Validus profits down 94.7% in 2011 due to catastrophe losses

PEMBROKE, Bermuda—Beleaguered by natural catastrophes and man-made disasters, Validus Holdings Ltd. announced on Friday that its annual net income plummeted 94.7% in 2011, to $21.3 million from $402.6 million in 2010.

The Pembroke, Bermuda-based reinsurer's underwriting income also dropped precipitously, to $11.8 million in 2011 from $242.4 million in 2010, a decrease of 95.1%, according to a statement from the company.

The company's fourth-quarter earnings were similarly depressed when compared with results from the same period in 2010. Validus posted a net income of $23.4 million for the three months ending Dec. 31, 2011, down 85% from $156.4 million in the same period in 2010. Underwriting income in the fourth quarter of 2011 was reported at $12.8 million, representing a 90.9% decrease from the $139.7 million posted in the prior-year period.

In a statement released Friday, Validus Chairman and CEO Ed Noonan acknowledged that catastrophe losses had taken a significant toll on the company and the market as a whole, but emphasized that the company still managed to turn a net gain for its sixth consecutive year.

“Despite these significant market losses, Validus was profitable in 2011, which continues our company's record of profitability in each year of our operations despite heavy insured loss activity and financial market turbulence over the period,” Mr. Noonan said in the statement. “I am satisfied with this outcome, which is the result of world-class underwriting, risk, financial and operational management throughout our global businesses.”

Not all of Validus' key metrics posted negative returns in 2011. The company experienced increases of 6.7% in annual gross premiums written and 2.7% in annual net premiums earned over its 2010 results. Gross premiums written rose to $2.12 billion in 2011 from $1.34 billion in 2010, while net premiums earned climbed to $1.80 billion in 2011 from $1.76 billion in 2010.

In the final three months of 2011, Validus reported $278.3 million in gross premiums written and $488.3 million in net premiums earned, representing increases over the same period in 2010 of 7.6% and 12.8% respectively.

Looking ahead into 2012, Mr. Noonan said he believes the company will continue to operate “from a position of strength.”

“Validus is well-positioned for 2012, and I am highly confident in our ability to capitalize on the current market conditions,” he said.