Investor Presentation THIRD QUARTER 2011 Cautionary Note Regarding - PowerPoint PPT Presentation

Investor Presentation THIRD QUARTER 2011

Cautionary Note Regarding Forward-looking Statements This presentation 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. 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, 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 dema nd 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 i nfrastructure, 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 includin g 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 our most recent reports on Form 10-K and Form 10-Q and other documents on file with the Securities and Exchange Commission. Any forward-looking statements made in this news 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. 2 INVESTOR PRESENTATION THIRD QUARTER 2011

Note on Non-GAAP Financial Measures In presenting the Company’s results herein, management has included and discussed certain schedules containing underwriting income (loss) available (attributable) to Validus, net operating income (loss) available (attributable) to Validus, annualized return on average equity and diluted book value per common share 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. We believe that these measures are important to investors and other interested parties. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The underwriting results of an insurance or reinsurance company are often measured by reference to its underwriting income because underwriting income indicates the performance of the company’s core underwriting function. Underwriting income is reconciled to net income by the addition or subtraction of net investment income (loss), finance expenses, transaction expenses, net realized gains (losses) on investments, net unrealized gains (losses) on investments and foreign exchange gains (losses). Net operating income (loss) available (attributable) to Validus is calculated based on net income (loss) available (attributable) to Validus excluding net realized gains (losses), net unrealized gains (losses) on investments, gains (losses) arising from translation of non-US$ denominated balances and non-recurring items. Net income is the most directly comparable GAAP measure. Net operating income focuses on the underlying fundamentals of our operations without the influence of realized gains (losses) from the sale of investments, net unrealized gains on investments, translation of non-US$ currencies 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. Diluted book value per share is calculated based on total shareholders’ equity plus the assumed proceeds from the exercise of outstanding stock options and warrants, divided by the sum of unvested restricted shares, stock options, warrants and share equivalents outstanding (assuming their exercise). Reconciliations to the most comparable GAAP measure for both net operating income and diluted book value per share can be found at the end of this presentation. 3 INVESTOR PRESENTATION THIRD QUARTER 2011

Selected Market Information at November 25, 2011 Exchange / Ticker: NYSE / “VR” Share Price: $28.79 Primary Shares Outstanding: 99,039,622 Primary Market Capitalization $2.85 billion Annual Dividend/Yield: $1.00 per share (3.47%) Analyst Coverage: Matt Carletti, JMP Securities Jay Cohen, Bank of America Merrill Lynch Dean Evans, Keefe, Bruyette & Woods Julia Ferguson, Dowling & Partners Matt Heimermann, J.P. Morgan Amit Kumar, Macquarie Brian Meredith, UBS Michael Paisan, Stifel Nicolaus Josh Shanker, Deutsche Bank 4 INVESTOR PRESENTATION THIRD QUARTER 2011

Validus Overview • Focus on short-tail classes of insurance and reinsurance • Business mix balanced between insurance and reinsurance • Leadership position in property catastrophe reinsurance • Global operating platform • Active capital management • Transparent risk disclosure 5 INVESTOR PRESENTATION THIRD QUARTER 2011

Validus is Diversified in Short-Tail Specialty Classes Last Twelve Months GPW through September 30, 2011 of $2.1 billion Balanced by Class: 52% Property, 26% Marine, 22% Specialty Validus Re Gross Premiums Written Talbot Gross Premiums Written Last Twelve Months: $1.170 billion Last Twelve Months: $1.017 billion Specialty, Bloodstock, Contingency, 8% 1% 2% Property, Financial 20% War, 17% Institutions, 4% Marine, 19% Accident & Onshore Property Health, 2% Energy, 11% Cat XOL, Aviation Other 57% Treaty, 4% Property, 16% Aviation, Marine, 33% Direct, 6% (a) $2.1 billion consolidated Gross Premiums Written reflects $81.5 million of intersegment eliminations. Validus Re Gross Premiums Written and Talbot Gross Premiums Written do not. 6 INVESTOR PRESENTATION THIRD QUARTER 2011

Balanced Between Insurance & Reinsurance 100% 2.1% 8.3% 23.2% 90% 26.5% 40.2% 44.7% 45.0% 80% 51.1% 54.2% 70% 66.1% 66.2% 70.2% 78.2% 60% 87.6% 100.0% 100.0% 100.0% 97.9% 50% 91.7% 76.8% 40% 73.5% 59.8% 55.3% 55.0% 30% 48.9% 45.8% 20% 33.9% 33.8% 29.8% 21.8% 12.4% 10% 0% TRH PRE PTP RNR FSR RE MRH VR AHL ALTE AXS ENH ACGL XL AWH LRE AGII Reinsurance (%) Insurance (%) (a) Based on 2010 gross premium written except TRH and ACGL based on net premium written. (b) Source: SEC filings and other public disclosures. 7 INVESTOR PRESENTATION THIRD QUARTER 2011

Focused on Short-Tail Specialty Classes 100% 4.1% 8.0% 90% 32.0% 34.9% 36.0% 39.3% 40.1% 41.6% 80% 49.5% 51.1% 51.1% 62.2% 64.7% 70% 72.7% 60% 100.0% 100.0% 100.0% 95.9% 50% 92.0% 40% 68.0% 65.1% 64.0% 60.7% 59.9% 58.4% 30% 50.5% 48.9% 48.9% 37.8% 35.3% 20% 27.3% 10% 0% LRE FSR RNR VR MRH PRE ENH AHL PTP AXS RE ALTE XL TRH AGII ACGL AWH Short Tail (%) Long Tail (%) (a) Based on 2010 gross premium written except TRH and ACGL based on net premium written. (b) Source: SEC filings and other public disclosures. 8 INVESTOR PRESENTATION THIRD QUARTER 2011

Validus Shareholders’ Equity vs. Selected Peers Peer Comparison – Q3 2011 Common Shareholders’ Equity in $US Billions 7.0 6.1 5.8 6.0 4.9 5.0 4.3 4.1 4.0 3.6 3.0 3.0 2.8 2.8 3.0 2.2 2.0 1.7 1.5 1.4 1.4 0.9 1.0 0.8 0.7 - RE PRE AXS TRH ACGL VR RNR AWH ALTE AHL ENH PTP AGII LRE MRH FSR MHLD GLRE Source: SNL Financial and company reports 9 INVESTOR PRESENTATION THIRD QUARTER 2011