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Validus Holdings Ltd. saw its second-quarter profit drop 56.7% to $81.7 million compared with the same period last year due in large part to significant losses in an oil rig explosion, the reinsurer said Wednesday.
In the April event, an oil rig belonging to Mexico's state-run oil company, Petróleos Mexicanos that is better known as Pemex, exploded in the Gulf of Mexico, resulting in an estimated loss of $48.1 million to the reinsurer, Validus Chairman and CEO Ed Noonan said during a conference call discussing results.
The loss was “slightly below our market share for big events,” Mr. Noonan said.
Meanwhile, Validus said its quarterly net premiums written increased 11.1% to $672.1 million and its gross premiums written increased 10.9% to $727.0 million compared with the same period last year.
In its earnings statement, Validus attributed the rise in gross premiums written to contributions from Validus' insurance-linked securities provider AlphaCat Managers Ltd. as well as specialty lines insurer Western World Insurance Group Inc., which Validus acquired last October for $690 million.
Mr. Noonan said acquiring Western World “gives us better diversification … but our basic bias is still toward short-tail liability business.” The addition of Western World “really rounded out all the pieces we needed to execute on our strategy,” he said.
The 2015 second-quarter combined ratio deteriorated to 80.7% from 68.6% during the same period last year. This year's second quarter included some $70.7 million of favorable loss reserve development from prior accident years that was “primarily due to lower-than-expected development on attritional losses,” Validus said in the statement.
Net income for the first half of 2015 was $294.0 million, a 25.5% decrease from the first half of last year, according to the statement.
The combined ratio for the six months ended June 30 deteriorated to 77.9% versus 68.5% for the same period in 2014.
First-half net premiums written increased to $1.6 billion versus $1.42 billion last year.
Axis Capital Holdings Ltd.’s second-quarter net income dropped 67% from that of the same period a year earlier to $63 million, owing in part to marine losses and lower investment income, the Pembroke, Bermuda-based underwriter reported.