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Press Release

Apr 26, 2017

Validus Reports Net Income Available to Validus Common Shareholders of $94.6 Million, or $1.17 Per Diluted Common Share and a 10.2% Annualized Return on Average Equity for the Three Months Ended March 31, 2017

PEMBROKE, Bermuda--(BUSINESS WIRE)--Apr. 26, 2017-- Validus Holdings, Ltd. (“Validus” or the “Company”) (NYSE:VR) today reported net income available to Validus common shareholders of $94.6 million, or $1.17 per diluted common share, for the three months ended March 31, 2017, compared to $166.8 million, or $1.98 per diluted common share, for the three months ended March 31, 2016.

Net operating income available to Validus common shareholders was $76.8 million, or $0.95 per diluted common share, for the three months ended March 31, 2017, compared to $121.5 million, or $1.44 per diluted common share, for the three months ended March 31, 2016.

The annualized return on average equity was 10.2% for the three months ended March 31, 2017, compared to 18.1% for the three months ended March 31, 2016. The annualized net operating return on average equity was 8.3% for the three months ended March 31, 2017, compared to 13.2% for the three months ended March 31, 2016.

Book value per common share at March 31, 2017 was $47.54, compared to $46.61 at December 31, 2016. Book value per diluted common share at March 31, 2017 was $45.88, compared to $44.97 at December 31, 2016, reflecting quarterly growth of 2.9%, inclusive of common dividends.

Commenting on the results for the three months ended March 31, 2017, Validus' Chairman and CEO Ed Noonan stated:

"This was another good quarter for the Validus Group. We had $94.6 million in net income, and an annualized return on average equity of 10.2% in the quarter. Our combined ratio of 83.2% reflects our continued commitment to underwriting profits, and most importantly we grew our book value per diluted common share (including dividends) by 2.9% during the quarter."

Income available to Validus common shareholders by segment for the three months ended March 31, 2017 and March 31, 2016 was as follows:

   
Three Months Ended March 31,
2017     2016
(Expressed in millions of U.S. dollars,
except per share information)
Validus Re - Underwriting income $ 71.8 $ 98.3
Talbot - Underwriting income 4.9 20.3
Western World - Underwriting loss (9.1 ) (4.7 )
Validus' share of AlphaCat income 6.1   8.8  
Total segmental income 73.7 122.7
Managed net investment income (a) 36.2 27.9
Corporate expenses (33.1 ) (32.5 )
Other items and eliminations 17.8   48.7  
Net income available to Validus common shareholders $ 94.6   $ 166.8  
Net income per diluted share available to Validus common shareholders $ 1.17   $ 1.98  
Net operating income available to Validus common shareholders (b) $ 76.8   $ 121.5  
Net operating income per diluted share available to Validus common shareholders (b) $ 0.95   $ 1.44  
 

(a)

 

Managed net investment income relates to our managed investment portfolio. Total net investment income, inclusive of AlphaCat's non-managed portfolio was $40.2 million and $29.5 million for the three months ended March 31, 2017 and 2016, respectively.

 

(b)

Net operating income available to Validus common shareholders is presented after tax and is considered a non-GAAP financial measure. A reconciliation of net income available to Validus common shareholders, the most comparable GAAP measure, to net operating income available to Validus common shareholders is presented at the end of this release.

 

This earnings release should be read in conjunction with the Company's first quarter 2017 investor financial supplement that has been posted to the Investors section of the Company's website located at www.validusholdings.com.

First Quarter 2017 Results

Highlights for the first quarter are as follows:

Notable and Non-Notable Losses

The Company defines a notable loss event as an event whereby consolidated net losses and loss expenses aggregate to a threshold greater than or equal to $30.0 million. The Company defines a non-notable loss event as an event whereby consolidated net losses and loss expenses aggregate to a threshold greater than or equal to $15.0 million but less than $30.0 million.

