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Validus Reports Net Income Available to Validus Common Shareholders of $89.8 Million, or $1.11 Per Diluted Share and a 9.7% Annualized Return on Average Equity for the Third Quarter of 2016

27 Oct 2016

PEMBROKE, Bermuda--(BUSINESS WIRE)--Oct. 27, 2016-- Validus Holdings, Ltd. (“Validus” or the “Company”) (NYSE: VR) today reported net income available to Validus common shareholders of $89.8 million, or $1.11 per diluted common share, for the three months ended September 30, 2016, compared to $66.7 million, or $0.78 per diluted common share, for the three months ended September 30, 2015. Net income available to Validus common shareholders was $351.6 million, or $4.24 per diluted common share, for the nine months ended September 30, 2016, compared to $305.9 million, or $3.52 per diluted common share, for the nine months ended September 30, 2015.

Net operating income available to Validus common shareholders was $82.6 million, or $1.02 per diluted common share, for the three months ended September 30, 2016, compared to $65.8 million, or $0.77 per diluted common share, for the three months ended September 30, 2015. Net operating income available to Validus common shareholders was $254.9 million, or $3.07 per diluted common share, for the nine months ended September 30, 2016, compared to $304.4 million, or $3.50 per diluted common share, for the nine months ended September 30, 2015.

The annualized return on average equity was 9.7% for the three months ended September 30, 2016, compared to 7.3% for the three months ended September 30, 2015. The annualized return on average equity was 12.7% for the nine months ended September 30, 2016, compared to 11.2% for the nine months ended September 30, 2015.

The annualized net operating return on average equity was 8.9% for the three months ended September 30, 2016, compared to 7.2% for the three months ended September 30, 2015. The annualized net operating return on average equity was 9.2% for the nine months ended September 30, 2016, compared to 11.1% for the nine months ended September 30, 2015.

Book value per diluted common share at September 30, 2016 was $45.16, reflecting quarterly growth of 2.5%, inclusive of common dividends.

Commenting on the financial results for the three months ended September 30, 2016, Validus' Chairman and CEO Ed Noonan stated:

"Validus delivered favorable results for the third quarter of 2016, with a combined ratio of 82.4% and strong investment returns driving book value growth of 2.5% inclusive of common dividends. Given current market conditions we continue to reduce exposure in areas under the most competitive pressure - notably marine and energy and certain property classes - while continuing to expand our profile in U.S. insurance and the management of third party capital."

Income available to Validus common shareholders by segment for the three months ended September 30, 2016 and September 30, 2015 was as follows:

         
       

Income available to Validus common shareholders
for the three months ended

        September 30, 2016   September 30, 2015
        (Expressed in millions of U.S. dollars, except per share information)
Validus Re - Underwriting income (a) (c)       $ 67.1     $ 56.6  
Talbot - Underwriting income (a) (c)       7.3     21.1  
Western World - Underwriting loss (a) (c)       (2.7 )    
Validus' share of AlphaCat income       11.2     7.5  
Validus' share of PaCRe, Ltd.           (8.0 )
Validus' share of AlphaCat income, net (a)       11.2     (0.5 )
Total segmental income       82.9     77.2  
Net investment income (b)       41.1     30.0  
Corporate operating expenses       (40.7 )   (39.3 )
Eliminations and other       (0.7 )   (2.1 )
Net operating income available to Validus common shareholders (c)       $ 82.6     $ 65.8  
Net operating income per diluted share available to Validus common shareholders (c)       $ 1.02     $ 0.77  
Net income available to Validus common shareholders (c)       $ 89.8     $ 66.7  
Net income per diluted share available to Validus common shareholders       $ 1.11     $ 0.78  

 

(a) Underwriting income and Validus' share of AlphaCat income are non-GAAP measures.
 
(b) Net investment income relates to our managed investment portfolio. Total net investment income, inclusive of AlphaCat's non-managed portfolio is $43.5 million and $31.6 million for the three months ended September 30, 2016 and 2015, respectively.
 
(c) A reconciliation of net operating income available to Validus common shareholders and underwriting income to net income available to Validus common shareholders, the most directly comparable GAAP measure, is presented at the end of this release.
 

This earnings release should be read in conjunction with the Company's September 30, 2016 investor financial supplement that has been posted to the Investors section of the Company's website located at www.validusholdings.com.

Third Quarter 2016 Results

Highlights for the third quarter are as follows:

  • Gross premiums written for the three months ended September 30, 2016 were $372.4 million compared to $402.5 million for the three months ended September 30, 2015, a decrease of $30.1 million, or 7.5%. The decrease was primarily driven by decreases in the Validus Re, Talbot and AlphaCat segments, partially offset by an increase in the Western World segment.
  • The loss ratio for the three months ended September 30, 2016 was 45.8%; which included $52.9 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.4 percentage points compared to a loss ratio for the three months ended September 30, 2015 of 46.1% which included $93.7 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 16.9 percentage points. The loss ratio for the three months ended September 30, 2016 included net non-notable losses of $21.6 million or 3.8 percentage points of the loss ratio. The non-notable losses were primarily from a single non-notable loss event described in further detail in the "Notable and Non-notable losses" section below. The loss ratio for the three months ended September 30, 2015 included net notable losses of $49.0 million, or 8.8 percentage points of the loss ratio and net non-notable losses of $22.2 million, or 4.0 percentage points of the loss ratio. The favorable development of $52.9 million for the three months ended September 30, 2016 was primarily due to favorable development on non-event reserves of $32.6 million and favorable development on event specific reserves of $20.3 million, primarily related to the 2015 Chilean earthquake and Tianjin port explosion loss events.
  • The combined ratio for the three months ended September 30, 2016 was 82.4%, compared to a combined ratio of 84.3% for the three months ended September 30, 2015, a decrease of 1.9 percentage points.
  • Net investment income for the three months ended September 30, 2016 was $41.1 million compared to $30.0 million for the three months ended September 30, 2015, an increase of $11.1 million, or 36.9%. The increase was primarily due to strong performance on the Company's portfolio of structured securities, including $9.5 million of returns generated from a single fixed income fund.
  • Net operating income available to Validus common shareholders for the three months ended September 30, 2016 was $82.6 million compared to $65.8 million for the three months ended September 30, 2015, an increase of $16.8 million, or 25.6%.
  • Net income available to Validus common shareholders for the three months ended September 30, 2016 was $89.8 million compared to $66.7 million for the three months ended September 30, 2015, an increase of $23.2 million, or 34.8%.
  • Annualized return on average equity was 9.7% and annualized net operating return on average equity was 8.9% for the three months ended September 30, 2016 compared to 7.3% and 7.2%, respectively, for the three months ended September 30, 2015.

