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Business Services Industry

Validus Announces First Quarter Net Income of $66.5 Million, Annualized Return on Average Equity of 13.5%

Business Wire, May 1, 2008

Diluted Book Value Per Share of $24.43 at March 31, 2008

HAMILTON, Bermuda -- 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.

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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.

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 benefiting 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).

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).

Business Services Industry

Validus Announces First Quarter Net Income of $66.5 Million, Annualized Return on Average Equity of 13.5%

Business Wire, May 1, 2008

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