There were no notable loss events occurring during the three months ended March 31, 2017. Losses and loss expenses from a single energy non-notable loss event occurring during the three months ended March 31, 2017 were $19.8 million, or 3.4 percentage points of the loss ratio. Details of this loss by segment are as follows:

   
First Quarter 2017 Non-Notable Loss Event
(Dollars in thousands) Validus Re     Talbot     Total
Net Losses and Loss Expenses 11,012 8,750 19,762
Less: Reinstatement Premiums, net (567 ) 1,627   1,060
Net Loss Attributable to Validus $ 10,445   $ 10,377   $ 20,822
 

Inclusive of reinstatement premiums payable of $1.1 million, the net loss attributable to the Company from this event was $20.8 million.

There were no notable or non-notable loss events occurring during the three months ended March 31, 2016.

The Company's loss ratio, excluding the impact of the non-notable loss event and the change in prior accident years, for the three months ended March 31, 2017 and 2016 was 54.1% and 48.7%, respectively.

Validus Re Segment

Highlights for the first quarter include the following:

Talbot Segment

Highlights for the first quarter include the following:

Western World Segment

Highlights for the first quarter include the following:

AlphaCat Segment

Highlights for the first quarter include the following:

Investments

Highlights of our managed portfolio for the first quarter include the following:

Corporate Expenses

Highlights for the first quarter include the following:

Shareholders' Equity and Capitalization

As at March 31, 2017, total shareholders' equity was $4.2 billion including $330.6 million of noncontrolling interest and $150.0 million of preferred shares. Shareholders' equity available to Validus common shareholders was $3.8 billion as at March 31, 2017. Book value per common share was $47.54 at March 31, 2017 based on 79,137,590 common shares, compared to $46.61 at December 31, 2016 based on 79,132,252 common shares. Book value per diluted common share was $45.88 at March 31, 2017 based on 82,001,614 diluted common shares, compared to $44.97 at December 31, 2016 based on 82,026,998 diluted common shares, an increase of 2.9%, inclusive of dividends for the three months ended March 31, 2017. Book value per diluted common share is a non-GAAP financial measure. A reconciliation of book value per common share, the most comparable GAAP measure, to book value per diluted common share is presented at the end of this release.

Total capitalization available to Validus at March 31, 2017 was $4.7 billion, including $537.4 million of junior subordinated deferrable debentures and $245.4 million of senior notes. Total capitalization at March 31, 2017 was $6.7 billion, including $1.7 billion of redeemable noncontrolling interest and $330.6 million of noncontrolling interest related to AlphaCat.

Share Repurchases

The Company has not repurchased any common shares during the three months ended March 31, 2017. A summary of the common share repurchases made to date under the Company’s previously announced share repurchase programs is as follows:

    Common Share Repurchase Activity

(Expressed in thousands of U.S. dollars except for share and per share information)

        Cumulative to Date
Share repurchases: As at March 31, 2017 As at April 25, 2017 through April 25, 2017
Aggregate purchase price (a) $ 2,704,406 $ $ 2,704,406
Common shares repurchased 80,508,849 80,508,849
Average price (a) $ 33.59 $ $ 33.59
 

(a)

 

Share transactions are on a trade date basis through April 25, 2017 and are inclusive of commissions. Average share price is rounded to two decimal places.

 

Conference Call

The Company will host a conference call for analysts and investors on April 27, 2017 at 10:00 AM (Eastern) to discuss the first quarter 2017 financial results and related matters. The conference call may be accessed by dialing 1-844-309-6712 (toll-free U.S.) or 1-484-747-6926 (international) and entering the passcode 9211 0610. Those who intend to participate in the conference call should register at least ten minutes in advance to ensure access to the call. A telephone replay of the conference call will be available through May 11, 2017, by dialing 1-855-859-2056 (toll-free U.S.) or 1-404-537-3406 (international) and entering the passcode 9211 0610.

