10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

Commission file number 001-33606

VALIDUS HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)

BERMUDA	98-0501001
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

29 Richmond Road, Pembroke, Bermuda HM 08
(Address of principal executive offices and zip code)

(441) 278-9000
(Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Name of Each Exchange on Which Registered:
Common Shares, $0.175 par value per share	New York Stock Exchange

          Securities registered pursuant to Section 12(g) of the Act:

None

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

          Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a
smaller reporting company) Smaller reporting company o

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

          The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2011 was $2,393.6 million computed upon the basis of the closing sales price of the Common Shares on June 30, 2011. For the purposes of this computation, shares held by directors and officers of the registrant have been excluded. Such exclusion is not intended, nor shall it be deemed, to be an admission that such persons are affiliates of the registrant.

          As of February 15, 2012, there were 99,478,305 outstanding Common Shares, $0.175 par value per share, of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

          Part III incorporates information from certain portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2011.

PART I		3
Item 1.	Business	3
Item 1A.	Risk Factors	29
Item 1B.	Unresolved Staff Comments	48
Item 2.	Properties	48
Item 3.	Legal Proceedings	48
Item 4.	Mine Safety Disclosure—Not Applicable	50
PART II		51
Item 5.	Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	51
Item 6.	Selected Financial Data	54
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	57
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	134
Item 8.	Financial Statements and Supplementary Data	137
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	137
Item 9A.	Controls and Procedures	137
Item 9B.	Other Information	137
PART III		138
Item 10.	Directors, Executive Officers and Corporate Governance	138
Item 11.	Executive Compensation	138
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	138
Item 13.	Certain Relationships and Related Transactions, and Director Independence	138
Item 14.	Principal Accountant Fees and Services	138
PART IV		139
Item 15.	Exhibits and Financial Statement Schedules	139
Signatures		146
Index to Consolidated Financial Statements and Financial Statements Schedules		148

This Annual Report on Form 10-K contains "Forward-Looking Statements" as defined in the Private Securities Litigation Reform Act of 1995. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such Forward-Looking Statements is set forth herein under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations—Cautionary Note Regarding Forward-Looking Statements."

PART I

All amounts presented in this part are in U.S. dollars except as otherwise noted.

Item 1.    Business

Overview

        Validus Holdings, Ltd. (the "Company") was incorporated under the laws of Bermuda on October 19, 2005. Our initial investor, which we refer to as our founding investor, is Aquiline Capital Partners LLC, a private equity firm dedicated to investing in financial services companies. Other sponsoring investors included private equity funds managed by Goldman Sachs Capital Partners, Vestar Capital Partners, New Mountain Capital and Merrill Lynch Global Private Equity. The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. ("Validus Re") and Talbot Holdings Ltd. ("Talbot"). The Company, through its subsidiaries, provides reinsurance coverage in the Property, Marine and Specialty lines markets, effective January 1, 2006, and insurance coverage in the same markets effective July 2, 2007.

        We seek to establish ourselves as a leader in the global insurance and reinsurance markets. Our principal operating objective is to use our capital efficiently by underwriting primarily short-tail insurance and reinsurance contracts with superior risk and return characteristics. Our primary underwriting objective is to construct a portfolio of short-tail insurance and reinsurance contracts which maximize our return on equity subject to prudent risk constraints on the amount of capital we expose to any single event. We manage our risks through a variety of means, including contract terms, portfolio selection, diversification criteria, including geographic diversification criteria, and proprietary and commercially available third-party vendor models.

        Since our formation in 2005, we have been able to achieve substantial success in the development of our business. Selected examples of our accomplishments are as follows:

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Raising approximately $1.0 billion of initial equity capital in December 2005 and underwriting $217.4 million in gross premiums written for the January 2006 renewal season;

•

At the time of the Company's formation an executive management team was assembled with an average of 20 years of industry experience and senior expertise spanning multiple aspects of the global insurance and reinsurance business;

•

Building a risk analytics staff comprised of over 40 experts, many of whom have PhDs and Masters degrees in related fields;

•

Developing Validus Capital Allocation and Pricing System ("VCAPS"), a proprietary computer-based system for modeling, pricing, allocating capital and analyzing catastrophe-exposed risks;

•

Acquiring all of the outstanding shares of Talbot Holdings Ltd. on July 2, 2007;

•

Completing an initial public offering ("IPO") on July 30, 2007;

•

Acquiring all of the outstanding shares of IPC Holdings Ltd. ("IPC") on September 4, 2009;

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•

Commencing in November of 2009, repurchasing $947.2 million or 35.0 million shares of the Company's common stock, representing 26.7% of the outstanding common shares at the repurchase starting point of September 30, 2009; and

•

Raising $185.0 million of initial capital for AlphaCat Re 2011, Ltd. ("AlphaCat Re 2011") on May 25, 2011 and a further $71.0 million of additional capital on December 23, 2011.

Our Operating Subsidiaries

        The following chart shows how our Company and its principal operating subsidiaries are organized.

For a complete list of the Company's subsidiaries, see Exhibit 21

(a)

AlphaCat Re 2011 Ltd. is a non-consolidated affiliate.

Our Segments

        Validus Re:    Validus Re, the Company's principal reinsurance operating subsidiary, operates as a Bermuda-based provider of short-tail reinsurance products on a global basis. Validus Re concentrates on first-party risks, which are property risks and other reinsurance lines commonly referred to as short-tail in nature due to the relatively brief period between the occurrence and payment of a claim.

        Validus Re was registered as a Class 4 insurer under The Insurance Act 1978 of Bermuda, amendments thereto and related regulations (the "Insurance Act") in November 2005. It commenced operations with approximately $1.0 billion of equity capital and a balance sheet unencumbered by any historical losses relating to the 2005 hurricane season, the events of September 11, 2001, asbestos or other legacy exposures affecting our industry.

        Validus Re entered the global reinsurance market in 2006 during a period of imbalance between the supply of underwriting capacity available for reinsurance on catastrophe-exposed property, marine and energy risks and demand for such reinsurance coverage.

        On September 4, 2009, the Company acquired all of the outstanding shares of IPC. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent,

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property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. For segmental reporting purposes, the results of IPC's operations since the acquisition date have been included within the Validus Re segment in the consolidated financial statements.

        On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, a new special purpose "sidecar" reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. At the time of formation, Validus Re had an equity interest in AlphaCat Re 2011 and as Validus Re held a majority of AlphaCat Re 2011's outstanding voting rights, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company.

        On December 23, 2011, the Company completed a secondary offering of common shares of AlphaCat Re 2011 to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors. As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re 2011; however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%. As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 have been derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 is treated as an equity method investment as at December 31, 2011. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 is recorded in the Consolidated Statements of Operations and Comprehensive Income as net income attributable to noncontrolling interest.

        The following are the primary lines in which Validus Re conducts its business. Details of gross premiums written by line of business are provided below:

	Year Ended December 31, 2011					Year Ended December 31, 2010					Year Ended December 31, 2009(a)
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)
Property	$	862,664		72.5	%	$	790,590		71.8	%	$	526,428		68.5	%
Marine		232,401		19.5	%		227,135		20.6	%		152,853		19.9	%
Specialty		95,155		8.0	%		83,514		7.6	%		88,803		11.6	%
Total	$	1,190,220		100.0	%	$	1,101,239		100.0	%	$	768,084		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Property:    Validus Re underwrites property catastrophe reinsurance, property per risk reinsurance and property pro rata reinsurance.

        Property catastrophe:    Property catastrophe reinsurance provides reinsurance for insurance companies' exposures to an accumulation of property and related losses from separate policies, typically relating to natural disasters or other catastrophic events. Property catastrophe reinsurance is generally written on an excess of loss basis, which provides coverage to primary insurance companies when aggregate claims and claim expenses from a single occurrence from a covered peril exceed a certain amount specified in a particular contract. Under these contracts, the Company provides protection to an insurer for a portion of the total losses in excess of a specified loss amount, up to a maximum amount per loss specified in the contract. In the event of a loss, most contracts provide for coverage of a second occurrence following the payment of a premium to reinstate the coverage under the contract, which is referred to as a reinstatement premium. The coverage provided under excess of loss reinsurance contracts may be on a worldwide basis or limited in scope to specific regions or geographical areas. Coverage can also vary from "all property" perils, which is the most expansive form of coverage, to more limited coverage of specified perils such as windstorm-only coverage. Property catastrophe reinsurance contracts are typically "all risk"

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in nature, providing protection against losses from earthquakes and hurricanes, as well as other natural and man-made catastrophes such as floods, tornadoes, fires and storms. The predominant exposures covered are losses stemming from property damage and business interruption coverage resulting from a covered peril. Certain risks, such as war or nuclear contamination may be excluded, partially or wholly, from certain contracts. Gross premiums written on property catastrophe business during the year ended December 31, 2011 were $666.9 million.

        Property per risk:    Property per risk reinsurance provides reinsurance for insurance companies' excess retention on individual property and related risks, such as highly-valued buildings. Risk excess of loss reinsurance protects insurance companies on their primary insurance risks on a "single risk" basis. A "risk" in this context might mean the insurance coverage on one building or a group of buildings or the insurance coverage under a single policy which the reinsured treats as a single risk. Coverage is usually triggered by a large loss sustained by an individual risk rather than by smaller losses which fall below the specified retention of the reinsurance contract. Such property per risk coverages are generally written on an excess of loss basis, which provides the reinsured protection beyond a specified amount up to the limit set within the reinsurance contract. Gross premiums written on property per risk business during the year ended December 31, 2011 were $70.0 million.

        Property pro rata:    Property pro rata contracts require that the reinsurer share the premiums as well as the losses and loss expenses in an agreed proportion with the cedant. Gross premiums written on property pro rata business during the year ended December 31, 2011 were $125.8 million.

        Marine:    Validus Re underwrites reinsurance on marine risks covering damage to or losses of marine vessels and cargo, third-party liability for marine accidents and physical loss and liability from principally offshore energy properties. Validus Re underwrites marine on an excess of loss basis and on a pro rata basis. Gross premiums written on marine business during the year ended December 31, 2011 were $232.4 million.

        Specialty:    Validus Re underwrites other lines of business depending on an evaluation of pricing and market conditions, which include aerospace and aviation, agriculture, terrorism, life and accident & health, financial lines, nuclear, workers' compensation catastrophe and crisis management. The Company seeks to underwrite other specialty lines with very limited exposure correlation with its property, marine and energy portfolios. With the exception of the aerospace line of business, which has a meaningful portion of its gross premiums written volume on a proportional basis, the Company's other specialty lines are written on an excess of loss basis. Gross premiums written on specialty business during the year ended December 31, 2011 were $95.2 million.

        Talbot:    On July 2, 2007, the Company acquired all of the outstanding shares of Talbot. Talbot is the Bermuda parent of a specialty insurance group primarily operating within the Lloyd's insurance market through Syndicate 1183. The acquisition of Talbot provides the Company with significant benefits in terms of product line and geographic diversification as well as offering the Company broader access to underwriting expertise. Similar to Validus Re, Talbot writes primarily short-tail lines of business but, as a complement to Validus Re, focuses mostly on insurance, as opposed to reinsurance risks, and on specialty lines where Validus Re currently has limited or no presence (e.g., war, financial institutions, contingency, accident and health). In addition, Talbot provides the Company with access to the Lloyd's marketplace where Validus Re does not operate. As a London-based insurer, Talbot also writes the majority of its premiums on risks outside the United States. Talbot's team of underwriters have, in many cases, spent most of their careers writing niche, short-tail business and bring their expertise to bear on expanding the Company's short-tail insurance franchise.

        The Company has expanded and diversified its business through Syndicate 1183's access to Lloyd's license agreements with regulators around the world. Underwriting Risk Services, Inc., Underwriting Risk

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Services (Middle East) Ltd., Validus Reaseguros, Inc., Validus Re Chile S.A. and Talbot Risk Services Pte Ltd, act as approved Lloyd's coverholders for Syndicate 1183.

        The following are the primary lines in which Talbot conducts its business. Details of gross premiums written by line of business are provided below:

	Year Ended December 31, 2011					Year Ended December 31, 2010					Year Ended December 31, 2009
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)
Property	$	306,317		30.2	%	$	314,769		32.1	%	$	269,583		29.3	%
Marine		341,821		33.7	%		315,102		32.1	%		307,385		33.4	%
Specialty		365,984		36.1	%		351,202		35.8	%		342,938		37.3	%
Total	$	1,014,122		100.0	%	$	981,073		100.0	%	$	919,906		100.0	%

        Property:    The main sub-classes within property are international and North American direct and facultative contracts, onshore energy, lineslips and binding authorities together with a book of business written on a treaty reinsurance basis. The business written is mostly commercial and industrial insurance though there is a modest personal lines component. The business is short-tail with premiums for reinsurance and, direct and facultative business, substantially earned within 12 months and premiums for lineslips and binding authorities substantially earned within 12 months of the expiry of the contract. Gross premiums written on property business during the year ended December 31, 2011 were $306.3 million, including $96.1 million of treaty reinsurance.

        Marine:    The main types of business within marine are hull, cargo, energy, marine and energy liabilities, yachts and marinas and other treaty. Hull consists primarily of ocean going vessels and cargo and covers worldwide risks. Energy covers a variety of oil and gas industry risks. The marine and energy liability account provides cover for protection and indemnity clubs and a wide range of companies operating in the marine and energy sector. Yacht and marina policies historically have been written through Underwriting Risk Services Ltd., an underwriting agency that is a subsidiary of Talbot. Each of the sub-classes within marine has a different profile of contracts written—some, such as energy, derive up to 27.9% of their business through writing facultative contracts while others, such as cargo, only derive 12.8% through this method. Each of the sub-classes also has a different geographical risk allocation. Most business written is short-tail enabling a quicker and more accurate picture of expected profitability than is the case for long tail business. The marine and energy liability account, which makes up $51.7 million of the $341.8 million of gross premiums written during the year ended December 31, 2011, is the primary long-tail class in this line. The business written is mainly on a direct and facultative basis with a small element written on a reinsurance basis either as excess of loss reinsurance or proportional reinsurance.

        Specialty:    This class consists of war (comprising marine & aviation war, political risks and political violence, including war on land), financial institutions, contingency, accident and health, airlines and aviation treaty. With the exception of aviation treaty, most of the business written under the specialty accounts is written on a direct or facultative basis or under a binding authority through a coverholder. Gross premiums written on specialty business during the year ended December 31, 2011 were $366.0 million.

        War:    The marine & aviation war account covers physical damage to aircraft and marine vessels caused by acts of war and terrorism. The political risk account deals primarily with expropriation, contract frustration/trade credit, kidnap and ransom, and malicious and accidental product tamper. The political violence account mainly insures physical loss to property or goods anywhere in the world, caused by war, terrorism or civil unrest. This class is often written in conjunction with cargo, specie, property, energy, contingency and political risk. The period of the risks can extend up to 36 months and beyond. The

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attritional losses on the account are traditionally low but the account can be affected by large individual losses. Talbot is a market leader in the war and political violence classes. Gross premiums written on war business during the year ended December 31, 2011 were $174.9 million.

        Financial Institutions:    Talbot's financial institutions team predominantly underwrites bankers blanket bond, professional indemnity and directors' and officers' coverage for various types of financial institutions and similar companies. Bankers blanket bond insurance products are specifically designed to protect against direct financial loss caused by fraud/criminal actions and mitigate the damage such activities may have on the asset base of the insured. Professional indemnity insurance protects businesses in the event that legal action is taken against them by third parties claiming professional negligence. Directors' and officers' insurance protects directors and officers against personal liability for losses incurred by a third party due to negligent performance by the director or officer. Gross premiums written on financial institutions business for the year ended December 31, 2011 were $37.5 million, comprising:

	Year Ended December 31, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)
Bankers blanket bond	$	22,565		60.1	%
Professional indemnity		13,058		34.8	%
Directors' and Officers'		1,904		5.1	%
Other		4		0.0	%
Total	$	37,531		100.0	%

        The risks covered in financial institutions are primarily fraud related and are principally written on an excess of loss basis. Talbot's financial institutions account is concentrated on non-U.S. based clients, with 40.2% of gross premiums written in 2011 generated in Europe, 10.5% from the U.S. and 49.3% from other geographical regions. In addition, Talbot seeks to write regional accounts rather than global financial institutions with exposure in multiple jurisdictions and has only limited participation in exposures to publicly listed U.S. companies. As of December 31, 2011, the Company had gross reserves related to the financial institutions business of $176.7 million, comprised of $69.5 million, or 39.4% of incurred but not reported ("IBNR") and $107.2 million, or 60.6% of case reserves. For comparison, as at December 31, 2010 the Company had gross reserves related to the financial institutions business of $171.5 million, comprising $83.0 million, or 48.4% of IBNR and $88.5 million, or 51.6% of case reserves. As of December 31, 2011, Talbot had minimal exposure to U.S. directors' and officers' risks.

        Contingency:    The main types of covers written under the contingency account are event cancellation and non-appearance business. Gross premiums written on contingency business during the year ended December 31, 2011 were $19.8 million.

        Accident and Health:    The accident and health account provides insurance in respect of individuals in both their personal and business activity together with corporations where they have an insurable interest relating to death or disability of employees or those under contract. Gross premiums written on accident and health business during the year ended December 31, 2011 were $21.9 million.

        Aviation:    The aviation account insures major airlines, general aviation, aviation hull war and satellites. The coverage includes excess of loss treaties with medium to high attachment points. Gross premiums written on aviation business during the year ended December 31, 2011 were $110.8 million.

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Enterprise Risk Management

        Validus has implemented an Enterprise Risk Management ("ERM") framework (the "Framework") to identify, assess, quantify and manage risks and opportunities in order to protect our capital and maximize shareholder returns. This framework is incorporated into the business activities of the Company and its strategic planning processes.

        The Company's Board of Directors has established a separate Risk Committee that is responsible for, among other things, approving the Company's ERM Framework, working with management to ensure ongoing, effective implementation of the Framework and reviewing the Company's specific risk limits as defined in the Framework, including limits for underwriting, investment, operational, business and other risks. The Company's Chief Risk Officer prepares a quarterly presentation for the Risk Committee and communicates with the chairman of the Risk Committee on an informal basis periodically throughout the year.

        The management committee of the Company that oversees risk management is the Group Risk Management Committee ("GRMC"). The GRMC is comprised of senior executives including among others; the Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, Chief Actuary, Chief Operating Officer, Chief Executive Officer of Validus Re and Chief Executive Officer of the Talbot Group.

        To efficiently asses risks to the Company the GRMC has identified six key risk categories. Potential risks may span several or all of these key risk areas and as such risks are considered both within the context of these areas and the Company as a whole. The key risk areas are; Credit Risk, Market Risk, Liquidity Risk, Insurance Risk, Operational Risk and Group Risk.

Risk Appetite

        The Group's risk appetite sets a context within which all risks and opportunities are viewed. The risk appetite is proposed by management and approved by the Board, it represents the amount of risk the Company wants to take, within the constraints of capital resources, strategy, regulation and the rating agency environment.

Economic Capital Model

        The Group uses economic capital modeling for capital adequacy assessment, risk-adjusted performance measurement and group-level and operating entity-level risk analysis.

