DECLINE IN PROFITS AT VALIDUS

Bermuda-based re/insurer Validus Holdings has reported a net income of $254.0m for the first half, down from $291.9m in the same period last year. However, net operating income was $327.1m, up from $264.1m in H1 2012. Gross written premiums for the period were $1.81bn, up from $1.46bn in H1 2012. Net premiums earned rose to $1.08bn, from $899m. The combined ratio was 69.7%. Favourable loss reserve developments were $106.8m, reducing the combined ratio by 9.9pp. At Validus Re, GPW were $1.10bn, up from $907.7m. The combined ratio was 66.6%, up from 58.2%. At Talbot, GPW for the first half reached $609.0m, up from $576.8m in H1 2012. The combined ratio improved to 73.6% from 89.8%. Net investment income was down slightly for H1, to $51.9m from $53.6m. However, net unrealized losses for the period were $148.6m, compared with $32.9m in H1 2012. In Q2 Validus increased its reserves for Costa Concordia by $41.2m, bringing its total reserves for the event to $115m. The consensus estimate for an industry loss of $1.7bn is seen as too optimistic by Validus. CFO Jeff Sangster said that the company was now estimating an industry loss some 10% higher, at $1.88bn. CEO Ed Noonan, noting that there were now plans to "winterize" the wreck and to attempt a refloat next year, said that “we are not convinced this is advisable, or workable". Validus is now reserving for the possibility that the vessel will have to be cut up in situ. Mr Noonan also noted that, if the loss rises above $1.9bn, a number of insurers would have exhausted their reinsurance recoveries.