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Validus Announces Record Second Quarter 2012 Net Operating Income Of $171.2 Million

Validus Holdings, Ltd. (“Validus” or the “Company”) (NYSE: VR) today reported net income available to Validus of $167.6 million, or $1.62 per diluted common share for the three months ended June 30, 2012, compared to $109.9 million, or $1.05 per diluted common share, for the three months ended June 30, 2011. Net income available to Validus for the six months ended June 30, 2012 was $291.9 million, or $2.80 per diluted common share compared to net (loss) attributable to Validus of $(62.5) million, or $(0.68) per diluted common share for the six months ended June 30, 2011.

Net operating income available to Validus for the three months ended June 30, 2012 was $171.2 million, or $1.65 per diluted common share, compared to $81.8 million, or $0.78 per diluted common share, for the three months ended June 30, 2011. Net operating income available to Validus for the six months ended June 30, 2012 was $264.1 million, or $2.53 per diluted common share, compared to a net operating (loss) attributable to Validus of $(83.7) million, or $(0.89) per diluted common share, for the six months ended June 30, 2011.

Net operating income (loss), a non-GAAP financial measure, is defined as net income (loss) excluding net realized and unrealized gains (losses) on investments, foreign exchange gains (losses) and non-recurring items. Net operating income (loss) available (attributable) to Validus is defined as net operating income (loss) as defined above, but excluding income (loss) available (attributable) to noncontrolling interest. Reconciliations of these measures to net income (loss) and net income (loss) available (attributable) to Validus, the most directly comparable GAAP measures, are presented at the end of this release.

Net income available to Validus, net operating income available to Validus and diluted earnings per share by Validus entity for the three months ended June 30, 2012 were as follows:
 

 
  Diluted Earnings  

 
  Diluted Operating

Net Income (loss)
Per Share

Net Operating
Earnings Per
Available to Available to

Income Available

Share Available to
  Validus   Validus  

to Validus
 

Validus
(Expressed in millions of U.S. dollars, except per share information)
Validus Re $ 159.8 $ 156.3
PaCRe (5.0 ) (0.1 )
Other AlphaCat Companies 12.1   11.9  
Validus Re consolidated 166.9 168.1
Talbot 29.1 31.5
Corporate & Eliminations   (28.4 )       (28.4 )    
Total $ 167.6   $ 1.62   $ 171.2   $ 1.65

Commenting on the financial results for the three months ended June 30, 2012, Ed Noonan, Validus' Chairman and Chief Executive Officer stated: “I am pleased to report record second quarter net operating income for Validus in the amount of $171.2 million which equates to an annualized operating return on average equity of 19.5%. These results and growth in diluted book value per share of 4.3% inclusive of dividends reflect the strength of the Validus franchise in our core short tail classes of reinsurance and insurance and our active capital management. All three of our segments - Validus Re, Talbot and AlphaCat - are firing on all cylinders."

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