www.validusholdings.com
Investor
Presentation
Third Quarter 2017
Validus Holdings, Ltd.
This presentation may include forward-looking statements, both with respect to Validus Holdings, Ltd. (“Validus” or the “Company”) 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, many of which are beyond the Company’s control. 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 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 our most recent reports on Form 10-K and Form 10-
Q and other documents on file with or furnished to the U.S. Securities and Exchange Commission (“SEC”). Any forward-looking statements
made in this presentation 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. Except as required by law, we undertake no obligation to update publicly or revise any forward-looking
statement, whether as a result of new information, future developments or otherwise.
Cautionary Note Regarding Forward-Looking Statements
2
• Since its founding in 2005, Validus has expanded its platform to include a U.S.
specialty insurer, Lloyd’s syndicate, third party reinsurance asset manager and global
reinsurer
• The diversified portfolio as measured by gross premium written is comprised of 47%
insurance and 53% reinsurance for the 12 months ended September 30, 2017
• Business plan since formation has been to focus on short-tail lines with strategic
diversification into select longer-tail classes
• Maintained a focus on underwriting profits in conjunction with a strong balance sheet
• Profitable in all 11 years of operation, 2006 through 2016
• Delivered outstanding financial results since 2007 IPO as measured by growth in book
value per diluted common share plus accumulated dividends
• Active capital management, returning $4.0 billion to investors through repurchases
and dividends from Validus’ 2007 IPO through November 1, 2017
Validus Group – Key Accomplishments
3
Validus Group of Companies
• U.S. specialty property and
casualty underwriter
• Focused on Excess and Surplus
Lines in the U.S. and Agriculture
with the addition of CRS in 2017
• Pioneer in the binding authority
business
• 19% of last 12 months GPW as of
September 30, 2017
• Investment advisor
• Focused on managing capital for
third parties and Validus in ILS and
other property catastrophe and
specialty reinsurance investments
• AUM of $2.9 billion(1) as of
October 1, 2017
• 11% of last 12 months GPW as of
September 30, 2017
• Lloyd’s of London Syndicate
• Focused on short-tail specialty
lines in the Lloyd’s of London
market
• Market leader in War & Terror,
Energy and Marine Classes
• 32% of last 12 months GPW as of
September 30, 2017
• Global reinsurer
• Focused primarily on treaty
reinsurance, including property
cat
• Specializing in Property CAT XOL,
Marine, and Specialty, including
Agriculture
• 38% of last 12 months GPW as of
September 30, 2017
Validus Research – Provides Analytical Support Across All Platforms
1) Assets under management (AUM) of $2.9 billion includes $2.7 billion of third party investment and $0.2 billion of related party investment.
• U.S. specialty internal MGA
• Writes brokerage and program business on behalf of Talbot and Western
World
4
Validus Research – Depth of Resources
• Research
– Validus Group’s thought leader in catastrophe risk quantification and model development
– Post-Doctoral expertise in physical and data sciences including seismology, atmospheric
sciences, hydrology, structural engineering, and statistics
– Responsibility for the Validus View of Risk – derived from independent
research/validation with the agility to reflect latest science and experience in a responsive
way
• Catastrophe Modeling
– Rigorous analyses/investigations of insurance/reinsurance transactions with a heavy focus
on exposure data quality
– Over 60 years of combined catastrophe modeling experience applying and evolving
industry best practice
• Software Engineering
– Continuous evolution of our core underwriting, portfolio and risk management systems,
