EX-99.1 2 y56920aexv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
 

(VALIDUSRE LOGO)
FOR IMMEDIATE RELEASE
     
Contacts:
    
Investors:
  Media:
Validus Holdings, Ltd.
  Drew Brown / Jamie Tully
Jon Levenson, Senior Vice President
  Sand Verbinnen & Co.
+1-441-278-9000
  +1-212-687-8080
Jon.Levenson@Validusre.bm
    
 
  Roddy Watt / Francesca Tuckett
 
  College Hill
 
  +44 (0) 207-457-2020
VALIDUS ANNOUNCES FIRST QUARTER NET INCOME OF $66.5 MILLION,
ANNUALIZED RETURN ON AVERAGE EQUITY OF 13.5%
Diluted Book Value Per Share of $24.43 at March 31, 2008
Hamilton, Bermuda, May 1, 2008 — Validus Holdings Limited (“Validus”) (NYSE: VR) today reported net income for the quarter ended March 31, 2008 of $66.5 million, or $0.85 per diluted common share, compared with $56.7 million, or $0.94 per diluted common share, for the quarter ended March 31, 2007.
Net operating income for the first quarter of 2008 was $65.5 million, or $0.84 per diluted share, compared with $53.7 million, or $0.89 per diluted common share, for the quarter ended March 31, 2007.
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.
Operating results of Talbot have been included in the consolidated financial statements from the acquisition date of July 2, 2007. The Validus data for first three months of 2007 refers only to the company prior to its acquisition of Talbot. Further, the 2008 Validus data gives effect to the initial public offering which was consummated on July 30, 2007.
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
1

 

First quarter 2008 results
Consolidated operating highlights for the first quarter include the following:
  •   Gross premiums written increased by 38.0% to $521.6 million from $378.1 million, due to the addition of Talbot which added $201.8 million of gross premiums written and offset reduced gross premiums written in the Validus Re segment;
 
  •   Net premiums earned increased by 161.8% to $291.9 million from $111.5 million, due primarily to the addition of Talbot which added $148.2 million of net premiums earned;
 
  •   Combined ratio of 82.4% which included $41.5 million of incurred losses relating to significant first quarter property loss events (representing 14.2 percentage points of the consolidated 48.0% loss ratio), and $12.8 million of favorable prior year loss reserve development benefitting the loss ratio by 4.4 percentage points;
 
  •   Investment income increased by 94.9% to $36.0 million from $18.5 million primarily due to higher investment balances resulting from funds from operations and the addition of Talbot;
 
  •   Annualized return on average equity of 13.5% and annualized net operating return on average equity of 13.4%; and
 
  •   Net income increased by 17.1% to $66.5 million from $56.7 million, due to the addition of Talbot which added $16.0 million of net income and partially offset by higher corporate expenses;
Commenting on the first quarter of 2008 results, Ed Noonan, Chairman and Chief Executive Officer of Validus, stated: “We are pleased to report solid earnings and a 13.5% annualized return on average equity for the quarter. We benefited greatly in the quarter from our acquisition of Talbot which has allowed us to grow our gross premium written by 38.0% and more fully diversify our global short-tail underwriting platform. In a quarter which saw individual risk losses of over $5 billion in the global market and continued turmoil in the credit markets, reporting solid net income of $66.5 million and maintaining a conservative balance sheet is a significant achievement for our company.”
Validus Re Segment Results
Gross premiums written during the first quarter of 2008 were $331.0 million, a decrease of $47.0 million from $378.1 million in the first quarter of 2007. Gross premiums written were comprised of $203.1 million of property premiums, $84.0 million of marine premiums and $43.9 million of specialty premiums compared to $238.8 million of property premiums, $101.2 million of marine premiums and $38.1 million of specialty premiums in the first quarter of 2007. The decreases in property and marine premiums written were primarily driven by reduced market pricing; increased client retentions and reduced participation on certain property proportional treaties.
Net premiums earned for the first quarter of 2008 were $143.7 million compared to $111.5 million for the first quarter of 2007, an increase of $32.2 million or 28.8%. The increase in net premiums earned reflects the benefit of earning premiums written in 2007.
The combined ratio increased to 62.6% from 59.9% in the first quarter of 2007. This increase was primarily due to a 3.2 percentage point increase in the Company’s acquisition cost ratio. The loss ratio of 41.0% included $30.2 million relating to significant first quarter property loss events (equal to 21.0 loss ratio points) and included favorable prior year loss reserve development of $4.9 million (representing 3.4 percentage points on the loss ratio).
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
2

 

