Property and Casualty Insurer Validus Holdings LTD Sells a Preferred Issue
By: Tim McPartland,
Validus Holdings LTD (NYSE:VR), a $11 billion dollar insurance holding company, has sold a investment grade preferred issue with a coupon rate of 5.875%.
We were not familiar with Validus Holdings so a bit of research was in order. VR was formed in 2005 by various private equity owners including Goldman Sachs and Merrill Lynch. They did their IPO in 2007 and since that time have gone through a number of capital raises which funded numerous acquisitions of other insurance companies. As of March 31, 2016 VR had total assets of over $11 billion and shareholder equity of $3.9 billion. The company has been highly profitable in the last few years as property and casualty insurers have benefited from a lack of large loss events (i.e. hurricanes).
With VR’s strong financials the new preferred issue has been given an investment grade rating by Standard & Poors’, although they are rated a notch below investment grade by Moodys’.
These shares carry a coupon of 5.875% and being an insurance company the dividend is non-cumulative (if the dividend is NOT declared by the board of directors it is gone forever). Additionally, the issue has the normal terms of being perpetual in duration (no maturity date) with an optional redemption period (at the companies option) starting approximately 5 years after issuance.
Shares are now trading on the OTC Grey market under the ticker VRHSP. For those interested in purchasing this security, but are not familiar with the workings of the OTC Grey market we have a short primer here.