including the Validus Capital Allocation and Pricing System (VCAPS)
5
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
09/30/06 09/30/07 09/30/08 09/30/09 09/30/10 09/30/11 09/30/12 09/30/13 09/30/14 09/30/15 09/30/16 09/30/17
U
SD
M
iil
lio
ns
Total shareholders' equity available to Validus AlphaCat AUM
Market Footprint of $6.8 Billion USD:
Shareholders’ Equity Available to Validus + AlphaCat AUM
Acquisition of
Talbot
07/02/2007
Validus IPO
07/30/2007
Acquisition of
IPC
09/04/2009
Founding of
AlphaCat
07/29/2008
Launch of
AlphaCat
Sidecars
05/23/2011
Acquisition of
Longhorn Re
04/25/2013
Launch of
AlphaCat
Opportunities
Fund
01/01/ 2016
Acquisition of
Western World
10/02/2014
Acquisition of
Flagstone
11/30/2012
Launch of
BetaCat Fund
10/01/2014
6
Acquisition of
Crop Risk
Services
05/01/2017
Launch of
AlphaCat
Advantage
Fund
01/01/2013
Global Operating Platform
7
Global operations with offices in Bermuda, United States, United Kingdom,
Australia, Canada, Chile, Singapore, Switzerland and United Arab Emirates
Atlanta | Boston | Decatur | Dubai | Hamilton | London | Miami | New York |
Parsippany | Santiago | Scottsdale | Singapore | Sydney | Waterloo | Zurich
10.7% Compound Annual Growth in Diluted BVPS Plus Accumulated
Dividends from Company Formation Through September 30, 2017
Growth in Book Value Per Diluted Share Plus Accumulated Dividends
8
16.93
19.73
24.00 23.78
29.68
32.98 32.28
35.22 36.23
39.65
42.33
44.97 43.13
0.80
1.60
2.48 3.48
4.48
7.68
8.88
10.16
11.56
12.70
16.93
19.73
24.00 24.58
31.28
35.46 35.76
39.70
43.91
48.53
52.49
56.53 55.83
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Diluted BVPS Cumulative Dividends Diluted BVPS plus Accumulated Dividends
1) Source: SNL Financial.
2) VR starting point is Pro Forma diluted BVPS at September 30, 2007 of $20.89 as disclosed in the VR IPO Prospectus.
3) Book value per diluted share calculation includes impact of quarterly and special dividends.
Compound Growth in Book Value per Diluted Share Versus Peers
From VR IPO Through September 30, 2017
9
13.8%
10.8%
10.1% 9.9% 9.6%
7.5% 7.2%
5.4%
-1.1%
-2.0%
3.0%
8.0%
13.0%
18.0%
ACGL RNR VR RE AXS AHL Y AGII XL
Gross Premium Written of $2.8 Billion – Last twelve months to September 30, 2017
1) $2.8 billion consolidated gross premiums written net of $29 million of intersegment eliminations.
By Operating SegmentBy Class of Business
Mix of Business
10
Specialty
36%
Other
Property
18%
Property
Cat XOL 14%
Marine
12%
AlphaCat
11%
Liability
9%
Validus Re
38%
Talbot
32%
Western
World
19%
AlphaCat
11%
Business Mix Development from 2010 to Today
1) Business mix based on gross premiums written net of intersegment eliminations.
2) All data points are as of December 31, except for 2017 which is for the last twelve months as of September 30, 2017.
11
Mix Shift = More Specialty, Less Cat XOL and Marine
23% 23% 20%
16% 19% 19% 19% 18%
28% 28%
28%
26% 21% 16% 13% 14%
1% 1%
1%
6%
5%
7% 10% 11%
26% 27% 30%
24%
24%
18% 14% 12%
22% 21% 21%
28%
29%
31% 35% 36%
2%
9% 9% 9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 (2)
Other Property Property Cat XOL AlphaCat Marine Specialty Liability
Growth and Diversification
Gross Premiums Written in $US Millions – 2006 to Year to Date (“YTD”) 2017
1) 2014 Gross Premiums Written for Western World cover the time period from the acquisition by Validus on October 2, 2014 through
December 31, 2014.
2) The table above excludes inter-segment eliminations.
3) All data points are as of December 31, except for 2017 which is as of September 30.
12
541
702 688 768
1,089 1,114 1,132
1,227 1,119 1,127 1,111 1,071
287
709
920
981 1,014
1,079
1,092
1,102 1,019 971
703
12
76 22
131
127 176 270
298
65
279 323
460
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Validus Re Talbot AlphaCat Western World
Adapting to Market Demand
1) 2006 was the first full year of operations for Validus.
2) GPW for 2006 is for the full year. GPW for 2017 is for the last twelve months as of September 30, 2017.
