Validus Estimates Losses of $64 Million from China Port Explosion & Chile Quake

Validus Holdings Ltd. estimates it lost just under $64 million from the Port of Tianjin explosion and recent earthquake in Chile, a number that matches its Q2 net income.

Breaking down this figure, the Bermuda-based insurance and reinsurance holding company estimated it lost a net of $43.9 million from the Aug. 12 Tianjin event in China, and $20 million from the Sept. 16 earthquake in Chile.

Validus said the estimated losses are net of reinstatement premiums and reinsurance, retrocessional and other recoveries. The number is based on Validus’ internal models, external reports and other information, as well as loss reporting from the impacted insureds.

However, Validus cautions that the number is primarily based on exposure analysis and industry loss estimates, because there is an absence of significant client loss reporting. Because of limited reported losses and other variables, Validus said its ultimate losses from both events may vary from its estimate.

Validus’ estimated $63.9 million loss estimate follows its $64 million in net income booked in the 2015 second quarter. Net income hit $135.4 million in the 2014 second quarter. At the time, Validus Chairman and CEO Ed Noonan blamed “meaningful loss activity in our core class of business,” but noted Validus delivered a 10.7 percent annualized operating return on average equity.

The Tianjin losses are affecting other companies as well. Zurich Insurance Company Ltd. disclosed it lot $275 million from the same event. Those losses, led, in part, to A.M. Best revising its ratings outlook for Zurich from stable to negative.

Source: Validus Holdings Ltd.

(A version of this article first appeared in Carrier Management, Insurance Journal’s sister publication.)