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.

During the three months ended September 30, 2016, the Company incurred losses and loss expenses from a third quarter non-notable loss event as follows:

         
        Three Months Ended September 30, 2016
        SpaceX Non-Notable Loss Event
(Dollars in thousands)       Validus Re   Talbot   Total
Validus' Share of Net Losses and Loss Expenses       $ 10,349     $ 9,894     $ 20,243  
Less: Reinstatement Premiums, net       (2,159 )   919     (1,240 )
Net Loss Attributable to Validus       $ 8,190     $ 10,813     $ 19,003  
                             

The September 1 st SpaceX rocket explosion at Cape Canaveral, Florida resulted in estimated losses and loss expenses of $20.2 million, or 3.6 percentage points of the loss ratio. Net of reinstatement premiums of $1.2 million, the net loss attributable to the Company from this event was $19.0 million.

During the three months ended September 30, 2015, the Company incurred $49.0 million of losses and loss expenses from notable loss events, or 8.8 percentage points of the loss ratio, primarily relating to the port explosion in Tianjin, China. Net of $3.9 million of reinstatement premiums, the effect of these events on the Company's underwriting income was a reduction of $45.1 million. Losses and loss expenses from a single non-notable loss event, the 2015 Chilean earthquake, were $22.2 million, or 4.0 percentage points of the loss ratio during the three months ended September 30, 2015. Net of $2.2 million of reinstatement premiums, the effect of this event on the Company's underwriting income was a reduction of $20.0 million.

The Company's loss ratio, excluding the impact of notable and non-notable loss events and the change in prior accident years, for the three months ended September 30, 2016 and 2015 was 51.2% and 50.2%, respectively.

Validus Re Segment

Highlights for the third quarter include the following:

  • Gross premiums written for the three months ended September 30, 2016 were $94.7 million compared to $103.3 million for the three months ended September 30, 2015, a decrease of $8.6 million, or 8.3%. Gross premiums written for the three months ended September 30, 2016 included $53.8 million of property premiums, $(4.5) million of marine premiums and $45.5 million of specialty premiums, compared to $65.4 million of property premiums, $13.4 million of marine premiums and $24.5 million of specialty premiums for the three months ended September 30, 2015. The decrease in the property lines of $11.6 million was primarily driven by a decrease in incepting business of $5.3 million, along with adjustments to existing business of $6.3 million, primarily in the catastrophe and per risk excess of loss classes. The decrease in the marine lines of $17.9 million was primarily due to the timing of renewals of certain proportional programs which incepted during the third quarter of 2015, as well as adjustments to existing business. Partially offsetting the decreases was an increase in the specialty lines of $21.0 million, primarily as a result of increased casualty business written during the period of $7.5 million and continued growth in the composite lines of $4.0 million, along with timing differences on the renewal of certain contracts and decreased premium adjustments year on year.
  • The loss ratio for the three months ended September 30, 2016 was 43.1%, which included $33.0 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 14.5 percentage points compared to a loss ratio for the three months ended September 30, 2015 of 50.3% which included $50.5 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 21.0 percentage points. The loss ratio for the three months ended September 30, 2016 included net non-notable losses totaling $10.4 million, or 4.5 percentage points of the loss ratio. The loss ratio for the three months ended September 30, 2015 included net notable losses of $37.0 million, or 15.4 percentage points of the loss ratio and net non-notable losses of $17.5 million, or 7.3 percentage points of the loss ratio. The favorable development of $33.0 million on prior accident years for the three months ended September 30, 2016 was primarily due to favorable development on non-event reserves of $14.5 million and favorable development on event specific reserves of $18.5 million, the largest contributors being the 2015 Chilean earthquake and Tianjin port explosion loss events.
  • The combined ratio for the three months ended September 30, 2016 was 70.7% compared to 77.6% for the three months ended September 30, 2015, a decrease of 6.9 percentage points.
  • Underwriting income for the three months ended September 30, 2016 was $67.1 million compared to $56.6 million for the three months ended September 30, 2015, an increase of $10.4 million, or 18.4%.