3) The acquisition of Crop Risk Services closed on May 1, 2017.
Growth and Diversification in VR’s Business Since Inception
Reinsurance
100%
2006 GPW(1)
$541 million
2017 GPW(2)
$2,847 million
• Significant growth in GPW through
acquisitions of:
– 2007 – Talbot
– 2009 – 2013: IPCRe, Flagstone,
Longhorn Re
– 2014 – Western World
– 2017 – Crop Risk Services (3)
• Improved portfolio balance in
insurance through Talbot and Western
World acquisitions
• AlphaCat established in 2008 to
capitalize on the insurance linked
securities market
• Access to multiple sources of capital
to respond to business opportunities
as presented
13
Reinsurance
53%
Insurance
47%
Business Mix – Reinsurance and Insurance
1) 2006 was the first full year of operations for Validus.
2) The above table includes inter-segment eliminations.
3) All data points are as of December 31, except for 2017 which is as of September 30.
Gross Premiums Written in $US Millions
14
541
725 779
861
1,193 1,311 1,259
1,505
1,341 1,394
1,501 1,458
264
584
760
798
814 907
896
1,018
1,164
1,148
1,050
541
989
1,363
1,621
1,991
2,125 2,166
2,401
2,359
2,558
2,649
2,508
0
500
1,000
1,500
2,000
2,500
3,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Insurance Reinsurance
Insurance Underwriting Income – Validus Versus Peers
1) Source: SEC filings and other public disclosures.
2) Validus insurance underwriting income includes Western World and Talbot’s direct insurance and facultative reinsurance.
3) AGII is excluded as they do not disclose underwriting income as insurance / reinsurance.
4) RNR is excluded as they are deemed to be all reinsurance.
Insurance Underwriting Income in $US Millions: 2012 - 2016
15
710
470
396
308
239
73
(558)
(600)
(400)
(200)
0
200
400
600
800
XL Y VR AXS ACGL AHL RE
Underwriting Income – Validus Versus Peers
1) Source: SEC filings and other public disclosures.
2) AGII is excluded as they do not disclose underwriting income as insurance / reinsurance.
3) RNR is deemed to be all reinsurance.
Underwriting Income in $US Millions: 2012 - 2016
16
3,837
1,857
2,488
1,736
1,533
1,722
1,426
992
(558)
710
396
470 239
308
73
(500)
0
500
1,000
1,500
2,000
2,500
3,000
RE XL RNR VR Y ACGL AXS AHL
Reinsurance Income Insurance Income
Gross premiums written of
$524 million
(Increases of 84% at Western
World, 517% at AlphaCat
and 62% at Validus Re)
(27.3)% ROAE and
(27.7)% net operating ROAE
1) Validus diluted book value per share, operating income, operating (loss) earnings per share and operating ROAE are non-GAAP
financial measures. For further details, please refer to the “Non-GAAP Financial Measures” section included in Part I, Item 2 of the
Company’s most recent Form 10-Q.
2) ROAE and net operating ROAE calculations are annualized.
3) Combined ratio excludes AlphaCat, which includes results attributable to AlphaCat’s third party investors and noncontrolling interests.
138.8% combined ratio(3)
(152.8% at Validus Re, 136.6%
at Talbot and 114.5% at
Western World)
Net (loss) attributable
to Validus common
shareholders of
$(250) million and
diluted (loss) per
share of $(3.17)
Book value per
diluted share of $43.13
(6.3)% change in book value
per diluted common share
(inclusive of dividends) in
Q3 2017
Q3 2017 Financial Results
Net operating (loss)
attributable to Validus
common shareholders of
$(254) million and
diluted operating (loss) per
share of $(3.22)
17
Validus Re – Highlights
Gross Premium Written - $1.1 Billion
last twelve months to September 30, 2017
Validus Re Overview
1) Validus Re financial information is based on reporting of the Validus Re segment which does not include AlphaCat.
2) YTD figures are as of September 30, 2017.
3) Other Specialty class includes Aerospace & Aviation, Casualty, Composite, Contingency, Crisis Management, Financial, Life and A&H, Technical
Lines, Terrorism, Trade Credit, and Workers' Compensation. Other Property class includes Per Risk XOL and Proportional.
