AIG Acquisition Target Validus Reports Q1 Loss

Validus Holdings reported it lost money during the 2018 first quarter, due partly to more expenses, an underwriting loss in its insurance segment and a drop in income for the carrier’s reinsurance arm.

The downbeat result may be its final earnings disclosure as an independent company before AIG’s $5.6 billion deal to buy the Bermuda-based reinsurer, insurer and asset manager closes in mid-2018.

Specifically, Validus lost $4.1 million, or $0.05 per diluted common share, for the three months ending March 31. That compares to $94.6 million in net income, or $1.17 per common share, over the same period in 2017.

Validus’s combined ratio for the period was 90.9, up from 83.2 over the 2017 first quarter.

Other results:

Gross premiums written were more than $1.8 billion versus just under $1.2 billion in the 2017 first quarter, thanks to increases in all segments.

Reinsurance premiums ceded were $376.3 million compared to $200 million in Q1 2017. Validus said the jump stemmed from rate increases in its Insurance and Reinsurance segments.

Net premiums earned were nearly $619 million for Q1 2018 compared to $575.4 million over the same period last year. Increases in the Asset Management and Insurance segments drove this but were partially offset by a decline in the Reinsurance segment.

Tax benefits were negative $6.8 million during the quarter, compared to a negative $3.5 million in the 2017 first quarter, due to Insurance segment operating losses and unrealized losses on Validus’ investment portfolio.

Validus booked $7.8 million in expenses during Q1 related to its planned acquisition by AIG.

Validus said its net investment return for Q1 2018 was $9.95 million compared to nearly $57.6 million in the 2017 first quarter.

Source: Validus