses related to the Western World acquisition. Transaction expenses included legal, financial advisory and audit related services.

Supplemental Pro Forma Information

Operating results of Western World have been included in the Consolidated Financial Statements from the October 2, 2014 acquisition date. The following selected unaudited pro forma financial information has been provided to present a summary of the combined results of the Company and Western World, assuming the transaction had been effected on January 1, 2014.

The unaudited pro forma data is for informational purposes only and does not necessarily represent results that would have occurred if the transaction had taken place on the basis assumed above.

	Year Ended December 31,
	2014
(Dollars in thousands)	Unaudited
Net premiums earned	$	2,216,349
Net operating income	$	481,179
Net income	$	448,071

The following selected audited information has been provided to present a summary of the results of Western World that have been included in the Consolidated Financial Statements for the year ended December 31, 2014.

	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