Talbot Segment

Highlights for the third quarter include the following:

  • Gross premiums written for the three months ended September 30, 2016 were $189.7 million compared to $226.0 million for the three months ended September 30, 2015, a decrease of $36.4 million, or 16.1%. Gross premiums written for the three months ended September 30, 2016 included $64.3 million of property premiums, $48.1 million of marine premiums and $77.3 million of specialty premiums compared to $72.7 million of property premiums, $66.8 million of marine premiums and $86.5 million of specialty premiums for the three months ended September 30, 2015. The decrease in the property and marine lines of $8.4 million and $18.7 million, respectively, were primarily driven by foreign exchange and reductions in our participation and non-renewals on various programs due to the current rate environment, notably in the downstream and upstream energy classes. The decrease in gross premiums written in the specialty lines of $9.2 million was primarily due to the timing of renewals of political risk contracts.
  • The loss ratio for the three months ended September 30, 2016 was 55.2%, which included $18.7 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.4 percentage points compared to a loss ratio for the three months ended September 30, 2015 of 45.8% which included $36.0 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 17.4 percentage points. The loss ratio for the three months ended September 30, 2016 included net non-notable losses totaling $11.3 million, or 5.7 percentage points of the loss ratio. The loss ratio for the three months ended September 30, 2015 included net notable losses of $12.0 million, or 5.8 percentage points of the loss ratio and net non-notable losses totaling $4.7 million, or 2.3 percentage points of the loss ratio. The favorable development of $18.7 million on prior accident years for the three months ended September 30, 2016 is primarily due to favorable development on non-event reserves of $16.9 million and favorable development on event specific reserves of $1.8 million.
  • The combined ratio for the three months ended September 30, 2016 was 96.4% compared to 90.0% for the three months ended September 30, 2015, an increase of 6.4 percentage points.
  • Underwriting income for the three months ended September 30, 2016 was $7.3 million compared to $21.1 million for the three months ended September 30, 2015, a decrease of $13.8 million, or 65.4%.

Western World Segment

Highlights for the third quarter include the following:

  • Gross premiums written for the three months ended September 30, 2016 were $85.3 million compared to $70.9 million for the three months ended September 30, 2015, an increase of $14.4 million, or 20.3%. Gross premiums written for the three months ended September 30, 2016 included $23.8 million of property premiums and $61.5 million of liability premiums, compared to $13.9 million of property premiums and $57.0 million of liability premiums for the three months ended September 30, 2015. The increase in gross premiums written in the property lines of $9.9 million was primarily due to additional business written in the commercial package property, program flood and brokerage property classes of $4.0 million, $2.9 million, and $2.6 million, respectively, as a result of the continued build out of the underwriting platform in short tail lines. The increase in gross premiums written in the liability lines of $4.5 million was driven primarily by increases in the commercial package liability and other liability classes of $8.6 million and was partially offset by decreases as a result of the discontinuation of underperforming programs and brokerage general liability lines.
  • The loss ratio for the three months ended September 30, 2016 was 64.6%, which included $0.9 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 1.2 percentage points compared to a loss ratio for the three months ended September 30, 2015 of 63.8% which included $5.1 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 7.9 percentage points. Losses and loss expenses for the three months ended September 30, 2016 included $3.0 million, or 4.3 percentage points of the loss ratio, of property losses on U.S.-based weather events including flood. Of the 2015 incurred losses, $2.5 million, or 3.9 percentage points of the loss ratio, arose from the amortization of the risk premium adjustment accounted for at the time of the acquisition of Western World.
  • The combined ratio for the three months ended September 30, 2016 was 104.1% compared to 100.4% for the three months ended September 30, 2015, an increase of 3.7 percentage points. The increase was primarily as a result of the policy acquisition costs ratio during the three months ended September 30, 2015 benefiting from a 4.6 percentage point reduction due to the amortization of the fair value adjustment accounted for at the time of the acquisition of Western World.
  • Underwriting loss for the three months ended September 30, 2016 was $2.7 million compared to $nil for the three months ended September 30, 2015.

AlphaCat Segment

Highlights for the third quarter include the following:

  • AlphaCat's assets under management were $2,615.1 million as at October 1, 2016, compared to $2,510.5 million as at July 1, 2016. Third party assets under management were $2,292.6 million as at October 1, 2016, compared to $2,186.9 million as at July 1, 2016.
  • Revenues earned for the three months ended September 30, 2016 were $8.4 million, of which $7.0 million were earned from third parties, compared to $7.5 million for the three months ended September 30, 2015, of which $5.8 million were earned from third parties. The increase in revenues earned from third parties of $1.3 million was primarily due to an increase in the capital base of the AlphaCat ILS Funds.
  • Total expenses for the three months ended September 30, 2016 were $3.3 million, compared to $6.6 million for the three months ended September 30, 2015, a decrease of $3.3 million, or 50.3%. The decrease was primarily due to reduced placement fees incurred in relation to raising new capital during the three months ended September 30, 2016.
  • Income available to Validus common shareholders before investment income from AlphaCat Funds and Sidecars for the three months ended September 30, 2016 was $5.1 million, compared to $0.9 million for the three months ended September 30, 2015, an increase of $4.2 million.
  • Investment income available to Validus common shareholders from AlphaCat Funds and Sidecars for the three months ended September 30, 2016 was $6.0 million, compared to $6.5 million for the three months ended September 30, 2015, a decrease of $0.5 million or 7.7%.
  • Validus' share of AlphaCat income for the three months ended September 30, 2016 was $11.2 million, compared to $7.5 million for the three months ended September 30, 2015, an increase of $3.7 million, or 49.4%.

Investments

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

  • Net investment income for the three months ended September 30, 2016 was $41.1 million compared to $30.0 million for the three months ended September 30, 2015, an increase of $11.1 million, or 36.9%. The increase was primarily due to strong performance on the Company's portfolio of structured securities, including $9.5 million of returns generated from a single fixed income fund. Annualized effective yield for the three months ended September 30, 2016 was 2.58%, compared to 1.91% for the three months ended September 30, 2015, an increase of 67 basis points.
  • Net realized gains on managed investments for the three months ended September 30, 2016 were $4.1 million compared to losses of $1.2 million for the three months ended September 30, 2015, a favorable movement of $5.3 million. The increase in net realized gains primarily resulted from the sale of managed fixed maturities.
  • The change in net unrealized gains on managed investments for the three months ended September 30, 2016 was $4.7 million compared to $1.8 million for the three months ended September 30, 2015, a favorable movement of $2.9 million, or 163.6%.

