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Validus Holdings Projects Q3 Cat Loss Estimates of $378.9M


Validus Holdings, Ltd. VR recently announced pre-tax catastrophe loss estimates emanating from inclement weather events in third-quarter 2017. The company projects catastrophe loss of about $378.9 million.

The catastrophe losses constitute $146.4 million from Hurricane Harvey, $163.2 million from Irma, $57.7 million from Maria and $11.6 million from the Mexican tremors.

The Zacks Consensus Estimate for the third quarter is currently pegged at 73 cents per share, reflecting a year-over-year slump of 28.9%. The company is scheduled to report third-quarter results on Oct 26.

Our proven model does not conclusively show that Validus Holdings is likely to beat on earnings this quarter. This is because the company’s current Zacks Rank #4 (Sell) lowers the predictive power of ESP, which further combined with an Earnings ESP of -10.35% makes surprise prediction difficult.

Last quarter, Validus Holdings had incurred net losses amounting to $3 million in the property lines at Western World segment from major disasters like 14 U.S. weather-related events, Colorado floods and the tropical storm Cindy. Nonetheless, sustained growth and portfolio diversification helped it generate 51.3% loss ratio. Exposure to huge cat loss is anticipated to weigh heavily on the bottom line in the soon-to-be-reported quarter.

Shares of Validus Holdings have lost 12.3% year to date, underperforming the industry's 22.1% rally. Catastrophes affecting underwriting results will possibly be a drag on the share price.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recently, American Financial Group, Inc. AFG calculates catastrophe loss of about $105 million or 95 cents per share post-tax. Chubb Limited CB expects $200 million post-tax cat losses from Maria, $24 million from Mexican earthquakes, $520 million from Harvey and between $640 million and $760 million from Irma. HCI Group, Inc. HCI projects loss between $100 million and $300 million.

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