(Source: Business Wire)Validus Holdings, Ltd. ("Validus" or the "Company") (NYSE: VR) today reported net income of $499.2 million, or $5.21 per diluted common share for the three months ended September 30, 2009, compared with a net (loss) of ($126.3) million, or ($1.71) per diluted common share, for the three months ended September 30, 2008. Net income for the nine months ended September 30, 2009 was $731.6 million, or $8.65 per diluted share, compared with $16.1 million, or $0.14 per diluted share, for the nine months ended September 30, 2008.

Net operating income for the three months ended September 30, 2009 was $145.6 million, or $1.52 per diluted share, compared with a net operating (loss) of ($53.1) million, or ($0.73) per diluted common share, for the three months ended September 30, 2008. Net operating income for the nine months ended September 30, 2009 was $356.4 million, or $4.21 per diluted share, compared with net operating income of $124.1 million, or $1.53 per diluted common share, for the nine months ended September 30, 2008.

Net operating income (loss), a non-GAAP financial measure, is defined as net income (loss) excluding net realized and unrealized gains or losses on investments, foreign exchange gains and losses and non-recurring items, including the gain on bargain purchase, net of expenses relating to the acquisition of IPC Holdings, Ltd. ("IPC") Reconciliations of this measure to net income, the most directly comparable GAAP measure, are presented at the end of this release.

Commenting on third quarter results and 2009 business conditions, Validus' Chairman and Chief Executive Officer Ed Noonan stated: "We completed the IPC amalgamation on September 4, 2009. As a consequence of the acquisition and of strong underlying financial results for our Validus Re and Talbot segments, we closed the quarter with total shareholders' equity of $3.97 billion, total assets of $7.18 billion and total investments and cash of $5.71 billion. Diluted book value per share rose to $28.61 at September 30, 2009, which when combined with our $0.20 quarterly dividend resulted in an increase in diluted book value per share plus dividends of 10.5% in the quarter. Looking toward 2010, we approach the January renewal season with $4.3 billion of capital and the ability and intent to support our clients with our expanded resources."

Third quarter 2009 results

Highlights for the third quarter include the following:

Gross premiums written for the three months ended September 30, 2009 were $331.0 million compared to $269.2 million for the three months ended September 30, 2008, an increase of $61.8 million, or 23.0%.

Net premiums earned for the three months ended September 30, 2009 were $374.7 million compared to $339.3 million for the three months ended September 30, 2008, an increase of $35.4 million, or 10.4%.

Combined ratio of 66.7% which included $32.0 million of favorable prior year loss reserve development, benefiting the loss ratio by 8.5 percentage points.

Net operating income for the three months ended September 30, 2009 of $145.6 million compared to a loss of ($53.1) million for the three months ended September 30, 2008, an increase of $198.7 million, or 374.5%, primarily attributable to an increased contribution from underwriting income of $200.1 million and lower finance charges of $3.3 million, offset by lower investment income of $6.8 million.

Net income for the three months ended September 30, 2009 of $499.2 million compared to a loss of ($126.3) million for the three months ended September 30, 2008, an increase of $625.5 million, or 495.2%, reflecting an increase in operating income of $198.7 million, an increase in net unrealized investment gains of $65.1 million, a decrease in foreign exchange losses of $39.7 million, and the gain on bargain purchase, net of expenses of $302.9 million.

Annualized return on average equity of 65.3% and annualized operating return on average equity of 19.0%.

Highlights for the nine months ended September 30, 2009 include the following:

Gross premiums written for the nine months ended September 30, 2009 were $1,366.0 million compared to $1,170.7 million for the nine months ended September 30, 2008, an increase of $195.2 million, or 16.7%.

Net premiums earned for the nine months ended September 30, 2009 were $1,021.7 million compared to $940.5 million for the nine months ended September 30, 2008, an increase of $81.2 million, or 8.6%.

Combined ratio of 70.9% which included $53.3 million of favorable prior year loss reserve development, benefiting the loss ratio by 5.2 percentage points.

Net operating income for the nine months ended September 30, 2009 of $356.4 million compared to $124.1 million for the nine months ended September 30, 2008, an increase of $232.2 million, or 187.1%, primarily reflecting increased contribution from underwriting income of $231.2 million and lower finance charges of $19.1 million, offset by lower investment income of $25.6 million.

Net income for the nine months ended September 30, 2009 of $731.6 million compared to $16.1 million for the nine months ended September 30, 2008, an increase of $715.6 million, reflecting growth in operating income of $232.2 million, an increase in net unrealized investment gains of $182.4 million, a gain on bargain purchase, net of expenses of $287.1 million offset in part by an increase in net realized losses on investments of $12.3 million.

Annualized return on average equity of 38.7% and annualized operating return on average equity of 18.9%.

