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.More details about these risks and uncertainties can be found in the company’s most recent annual report on Form 10-K and quarterly report on Form 10-Q both as filed with the U.S. Securities and Exchange Commission. Management will also refer to certain non-GAAP financial measures when describing the company’s performance. These items are reconciled and explained in our earnings release and financial supplement. With that, I’ll turn the call over to Ed Noonan. Ed Noonan Thank you, John, and good morning. And thank you all for taking the time to join us today. 2011 was a devastating year with catastrophe loss of roughly $110 billion across the industry, almost on par with 2005 when Katrina, Rita and Wilma occurred. For Validus, 2011 was in many ways our most fulfilling year. Despite being one of the largest international catastrophe reinsurer, we would deliberately underweight in all of the territories affected by the year’s cat events. For Validus Re and Talbot underwriters generated underwriting income in the year with combined ratios below 100%, despite one of the worst years in history for their respective markets. We had net operating income of $52.3 million for the year and grow our book value plus dividends by slightly less than 1%. We also finished the year with our balance sheet in great shape. Our reserves are strong, our assets clean, high quality and short duration, and our overall capital adequacy actually improved going into 2012. The January 1 renewals were extremely successful and we have plenty of capacity available for opportunities for remainder of the year. A year ago, we were restricting our cat business as rates were coming off, since then we’ve had three quarters of strong growth which we expect to continue over the coming months. There is a great deal to cover in the quarter and I’ll provide more commentary on losses, market conditions and our view of the market after Jeff covers our financial results.
So, with that, let me turn the call over to Jeff Consolino.Jeff Consolino Thanks, Ed, and thank you all for joining the call today. In particular, I’d like to welcome those of you who became more significant shareholders at Validus in 2011, and also those analysts who resumed coverage on our company after being restricted in 2011, welcome back. Before I provide an overview of the fourth quarter 2011 results of operations and our financial position, I’d like to talk about the year we had in 2011 from the financial point of view. As Ed mentioned, 2011 delivered at least $108 billion in catastrophe and man-made disaster losses to the worldwide reinsurance and insurance industries. This is the largest cat bill for the industry since the Katrina, Rita and Wilma year of 2005 which hit $120 billion. Despite this, in 2011 we recorded a combined ratio of 99.4%, which means despite the repeated and severe worldwide losses in the year, our underwriting was profitable for the year. We reported net income of $21.3 million for the year and by doing so, we have now produced the full year profit in each of the six years in which we have been in business. We were profitable in 2011 despite booking $633.9 million of notable catastrophe losses and loss expenses for the year, and providing additional $78.0 million as reserve of development on events. You can look this up yourself, but we believe only four companies in the 19 company Bermuda and reinsurance peer group that we track, have been profitable in each of the six years in this span of time. As with 2006, we’ve been able to focus on growing our business rather than grappling with losses, capital adequacy or potential rating exchanges. For the fourth quarter of 2011, net income to Validus common shareholders was $27.3 million, this with $0.25 per diluted common share. Net operating income to Validus common shareholders was $23.4 million or $0.21 per diluted share.
Diluted book value per common share at quarter end was $32.28, we paid a $0.25 per share dividend in the quarter and so this is annualized growth of 3.7% in diluted book value per share plus accumulated dividends through the quarter.By getting out of 2011, without reducing our shareholders financial net worth, our track record since formation is at 13.3% compounded annual growth and diluted book value per share plus accumulated dividends, since our IPO this is 12.7%. Speaking in more detail to the quarter’s results of operations, in the fourth quarter of 2011 gross premiums written on a consolidated basis increased by 7.6% to $278.3 million, this is an increase of $19.5 million over the prior year’s quarter in dollar terms. Read the rest of this transcript for free on seekingalpha.com