Modeling

        A pivotal factor in determining whether to found and fund the Company was the opportunity for differentiation based upon superior risk management expertise; specifically, managing catastrophe risk and optimizing our portfolio to generate attractive returns on capital while controlling our exposure to risk, and assembling a management team with the experience and expertise to do so. The Company's proprietary models are current with emerging scientific trends. This has enabled the Company to gain a competitive advantage over those reinsurers who rely exclusively on commercial models for pricing and portfolio management. The Company has made a significant investment in expertise in the risk modeling area to capitalize on this opportunity. The Company has assembled an experienced group of professional experts who operate in an environment designed to allow them to use their expertise as a competitive advantage. While the Company uses both proprietary and commercial probabilistic models, Catastrophe risk is ultimately subject to absolute aggregate limitations based on risk levels determined by the Risk Committee of the Board of Directors.

        Vendor Models:    The Company has global licenses for all three major commercial vendor models (RMS, AIR and EQECAT), to assess the adequacy of risk pricing and to monitor its overall exposure to risk in correlated geographic zones. Commencing in January 2012, the Company incorporated RMS

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version 11 into its vendor models. The Company models property exposures that could potentially lead to an over-aggregation of property risks (i.e., catastrophe-exposed business) using the vendor models. The vendor models enable the Company to aggregate exposures by correlated event loss scenarios, which are probability-weighted. This enables the generation of exceedance probability curves for the portfolio and major geographic areas. Once exposures are modeled using one of the vendor models, the other two models are used as a reasonability check and validation of the loss scenarios developed and reported by the first. The three commercial models each have unique strengths and weaknesses. For example, it is sometimes necessary to impose changes to frequency and severity ahead of changes made by the model vendors.

        The Company's review of market practice revealed a number of areas where quantitative expertise can be used to improve the reliability of the vendor model outputs:

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Ceding companies may often report insufficient data and many reinsurers may not be sufficiently critical in their analysis of this data. The Company generally scrutinizes data for anomalies that may indicate insufficient data quality. These circumstances are addressed by either declining the program or, if the variances are manageable, by modifying the model output and pricing to reflect insufficient data quality;

•

Prior to making overall adjustments for changes in climate variables, other variables are carefully examined (for example, demand surge, storm surge, and secondary uncertainty); and

•

Pricing individual contracts frequently requires further adjustments to the three vendor models. Examples include bias in damage curves for commercial structures and occupancies and frequency of specific perils.

        In addition, many risks, such as second-event covers, aggregate excess of loss, or attritional loss components cannot be fully evaluated using the vendor models. In order to better evaluate and price these risks, the Company has developed proprietary analytical tools, such as VCAPS and other models and data sets.

        Proprietary Models:    In addition to making frequency and severity adjustments to the vendor model outputs, the Company has implemented a proprietary pricing and risk management tool, VCAPS, to assist in pricing submissions and monitoring risk aggregation.

        To supplement the analysis performed using vendor models, VCAPS uses the gross loss output of catastrophe models to generate a 100,000-year simulation set, which is used for both pricing and risk management. This approach allows more precise measurement and pricing of exposures. The two primary benefits of this approach are:

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VCAPS takes into account annual limits, event/franchise/annual aggregate deductibles, and reinstatement premiums. This allows for more accurate evaluation of treaties with a broad range of features, including both common (reinstatement premium and annual limits) and complex features (second or third event coverage, aggregate excess of loss, attritional loss components covers with varying attachment across different geographical zones or lines of businesses and covers with complicated structures); and

•

VCAPS use of 100,000-year simulations enables robust pricing of catastrophe-exposed business. This is possible in real-time operation because the Company has designed a computing hardware platform and software environment to accommodate the significant computing needs.

        In addition to VCAPS, the Company uses other proprietary models and other data in evaluating exposures. The Company cannot assure that the models and assumptions used by the software will accurately predict losses. Further, the Company cannot assure that the software is free of defects in the modeling logic or in the software code. In addition, the Company has not sought copyright or other legal protection for VCAPS.

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Underwriting Risk Management

        We underwrite and manage risk by paying close attention to risk selection and analysis. Through a detailed examination of contract terms, diversification criteria, contract experience and exposure, we aim to outperform our peers. We strive to provide our experienced underwriters with technically sound and objective information. We believe a strong working relationship between the underwriting, catastrophe modeling and actuarial disciplines is critical to long-term success and solid decision-making.

        All of the Company's underwriters are subject to a set of underwriting guidelines. At Validus Re, these guidelines are established by the Chief Executive Officer and approved by the Company's Board of Directors. At Talbot, the guidelines are established by executive management at Talbot and approved by their Board of Directors. These guidelines are then subject to review and approval by the Risk Committee of our Board of Directors. Underwriters are also issued letters of authority that specifically address the limits of their underwriting authority and their referral criteria. The Company's current underwriting guidelines and letters of authority include:

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lines of business that a particular underwriter is authorized to write;

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exposure limits by line of business;

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contractual exposures and limits requiring mandatory referrals to the Chief Executive Officer at Validus Re and the Chief Executive Officer at Talbot; and

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level of analysis to be performed by lines of business.

        In general, our underwriting approach is to:

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seek high quality clients who have demonstrated superior performance over an extended period;

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evaluate our clients' exposures and make adjustments where their exposure is not adequately reflected;

•

apply the comprehensive knowledge and experience of our entire underwriting team to make progressive and cohesive decisions about the business they underwrite;

•

employ our well-founded and carefully maintained market contacts within the group to enhance our robust distribution capabilities; and

•

refer submissions to the Chief Underwriting Officer at Validus Re, the Chief Executive Officer at Talbot, Chief Executive Officer at Validus Re and the Risk Committee of our Board of Directors according to our underwriting guidelines.

        The underwriting guidelines are subject to waiver or change by the Chief Executive Officer at Validus Re or the Chief Executive Officer at Talbot subject to their authority as overseen by their respective Risk Committees.

        Our underwriters have the responsibility to analyze all submissions and determine if the related potential exposures meet with both the Company's risk profile line size and aggregate limitations, in line with the business plan. In order to ensure compliance, we run appropriate management information reports and all lines are subject to fully approved regulatory audits. Further, our treaty reinsurance operation has the authority limits of individual underwriters built into VCAPS while Talbot maintains separate compliance procedures to ensure that the appropriate policies and guidelines are followed.

        Validus Re:    We have established a referral process whereby business exceeding set exposure or premium limits is referred to the Chief Executive Officer for review. As the reviewer of such potential business, the Chief Executive Officer has the ability to determine if the business meets the Company's overall desired risk profile. The Chief Executive Officer has defined underwriting authority for each underwriter, and risks outside of this authority must be referred to the Company's Chief Executive Officer.

11

The Risk Committee of our Board of Directors reviews business that is outside the authority of the Chief Executive Officer.

        Talbot:    Our risk review and control processes have been designed to ensure that all written risks comply with underwriting and risk control strategies. The workflow system is designed to automate the referral of risks to the relevant reviewer who has an appropriate level of authority to review the risk. These reviews are documented, monitored and reports are prepared on a regular basis.

        Collectively, the various peer review procedures serve numerous objectives, including:

•

Validating that underwriting decisions are in accordance with risk appetite, authorities, agreed business plans and standards for type, quality and profitability of risk;

•

Providing an experienced and suitably qualified second review of individual risks;

•

Ensuring that risks identified as significant undergo the highest level of technical underwriting review;

•

Elevating technical underwriting queries and/or need for remedial actions on a timely basis; and

•

Improving database accuracy and coding for subsequent management reporting.

The principal elements of the underwriting review process are as follows:

        Underwriter Review:    The underwriting team must evidence data entry review by confirming review and agreement on the workflow system within a specified number of working days of entry being completed by the contracted third party.

        Peer Review:    The majority of risks are peer reviewed by another underwriter within a specified number of working days of data entry being completed. There is an agreed matrix of underwriters authorized to peer review.

        Class of business review:    Risks written into a class by an underwriter other than the nominated class underwriter are subsequently forwarded to, and reviewed by, the nominated class underwriter.

        Exceptions review:    Risks that exceed a set of pre-determined criteria will also be referred to the Active Underwriter or the Underwriting Risk Officer for review. Such risks are discussed by the underwriters at regular underwriting meetings in the presence of at least one of the above. In certain circumstances, some risks may be referred to the Insurance Management Committee or the Talbot Underwriting Ltd ("TUL") Board for final approval. These reviews also commonly include reports of risks renewed where there has been a large loss ratio in the recent past.

        Insurance Management Committee:    At its regular meetings, the Committee reviews a range of key performance indicators including: premium income written versus plan; movements in syndicate cash and investments; aggregate exposures; together with other highlighted exception reports. The Committee also reviews claim movements over a financial threshold.

        Expert Review Subcommittee ("ERC"):    The ERC is a committee that meets regularly to review the underwriting activities of Syndicate 1183 and other related activities to provide assurance that the underwriting risks assumed are within the parameters of the business plan. This is achieved with the help of eight external expert reviewers who report their findings to the ERC.

        The expert reviewers obtain and review a sample of risks underwritten in each class and report their findings to the quarterly meetings of the ERC. Findings range from general comments on approach and processes to specific points in respect of individual risks.

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        Within Talbot, the TUL Board is responsible for creating the environment and structures for risk management to operate effectively. The Talbot Chief Executive is responsible for ensuring the risk management process is implemented.

        The TUL Board has several committees responsible for monitoring risk. The TUL Board approves the risk appetite as part of the syndicate business plan process which sets targets for premium volume, pricing, line sizes, aggregate exposures and retention by class of business.

        The TUL Executive Committee is responsible for establishing and maintaining a comprehensive risk register and key controls for TUL. It is responsible for formulating a risk appetite consistent with the Company's risk appetite, for approval by the TUL Board.

        The key focuses of each committee are as follows:

•

The TUL Executive Committee manages key risks with regard to strategy and reserves;

•

The Insurance Management Committee manages insurance risks;

•

The Operational Risk Committee manages risk related to people, processes, systems and external events; and

•

The Financial Risk Committee manages credit risk associated with reinsurers, brokers, coverholders and investments, market risk and liquidity risk.

        Performance against underwriting targets is measured regularly throughout the year. Risks written are subject to peer review, an internal quality control process. Pricing is controlled by the monitoring of rate movements and the comparison of technical prices to actual prices for certain classes of business. Controls over aggregation of claims exposures vary by class of business. They include limiting coastal risks, monitoring aggregation by county/region/blast zones and applying line size limits in all cases. Catastrophe modeling software and techniques are used to model expected loss outcomes for Lloyd's Realistic Disaster Scenario returns and in-house catastrophe event scenarios. Reserves are reviewed for adequacy on a quarterly basis. The syndicate also purchases reinsurance, with an appropriate number of reinstatements, to arrive at an acceptable net retained risk.

Program Limits

        Overall exposure to risk is controlled by limiting the amount of insurance or reinsurance underwritten in a particular program or contract. This helps to diversify within and across risk zones. The Risk Committee sets these limits, which may be exceeded only with its approval.

Geographic Diversification

        The Company actively manages its aggregate exposures by geographic or risk zone ("zones") to maintain a balanced and diverse portfolio of underlying risks. The coverage the Company is willing to provide for any risk located in a particular zone is limited to a predetermined level, thus limiting the net aggregate loss exposure from all contracts covering risks believed to be located in any zone. Contracts that have "worldwide" territorial limits have exposures in several geographic zones. Generally, if a proposed reinsurance program would cause the limit to be exceeded, the program would be declined, regardless of its desirability, unless the Company buys retrocessional coverage, thereby reducing the net aggregate

13

exposure to the maximum limit permitted or less. The following table summarizes our Gross Premiums Written by geographic zone:

	Year ended December 31, 2011
	Gross Premiums Written
(Dollars in thousands)	Validus Re		Talbot		Eliminations			Total		%
United States	$	520,241	$	117,178	$	(9,494	)	$	627,925		29.6	%
Worldwide excluding United States(a)		48,047		247,367		(14,146	)		281,268		13.2	%
Europe		89,705		52,018		(1,988	)		139,735		6.6	%
Latin America and Caribbean		43,627		94,859		(27,857	)		110,629		5.2	%
Japan		43,032		7,380		(458	)		49,954		2.3	%
Canada		518		10,583		(507	)		10,594		0.5	%
Rest of the world(b)		58,908		—		—			58,908		2.8	%
Sub-total, non United States		283,837		412,207		(44,956	)		651,088		30.6	%
Worldwide including United States		121,941		50,723		(2,852	)		169,812		8.0	%
Marine and Aerospace(c)		264,201		434,014		(22,349	)		675,866		31.8	%
Total	$	1,190,220	$	1,014,122	$	(79,651	)	$	2,124,691		100.0	%

(a)

Represents risks in two or more geographic zones.

(b)

Represents risk in one geographic zone.

(c)

Not classified by geographic area as marine and aerospace risks can span multiple geographic areas and are not fixed locations in some instances.

        The effectiveness of geographic zone limits in managing risk exposure depends on the degree to which an actual event is confined to the zone in question and on the Company's ability to determine the actual location of the risks believed to be covered under a particular insurance or reinsurance program. Accordingly, there can be no assurance that risk exposure in any particular zone will not exceed that zone's limits. Further control over diversification is achieved through guidelines covering the types and amount of business written in product classes and lines within a class.

Reinsurance Management

        Validus Re Retrocession:    Validus Re monitors the opportunity to purchase retrocessional coverage on a continual basis and employs the VCAPS modeling system to evaluate the effectiveness of risk mitigation and exposure management relative to the cost. This coverage may be purchased on an indemnity basis as well as on an index basis (e.g., industry loss warranties ("ILWs")). Validus Re also considers alternative retrocessional structures, including collateralized quota share ("sidecar") and other capital markets products.

        When Validus Re buys retrocessional coverage on an indemnity basis, payment is for an agreed upon portion of the losses actually suffered. In contrast, when Validus Re buys an ILW cover, which is a reinsurance contract in which the payout is dependent on both the insured loss of the policy purchaser and the measure of the industry-wide loss, payment is made only if both Validus Re and the industry suffer a loss, as reported by one of a number of independent agencies, in excess of specified threshold amounts. With an ILW, Validus Re bears the risk of suffering a loss while receiving no payment under the ILW if the industry loss was less than the specified threshold amount.

        Validus Re may use capital markets instruments for risk management in the future (e.g., catastrophe bonds, sidecar facilities and other forms of risk securitization) where the pricing and terms are attractive.

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        Talbot Ceded Reinsurance:    Talbot enters into reinsurance agreements in order to mitigate its accumulation of loss, reduce its liability on individual risks and enable it to underwrite policies with higher limits. The ceding of the insurance does not legally discharge Talbot from its primary liability for the full amount of the policies, and Talbot is required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement.

        The following describes the Talbot Group's process in the purchase and authorization of treaty reinsurance policies only. It does not cover the purchase of facultative reinsurance because these premiums are not significant.

        The reinsurance program is reviewed by the reinsurance purchasing team on an on-going basis in line with the main business planning process. This process incorporates advice and analytical work from our brokers, actuarial and capital modeling teams.

        The review and modification is based upon the following:

•

budgeted underwriting for the coming year;

•

loss experience from prior years;

•

loss information from the coming year's individual capital assessment calculations;

•

changes to risk limits and aggregation limits expected and any other changes to Talbot's risk tolerance;

•

scenario planning;

•

changes to capital requirements; and

•

Realistic Disaster Scenarios ("RDSs") prescribed by Lloyd's.

        The main type of reinsurance purchased is losses occurring; however, for a few lines of business, where the timing of the loss event is less easily verified or where such cover is available, risk attaching policies are purchased.

        The type, quantity and cost of cover of the proposed reinsurance program is discussed and reviewed by the Chief Executive Officer of the Talbot group, and ultimately authorized by the TUL Board.

        Once this has occurred, the reinsurance program is purchased in the months prior to the beginning of the covered period. All reinsurance contracts arranged are authorized for purchase by the Director of Underwriting and Operations. Slips are developed prior to inception to ensure the best possible cover is achieved. After purchase, cover notes are reviewed by the relevant class underwriters and presentations made to all underwriting staff to ensure they are aware of the boundaries of the cover.

Distribution

        Although we conduct some business on a direct basis with our treaty and facultative reinsurance clients, most of our business is derived through insurance and reinsurance intermediaries ("brokers"), who access business from clients and coverholders. We are able to attract business through our recognized lead capability in most classes we underwrite, particularly in classes where such lead ability is rare.

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        Currently, our largest broker relationships, as measured by gross premiums written, are with Aon Benfield Group Ltd., Marsh & McLennan Companies, Inc./Guy Carpenter & Co., and Willis Group Holdings Ltd. The following table sets forth the Company's gross premiums written by broker:

	Year Ended December 31, 2011
	Gross Premiums Written
(Dollars in thousands)	Validus Re		Talbot		Eliminations			Total		%
Name of Broker
Marsh Inc./Guy Carpenter & Co.	$	390,312	$	172,651	$	(13,560	)	$	549,403		25.9	%
Aon Benfield Group Ltd.		238,298		133,634		(10,496	)		361,436		17.0	%
Willis Group Holdings Ltd.		356,682		162,084		(12,730	)		506,036		23.8	%
Sub-total		985,292		468,369		(36,786	)		1,416,875		66.7	%
All Others		204,928		545,753		(42,865	)		707,816		33.3	%
Total	$	1,190,220	$	1,014,122	$	(79,651	)	$	2,124,691		100.0	%

Reserve for losses and loss expenses

        For insurance and reinsurance companies, a significant judgment made by management is the estimation of the reserve for losses and loss expenses. The Company establishes its reserve for losses and loss expenses to cover the estimated incurred liability for both reported and unreported claims.

        The following tables show certain information with respect to the Company's gross and net reserves:

	As at December 31, 2011
(Dollars in thousands)	Gross case reserves		Gross IBNR		Total Gross Reserve for Loss and Loss Expenses
Property	$	736,448	$	575,556	$	1,312,004
Marine		437,367		350,833		788,200
Specialty		240,627		290,312		530,939
Total	$	1,414,442	$	1,216,701	$	2,631,143

	As at December 31, 2011
(Dollars in thousands)	Net case reserves		Net IBNR		Total Net Reserve for Loss and Loss Expenses
Property	$	611,385	$	512,730	$	1,124,115
Marine		375,364		326,218		701,582
Specialty		190,506		242,455		432,961
Total	$	1,177,255	$	1,081,403	$	2,258,658

        Loss reserves are established due to the significant periods of time that may lapse between the occurrence, reporting and payment of a loss. To recognize liabilities for unpaid losses and loss expenses, the Company estimates future amounts needed to pay claims and related expenses with respect to insured events. The Company's reserving practices and the establishment of any particular reserve reflects management's judgment concerning sound financial practice and does not represent any admission of liability with respect to any claim. Unpaid losses and loss expense reserves are established for reported claims ("case reserves") and IBNR claims.

        The nature of the Company's high excess of loss liability and catastrophe business can result in loss payments that are both irregular and significant. Such loss payments are part of the normal course of business for the Company. Adjustments to reserves for individual years can also be irregular and

16

significant. Conditions and trends that have affected development of liabilities in the past may not necessarily occur in the future. Accordingly, it is inappropriate to extrapolate future redundancies or deficiencies based upon historical experience. See Part I, Item 1A, "Risk Factors" and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Cautionary Note Regarding Forward-Looking Statements."

