Validus Announces Quarterly Net Operating Income of $73.6 Million, or $0.86 Per Diluted Common Share

Validus Holdings, Ltd. (“Validus” or the “Company”) (NYSE:VR) today reported net income available to Validus of $66.7 million, or $0.78 per diluted common share, for the three months ended September 30, 2015, compared to $39.7 million, or $0.41 per diluted common share, for the three months ended September 30, 2014. Net income available to Validus was $304.1 million, or $3.50 per diluted common share, for the nine months ended September 30, 2015, compared to $355.4 million, or $3.70 per diluted common share, for the nine months ended September 30, 2014.

Net operating income available to Validus was $73.6 million, or $0.86 per diluted common share, for the three months ended September 30, 2015, compared to $84.9 million, or $0.90 per diluted common share, for the three months ended September 30, 2014. Net operating income available to Validus was $304.8 million, or $3.51 per diluted common share, for the nine months ended September 30, 2015, compared to $357.4 million, or $3.73 per diluted common share, for the nine months ended September 30, 2014.

Book value per diluted common share at September 30, 2015 was $41.89, reflecting quarterly growth of 1.9% inclusive of dividends.

Commenting on the financial results for the three months ended September 30, 2015, Validus' Chairman and CEO Ed Noonan stated:

“Validus delivered 1.9% growth in book value per diluted share inclusive of dividends during the quarter, a meaningful accomplishment given the significant investment market volatility and loss activity including the Tianjin, China industrial explosion and earthquake in Chile. Validus continues to benefit from our core principles of strong underwriting and analytical discipline and a rock solid balance sheet, foundations which serve us well as we continue our evolution as a global provider of insurance and reinsurance.”

Net income and net operating income available to Validus, net earnings and net operating earnings per diluted common share available to Validus, by segment for the three months ended September 30, 2015 were as follows:

Net operating income (loss), a non-GAAP financial measure, is defined as net income (loss) excluding net realized and change in net unrealized gains (losses) on investments, income (loss) from investment affiliate, foreign exchange gains (losses), other income (loss) and non-recurring items. Net operating income (loss) available (attributable) to Validus is defined as above, but excludes 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.

Third Quarter 2015 Results

Highlights for the third quarter are as follows:

• Gross premiums written for the three months ended September 30, 2015 were $401.7 million compared to $359.0 million for the three months ended September 30, 2014, an increase of $42.7 million, or 11.9%. The increase was primarily due to the contribution from Western World and an increase in AlphaCat gross written premium. This increase was offset by decreases at both Validus Re and Talbot.
• Net premiums earned for the three months ended September 30, 2015 were $555.5 million compared to $494.7 million for the three months ended September 30, 2014, an increase of $60.8 million, or 12.3%.
• Underwriting income for the three months ended September 30, 2015 was $86.1 million compared to $92.1 million for the three months ended September 30, 2014, a decrease of $6.0 million, or 6.5%.
• Combined ratio for the three months ended September 30, 2015 was 84.5% which included $91.5 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 16.5 percentage points compared to a combined ratio for the three months ended September 30, 2014 of 81.4% which included $55.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 11.2 percentage points. The favorable development of $91.5 million for the three months ended September 30, 2015 is primarily from non-event reserves in the amount of $60.8 million. Favorable development on prior years from event specific reserves was $30.7 million.
• Net operating income available to Validus for the three months ended September 30, 2015 was $73.6 million compared to $84.9 million for the three months ended September 30, 2014, a decrease of $11.3 million, or 13.3%.
• Net income available to Validus for the three months ended September 30, 2015 was $66.7 million compared to $39.7 million for the three months ended September 30, 2014, an increase of $27.0 million, or 68.0%.
• Annualized return on average equity of 7.3% and annualized net operating return on average equity of 8.1% for the three months ended September 30, 2015 compared to 4.2% and 9.1%, respectively, for the three months ended September 30, 2014.