Talbot Segment Results
Gross premiums written during the first quarter of 2008 were $201.8 million, comprised of $40.4 million of property premiums, $86.2 million of marine premiums and $75.2 million of specialty premiums. Net premiums earned for the first quarter of 2008 were $148.2 million. The combined ratio was 94.0%, comprised of a loss ratio of 54.7%, a policy acquisition costs ratio of 24.5% and a general and administrative expense ratio of 14.8%. The loss ratio of 54.7% included $11.3 million relating to significant first quarter property loss events (equal to 7.6 loss ratio points) and included favorable prior year loss reserve development of $7.8 million (representing 5.3 percentage points on the loss ratio).
Corporate Segment Results
Corporate results are comprised of executive and board expenses, internal and external audit expenses, interest and costs from the junior subordinated deferrable debentures, and other costs relating to the Company as a whole. General and administrative expenses for the three months ended March 31, 2008 were $6.8 million compared to $3.9 million for the three months ended March 31, 2007. Stock compensation expenses for the three months ended March 31, 2008 were $4.3 million compared to $1.2 million for the three months ended March 31, 2007, which primarily reflects the added cost from the Employee Seller shares issued to Talbot employees as part of the acquisition.
Investments
Net investment income increased in the first quarter of 2008 due to higher investment balances resulting from the addition of Talbot and from funds generated from operations.
Investment income was $36.0 million in the first quarter of 2008 compared to $18.5 million in the first quarter of 2007, an increase of 94.9%, or $17.5 million. Net realized gains on investments were $7.7 million, compared to $46,000 of net realized gains in the first quarter of 2007.
The Company recorded $15.0 million of net unrealized losses in the three months ended March 31, 2008. The Company recorded $1.6 million net unrealized gains in the three months ended March 31, 2007. The net unrealized losses in the three months ended March 31, 2008 were primarily the result of market value declines in the Company’s holding of AAA-rated Alt-A non-Agency residential mortgage-backed securities (“RMBS’). At March 31, 2008, the Company held $117.8 million of Alt-A residential mortgage-backed securities. The Company’s Alt-A non-Agency RMBS allocation consists entirely of AAA securities.
Finance Expenses
Finance expenses for the quarter ended March 31, 2008 were $21.5 million, increasing from $4.4 million in the three months ended March 31, 2007. Finance expenses consist of interest due on outstanding debt, the amortization of debt offering expenses and offering discount fees relating to the Company’s credit facility, and third-party capital costs for Talbot. The increase partially relates to the inclusion of Talbot in the consolidated financial statements effective with the beginning of the third quarter of 2007. Talbot’s third-party capital costs were $13.0 million in the first quarter of 2008. In addition, the increase in finance expenses is partially attributable to the issuance of junior subordinated deferrable debentures in the second quarter of 2007.
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
3

 

Shareholders’ Equity and Capitalization
At March 31, 2008, shareholders’ equity was $1.99 billion. Diluted book value per common share was $24.43 and book value per common share was $26.82 compared to $24.00 and $26.08, respectively, at December 31, 2007. Diluted book value per share is a non-GAAP financial measure. A reconciliation of this measure to shareholders’ equity is presented at the end of this release.
Total capitalization at March 31, 2008 was $2.34 billion, including $350.0 million of junior subordinated deferrable debentures.
On April 29, 2008, the Company announced that it had repurchased $45.7 million principal amount of its Junior Subordinated Deferrable Interest Debentures (“JSDs”) from an unaffiliated financial institution in a privately negotiated transaction. The aggregate price of the repurchased JSDs was $36.5 million, plus accrued and unpaid interest of $0.5 million. The transaction will result in a second quarter gain and an increase in book value of $8.8 million equal to $0.10 per diluted common share in the quarter ended June 30, 2008.
Conference Call
We will host a conference call for analysts and investors on May 2, 2008 at 10:00 AM (Eastern) to discuss the first quarter financial results and related matters. The conference call can be accessed via telephone by dialing (800) 860-2442 (toll-free U.S.) or 412-858-4600 (international). 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 19, 2008 by dialing 877-344-7529 and entering the pass code 417507# .
This conference call will also be available through a live audio webcast accessible through the Investor Information section of our website at www.validusre.bm. In addition, a financial supplement relating to our financial results for the quarter ended March 31, 2008 is available in the Investor Information section of our website.
About Validus Holdings, Ltd.
Validus Holdings, Ltd. is a provider of reinsurance and insurance, conducting its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. (“Validus Re”) and Talbot Holdings Ltd. (“Talbot”). Validus Re is a Bermuda based reinsurer focused on short-tail lines of reinsurance. Talbot is the Bermuda parent of the specialty insurance group primarily operating within the Lloyd’s insurance market through Syndicate 1183.
Validus Re is rated “A-” (“Excellent”) by A.M. Best. For more information about Validus, visit our website at www.validusre.bm.
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
4