Corporate Operating Expenses

Highlights for the third quarter include the following:

  • General and administrative expenses for the three months ended September 30, 2016 were $18.2 million compared to $18.8 million for the three months ended September 30, 2015, a decrease of $0.6 million or 3.1%.
  • Share compensation expenses for the three months ended September 30, 2016 were $4.0 million compared to $3.4 million for the three months ended September 30, 2015, an increase of $0.7 million or 19.7%.
  • Finance expenses, excluding the Company's share of AlphaCat finance expenses from consolidated variable interest entities, for the three months ended September 30, 2016 were $14.3 million compared to $15.1 million for the three months ended September 30, 2015, a decrease of $0.8 million or 5.5%.
  • Dividends paid on preferred shares for the three months ended September 30, 2016 were $2.3 million compared to $nil for the three months ended September 30, 2015.
  • Tax expenses for the three months ended September 30, 2016 were $1.8 million compared to $2.0 million for the three months ended September 30, 2015, a decrease of $0.2 million or 9.3%.

Year to Date 2016 Results

Highlights for the year to date include the following:

  • Gross premiums written for the nine months ended September 30, 2016 were $2,309.3 million compared to $2,247.9 million for the nine months ended September 30, 2015, an increase of $61.4 million, or 2.7%.
  • The loss ratio for the nine months ended September 30, 2016 was 46.2% which included $169.4 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.9 percentage points compared to a loss ratio for the nine months ended September 30, 2015 of 44.8% which included $248.0 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 14.6 percentage points. The loss ratio for the nine months ended September 30, 2016 included net notable losses of $37.9 million, or 2.2 percentage points of the loss ratio and net non-notable losses totaling $69.9 million, or 4.1 percentage points of the loss ratio. The loss ratio for the nine months ended September 30, 2015 included net notable losses of $97.1 million, or 5.7 percentage points of the loss ratio and net non-notable losses of $22.2 million, or 1.3 percentage points of the loss ratio. The favorable development of $169.4 million for the nine months ended September 30, 2016 was primarily due to favorable development on non-event reserves of $160.4 million and favorable development on event reserves of $9.0 million.
  • The combined ratio for the nine months ended September 30, 2016 was 82.5% compared to 80.1% for the nine months ended September 30, 2015, an increase of 2.4 percentage points.
  • Net operating income available to Validus common shareholders for the nine months ended September 30, 2016 was $254.9 million compared to $304.4 million for the nine months ended September 30, 2015, a decrease of $49.5 million, or 16.3%.
  • Net income available to Validus common shareholders for the nine months ended September 30, 2016 was $351.6 million compared to $305.9 million for the nine months ended September 30, 2015, an increase of $45.8 million, or 15.0%.
  • Annualized return on average equity was 12.7% and annualized net operating return on average equity was 9.2% for the nine months ended September 30, 2016 compared to 11.2% and 11.1%, respectively, for the nine months ended September 30, 2015.

Shareholders' Equity and Capitalization

As at September 30, 2016, total shareholders' equity was $4.1 billion including $223.0 million of noncontrolling interest and $150.0 million of preferred shares issued on June 13, 2016. Shareholders' equity available to Validus common shareholders was $3.7 billion as at September 30, 2016. Book value per diluted common share was $45.16 at September 30, 2016 based on 82,341,307 diluted common shares, compared to $44.41 at June 30, 2016 based on 83,700,593 diluted common shares, an increase of 2.5%, inclusive of dividends for the three months ended September 30, 2016. Book value per diluted common share is a non-GAAP financial measure. A reconciliation of this measure to book value per common share is presented at the end of this release.

Total capitalization available to Validus at September 30, 2016 was $4.7 billion, including $538.2 million of junior subordinated deferrable debentures and $245.3 million of senior notes. Total capitalization at September 30, 2016 was $6.4 billion, including $1.6 billion of redeemable noncontrolling interest and $223.0 million of noncontrolling interest related to AlphaCat.

Share Repurchases

The Company repurchased 1,349,690 shares during the three months ended September 30, 2016. The share repurchases made during the three months ended September 30, 2016 resulted in a dilutive impact to book value per diluted common share of $0.07 for the quarter. A summary of the share repurchases made to date under the Company’s previously announced share repurchase programs is as follows:

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

As at June 30,
2016

              Quarter ended
Effect of share repurchases:       (cumulative)   July   August   September   September 30, 2016
Aggregate purchase price (a)       $ 2,620,814   $ 18,438   $ 20,599   $ 27,895   $ 66,932
Shares repurchased       78,841,758   382,648   411,738   555,304   1,349,690
Average price (a)       $ 33.24   $ 48.18   $ 50.03   $ 50.23   $ 49.59
                                   
         
        Share Repurchase Activity

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

Effect of share repurchases:       As at September 30, 2016   As at October 26, 2016   Cumulative to Date Effect
Aggregate purchase price (a)       $ 2,687,746   $ 4,029   $ 2,691,775
Shares repurchased       80,191,448   81,174   80,272,622
Average price (a)       $ 33.52   $ 49.63   $ 33.53
                       
(a)   Share transactions are on a trade date basis through October 26, 2016 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 October 28, 2016 at 10:00 AM (Eastern) to discuss the third quarter 2016 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 7188 6983. 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 November 11, 2016, by dialing 1-855-859-2056 (toll-free U.S.) or 1-404-537-3406 (international) and entering the passcode 7188 6983.