Notable and Non-Notable Loss Events

During the three months ended September 30, 2015, the Company incurred a notable loss event, defined as consolidated losses which aggregate to a threshold greater than or equal to $30.0 million. The event, the August 12th explosion in the port of Tianjin, China, resulted in an estimated loss to the Company of $47.8 million or 8.6 percentage points of the loss ratio. Net of $3.9 million of reinstatement premiums, the net loss was $43.9 million. During the three months ended September 30, 2014, the Company incurred a loss of $28.1 million related to the Tripoli airport which subsequently developed into a notable loss event during the three months ended December 31, 2014.

During the three months ended September 30, 2015, the Company incurred a non-notable loss event, defined as consolidated losses which aggregate to a threshold greater than or equal to $15.0 million, but less than $30.0 million. The event, a Chilean earthquake, resulted in an estimated loss to the Company of $22.2 million, or 4.0 percentage points of the loss ratio. Net of $2.2 million of reinstatement premiums, the net loss was $20.0 million. The Company's loss ratio, excluding prior year development, notable loss events, and non-notable loss events for the three months ended September 30, 2015 and 2014 was 50.2% for both periods.

Year to Date 2015 Results

Highlights for the year to date include the following:

• Gross premiums written for the nine months ended September 30, 2015 were $2,248.1 million compared to $2,026.6 million for the nine months ended September 30, 2014, an increase of $221.5 million, or 10.9%.
• Net premiums earned for the nine months ended September 30, 2015 were $1,706.8 million compared to $1,443.7 million for the nine months ended September 30, 2014, an increase of $263.1 million, or 18.2%.
• Underwriting income for the nine months ended September 30, 2015 was $341.0 million compared to $391.3 million for the nine months ended September 30, 2014, a decrease of $50.2 million, or 12.8%.
• Combined ratio for the nine months ended September 30, 2015 was 80.0% which included $245.8 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 14.4 percentage points compared to a combined ratio for the nine months ended September 30, 2014 of 72.9% which included $167.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 11.6 percentage points.
• Net operating income available to Validus for the nine months ended September 30, 2015 was $304.8 million compared to $357.4 million for the nine months ended September 30, 2014, a decrease of $52.6 million, or 14.7%.
• Net income available to Validus for the nine months ended September 30, 2015 was $304.1 million compared to $355.4 million for the nine months ended September 30, 2014, a decrease of $51.4 million, or 14.4%.
• Annualized return on average equity of 11.1% and annualized net operating return on average equity of 11.2% for the nine months ended September 30, 2015 compared to 12.8% and 12.9%, respectively, for the nine months ended September 30, 2014.

Validus Re Segment

Highlights for the third quarter include the following:

• Gross premiums written for the three months ended September 30, 2015 were $102.9 million compared to $114.4 million for the three months ended September 30, 2014, a decrease of $11.5 million, or 10.0%. Gross premiums written for the three months ended September 30, 2015 included $65.0 million of property premiums, $13.4 million of marine premiums and $24.5 million of specialty premiums, compared to $70.1 million of property premiums, $23.0 million of marine premiums and $21.3 million of specialty premiums for the three months ended September 30, 2014. The decrease in the property lines of $5.1 million was primarily driven by adjustments to premiums on existing business. The decrease in the marine lines of $9.6 million was primarily driven by reduced proportional business due to timing of the renewal of a significant program which was made in the first quarter of 2015 versus the third quarter of 2014.
• Net premiums earned for the three months ended September 30, 2015 were $240.7 million compared to $226.7 million for the three months ended September 30, 2014, an increase of $14.0 million, or 6.2%.
• The combined ratio for the three months ended September 30, 2015 was 77.6% compared to 70.3% for the three months ended September 30, 2014, an increase of 7.3 percentage points.
• The loss ratio for the three months ended September 30, 2015 was 50.3% compared to 45.0% for the three months ended September 30, 2014, an increase of 5.3 percentage points. The loss ratio for the three months ended September 30, 2015 included favorable loss reserve development on prior accident years of $50.5 million, benefiting the loss ratio by 21.0 percentage points. Favorable development on prior years from non-event reserves was $25.3 million. Favorable development on prior years from event specific reserves was $25.2 million, including $12.0 million on Superstorm Sandy, $5.6 million on Hurricane Ike and $5.0 million on the 2010 Chilean earthquake. The loss ratio for the three months ended September 30, 2014 included favorable loss reserve development on prior accident years of $20.1 million, benefiting the loss ratio by 8.9 percentage points.
• General and administrative expenses for the three months ended September 30, 2015 were $20.0 million compared to $18.5 million for the three months ended September 30, 2014, an increase of $1.4 million, or 7.8%.
• Net operating income available to Validus Re for the three months ended September 30, 2015 was $72.2 million compared to $86.0 million, for the three months ended September 30, 2014, a decrease of $13.8 million, or 16.0%.
• Net income available to Validus Re for the three months ended September 30, 2015 was $63.9 million compared to $54.0 million, for the three months ended September 30, 2014, an increase of $9.9 million, or 18.3%.