        The tables below present the development of the Company's unpaid losses and loss expense reserves on both a net and gross basis. The cumulative redundancy (deficiency) calculated on a net basis differs from that calculated on a gross basis. As different reinsurance programs cover different underwriting years, net and gross loss experience will not develop proportionately. The top line of the tables shows the estimated liability, net and gross of reinsurance recoveries, as at the year end balance sheet date for each of the indicated years. This represents the estimated amounts of losses and loss expenses, including IBNR, arising in the current and all prior years that are unpaid at the year end balance sheet date of the indicated year. The tables also show the re-estimated amount of the previously recorded reserve liability based on experience as of the year end balance sheet date of each succeeding year. The estimate changes as more information becomes known about the frequency and severity of claims for individual years. The cumulative redundancy (deficiency) represents the aggregate change with respect to that liability originally estimated. The lower portion of each table also reflects the cumulative paid losses relating to these reserves. Conditions and trends that have affected development of liabilities in the past may not necessarily occur in the future. Accordingly, it is not appropriate to extrapolate redundancies or deficiencies into the future, based on the tables below. See Part I, Item 1A, "Risk Factors" and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Cautionary Note Regarding Forward-Looking Statements."

Analysis of Losses and Loss Expense Reserve Development Net of Recoveries

	Year Ended December 31,
(Dollars in thousands)	2006		2007		2008		2009		2010		2011
Estimated liability for unpaid losses and loss expense, net of reinsurance recoverable	$	77,363	$	791,713	$	1,096,507	$	1,440,369	$	1,752,839	$	2,258,658
Liability—estimated as of:
One year later		60,106		722,010		1,018,930		1,283,759		1,596,720
Two years later		54,302		670,069		937,696		1,181,987
Three years later		50,149		606,387		902,161
Four years later		46,851		584,588
Five years later		45,946
Cumulative redundancy (deficiency)(a)		31,417		207,125		194,346		258,382		156,119
Cumulated paid losses, net of reinsurance recoveries, as of:
One year later	$	27,180	$	216,469	$	353,476	$	384,828		476,779
Two years later		34,935		320,803		562,831		634,041
Three years later		39,520		350,521		662,319
Four years later		41,746		374,788
Five years later		41,901

(a)

See Part II Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion.

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Analysis of Losses and Loss Expense Reserve Development Gross of Recoveries

	Year Ended December 31,
(Dollars in thousands)	2006		2007		2008		2009		2010		2011
Estimated gross liability for unpaid losses and loss expense	$	77,363	$	926,117	$	1,305,303	$	1,622,134	$	2,035,973	$	2,631,143
Liability—estimated as of:
One year later		60,106		846,863		1,223,018		1,484,646		1,854,565
Two years later		54,302		791,438		1,164,923		1,385,533
Three years later		50,149		745,624		1,134,043
Four years later		46,851		721,730
Five years later		45,946
Cumulative redundancy (deficiency)(a)		31,417		204,387		171,260		236,601		181,408
Cumulative paid losses, gross of reinsurance recoveries, as of:
One year later	$	27,180	$	245,240	$	437,210	$	455,182		557,894
Two years later		34,935		394,685		709,218		650,572
Three years later		39,520		452,559		830,435
Four years later		41,746		480,277
Five years later		41,901

(a)

See Part II Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion.

        The following table presents an analysis of the Company's paid, unpaid and incurred losses and loss expenses and a reconciliation of beginning and ending unpaid losses and loss expenses for the years indicated:

	Year Ended December 31,
(Dollars in thousands)	2011			2010			2009
Gross reserves at beginning of year	$	2,035,973		$	1,622,134		$	1,305,303
Losses recoverable at beginning of year		(283,134	)		(181,765	)		(208,796	)
Net reserves at beginning of year		1,752,839			1,440,369			1,096,507
Net loss reserves acquired in purchase of IPC		—			—			304,957
Incurred losses—current year		1,400,520			1,144,196			625,810
Incurred losses—change in prior accident years		(156,119	)		(156,610	)		(102,053	)
Incurred losses		1,244,401			987,586			523,757
Paid losses—current year		(272,479	)		(288,974	)		(122,351	)
Paid losses—prior year		(470,547	)		(384,448	)		(385,084	)
Total net paid losses		(743,026	)		(673,422	)		(507,435	)
Foreign exchange		4,444			(1,694	)		22,583
Net reserves at year end		2,258,658			1,752,839			1,440,369
Losses recoverable at year end		372,485			283,134			181,765
Gross reserves at year end	$	2,631,143		$	2,035,973		$	1,622,134

        Validus Re:    Validus Re's loss reserves are established based upon an estimate of the total cost of claims that have been incurred, including estimates of unpaid liability on known individual claims, the costs

18

of additional case reserves on claims reported but not considered to be adequately reserved in such reporting ("ACRs") and amounts that have been incurred but not yet reported. ACRs are used in certain cases and may be calculated based on management's estimate of the required case reserve on an individual claim less the case reserves reported by the client. The Validus Re Loss Reserve Committee follows material catastrophe event ultimate loss reserve estimation procedures for the investigation, analysis, estimation and approval of ultimate loss reserving resulting from any material catastrophe event. U.S. GAAP does not permit the establishment of loss reserves until an event occurs that gives rise to a loss.

        For reported losses, Validus Re establishes case reserves within the parameters of the coverage provided in the reinsurance contracts. Where there is a reported claim for which the reported case reserve is determined to be insufficient, Validus Re may book an ACR or individual claim IBNR estimate that is adjusted as claims notifications are received. Information may be obtained from various sources including brokers, proprietary and third party vendor models and internal data regarding reinsured exposures related to the geographic location of the event, as well as other sources. Validus Re uses generally accepted actuarial techniques in its IBNR estimation process. Validus Re also uses historical insurance industry loss emergence patterns, as well as estimates of future trends in claims severity, frequency and other factors, to aid it in establishing loss reserves.

        Loss reserves represent estimates, including actuarial and statistical projections at a given point in time, of the expectations of the ultimate settlement and administration costs of claims incurred. Such estimates are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends in loss severity and frequency and other variable factors such as inflation, litigation and tort reform. This uncertainty is heightened by the short time in which Validus Re has operated, thereby providing limited claims loss emergence patterns that directly pertain to Validus Re's operations. This has necessitated the use of industry loss emergence patterns in deriving IBNR, which despite management's and our actuaries' care in selecting them, will differ from actual experience. Further, expected losses and loss ratios are typically developed using vendor and proprietary computer models and these expected losses and loss ratios are a significant component in the calculation deriving IBNR. Finally, the uncertainty surrounding estimated costs is greater in cases where large, unique events have been reported and the associated claims are in early stages of resolution. As a result of these uncertainties, it is likely that the ultimate liability will differ from such estimates, perhaps materially. During 2010 and 2011, given the complexity and severity of notable loss events in the year, an explicit reserve for potential development on 2010 and 2011 notable loss events (RDE) was included within the Company's IBNR reserving process. As uncertainties surrounding initial estimates on notable loss events develop, it is expected that this reserve will be allocated to specific notable loss events.

        The requirement for a reserve for potential development on notable loss events in a quarter is a function of (a) the number of significant events occurring in that quarter and (b) the complexity and volatility of those events. These factors are considered in the aggregate for the events occurring in the quarter, recognizing that it is more likely that one or some of the events may deteriorate significantly, rather than all deteriorating proportionately. The evaluation of each quarter's requirement for a reserve for development on notable loss events takes place as part of the quarterly evaluation of the Company's overall reserve requirements. It is not directly linked in isolation to any one significant/notable loss in the quarter, and therefore it is not 'assigned to a contract on the basis of a specific review'. The reserve for development on notable loss events is evaluated by our in-house actuaries as part of their normal process in setting of indicated reserves for the quarter. In ensuing quarters senior management revisits and re-estimates each event previously considered in the catastrophe loss event process, as well as events that have subsequently emerged in the current quarter. Changes to the reserve for potential development on notable loss events will be considered in light of changes to previous loss estimates from notable losses in this re-estimation process.

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        Loss reserves are reviewed regularly and adjustments to reserves, if any, will be recorded in earnings in the period in which they are determined. Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates.

        Talbot:    Talbot's loss reserves are established based upon an estimate of the total cost of claims that have been incurred, including case reserves and IBNR. Talbot uses generally accepted actuarial techniques in its IBNR estimation process. ACRs are not generally used.

        Talbot performs internal assessments of liabilities on a quarterly basis. Talbot's loss reserving process involves the assessment of actuarial estimates of gross ultimate losses on both an ultimate basis (i.e., ignoring the period during which premium earns) and an earned basis, split by underwriting year and class of business, and generally also between attritional, large and catastrophe losses. These estimates are made using a variety of generally accepted actuarial projection methodologies, as well as additional qualitative consideration of future trends in frequency, severity and other factors. The gross estimates are used to estimate ceded reinsurance recoveries, which are in turn used to calculate net ultimate losses as the difference between gross and ceded. These figures are subsequently used by Talbot's management to help it assess its best estimate of gross and net ultimate losses.

        As with Validus Re, Talbot's loss reserves represent estimates, including actuarial and statistical projections at a given point in time, of the expectations of the ultimate settlement and administration costs of claims incurred. Such estimates are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends in loss severity and frequency and other variable factors such as inflation, litigation and tort reform. The uncertainty surrounding estimated costs is also greater in cases where large, unique events have been reported and the associated claims are in the early stages of resolution. As a result of these uncertainties, it is likely that the ultimate liability will differ from such estimates, perhaps materially.

        Talbot's loss reserves are reviewed regularly and adjustments to reserves, if any, will be recorded in earnings in the period in which they are determined. Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates. See Part I, Item 1A, "Risk Factors" and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Cautionary Note Regarding Forward-Looking Statements."

Investment Management

        The Company manages its investment portfolio on a consolidated basis. As we provide short-tail insurance and reinsurance coverage, we could become liable to pay substantial claims on short notice. Accordingly, we follow a conservative investment strategy designed to emphasize the preservation of invested assets and provide sufficient liquidity for the prompt payment of claims. Our Board of Directors, led by our Finance Committee, oversees our investment strategy, and in consultation with BlackRock Financial Management, Inc., Goldman Sachs Asset Management, Conning, Inc. and Pinebridge Investments Europe Ltd., our portfolio advisors, has established investment guidelines for us. The investment guidelines dictate the portfolio's overall objective, benchmark portfolio, eligible securities, duration, use of derivatives, inclusion of foreign securities, diversification requirements and average portfolio rating. Management and the Finance Committee periodically review these guidelines in light of our investment goals and consequently they may change at any time.

        Substantially all of the fixed maturity investments held at December 31, 2011 were publicly traded. At December 31, 2011, the average duration of the Company's fixed maturity portfolio was 1.63 years (December 31, 2010: 2.27 years). Management emphasizes capital preservation for the portfolio and maintains a significant allocation of short-term investments. At December 31, 2011, the average rating of the portfolio was AA- (December 31, 2010: AA+). At December 31, 2011, the total fixed maturity portfolio was $4,894.1 million (December 31, 2010: $4,823.9 million), of which $882.9 million (December 31, 2010: $2,946.5 million) were rated AAA.

20

        Please refer to our Current Report on Form 8-K furnished to the Securities and Exchange Commission (the "SEC") on February 2, 2012 for additional disclosure with respect to the composition of our investment portfolio.

Claims Management

        Claims management includes the receipt of initial loss notifications, generation of appropriate responses to claim reports, identification and handling of coverage issues, determination of whether further investigation is required and, where appropriate retention of legal representation, establishment of case reserves, approval of loss payments and notification to reinsurers.

        Validus Re:    The role of our claims department is to investigate, evaluate and pay claims efficiently. Our claims director has implemented claims handling guidelines, and reporting and control procedures. The primary objectives of the claims department are to ensure that each claim is addressed, evaluated, processed and appropriately documented in a timely and efficient manner and information relevant to the management of the claim is retained.

        Talbot:    Where Talbot is the lead syndicate on business written, the claims adjusters will deal with the broker representing the insured. This may involve appointing attorneys, loss adjusters or other experts. The central Lloyd's market claims bureau will respond on behalf of syndicates other than the leading syndicate.

        Where Talbot is not the lead underwriter on syndicate business, the case reserves are established by the lead underwriter in conjunction with third party/bureau input who then advise regarding movements in loss reserves to all syndicates participating on the risk. Material claims and claims movements are subject to review by Talbot.

Competition

        The insurance and reinsurance industries are highly competitive. We compete with major U.S., Bermuda, European and other international insurers and reinsurers and certain underwriting syndicates and insurers. We encounter competition in all of our classes of business but there is less competition in those of our lines where we are a specialist underwriter. The Company competes with insurance and reinsurance providers such as:

•

ACE Tempest Re, Aspen Insurance Holdings Limited, Allied World Assurance Company Holdings Limited, Alterra Capital Holdings, Ltd., Arch Capital Group Limited, Axis Capital Holdings Limited, Endurance Specialty Holdings Limited, Everest Re Group Limited, Flagstone Reinsurance Holdings Group Limited, Munich Re, PartnerRe Ltd., Platinum Underwriters Holdings Ltd., Renaissance Reinsurance Holdings Ltd., Swiss Re and XL Re;

•

Amlin plc, Catlin Group Limited, Hiscox and others in the Lloyd's market;

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Direct insurers who compete with Lloyd's on a worldwide basis;

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Various capital markets participants who access insurance and reinsurance business in securitized form, through special purpose entities or derivative transactions; and

•

Government-sponsored insurers and reinsurers.

        Competition varies depending on the type of business being insured or reinsured and whether the Company is in a leading or following position. Competition in the types of business that the Company underwrites is based on many factors, including:

•

Premiums charged and other terms and conditions offered;

•

Services provided;

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•

Financial ratings assigned by independent rating agencies;

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Speed of claims payment;

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Reputation;

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Perceived financial strength; and

•

The experience of the underwriter in the line of insurance or reinsurance written.

        Increased competition could result in fewer submissions, lower premium rates, lower share of allocated cover, and less favorable policy terms, which could adversely impact the Company's growth and profitability. Capital market participants have created alternative products such as catastrophe bonds that are intended to compete with reinsurance products. The Company is unable to predict the extent to which these new, proposed or potential initiatives may affect the demand for products or the risks that may be available to consider underwriting.

Regulation

United States

        Talbot operates primarily within the Lloyd's insurance market through Syndicate 1183, and Lloyd's operations are subject to regulation in the United States in addition to being regulated in the United Kingdom, as discussed below. The Lloyd's market is licensed to engage in insurance business in Illinois, Kentucky and the U.S. Virgin Islands and operates as an eligible excess and surplus lines insurer in all states and territories except Kentucky and the U.S. Virgin Islands. Lloyd's is also an accredited reinsurer in all states and territories of the United States. Lloyd's maintains various trust funds in the state of New York to protect its United States business and is therefore subject to regulation by the New York Insurance Department, which acts as the domiciliary department for Lloyd's U.S. trust funds. There are deposit trust funds in other states to support Lloyd's reinsurance and excess and surplus lines insurance business.

        Talbot is subject to a Closing Agreement between Lloyd's and the U.S. Internal Revenue Service pursuant to which Talbot is subject to U.S. federal income tax to the extent its income is attributable to U.S. agents who have authority to bind Talbot. Specifically, U.S. federal income tax is imposed on 35% of its income attributable to U.S. binding authorities (70% for Illinois or Kentucky business).

        We currently conduct our business in a manner such that we expect that Validus Re will not be subject to insurance and/or reinsurance licensing requirements or regulations in the United States. Although we do not currently intend for Validus Re to engage in activities which would require it to comply with insurance and reinsurance licensing requirements in the United States, should we choose to engage in activities that would require Validus Re to become licensed in the United States, we cannot assure you that we will be able to do so or to do so in a timely manner. Furthermore, the laws and regulations applicable to direct insurers could indirectly affect us, such as collateral requirements in various U.S. states to enable such insurers to receive credit for reinsurance ceded to us.

        In addition, the insurance and reinsurance regulatory framework of Bermuda and the insurance of U.S. risk by companies based in Bermuda and not licensed or authorized in the United States recently has become the subject of increased scrutiny in many jurisdictions, including the United States. We are not able to predict the future impact of changes in the laws and regulation to which we are or may become subject on the Company's financial condition or results of operations.

United Kingdom

        The financial services industry in the UK is regulated by the Financial Services Authority ("FSA"). The FSA is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. Although accountable to treasury ministers and through them to Parliament, it is

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funded entirely by the firms it regulates. The FSA has wide ranging powers in relation to rule-making, investigation and enforcement to enable it to meet its four statutory objectives, which are summarized as one overall aim: "to promote efficient, orderly and fair markets and to help retail consumers achieve a fair deal."

        In relation to insurance business, the FSA regulates insurers, insurance intermediaries and Lloyd's itself. The FSA and Lloyd's have common objectives in ensuring that Lloyd's market is appropriately regulated and, to minimize duplication, the FSA has agreed arrangements with Lloyd's for co-operation on supervision and enforcement.

        Talbot's underwriting activities are therefore regulated by the FSA as well as being subject to the Lloyd's "franchise". Both FSA and Lloyd's have powers to remove their respective authorization to manage Lloyd's syndicates. Lloyd's approves annually Syndicate 1183's business plan and any subsequent material changes, and the amount of capital required to support that plan. Lloyd's may require changes to any business plan presented to it or additional capital to be provided to support the underwriting (known as Funds as Lloyd's).

        In addition, Talbot's intermediary company, Underwriting Risk Services Ltd. is regulated by the FSA as an insurance intermediary.

        The U.K. government has set out proposals to replace the current system of financial regulation, which it believes has weaknesses, with a new regulatory framework. The key weakness it identified was that no single institution has the responsibility, authority and tools to monitor the financial system as a whole, and respond accordingly. That power will be given to the Bank of England. The U.K. government intends to create a new Financial Policy Committee (FPC) within the Bank, which will look at the wider economic and financial risks to the stability of the system.

        In addition, the FSA will cease to exist in its current form, and the U.K government will create two new focused financial regulators:

•

A new Prudential Regulation Authority (PRA) will be responsible for the day-to-day supervision of financial institutions that are subject to significant prudential regulation. It will adopt a more judgment-focused approach to regulation so that business models can be challenged, risks identified and action taken to preserve financial stability.

•

A new Financial Conduct Authority (FCA) will have a strong mandate for promoting confidence and transparency in financial services and to give greater protection for consumers of financial services.

        The Financial Services Bill was introduced to Parliament on January 26, 2012. Subject to the parliamentary timetable the U.K government's aim is for the Bill to gain Royal Assent by the end of 2012, and for the new system to be operational in early 2013.

        In November 2007 Talbot established Talbot Risk Services Pte Ltd in Singapore to source business in the Far East under the Lloyd's Asia Scheme. The Lloyd's Asia Scheme was established by the Monetary Authority of Singapore to encourage members of Lloyd's to expand insurance activities in Asia.

        An EU directive covering the capital adequacy, risk management and regulatory reporting for insurers, known as Solvency II was adopted by the European Parliament in April 2009. A directive, known as Omnibus II, which will amend certain of the Solvency II proposals, including the implementation date, is due to be considered by the European Parliament in 2012. The proposed Solvency II insurance directive is currently expected to come into force with a soft launch on January 1, 2013 and a full implementation on January 1, 2014. Insurers and reinsurers are undertaking a significant amount of work to ensure that they meet the new requirements and this may divert resources from other operational roles. The Company's implementation plans are well underway, although final Solvency II guidelines have not been published.

