Validus Re: Net Income $179 Million

August 14, 2010

Bermuda-based Validus Holdings, Ltd. reported net income of $179.8 million, or $1.44 per diluted common share for the three months ended June 30, 2010, compared with net income of $137.6 million, or $1.74 per diluted common share, for the three months ended June 30, 2009. Net income for the six months ended June 30, 2010 was $61.4 million, or $0.48 per diluted common share compared with $232.5 million, or $2.94 per diluted common share, for the six months ended June 30, 2009.

Net operating income for the three months ended June 30, 2010 was $129.8 million, or $1.04 per diluted share, compared with net operating income of $110.4 million, or $1.40 per diluted common share, for the three months ended June 30, 2009. Net operating (loss) for the six months ended June 30, 2010 was ($6.6) million, or ($0.05) per diluted common share, compared with net operating income of $210.8 million, or $2.67 per diluted common share, for the six months ended June 30, 2009.

Net operating income, a non-GAAP financial measure, is defined as net income excluding net realized and unrealized gains or losses on investments, foreign exchange gains and losses and non-recurring items. Reconciliations of this measure to net income, the most directly comparable GAAP measure, are presented at the end of this release.

Ed Noonan, Chairman and Chief Executive Officer of Validus commented:

In the second quarter of 2010, we were able to grow our diluted book value per share including dividends by 6.5%. We also completed the re-underwriting and optimization of the reinsurance portfolio acquired from IPC in the second half of 2009. We are following through on our commitment to shareholders to manage capital actively and in the second quarter repurchased approximately $315.0 million of our common shares, which included 12.0 million common shares purchased pursuant to our modified Dutch auction tender offer. We close the quarter with a very strong balance sheet, including loss reserves with a high component of IBNR against our short-tail portfolio

Highlights for the second quarter include the following:

  • Gross premiums written for the three months ended June 30, 2010 were $516.9 million compared to $425.0 million for the three months ended June 30, 2009, an increase of $91.8 million, or 21.6%, primarily due to the IPC acquisition which closed in September 2009.
  • Net premiums earned for the three months ended June 30, 2010 were $437.9 million compared to $328.2 million for the three months ended June 30, 2009, an increase of $109.7 million, or 33.4%.
  • Underwriting income for the three months ended June 30, 2010 was $109.7 million compared to $92.2 million for the three months ended June 30, 2009, an increase of $17.5 million, or 19.0%. In the second quarter of 2010, the Company incurred $70.5 million of losses and loss expenses, gross of reinstatement premiums from Deepwater Horizon, Aban Pearl, the Perth hailstorms and the riots in Bangkok, Thailand.
  • Combined ratio of 74.9% which included $49.6 million of favorable prior year loss reserve development, benefiting the loss ratio by 11.3 percentage points.
  • Net operating income for the three months ended June 30, 2010 of $129.8 million compared to net operating income of $110.4 million for the three months ended June 30, 2009, an increase of $19.4 million, or 17.6%, reflecting increased underwriting and investment income.
  • Net income for the three months ended June 30, 2010 was $179.8 million compared to net income of $137.6 million for the three months ended June 30, 2009, an increase of $42.2 million, or 30.7%, reflecting an increase in net unrealized investment gains of $4.4 million, an increase in foreign exchange losses of $12.5 million, offset by an increase in net realized investment gains of $15.1 million.
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