This conference call will also be available through a live audio webcast accessible through the Investors section of the Company's website located at www.validusholdings.com. A replay of the webcast will be available at the Investors section of the Company's website through May 11, 2017. In addition, a financial supplement relating to the Company's financial results for the three months ended March 31, 2017 is available in the Investors section of the Company's website.

About Validus Holdings, Ltd.

Validus Holdings, Ltd. ("Validus") is a holding company for reinsurance and insurance operating companies and investment advisors including Validus Reinsurance, Ltd. (“Validus Re”), Talbot Underwriting Ltd. (“Talbot”), Western World Insurance Group, Inc. (“Western World”) and AlphaCat Managers, Ltd. (“AlphaCat”).

Validus Re is a Bermuda based reinsurer focused primarily on treaty reinsurance. Talbot is a specialty insurance group primarily operating within the Lloyd's insurance market through Syndicate 1183. Western World is a U.S. specialty lines insurance company focused on excess and surplus lines. AlphaCat is a Bermuda based investment adviser managing capital for third parties and Validus in insurance linked securities and other property catastrophe and specialty reinsurance investments.

       

Validus Holdings, Ltd.

Consolidated Balance Sheets

As at March 31, 2017 and December 31, 2016

(Expressed in thousands of U.S. dollars, except share and per share information)

 
March 31,
2017
December 31,
2016
Assets
Fixed maturity investments trading, at fair value (amortized cost: 2017—$5,391,103; 2016—$5,584,599) $ 5,365,216 $ 5,543,030
Short-term investments trading, at fair value (amortized cost: 2017—$2,785,232; 2016—$2,796,358) 2,785,226 2,796,170
Other investments, at fair value (cost: 2017—$415,679; 2016—$380,130) 443,004 405,712
Investments in investment affiliates, equity method (cost: 2017—$83,968; 2016—$84,840) 94,697 100,431
Cash and cash equivalents 623,937 419,976
Restricted cash 92,547   70,956  
Total investments and cash 9,404,627 9,336,275
Premiums receivable 1,214,745 725,390
Deferred acquisition costs 292,180 209,227
Prepaid reinsurance premiums 199,046 77,996
Securities lending collateral 10,386 9,779
Loss reserves recoverable 451,856 430,421
Paid losses recoverable 37,837 35,247
Income taxes recoverable 6,757 4,870
Deferred tax asset 45,995 43,529
Receivable for investments sold 9,302 3,901
Intangible assets 114,176 115,592
Goodwill 196,758 196,758
Accrued investment income 25,962 26,488
Other assets 127,494   134,282  
Total assets $ 12,137,121   $ 11,349,755  
 
Liabilities
Reserve for losses and loss expenses $ 3,052,745 $ 2,995,195
Unearned premiums 1,612,474 1,076,049
Reinsurance balances payable 118,119 54,781
Securities lending payable 10,852 10,245
Deferred tax liability 3,818 3,331
Payable for investments purchased 38,486 29,447
Accounts payable and accrued expenses 171,134 587,648
Notes payable to AlphaCat investors 446,576 278,202
Senior notes payable 245,412 245,362
Debentures payable 537,402   537,226  
Total liabilities $ 6,237,018   $ 5,817,486  
Commitments and contingent liabilities
Redeemable noncontrolling interests 1,657,630 1,528,001
Shareholders’ equity
Preferred shares (Issued and Outstanding: 2017—6,000; 2016—6,000) 150,000 150,000
Common shares (Issued: 2017—161,285,411; 2016—161,279,976; Outstanding: 2017—79,137,590; 2016—79,132,252) 28,225 28,224
Treasury shares (2017—82,147,821; 2016—82,147,724) (14,376 ) (14,376 )
Additional paid-in capital 830,346 821,023
Accumulated other comprehensive loss (22,453 ) (23,216 )
Retained earnings 2,940,134   2,876,636  
Total shareholders’ equity available to Validus 3,911,876 3,838,291
Noncontrolling interests 330,597   165,977  
Total shareholders’ equity $ 4,242,473   $ 4,004,268  
Total liabilities, noncontrolling interests and shareholders’ equity $ 12,137,121   $ 11,349,755  
 
   

Validus Holdings, Ltd.