This conference call will also be available through a live audio webcast accessible through the Investor Relations section of the Company's website located at www.validusholdings.com. A replay of the webcast will be available at the Investor Relations section of the Company's website through November 11, 2016. In addition, a financial supplement relating to the Company's financial results for the three and nine months ended September 30, 2016 is available in the Investor Relations 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 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 September 30, 2016 and December 31, 2015

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

 

             
        September 30,
2016
  December 31,
2015
        (unaudited)    
Assets            
Fixed maturities trading, at fair value (amortized cost: 2016—$5,547,838; 2015—$5,556,900)       $ 5,576,341     $ 5,510,331  
Short-term investments trading, at fair value (amortized cost: 2016—$2,481,573; 2015—$1,941,615)       2,481,406     1,941,635  
Other investments, at fair value (cost: 2016—$371,668; 2015—$315,963)       394,695     336,856  
Cash and cash equivalents       443,992     723,109  
Restricted cash       113,048     73,270  
Total investments, cash and cash equivalents       9,009,482     8,585,201  
Investments in affiliates, equity method (cost: 2016—$86,305; 2015—$70,186)       99,731     88,065  
Premiums receivable       939,127     658,682  
Deferred acquisition costs       249,922     181,002  
Prepaid reinsurance premiums       119,805     77,992  
Securities lending collateral       10,629     4,863  
Loss reserves recoverable       444,609     350,586  
Paid losses recoverable       36,069     23,071  
Income taxes recoverable       6,879     16,228  
Deferred tax asset       26,015     21,661  
Receivable for investments sold       21,854     39,766  
Intangible assets       117,010     121,258  
Goodwill       196,758     196,758  
Accrued investment income       24,906     23,897  
Other assets       183,357     126,782  
Total assets       $ 11,486,153     $ 10,515,812  
             
Liabilities            
Reserve for losses and loss expenses       $ 3,035,987     $ 2,996,567  
Unearned premiums       1,359,438     966,210  
Reinsurance balances payable       76,429     75,380  
Securities lending payable       11,095     5,329  
Deferred tax liability       3,278     3,847  
Payable for investments purchased       49,435     77,475  
Accounts payable and accrued expenses       144,086     627,331  
Notes payable to AlphaCat investors       372,730     75,493  
Senior notes payable       245,311     245,161  
Debentures payable       538,168     537,668  
Total liabilities       $ 5,835,957     $ 5,610,461  
             
Commitments and contingent liabilities            
Redeemable noncontrolling interest       1,559,580     1,111,714  
             
Shareholders’ equity            
Preferred shares (Issued and Outstanding: 2016—6,000; 2015—nil)       $ 150,000     $  
Common shares (Issued: 2016—161,273,353; 2015—160,570,772; Outstanding: 2016—79,443,030; 2015—82,900,617)       28,223     28,100  
Treasury shares (2016—81,830,323; 2015—77,670,155)       (14,320 )   (13,592 )
Additional paid-in capital       827,256     1,002,980  
Accumulated other comprehensive loss       (21,092 )   (12,569 )
Retained earnings       2,897,553     2,634,056  
Total shareholders’ equity available to Validus       3,867,620     3,638,975  
Noncontrolling interest       222,996     154,662  
Total shareholders’ equity       $ 4,090,616     $ 3,793,637  
             
Total liabilities, noncontrolling interests and shareholders’ equity       $ 11,486,153     $ 10,515,812  
                     
             
Validus Holdings, Ltd.

Non-GAAP Financial Measures

Consolidated Statements of Operations - Underwriting Income Format

For the three and nine months ended September 30, 2016 and 2015

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

 

             
        Three Months Ended September 30,   Nine Months Ended September 30,
(Dollars in thousands)       2016   2015   2016   2015
Underwriting revenues                    
Gross premiums written       $ 372,418     $ 402,509     $ 2,309,251     $ 2,247,901  
Reinsurance premiums ceded       (45,006 )   (48,810 )   (249,070 )   (295,553 )
Net premiums written       327,412     353,699     2,060,181     1,952,348  
Change in unearned premiums       236,363     201,312     (351,415 )   (248,759 )
Net premiums earned       563,775     555,011     1,708,766     1,703,589  
Other insurance related income       919     3,496     2,400     5,144  
Total underwriting revenues       564,694     558,507     1,711,166     1,708,733  
                     
Underwriting deductions                    
Losses and loss expenses       258,394     256,010     789,971     763,085  
Policy acquisition costs       113,434     105,039     328,593     307,773  
General and administrative expenses       82,443     96,886     258,339     265,146  
Share compensation expenses       10,501     9,983     32,465     28,279  
Total underwriting deductions       464,772     467,918     1,409,368     1,364,283  
                     
Underwriting income       $ 99,922     $ 90,589     $ 301,798     $ 344,450  
                     
Net investment income       43,514     31,572     112,232     96,212  
Finance expenses       (14,521 )   (18,512 )   (43,890 )   (58,161 )
Dividends on preferred shares       (2,252 )       (2,252 )    
Tax expense       (1,830 )   (2,018 )   (1,418 )   (7,132 )
Loss from operating affiliates           (7,963 )   (23 )   (2,241 )
(Income) attributable to AlphaCat investors       (5,564 )   (1,438 )   (16,278 )   (1,438 )
Net operating (income) attributable to noncontrolling interest       (36,672 )   (26,467 )   (95,294 )   (67,336 )
Net operating income available to Validus common shareholders       $ 82,597     $ 65,763     $ 254,875     $ 304,354  
                     