Validus Re Segment Results

Gross premiums written for the three months ended September 30, 2009 were $124.7 million compared to $125.0 million for the three months ended September 30, 2008, a decrease of $0.3 million, or 0.3%. Gross premiums written for the three months ended September 30, 2009 were comprised of $80.6 million of property premiums, $28.4 million of marine premiums and $15.7 million of specialty premiums compared to $97.5 million of property premiums, $19.2 million of marine premiums and $8.3 million of specialty premiums in the three months ended September 30, 2008.

Net premiums earned for the three months ended September 30, 2009 were $199.8 million compared to $181.4 million for the three months ended September 30, 2008, an increase of $18.4 million, or 10.1%.

The combined ratio for the three months ended September 30, 2009 was 49.2% compared to 139.7% for the three months ended September 30, 2008, a decrease of (90.5) percentage points.

The loss ratio for the three months ended September 30, 2009 was 23.0% compared to 119.7% for the three months ended September 30, 2008, a decrease of (96.7) percentage points, due primarily to lower incidences of significant property and other loss events in the three months ended September 30, 2009, which added 95.2 points to the loss ratio for the three months ended September 30, 2008. The loss ratio for the three months ended September 30, 2009 included favorable prior year loss reserve development of $19.3 million (benefiting the loss ratio by 9.6 percentage points).

Gross premiums written for the nine months ended September 30, 2009 were $734.4 million compared to $643.9 million for the nine months ended September 30, 2008, an increase of $90.5 million, or 14.1%. Gross premiums written for the nine months ended September 30, 2009 were comprised of $499.1 million of property premiums, $153.9 million of marine premiums and $81.3 million of specialty premiums compared to $472.0 million of property premiums, $111.9 million of marine premiums and $60.0 million of specialty premiums in the nine months ended September 30, 2008.

Net premiums earned for the nine months ended September 30, 2009 were $537.9 million compared to $489.2 million for the nine months ended September 30, 2008, an increase of $48.7 million, or 10.0%.

The combined ratio for the nine months ended September 30, 2009 was 52.8% compared to 87.7% for the nine months ended September 30, 2008, a decrease of (34.9) percentage points.

The loss ratio for the nine months ended September 30, 2009 was 26.5% compared to 66.4% for the nine months ended September 30, 2008, a decrease of (39.9) percentage points. The loss ratio for the nine months ended September 30, 2009 included favorable prior year loss reserve development of $24.1 million (benefiting the loss ratio by 4.5 percentage points).

Talbot Segment Results

Gross premiums written for the three months ended September 30, 2009 were $227.3 million compared to $157.3 million for the three months ended September 30, 2008, an increase of $70.0 million, or 44.5%. Gross premiums written for the three months ended September 30, 2009 were comprised of $79.2 million of property premiums, $69.6 million of marine premiums and $78.5 million of specialty premiums compared to $35.2 million of property premiums, $66.7 million of marine premiums and $55.4 million of specialty premiums in the three months ended September 30, 2008.

Net premiums earned for the three months ended September 30, 2009 were $174.9 million compared to $157.9 million for the three months ended September 30, 2008, an increase of $17.0 million, or 10.8%.

The combined ratio for the three months ended September 30, 2009 was 83.5% compared to 97.7% for the three months ended September 30, 2008, a decrease of (14.2) percentage points.

The loss ratio for the three months ended September 30, 2009 was 50.4% compared to 64.2% for the three months ended September 30, 2008, a decrease of (13.8) percentage points. The loss ratio for the three months ended September 30, 2009 included favorable prior year loss reserve development of $12.8 million (benefiting the loss ratio by 7.3 percentage points).

Gross premiums written for the nine months ended September 30, 2009 were $690.4 million compared to $556.3 million for the nine months ended September 30, 2008, an increase of $134.0 million, or 24.1%. Gross premiums written for the nine months ended September 30, 2009 were comprised of $218.7 million of property premiums, $244.7 million of marine premiums and $227.0 million of specialty premiums compared to $123.0 million of property premiums, $230.8 million of marine premiums and $202.6 million of specialty premiums in the nine months ended September 30, 2008.

Net premiums earned for the nine months ended September 30, 2009 were $483.8 million compared to $451.3 million for the nine months ended September 30, 2008, an increase of $32.4 million, or 7.2%.

The combined ratio for the nine months ended September 30, 2009 was 87.3% compared to 92.9% for the nine months ended September 30, 2008, a decrease of (5.6) percentage points.

The loss ratio for the nine months ended September 30, 2009 was 51.3% compared to 56.7% for the nine months ended September 30, 2008, a decrease of (5.4) percentage points. The loss ratio for the nine months ended September 30, 2009 included favorable prior year loss reserve development of $29.2 million (benefiting the loss ratio by 6.0 percentage points).