Consolidated Statements of Income

For the three months ended March 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share information)

 
Three Months Ended March 31,
2017     2016
Revenues
Gross premiums written $ 1,190,857 $ 1,172,791
Reinsurance premiums ceded (200,106 ) (167,835 )
Net premiums written 990,751 1,004,956
Change in unearned premiums (415,375 ) (433,688 )
Net premiums earned 575,376 571,268
Net investment income 40,214 29,461
Net realized losses on investments (1,164 ) (584 )
Change in net unrealized gains on investments 13,348 47,444
Income (loss) from investment affiliates 5,188 (4,113 )
Other insurance related income and other income 1,330 1,413
Foreign exchange gains 1,569   6,245  
Total revenues 635,861   651,134  
Expenses
Losses and loss expenses 269,585 224,447
Policy acquisition costs 111,628 107,193
General and administrative expenses 87,924 86,208
Share compensation expenses 9,491 11,237
Finance expenses 13,943   15,203  
Total expenses 492,571   444,288  
Income before taxes, loss from operating affiliate and (income) attributable to AlphaCat investors 143,290 206,846
Tax benefit 3,549 2,118
Loss from operating affiliate (23 )
(Income) attributable to AlphaCat investors (7,503 ) (4,600 )
Net income $ 139,336 $ 204,341
Net (income) attributable to noncontrolling interests (42,572 ) (37,531 )
Net income available to Validus 96,764 166,810
Dividends on preferred shares (2,203 )  
Net income available to Validus common shareholders $ 94,561   $ 166,810  
 
Selected ratios:
Ratio of net to gross premiums written 83.2 % 85.7 %
 
Losses and loss expense ratio 46.9 % 39.3 %
 
Policy acquisition cost ratio 19.4 % 18.8 %
General and administrative expense ratio (a) 16.9 % 17.0 %
Expense ratio 36.3 % 35.8 %
Combined ratio 83.2 % 75.1 %
 

(a) The general and administrative expense ratio includes share compensation expenses.

 
   

Validus Holdings, Ltd.

Segment Information

For the three months ended March 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share information)

 
Validus Re Segment Three Months Ended March 31,
2017     2016
Underwriting revenues
Gross premiums written $ 620,522 $ 691,668
Reinsurance premiums ceded (108,813 ) (92,495 )
Net premiums written 511,709 599,173
Change in unearned premiums (293,297 ) (355,342 )
Net premiums earned 218,412   243,831  
Other insurance related income (loss) 78   (315 )
Total underwriting revenues 218,490   243,516  
Underwriting deductions
Losses and loss expenses 86,154 82,868
Policy acquisition costs 41,256 42,259
General and administrative expenses 16,832 17,179
Share compensation expenses 2,477   2,901  
Total underwriting deductions 146,719   145,207  
Underwriting income $ 71,771   $ 98,309  
 
Talbot Segment Three Months Ended March 31,
2017 2016
Underwriting revenues
Gross premiums written $ 247,175 $ 266,317
Reinsurance premiums ceded (92,824 ) (87,458 )
Net premiums written 154,351 178,859
Change in unearned premiums 40,714   27,933  
Net premiums earned 195,065   206,792  
Other insurance related income 755   11  
Total underwriting revenues 195,820   206,803  
Underwriting deductions
Losses and loss expenses 106,412 100,101
Policy acquisition costs 43,276 44,343
General and administrative expenses 38,443 38,535
Share compensation expenses 2,827   3,522  
Total underwriting deductions 190,958   186,501  
Underwriting income $ 4,862   $ 20,302  
 