Net realized gains (losses) on investments       4,397     (1,187 )   6,537     5,226  
Change in net unrealized gains on investments       5,459     3,916     84,331     2,467  
Income (loss) from investment affiliate       453     2,482     (4,249 )   5,542  
Foreign exchange (losses) gains       (766 )   (2,592 )   11,765     (9,528 )
Other loss       (1,529 )   (1,970 )   (773 )   (2,578 )
Net (income) loss attributable to noncontrolling interest       (767 )   238     (869 )   368  
Net income available to Validus common shareholders       $ 89,844     $ 66,650     $ 351,617     $ 305,851  
                     
Selected ratios:                    
Ratio of net to gross premiums written       87.9 %   87.9 %   89.2 %   86.9 %
                     
Losses and loss expenses ratio       45.8 %   46.1 %   46.2 %   44.8 %
                     
Policy acquisition costs ratio       20.1 %   18.9 %   19.2 %   18.1 %
General and administrative expenses ratio (a)       16.5 %   19.3 %   17.1 %   17.2 %
Expense ratio       36.6 %   38.2 %   36.3 %   35.3 %
                     
Combined ratio       82.4 %   84.3 %   82.5 %   80.1 %
                             
(a)   The general and administrative expense ratio includes share compensation expenses.
     
             
Validus Holdings, Ltd.

Segment Information

For the three and nine months ended September 30, 2016 and 2015

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

 

             
Validus Re Segment       Three Months Ended September 30,   Nine Months Ended September 30,
        2016   2015   2016   2015
Underwriting revenues                    
Gross premiums written       $ 94,741     $ 103,297     $ 1,072,219     $ 1,112,410  
Reinsurance premiums ceded       (15,967 )   (15,846 )   (111,658 )   (149,001 )
Net premiums written       78,774     87,451     960,561     963,409  
Change in unearned premiums       149,705     153,210     (241,129 )   (205,110 )
Net premiums earned       228,479     240,661     719,432     758,299  
Other insurance related income (loss)       58     2,569     (107 )   3,318  
Total underwriting revenues       228,537     243,230     719,325     761,617  
                     
Underwriting deductions                    
Losses and loss expenses       98,425     120,958     313,432     357,491  
Policy acquisition costs       42,837     42,989     127,660     128,909  
General and administrative expenses       17,528     19,964     52,579     58,254  
Share compensation expenses       2,695     2,691     8,371     7,665  
Total underwriting deductions       161,485     186,602     502,042     552,319  
                     
Underwriting income       $ 67,052     $ 56,628     $ 217,283     $ 209,298  
                                     
             
Talbot Segment       Three Months Ended September 30,   Nine Months Ended September 30,
        2016   2015   2016   2015
Underwriting revenues                    
Gross premiums written       $ 189,674     $ 226,025     $ 752,058     $ 789,148  
Reinsurance premiums ceded       (22,877 )   (35,823 )   (137,496 )   (164,144 )
Net premiums written       166,797     190,202     614,562     625,004  
Change in unearned premiums       32,258     15,942     (7,166 )   9,167  
Net premiums earned       199,055     206,144     607,396     634,171  
Other insurance related income       99     470     389     564  
Total underwriting revenues       199,154     206,614     607,785     634,735  
                     
Underwriting deductions                    
Losses and loss expenses       109,860     94,414     319,271     268,512  
Policy acquisition costs       46,488     44,575     134,444     141,338  
General and administrative expenses       32,333     43,292     109,929     115,341  
Share compensation expenses       3,163     3,214     9,955     9,195  
Total underwriting deductions       191,844     185,495     573,599     534,386  
                     
Underwriting income       $ 7,310     $ 21,119     $ 34,186     $ 100,349  
                                     
             
Western World Segment       Three Months Ended September 30,   Nine Months Ended September 30,
        2016   2015   2016   2015
Underwriting revenues                    
Gross premiums written       $ 85,260     $ 70,871     $ 236,190     $ 207,372  
Reinsurance premiums ceded       (6,202 )   (4,716 )   (15,347 )   (13,390 )
Net premiums written       79,058     66,155     220,843     193,982  
Change in unearned premiums       (8,260 )   (2,225 )   (22,890 )   2,948  
Net premiums earned       70,798     63,930     197,953     196,930  
Other insurance related income       219     248     696     787  
Total underwriting revenues       71,017     64,178     198,649     197,717  
                     
Underwriting deductions                    
Losses and loss expenses       45,748     40,810     129,623     138,098  
Policy acquisition costs       17,094     13,214     46,704     27,110  
General and administrative expenses       10,171     9,587     33,704     29,137  
Share compensation expenses       702     554     1,825     1,525  
Total underwriting deductions       73,715     64,165     211,856     195,870  
                     
Underwriting (loss) income       $ (2,698 )   $ 13     $ (13,207 )   $ 1,847  
                                     
             
Validus Holdings, Ltd.

