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Validus Holdings to Incur $64 Million Catastrophe Loss in Q3

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Validus Holdings, Ltd.VR estimates catastrophe loss of $63.9 million stemming from an earthquake in Chile on Sep 16, 2015 and an explosion in Tianjin, China on Aug 12, 2015. The loss, net of reinstatement premiums and reinsurance, retrocessional and other recoveries will impact both the Validus Re and the Talbot segment of the company.

Net loss from explosion will weigh on the performance of Validus Re by $32.7 million while the same will impact Talbot by $11.2 million. In addition, Validus Re will have to suffer loss of $15.3 million from the earthquake in Chile and Talbot will bear a $4.7 million loss from the same. Therefore, the Tianjin explosion is estimated to drag down the results of the company by $43.9 million while the Chilean earthquake will have a net adverse impact of $20 million on the company.

In the last quarter too, Validus Holdings had to digest a loss of $48.1 million due to the Pemex explosion. This was however lower than the loss estimated for the third quarter. The second-quarter loss also stemmed from the same segments, which hurt underwriting income by 24% year over year. Also, with operating net income of $1.13 per share in the second quarter, Validus Holdings delivered a negative surprise and declined year over year.

Validus Holdings is scheduled to announce its third-quarter results on Oct 29. Our proven model does not conclusively show that the company will beat on earnings. Though Validus Holdings' Zacks Rank #3 (Hold) increases the predictive power of an earnings beat, an Earnings ESP of 0.0% makes out surprise prediction difficult.

Stocks to Consider

Some better-ranked insurance brokers are Brown & Brown Inc. BRO , eHealth, Inc. EHTH and Hannover Rück SE HVRRY . Each of these stocks carries a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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