This is a non-GAAP financial measure which is described in the section entitled “Non-GAAP Financial Measures.”
Full Year 2016, 2015 and 2014 Summarized Results of Operations - Consolidated
For the year ended December 31, 2016, losses and loss expenses from the three notable loss events were $90.2 million, or 4.0 percentage points of the loss ratio. Net of losses attributable to AlphaCat investors and noncontrolling interests of $21.7 million and reinstatement premiums of $4.3 million, the net loss attributable to the Company from these notable loss events was $64.2 million. Losses and loss expenses from the four non-notable loss events were $70.2 million, or 3.1 percentage points of the loss ratio. Net of losses attributable to AlphaCat investors and noncontrolling interests of $5.6 million and reinstatement premiums of $12.6 million, the net loss attributable to the Company from these non-notable loss events was $52.0 million.
A decrease in gross premiums written in the marine lines of $38.3 million, primarily due to non-renewals as a result of difficult market conditions and business historically written in marine lines being renewed in specialty lines. Further contributing to the decrease was a gain on the commutation of a Flagstone contract with a Lloyd’s counterparty which occurred in the three months ended December 31, 2014.
▪Tianjin - property and marine lines of $3.3 million and $8.3 million, respectively; and
Loss reserve development by line of business for the year ended December 31, 2014 was as follows:
Net premiums earned for the year ended December 31, 2016 were $273.2 million compared to $258.7 million for the year ended December 31, 2015, an increase of $14.6 million, or 5.6%. The increase was primarily driven by the increase in gross premiums written in the property lines and was partially offset by the discontinuation of various liability lines as discussed above.
Investment income from the AlphaCat Funds and Sidecars, excluding PaCRe which was off-risk effective January 1, 2016, for the years ended December 31, 2016, 2015 and 2014 was $20.6 million, $23.1 million and $25.8 million, respectively. The decrease of $2.5 million during the year ended December 31, 2016 as compared to 2015 was primarily driven by Validus’ share of the net losses and loss expenses arising from notable and non-notable loss events during 2016. The decrease of $2.7 million during the year ended December 31, 2015 as compared to 2014 was primarily due to a reduction in related party assets under management and the change in the ratio of higher to lower risk investments during 2015.
Managed net investment income for the years ended December 31, 2016, 2015 and 2014 was $141.7 million, $121.2 million and $95.8 million, respectively. The increase of $20.6 million during the year ended December 31, 2016 as compared to 2015 was primarily driven by returns on the Company’s portfolio of structured securities, of which $16.7 million was generated from a single fixed income fund. The increase of $25.4 million during the year ended December 31, 2015 as compared to 2014 was driven by a change in asset allocation intended to improve yield. Managed net investment income from other investments includes distributed and undistributed net income from certain investment funds.
Finance expenses for the years ended December 31, 2016, 2015 and 2014 were $57.2 million, $61.1 million and $60.3 million, respectively. The decrease of $3.9 million during the year ended December 31, 2016 as compared to 2015 was primarily due to reduced credit facility expenses.
The Company’s reporting currency is the U.S. dollar. As a significant portion of the Company’s operations are transacted in currencies other than the U.S. dollar, fluctuations in foreign exchange rates may affect year-to-year comparisons. The Company’s largest foreign currency fluctuation exposure is to the following currencies, with the movement in each currency against the U.S. dollar for the year ended December 31, 2016, 2015 and 2014 shown in the table below:
A significant portion of (re)insurance contracts written by the Company provide short-tail reinsurance coverage for losses resulting mainly from natural and man-made catastrophes, which could result in payment of a substantial amount of losses at short notice. Accordingly, the Company’s investment portfolio is primarily structured to provide liquidity, which means the investment portfolio contains a significant amount of relatively short-term fixed maturity investments. The Company’s IPS specifically requires