Segment Information

For the three and nine months ended September 30, 2016 and 2015

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

 

             
AlphaCat Segment       Three Months Ended September 30,   Nine Months Ended September 30,
        2016   2015   2016   2015
Revenues                    
Third party       $ 7,025     $ 5,762     $ 14,843     $ 14,622  
Related party       1,373     1,738     2,592     4,058  
Total revenues       8,398     7,500     17,435     18,680  
                     
Expenses                    
General and administrative expenses       3,324     4,124     7,557     8,883  
Share compensation expenses       (107 )   141     167     440  
Finance expenses       31     2,297     914     9,259  
Foreign exchange gains (losses)       5     (11 )   17     (9 )
Total expenses       3,253     6,551     8,655     18,573  
                     
Income before investments from AlphaCat Funds and Sidecars       5,145     949     8,780     107  
                     
Investment income (loss) from AlphaCat Funds and Sidecars (a)                    
AlphaCat Sidecars       (72 )   1,445     593     3,886  
AlphaCat ILS Funds - Lower Risk (b)       2,321     2,274     6,903     5,454  
AlphaCat ILS Funds - Higher Risk (b)       2,479     1,807     5,607     6,608  
BetaCat ILS Funds       1,303     1,007     2,979     1,241  
PaCRe           (7,963 )   (23 )   (2,241 )
Total investment income (loss) from AlphaCat Funds and Sidecars       6,031     (1,430 )   16,059     14,948  
                     
Validus' share of AlphaCat income (loss)       $ 11,176     $ (481 )   $ 24,839     $ 15,055  
                                     
(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 September 30,   Nine Months Ended September 30,
        2016   2015   2016   2015
Investment income                    
Net investment income (a)       $ 41,071     $ 29,991     $ 105,843     $ 91,281  
                     
Operating expenses                    
General and administrative expenses       18,221     18,804     52,276     51,502  
Share compensation expenses       4,048     3,383     12,147     9,454  
Finance expenses (a)       14,317     15,143     42,637     45,623  
Dividends on preferred shares       2,252         2,252    

 
Tax expense       1,830     2,018     1,418     7,132  
Total operating expenses       40,668     39,348     110,730     113,711  
                     
Other items                    
Net realized gains (losses) on investments (a)       4,080     (1,233 )   5,514     5,051  
Change in net unrealized gains on investments (a)       4,652     1,765     81,782     2,508  
Income (loss) from investment affiliate       453     2,482     (4,249 )   5,542  
Foreign exchange (losses) gains (a)       (1,067 )   (2,331 )   11,628     (9,024 )
Other loss       (1,529 )   (1,970 )   (773 )   (2,578 )
Total other items       6,589     (1,287 )   93,902     1,499  
                     
Total Corporate and Investments       $ 6,992     $ (10,644 )   $ 89,015     $ (20,931 )
                                     
(a)   These items exclude the components which are included in Validus' share of AlphaCat and amounts which are consolidated from variable interest entities.
     
         
Validus Holdings, Ltd.

Non-GAAP Financial Measures Reconciliation

Book Value per Common Share, Book Value per Diluted Common Share and Book Value per Diluted Common Share plus Accumulated Dividends

As at September 30, 2016 and December 31, 2015

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

 

         
        September 30, 2016
(Dollars in thousands, except share and per share amounts)      

Equity
Amount

  Shares  

Exercise Price
(a)

 

Book Value
Per
Share

Book value per common share                    
Total shareholders' equity available to Validus common shareholders (b)       $ 3,717,620     79,443,030         $ 46.80
                     
Tangible book value per common share                   $ 42.85
                     
Book value per diluted common share                    
Total shareholders' equity available to Validus common shareholders (b)       3,717,620     79,443,030          
Assumed exercise of outstanding stock options (c)       689     30,050     $ 22.93      
Unvested restricted shares           2,868,227          
Book value per diluted common share       $ 3,718,309     82,341,307         $ 45.16
Adjustment for accumulated dividends                   11.21
Book value per diluted common share plus accumulated dividends                   $ 56.37
                     
Tangible book value per diluted common share                   $ 41.35
                       
         
        December 31, 2015
(Dollars in thousands, except share and per share amounts)      

Equity
Amount

  Shares  

Exercise Price
(a)

 

Book Value
Per
Share

Book value per common share                    
Total shareholders' equity available to Validus common shareholders (b)       $ 3,638,975     82,900,617         $ 43.90
                     
Tangible book value per common share                   $ 40.06
                     
Book value per diluted common share                    
Total shareholders' equity available to Validus common shareholders (b)       3,638,975     82,900,617          
Assumed exercise of outstanding stock options (c)       1,319     65,401     $ 20.17      
Unvested restricted shares           3,026,376          
Book value per diluted common share       $ 3,640,294     85,992,394         $ 42.33
Adjustment for accumulated dividends                   10.16
Book value per diluted common share plus accumulated dividends                   $ 52.49
                     
Tangible book value per diluted common share                   $ 38.63
                       
(a)   Weighted average exercise price for those stock options that have an exercise price lower than book value per share.
 
(b)   Total shareholders' equity available to Validus common shareholders excludes the liquidation value of the preferred shares of $150.0 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.
             
Validus Holdings, Ltd.

Non-GAAP Financial Measures Reconciliation

Underwriting Income, Net Operating Income available to Validus Common Shareholders, Net Operating Income per share available to Validus Common Shareholders and Annualized Net Operating Return on Average Equity

For the three and nine months ended September 30, 2016 and 2015

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

 