• Validus Re formed in October 2005 as the first operating
subsidiary of Validus Holdings, Ltd.
• Headquartered in Bermuda with overseas offices in Asia,
Continental Europe and Latin America
• Global provider focused on treaty reinsurance including
– Property catastrophe
– Marine and energy
– Specialty lines
• A.M. Best rating of A (Stable); S&P Rating of A (Stable)
18
Property Cat
XOL
35%
Other
Property
10%
Other
Specialty
20%
Agriculture
15%
Marine
10%
Casualty
10%
278
92
413
240
16
228
443
387
281
268
(2)
-$50
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
YTD
Net Underwriting Income (Loss) in $US Millions
Validus Re – Business Mix Development
19
1) All data points are as of December 31, except for 2017 which is for the last twelve months as of September 30, 2017.
GPW mix by product line
51% 52% 52% 50%
45%
37%
31%
35%
20% 18% 15%
10%
10%
11%
11%
10%
1% 1%
1% 14%
13% 24%
22% 15%
7% 8%
9%
10%
15%
14%
18%
20%
21% 21% 23%
16% 17% 13%
10%
10%
1%
8% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 (1)
Property - Cat XOL Other Property Agriculture Other Specialty Marine Casualty
AlphaCat – Highlights
AlphaCat Overview
Assets Under Management
Expressed in $US Millions
1) AlphaCat financial information is based on reporting of the AlphaCat segment.
2) AlphaCat began operations in 2008, and became a stand alone segment in 2012.
Q3 2017 Performance
• Generated management fee revenue of $6 million
• Validus’ share of AlphaCat (loss) of $(28) million
• Investment advisor managing capital for third parties
and Validus in ILS and other property catastrophe and
specialty reinsurance investments
• AlphaCat brand was established in 2008
• In 2011, AlphaCat opened access to external investors
• As of October 1, 2017, AlphaCat had $2.9 billion in
assets under management
20
1,534
2,060
2,499 2,692
347
327
243
168
-
500
1,000
1,500
2,000
2,500
3,000
3,500
1-Jan-15 1-Jan-16 1-Jan-17 1-Oct-17
Third Party Related Party
Talbot – Highlights
Gross Premium Written - $921 Million last
twelve months to September 30, 2017
Talbot Overview
Net Underwriting Income (Loss) in $US Millions
• Founded in 2001 and acquired by Validus in 2007
• Significant competitive position
• Focus is on short-tail business with meaningful market
position in targeted classes
• By design, Talbot is underweight in Casualty, Casualty
Treaty and Property Treaty classes
• Headquartered in London with strategically placed
offices in international hubs – Dubai, Miami, New York,
Santiago, Singapore and Sydney
1) Talbot financial information is based on reporting of the Talbot segment.
2) YTD 2017 figures are as of September 30, 2017.
3) Energy is Downstream Energy and Power. Other includes Accident & Health and Contingency lines.
21
Marine
26%
Property
23%Political
Lines
22%
Energy
9%
Aviation
9%
Fin. Lines
6%
Other
5%
79
46
79 72
11
85
169
108
136
33
(45)
-$100
-$50
$0
$50
$100
$150
$200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
YTD
Western World – Highlights
Gross Premium Written - $547 Million
last twelve months to September 30, 2017
Western World Overview
1) Western World financial information is based on reporting of the Western World segment.
• Founded in 1964 and acquired by Validus in 2014
• Focused on US small enterprise business - E&S and
admitted
• Headquartered in Parsippany with offices across the
United States in Atlanta, Boston, Decatur, New York
and Scottsdale
• Business plan since acquisition has been to focus on
contract binding with strategic diversification into
other specialty classes of business including:
– Property: Contract and Brokerage
– Flood
– Homeowners’ non-admitted
– Financial Institutions, D&O and E&O
– Cyber
– Acquired Crop Risk Services to write agricultural
business: multi peril and private products
• Western World Integrated Platform (“WWIP”) is a
technological competitive advantage
22
Property 24%
Liability
46%
Agriculture
30%
1) A full explanation and disclaimer is contained in the notes on other financial and exposure measures found in the Appendix hereto.