Western World Segment Three Months Ended March 31,
2017 2016
Underwriting revenues
Gross premiums written $ 172,043 $ 63,959
Reinsurance premiums ceded (5,618 ) (4,139 )
Net premiums written 166,425 59,820
Change in unearned premiums (69,153 ) 1,679  
Net premiums earned 97,272   61,499  
Other insurance related income 241   288  
Total underwriting revenues 97,513   61,787  
Underwriting deductions
Losses and loss expenses 74,925 39,646
Policy acquisition costs 20,236 14,200
General and administrative expenses 10,754 12,075
Share compensation expenses 692   581  
Total underwriting deductions 106,607   66,502  
Underwriting loss $ (9,094 ) $ (4,715 )
 
   

Validus Holdings, Ltd.

Segment Information

For the three months ended March 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share information)

 
AlphaCat Segment Three Months Ended March 31,
2017     2016
Revenues
Third party $ 4,644 $ 4,727
Related party 631   891  
Total revenues 5,275   5,618  
Expenses
General and administrative expenses 3,844 1,482
Share compensation expenses 82 141
Finance expenses 31 808
Tax benefit (1 )
Foreign exchange (gains) losses (1 ) 8  
Total expenses 3,955   2,439  
Income before investment income from AlphaCat Funds and Sidecars 1,320   3,179  
Investment income (loss) from AlphaCat Funds and Sidecars (a)
AlphaCat Sidecars (112 ) 124
AlphaCat ILS Funds - Lower Risk (b) 2,189 2,507
AlphaCat ILS Funds - Higher Risk (b) 2,367 2,436
BetaCat ILS Funds 368 563
PaCRe   (23 )
Total investment income from AlphaCat Funds and Sidecars 4,812   5,607  
Validus' share of AlphaCat income $ 6,132   $ 8,786  
 

(a)

 

The investment income from the AlphaCat funds and sidecars is based on equity accounting.

 

(b)

Lower risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of less than 7%, whereas higher risk AlphaCat ILS funds have a maximum permitted portfolio expected loss of greater than 7%. Expected loss represents the average annual loss over the set of simulation scenarios divided by the total limit.

 
Corporate and Investments     Three Months Ended March 31,
2017     2016
Investment income
Managed net investment income (a) $ 36,192 $ 27,923
 
Corporate expenses
General and administrative expenses 17,177 16,183
Share compensation expenses 3,413 4,092
Finance expenses (a) 13,864 14,341
Dividends on preferred shares 2,203
Tax benefit (a) (3,548 ) (2,118 )
Total Corporate expenses 33,109   32,498  
 
Other items
Net realized losses on managed investments (a) (2,892 ) (1,086 )
Change in net unrealized gains on managed investments (a) 14,349 47,078
Income (loss) from investment affiliates 5,188 (4,113 )
Foreign exchange gains (a) 1,103 6,074
Other income 94   677  
Total other items 17,842   48,630  
Total Corporate and Investments $ 20,925   $ 44,055  
 

(a)

 

These items exclude the components which are included in Validus' share of AlphaCat and amounts which are consolidated from variable interest entities.

 

Non-GAAP Financial Measures

In presenting the Company’s results, management has included and discussed certain non-GAAP financial measures. The Company believes that these non-GAAP measures, which may be defined and calculated differently by other companies, better explain and enhance the understanding of the Company’s results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP.

In addition to presenting book value per common share determined in accordance with U.S. GAAP, the Company believes that the following non-GAAP book value financial measures are key financial indicators for evaluating performance and measuring overall growth: book value per diluted common share, book value per diluted common share plus accumulated dividends and tangible book value per diluted common share. A reconciliation of book value per common share, a GAAP financial measure, to the non-GAAP book value financial measures has been included below.

