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Validus records $412.7m net loss following Q3 catastrophe events

10th October 2017 - Author: Steve Evans

Validus Holdings, the Bermuda based specialist insurance and reinsurance firm, has revealed an estimate of its losses from third-quarter 2017 catastrophe events, putting its losses at $412.7 million net, or $378.9 million net of impact on premiums earned.

The $378.9 million figure is net of reinsurance, retrocessional recoveries, non-controlling interest and net impact on premiums earned, with it split as Validus Re contributing $223.3 million, Talbot $100.0 million, Western World $19.9 million, and AlphaCat $35.7 million.

Validus forecasts a $146.4 million loss from hurricane Harvey, $163.2 million from hurricane Irma, $57.7 million from hurricane Maria and $11.6 million from the Mexico City earthquake.

Ed Noonan, Validus’ Chairman and Chief Executive Officer, said; “The devastation caused by these disasters has inflicted significant suffering and loss to tens of millions of people, and our first thoughts are for those whose lives have been disrupted. A key part of what we do is to help people recover from the financial impact of catastrophes. We will pay significant amounts in this regard, and it is a moment in which I am proud of the role that our company and our industry performs for communities all over the world.

“Validus is a strong company, and we are very prudent in our risk management. As we look to the rest of the year we continue to be well positioned with significant retrocessional and reinsurance protection in place. While these events will affect each of our businesses, our financial position allows us to sustain these events with no disruption.”

Validus also provided its own estimates of industry losses from each event, excluding the NFIP’s losses. These had been used in its own loss estimation process.

Validus puts Hurricane Harvey at $20 – $30 billion, Hurricane Irma at $25 – $40 billion, Hurricane Maria at $25 – $45 billion and the Mexico City earthquake at $2 – $4 billion.

Analysts at KBW said that the losses represent around 10% of Validus common equity, at the mid-point of the year, which they see as in-line.

Interestingly, at the industry loss estimate levels that Validus provided, its own share of each catastrophe event loss was lower than its market share, according to KBW. This suggests the reinsurer has robust retrocession in place which it has put to work lowering its PML’s effectively.

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