2) 1:100 year PML as a % of capital and shareholders’ equity is based on United States Hurricane PML.
3) Validus Re net maximum zonal aggregate includes Validus share of AlphaCat limits, excludes Western World and the limits supported by
the Funds at Lloyd’s provided by Validus Re.
4) Peak US hurricane PML down 22% as compared to the January 1, 2013 portfolio, the historical high point.
Transparent Risk Disclosure – October 1, 2017 Portfolio
Peak Zone PML
23
Peak US Hurricane PML Down 22% Since 2013
Consolidated (Validus Re, Talbot and Western World) Estimated Net Loss
Zones Perils
20 year return
period
50 year return
period
100 year return
period
250 year return
period
Validus Re Net
Maximum Zonal
Aggregate
United States Hurricane 272,688 531,267 755,747 1,002,419 1,769,395
California Earthquake 70,238 193,206 367,941 622,943 1,622,881
Europe Windstorm 87,734 194,143 402,578 689,535 1,444,805
Japan Earthquake 56,205 146,415 199,550 314,354 1,019,641
Japan Typhoon 73,039 153,150 262,024 371,557 953,033
1:100 year PML equal to 16.0% of quarter end capital, 19.2% of shareholders’ equity available to Validus
Net Probable Maximum Loss (1:100) by Zone and Peril Compared to Total Capitalization
Substantial Capital Margin Above Risk Appetites
1) A full explanation and disclaimer is contained in the notes on other financial and exposure measures found in the Appendix hereto.
2) Consolidated (Validus Re, Talbot and Western World) estimated net loss 1:100 year PML as a % of total capitalization.
3) Total capitalization equals total shareholder's equity less noncontrolling interests plus Senior Notes and Junior Subordinated Deferrable
Debentures.
4) All data points are as at January 1, except 2017 which is as at October 1.
1:100 PML Internal Risk Appetite
24
0%
5%
10%
15%
20%
25%
2012 2013 2014 2015 2016 2017
United States Hurricane California Earthquake Europe Windstorm Japan Earthquake Japan Typhoon
Realistic Disaster Scenarios
25
Consolidated (Validus Re, Talbot and Western World) Estimated Exposures to Specified Loss Scenarios - As of July 1, 2017
(Expressed in millions of U.S. Dollars, except share and per share information)
Type Catastrophe Scenarios Description
Estimated
Consolidated
(Validus Re, Talbot
and Western World)
Net Loss
% of latest 12
Months Consolidated
Net Premiums
Earned
Marine Loss of major complex Total loss to all platforms and bridge links of a major oil complex $ 173.3 7.0%
Marine
Major cruise vessel
incident US-owned cruise vessel sunk or severely damaged 147.3 6.0%
Marine Marine collision Fully laden tanker collides with a cruise vessel in US waters 111.6 4.5%
Political Risks South East Asia
Chinese economy has a "hard landing" with sharp fall in growth rates;
regional contagion 177.4 7.2%
Political Risks Russia
The Russian corporate sector struggles to deal with the effects of crashing
commodity and stock prices 62.2 2.5%
Political Risks Turkey Severe economic crisis in Turkey due to political upheaval 50.1 2.0%
Political Risks Nigeria
Severe economic, political and social crisis in Nigeria leads to widespread civil
unrest 49.8 2.0%
Political Risks Middle East US and Iran escalate into military confrontation; regional contagion 88.2 3.6%
Aviation Aviation collision Collision of two aircraft over a major city 34.0 1.4%
Satellite Solar flare
Large single or sequence of proton flares results in loss to all satellites in
synchronous orbit 54.7 2.2%
Satellite Generic defect Undetected defect in a number of operational satellites causing major loss 29.4 1.2%
Terrorism Rockefeller Center Midtown Manhattan suffers a 2-tonne conventional bomb blast 96.2 3.9%
Terrorism
One World Trade
Center Lower Manhattan suffers a 2-tonne conventional bomb blast 45.3 1.8%
Liability Professional lines Failure or collapse of a major corporation 42.4 1.7%
Liability Professional lines UK pensions mis-selling 19.1 0.8%
Cyber
Major data security
breach
Simultaneous cyber-attacks on organizations within one industrial sector; loss
of customer data 74.6 3.0%
1) A full explanation and disclaimer is contained in the notes on other financial and exposure measures found in the Appendix hereto.