Highlights for the year to date include the following:

• Gross premiums written for the nine months ended September 30, 2015 were $1,111.0 million compared to $1,081.8 million for the nine months ended September 30, 2014, an increase of $29.2 million, or 2.7%. Gross premiums written for the nine months ended September 30, 2015 included $530.5 million of property premiums, $153.4 million of marine premiums and $427.2 million of specialty premiums, compared to $598.6 million of property premiums, $175.7 million of marine premiums and $307.5 million of specialty premiums for the nine months ended September 30, 2014.
• Net premiums earned for the nine months ended September 30, 2015 were $758.3 million compared to $686.8 million for the nine months ended September 30, 2014, an increase of $71.5 million, or 10.4%.
• The combined ratio for the nine months ended September 30, 2015 was 72.8% compared to 60.5% for the nine months ended September 30, 2014, an increase of 12.3 percentage points.
• The loss ratio for the nine months ended September 30, 2015 was 47.1% compared to 36.1% for the nine months ended September 30, 2014, an increase of 11.0 percentage points. The loss ratio for the nine months ended September 30, 2015 included favorable loss reserve development on prior accident years of $106.1 million, benefiting the loss ratio by 14.0 percentage points. The loss ratio for the nine months ended September 30, 2014 included favorable loss reserve development on prior accident years of $56.8 million, benefiting the loss ratio by 8.3 percentage points.
• General and administrative expenses for the nine months ended September 30, 2015 were $58.3 million compared to $53.8 million for the nine months ended September 30, 2014, an increase of $4.5 million, or 8.4%.
• Net operating income available to Validus Re for the nine months ended September 30, 2015 was $254.9 million compared to $318.8 million, for the nine months ended September 30, 2014, a decrease of $63.9 million, or 20.0%.
• Net income available to Validus Re for the nine months ended September 30, 2015 was $250.8 million compared to $319.5 million, for the nine months ended September 30, 2014, a decrease of $68.7 million, or 21.5%.

Talbot Segment

Highlights for the third quarter include the following:

• Gross premiums written for the three months ended September 30, 2015 were $226.0 million compared to $245.7 million for the three months ended September 30, 2014, a decrease of $19.7 million, or 8.0%. Gross premiums written for the three months ended September 30, 2015 included $72.7 million of property premiums, $66.8 million of marine premiums and $86.5 million of specialty premiums compared to $67.0 million of property premiums, $90.8 million of marine premiums and $87.8 million of specialty premiums for the three months ended September 30, 2014. The decrease in the marine lines of $24.0 million was driven by decreases in a number of classes, but primarily the upstream energy and cargo lines due to ongoing market conditions and economic factors which have reduced new business and renewals.
• Net premiums earned for the three months ended September 30, 2015 were $206.1 million compared to $232.8 million for the three months ended September 30, 2014, a decrease of $26.7 million, or 11.5%.
• The combined ratio for the three months ended September 30, 2015 was 90.0% compared to 88.9% for the three months ended September 30, 2014, an increase of 1.1 percentage points.
• The loss ratio for the three months ended September 30, 2015 was 45.8% compared to 50.8% for the three months ended September 30, 2014, a decrease of 5.0 percentage points. The loss ratio for the three months ended September 30, 2015 included favorable loss reserve development on prior accident years of $36.0 million, benefiting the loss ratio by 17.4 percentage points. The favorable development on prior years is primarily from non-event reserves in the amount of $30.4 million. Favorable development on prior years from event specific reserves was $5.5 million. The loss ratio for the three months ended September 30, 2014 included favorable loss reserve development on prior accident years of $35.4 million, benefiting the loss ratio by 15.2 percentage points.
• General and administrative expenses for the three months ended September 30, 2015 were $43.3 million compared to $37.7 million for the three months ended September 30, 2014, an increase of $5.6 million, or 14.8%.
• Net operating income available to Talbot for the three months ended September 30, 2015 was $26.4 million compared to $31.5 million, for the three months ended September 30, 2014, a decrease of $5.1 million, or 16.2%.
• Net income available to Talbot for the three months ended September 30, 2015 was $24.2 million compared to $21.7 million, for the three months ended September 30, 2014, an increase of $2.5 million, or 11.6%.

Highlights for the year to date include the following:

• Gross premiums written for the nine months ended September 30, 2015 were $789.1 million compared to $854.3 million for the nine months ended September 30, 2014, a decrease of $65.2 million, or 7.6%. Gross premiums written for the nine months ended September 30, 2015 included $253.2 million of property premiums, $266.9 million of marine premiums and $269.1 million of specialty premiums compared to $261.1 million of property premiums, $319.8 million of marine premiums and $273.4 million of specialty premiums for the nine months ended September 30, 2014.
• Net premiums earned for the nine months ended September 30, 2015 were $634.2 million compared to $658.6 million for the nine months ended September 30, 2014, a decrease of $24.4 million, or 3.7%.
• The combined ratio for the nine months ended September 30, 2015 was 84.3% compared to 84.8% for the nine months ended September 30, 2014, a decrease of 0.5 percentage points.
• The loss ratio for the nine months ended September 30, 2015 was 42.4% compared to 46.3% for the nine months ended September 30, 2014, a decrease of 3.9 percentage points. The loss ratio for the nine months ended September 30, 2015 included favorable loss reserve development on prior accident years of $123.2 million, benefiting the loss ratio by 19.4 percentage points. The loss ratio for the nine months ended September 30, 2014 included favorable loss reserve development on prior accident years of $99.2 million, benefiting the loss ratio by 15.1 percentage points.
• General and administrative expenses for the nine months ended September 30, 2015 were $115.3 million compared to $107.0 million for the nine months ended September 30, 2014, an increase of $8.3 million, or 7.8%.
• Net operating income available to Talbot for the nine months ended September 30, 2015 was $115.0 million compared to $113.7 million for the nine months ended September 30, 2014, an increase of $1.3 million, or 1.1%.
• Net income available to Talbot for the nine months ended September 30, 2015 was $112.4 million compared to $110.5 million, for the nine months ended September 30, 2014, an increase of $1.8 million, or 1.6%.

AlphaCat Segment(1)

Highlights for the third quarter include the following:

• AlphaCat's assets under management were $2,238.6 million as at October 1, 2015, compared to $2,079.3 million as at July 1, 2015. Third party assets under management were $1,877.4 million as at October 1, 2015, compared to $1,724.3 million as at July 1, 2015. During the three months ended September 30, 2015, a total of $165.7 million of capital was raised, of which $163.8 million was raised from third parties.
• Management fees earned from third parties were $5.8 million for the three months ended September 30, 2015, compared to $4.1 million for the three months ended September 30, 2014, an increase of $1.6 million. Increased third party assets under management drove the increase in third party management fees between periods.
• The AlphaCat sidecars and ILS funds contributed $6.5 million of income for the three months ended September 30, 2015, compared to $3.7 million for the three months ended September 30, 2014, an increase of $2.9 million.
• Total expenses for the three months ended September 30, 2015 were $6.6 million, compared to $3.9 million for the three months ended September 30, 2014, an increase of $2.7 million. Included within the expenses for the three months ended September 30, 2015 was $2.3 million of finance expenses relating to the raising of third party capital.
• Validus' share of AlphaCat net operating income for the three months ended September 30, 2015 was $5.7 million, compared to $3.9 million for the three months ended September 30, 2014, an increase of $1.9 million.
• Validus' share of PaCRe's net realized and unrealized investment losses for the three months ended September 30, 2015 was $8.0 million, compared to $5.8 million for the three months ended September 30, 2014, an increase of $2.1 million.
• Validus' share of AlphaCat's net loss for the three months ended September 30, 2015 was $2.2 million, compared to $2.0 million for the three months ended September 30, 2014, an increase of $0.2 million.
• Highlights for the year to date include the following:

• Management fees earned from third parties for the nine months ended September 30, 2015 were $14.6 million, compared to $14.2 million for the nine months ended September 30, 2014, an increase of $0.4 million.
• The AlphaCat sidecars and ILS funds contributed $17.2 million of income for the nine months ended September 30, 2015, compared to $18.5 million for the nine months ended September 30, 2014, a decrease of $1.3 million.
• Total expenses for the nine months ended September 30, 2015 were $18.6 million, compared to $10.0 million for the nine months ended September 30, 2014, an increase of $8.6 million. Included within the expenses for the nine months ended September 30, 2015 was $9.2 million of finance expenses relating to the raising of third party capital.
• PaCRe contributed $0.1 million of net operating income for the nine months ended September 30, 2015, compared to $0.2 million for the nine months ended September 30, 2014, a decrease of $0.1 million.
• For the nine months ended September 30, 2015, there was an accounting loss of $1.8 million on the deconsolidation of one of the ILS funds compared to an accounting gain on another of the ILS funds of $1.4 million for the nine months ended September 30, 2014.
• Validus' share of AlphaCat net operating income for the nine months ended September 30, 2015 was $11.6 million, compared to $24.2 million for the nine months ended September 30, 2014, a decrease of $12.7 million.
• Validus' share of PaCRe's net realized and unrealized investment losses for the nine months ended September 30, 2015 were $2.3 million, compared to a gain of $2.5 million for the nine months ended September 30, 2014, a decrease of $4.9 million.
• Validus' share of AlphaCat net income for the nine months ended September 30, 2015 was $9.2 million, compared to $26.8 million for the nine months ended September 30, 2014, a decrease of $17.5 million.

(1) Please refer to page 16 of this document for further details on the AlphaCat segment.

Western World Segment

The acquisition of Western World closed on October 2, 2014 and the segment was included in the Company's results for the first time in the fourth quarter of 2014. As such, there are no comparatives for the three or nine months ended September 30, 2014.

Highlights for the third quarter include the following:

• Gross premiums written for the three months ended September 30, 2015 were $70.9 million, which included $13.9 million of property premiums and $57.0 million of liability premiums.
• Net premiums earned for the three months ended September 30, 2015 were $63.9 million.
• The combined ratio for the three months ended September 30, 2015 was 100.4%.
• The loss ratio for the three months ended September 30, 2015 was 63.8%, which included favorable loss reserve development on prior accident years of $5.1 million, benefiting the loss ratio by 7.9 percentage points. Of this, $2.5 million or 3.9 percentage points arose from the amortization of the risk premium adjustment accounted for at the time of the acquisition of Western World.
• Policy acquisition costs for the three months ended September 30, 2015 were $13.2 million or 20.7% of net premiums earned. Amortization of the fair value adjustment accounted for at the time of the acquisition favorably impacted policy acquisition costs by approximately $3.0 million or 4.7 percentage points.
• General and administrative expenses for the three months ended September 30, 2015 were $9.6 million, or 15.9% of net premiums earned.
• Net operating income available to Western World for the three months ended September 30, 2015 was $3.2 million.
• Net income available to Western World for the three months ended September 30, 2015 was $10.3 million.