 

Validus Holdings, Ltd.
Consolidated Balance Sheets
As at March 31, 2008 (unaudited) and December 31, 2007
(expressed in thousands of U.S. dollars, except share amounts)
                 
    March 31,     December 31,  
    2008     2007  
 
                
Assets
                
Fixed maturities, at fair value
   $ 2,759,884     $ 2,411,398  
Short-term investments, at fair value
     133,711       250,623  
Cash and cash equivalents
     347,347       444,698  
 
            
Total cash and investments
     3,240,942       3,106,719  
Premiums receivable
     572,175       401,241  
Deferred acquisition costs
     135,789       105,562  
Prepaid reinsurance premiums
     71,855       22,817  
Securities lending collateral
     191,256       164,324  
Loss reserves recoverable
     118,575       134,404  
Paid losses recoverable
     7,008       7,810  
Taxes recoverable
     —       3,325  
Goodwill and other intangible assets
     150,732       151,772  
Accrued investment income
     22,187       19,960  
Other assets
     25,119       26,290  
 
            
 
                
Total assets
   $ 4,535,638     $ 4,144,224  
 
            
 
                
Liabilities
                
Reserve for losses and loss expenses
   $ 977,236     $ 926,117  
Unearned premiums
     750,257       557,344  
Reinsurance balances payables
     88,356       36,848  
Securities lending payable
     192,468       164,324  
Taxes payable
     1,531       —  
Deferred taxation
     13,421       16,663  
Net payable for investments purchased
     52,307       31,426  
Accounts payable and accrued expenses
     119,404       126,702  
Debentures payable
     350,000       350,000  
 
            
 
                
Total liabilities
     2,544,980       2,209,424  
 
                
Commitments and contingent liabilities
                
 
                
Shareholders’ equity
                
Ordinary shares
     12,990       12,985  
Additional paid-in capital
     1,391,303       1,384,604  
Accumulated other comprehensive income (loss)
     18       (49 )
Retained earnings
     586,347       537,260  
 
            
 
                
Total shareholders’ equity
     1,990,658       1,934,800  
 
            
 
                
Total liabilities and shareholders’ equity
   $ 4,535,638     $ 4,144,224  
 
            
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
5

 

Validus Holdings, Ltd.
Consolidated Statements of Operations and Comprehensive Income
For the three months March 31, 2008 and 2007
(expressed in thousands of U.S. dollars, except share amounts)
                 
    Three months ended  
    March 31,     March 31,  
    2008     2007  
 
                
Revenues
                
Gross premiums written
   $ 521,594     $ 378,070  
Reinsurance premiums ceded
     (84,900 )     (30,958 )
 
            
Net premiums written
     436,694       347,112  
Change in unearned premiums
     (144,830 )     (235,620 )
 
            
Net premiums earned
     291,864       111,492  
Net investment income
     36,043       18,497  
Net realized gains on investments
     7,744       46  
Net unrealized (losses) gains on investments
     (14,977 )     1,643  
Other income
     935       —  
Foreign exchange gains
     8,179       1,389  
 
            
Total revenues
     329,788       133,067  
 
                
Expenses
                
Losses and loss expense
     140,024       46,487  
Policy acquisition costs
     56,701       12,219  
General and administrative expenses
     37,107       11,227  
Share compensation expense
     6,535       1,945  
Finance expenses
     21,517       4,441  
 
            
Total expenses
     261,884       76,319  
 
            
 
                
Net income before taxes
     67,904       56,748  
Taxes
     1,429       —  
 
            
 
                
Net income
   $ 66,475     $ 56,748  
 
            
 
                
Comprehensive income
                
Foreign currency translation adjustments
     67       —  
 
            
 
                
Comprehensive income
   $ 66,542     $ 56,748  
 
            
 
                
Earnings per share
                
Weighted average number of common shares and common share equivalents outstanding
                
Basic
     74,209,371       58,482,601  
Diluted
     78,329,727       60,215,392  
 
                
Basic earnings per share
   $ 0.87     $ 0.97  
 
            
Diluted earnings per share
   $ 0.85     $ 0.94  
 
            
 
                
Cash dividends declared per share
   $ 0.20     $ 0.00  
 
            
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
6

 

Validus Holdings, Ltd.
Consolidated Statements of Operations
For the three months ended March 31, 2008
(expressed in thousands of U.S. dollars, except share amounts)
                                 
