Validus Holdings Ltd
) expects to record a catastrophe loss of $69.6 million in the
second quarter, resulting from heavy flooding in Central Europe.
This loss is net of reinsurance, effects of reinstatement
premiums, retrocessional and other recoveries. Validus estimates
the industry loss from this event to be in the range of $4-$5
The entire estimated loss from severe rainfall in Central Europe
during May and June 2013 is expected to be split among the three
operating segments of Validus- Validus Re, Talbot and AlphaCat.
Validus Re will bear majority of the loss that is $63.1 million
or approximately 90.7% of the loss. Talbot will bear $6.4 million
or approximately 9.2% of the estimated loss. The remaining $0.1
million or 0.1% of the loss will be borne by AlphaCat.
However, owing to the uncertainties and limitations involved in
the event information, actual losses might vary from the
estimate. Such estimate revision will be recorded by the company
in the period of its occurrence.
Validus' first-quarter operating earnings increased 108% year
over year to $1.83 per share and outpaced the Zacks Consensus
Estimate of $1.39 per share owing to improved performances in all
its three operating units.
Additionally, Validus delivered positive earnings surprise in
each of the last 4 quarters with an impressive average beat of
32.7%. The improved performances during the first quarter came on
the back of lower catastrophe activities. As a result, overall
combined ratio in the first quarter improved 2410 basis points to
However, the picture is expected to alter in the upcoming period
owing to huge losses from the European floods. The Zacks
Consensus Estimate for the second quarter of 2013 stands at $1.38
per share representing a year-over-year decline of 16.4%.
However, if no significant catastrophe events are reported
during the rest of the year, this estimated loss might be
mitigated and the company would come up with better numbers. The
Zacks Consensus Estimate for full year 2013 is currently pegged
at $5.40 per share, representing a year-over-year improvement of
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VALIDUS HOLDING (VR): Free Stock Analysis
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