Best Assigns FSR to Validus Re

December 13, 2005

A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating of “a-” to Validus Reinsurance Ltd. (Validus) (Bermuda). The ratings have a stable outlook.

Validus will operate as a Bermuda-based company primarily focused on property catastrophe and marine and energy coverage on a worldwide basis through the broker market. The company will be capitalized with approximately $1 billion in common equity from investors, which include Aquiline Capital Partners LLC, Merrill Lynch Corporation and Goldman Sachs.

These ratings reflect Validus’ solid capitalization, experienced management team and sound business plan. In addition to meeting A.M. Best’s previously established requirements for new company formations, the rating assignments for Validus also reflect its ability to meet A.M. Best’s stricter risk-based capital requirements for property catastrophe companies.

In determining the ratings, A.M. Best was concerned that several key operational positions have yet to be filled, and there may be an issue in attracting and retaining key personnel given the tight employment market that currently exists in Bermuda. A.M. Best perceives this as a risk factor that could be detrimental to Validus’ ability to fully execute its current business plan. Despite this concern, A.M. Best believes that the overall strength of management, existing infrastructure, distribution capability and capital resources are sufficient to warrant a FSR of A- (Excellent).

In addition to being susceptible to low frequency high severity events, A.M. Best anticipates that Validus will be challenged by increased competition from both established companies and other new start-ups seeking to enter the industry. The additional capacity brought to the market could dampen expected returns if pricing of reinsurance coverage fails to meet anticipated levels.

Furthermore, the ability of Validus to effectively build and retain market acceptance will only be proven over time. Accordingly, A.M. Best will closely monitor the quarterly performance of Validus against its stated business plan, and any material negative deviations in terms of management, earnings, capitalization or risk profile could result in downward pressure on the assigned ratings.

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