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. Â 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. Â As of March 31, 2016 VR had total assets of over $11 billion and shareholder equity of $3.9 billion. Â 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). Â 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.
Details of this new issue can be found here.
Shares are now trading on the OTC Grey market under the ticker VRHSP. Â 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.