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Validus Holdings, Ltd. Updates Estimates of the Financial Impact of Hurricane Ike

^{Published on 2009-01-20 13:26:51, Last Modified on 2009-01-20 13:28:56 - Market Wire}
 

HAMILTON, Bermuda--([ BUSINESS WIRE ])--Validus Holdings, Ltd. ("Validus")(NYSE: VR) today announced that it has increased its estimate of the net adverse effect from Hurricane Ike by approximately $70.1 million to a current total estimate of approximately $235.1 million. Validus' estimate of the net adverse effect is net of reinstatement premiums, reinsurance and other recoveries. This estimate is based on Validus' evaluation of impacted contracts and information provided by customers and intermediaries. There is no change to Validus' estimate related to Hurricane Gustav.

Tables providing summary and detailed allocations of the revised Hurricane Ike estimates are provided below.

The increased estimate arises primarily from property catastrophe excess of loss reinsurance coverage provided to insurance companies with exposure in the continental United States and to a lesser extent insurance companies with exposure to Gulf of Mexico offshore energy facilities.

Based on this revised information, Validus now estimates that industry losses from Hurricane Ike are in the range of $18.0 billion - $21.0 billion, an increase from earlier estimates of between $15.0 billion- $17.0 billion.

Validus Chairman and CEO Ed Noonan commented: "Hurricane Ike, which made landfall on September 13, 2008, is the third most costly windstorm in history and losses have continued to escalate for the industry. The financial effect on Validus from Hurricane Ike is now estimated at $235.1 million. As industry insured losses rise from Hurricane Ike, a disproportionate percent of the increase is borne by the reinsurance sector as more ceding companies attach excess reinsurance layers or trigger additional reinsurance recoveries from their catastrophe programs. We now expect to make recoveries under the Validus Reinsurance retrocessional program and have nearly exhausted our net retentions required before we begin to make recoveries from Talbot's property reinsurance coverage. Despite the losses associated with Hurricane Ike, we expect to report significant underwriting profits for the 2008 year as a result of our global diversification."

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.

Cautionary Note Regarding Forward-Looking Statements

All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, additionally, you should not place undue reliance on any such statements. This release may include forward-looking statements, both with respect to us and our 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. 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 our risk management and loss limitation methods; 4) cyclicality of demand and pricing in the insurance and reinsurance markets; 5) our limited operating history; 6) our ability to successfully implement our business strategy during "soft" as well as "hard" markets; 7) adequacy of our 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) our 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 other businesses we may acquire or new business ventures we may start; 15) the effect on our investment portfolio 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.

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 or elsewhere, including the Risk Factors included in our most recent reports on Form 10-K and Form 10-Q and other documents on file with the Securities and Exchange Commission, as well as management's response to any of the aforementioned factors. Any forward-looking statements made in this release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. We undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.