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Bermuda

        General.    As a holding company, Validus Holdings, Ltd. is not subject to Bermuda insurance regulation. However, the Insurance Act 1978 regulates the Company's operating subsidiaries in Bermuda, and it provides that no person may carry on any insurance business in or from within Bermuda unless registered as an insurer by the Bermuda Monetary Authority (the "BMA") under the Insurance Act. The Insurance Act makes no distinction between insurance and reinsurance business. The Company has four Bermuda based-subsidiaries, Validus Re, a Class 4 insurer, Validus Re Americas, Ltd (formerly IPCRe Limited), a Class 4 insurer, Talbot Insurance (Bermuda) Ltd., a Class 3 insurer, and AlphaCat Reinsurance, Ltd, a Class 3 insurer, each registered under the Insurance Act 1978 (Bermuda), and its Related Regulations ("The Act").

        Principal Representative.    The Insurance Act requires that every insurer, including the Bermuda insurance subsidiaries of the Company, appoint and maintain a principal representative resident in Bermuda and maintain a principal office in Bermuda. The principal representative must be knowledgeable in insurance and is responsible for arranging the maintenance and custody of the statutory accounting records and for filing the Annual Statutory Financial Return and Capital and Solvency Return.

        The Insurance Act imposes on Bermuda insurance companies solvency and liquidity standards, certain restrictions on the declaration and payment of dividends and distributions, certain restrictions on the reduction of statutory capital, auditing and reporting requirements, and grants the BMA powers to supervise, investigate and intervene in the affairs of insurance companies. Significant requirements include the appointment of an independent auditor, the appointment of a loss reserve specialist and the filing of an Annual Statutory Financial Return with the BMA.

        Supervision.    The BMA may appoint an inspector with extensive powers to investigate the affairs of any of the Company's Bermuda insurance subsidiaries if it believes that such an investigation is in the best interests of such insurer's policyholders or persons who may become policyholders. In order to verify or supplement information otherwise provided to the BMA, the BMA may direct any of the Company's Bermuda insurance subsidiaries to produce documents or information relating to matters connected with its business. If it appears to the BMA that there is a risk of any of the Company's Bermuda insurance subsidiaries becoming insolvent, or being in breach of the Insurance Act, or any conditions imposed upon its registration under the Insurance Act, the BMA may, among other things, direct the relevant entity or entities: (i) not to take on any new insurance business; (ii) not to vary any insurance contract if the effect would be to increase its liabilities; (iii) not to make certain investments; (iv) to realize certain investments; (v) to maintain in or transfer to the custody of a specified bank certain assets; (vi) not to declare or pay any dividends or other distributions, or to restrict the making of such payments; and/or (vii) to limit its premium income.

        Restrictions on Dividends.    Under the Bermuda Companies Act 1981, as amended, a Bermuda company, including the Company, may not declare or pay a dividend or make a distribution out of contributed surplus if there are reasonable grounds for believing that: (a) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realizable value of the company's assets would thereby be less than its liabilities. Further, an insurer may not declare or pay any dividends during any financial year if it would cause the insurer to fail to meet its relevant margins, and an insurer which fails to meet its relevant margins on the last day of any financial year may not, without the approval of the BMA, declare or pay any dividends during the next financial year. In addition, as Class 4 Insurers, Validus Re and Validus Re Americas, Ltd. may not in any financial year pay dividends which would exceed 25 percent of its total statutory capital and surplus, as shown on its statutory balance sheet in relation to the previous financial year, unless it files a solvency affidavit at least seven days in advance.

        Enhanced Capital Requirements and Minimum Solvency.    In 2008, the Bermuda insurance supervisory framework underwent major revision with the passage of the Insurance Amendment Act 2008 (the

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Amendment Act). The Amendment Act established new risk-based regulatory capital adequacy and solvency margin requirements for Bermuda insurers. These requirements are updated periodically.

        The new risk-based capital model, or Bermuda Solvency Capital Requirement ("BSCR"), is a tool to assist the BMA in measuring risk and in determining appropriate levels of capitalization. The BSCR employs a standard mathematical model that correlates risk underwritten by Bermuda insurers to the capital that is dedicated to their business. The framework that has been developed applies a standard measurement format to the risk associated with an insurer's assets, liabilities and premiums, including a formula to take account of catastrophe risk exposure. In order to minimize the risk of shortfall in capital arising from an unexpected adverse deviation and in moving towards the implementation of a risk-based capital approach, the BMA requires that insurers operate at or above a threshold capital level (termed the Target Capital Level (TCL)), which exceeds the BSCR or approved internal model minimum amounts.

        In order to minimize the risk of a shortfall in capital arising from an unexpected adverse deviation and in moving towards the implementation of a risk-based capital approach, the BMA proposes that insurers operate at or above a threshold captive level (termed the Target Capital Level ("TCL")), which exceeds the BSCR (Enhanced Capital Requirement ("ECR")) or approved internal model minimum amounts. Presently the BSCR model applies to Validus Re and Validus Re Americas, Ltd.

        In addition to the new risk-based solvency capital regime described above is the minimum solvency margin test set out in the Insurance Returns and Solvency Amendment Regulations 1980 (as amended) applicable to all Bermuda insurance companies. While it must calculate its ECR annually by reference to either the BSCR or an approved internal model, a Class 4 Insurer is also required to meet a margin of solvency as well as minimum amounts of paid-up capital for registration (termed the Regulatory Capital Requirement) ("RCR")). Under the RCR, the value of the general business assets of a Class 4 insurer must exceed the amount of its general business liabilities by an amount greater than the prescribed minimum solvency margin, being equal to the greater of:

        (a)   $100,000,000;

        (b)   50% of net premiums written (being gross premiums written less any premiums ceded by the insurer, but the insurer may not deduct more than 25% of gross premiums when computing net premiums written); or

        (c)   15% of net losses and loss expense reserves.

        The Company's Bermuda insurance subsidiaries must prepare annual statutory financial statements and file them with the BMA, together with audited annual financial statements prepared in accordance with U.S. GAAP, International Financial Reporting Standards (IFRS) or any such GAAP as the BMA may recognize. These audited financial statements are made public by the BMA.

        Prudential Standards:    The BMA may make Rules prescribing prudential standards in relation to enhanced capital requirements, capital and solvency returns, insurance reserves and eligible capital and may impose different requirements to be complied with by different classes of insurers, in different situations and in respect of different activities. The Rules may allow the BMA to exercise powers and discretion in relation to prudential standards including the power to approve, improve, adjust or exclude specific prudential standards in relation to a particular insurer or a specific class of insurer. The Rules may provide for summary offences in relation to the making of false or misleading statements or returns. An insurer may make application to be exempted from the requirement to comply with any prudential standard. The BMA will not grant such an exemption unless it is satisfied that it is appropriate having regard to the obligations of the insurer towards its policyholders.

        Adjustments to ECR and Available Statutory Capital and Surplus:    The BMA, under specified circumstances, may make adjustments to an insurer's enhanced capital requirements and available statutory capital and surplus. Such adjustments may require an increase in the amount of insurance

25

reserves to the level of existing prudential standards. The BMA shall notify an insurer of its intention and provide the insurer with an opportunity to make written representations. An insurer also has the opportunity to make application to the BMA for an adjustment to its enhanced capital requirements or available statutory capital and surplus. The BMA will make such adjustments as it determines to be appropriate.

        Group Supervision.    Emerging international norms in the regulation of global insurance and reinsurance groups are trending increasingly towards the imposition of group-wide supervisory regimes by one principal "home" regulator over all the legal entities in the group, no matter where incorporated. The Insurance Amendment Act 2010 ("2010 Amendment Act") which became operative on March 25, 2010, introduced such a regime into Bermuda insurance regulation.

        The 2010 Amendment Act introduced into the Insurance Act a new part concerning group supervision. The new part includes new provisions regarding group supervision, the authority to exclude specified entities from group supervision, the power of the BMA to withdraw as group supervisor, the functions of the BMA as group supervisor and the power of the BMA to make rules regarding group supervision. The BMA has subsequently released Insurance (Group Supervision) Rules 2011, which, when operative, will be applicable to the Company. The BMA is the group supervisor for the Company and its subsidiaries.

        The Bermuda Insurance Code of Conduct.    The BMA has implemented a new insurance code, the Insurance Code of Conduct (the "Bermuda Insurance Code"), which came into effect on July 1, 2010. The BMA established July 1, 2011 as the date of compliance for commercial insurers, such as the Company's Bermuda insurance subsidiaries.

        The Code is divided into six categories, including:

        (a)   Proportionality Principle;

        (b)   Corporate Governance;

        (c)   Risk Management;

        (d)   Governance Mechanism;

        (e)   Outsourcing; and

        (f)    Market Discipline and Disclosure.

        These categories contain the duties, requirements and compliance standards to be adhered to by all insurers. It stipulates that in order to achieve compliance with the Bermuda Insurance Code, insurers are to develop and apply policies and procedures capable of assessment by the BMA.

        Securities:    Securities may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act 2003, and Exchange Control Act 1972, and related regulations of Bermuda which regulate the sale of securities in Bermuda. In addition, specific permission is required from the BMA, pursuant to the provisions of the Exchange Control Act 1972 and related regulations, for all issuances and transfers of securities of Bermuda companies, other than in cases where the BMA has granted a general permission. The BMA, in its policy dated June 1, 2005, provides that where any equity securities, which would include our ordinary shares, of a Bermuda company are listed on an appointed stock exchange (the New York Stock Exchange is deemed to be an appointed stock exchange under Bermuda law), general permission is given for the issue and subsequent transfer of any securities of a company from and/or to a non-resident, for as long as any equity securities of the company remain so listed. The ordinary shares of the Company are listed on the New York Stock Exchange.

        Notwithstanding the above general permission, the BMA has granted us permission to, subject to our ordinary or voting shares being listed on an appointed stock exchange, issue, grant, create, sell and transfer

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any of our shares, stock, bonds, notes (other than promissory notes), debentures, debenture stock, units under a unit trust scheme, shares in an oil royalty, options, warrants, coupons, rights and depository receipts, collectively, the "Securities", to and among persons who are either resident or non-resident of Bermuda for exchange control purposes, whether or not the Securities (excluding, for the avoidance of doubt, our ordinary or voting shares) are listed on an appointed stock exchange.

        Controller Notification.    Under the Insurance Act each shareholder or prospective shareholder will be responsible for notifying the BMA in writing of his becoming a controller, directly or indirectly, of 10%, 20%, 33% or 50% of the Company and/or any of the Company's Bermuda insurance subsidiaries within 45 days of becoming such a controller. The BMA may serve a notice of objection on any controller of the Company or any of the Company's Bermuda insurance subsidiaries if it appears to the BMA that the person is no longer fit and proper to be such a controller. The Company's Bermuda insurance subsidiaries are also required to notify the BMA in writing in the event of any person becoming or ceasing to be a controller or officer, a controller or officer being a managing director, chief executive, director, secretary, chief executive or senior executive or other person in accordance with whose directions or instructions the directors of the Bermuda insurance subsidiaries are accustomed to act, including any person who holds, or is entitled to exercise, 10% or more of the voting shares or voting power or is able to exercise a significant influence over the management of any of the Bermuda insurance subsidiaries.

Employment Practices

        The Company prides itself on its ability to attract extraordinarily talented people from all over the world to help us build our business. We are in a knowledge business, and the competition for talent is intense. We have developed an outstanding group of deeply talented professionals. Most importantly, we are able to retain this talented group and harness them toward providing risk management solutions for our clients and for our Company. We believe our relations with our employees are excellent.

        The following table details our personnel by geographic location as at December 31, 2011:

Location	Validus Re		Talbot		Corporate		Total		%
London, England		—		285		—		285		58.2	%
Hamilton, Bermuda		60		1		47		108		22.0	%
Waterloo, Canada		—		—		29		29		5.9	%
Republic of Singapore		8		14		—		22		4.5	%
Miami, United States		16		—		—		16		3.3	%
New York, United States		—		13		4		17		3.5	%
Dubai, United Arab Emirates		—		6		—		6		1.2	%
Santiago, Chile		6		—		—		6		1.2	%
Hamburg, Germany		1		—		—		1		0.2	%
Total		91		319		80		490		100.0	%

Available Information

        The Company files periodic reports, proxy statements and other information with the SEC. The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The SEC's website address is http://www.sec.gov. The Company's common shares are traded on the NYSE with the symbol "VR". Similar information concerning the Company can be reviewed at the office of the NYSE at 20 Broad Street, New York, New York, 10005. The Company's website address is http://www.validusholdings.com. Information contained in this website is not part of this report.

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        The Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge, including through our website, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Copies of the charters for the audit committee, the compensation committee, the corporate governance and nominating committee, the finance committee and the risk committee, as well as the Company's Corporate Governance Guidelines, Code of Business Conduct and Ethics for Directors, Officers and Employees (the "Code"), which applies to all of the Company's Directors, officers and employees, and Code of Ethics for Senior Officers, which applies to the Company's principal executive officer, principal accounting officer and other persons holding a comparable position, are available free of charge on the Company's website at http://www.validusholdings.com or by writing to Investor Relations, Validus Holdings, Ltd., 29 Richmond Road, Pembroke, HM 08, Bermuda. The Company will also post on its website any amendment to the Code and any waiver of the Code granted to any of its directors or executive officers to the extent required by applicable rules.

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Item 1A.    Risk Factors

Risks Related to Our Company

Claims on policies written under our short-tail insurance lines that arise from unpredictable and severe catastrophic events could adversely affect our financial condition or results of operations.

        Substantially all of our gross premiums written to date are in short-tail lines, many of which have the potential to accumulate, which means we could become liable for a significant amount of losses in a brief period. The short-tail policies we write expose us to claims arising out of unpredictable natural and other catastrophic events, whether arising from natural causes such as hurricanes, windstorms, tsunamis, severe winter weather, earthquakes and floods, or man-made causes such as fires, explosions, acts of terrorism, war or political unrest. Many observers believe that the Atlantic basin is in the active phase of a multi-decade cycle in which conditions in the ocean and atmosphere, including warmer-than-average sea-surface temperatures and low wind shear, enhance hurricane activity. This increase in the number and intensity of tropical storms and hurricanes can span multiple decades (approximately 20 to 30 years). These conditions may translate to a greater potential for hurricanes to make landfall in the U.S. at higher intensities over the next five years. In addition, climate change may be causing changes in global temperatures, which may in the future increase the frequency and severity of natural catastrophes and the losses resulting therefrom. Although the frequency and severity of catastrophes are inherently unpredictable, we use state-of-science understanding of climate change and other climate signals for pricing and risk aggregation.

        The extent of losses from catastrophes is a function of both the number and severity of the insured events and the total amount of insured exposure in the areas affected. Increases in the value and concentrations of insured property, the effects of inflation and changes in cyclical weather patterns may increase the severity of claims from natural catastrophic events in the future. Similarly, changes in global political and economic conditions may increase both the frequency and severity of man-made catastrophic events in the future. Claims from catastrophic events could reduce our earnings and cause substantial volatility in our results of operations for any fiscal quarter or year, which could adversely affect our financial condition, possibly to the extent of eliminating our shareholders' equity. Our ability to write new reinsurance policies could also be affected as a result of corresponding reductions in our capital.

        Underwriting is inherently a matter of judgment, involving important assumptions about matters that are unpredictable and beyond our control, and for which historical experience and probability analysis may not provide sufficient guidance. One or more catastrophic or other events could result in claims that substantially exceed our expectations and which would become due in a short period of time, which could materially adversely affect our financial condition, liquidity or results of operations.

Emerging claim and coverage issues could adversely affect our business.

        As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until sometime after we have issued insurance or reinsurance contracts that are affected by the changes. For example, a (re)insurance contract might limit the amount that can be recovered as a result of flooding. However, if the flood damage was caused by an event that also caused extensive wind damage, the quantification of the two types of damage is often a matter of judgment. Similarly, one geographic zone could be affected by more than one catastrophic event. In this case, the amount recoverable from an insurer or reinsurer may in part be determined by the judgmental allocation of damage between the storms. Given the magnitude of the amounts at stake, these types of issues occasionally necessitate judicial resolution. In addition, our actual losses may vary materially from our current estimate of the loss based on a number of factors, including receipt of additional information from insureds or brokers, the attribution of losses to coverages that had not previously been considered as exposed and inflation in repair costs due to additional demand for labor

29

and materials. As a result, the full extent of liability under an insurance or reinsurance contract may not be known for many years after such contract is issued and a loss occurs. Our exposure to this uncertainty is greater in our longer tail lines (marine and energy liabilities and financial institutions).

We depend on ratings from third party rating agencies. Our financial strength rating could be revised downward, which could affect our standing among brokers and customers, cause our premiums and earnings to decrease and limit our ability to pay dividends on our common shares.

        Third-party rating agencies assess and rate the financial strength of insurers and reinsurers based upon criteria established by the rating agencies, which criteria are subject to change. The financial strength ratings assigned by rating agencies to insurance and reinsurance companies represent independent opinions of financial strength and ability to meet policyholder obligations and are not directed toward the protection of investors. Ratings have become an increasingly important factor in establishing the competitive position of insurance and reinsurance companies. Insurers and intermediaries use these ratings as one measure by which to assess the financial strength and quality of insurers and reinsurers. These ratings are often a key factor in the decision by an insured or intermediary of whether to place business with a particular insurance or reinsurance provider. These ratings are not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our common shares.

        If our financial strength rating is reduced from current levels, our competitive position in the reinsurance industry would suffer, and it would be more difficult for us to market our products. A downgrade could result in a significant reduction in the number of reinsurance contracts we write and in a substantial loss of business as our customers and brokers that place such business, move to other competitors with higher financial strength ratings. The substantial majority of reinsurance contracts issued through reinsurance brokers contain provisions permitting the ceding company to cancel such contracts in the event of a downgrade of the reinsurer by A.M. Best below "A-" (Excellent).

        We cannot predict in advance the extent to which this cancellation right would be exercised, if at all, or what effect any such cancellations would have on our financial condition or future operations, but such effect could be material and adverse. Consequently, substantially all of Validus Re's business could be affected by a downgrade of our A.M. Best rating below "A-".

        The indenture governing our Junior Subordinated Deferrable Debentures would restrict us from declaring or paying dividends on our common shares if we are downgraded by A.M. Best to a financial strength rating of "B" (Fair) or below or if A.M. Best withdraws its financial strength rating on any of our material insurance subsidiaries. A downgrade of the Company's A.M. Best financial strength rating below "B++" (Fair) would also constitute an event of default under our credit facilities. Either of these events could, among other things, reduce the Company's financial flexibility.

If the Company's risk management and loss limitation methods fail to adequately manage exposure to losses from catastrophic events, our financial condition and results of operations could be adversely affected.

        The Company manages exposure to catastrophic losses by analyzing the probability and severity of the occurrence of catastrophic events and the impact of such events on our overall (re)insurance and investment portfolio. The Company uses various tools to analyze and manage the reinsurance exposures assumed from insureds and ceding companies and risks from a catastrophic event that could have an adverse effect on the investment portfolio. VCAPS, a proprietary risk modeling software, enables Validus Re to assess the adequacy of reinsurance risk pricing and to monitor the overall exposure to insurance and reinsurance risk in correlated geographic zones. The Company cannot assure the models and assumptions used by the software will accurately predict losses. Further, the Company cannot assure that it is free of defects in the modeling logic or in the software code. In addition, the Company has not sought copyright or other legal protection for VCAPS.