Active Capital Management
Expressed in millions of U.S. Dollars
1) Inception to date capital management includes $14 million of dividends on preferred shares.
2) Inception to date and YTD 2017 capital management actions of $4.0 billion is through November 1, 2017.
Capital Management Inception to
Date of $4.0 Billion(1)
• On Feb 3, 2015 Validus reset the
common share repurchase
authorization to $750 million
• Remaining authorization of $302
million
• On February 9, 2017 Validus
increased the quarterly dividend to
$0.38 per share
• 2017 YTD capital management of
$122 million
― Common share repurchases of $18
million
― Common share dividends of $94
million
― Preferred share dividends of $10
million
Capital Management
26
2,723
1,038
231
Special Dividend
Common Share Dividends
Share Repurchases
Managed Investment Portfolio at September 30, 2017
• Total managed investments, cash and
cash equivalents and restricted cash of
$7.0 billion
– Emphasis on the preservation of
invested assets
– Provision of sufficient liquidity for
prompt payment of claims
– Comprehensive portfolio disclosure
• Average portfolio rating of AA-
• Duration of 2.04 years
• Q3 2017 annualized investment yield:
2.23% (Q3 2016: 2.58%)
1) Validus has $10.0 billion total investments, cash and cash equivalents and restricted cash inclusive of investments supporting AlphaCat
collateralized business.
27
21.1%
13.8%
11.9%
8.6%
7.5%
6.8%
6.7%
5.6%
4.5%
4.2%
3.7%
3.0%
1.3%
0.7%
0.6%
0% 5% 10% 15% 20% 25%
U.S. corporate
Cash
Agency RMBS
U.S. Govt. and Agency
ABS
Other
Bank loans
Non-U.S. corporate
CMBS
Non-U.S. Govt. and Agency
Short term
State and local
Investment affiliates
Restricted cash
Non-Agency RMBS
Invested Asset Strategy and Performance
• In 2014, Validus set out to increase portfolio yield without increasing tail risk. Validus’ Chief Investment
Officer worked with our risk and financial modeling teams to establish a new portfolio allocation
• Our managed portfolio is conservatively positioned and asset allocation is continually evaluated to
balance capital preservation and liquidity needs with reasonable return expectations
28
1.91% 1.90% 1.79% 2.34% 2.58%
2.25% 2.27% 2.35% 2.23%
1.89% 1.92% 1.91%
1.99%
2.15%
2.24%
2.36% 2.36%
2.28%
1.20%
1.40%
1.60%
1.80%
2.00%
2.20%
2.40%
2.60%
2.80%
Sep-30-15 Dec-31-15 Mar-31-16 Jun-30-16 Sep-30-16 Dec-31-16 Mar-31-17 Jun-30-17 Sep-30-17
Quarter Annualized Yield Rolling 4-Quarter Annualized Yield
Loss Reserves at September 30, 2017
• Gross reserves for losses and loss
expenses of $4.9 billion
• $3.6 billion net of reinsurance
• Q3 notable losses - Hurricane Harvey of
$146 million, Hurricane Irma of $163
million and Hurricane Maria of $58 million
• No non-notable losses in Q3
• Favorable reserve development during Q3
2017:
– Validus Re: $48 million
– AlphaCat: $24 million
– Talbot: $3 million
– Western World: $nil
Net Favorable Reserve Development
Expressed in $US Millions
Validus Gross Reserve Mix
1) Q3 notable losses include Validus’ share of net losses and loss expenses less the net impact on premiums earned, including
reinstatement premiums assumed and ceded, and the net impact of accelerating unearned premiums assumed and ceded.
2) Notable loss events are loss events which aggregate to over $30 million on a consolidated basis. Non-notable loss events are loss
events which aggregate to over $15 million but less than $30 million on a consolidated basis.