Highlights for the year to date include the following:

• Gross premiums written for the nine months ended September 30, 2015 were $207.4 million, which included $39.1 million of property premiums and $168.2 million of liability premiums.
• Net premiums earned for the nine months ended September 30, 2015 were $196.9 million.
• The combined ratio for the nine months ended September 30, 2015 was 99.5%.
• The loss ratio for the nine months ended September 30, 2015 was 70.1%, which included favorable loss reserve development on prior accident years of $15.6 million, benefiting the loss ratio by 8.0 percentage points. Of this, $8.6 million or 4.4 percentage points arose from the amortization of the risk premium adjustment accounted for at the time of the acquisition of Western World.
• Policy acquisition costs for the nine months ended September 30, 2015 were $27.1 million or 13.8% of net premiums earned. Amortization of the fair value adjustment accounted for at the time of the acquisition favorably impacted policy acquisition costs by approximately $20.0 million or 10.2 percentage points.
• General and administrative expenses for the nine months ended September 30, 2015 were $29.1 million, or 15.6% of net premiums earned.
• Net operating income available to Western World for the nine months ended September 30, 2015 was $16.1 million.
• Net income available to Western World for the nine months ended September 30, 2015 was $22.0 million.

Corporate Results

Corporate results include executive and board expenses, internal and external audit expenses, interest and costs incurred in connection with the Company's senior notes and junior subordinated deferrable debentures and other costs relating to the Company as a whole.

Highlights for the third quarter include the following:

• General and administrative expenses for the three months ended September 30, 2015, net of operating segment eliminations, were $18.5 million compared to $19.4 million for the three months ended September 30, 2014, a decrease of $0.9 million or 4.6%.
• Share compensation expenses for the three months ended September 30, 2015 were $3.4 million compared to $3.0 million for the three months ended September 30, 2014, an increase of $0.4 million or 12.3%.

Highlights for the year to date include the following:

• General and administrative expenses for the nine months ended September 30, 2015, net of operating segment eliminations, were $49.1 million compared to $55.2 million for the nine months ended September 30, 2014, a decrease of $6.1 million, or 11.1%.
• Share compensation expenses for the nine months ended September 30, 2015 were $9.5 million compared to $8.4 million for the nine months ended September 30, 2014, an increase of $1.1 million, or 13.1%.

Investments

Highlights for the third quarter include the following:

• Net investment income for the three months ended September 30, 2015 was $31.5 million compared to $25.3 million for the three months ended September 30, 2014, an increase of $6.3 million, or 24.8%.
• Net realized losses on investments for the three months ended September 30, 2015 were $41.9 million compared to a gain of $4.6 million for the three months ended September 30, 2014, a decrease of $46.5 million. The net realized losses for the three months ended September 30, 2015, included $40.7 million in realized losses relating to PaCRe. The amount of PaCRe's realized losses attributable to noncontrolling interest was $36.6 million for the three months ended September 30, 2015, leaving a net loss to the Company of $4.1 million. The net realized gains on investments for the three months ended September 30, 2014 was driven by $2.6 million in realized gains relating to PaCRe. The amount of PaCRe's realized gains attributable to noncontrolling interest was $2.3 million for the three months ended September 30, 2014, leaving a net gain to the Company of $0.3 million.
• The change in net unrealized losses on investments for the three months ended September 30, 2015 was $34.9 million compared to $85.0 million for the three months ended September 30, 2014, a decrease of $50.1 million, or 58.9%. The change in net unrealized losses on investments for the three months ended September 30, 2015 included $38.8 million in unrealized losses relating to PaCRe. The amount of PaCRe's net unrealized losses attributable to noncontrolling interest was $34.9 million for the three months ended September 30, 2015, leaving a net loss to the Company of $3.9 million. The change in net unrealized losses on investments for the three months ended September 30, 2014 was driven by $61.0 million in unrealized losses relating to PaCRe. The amount of PaCRe's net unrealized losses attributable to noncontrolling interest was $54.9 million for the three months ended September 30, 2014, leaving a net loss to the Company of $6.1 million.