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        In addition, much of the information that the Company enters into the risk modeling software is based on third-party data that may not be reliable, as well as estimates and assumptions that are dependent on many variables, such as assumptions about building material and labor demand surge, storm surge, the expenses of settling claims (known as loss adjustment expenses), insurance-to-value and storm intensity. Accordingly, if the estimates and assumptions that are entered into the proprietary risk model are incorrect, or if the proprietary risk model proves to be an inaccurate forecasting tool, the losses the Company might incur from an actual catastrophe could be materially higher than its expectation of losses generated from modeled catastrophe scenarios, and its financial condition and results of operations could be adversely affected.

        A modeled outcome of net loss from a single event also relies in significant part on the reinsurance and retrocessional arrangements in place, or expected to be in place at the time of the analysis, and may change during the year. Modeled outcomes assume that the reinsurance in place responds as expected with minimal reinsurance failure or dispute. Reinsurance and retrocessional coverage is purchased to protect the inwards exposure in line with the Company's risk appetite, but it is possible for there to be a mismatch or gap in cover which could result in higher than modeled losses. In addition, many parts of the reinsurance program are purchased with limited reinstatements and, therefore, the number of claims or events which may be recovered from second or subsequent events is limited. It should also be noted that renewal dates of the reinsurance and retrocessional program do not necessarily coincide with those of the inwards business written. Where inwards business is not protected by risks attaching reinsurance and retrocessional programs, the programs could expire resulting in an increase in the possible net loss retained and as such, could have a material adverse effect on our financial condition and results of operations.

        The Company also seeks to limit loss exposure through loss limitation provisions in its policies, such as limitations on the amount of losses that can be claimed under a policy, limitations or exclusions from coverage and provisions relating to choice of forum, which are intended to assure that its policies are legally interpreted as intended. There can be no assurance that these contractual provisions will be enforceable in the manner expected or that disputes relating to coverage will be resolved in its favor. If the loss limitation provisions in the policies are not enforceable or disputes arise concerning the application of such provisions, the losses we might incur from a catastrophic event could be materially higher than expectation and our financial condition and results of operations could be adversely affected.

The insurance and reinsurance business is historically cyclical, and we expect to experience periods with excess underwriting capacity and unfavorable premium rates and policy terms and conditions, which could materially adversely affect our financial condition and results of operations.

        The insurance and reinsurance industry has historically been cyclical. Insurers and reinsurers have experienced significant fluctuations in operating results due to competition, frequency of occurrence or severity of catastrophic events, levels of underwriting capacity, underwriting results of primary insurers, general economic conditions and other factors. The supply of insurance and reinsurance is related to prevailing prices, the level of insured losses and the level of industry surplus which, in turn, may fluctuate, including in response to changes in rates of return on investments being earned in the reinsurance industry.

        The insurance and reinsurance pricing cycle has historically been a market phenomenon, driven by supply and demand rather than by the actual cost of coverage. The upward phase of a cycle is often triggered when a major event forces insurers and reinsurers to make large claim payments, thereby drawing down capital. This, combined with increased demand for insurance against the risk associated with the event, pushes prices upwards. Over time, insurers' and reinsurers' capital is replenished with the higher revenues. At the same time, new entrants flock to the industry seeking a part of the profitable business. This combination prompts a slide in prices—the downward cycle—until a major insured event restarts the upward phase. As a result, the insurance and reinsurance business has been characterized by periods of intense competition on price and policy terms due to excessive underwriting capacity, which is the

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percentage of surplus or the dollar amount of exposure that a reinsurer is willing to place at risk, as well as periods when shortages of capacity result in favorable premium rates and policy terms and conditions.

        Premium levels may be adversely affected by a number of factors which fluctuate and may contribute to price declines generally in the reinsurance industry. For example, as premium levels for many products increased subsequent to the significant natural catastrophes of 2004 and 2005, the supply of reinsurance increased, either as a result of capital provided by new entrants or by the commitment of additional capital by existing reinsurers. Increases in the supply of insurance and reinsurance may have consequences for the reinsurance industry generally and for us including fewer contracts written, lower premium rates, increased expenses for customer acquisition and retention, and less favorable policy terms and conditions. As a consequence, the Company may experience greater competition on most insurance and reinsurance lines. This could adversely affect the rates we receive for our reinsurance and our gross premiums written.

        The cyclical trends in the industry and the industry's profitability can also be affected significantly by volatile and unpredictable developments, such as natural disasters (such as catastrophic hurricanes, windstorms, tornados, earthquakes and floods), courts granting large awards for certain damages, fluctuations in interest rates, changes in the investment environment that affect market prices of investments and inflationary pressures that may tend to affect the size of losses experienced by insureds and primary insurance companies. We expect to experience the effects of cyclicality, which could materially adversely affect our financial condition and results of operations.

Competition for business in our industry is intense, and if we are unable to compete effectively, we may not be able to retain market share and our business may be materially adversely affected.

        The insurance and reinsurance industries are highly competitive. We face intense competition, based upon (among other things) global capacity, product breadth, reputation and experience with respect to particular lines of business, relationships with (re)insurance intermediaries, quality of service, capital and perceived financial strength (including independent rating agencies' ratings), innovation and price. We compete with major global insurance and reinsurance companies and underwriting syndicates, many of which have extensive experience in (re)insurance and may have greater financial, marketing and employee resources available to them than us. Other financial institutions, such as banks and hedge funds, now offer products and services similar to our products and services through alternative capital markets products that are structured to provide protections similar to those provided by reinsurers. These products, such as catastrophe-linked bonds, compete with our products. In the future, underwriting capacity will continue to enter the market from these identified competitors and perhaps other sources. Increased competition could result in fewer submissions and lower rates, which could have an adverse effect on our growth and profitability. If we are unable to compete effectively against these competitors, we may not be able to retain market share.

        Insureds have been retaining a greater proportion of their risk portfolios than previously, and industrial and commercial companies have been increasingly relying upon their own subsidiary insurance companies, known as captive insurance companies, self-insurance pools, risk retention groups, mutual insurance companies and other mechanisms for funding their risks, rather than risk transferring insurance. This has also put downward pressure on insurance premiums.

If we underestimate our reserve for losses and loss expenses, our financial condition and results of operations could be adversely affected.

        Our success depends on our ability to accurately assess the risks associated with the businesses and properties that we insure/reinsure. If unpredictable catastrophic events occur, or if we fail to adequately manage our exposure to losses or fail to adequately estimate our reserve requirements, our actual losses and loss expenses may deviate, perhaps substantially, from our reserve estimates.

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        We estimate the risks associated with our outstanding obligations, including the risk embedded within our unearned premiums. To do this, we establish reserves for losses and loss expenses (or loss reserves), which are liabilities that we record to reflect the estimated costs of claim payment and the related expenses that we will ultimately be required to pay in respect of premiums written and include case reserves and IBNR reserves. However, under U.S. GAAP, we are not permitted to establish reserves for losses until an event which gives rise to a claim occurs. As a result, only reserves applicable to losses incurred up to the reporting date may be set aside on our financial statements, with no allowance for the provision of loss reserves to account for possible other future losses. Case reserves are reserves established with respect to specific individual reported claims. IBNR reserves are reserves for estimated losses that we have incurred but that have not yet been reported to us.

        Our reserve estimates do not represent an exact calculation of liability. Rather, they are estimates of what we expect the ultimate settlement and administration of claims will cost. These estimates are based upon actuarial and statistical projections and on our assessment of currently available data, predictions of future developments and estimates of future trends and other variable factors such as inflation. Establishing an appropriate level of our loss reserve estimates is an inherently uncertain process. It is likely that the ultimate liability will be greater or less than these estimates and that, at times, this variance will be material. Our reserve estimates are regularly refined as experience develops and claims are reported and settled. Establishing an appropriate level for our reserve estimates is an inherently uncertain process. In addition, as we operate largely through intermediaries, reserving for our business can involve added uncertainty arising from our dependence on information from ceding companies which, in addition to the risk of receiving inaccurate information involves an inherent time lag between reporting information from the primary insurer to us. Additionally, ceding companies employ differing reserving practices which add further uncertainty to the establishment of our reserves. Moreover, these uncertainties are greater for reinsurers like us than for reinsurers with a longer operating history, because we do not yet have an established loss history. The lack of historical information for the Company has necessitated the use of industry loss emergence patterns in deriving IBNR. Loss emergence patterns are development patterns used to project current reported or paid loss amounts to their ultimate settlement value or amount. Further, expected losses and loss ratios are typically developed using vendor and proprietary computer models and these expected loss ratios are a material component in the calculation deriving IBNR. Actual loss ratios will deviate from expected loss ratios and ultimate loss ratios will be greater or less than expected loss ratios. Because of these uncertainties, it is possible that our estimates for reserves at any given time could prove inadequate.

        To the extent we determine that actual losses and loss adjustment expenses from events which have occurred exceed our expectations and the loss reserves reflected in our financial statements, we will be required to reflect these changes in the current reporting period. This could cause a sudden and material increase in our liabilities and a reduction in our profitability, including operating losses and reduction of capital, which could materially restrict our ability to write new business and adversely affect our financial condition and results of operations and potentially our A.M. Best rating.

The preparation of our financial statements will require us to make many estimates and judgments, which are even more difficult than those made in a mature company, and which, if inaccurate, could cause volatility in our results.

        Our consolidated financial statements have been prepared in accordance with U.S. GAAP. Management believes the item that requires the most subjective and complex estimates is the reserve for losses and loss expenses. Due to the Company's relatively short operating history, loss experience is limited and reliable evidence of changes in trends of numbers of claims incurred, average settlement amounts, numbers of claims outstanding and average losses per claim will necessarily take many years to develop. Following a major catastrophic event, the possibility of future litigation or legislative change that may affect interpretation of policy terms further increases the degree of uncertainty in the reserving process. The uncertainties inherent in the reserving process, together with the potential for unforeseen

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developments, including changes in laws and the prevailing interpretation of policy terms, may result in losses and loss expenses materially different than the reserves initially established. Changes to prior year reserves will affect current underwriting results by increasing net income if the prior year reserves prove to be redundant or by decreasing net income if the prior year reserves prove to be insufficient. We expect volatility in results in periods in which significant loss events occur because U.S. GAAP does not permit insurers or reinsurers to reserve for loss events until they have occurred and are expected to give rise to a claim. As a result, we are not allowed to record contingency reserves to account for expected future losses. We anticipate that claims arising from future events will require the establishment of substantial reserves from time to time.

We rely on key personnel and the loss of their services may adversely affect us. The Bermuda location of our head office may be an impediment to attracting and retaining experienced personnel.

        Various aspects of our business depend on the services and skills of key personnel of the Company. We believe there are only a limited number of available qualified executives in the business lines in which we compete. We rely substantially upon the services of Edward J. Noonan, Chairman of our Board of Directors and Chief Executive Officer; Joseph E. (Jeff) Consolino, President and Chief Financial Officer; C.N. Rupert Atkin, Chief Executive Officer of the Talbot Group; Michael E.A. Carpenter, Chairman of the Talbot Group; C. Jerome Dill, Executive Vice President and General Counsel; Andrew M. Gibbs, Executive Vice President and Group Controller; Andrew E. Kudera, Executive Vice President and Chief Actuary; Robert F. Kuzloski, Executive Vice President and Chief Corporate Legal Officer; Stuart W. Mercer, Executive Vice President and Chief Risk Officer; Jonathan P. Ritz, Executive Vice President, Business Operations; and Conan M. Ward, Executive Vice President of the Company and Chief Executive Officer of Validus Reinsurance, Ltd., among other key employees. The loss of any of their services or the services of other members of our management team or any difficulty in attracting and retaining other talented personnel could impede the further implementation of our business strategy, reduce our revenues and decrease our operational effectiveness. Although we have an employment agreement with each of the above named executives, there is a possibility that these employment agreements may not be enforceable in the event any of these employees leave. The employment agreements for each of the above-named executives provide that the terms of the agreement will continue for a defined period after either party giving notice of termination, and will terminate immediately upon the Company giving notice of termination for cause. We do not currently maintain key man life insurance policies with respect to them or any of our other employees.

        The operating location of our head office and our Validus Re subsidiary may be an impediment to attracting and retaining experienced personnel. Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may not engage in any gainful occupation in Bermuda without an appropriate governmental work permit. Our success may depend in part on the continued services of key employees in Bermuda. A work permit may be granted or renewed upon demonstrating that, after proper public advertisement, no Bermudian (or spouse of a Bermudian or a holder of a permanent resident's certificate or holder of a working resident's certificate) is available who meets the minimum standards reasonably required by the employer. The Bermuda government's policy places a six-year term limit on individuals with work permits, subject to certain exemptions for key employees. A work permit is issued with an expiry date (up to five years) and no assurances can be given that any work permit will be issued or, if issued, renewed upon the expiration of the relevant term. If work permits are not obtained, or are not renewed, for our principal employees, we would lose their services, which could materially affect our business. Work permits are currently required for 48 of our Bermuda employees, the majority of whom have obtained three- or five-year work permits.

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Certain of our directors and officers may have conflicts of interest with us.

        Entities affiliated with some of our directors have sponsored or invested in, and may in the future sponsor or invest in, other entities engaged in or intending to engage in insurance and reinsurance underwriting, some of which compete with us. They have also entered into, or may in the future enter into, agreements with companies that compete with us.

        We have a policy in place applicable to each of our directors and officers which provides for the resolution of potential conflicts of interest. However, we may not be in a position to influence any party's decision to engage in activities that would give rise to a conflict of interest, and they may take actions that are not in our shareholders' best interests.

We may require additional capital or credit in the future, which may not be available or only available on unfavorable terms.

        We monitor our capital adequacy on a regular basis. The capital requirements of our business depend on many factors, including our premiums written, loss reserves, investment portfolio composition and risk exposures, as well as satisfying regulatory and rating agency capital requirements. Our ability to underwrite is largely dependent upon the quality of our claims paying and financial strength ratings as evaluated by independent rating agencies. To the extent that our existing capital is insufficient to fund our future operating requirements and/or cover claim losses, we may need to raise additional funds through financings or limit our growth. Any equity or debt financing, if available at all, may be on terms that are unfavorable to us. In the case of equity financings, dilution to our shareholders could result, and, in any case, such securities may have rights, preferences and privileges that are senior to those of our outstanding securities. In addition, the capital and credit markets have recently been experiencing extreme volatility and disruption. In some cases, the markets have exerted downward pressure on the availability of liquidity and credit capacity for certain issuers. If we are not able to obtain adequate capital, our business, results of operations and financial condition could be adversely affected.

        In addition, as an alien insurer and reinsurer (not licensed in the U.S.), we are required to post collateral security with respect to any (re)insurance liabilities that we assume from insureds or ceding insurers domiciled in the U.S. in order for U.S. ceding companies to obtain full statutory and regulatory credit for our reinsurance. Other jurisdictions may have similar collateral requirements. Under applicable statutory provisions, these security arrangements may be in the form of letters of credit, insurance or reinsurance trusts maintained by trustees or funds-withheld arrangements where assets are held by the ceding company. We intend to satisfy such statutory requirements by maintaining the trust fund requirements for Talbot's underwriting at Lloyd's and by providing to primary insurers letters of credit issued under our credit facilities. To the extent that we are required to post additional security in the future, we may require additional letter of credit capacity and there can be no assurance that we will be able to obtain such additional capacity or arrange for other types of security on commercially acceptable terms or on terms as favorable as under our current letter of credit facilities. Our inability to provide collateral satisfying the statutory and regulatory guidelines applicable to insureds and primary insurers would have a material adverse effect on our ability to provide (re)insurance to third parties and negatively affect our financial position and results of operations.

        Security arrangements may subject our assets to security interests and/or require that a portion of our assets be pledged to, or otherwise held by, third parties. Although the investment income derived from our assets while held in trust typically accrues to our benefit, the investment of these assets is governed by the investment regulations of the state of domicile of the ceding insurer and therefore the investment returns on these assets may not be as high as they otherwise would be.

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Loss of business from one or more major brokers could adversely affect us.

        We market our insurance and reinsurance on a worldwide basis primarily through brokers, and we depend on a small number of brokers for a large portion of our revenues. For the year ended December 31, 2011, our business was primarily sourced from the following brokers: Marsh Inc./Guy Carpenter & Co. 25.9%, Aon Benfield Group Ltd. 17.0% and Willis Group Holdings Ltd. 23.8%. These three brokers provided a total of 66.7% of our gross premiums written for the year ended December 31, 2011. Loss of all or a substantial portion of the business provided by one or more of these brokers could adversely affect our business.

We assume a degree of credit risk associated with substantially all of our brokers.

        In accordance with industry practice, we frequently pay amounts owed on claims under our policies to brokers and the brokers, in turn, pay these amounts over to the ceding insurers and reinsurers that have reinsured a portion of their liabilities with us. In some jurisdictions, if a broker fails to make such a payment, we might remain liable to the ceding insurer or reinsurer for the deficiency notwithstanding the broker's obligation to make such payment. Conversely, in certain jurisdictions, when the ceding insurer or reinsurer pays premiums for these policies to reinsurance brokers for payment to us, these premiums are considered to have been paid and the ceding insurer or reinsurer will no longer be liable to us for these premiums, whether or not we have actually received them. Consequently, we assume a degree of credit risk associated with substantially all of our brokers.

Our utilization of brokers, managing general agents and other third parties to support our business exposes us to operational and financial risks

        Talbot's business at Lloyd's relies upon brokers, managing general agents and other third parties to produce and service a proportion of its operations. In these arrangements, we typically grant the third party the right to bind us to new and renewal policies, subject to underwriting guidelines we provide and other contractual restrictions and obligations. Should these third parties issue policies that contravene these guidelines, restrictions or obligations, we could nonetheless be deemed liable for such policies. Although we would intend to resist claims that exceed or expand on our underwriting intention, it is possible that we would not prevail in such an action, or that our managing general agent would be unable adequately to indemnify us for their contractual breach.

        We also rely on managing general agents, third party administrators or other third parties we retain, to collect premiums and to pay valid claims. We could also be exposed to their or their producer's operational risk, including, but not limited to, contract wording errors, technological and staffing deficiencies and inadequate disaster recovery plans. We could also be exposed to potential liabilities relating to the claims practices of the third party administrators we have retained to manage the claims activity on this business. Although we have implemented monitoring and other oversight protocols, we cannot assure you that these measures will be sufficient to mitigate all of these exposures.

Our success depends on our ability to establish and maintain effective operating procedures and internal controls. Failure to detect control issues and any instances of fraud could adversely affect us.

        Our success is dependent upon our ability to establish and maintain operating procedures and internal controls (including the timely and successful implementation of information technology systems and programs) to effectively support our business and our regulatory and reporting requirements. We may not be successful in such efforts. Even when implemented, as a result of the inherent limitations in all control systems, no evaluation of controls can provide full assurance that all control issues and instances of fraud, if any, within the Company will be detected.

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We may be unable to purchase reinsurance or retrocessional reinsurance in the future, and if we do successfully purchase reinsurance or retrocessional reinsurance, we may be unable to collect on claims submitted under such policies, which could adversely affect our business, financial condition and results of operations.