    Three months ended March 31, 2008  
                    Corporate        
                    &        
    Validus Re     Talbot     Elimination     Total  
 
                                
Gross premiums written
   $ 331,048     $ 201,794     $ (11,248 )   $ 521,594  
Reinsurance premiums ceded
     (23,743 )     (72,405 )     11,248       (84,900 )
 
                        
Net premiums written
     307,305       129,389       —       436,694  
Change in unearned premiums
     (163,651 )     18,821       —       (144,830 )
 
                        
Net premiums earned
     143,654       148,210       —       291,864  
Losses and loss expense
     58,915       81,109       —       140,024  
Policy acquisition costs
     20,403       36,298       —       56,701  
General and administrative expenses
     9,379       20,923       6,805       37,107  
Stock compensation expenses
     1,226       976       4,333       6,535  
 
                        
 
                                
Underwriting income (loss)
   $ 53,731     $ 8,904     $ (11,138 )   $ 51,497  
 
                        
 
                                
Net investment income
     25,027       10,982       34       36,043  
Other income
     —       935       —       935  
Finance expenses
     (354 )     (13,220 )     (7,943 )     (21,517 )
 
                        
 
                                
Operating income (loss) before taxes
     78,404       7,601       (19,047 )     66,958  
Taxes
     28       1,401       —       1,429  
 
                        
 
                                
Net operating income (loss)
   $ 78,376     $ 6,200     $ (19,047 )   $ 65,529  
 
                        
 
                                
Net realized gains on investments
     2,077       5,667       —       7,744  
Net unrealized (losses) gains on investments
     (18,612 )     3,635       —       (14,977 )
Foreign exchange gains
     7,675       504       —       8,179  
 
                        
 
                                
Net income (loss)
   $ 69,516     $ 16,006     $ (19,047 )   $ 66,475  
 
                        
 
                                
Loss and loss expense ratio
     41.0 %     54.7 %             48.0 %
Policy acquisition cost ratio
     14.2 %     24.5 %             19.4 %
General and administrative expense ratio
     7.4 %     14.8 %             15.0 %
 
                          
Expense ratio
     21.6 %     39.3 %             34.4 %
 
                          
 
                                
Combined ratio
     62.6 %     94.0 %             82.4 %
 
                          
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
7

 

Validus Holdings, Ltd.
Consolidated Statements of Operations
For the three months ended March 31, 2007
(expressed in thousands of U.S. dollars, except share amounts)
                                 
    Three months ended March 31, 2007  
                    Corporate        
                    &        
    Validus Re     Talbot     Elimination     Total  
 
                                
Gross premiums written
   $ 378,070     $ —     $ —     $ 378,070  
Reinsurance premiums ceded
     (30,958 )     —       —       (30,958 )
 
                        
Net premiums written
     347,112       —       —       347,112  
Change in unearned premiums
     (235,620 )     —       —       (235,620 )
 
                        
Net premiums earned
     111,492       —       —       111,492  
Losses and loss expense
     46,487       —       —       46,487  
Policy acquisition costs
     12,219       —       —       12,219  
General and administrative expenses
     7,292       —       3,935       11,227  
Stock compensation expenses
     765       —       1,180       1,945  
 
                        
 
                                
Underwriting income (loss)
   $ 44,729     $ —     $ (5,115 )   $ 39,614  
 
                        
 
                                
Net investment income
     18,496       —       1       18,497  
Other income
     —       —       —       —  
Finance expenses
     (856 )     —       (3,585 )     (4,441 )
 
                        
 
                                
Operating income (loss) before taxes
     62,369       —       (8,699 )     53,670  
Taxes
     —       —       —       —  
 
                        
 
                                
Net operating income (loss)
   $ 62,369     $ —     $ (8,699 )   $ 53,670  
 
                        
 
                                
Net realized gains on investments
     46       —       —       46  
Net unrealized gains on investments
     1,643       —       —       1,643  
Foreign exchange gains
     1,389       —       —       1,389  
 
                        
 
                                
Net income (loss)
   $ 65,447     $ —     $ (8,699 )   $ 56,748  
 
                        
 
                                
Loss and loss expense ratio
     41.7 %     0.0 %             41.7 %
Policy acquisition cost ratio
     11.0 %     0.0 %             11.0 %
General and administrative expense ratio
     7.2 %     0.0 %             11.8 %
 
                          
Expense ratio
     18.2 %     0.0 %             22.8 %
 
                          
 
                                
Combined ratio
     59.9 %     0.0 %             64.5 %
 
                          
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
8

 