             
        Three Months Ended September 30,   Nine Months Ended September 30,
        2016   2015   2016   2015
Net income available to Validus common shareholders       $ 89,844     $ 66,650     $ 351,617     $ 305,851  
Adjustments for:                    
Net realized (gains) losses on investments       (4,397 )   1,187     (6,537 )   (5,226 )
Change in net unrealized gains on investments       (5,459 )   (3,916 )   (84,331 )   (2,467 )
(Loss) income from investment affiliate       (453 )   (2,482 )   4,249     (5,542 )
Foreign exchange losses (gains)       766     2,592     (11,765 )   9,528  
Other loss       1,529     1,970     773     2,578  
Net income (loss) attributable to noncontrolling interest       767     (238 )   869     (368 )
Net operating income available to Validus common shareholders       $ 82,597     $ 65,763     $ 254,875     $ 304,354  
Net investment income       (43,514 )   (31,572 )   (112,232 )   (96,212 )
Finance expenses       14,521     18,512     43,890     58,161  
Dividends on preferred shares       2,252         2,252      
Tax expense       1,830     2,018     1,418     7,132  
Loss from operating affiliates           7,963     23     2,241  
Income attributable to AlphaCat investors       5,564     1,438     16,278     1,438  
Net operating income attributable to noncontrolling interest       36,672     26,467     95,294     67,336  
Underwriting income       $ 99,922     $ 90,589     $ 301,798     $ 344,450  
                     
Net operating income available to Validus common shareholders       82,597     65,763     254,875     304,354  
Less: Dividends on outstanding warrants           (1,080 )       (3,566 )
Net operating income allocated to Validus, adjusted       $ 82,597     $ 64,683     $ 254,875     $ 300,788  
                     
Net income per share available to Validus common shareholders - diluted       $ 1.11     $ 0.78     $ 4.24     $ 3.52  
Adjustments for:                    
Net realized (gains) losses on investments       (0.05 )   0.01     (0.08 )   (0.06 )
Change in net unrealized gains on investments       (0.07 )   (0.05 )   (1.02 )   (0.03 )
(Loss) income from investment affiliate       (0.01 )   (0.03 )   0.05     (0.06 )
Foreign exchange losses (gains)       0.01     0.03     (0.14 )   0.11  
Other loss       0.02     0.03     0.01     0.02  
Net income (loss) attributable to noncontrolling interest       0.01         0.01      
Net operating income per share available to Validus common shareholders - diluted       $ 1.02     $ 0.77     $ 3.07     $ 3.50  
                     
Weighted average number of common shares and common share equivalents       81,244,556     85,629,494     82,938,624     86,841,927  
                     
Average shareholders' equity available to Validus common shareholders       $ 3,716,938     $ 3,651,151     $ 3,699,319     $ 3,642,656  
                     
Annualized net return on average equity       9.7 %   7.3 %   12.7 %   11.2 %
Annualized net operating return on average equity       8.9 %   7.2 %   9.2 %   11.1 %
                             

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.

Non-GAAP Financial Measures

In presenting the Company's results, management has included and discussed certain schedules containing net operating income (loss), net operating income (loss) available (attributable) to Validus common shareholders, net operating income (loss) per share, underwriting income (loss), annualized net operating return on average equity, book value per diluted common share and book value per diluted common share plus accumulated dividends that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. A reconciliation of underwriting income and net operating income (loss) available (attributable) to Validus common shareholders to net income (loss) available (attributable) to Validus common shareholders, the most comparable U.S. GAAP financial measure, is presented in the section above entitled “Underwriting Income, Net Operating Income available to Validus common shareholders, Net Operating Income per share available to Validus common shareholders and Annualized Net Operating Return on Average Equity”. A reconciliation of underwriting income and operating income to net income, the most comparable U.S. GAAP financial measure, is presented in the “Consolidated Statements of Operations” above.

The AlphaCat segment information is presented as an asset manager view and therefore is considered non-GAAP.

Underwriting income indicates the performance of the Company's core underwriting segments, excluding revenues and expenses such as net investment income (loss), finance expenses, net realized and change in unrealized gains (losses) on investments, foreign exchange gains (losses), other income (loss) and transaction expenses. The Company believes the reporting of underwriting income enhances the understanding of our results by highlighting the underlying profitability of the Company's core insurance and reinsurance business. Underwriting profitability is influenced significantly by earned premium growth, adequacy of the Company's pricing and loss frequency and severity.

Underwriting profitability over time 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. The Company believes that underwriting income provides investors with a valuable measure of profitability derived from underwriting activities.

Net operating income (loss), a non-GAAP financial measure, is defined as net income (loss) excluding net realized and change in net unrealized gains (losses) on investments, income (loss) from investment affiliate, foreign exchange gains (losses), other income (loss) and non-recurring items. Net operating income (loss) available (attributable) to Validus common shareholders is defined as above, but excludes operating income (loss) available (attributable) to noncontrolling interest and dividends on preferred shares. Reconciliations of these measures to net income (loss) and net income (loss) available (attributable) to Validus common shareholders, the most directly comparable GAAP measures, are presented at the end of this release.

Annualized net operating return on average equity is presented in the section above entitled “Underwriting Income, Net Operating Income available to Validus common shareholders, Net Operating Income per share available to Validus common shareholders and Annualized Net Operating Return on Average Equity.” A reconciliation of book value per diluted common share and book value per diluted common share plus accumulated dividends to book value per common share, the most comparable U.S. GAAP financial measure, is presented in the section above entitled “Book Value per Common Share, Book Value per Diluted Common Share and Book Value per Diluted Common Share plus Accumulated Dividends.” Net operating income (loss) is calculated based on net income (loss) excluding net realized gains (losses) on investments, change in net unrealized gains (losses) on investments, foreign exchange gains (losses), other income (loss), income (loss) from investment affiliates and non-recurring items. Realized gains (losses) from the sale of investments are driven by the timing of the disposition of investments, not by our operating performance. Gains (losses) arising from translation of non-US$ denominated balances are unrelated to our underlying business. Net operating income (loss) available (attributable) to Validus common shareholders is defined as net operating income (loss) as defined above, but excluding operating income (loss) available (attributable) to noncontrolling interest and dividends on preferred shares.

 

Source: Validus Holdings, Ltd.

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