        We purchase reinsurance and retrocessional reinsurance in order that we may offer insureds and cedants greater capacity, and to mitigate the effect of large and multiple losses on our financial condition. Reinsurance is a transaction whereby an insurer or reinsurer cedes to a reinsurer all or part of the insurance it has written or reinsurance it has assumed. A reinsurer's or retrocessional reinsurer's insolvency or inability or refusal to make timely payments under the terms of its reinsurance agreement with us could have an adverse effect on us because we remain liable to our client. From time to time, market conditions have limited, and in some cases have prevented, insurers and reinsurers from obtaining the types and amounts of reinsurance or retrocessional reinsurance that they consider adequate for their business needs. Accordingly, we may not be able to obtain our desired amounts of reinsurance or retrocessional reinsurance or negotiate terms that we deem appropriate or acceptable or obtain reinsurance or retrocessional reinsurance from entities with satisfactory creditworthiness.

Our investment portfolio may suffer reduced returns or losses which could adversely affect our results of operations and financial condition. Any increase in interest rates or volatility in the fixed income markets could result in significant unrealized losses in the fair value of our investment portfolio which would reduce our net income.

        Our operating results depend in part on the performance of our investment portfolio, which currently consists largely of fixed maturity securities, as well as the ability of our investment managers to effectively implement our investment strategy. Our Board of Directors, led by our Finance Committee, oversees our investment strategy, and in consultation with our portfolio advisors, has established investment guidelines. The investment guidelines dictate the portfolio's overall objective, benchmark portfolio, eligible securities, duration, limitations on the use of derivatives and inclusion of foreign securities, diversification requirements and average portfolio rating. Management and the Finance Committee periodically review these guidelines in light of our investment goals and consequently they may change at any time.

        The investment return, including net investment income, net realized gains (losses) on investments, net unrealized (losses) gains on investments, on our invested assets was $120.8 million, or 2.3% for the year ended December 31, 2011. While we follow a conservative investment strategy designed to emphasize the preservation of invested assets and to provide sufficient liquidity for the prompt payment of claims, we will nevertheless be subject to market-wide risks including illiquidity and pricing uncertainty and fluctuations, as well as to risks inherent in particular securities. Our investment performance may vary substantially over time, and there can be no assurance that we will achieve our investment objectives. See "Business—Investments."

        Investment results will also be affected by general economic conditions, market volatility, interest rate fluctuations, liquidity and credit risks beyond our control. In addition, our need for liquidity may result in investment returns below our expectations. Also, with respect to certain of our investments, we are subject to prepayment or reinvestment risk. In particular, our fixed income portfolio is subject to reinvestment risk, and as at December 31, 2011, 16.9% of our fixed income portfolio is comprised of mortgage backed and asset backed securities which are subject to prepayment risk. Although we attempt to manage the risks of investing in a changing interest rate environment, a significant increase in interest rates could result in significant losses, realized or unrealized, in the fair value of our investment portfolio and, consequently, could have an adverse affect on our results of operations.

Our operating results may be adversely affected by currency fluctuations.

        Our functional currency is the U.S. dollar. Many of our companies maintain both assets and liabilities in local currencies. Therefore, we are exposed to foreign exchange risk on the assets and liabilities denominated in those foreign currencies. Foreign exchange risk is reviewed as part of our risk management

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process. Locally required capital levels may be invested in home currencies in order to satisfy regulatory requirements and to support local insurance operations. The principal currencies creating foreign exchange risk are the British pound sterling and the Euro. As of December 31, 2011, $797.0 million, or 10.5% of our total assets and $890.5 million, or 21.4% of our total liabilities were held in foreign currencies. As of December 31, 2011, $88.8 million, or 2.1% of our total net liabilities held in foreign currencies was non-monetary items which do not require revaluation at each reporting date. We look to manage our foreign currency exposure through the use of currency derivatives as well as matching of our major foreign denominated assets and liabilities. However, there is no guarantee that we will effectively mitigate our exposure to foreign exchange losses. Please refer to Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" for further discussion of foreign currency risk.

Heightened European sovereign debt risk could adversely affect our results of operations and financial condition.

        Our fixed income portfolio contains certain Eurozone non-U.S. Government and Government Agency securities and Eurozone Non-U.S. corporate securities which are subject to increased liquidity risk, interest rate risk and default risk as a result of heightened European sovereign debt risk. As of December 31, 2011 our fixed income portfolio contains $159.4 million or 3.3% of Eurozone Non-U.S. Government securities and $267.5 or 5.5% of Eurozone Non-U.S. corporate securities. Increased defaults, and or a significant increase in interest rates could result in losses, realized or unrealized, in the fair value of our investment portfolio and, consequently, could have an adverse affect on our results of operations.

Risks Related to Acquisitions and New Ventures

Any future acquisitions or new ventures may expose us to operational risks.

        We may in the future make strategic acquisitions, either of other companies or selected books of business, or grow our business organically. Any future acquisitions or new ventures may expose us to operational challenges and risks, including:

•

integrating financial and operational reporting systems;

•

establishing satisfactory budgetary and other financial controls;

•

funding increased capital needs and overhead expenses;

•

obtaining management personnel required for expanded operations;

•

funding cash flow shortages that may occur if anticipated sales and revenues are not realized or are delayed, whether by general economic or market conditions or unforeseen internal difficulties;

•

the value of assets related to acquisitions or new ventures may be lower than expected or may diminish due to credit defaults or changes in interest rates and liabilities assumed may be greater than expected;

•

the assets and liabilities related to acquisitions or new ventures may be subject to foreign currency exchange rate fluctuation; and

•

financial exposures in the event that the sellers of the entities we acquire are unable or unwilling to meet their indemnification, reinsurance and other obligations to us.

        Our failure to manage successfully these operational challenges and risks may adversely impact our results of operations.

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Risks Relating to Lloyd's and Other U.K. Regulatory Matters

The regulation of Lloyd's members and of Lloyd's by the U.K. Financial Services Authority ("FSA") and under European Directives and other local laws may result in intervention that could have a significant negative impact on Talbot.

        Talbot operates in a regulated jurisdiction. Its underwriting activities are regulated by the FSA and franchised by Lloyd's. The FSA has substantial powers of intervention in relation to the Lloyd's managing agents (such as Talbot Underwriting Ltd.) which it regulates, including the power to remove their authorization to manage Lloyd's syndicates. In addition, the Lloyd's Franchise Board requires annual approval of Syndicate 1183's business plan, including a maximum underwriting capacity, and may require changes to any business plan presented to it or additional capital to be provided to support underwriting (known as Funds at Lloyd's or "FAL"). An adverse determination in any of these cases could lead to a change in business strategy which may have an adverse effect on Talbot's financial condition and operating results.

        An EU directive covering the capital adequacy, risk management and regulatory reporting for insurers, known as Solvency II was adopted by the European Parliament in April 2009. A directive, known as Omnibus II, which will amend certain of the Solvency II proposals, including the implementation date, is due to be considered by the European Parliament in 2012. The proposed Solvency II insurance directive is currently expected to come into force with a soft launch on January 1, 2013 and a full implementation on January 1, 2014. Insurers and reinsurers are undertaking a significant amount of work to ensure that they meet the new requirements and this may divert resources from other operational roles. The Company and Talbot's implementation plans are well underway, although final Solvency II guidelines have not been published. There can be no assurance that future legislation will not have an adverse effect on Talbot or the Company. Talbot continues to work towards a January 1, 2013 implementation date as agreed with Lloyd's and the FSA.

        Additionally, Lloyd's worldwide insurance and reinsurance business is subject to local regulation. Changes in such regulation may have an adverse effect on Lloyd's generally and on Talbot.

The future structure of U.K. financial regulation

        The U.K. government has set out proposals to replace the current system of financial regulation, which it believes has weaknesses, with a new regulatory framework. The key weakness it identified was that no single institution has the responsibility, authority and tools to monitor the financial system as a whole, and respond accordingly. That power will be given to the Bank of England. The U.K. government will create a new Financial Policy Committee (FPC) within the Bank, which will look at the wider economic and financial risks to the stability of the system.

        In addition, the FSA will cease to exist in its current form, and the Government will create two new focused financial regulators:

•

A new Prudential Regulation Authority (PRA) will be responsible for the day-to-day supervision of financial institutions that are subject to significant prudential regulation. It will adopt a more judgment-focused approach to regulation so that business models can be challenged, risks identified and action taken to preserve financial stability.

•

A new Financial Conduct Authority (FCA) will have a strong mandate for promoting confidence and transparency in financial services and to give greater protection for consumers of financial services.

        The Financial Services Bill was introduced to Parliament on January 26, 2012. Subject to the parliamentary timetable the U.K. government's aim is for the Bill to gain Royal Assent by the end of 2012, and for the new system to be operational in early 2013.

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        Lloyd's is keeping abreast of these developments and lobbying on behalf of the market when necessary. It is likely that Lloyd's itself and managing agency businesses will come under the day-to-day supervision of the PRA in due course although Talbot will also have to interact with the FCA. We are unable to determine the impact, if any, the change in U.K. financial regulation will have on Talbot's financial condition and results of operations.

Should Lloyd's Council decide additional levies are required to support the central fund, this could adversely affect Talbot.

        The central fund, which is funded by annual contributions and loans from Lloyd's members, acts as a policyholders' protection fund to make payments where any Lloyd's member has failed to pay, or is unable to pay, valid claims. The Lloyd's Council may resolve to make payments from the central fund for the advancement and protection of policyholders, which could lead to additional or special contributions being payable by Lloyd's members, including Talbot. This, in turn, could adversely affect Talbot and the Company

Lloyd's 1992 and prior liabilities.

        Lloyd's currently has a number of contingent liabilities in respect of risks under certain policies allocated to 1992 or prior years of account.

        Notwithstanding the "firebreak" introduced when Lloyd's implemented the Reconstruction and Renewal Plan in 1996, and the phase II completion which was effective June 30, 2009 which, as a result Equitas and relevant policyholders now benefit from $7.0 billion of reinsurance cover provided under this arrangement, Lloyd's members, including Talbot subsidiaries, remain indirectly exposed in a number of ways to 1992 and prior business then reinsured by Equitas, including through the application of overseas deposits and the central fund.

        The statutory transfer of 1992 and prior non-life business from Names to Equitas Insurance Limited, relieved the members and former members concerned from those liabilities under U.K. law and the law of every other state within the EEA, however, if the limit of retrocessional cover from National Indemnity Company in respect of that business proves to be insufficient and as a consequence Equitas is unable to pay the 1992 and prior liabilities in full, Lloyd's will be liable to meet any shortfall arising in respect of certain policies. The central fund, which Lloyd's can replenish, subject to its Bye-laws, by issuing calls on current underwriting members of Lloyd's (which will include Talbot subsidiaries), may be applied for these purposes. Lloyd's also has contingent liabilities under indemnities in respect of claims against certain persons.

The failure of Lloyd's to satisfy the FSA's annual solvency test could result in limitations on managing agents' ability, including Talbot's ability to underwrite or to commence legal proceedings against Lloyd's.

        The FSA requires Lloyd's to satisfy an annual solvency test. The solvency requirement in essence measures whether Lloyd's has sufficient assets in the aggregate to meet all outstanding liabilities of its members, both current and in run-off. If Lloyd's fails to satisfy the test in any year, the FSA may require Lloyd's to cease trading and/or its members to cease or reduce underwriting. In the event of Lloyd's failing to meet any solvency requirement, either the Society of Lloyd's or the FSA may apply to the court for a Lloyd's Market Reorganisation Order ("LMRO"). On the making of an order a "reorganisation controller" is appointed, and for its duration, a moratorium is imposed preventing any proceedings or legal process from being commenced or continued against any party that is the subject of such an order, which, if made, would apply to the market as a whole, including members, former members, managing agents, members' agents, Lloyd's brokers, approved run-off companies and managing general agents unless individual parties are specifically excluded.

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A downgrade in Lloyd's ratings would have an adverse effect on Syndicate 1183's standing among brokers and customers and cause its premiums and earnings to decrease.

        The ability of Lloyd's syndicates to trade in certain classes of business at current levels is dependent on the maintenance of a satisfactory credit rating issued by an accredited rating agency. The financial security of the Lloyd's market is regularly assessed by three independent rating agencies, A.M. Best, Standard & Poor's and Fitch Ratings. Syndicate 1183 benefits from Lloyd's current ratings and would be adversely affected if the current ratings were downgraded from their present levels.

An increase in the charges paid by Talbot to participate in the Lloyd's market could adversely affect Talbot's financial and operating results.

        Lloyd's imposes a number of charges on businesses operating in the Lloyd's market, including, for example, annual subscriptions and central fund contributions for members and policy signing charges. The basis and amounts of charges may be varied by Lloyd's and could adversely affect Talbot and the Company.

An increase in the level or type of deposits required by U.S. Situs Trust Deeds to be maintained by Lloyd's syndicates could result in Syndicate 1183 being required to make a cash call which could adversely affect Talbot's financial performance.

        The U.S. Situs Trust Deeds require syndicates transacting certain types of business in the United States to maintain minimum deposits as protection for U.S. policyholders. These deposits represent the syndicates' estimates of unpaid claims liabilities (less premiums receivable) relating to this business, adjusted for provisions for potential bad debt on premiums earned but not received and for any anticipated profit on unearned premiums. No credit is generally allowed for potential reinsurance recoveries. The New York Insurance Department and the U.S. National Association of Insurance Commissioners currently require funding of 30% of gross liabilities in relation to insurance business classified as "Surplus Lines." The "Credit for Reinsurance" trust fund is usually required to be funded at 100% of gross liabilities. The funds contained within the deposits are not ordinarily available to meet trading expenses. U.S. regulators may increase the level of funding required or change the requirements as to the nature of funding. Accordingly, in the event of a major claim arising in the United States, for example from a major catastrophe, syndicates participating in such U.S. business may be required to make cash calls on their members to meet claims payments and deposit funding obligations. This could adversely affect Talbot.

Risks Related to Taxation

We may be subject to U.S. tax.

        We are organized under the laws of Bermuda and presently intend to structure our activities to minimize the risk that we would be considered engaged in a U.S. trade or business. No definitive standards, however, are provided by the Internal Revenue Code of 1986, as amended (the "Code"), U.S. Treasury regulations or court decisions regarding activities that constitute the conduct of a U.S. trade or business. Because that determination is essentially factual, we cannot assure that the Internal Revenue Service (the "IRS") will not contend that we are engaged in a U.S. trade or business. If we were found to be so engaged, we would be subject to U.S. corporate income and branch profits tax on our earnings that are effectively connected to such U.S. trade or business.

        If Validus Re is entitled to the benefits of the income tax treaty between the U.S. and Bermuda (the "Bermuda Treaty"), it would not be subject to U.S. income tax on any income protected by the Bermuda Treaty unless that income is attributable to a permanent establishment in the U.S. The Bermuda Treaty clearly applies to premium income, but may be construed as not protecting other income such as investment income. If Validus Re were found to be engaged in a trade or business in the U.S. and were entitled to the benefits of the Bermuda Treaty in general, but the Bermuda Treaty was found not to protect investment income, a portion of Validus Re's investment income could be subject to U.S. tax.

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U.S. persons who hold common shares may be subject to U.S. income taxation at ordinary income rates on our undistributed earnings and profits.

        Controlled Foreign Corporation Status:    The Company should not be a controlled foreign corporation ("CFC") because its organizational documents provide that if the common shares owned, directly, indirectly or by attribution, by any person would otherwise represent more than 9.09% of the aggregate voting power of all the Company's common shares, the voting rights attached to those common shares will be reduced so that such person may not exercise and is not attributed more than 9.09% of the total voting power of the common shares. We cannot assure, however, that the provisions of the Organizational Documents will operate as intended and that the Company will not be considered a CFC. If the Company were considered a CFC, any shareholder that is a U.S. person that owns directly, indirectly or by attribution, 10% or more of the voting power of the Company may be subject to current U.S. income taxation at ordinary income tax rates on all or a portion of the Company's undistributed earnings and profits attributable to Validus Re's insurance and reinsurance income, including underwriting and investment income. Any gain realized on sale of common shares by such shareholder may also be taxed as a dividend to the extent of the Company's earnings and profits attributed to such shares during the period that the shareholder held the shares and while the Company was a CFC (with certain adjustments).

        Related Person Insurance Income:    If the related person insurance income ("RPII") of any of the Company's non-U.S. insurance subsidiaries were to equal or exceed 20% of that subsidiary's gross insurance income in any taxable year, and U.S. persons were treated as owning 25% or more of the subsidiary's stock, by vote or value, a U.S. person who directly or indirectly owns any common shares on the last day of such taxable year on which the 25% threshold is met would be required to include in income for U.S. federal income tax purposes that person's ratable share of that subsidiary's RPII for the taxable year. The amount to be included in income is determined as if the RPII were distributed proportionately to U.S. shareholders on that date, regardless of whether that income is distributed. The amount of RPII to be included in income is limited by such shareholder's share of the subsidiary's current-year earnings and profits, and possibly reduced by the shareholder's share of prior year deficits in earnings and profits. The amount of RPII earned by a subsidiary will depend on several factors, including the identity of persons directly or indirectly insured or reinsured by that subsidiary. Although we do not believe that the 20% threshold will be met for our non-U.S. insurance subsidiaries, some of the factors that might affect that determination in any period may be beyond our control. Consequently, we cannot assure that we will not exceed the RPII threshold in any taxable year.

        If a U.S. person disposes of shares in a non-U.S. insurance corporation that had RPII (even if the 20% threshold was not met) and the 25% threshold is met at any time during the five-year period ending on the date of disposition, and the U.S. person owned any shares at such time, any gain from the disposition will generally be treated as a dividend to the extent of the holder's share of the corporation's undistributed earnings and profits that were accumulated during the period that the holder owned the shares (possibly whether or not those earnings and profits are attributable to RPII). In addition, the shareholder will be required to comply with specified reporting requirements, regardless of the amount of shares owned. We believe that those rules should not apply to a disposition of common shares because the Company is not itself directly engaged in the insurance business. We cannot assure, however, that the IRS will not successfully assert that those rules apply to a disposition of common shares.

U.S. persons who hold common shares will be subject to adverse tax consequences if the Company is considered a passive foreign investment company for U.S. federal income tax purposes.

        If the Company is considered a passive foreign investment company ("PFIC") for U.S. federal income tax purposes, a U.S. holder who owns common shares will be subject to adverse tax consequences, including a greater tax liability than might otherwise apply and an interest charge on certain taxes that are deferred as a result of the Company's non-U.S. status. We currently do not expect that the Company will be a PFIC for U.S. federal income tax purposes in the current taxable year or the foreseeable future

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because, through Validus Re, Talbot 2002 Underwriting Capital Ltd. and Talbot Underwriting Ltd., it intends to be predominantly engaged in the active conduct of a global insurance and reinsurance business. We cannot assure you, however, that the Company will not be deemed to be a PFIC by the IRS. No regulations currently exist regarding the application of the PFIC provisions to an insurance company.

Changes in U.S. tax laws may be retroactive and could subject a U.S. holder of our common shares to other adverse tax consequences.

        The tax treatment of non-U.S. companies and their U.S. and non-U.S. insurance and reinsurance subsidiaries has been the subject of Congressional discussion and legislative proposals in the U.S. We cannot assure that future legislative action will not increase the amount of U.S. tax payable by us.

        In addition, the U.S. federal income tax laws and interpretations, including those regarding whether a company is engaged in a U.S. trade or business or is a PFIC, or whether U.S. holders would be required to include "subpart F income" or RPII in their gross income, are subject to change, possibly on a retroactive basis. No regulations regarding the application of the PFIC rules to insurance companies are currently in effect, and the regulations regarding RPII are still in proposed form. New regulations or pronouncements interpreting or clarifying such rules may be forthcoming. We cannot be certain if, when, or in what form, such regulations or pronouncements may be provided, and whether such guidance will have a retroactive effect.

