Fourth-quarter results were heavily impacted by $361 million in net losses and loss expenses attributed to Sandy. The storm primarily hit Validus' two largest classes, catastrophe and marine, and drove an unprofitable combined ratio of 122.7 for the quarter.

The Pembroke, Bermuda-based insurer and reinsurer says it estimates industry losses from Sandy to exceed the highest estimation of losses provided by catastrophe modelers of $25 billion.

Validus' Sandy loss estimate of about $333.1 million remains unchanged. During an earnings conference call, CEO Ed Noonan says personal and commercial claims are going smoothly, with “little debate over wind versus flood,” but he does expect commercial claims out of Manhattan, N.Y. to take longer to settle due to their complexity.

Continuing with Sandy-related observations, Noonan says the storm exposed “some limitations” of policy wording on deductibles, “that the market is beginning to address.”

Noonan also addressed the tendency to see an event like Sandy as a “part of some new trend.”

“I think it's helpful to separate the probability of financial loss from the meteorology attributes of the event,” he adds. “A land-falling storm of this size in New Jersey is about a 1-in-28-year event. The storm surge associated with the high tide and full moon occurring simultaneously with a land-falling storm is a much, much more remote event.”

But Sandy wasn't unique, Noonan says. The industry has the models to contemplate these types of storms, he says, adding that Validus disagreed with one modeler's view of flood so the insurer uses its own models.

Noonan also told analysts on the conference call that Validus plans to buy a small crop insurer, Longhorn Re. He says crop insurance was the primary driver of strong growth in Validus' specialty segment.

“Crop fits as a part of our portfolio and we see this as an attractive time to expand in light of last year's loss activity,” Noon says.

In-coming CFO Jeff Sangster says short-tail crop business is attractive because it “has little or no correlation with our other big risk classes—things like hurricanes, marine [and] terrorism.”

“We see the crop business as a good long-term fit,” since it does not require a lot of capital to get a return, adds Sangster.