Corporate Segment Results

Corporate results are comprised of executive and board expenses, internal and external audit expenses, interest and costs incurred in connection with the Company's junior subordinated deferrable debentures and other costs relating to the Company as a whole. General and administrative expenses for the three months ended September 30, 2009 were $4.6 million compared to $4.3 million for the three months ended September 30, 2008, an increase of $0.3 million, or 7.6%. Additionally, there was $302.9 million in income from the gain on bargain purchase, net of expenses relating to the acquisition of IPC during the quarter. Share compensation expense for the three months ended September 30, 2009 was $2.7 million compared to $3.0 million for the three months ended September 30, 2008, a decrease of $0.3 million, or 10.3%.

General and administrative expenses for the nine months ended September 30, 2009 were $13.8 million compared to $15.3 million for the nine months ended September 30, 2008, a decrease of $1.5 million, or 9.5%. Additionally, there was $287.1 million in income from the gain on bargain purchase, net of expenses relating to the acquisition of IPC during the quarter. Share compensation expense for the nine months ended September 30, 2009 was $8.1 million compared to $11.9 million for the nine months ended September 30, 2008, a decrease of $3.9 million, or 32.4%, due to the vesting of a tranche of restricted stock to senior executives during the three months ended March 31, 2009.

Investments

Net investment income for the three months ended September 30, 2009 was $29.5 million compared to $36.4 million for the three months ended September 30, 2008, a decrease of $6.8 million, or 18.8%. Net investment income for the nine months ended September 30, 2009 was $83.3 million compared to $108.9 million for the nine months ended September 30, 2008, a decrease of $25.6 million, or 23.5%. Net investment income decreased as a result of reduced market yields and higher average cash balances.

Net realized gains on investments for the three months ended September 30, 2009 were $5.4 million compared to net realized (losses) of ($13.7) million for the three months ended September 30, 2008. Net realized (losses) on investments for the nine months ended September 30, 2009 were ($20.6) million compared to net realized (losses) of ($8.3) million for the nine months ended September 30, 2008.

Net unrealized gains on investments for the three months ended September 30, 2009 were $50.4 million compared to net unrealized (losses) of ($14.6) million for the three months ended September 30, 2008. Net unrealized gains on investments for the nine months ended September 30, 2009 were $109.8 million compared to net unrealized (losses) of ($72.6) million for the nine months ended September 30, 2008. The net unrealized gains in the three months ended September 30, 2009 resulted primarily from unrealized gains in non-agency RMBS and corporate bonds sectors, partially offset by unrealized losses in US government and government agency securities. As at September 30, 2009, the unrealized gain on investments was $25.1 million, which represented 0.4% of total investments and cash.

Finance Expenses

Finance expenses for the three months ended September 30, 2009 were $11.3 million compared to $14.5 million for the three months ended September 30, 2008, a decrease of $3.3 million, or 22.5%. Finance expenses for the nine months ended September 30, 2009 were $29.7 million compared to $48.8 million for the nine months ended September 30, 2008, a decrease of $19.1 million, or 39.1%. These decreases primarily related to the termination of third-party capital for Talbot commencing with the 2008 year of account. Finance expenses consisted principally of interest on the Company's junior subordinated deferrable debentures and third-party capital costs for Talbot.

Shareholders' Equity and Capitalization

As at September 30, 2009, shareholders' equity was $3.97 billion. Diluted book value per common share was $28.61 compared to $26.08 at June 30, 2009. Diluted book value per common share is a non-GAAP financial measure. A reconciliation of this measure to shareholders' equity is presented at the end of this release.

Total capitalization at September 30, 2009 was $4.3 billion, including $304.3 million of junior subordinated deferrable debentures.

Share Repurchase Program Authorization

The Company also announced today that on November 4, 2009, the Board of Directors of the Company (the "Board") approved a share repurchase program, authorizing the Company to repurchase up to $400million of its common shares. The Company expects the purchases to be made from time to time in the open market or in privately negotiated transactions. The timing, form and amount of the share repurchases under the program will depend on a variety of factors, including market conditions, the Company's capital position relative to internal and rating agency targets, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board at any time.

Conference Call

The Company will host a conference call for analysts and investors on November 6, 2009 at 9:00 AM (Eastern) to discuss the third quarter 2009 financial results and related matters. The conference call can be accessed via telephone by dialing 1-866-713-8566 (toll-free U.S.) or 1-617-597-5325 (international) and entering the pass code 31062383. 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 20, 2009 by dialing 1-888-286-8010 (toll-free U.S.) or 1-617-801-6888 (international) and entering the pass code 45321761.

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. In addition, a financial supplement relating to our financial results for the three and nine months ended September 30, 2009 is available in the Investor Relations section of the Company's website.

About Validus Holdings, Ltd.

Validus Holdings, Ltd. is a provider of reinsurance and insurance, conducting its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. ("Validus Re") and Talbot Holdings Ltd. ("Talbot"). 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.

                                                                                                
 Validus Holdings, Ltd.                                                                         
 Consolidated Balance Sheets                                                                    
 As at September 30, 2009 (Unaudited) and December 31, 2008                                     
 (Expressed in thousands of U.S.