The Obama administration's proposed budget for Fiscal Year 2013 could subject a U.S. holder of common shares to adverse tax consequences.

        Under current U.S. law, non-corporate U.S. holders of our common shares generally are taxed on dividends at a capital gains tax rate of 15% rather than ordinary income tax rates. The Obama administration's proposed budget for fiscal year 2013 contains a proposal that would not extend the current 0% and 15% tax rates for qualified dividends that would be taxable in the 36% or 39.6% tax brackets. This proposal would be effective for taxable years beginning after December 31, 2012. If this proposal becomes law, certain individual U.S. shareholders would no longer benefit from the current tax rate of 15% on dividend paid by us.

The Obama administration's proposed budget for Fiscal Year 2013 could disallow a deduction for premiums paid for reinsurance.

        Insurance companies are generally allowed a deduction for premiums paid for reinsurance. The proposed budget for fiscal year 2013 contains a proposal that denies an insurance company a deduction for premiums and other amounts paid to affiliated foreign companies with respect to reinsurance of property and casualty risks to the extent that the foreign reinsurer (or its parent company) is not subject to U.S. income tax with respect to the premiums received. Furthermore, the proposed law would exclude from the insurance company's income (in the same proportion in which the premium deduction was denied) any return premiums, ceding commissions, reinsurance recovered, or other amounts received with respect to reinsurance policies for which a premium deduction is wholly or partially denied. The current proposal would only apply to policies issued in tax years beginning after December 31, 2012. Based on the information currently available to us, it is uncertain to which extent this legislation will adversely impact us.

We may become subject to taxes in Bermuda after March 31, 2035, which may have a material adverse effect on our results of operations.

        Under current Bermuda law, we are not subject to tax on income or capital gains. We have received from the Minister of Finance under The Exempted Undertaking Tax Protection Act 1966, as amended, an assurance that, in the event that Bermuda enacts legislation imposing tax computed on profits, income, any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance, then the imposition of any such tax shall not be applicable to us or to any of our operations or shares, debentures or

43

other obligations, until March 31, 2035. We could be subject to taxes in Bermuda after that date. This assurance is subject to the proviso that it is not to be construed to prevent the application of any tax or duty to such persons as are ordinarily resident in Bermuda or to prevent the application of any tax payable in accordance with the provisions of the Land Tax Act 1967 or otherwise payable in relation to any property leased to us. We and Validus Re each pay annual Bermuda government fees; Validus Re pays annual insurance license fees. In addition, all entities employing individuals in Bermuda are required to pay a payroll tax and there are other sundry taxes payable, directly or indirectly, to the Bermuda government.

Our non-U.K. companies may be subject to U.K. tax.

        We intend to operate in such a manner that none of our non-U.K. companies would be resident in the U.K. for tax purposes. A company incorporated outside the U.K. will be resident in the U.K. if its business is centrally managed and controlled from the U.K.. Because the concept of central management and control is not defined in statute but derives from case law and the determination of residence is subjective, the U.K. Inland Revenue might contend successfully that one or more of our companies is resident in the U.K..

        Furthermore, we intend to operate in such a manner that none of our non-U.K. companies carry on a trade wholly or partly in the U.K.. Case law has held that whether or not a trade is being carried on is a matter of fact and emphasis is placed on where operations take place from which the profits in substance arise. This judgment is subjective. U.K. Inland Revenue might contend successfully that one or more of our non-U.K. companies, is conducting business in the U.K. For U.K. tax purposes, a non-U.K. tax resident company will only be subject to U.K. corporation tax if it carries on a trade in the U.K. through a U.K. permanent establishment. However, that company will still have an income tax liability in the U.K. if it carries on a trade in the U.K., even absent a permanent establishment, unless that company is treaty-protected.

        On July 19, 2011, the U.K. government passed the Finance Act 2011 which reduced the U.K. corporate income tax rate from 27% to 26% (as of April 1, 2011) and provided for a further reduction in the U.K. corporate income tax rate from 26% to 25% (effective April 1, 2012)

        On December 6, 2011, the U.K. government released draft legislation for a number of key tax reforms which includes a further reduction in U.K. corporation tax rate to 24% (effective April 1, 2013) and 23% (effective April 1, 2014). The effect of a change in an enacted tax law should be recognized through an adjustment to income from continuing operations in the period that legislation is enacted.

        The deferred tax liability for underwriting profit taxable in future periods arises because of a difference in timing, for tax payment purposes, between when Talbot syndicate underwriting income is subject to tax and when corresponding corporate name reinsurance premiums are allowable for tax. Under current U.K. tax legislation, syndicate underwriting income for a particular underwriting year of account is taxed in the year the syndicate closes. However the corresponding corporate name reinsurance premiums are allowable for tax as they are accounted for on an accruals basis. On December 6, 2011, HM Revenue & Customs announced that this timing difference will be eliminated by legislating that the corporate name reinsurance premiums will only allowable for tax in the same period that the syndicate underwriting income for the corresponding underwriting year of account is subject to tax. This change only applies to the 2012 and future underwriting years of account. Therefore, it is expected that the deferred tax liability will be eliminated in future accounting periods as a result of this change.

Risks Related to Laws and Regulations Applicable to Us

If we become subject to insurance statutes and regulations in addition to the statutes and regulations that currently apply to us, there could be a significant and negative impact on our business.

        We currently conduct our business in a manner such that we expect the Company will not be subject to insurance and/or reinsurance licensing requirements or regulations in any jurisdiction other than Bermuda,

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in limited circumstances, the United States, and, with respect to Talbot, the U.K. and jurisdictions to which Lloyd's is subject. See "Business—Regulation—United States and Bermuda." Although we do not currently intend to engage in activities which would require us to comply with insurance and reinsurance licensing requirements of other jurisdictions, should we choose to engage in activities that would require us to become licensed in such jurisdictions, we cannot assure that we will be able to do so or to do so in a timely manner. Furthermore, the laws and regulations applicable to direct insurers could indirectly affect us, such as collateral requirements in various U.S. states to enable such insurers to receive credit for reinsurance ceded to us.

        The insurance and reinsurance regulatory framework of Bermuda and the insurance of U.S. risk by companies based in Bermuda that are not licensed or authorized in the U.S. have recently become subject to increased scrutiny in many jurisdictions, including the United States. In the past, there have been U.S. Congressional and other initiatives in the United States regarding increased supervision and regulation of the insurance industry, including proposals to supervise and regulate offshore reinsurers. Government regulators are generally concerned with the protection of policyholders rather than other constituencies, such as our shareholders. We are not able to predict the future impact on our operations of changes in the laws and regulations to which we are or may become subject.

Risks Related to Ownership of Our Common Shares

Because we are a holding company and substantially all of our operations are conducted by our main operating subsidiaries, Validus Re and Talbot, our ability to meet any ongoing cash requirements and to pay dividends will depend on our ability to obtain cash dividends or other cash payments or obtain loans from Validus Re and Talbot.

        We conduct substantially all of our operations through subsidiaries. Our ability to meet our ongoing cash requirements, including any debt service payments or other expenses, and pay dividends on our common shares in the future, will depend on our ability to obtain cash dividends or other cash payments or obtain loans from these subsidiaries and as a result will depend on the financial condition of these subsidiaries. The inability of these subsidiaries to pay dividends in an amount sufficient to enable us to meet our cash requirements could have a material adverse effect on us and the value of our common shares. Each of these subsidiaries is a separate and distinct legal entity that has no obligation to pay any dividends or to lend or advance us funds and may be restricted from doing so by contract, including other financing arrangements, charter provisions or applicable legal and regulatory requirements or rating agency constraints. The payment of dividends by these subsidiaries to us is limited under Bermuda law and regulations. The Insurance Act provides that our Bermuda subsidiaries may not declare or pay in any financial year dividends of more than 25% of its total statutory capital and surplus (as shown on its statutory balance sheet in relation to the previous financial year) unless it files an affidavit with the BMA at least seven days prior to the payment signed by at least two directors and such subsidiary's principal representative, stating that in their opinion such subsidiaries will continue to satisfy the required margins following declaration of those dividends, though there is no additional requirement for BMA approval. In addition, before reducing its total statutory capital by 15% or more (as set out in its previous years' statutory financial statements) each of these subsidiaries must make application to the BMA for permission to do so, such application to consist of an affidavit signed by at least two directors and such subsidiary's principal representative stating that in their opinion the proposed reduction in capital will not cause such subsidiaries to fail to meet its relevant margins, and such other information as the BMA may require. At December 31, 2011, the excesses of statutory capital and surplus above minimum solvency margins for Validus Re and Talbot Insurance (Bermuda), Ltd., a Talbot subsidiary, were $2,822.7 million and $449.2 million, respectively. These amounts are available for distribution as dividend payments to the Company, subject to approval of the BMA. These amounts were calculated using the BMA's risk-based capital model, or Bermuda Solvency Capital Requirement ("BSCR"), and are based on draft regulatory filings for Validus Re and Talbot Insurance (Bermuda) Ltd.

        The timing and amount of any cash dividends on our common shares are at the discretion of our Board of Directors and will depend upon our results of operations and cash flows, our financial position

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and capital requirements, general business conditions, legal, tax, regulatory, rating agency and contractual constraints or restrictions and any other factors that our Board of Directors deems relevant. In addition, the indenture governing our Junior Subordinated Deferrable Debentures would restrict us from declaring or paying dividends on our common shares if we are downgraded by A.M. Best to a financial strength rating of "B" (Fair) or below or if A.M. Best withdraws its financial strength rating on any of our material insurance subsidiaries.

Future sales of our common shares and grants of restricted shares may affect the market price of our common shares and the future exercise of options and warrants may result in immediate and substantial dilution of the common shares.

        As of February 15, 2012 (but without giving effect to unvested restricted shares), we had 99,478,305 common shares outstanding and 6,916,678 shares issuable upon exercise of outstanding warrants. Approximately 11,385,084 of these outstanding shares were subject to the volume limitations and other conditions of Rule 144 under the Securities Act of 1933, as amended, which we refer to as the "Securities Act." Furthermore, certain of our sponsoring shareholders and their transferees have the right to require us to register these common shares under the Securities Act for sale to the public, either in an independent offering pursuant to a demand registration or in conjunction with a public offering, subject to a "lock-up" agreement of no more than 90 days. Following any registration of this type, the common shares to which the registration relates will be freely transferable. In addition, we have filed one or more registration statements on Form S-8 under the Securities Act to register common shares issued or reserved for issuance under our 2005 Long Term Incentive Plan (the "Plan"). The number of common shares that have been reserved for issuance under the Plan is equal to 13,126,896 of which 4,109,215 shares remain available as of December 31, 2011. We cannot predict what effect, if any, future sales of our common shares, or the availability of common shares for future sale, will have on the market price of our common shares. Sales of substantial amounts of our common shares in the public market, or the perception that sales of this type could occur, could depress the market price of our common shares and may make it more difficult for our shareholders to sell their common shares at a time and price that they deem appropriate.

        Our Bye-laws authorize our Board of Directors to issue one or more series of common shares and preferred shares without stockholder approval. Specifically, we have an authorized share capital of 571,428,571 shares ($0.175 par value per share), which can consist of common shares and/or preference shares, as determined by our Board of Directors. The Board of Directors has the right to issue the remaining shares without obtaining any approval from our stockholders and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series or designation of such series. Any issuance of our preferred stock could adversely affect the voting power of the holders of our common shares and could have the effect of delaying, deferring, or preventing the payment of any dividends (including any liquidating dividends) and any change in control of us. If a significant number of either common or preferred shares are issued, it may cause the market price of our common shares to decline.

Our classified board structure may prevent a change in our control.

        Our board of directors is divided into three classes of directors. Each year one class of directors is elected by the shareholders for a three year term. The staggered terms of our directors may reduce the possibility of a tender offer or an attempt at a change in control, even though a tender offer or change in control might be in the best interest of our shareholders.

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There are provisions in our Bye-laws that reduce the voting rights of voting common shares that are held by a person or group to the extent that such person or group holds more than 9.09% of the aggregate voting power of all common shares entitled to vote on a matter.

        In general, and except as provided below, shareholders have one vote for each voting common share held by them and are entitled to vote at all meetings of shareholders. However, if, and for so long as, the common shares of a shareholder, including any votes conferred by "controlled shares" (as defined below), would otherwise represent more than 9.09% of the aggregate voting power of all common shares entitled to vote on a matter, including an election of directors, the votes conferred by such shares will be reduced by whatever amount is necessary such that, after giving effect to any such reduction (and any other reductions in voting power required by our Bye-laws), the votes conferred by such shares represent 9.09% of the aggregate voting power of all common shares entitled to vote on such matter. "Controlled shares" include, among other things, all shares that a person is deemed to own directly, indirectly or constructively (within the meaning of Section 958 of the Code, or Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act")). At December 31, 2011, there were 101,046,056 voting common shares, of which 9,185,086 voting common shares would confer votes that represent 9.09% of the aggregate voting power of all common shares entitled to vote generally at an election of directors. An investor who does not hold, and is not deemed under the provisions of our Bye-laws to own, any of our common shares may therefore purchase up to such amount without being subject to voting cutback provisions in our Bye-laws.

        In addition, we have the authority under our Bye-laws to request information from any shareholder for the purpose of determining ownership of controlled shares by such shareholder.

There are regulatory limitations on the ownership and transfer of our common shares which could result in the delay or denial of any transfers shareholders might seek to make.

        The BMA must approve all issuances and transfers of securities of a Bermuda exempt company. We have received permission from the BMA to issue our common shares, and for the free transferability of our common shares as long as the common shares are listed on the New York Stock Exchange or other appointed exchange, to and among persons who are residents and non-residents of Bermuda for exchange control purposes. Any other transfers remain subject to approval by the BMA and such approval may be denied or delayed.

A shareholder of our company may have greater difficulties in protecting its interests than as a shareholder of a U.S. corporation.

        The Companies Act 1981 (the "Companies Act"), which applies to us, differs in material respects from laws generally applicable to U.S. corporations and their shareholders. Taken together with the provisions of our Bye-laws, some of these differences may result in a shareholder having greater difficulties in protecting its interests as a shareholder of our company than it would have as a shareholder of a U.S. corporation. This affects, among other things, the circumstances under which transactions involving an interested director are voidable, whether an interested director can be held accountable for any benefit realized in a transaction with our company, what approvals are required for business combinations by our company with a large shareholder or a wholly owned subsidiary, what rights a shareholder may have as a shareholder to enforce specified provisions of the Companies Act or our Bye-laws, and the circumstances under which we may indemnify our directors and officers.

We are a Bermuda company and it may be difficult for our shareholders to enforce judgments against us or against our directors and executive officers.

        We were incorporated under the laws of Bermuda and our business is based in Bermuda. In addition, certain of our directors and officers reside outside the United States, and a portion of our assets and the assets of such persons may be located in jurisdictions outside the United States. As such, it may be difficult

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or impossible to effect service of process within the United States upon us or those persons, or to recover against us or them on judgments of U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. Further, no claim may be brought in Bermuda against us or our directors and officers in the first instance for violation of U.S. federal securities laws because these laws have no extraterritorial application under Bermuda law and do not have force of law in Bermuda; however, a Bermuda court may impose civil liability, including the possibility of monetary damages, on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda law. Currently, of our executive officers, Joseph E. (Jeff) Consolino, C. Jerome Dill and Conan Ward reside in Bermuda, Edward Noonan and Stuart Mercer maintain residences in both Bermuda and the United States and Rupert Atkin, Michael Carpenter and Julian Ross reside in the United Kingdom. Of our directors, Edward Noonan maintains residences in both Bermuda and the United States, Jean-Marie Nessi resides in France and the remainder reside in the United States.

        We have been advised by Bermuda counsel, that there is doubt as to whether the courts of Bermuda would enforce judgments of U.S. courts obtained in actions against us or our directors and officers, as well as the experts named herein, predicated upon the civil liability provisions of the U.S. federal securities laws, or original actions brought in Bermuda against us or such persons predicated solely upon U.S. federal securities laws. Further, we have been advised by Bermuda counsel that there is no treaty in effect between the United States and Bermuda providing for the enforcement of judgments of U.S. courts in civil and commercial matters, and there are grounds upon which Bermuda courts may decline to enforce the judgments of U.S. courts. Some remedies available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities laws, may not be allowed in Bermuda courts as contrary to public policy in Bermuda. Because judgments of U.S. courts are not automatically enforceable in Bermuda, it may be difficult for our shareholders to recover against us based upon such judgments.

Item 1B.    Unresolved Staff Comments

        None.

Item 2.    Properties

        The Company does not own any real property. The Company and its subsidiaries currently occupy office space as described below. We believe our current facilities and the leaseholds with respect thereto are sufficient for us to conduct our operations.

Legal entity	Location	Expiration date
Validus Holdings, Ltd. and Validus Re	Pembroke, Bermuda	December 31, 2021
Validus Re	Hamilton, Bermuda	April 30, 2012
Validus Re	Hamburg, Germany	July 1, 2012
Validus Research Inc.	Waterloo, Canada	March 31, 2015
Validus Reaseguros, Inc.	Miami, Florida, USA	April 1, 2018
Validus Services, Inc.	New York, New York, USA	November 8, 2015
Underwriting Risk Services, Inc.	New York, New York, USA	November 8, 2015
Talbot Holding Ltd and Talbot Underwriting Services Ltd.	London, England	June 22, 2024
Validus Reinsurance, Ltd.	Republic of Singapore	August 31, 2013
Talbot Risk Services PTE Ltd.	Republic of Singapore	December 31, 2015
Underwriting Services (Middle East) Ltd.	Dubai, United Arab Emirates	January 31, 2014
Validus Re Chile S.A.	Santiago, Chile	May 1, 2014

Item 3.    Legal Proceedings

        Similar to the rest of the insurance and reinsurance industry, we are subject to litigation and arbitration in the ordinary course of business.

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Executive Officers of the Company

        The following table provides information regarding our executive officers and key employees as of February 17, 2012:

Name	Age		Position
Edward J. Noonan		53	Chairman of the Board of Directors and Chief Executive Officer of the Validus Group
Joseph E. (Jeff) Consolino		45	President and Chief Financial Officer
C.N. Rupert Atkin		53	Chief Executive Officer of the Talbot Group
Michael E.A. Carpenter		62	Chairman of the Talbot Group and Director of the Company
C. Jerome Dill		51	Executive Vice President and General Counsel
Andrew M. Gibbs		50	Executive Vice President and Group Controller
Andrew E. Kudera		52	Executive Vice President and Chief Actuary
Robert F. Kuzloski		48	Executive Vice President and Chief Corporate Legal Officer
Stuart W. Mercer		52	Executive Vice President and Chief Risk Officer
Jonathan P. Ritz		44	Executive Vice President, Business Operations
Conan M. Ward		44	Executive Vice President of the Company and Chief Executive Officer of Validus Reinsurance, Ltd.