29
Case
Reserves
26%
IBNR
Reserves
74%
202
33 42
51 38
59
14
20 5
11
5
16
$0
$50
$100
$150
$200
$250
2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Non-event Event
97
47 45 38
3
49
(10) (9) (6) (2)
29
90
68
30
20
96
83
58
20
72
91
41
95
43
91
175
223
259
306
216
($15)
$35
$85
$135
$185
$235
$285
$335
2012 2013 2014 2015 2016
Before 2010 2010 2011 2012 2013 2014 2015
Development of Prior Period Loss Reserves by Accident Year
Development of Prior Period Loss Reserves in $US Millions – 2012 to 2016
30
• Global insurance and reinsurance business
• Size and scale to compete effectively in targeted markets
• Four distinct yet complementary operating segments
• Focused on short-tail lines with strategic diversification into select longer-tail classes
• Profitable in all 11 years of operation
• Short duration, highly liquid, conservative balance sheet
• Transparent risk disclosure
Continue to be Well Positioned for 2017 and Beyond
31
Investor Presentation
Appendix
Validus Holdings, Ltd.
Gross premiums written of
$2,649 million
(Increases of 54% at AlphaCat
and 16% at Western World)
9.7% ROAE and
8.7% net operating ROAE
1) Validus diluted book value per share, operating income, operating earnings per share and operating ROAE are non-GAAP financial
measures. For further details, please refer to the “Non-GAAP Financial Measures” section included in Part II, Item 7 of the Company’s
most recent Form 10-K.
84.2% combined ratio
(71.6% at Validus Re, 95.9% at
Talbot and 107.6% at
Western World)
Net income available to
Validus common
shareholders of
$359 million and
diluted earnings per
share of $4.36
Book value
per diluted share of $44.97
9.5% growth (including
dividends) in 2016
Full Year 2016 Financial Results
Net operating income
available to Validus common
shareholders of $321
million and
diluted operating earnings
per share of $3.90
33
Selected Market Information at September 30, 2017
Exchange/Ticker:
Share Price:
Primary Shares Outstanding:
Primary Market Capitalization:
Annual Dividend/Yield:
NYSE / “VR”
$49.21
79,457,253
$3.9 billion
$1.52 per share (3.09%)
1) Validus increased its quarterly common share dividend to $0.38 from $0.35 on February 9, 2017. 34
Corn
48%
Soybean
23%
Wheat
10%
Cotton
7%
Other
12%
IL
13%
TX
12%
MN
7%
WI
7%ND
6%IN
6%
SD
5%
OH
5%
OK
5%
AR
4%
KS
4%
NE
4%
Other
20%
Key Highlights
• Stratford Insurance Company, a Western World
subsidiary, is the Standard Reinsurance Agreement
(“SRA”) holder and Approved Insurance Provider (“AIP”)
• #9 ranked U.S. crop writer with 5.1% market share
• Scaled business with 1,170 agents across 36 states
• Successful joint marketing partnership with ADM grain
division
• Strong value proposition for farmers and knowledge of
their needs
• Strong management team with significant experience
and relationships in the crop industry
• Operational excellence in claims, marketing and
origination
• Leading technology, data and analytics integration to
improve service and efficiency
1) RY represents Reinsurance Year.
2) Mix figures represent MPCI for RY2016, source ADM CRS Management.
3) CRS #9 US crop writer ranking and market share data represents RY2016, source National Crop Insurance Services.
Crop Mix RY 2016
(2)
Company Overview
• First established in 1982 as ASI Agriserve Inc. (“ASI”)
• In 2010, ADM acquired 100% of the shares of ASI and the
company became ADM Crop Risk Services
• Acquired by Validus Group on May 1, 2017
• Primary crop insurance general agent headquartered in
Decatur, IL with over 400 employees
• 86% of gross premiums written (“GPW”) is multi-peril crop
insurance (“MPCI”) and 14% private crop insurance
products
• Total 2016 GPW of $555.0 million
Geography Mix RY 2016
(2))
35
Crop Risk Services – Highlights
Net Loss Estimates
Net loss estimates and zonal aggregates are before income tax, net of reinstatement premiums, and net of reinsurance and retrocessional recoveries. The estimates set forth
above are based on an Occurrence basis on assumptions that are inherently subject to significant uncertainties and contingencies. These uncertainties and contingencies can
affect actual losses and could cause actual losses to differ materially from those expressed above. In particular, modeled loss estimates do not necessarily accurately predict
actual losses, and may significantly mis-estimate actual losses. Such estimates, therefore, should not be considered as a representation of actual losses.