Validus Holdings, Ltd.
Non-GAAP Financial Measure Reconciliation
Net Operating Income and Annualized Net Operating Return on Average Equity
For the three months ended March 31, 2008 and 2007
(expressed in thousands of U.S. dollars, except share amounts)
                 
    Three months ended  
    March 31,     March 31,  
    2008     2007  
 
                
Net income
   $ 66,475     $ 56,748  
 
                
Adjustment for net realized gains on investments
     (7,744 )     (46 )
Adjustment for net unrealized (gains) on investments
     14,977       (1,643 )
Adjustment for foreign exchange gains
     (8,179 )     (1,389 )
 
            
 
                
Net operating income
   $ 65,529     $ 53,670  
 
            
 
                
Net income per share — diluted
   $ 0.85     $ 0.94  
 
                
Adjustment for net realized gains on investments
     (0.10 )     (0.00 )
Adjustment for net unrealized (gains) on investments
     0.19       (0.03 )
Adjustment for foreign exchange gains
     (0.10 )     (0.02 )
 
            
 
                
Net operating income per share — diluted
   $ 0.84     $ 0.89  
 
            
 
                
Weighted average number of common shares and common share equivalents — diluted
     78,329,727       60,215,392  
 
                
Net operating income
   $ 65,529     $ 53,670  
 
                
Average shareholders’ equity
     1,962,729       1,221,870  
 
                
Annualized net operating return on average equity
     13.4 %     17.6 %
 
            
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
9

 

Validus Holdings, Ltd.
Non-GAAP Financial Measure Reconciliation
Diluted Book Value Per Share
As at March 31, 2008 and December 31, 2007
(expressed in thousands of U.S. dollars, except share amounts)
                                 
    At March 31, 2008  
    Equity             Exercise     Book value  
    amount     Shares     Price     per share  
 
                                
Book value per common share
                                
Total shareholders’ equity
   $ 1,990,658       74,230,411             $ 26.82  
 
                              
 
                                
Diluted book value per common share
                                
Total shareholders’ equity
   $ 1,990,658       74,230,411                  
Assumed exercise of outstanding warrants
     152,545       8,693,216     $ 17.55          
Assumed exercise of outstanding options
     52,683       2,893,968     $ 18.20          
Unvested restricted shares
     —       4,058,486                  
 
                            
 
                                
Diluted book value per common share
   $ 2,195,886       89,876,081             $ 24.43  
 
                          
                                 
    At December 31, 2007  
    Equity             Exercise     Book value  
    amount     Shares     Price     per share  
 
                                
Book value per common share
                                
Total shareholders’ equity
   $ 1,934,800       74,199,836             $ 26.08  
 
                              
 
                                
Diluted book value per common share
                                
Total shareholders’ equity
   $ 1,934,800       74,199,836                  
Assumed exercise of outstanding warrants
     152,869       8,711,729     $ 17.55          
Assumed exercise of outstanding options
     49,196       2,761,176     $ 17.82          
Unvested restricted shares
     —       3,367,961                  
 
                            
 
                                
Diluted book value per common share
   $ 2,136,865       89,040,702             $ 24.00  
 
                          
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
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Cautionary Note Regarding Forward-Looking Statements
All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements. This report may include forward-looking statements, both with respect to us and our 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. 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 our risk management and loss limitation methods; 4) cyclicality of demand and pricing in the insurance and reinsurance market; 5) our limited operating history; 6) the effect on our investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and other factors; 7) adequacy of our 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 reinsurance brokers; 12) our 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, interest rates and foreign currency exchange rates); 14) the integration of Talbot or other businesses we may acquire or new business ventures we may start; 15) acts of terrorism or outbreak of war; and 16) availability of reinsurance and retrocessional coverage.
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 or elsewhere, including the Risk Factors included in our Annual Report on form 10-K. Any forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. We undertake 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), annualized net operating return on average equity and diluted book value per share 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 net operating income to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled “Net Operating Income and Annualized Net Operating Return on Average Equity”. Annualized net operating return on average equity is presented in the section below entitled “Net Operating Income and Annualized Net Operating Return on Average Equity”. A reconciliation of diluted book value per share to book value per share, the most comparable U.S. GAAP financial measure, is presented in the section below entitled “Diluted Book Value Per Share”. Net operating income is calculated based on net income (loss) excluding net realized gains (losses), net unrealized gains (losses) on investments, gains (losses) arising from translation of non-US$ denominated balances 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.
Validus Holdings Limited, 19 Par-la-Ville Road, Hamilton, Bermuda HM11
Tel: 441.278.9000 Fax: 441.278.9090
www.validusre.bm
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