Validus Holdings Ltd. Chairman and CEO Ed Noonan said that the crash of Malaysia Airlines Flight 17 after a missile shot it down over the Ukraine earlier this month will likely “have implications” for the aviation and war property casualty insurance markets.

“The tragic loss of life will result in a significant payout,” Noonan said during the July 25 investor call held to discuss 2014 second-quarter earnings. “This event is the second large loss this year to [hit a] market with less than $100 million premium dollars [the aviation war market]. Major airlines renew in the fourth quarter, and we expect that these events will have a material impact on aviation rates both war and standard.”

Noonan explained that airlines purchase coverage in both the all-risk market, to cover the value of the plane and crash liability, and also a separate policy to cover war/terror related damage in the “war and terrorism” market. He noted that Validus’ Lloyds syndicate, Talbot Underwriters, is one of the largest players in that space, but that it had declined a Malaysia Airlines all-risk policy “due to what we saw as inadequate rates.”

Validus/Talbot does participate in terror and war coverage, Noonan said, and will take a hit from this crash. The estimated loss to Validus group from the Malaysia Airlines/Ukraine event is about $15 million. Noonan added that another loss relating to damage to aircraft at the airport in Tripoli due to continued instability in Libya will cost between $15 million and $18 million, “primarily from a treaty account.” But, he said, Talbot declined to write a key account involved in that loss, and will simply “pick up a small loss from private aviation damaged, but we’ll avoid a large claim.”

“Discipline around pricing and conditions caused us to avoid a large market loss,” Noonan told investors.

Last month, Validus agreed to buy Western World Insurance Group for $690 million in a deal expected to close in the third quarter. Noonan said that both sides “will be working hard to hit the ground running when the transaction closes.”

He emphasized that the marketplace remains competitive across insurance and reinsurance lines, but particularly the latter division, driven by “market dynamics, continued excess in supply and reduction in demand from buyers.”

“Rates are down in every territory,” Noonan said. “We continue to reshape our portfolio accordingly.”

Validus faced some downward trending in its reinsurance division during the 2014 second quarter. But its Talbot division and AlphaCat investment management arm performed well.

The Bermuda-based reinsurance, insurance and insurance-linked securities manager said it generated $153.4 million in net income ($1.61 per diluted common share) for the 2014 second quarter. That’s up considerably from $30.7 million ($0.28 per diluted common share) over the same period in 2013.

One factor that hurt: European floods, for which Validus incurred $77.6 million of losses from one major loss event, the company said.

Broken down, Validus reported a 68.6 combined ratio for the 2014 second quarter versus 78.5 in the 2013 second quarter. The 2014 figure included $72.7 million of favorable loss reserve development from previous accident years, up from $41 million a year ago.

Translating the combined ratios into dollars, underwriting income hit the $146.1 million mark during Q2, up more than 24 percent from $117.7 million in underwriting income in the 2013 second quarter.

Validus produced $655.7 million in gross written premiums for the 2014 second quarter, down from $702.3 million in the 2013 second quarter. Net premiums written also declined, coming in at $466 million for the second quarter, a double-digit decline from $547.5 million last year.

Here’s a breakdown of the major results by division:

Validus Re
The division produced $310.3 million in gross written premiums for the 2014 second quarter, down from $353.4 million over the year-ago-period.

Net operating income for the division surpassed $107 million, up from $73.6 million in the 2013 second quarter.

Validus Re’s combined ratio came in at 57.8, versus 81.5 last year.

Talbot Holdings
Gross premiums for the Lloyds specialty insurance division were relatively flat at nearly $318 million during the quarter, compared to $315.5 million in the 2013 second quarter.

Talbot’s combined ratio reached 78.7, an increase over the 75.3 combined ratio in the 2013 second quarter.

AlphaCat Segment
This division is a Bermuda-based investment advisor that manages capital for third parties in insurance-linked securities and other property/casualty reinsurance investments. Gross premiums written from its consolidated entities came in at $43.8 million, down from $46.8 million in the 2013 second quarter.