Highlights for the year to date include the following:

• Net investment income for the nine months ended September 30, 2015 was $96.2 million compared to $69.9 million for the nine months ended September 30, 2014, an increase of $26.2 million, or 37.5%.
• Net realized losses on investments for the nine months ended September 30, 2015 were $35.5 million compared to a gain of $16.2 million for the nine months ended September 30, 2014, a decrease of $51.7 million. The net realized losses for the nine months ended September 30, 2015, included $40.7 million in realized losses relating to PaCRe. The amount of PaCRe's realized losses attributable to noncontrolling interest was $36.6 million for the nine months ended September 30, 2015, leaving a net loss to the Company of $4.1 million. The net realized gains on investments for the nine months ended September 30, 2014 was driven by $8.2 million in realized gains relating to PaCRe. The amount of PaCRe's realized gains attributable to noncontrolling interest was $7.4 million for the nine months ended September 30, 2014, leaving a net gain to the Company of $0.8 million.
• The change in net unrealized gains on investments for the nine months ended September 30, 2015 was $19.8 million compared to $16.1 million for the nine months ended September 30, 2014, an increase of $3.6 million, or 22.4%. The change in net unrealized gains on investments for the nine months ended September 30, 2015 was driven by $17.3 million in unrealized gains relating to PaCRe. The amount of PaCRe's net unrealized gains attributable to noncontrolling interest was $15.6 million for the nine months ended September 30, 2015, leaving a net gain to the Company of $1.7 million. The change in net unrealized gains on investments for the nine months ended September 30, 2014 was driven by $16.9 million in unrealized gains relating to PaCRe. The amount of PaCRe's net unrealized gains attributable to noncontrolling interest was $15.3 million for the nine months ended September 30, 2014, leaving a net loss to the Company of $1.7 million.

Shareholders' Equity and Capitalization

As at September 30, 2015, total shareholders' equity was $4.1 billion including $438.4 million of noncontrolling interest. Shareholders' equity available to Validus was $3.6 billion as at September 30, 2015. Book value per diluted common share was $41.89 at September 30, 2015, compared to $41.43 at June 30, 2015. Book value per diluted common share is a non-GAAP financial measure. A reconciliation of this measure to book value per common share is presented at the end of this release.

Total capitalization at September 30, 2015 was $4.9 billion, including $538.1 million of junior subordinated deferrable debentures and $247.4 million of senior notes. Total capitalization available to Validus at September 30, 2015 was $4.4 billion, excluding $438.4 million of noncontrolling interest.

Share Repurchases

For the three months ended September 30, 2015, the number of shares repurchased by the Company was 1.4 million. The share repurchases made during the three months ended September 30, 2015 resulted in a dilutive impact on book value per diluted common share of $0.04 for the quarter. A summary of the share repurchases made to date under the Company’s previously announced share repurchase program is as follows:

Conference Call

The Company will host a conference call for analysts and investors on October 30, 2015 at 10:00 AM (Eastern) to discuss the third quarter 2015 financial results and related matters. The conference call may be accessed by dialing 1-866-440-4674 (toll-free U.S.) or 1-704-908-0454 (international) and entering the passcode 4212 9203. Those who intend to participate in the conference call should register at least ten minutes in advance to ensure access to the call. A telephone replay of the conference call will be available through November 13, 2015, by dialing 1-855-859-2056 (toll-free U.S.) or 1-404-537-3406 (international) and entering the passcode 4212 9203.

