Validus Reports $165.8 Million Q4 Net Income; $897.4 Million Full Year

February 22, 2010

Bermuda-based Validus Holdings, Ltd. reported net income of $165.8 million, or $1.23 per diluted common share for the three months ended December 31, 2009, compared with net income of $37.0 million, or $0.47 per diluted common share, for the three months ended December 31, 2008.

Net income for the year ended December 31, 2009 was $897.4 million, or $9.24 per diluted common share, compared with $53.1 million, or $0.61 per diluted common share, for the year ended December 31, 2008.

Net operating income, which excludes capital gains/losses, for the fourth quarter was $176.9 million, or $1.31 per diluted common share, compared with net operating income of $50.9 million, or $0.65 per diluted common share, for the three months ended December 31, 2008.

Net operating income for the full year was $533.3 million, or $5.49 per diluted common share, compared with net operating income of $175.1 million, or $2.22 per diluted common share, for the year ended December 31, 2008.

Highlights for the fourth quarter also included the following:
— Gross premiums written for the three months ended December 31, 2009 were $255.3 million compared to $191.7 million for the three months ended December 31, 2008, an increase of $63.6 million, or 33.1 percent.
— Net premiums earned for the three months ended December 31, 2009 were $427.9 million compared to $316.0 million for the three months ended December 31, 2008, an increase of $111.9 million, or 35.4 percent.
— Combined ratio of 64.1 percent which included $48.7 million of favorable prior year loss reserve development, benefiting the loss ratio by 11.4 percentage points.
— Annualized return on average equity of 16.6 percent and annualized operating return on average equity of 17.7 percent.

Validus also listed the following highlights for the full year:
— Gross premiums written for the year ended December 31, 2009 were $1,621.2 million compared to $1,362.5 million for the year ended December 31, 2008, an increase of $258.8 million, or 19.0 percent.
— Net premiums earned for the year ended December 31, 2009 were $1,449.6 million compared to $1,256.5 million for the year ended December 31, 2008, an increase of $193.1 million, or 15.4 percent.
— Combined ratio of 68.9 percent which included $102.1 million of favorable prior year loss reserve development, benefiting the loss ratio by 7.0 percentage points.
— Annualized return on average equity of 31.8 percent and annualized operating return on average equity of 18.9 percent.

Chairman and CEO Ed Noonan summarized the fourth quarter and full year results: “We completed the IPC amalgamation on September 4, 2009,” he stated. “As a consequence of this acquisition and of strong underlying financial results in our Validus Re and Talbot segments, we closed the quarter with total shareholders’ equity of $4.03 billion, total assets of $7.02 billion and total investments and cash of $5.78 billion.

“Diluted book value per share rose to $29.68 at December 31, 2009, which when combined with our $0.20 quarterly dividend resulted in an increase in diluted book value per share plus dividends of 4.4 percent in the quarter. Total value creation for our shareholders in 2009 as measured by growth in diluted book value per share plus accumulated dividends for the year was 28.2 percent.”

Noonan also commented on Validus January renewal success, indicating: “We were very pleased with our ability to execute on our goals in January. We were able to grow the combined premium of Validus Re post acquisition, while bringing more diversification to our risk profile. We improved the loss ratio on the combined catastrophe portfolio, while materially reducing our probable maximum loss.

“We were extremely gratified with the reception afforded us by clients and brokers as one of the largest underwriters of catastrophe risk. In our Talbot Syndicate we saw rate increases diminish but continue to be at attractive levels in most classes.”

The complete report, additional information, and details on accessing the replay of the earnings conference call, held on Friday, Feb. 29, may be obtained on the group’s web site at: www.validusholdings.com.

A telephone replay of the conference call will be available through March 5, 2010 by dialing 1-888-286-8010 (toll-free U.S.) or 1-617-801-6888 (international) and entering the pass code 56383693.

Source: Validus Holdings.

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