The CEO of one of the Island’s largest reinsurance companies says they “are firing on all cylinders” and are here to stay in Bermuda.In a one-on-one interview with The Royal Gazette, Validus Holdings CEO Ed Noonan said that each of the company’s businesses has performed extremely well this year, leading to record second-quarter results that beat Wall Street expectations as well as the company’s.“We’ve got three operating businesses — our syndicate in London, Talbot continues to just be an outstanding business and perform extraordinarily well,” Mr Noonan said. “Validus Re’s performing extremely well and our third business, our AlphaCat business, where we manage assets on behalf of third parties in the catastrophe space, also did extremely well in the quarter.”The Bermuda-based reinsurer increased its second-quarter net income by more than 52 percent, or $57.7 million, to $167.6 million compared with last year. Net income after six months is $291.9 million compared to a net loss of $62.5 million a year ago.The company also reported a record net operating income of $171.2 million for the second quarter — more than 25 percent higher than analysts’ expectations.Second quarter underwriting income at Validus jumped more than 108 percent to $149.4 million, from $71.6 million last year. The combined ratio was 66.6 for the second quarter compared to 83.2 during 2011’s second quarter.While they, like many other reinsurers, have benefited from the absence of notable losses this year, Mr Noonan says they’ve also continued to have overall favourable development on past years and have grown nicely in the quarter.“We added PaCRe and AlphaCat Re 2012, two new ventures, both of which were extremely successful, so you know, it’s a quarter where the entire business model was clicking very nicely,” he said.The second quarter was the first to include results of the new ventures and the company saw mixed success in the sidecar segment.AlphaCat Re 2012 launched in June to write collateralised reinsurance primarily on windstorm risks for Florida domiciled insurance companies. The division contributed $12.1 million to the company’s profits in the second quarter.And in April, Validus launched a Bermuda Class 4 reinsurer, PaCRe, in a joint-venture with John Paulson and his Paulson & Co hedge fund. It officially started writing high-layer catastrophe risk in June — putting down companion lines on high layer business that Validus Re underwrites.Validus took a $5 million quarterly loss from the new start-up when PaCRe posted a $50.4 million loss in the second quarter as a result of unrealised investment losses. Paulson & Co picked up the rest of the loss burden. Mr Noonan says a loss like that is just the nature of the business.“We feel extremely good about PaCRe, but there will be certain quarters where the price of certain assets declines and that gets reflected in PaCRe’s results,” he said. “But we’re not worried about the company’s risk adjusted capital because we restrict the underwriting risk to such a low level we’re extremely confident about it.“We’ve restricted the amount of risk we take on in underwriting to a very, very conservative level — roughly a third of the capital is exposed in the worst case event. We know that alternative asset strategies, and particularly, Paulson and Company, has outperformed all other investment strategies over time, but we also know that there will be quarters where assets trade down and so on a long-term basis.”As far as Validus Re is concerned, Mr Noonan says the company is an established leader in the global catastrophe business as well as the global marine and offshore energy market. He says the business is in a very good place and that rates are very good, despite not developing exactly as they had hoped earlier in the year.Despite a recent influx of reinsurance and retro capacity, he says he doesn’t anticipate a softening.“It’s clear that there is additional money that’s come into the sector and we’re a part of that. We manage about $1 billion in third-party assets — I won’t complain about it. But I think the money that came into the sector did tend to have the effect of muting rate increases. The rates would’ve been higher were it not for that,” he said.Looking ahead to the second half of the year, Mr Noonan says in the absence of a major cat event, he sees continued growth for the company in all areas.“I think there’s good discipline among reinsurers and everybody understands the amount of capital required to support the business. My expectation is, even in the absence of catastrophes, we’ll still have a disciplined business,” he said. “I think in the absence of catastrophes there’ll be more competition, but it’ll be disciplined.“We see organic and third party asset management as being attractive areas of growth for us,” he said. “We think we can grow the business very nicely in each of our current operating units.”Mr Noonan also says he expects Validus to stay right here in Bermuda, despite some other re/insurers taking advantage of the UK recently reducing its corporation tax to make it a more attractive place to domicile.“Validus is a Bermuda company. We’ve looked at all the jurisdictions as it’s our responsibility. We believe Bermuda is the best jurisdiction for our company,” Mr Noonan said. “We have no plans to move, we’re big supporters of the Island — we think it’s extremely well regulated and we think it’s very stable and from our standpoint, no, we have no intentions whatsoever. We think Bermuda is by far the jurisdiction of choice.”He also says that as the business grows, they may very well grow in Bermuda.“We’re a fairly sizeable employer on the Island now and happily so. We’ve got a great Bermuda workforce. If you look at the number of Validus employees in Bermuda, developing their careers through insurance exams and reinsurance exams, it’s extraordinary.“And so, we are just incredibly proud of the Bermudian workforce we have and as our business grows, we feel like there’s a good labour pool that we can grow on and hopefully help people build their careers.”