This conference call will also be available through a live audio webcast accessible through the Investor Relations section of the Company's website located at www.validusholdings.com. A replay of the webcast will be available at the Investor Relations section of the Company's website through November 13, 2015. In addition, a financial supplement relating to the Company's financial results for the three and nine months ended September 30, 2015 is available in the Investor Relations section of the Company's website.

About Validus Holdings, Ltd.

Validus Holdings, Ltd. is a holding company for reinsurance and insurance operating companies and investment advisors including Validus Reinsurance, Ltd. (“Validus Re”), Talbot Holdings Ltd. (“Talbot”), Western World Insurance Group, Inc. (“Western World”) and AlphaCat Managers, Ltd. (“AlphaCat”).

The results of Western World are consolidated from the October 2, 2014 date of acquisition.

Validus Re is a Bermuda based reinsurer focused on short-tail lines of reinsurance. Talbot is the Bermuda parent of the specialty insurance group primarily operating within the Lloyd's insurance market through Syndicate 1183. Western World is a U.S. specialty lines insurance company focused on excess and surplus lines. AlphaCat is a Bermuda based investment adviser managing capital for third parties and the Group in insurance linked securities and other property catastrophe reinsurance investments.

Cautionary Note Regarding Forward-Looking Statements

This press release may include forward-looking statements, both with respect to the Company and its 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. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond the Company's control. 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 Validus' most recent reports on Form 10-K and Form 10-Q and other documents of the Company on file with or furnished to the U.S. Securities and Exchange Commission (“SEC”). Any forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Validus will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Validus or its business or operations. Except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

In presenting the Company's results, management has included and discussed certain schedules containing net operating income (loss), net operating income (loss) available (attributable) to Validus, net operating income (loss) per share, underwriting income (loss), annualized net operating return on average equity, book value per diluted common share and book value per diluted common share plus accumulated dividends that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. A reconciliation of net operating income (loss) to net income (loss), the most comparable U.S. GAAP financial measure, is presented in the section above entitled “Net Operating Income available to Validus, Net Operating Income per share available to Validus and Annualized Net Operating Return on Average Equity”. A reconciliation of underwriting income and operating income to net income, the most comparable U.S. GAAP financial measure, is presented in the “Consolidated Statements of Operations” above.

Underwriting income indicates the performance of the Company's core underwriting function, excluding revenues and expenses such as net investment income (loss), other insurance related income (loss), finance expenses, net realized and change in unrealized gains (losses) on investments, foreign exchange gains (losses), other income (loss) and transaction expenses. The Company believes the reporting of underwriting income enhances the understanding of our results by highlighting the underlying profitability of the Company's core insurance and reinsurance business. Underwriting profitability is influenced significantly by earned premium growth, adequacy of the Company's pricing and loss frequency and severity.

Underwriting profitability over time is also influenced by the Company's underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through its management of acquisition costs and other underwriting expenses. The Company believes that underwriting income provides investors with a valuable measure of profitability derived from underwriting activities.

Annualized net operating return on average equity is presented in the section above entitled “Net Operating Income available to Validus, Net Operating Income per share available to Validus and Annualized Net Operating Return on Average Equity.” A reconciliation of book value per diluted common share and book value per diluted common share plus accumulated dividends to book value per common share, the most comparable U.S. GAAP financial measure, is presented in the section above entitled “Book Value per Common Share, Book Value per Diluted Common Share and Book Value per Diluted Common Share plus Accumulated Dividends.” Net operating income (loss) is calculated based on net income (loss) excluding net realized gains (losses) on investments, change in net unrealized gains (losses) on investments, foreign exchange gains (losses), other income (loss), income (loss) from investment affiliates and non-recurring items. Realized gains (losses) from the sale of investments are driven by the timing of the disposition of investments, not by our operating performance. Gains (losses) arising from translation of non-US$ denominated balances are unrelated to our underlying business. 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.

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