In addition to presenting net income available to Validus common shareholders determined in accordance with U.S. GAAP, the Company believes that showing net operating income available to Validus common shareholders, a non-GAAP financial measure, provides investors with a valuable measure of profitability and enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the Company’s results in a manner similar to how management analyzes the Company’s underlying business performance.

Net operating income available to Validus common shareholders, a non-GAAP financial measure, is calculated by the addition or subtraction of certain Consolidated Statement of Income line items from net income available to Validus common shareholders, the most directly comparable GAAP financial measure, and measures the performance of the Company’s operations without the influence of gains or losses on investments and foreign currencies and other items as noted in the reconciliation below. The Company excludes these items from its calculation of net operating income available to Validus common shareholders because the amount of these gains and losses is heavily influenced by, and fluctuates in part, according to availability of investment market opportunities and other factors. The Company believes these amounts are largely independent of its core underwriting activities and including them distorts the analysis of trends in its operations. The Company believes the reporting of net operating income available to Validus common shareholders enhances the understanding of results by highlighting the underlying profitability of the Company’s core (re)insurance operations. This profitability is influenced significantly by earned premium growth, adequacy of the Company’s pricing, as well as loss frequency and severity. Over time it is also influenced by the Company’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through its management of acquisition costs and other underwriting expenses.

Return on average equity, a GAAP financial measure, and net operating return on average equity, a non-GAAP financial measure, represents the returns generated on common shareholders’ equity during the year and are presented below.

   

Validus Holdings, Ltd.

Non-GAAP Financial Measures Reconciliation

Book Value per Common Share, Book Value per Diluted Common Share and Tangible Book Value per Diluted Common Share

As at March 31, 2017 and December 31, 2016

(Expressed in thousands of U.S. dollars, except share and per share information)

 
At March 31, 2017
Equity Amount     Common Shares     Per Share
Amount (a)
Book value per common share (b) $ 3,761,876 79,137,590 $ 47.54
Non-GAAP Adjustments:
Assumed exercise of outstanding stock options (c)(d) 614 26,136
Unvested restricted shares   2,837,888  
Book value per diluted common share (e) 3,762,490 82,001,614 $ 45.88
Goodwill (196,758 )
Intangible assets (114,176 )  
Tangible book value per diluted common share (e) $ 3,451,556 82,001,614 $ 42.09
 
Book value per diluted common share (e) $ 45.88
Accumulated dividends 11.94
Book value per diluted common share plus accumulated dividends (e) $ 57.82
 
At December 31, 2016
Equity Amount Common Shares Per Share
Amount (a)
Book value per common share (b) $ 3,688,291 79,132,252 $ 46.61
Non-GAAP Adjustments:
Assumed exercise of outstanding stock options (c)(d) 614 26,136
Unvested restricted shares   2,868,610  
Book value per diluted common share (e) 3,688,905 82,026,998 $ 44.97
Goodwill (196,758 )
Intangible assets (115,592 )  
Tangible book value per diluted common share (e) $ 3,376,555 82,026,998 $ 41.16
 
Book value per diluted common share (e) $ 44.97
Accumulated dividends 11.56
Book value per diluted common share plus accumulated dividends (e) $ 56.53
 

(a)

 

Per share amounts are calculated by dividing the equity amount by the common shares.

 

(b)

The equity amount used in the calculation of book value per common share represents total shareholders' equity available to Validus excluding the liquidation value of the preferred shares of $150 million.

 

(c)

Using the "as-if-converted" method, assuming all proceeds received upon exercise of stock options will be retained by the Company and the resulting common shares from exercise remain outstanding.

 

(d)

At March 31, 2017, the weighted average exercise price for those stock options that had an exercise price lower than book value per share was $23.48 (December 31, 2016: $23.48).

 

(e)

Non-GAAP financial measure.

 
   

Validus Holdings, Ltd.