The Company has developed the estimates of losses expected from certain catastrophes for its portfolio of property, marine, workers’ compensation, and personal accident
contracts using commercially available catastrophe models such as RMS, AIR and EQECAT, which are applied and adjusted by the Company. These estimates include
assumptions regarding the location, size and magnitude of an event, the frequency of events, the construction type and damageability of property in a zone, policy terms
and conditions and the cost of rebuilding property in a zone, among other assumptions. These assumptions will evolve following any actual event. Accordingly, if the
estimates and assumptions that are entered into the risk model are incorrect, or if the risk model proves to be an inaccurate forecasting tool, the losses the Company might
incur from an actual catastrophe could be materially higher than its expectation of losses generated from modeled catastrophe scenarios. In addition, many risks such as
second-event covers, aggregate excess of loss, or attritional loss components cannot be fully evaluated using the vendor models. Further, the Company cannot assure that
such third party models are free of defects in the modeling logic or in the software code.
The Company has presented the Company Realistic Disaster Scenarios for non-natural catastrophe events. Twice yearly, Lloyd's syndicates' including the Company's Talbot
Syndicate 1183 are required to provide details of their potential exposures to specific disaster scenarios. Lloyd’s makes its updated Realistic Disaster Scenarios (RDS)
guidance available to the market annually. The RDS scenario specification document for 2016 can be accessed at the RDS part of the Lloyd's public website:
http://www.lloyds.com/the-market/tools-and-resources/research/exposure-management/realistic-disaster-scenarios.
The Consolidated Net Premiums Earned used in the calculation represent the latest 12 months of net premiums earned up to September 30, 2017.
Modeling catastrophe threat scenarios is a complex exercise involving numerous variables and is inherently subject to significant uncertainties and contingencies. These
uncertainties and contingencies can affect actual losses and could cause actual losses incurred by the Company to differ materially from those expressed above. Should an
event occur, the modeled outcomes may prove inadequate, possibly materially so. This may occur for a number of reasons including, legal requirements, model deficiency,
non-modeled risks or data inaccuracies.
Notes on Other Financial and Exposure Measures
36
Notes on Other Financial and Exposure Measures - Continued
A modeled outcome of net loss from a single event also relies in significant part on the reinsurance and retrocession arrangements in place, or expected to be in place at the
time of the analysis, and may change during the year. Modeled outcomes assume that the reinsurance and retrocession in place responds as expected with minimal
reinsurance failure or dispute. Reinsurance is purchased to match the original exposure as far as possible, but it is possible for there to be a mismatch or gap in cover which
could result in higher than modeled losses to the Company. In addition, many parts of the reinsurance program are purchased with limited reinstatements and, therefore, the
number of claims or events which may be recovered from second or subsequent events is limited. It should also be noted that renewal dates of the reinsurance program do
not necessarily coincide with those of the inwards business written. Where original business is not protected by risks attaching reinsurance or retrocession programs, the
programs could expire resulting in an increase in the possible net loss retained by the Company.
Investors should not rely on the information set forth in this presentation when considering investment in the Company. The information contained in this presentation has
not been audited nor has it been subject to independent verification. The estimates set forth above speak only as of the date of this presentation and the Company
undertakes no obligation to update or revise such information to reflect the occurrence of future events. The events presented reflect a specific set of prescribed calculations
and do not necessarily reflect all events that may impact the Company.
37
Street Address: 29 Richmond Road
Pembroke, Bermuda HM 08
Mailing Address: Suite 1790 48 Par-la-Ville Road
Hamilton, Bermuda HM 11
Telephone: +1-441-278-9000
Email: investor.relations@validusholdings.com
For more information on our company, products and
management team please visit our website at:
www.validusholdings.com