Validus Q3 Net Surges to $136.5 Million

Bermuda-based Validus Holdings Limited reported net income for the quarter ended September 30, 2007 of $136.5 million, or $1.90 per diluted common share, compared with $69.7 million, or $1.19 per diluted common share, for the quarter ended September 30, 2006.

Net income for the nine months ended September 30, 2007 was $264.0 million, or $4.11 per diluted share, compared with $114.0 million, or $1.95 per diluted share, for the corresponding period in 2006.

Net operating income, which excludes capital gains/losses, for the third quarter of 2007 was $127.9 million, or $1.78 per diluted share, compared with $69.5 million, or $1.18 per diluted common share, for the quarter ended September 30, 2006. Net operating income for the nine months ended September 30, 2007 was $256.8 million, or $4.00 per diluted share, compared with $114.0 million, or $1.94 per diluted common share, for the nine months ended September 30, 2006.

The bulletin also noted the following operating highlights for the third quarter:
— Gross premiums written increased by 110.5 percent to $245.3 million from $116.5 million, due primarily to the addition of Talbot which added $143.0 million of gross premiums written;
— Net premiums written increased by 205.8 percent to $237.4 million from $77.6 million, due primarily to the addition of Talbot which added $142.4 million of net premiums written;
— Net premiums earned increased by 219.5 percent to $295.5 million from $92.5 million, due primarily to the addition of Talbot which added $143.5 million of net premiums earned;
— Combined ratio of 63.0 percent, which included $20.9 million in incurred losses relating to the July UK floods (representing 7.1 percentage points of the consolidated 29.5 percent loss ratio);
— Investment income increased by 124.7 percent to $36.6 million from $16.3 million primarily due to higher investment balances resulting from funds from operations and the addition of Talbot;
— Annualized return on average equity of 35.1 percent and annualized net operating return on average equity of 32.9 percent; and
— Net income increased by 95.9 percent to $136.5 million from $69.7 million, due partly to the addition of Talbot which added $43.1 million of net income;

Consolidated operating highlights for the nine months ended September 30, 2007 included the following:
— Gross premiums written increased by 67.8 percent to $797.6 million from $475.3 million, due partly to the addition of Talbot which added $143.0 million of gross premiums written premium;
— Net premiums written increased by 78.0 percent to $732.0 million from $411.2 million, due partly to the addition of Talbot which added $142.4 million of net premiums written;
— Net premiums earned increased by 168.2 percent to $540.0 million from $201.4 million, due partly to the addition of Talbot which added $143.5 million of net premiums earned;
— Combined ratio of 61.4 percent, which included $30.9 million in incurred losses relating to the June and July UK floods (representing 5.7 percentage points of the consolidated 32.7 percent loss ratio);
— Investment income increased by 85.3 percent to $74.8 million from $40.4 million primarily due to higher investment balances resulting from funds from operations and the addition of Talbot;
— Annualized return on average equity of 25.3 percent and annualized net operating return on average equity of 24.6 percent; and
— Net income increased by 131.5 percent to $264.0 million from $114.0 million, due partly to the addition of Talbot which added $43.1 million of net income;

Chairman and CEO Ed Noonan commented: “We are pleased to report an annualized net operating return on average equity in the quarter of 32.9 percent. Our results in the quarter reflect strong underwriting results across almost all lines of business in both Bermuda and London. Our results also reflect the benefits of improved capital utilization through our acquisition of Talbot, with the exposure and earnings diversification that it brings to the Validus group.”

Additional information and a replay of the investors and analysts conference call may be obtained on the Company’s web site at: www.validusre.bm. In addition, a financial supplement relating for the quarter ended September 30, 2007 is available in the Investor Information section of the web site.

Source: Validus Holdings, Ltd.