Non-GAAP Financial Measures Reconciliation

Net Operating Income available to Validus Common Shareholders, Net Operating Income per Diluted Share Available to
Validus Common Shareholders and Annualized Net Operating Return on Average Equity

For the three months ended March 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share information)

 
Three Months Ended
March 31,
2017
    March 31,
2016
Net income available to Validus common shareholders $ 94,561 $ 166,810
Non-GAAP Adjustments:
Net realized losses on investments 1,164 584
Change in net unrealized gains on investments (13,348 ) (47,444 )
(Income) loss from investment affiliates (5,188 ) 4,113
Foreign exchange gains (1,569 ) (6,245 )
Other income (94 ) (677 )
Net income attributable to noncontrolling interests 728 237
Tax expense (a) 580   4,127  
Net operating income available to Validus common shareholders (b) $ 76,834   $ 121,505  
 
Earnings per diluted share available to Validus common shareholders $ 1.17 $ 1.98
Non-GAAP Adjustments:
Net realized losses on investments 0.01
Change in net unrealized gains on investments (0.17 ) (0.56 )
(Income) loss from investment affiliates (0.06 ) 0.05
Foreign exchange gains (0.02 ) (0.07 )
Other income (0.01 )
Net income attributable to noncontrolling interests 0.01
Tax expense (a) 0.01   0.05  
Net operating income per diluted share available to Validus common shareholders (b) $ 0.95   $ 1.44  
 
Average shareholders' equity available to Validus common shareholders (c) $ 3,725,084 $ 3,681,701
 
Annualized return on average equity 10.2 % 18.1 %
Annualized net operating return on average equity (b) 8.3 % 13.2 %
 

(a)

 

Represents the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates to. The tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize tax losses carried forward.

 

(b)

Non-GAAP financial measure.

 

(c)

Average shareholders’ equity for the three months ended is the average of the beginning and ending quarter end shareholders’ equity balances, excluding the liquidation value of the preferred shares of $150,000.

 

Cautionary Note Regarding Forward-Looking Statements

This press release may include forward-looking statements, both with respect to the Company and its industry, that reflect our current views with respect to future events and financial performance. Statements that include the words "expect", "intend", "plan", "believe", "project", "anticipate", "will", "may" and similar statements of a future or forward-looking nature identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond the Company's control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements. We believe that these factors include, but are not limited to, the following: 1) unpredictability and severity of catastrophic events; 2) rating agency actions; 3) adequacy of Validus' risk management and loss limitation methods; 4) cyclicality of demand and pricing in the insurance and reinsurance markets; 5) statutory or regulatory developments including tax policy, reinsurance and other regulatory matters; 6) Validus' ability to implement its business strategy during "soft" as well as "hard" markets; 7) adequacy of Validus' loss reserves; 8) continued availability of capital and financing; 9) retention of key personnel; 10) competition; 11) potential loss of business from one or more major insurance or reinsurance brokers; 12) Validus' ability to implement, successfully and on a timely basis, complex infrastructure, distribution capabilities, systems, procedures and internal controls, and to develop accurate actuarial data to support the business and regulatory and reporting requirements; 13) general economic and market conditions (including inflation, volatility in the credit and capital markets, interest rates and foreign currency exchange rates); 14) the integration of businesses Validus may acquire or new business ventures Validus may start; 15) the effect on Validus' investment portfolios of changing financial market conditions including inflation, interest rates, liquidity and other factors; 16) acts of terrorism or outbreak of war; and 17) availability of reinsurance and retrocessional coverage, as well as management's response to any of the aforementioned factors.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors included in Validus' most recent reports on Form 10-K and Form 10-Q and other documents of the Company on file with or furnished to the U.S. Securities and Exchange Commission (“SEC”). Any forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Validus will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Validus or its business or operations. Except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Source: Validus Holdings, Ltd.

Investors:
Validus Holdings, Ltd.
Investor.Relations@validusholdings.com
+1-441-278-9000
or
Media:
Brunswick Group
Mustafa Riffat / Charlotte Connerton
+1-212-333-3810