Edward J. Noonan has been Chairman of our Board and the Chief Executive Officer of the Company since its formation. Mr. Noonan has 30 years of experience in the insurance and reinsurance industry, serving most recently as the acting Chief Executive Officer of Global Indemnity plc (Nasdaq: GBLI) from February 2005 through October 2005 and as a member of the Board of Directors from December 2003 to May 2007. Mr. Noonan served as President and Chief Executive Officer of American Re-Insurance Company from 1997 to 2002, having joined American Re in 1983. Mr. Noonan also served as Chairman of Inter-Ocean Reinsurance Holdings of Hamilton, Bermuda from 1997 to 2002. Mr. Noonan is also a Director of Central Mutual Insurance Company and All American Insurance Company, both of which are property and casualty companies based in Ohio.

Joseph E. (Jeff) Consolino was appointed President of the Company on November 15, 2010 and continues to serve as the Company's Chief Financial Officer, a position that he has held since March 2006. Mr. Consolino has over 18 years of experience in the financial services industry, specifically in providing investment banking services to the insurance industry, and most recently served as a managing director in Merrill Lynch's Financial Institutions Group specializing in insurance company advisory and financing transactions. He serves as a Director of National Interstate Corporation, a property and casualty company based in Ohio and of AmWINS Group, Inc., a wholesale insurance broker based in North Carolina.

C. N. Rupert Atkin began his career at the Alexander Howden Group in 1980 before moving to Catlin Underwriting Agencies in 1984. After six years at Catlin he left to join Talbot, then Venton Underwriting Ltd to start Syndicate 1183 as Active Underwriter. In November 2001, Mr. Atkin was made Director of Underwriting. Following the sale of Talbot to Validus in the summer of 2007 Mr. Atkin was appointed as Chief Executive Officer of Talbot. Mr. Atkin has served or is still serving on a variety of market bodies including chairing the Lloyd's Underwriters' Association and Joint War Risk Committee and being a member of the Lloyd's Insurance Services Board, Lloyd's Regulatory Board, Lloyd's Professional Standards Committee and Lloyd's Charities Trust Committee. Mr. Atkin was appointed to the Council of Lloyd's in 2007 and appointed as the Chairman of the Lloyd's Market Association in 2012.

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Michael E. A. Carpenter joined Talbot in June 2001 as the Chief Executive officer. Following the sale of Talbot to Validus in the summer of 2007, Michael was appointed as Chairman. Prior to joining Talbot in 2001, Mr. Carpenter served as finance director and managing director of Limit plc, the UK listed Lloyd's group now part of QBE, from 1993 to 2000. Mr. Carpenter is a graduate of Cambridge University, a Member of the Chartered Institute for Securities & Investment (CISI) and a Fellow of the Institute of Chartered Accountants (FCA).

C. Jerome Dill has been Executive Vice President and General Counsel of the Company since April 1, 2007. Prior to joining the Company, Mr. Dill was a partner with the law firm of Appleby Hunter Bailhache, which he joined in 1986.

Andrew M. Gibbs has served as Executive Vice President and Controller of the Company since August 2008. Prior to joining the Company, Mr. Gibbs served in various finance and operational positions in the Ace Limited group of companies from 1996 to 2008. Mr. Gibbs is a Fellow of the Institute of Chartered Accountants in England & Wales, Associate of the Chartered Insurance Institute. Mr. Gibbs has over twenty five years experience in the insurance and reinsurance industry. Mr. Gibbs is a former partner with Ernst & Young.

Andrew E. Kudera has served as Chief Actuary of the Company since January 2010. Previously, Mr. Kudera operated an independent actuarial consulting firm which served as corporate actuary and loss reserve specialist for Validus Re from its inception through the end of 2008. Prior to establishing his own consulting firm, Mr. Kudera was the Chief Reserving Actuary for Endurance Specialty Holdings Ltd., a large international insurance and reinsurance company. Mr. Kudera has over 30 years of actuarial and financial management experience in the insurance industry, primarily in a consulting capacity. Mr. Kudera is a Fellow of the Casualty Actuarial Society, a Member of the American Academy of Actuaries, an Associate of the Society of Actuaries, and a Fellow of the Canadian Institute of Actuaries.

Robert F. Kuzloski serves as Executive Vice President and Chief Corporate Legal Officer of the Company. Prior to joining the Company in January of 2009, Mr. Kuzloski served as the Senior Vice President and Assistant General Counsel of XL Capital Ltd. Prior to that, Mr. Kuzloski worked as an attorney at the law firm of Cahill Gordon & Reindel LLP where he specialized in general corporate and securities law, mergers and acquisitions and corporate finance.

Stuart W. Mercer has been Executive Vice President of the Company since its formation. Mr. Mercer has over 20 years of experience in the financial industry focusing on structured derivatives, energy finance and reinsurance. Previously, Mr. Mercer was a senior advisor to DTE Energy Trading.

Jonathan P. Ritz serves as Executive Vice President, Business Operations of the Company. Mr. Ritz has over 20 years of experience in the (re)insurance and brokerage industries. Most recently, Mr. Ritz served as Chief Operating Officer of IFG Companies—Burlington Insurance Group. Prior to IFG, Mr. Ritz served as Chief Operating Officer of the specialty lines division of ICAT Holdings LLC. From 2007 to 2008, Mr. Ritz was a Managing Director at Guy Carpenter and from 1997 to 2007 he held various positions with United America Insurance Group including Chief Operating Officer and senior vice president of ceded reinsurance.

Conan M. Ward has been Chief Executive Officer of Validus Reinsurance, Ltd. since July of 2009. Prior to that time, Mr. Ward served as Executive Vice President and Chief Underwriting Officer of the Company since January 2006. Mr. Ward has over 16 years of insurance industry experience. Mr. Ward was Executive Vice President of the Global Reinsurance division of Axis Capital Holdings, Ltd. from November 2001 until November 2005, where he oversaw the division's worldwide property catastrophe, property per risk, property pro rata portfolios. He is one of the founders of Axis Specialty, Ltd and was a member of the operating board and senior management committee of Axis Capital. From July 2000 to November 2001, Mr. Ward was a Senior Vice President at Guy Carpenter & Co.

Item 4.    Mine Safety Disclosure—Not Applicable

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PART II

All amounts presented in this part are in U.S. dollars except as otherwise noted.

Item 5.    Market for Registrants, Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

        The Company's common shares, $0.175 par value per share, are listed on the New York Stock Exchange under the symbol "VR."

        The following tables sets forth the high and low sales prices per share, as reported on the New York Stock Exchange Composite Tape, of the Company's common shares per fiscal quarter for the two most recent fiscal years.

	High		Low
2011:
1st Quarter	$	33.33	$	29.85
2nd Quarter	$	34.51	$	29.65
3rd Quarter	$	31.26	$	23.45
4th Quarter	$	31.41	$	24.30

	High		Low
2010:
1st Quarter	$	27.99	$	25.64
2nd Quarter	$	27.42	$	23.14
3rd Quarter	$	26.78	$	24.45
4th Quarter	$	30.66	$	26.64

        There were approximately 47 record holders of our common shares as of December 31, 2011. This figure does not represent the actual number of beneficial owners of our common shares because such shares are frequently held in "street name" by securities dealers and others for the benefit of individual owners who may vote the shares.

Performance Graph

        Set forth below is a line graph comparing the percentage change in the cumulative total shareholder return, assuming the reinvestment of dividends, over the period from the Company's IPO on July 25, 2007, through December 31, 2011 as compared to the cumulative total return of the S&P 500 Stock Index and the cumulative total return of an index of the Company's peer group. The peer group index is comprised of the following companies*: Allied World Assurance Company Holdings, AG., Arch Capital Group Ltd., Argo Group International Holdings, Ltd., Aspen Insurance Holdings Limited, Axis Capital Holdings Limited, Endurance Specialty Holdings Ltd., Everest Re Group, Ltd., Flagstone Reinsurance Holdings SA,

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Montpelier Re Holdings Ltd., PartnerRe Ltd., Platinum Underwriters Holdings Ltd., RenaissanceRe Holdings Ltd., and Transatlantic Holdings, Inc.

Dividend Policy

        The Company currently pays a quarterly cash dividend of $0.25 per common share and per common share equivalent for which each outstanding warrant is exercisable.

        We are a holding company and have no direct operations. Our ability to pay dividends depends, in part, on the ability of Validus Re and Talbot to pay dividends to us. Each of the subsidiaries is subject to significant regulatory restrictions limiting its ability to declare and pay dividends. The Insurance Act provides that these subsidiaries may not declare or pay in any financial year dividends of more than 25% of its total statutory capital and surplus (as shown on its statutory balance sheet in relation to the previous financial year) unless it files an affidavit with the BMA at least seven days prior to the payment signed by at least two directors and such subsidiary's principal representative, stating that in their opinion such subsidiaries will continue to satisfy the required margins following declaration of those dividends. In addition, before reducing its total statutory capital by 15% or more (as set out in its previous years' statutory financial statements) each of these subsidiaries must make application to the BMA for permission to do so, such application to consist of an affidavit signed by at least two directors and such subsidiary's principal representative stating that in their opinion the proposed reduction in capital will not cause such subsidiary to fail to meet its relevant margins, and such other information as the BMA may require. At December 31, 2011, the excesses of statutory capital and surplus above minimum solvency margins for Validus Re and Talbot Insurance (Bermuda), Ltd., a Talbot subsidiary, were $2,822.7 million and $449.1 million, respectively. These amounts are available for distribution as dividend payments to the Company, subject to approval of the BMA. These amounts were calculated using the BMA's risk-based capital model, or Bermuda Solvency Capital Requirement ("BSCR"), and are based on draft regulatory filings for Validus Re and Talbot Insurance (Bermuda) Ltd.

        Talbot manages Syndicate 1183 (the "Syndicate") at Lloyd's. Lloyd's requires Talbot to hold cash and investments in trust for the benefit of policyholders either as Syndicate trust funds or as Funds at Lloyd's ("FAL"). Talbot may not distribute funds from the Syndicate into its corporate member's trust accounts unless, firstly, they are represented by audited profits and, secondly, the Syndicate has adequate future cash flow to service its policyholders. Talbot's corporate member may not distribute funds to Talbot's

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unregulated bank or investment accounts unless they are represented by a surplus of cash and investments over the FAL requirement. Additionally, U.K. company law prohibits Talbot's corporate name from declaring a dividend to the Company unless it has "profits available for distribution". The determination of whether a company has profits available for distribution is based on its accumulated realized profits less its accumulated realized losses. While the U.K. insurance regulatory laws do not impose statutory restrictions on a corporate name's ability to declare a dividend, the U.K. Financial Services Authority's ("FSA") rules require maintenance of each insurance company's solvency margin within its jurisdiction.

        In addition, the indenture governing our Junior Subordinated Deferrable Debentures would restrict us from declaring or paying dividends on our common shares if we are downgraded by A.M. Best to a financial strength rating of "B" (Fair) or below or if A.M. Best withdraws its financial strength rating on any of our material insurance subsidiaries. On February 6, 2012, A.M. Best upgraded our financial strength rating to A (Excellent) with a stable outlook. See "Business—Regulation—Bermuda," "Risk Factors—Risks Related to Ownership of Our Common Shares—Because we are a holding company and substantially all of our operations are conducted by our main operating subsidiaries, Validus Re and Talbot, our ability to meet any ongoing cash requirements and to pay dividends will depend on our ability to obtain cash dividends or other cash payments or obtain loans from Validus Re and Talbot," "Risk Factors—Risks Related to Our Company—We depend on ratings by A.M. Best Company. Our financial strength rating could be revised downward, which could affect our standing among brokers and customers, cause our premiums and earnings to decrease and limit our ability to pay dividends on our common shares."

Share Repurchase Program

        In November 2009, the Board of Directors of the Company authorized an initial $400.0 million share repurchase program. On February 17, 2010, the Board of Directors of the Company authorized the Company to return up to $750.0 million to shareholders. This amount was in addition to, and in excess of, the $135.5 million of common shares purchased by the Company through February 17, 2010 under its previously authorized $400.0 million share repurchase program. On May 6, 2010, the Board of Directors authorized a self tender offer pursuant to which the Company has repurchased $300.0 million in common shares.

        On November 4, 2010, the Company announced that its Board of Directors had approved share repurchase transactions aggregating $300.0 million. These repurchases were effected by a tender offer which the Company commenced on Monday November 8, 2010, for up to 7,945,400 of its common shares at a price of $30.00 per share. In addition, the Board of Directors authorized separate repurchase agreements with funds affiliated with or managed by each of Aquiline Capital Partners LLC, New Mountain Capital, LLC and Vestar Capital Partners pursuant to which the Company has repurchased $61.6 million in common shares. On December 20, 2010, the Board of Directors authorized the Company to return up to $400.0 million to shareholders. This amount was in addition to the $929.2 million of common shares purchased by the Company through December 23, 2010 under its previously authorized share repurchase program.

        The Company expects the purchases under its share repurchase program 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 of Directors at any time.

        The Company has repurchased approximately 35.0 million common shares for an aggregate purchase price of $947.2 million from the inception of the share repurchase program to February 15, 2012.

        Share repurchases include repurchases by the Company of shares, from time to time, from employees in order to facilitate the payment of withholding taxes on restricted shares granted and the exercise of

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stock appreciation rights. We purchased these shares at their fair market value, as determined by reference to the closing price of our common shares on the day the restricted shares vested or the stock appreciation rights were exercised.

			Share Repurchase Activity by Quarter
Effect of share repurchases:	As at December 31, 2010 (cumulative)		Quarter ended March 31, 2011		Quarter ended June 30, 2011		Quarter ended September 30, 2011		Quarter ended December 31, 2011
	(Dollars in thousands, except share and per share amounts)
Aggregate purchase price(a)	$	941,170	$	6,000	$	—	$	—	$	—
Shares repurchased		34,836,885		195,100		—		—		—
Average price(a)	$	27.02	$	30.75	$	—	$	—	$	—
Estimated net accretive (dilutive) impact on:
Diluted BV per common share(b)			$	1.02	$	1.16	$	1.23	$	1.25
Diluted EPS—Quarter(c)			$	n/a	$	0.26	$	0.13	$	0.05

			Share Repurchase Activity Post Year End
Effect of share repurchases:	As at December 31, 2011 (cumulative)		January 31, 2012		February 15, 2012		As at February 15, 2012		Cumulative to Date Effect
	(Dollars in thousands, except share and per share amounts)
Aggregate purchase price(a)	$	947,170	$	—	$	—	$	—	$	947,170
Shares repurchased		35,031,985		—		—		—		35,031,985
Average price(a)	$	27.04	$	—	$	—	$	—	$	27.04

(a)

Share transactions are on a trade date basis through February 15, 2012 and are inclusive of commissions. Average share price is rounded to two decimal places.

(b)

As the average price per share repurchased during the periods 2009, 2010 and 2011 was lower than the book value per common share, the repurchase of shares increased the ending book value per share.

(c)

The estimated impact on diluted earnings per share was calculated by comparing reported results versus i) net income per share plus an estimate of lost net investment income on the cumulative share repurchases divided by ii) weighted average diluted shares outstanding excluding the weighted average impact of cumulative share repurchases. The impact of cumulative share repurchases was accretive to diluted earnings per share.

Item 6.    Selected Financial Data

        The summary consolidated statement of operations data for the years ended December 31, 2011, December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007 and the summary consolidated balance sheet data as of December 31, 2011, December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007 are derived from our audited consolidated financial statements. The Company was formed on October 19, 2005 and completed the acquisitions of Talbot and IPC on July 2, 2007 and September 4, 2009, respectively. Talbot is included in the Company's consolidated results only for the six months ended December 31, 2007 and subsequent fiscal year ends. IPC is included in the Company's consolidated results only for the four months ended December 31, 2009 and subsequent fiscal year ends. IPC is not included in consolidated results for the years ended December 31, 2007, and December 31, 2008.

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        You should read the following summary consolidated financial information together with the other information contained in this Annual Report on Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included elsewhere herein.

	Year Ended December 31,
	2011			2010			2009			2008			2007
	(Dollars in thousands, except share and per share amounts)
Revenues
Gross premiums written	$	2,124,691		$	1,990,566		$	1,621,241		$	1,362,484		$	988,637
Reinsurance premiums ceded		(289,241	)		(229,482	)		(232,883	)		(124,160	)		(70,210	)
Net premiums written		1,835,450			1,761,084			1,388,358			1,238,324			918,427
Change in unearned premiums		(33,307	)		39			61,219			18,194			(60,348	)
Net premiums earned		1,802,143			1,761,123			1,449,577			1,256,518			858,079
Gain on bargain purchase, net of expenses(a)		—			—			287,099			—			—
Net investment income		112,296			134,103			118,773			139,528			112,324
Realized gain on repurchase of debentures		—			—			4,444			8,752			—
Net realized gains (losses) on investments		28,532			32,498			(11,543	)		(1,591	)		1,608
Net unrealized (losses) gains on investments(b)		(19,991	)		45,952			84,796			(79,707	)		12,364
Other income		5,718			5,219			4,634			5,264			3,301
Foreign exchange (losses) gains		(22,124	)		1,351			(674	)		(49,397	)		6,696
Total revenues		1,906,574			1,980,246			1,937,106			1,279,367			994,372
Expenses
Losses and loss expenses		1,244,401			987,586			523,757			772,154			283,993
Policy acquisition costs		314,184			292,899			262,966			234,951			134,277
General and administrative expenses(c)		197,497			209,290			185,568			123,948			100,765
Share compensation expenses		34,296			28,911			27,037			27,097			16,189
Finance expenses		54,817			55,870			44,130			57,318			51,754
Fair value of warrants issued		—			—			—			—			2,893
Transaction expenses(d)		17,433			—			—			—			—
Total expenses		1,862,628			1,574,556			1,043,458			1,215,468			589,871
Net income (loss) before taxes		43,946			405,690			893,648			63,899			404,501
Tax (expense) benefit		(824	)		(3,126	)		3,759			(10,788	)		(1,505	)
Net income		43,122			402,564			897,407			53,111			402,996
Net income attributable to noncontrolling interest		(21,793	)		—			—			—			—
Net income available to Validus		21,329			402,564			897,407			53,111			402,996
Comprehensive income
Foreign currency translation adjustments		(1,146	)		(604	)		3,007			(7,809	)		(49	)
Comprehensive income	$	20,183		$	401,960		$	1,797,821		$	98,413		$	402,947
Earnings per share(e)
Weighted average number of common shares and common share equivalents outstanding
Basic		98,607,439			116,018,364			93,697,194			74,677,903			65,068,093
Diluted		100,928,284			120,630,945			97,168,409			75,819,413			67,786,673

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	Year Ended December 31,
	2011			2010			2009			2008			2007
	(Dollars in thousands, except share and per share amounts)
Basic earnings per share available to common shareholders	$	0.14		$	3.41		$	9.51		$	0.62		$	6.19
Diluted earnings per share available to common shareholders	$	0.14		$	3.34		$	9.24		$	0.61		$	5.95
Cash dividends declared per share	$	1.00		$	0.88		$	0.80		$	0.80		$	—
Selected financial ratios
Losses and loss expenses(f)		69.1	%		56.1	%		36.1	%		61.5	%		33.1	%
Policy acquisition cost(g)		17.4	%		16.6	%		18.1	%		18.7	%		15.6	%
General and administrative expense(h)		12.9	%		13.5	%		14.7	%		12.0	%		13.3	%
Expense ratio(i)		30.3	%		30.1	%		32.8	%		30.7	%		28.9	%
Combined ratio(j)		99.4	%		86.2	%		68.9	%		92.2	%		62.0	%
Annualized return on average equity(k)		0.6	%		10.8	%		31.8	%		2.7	%		26.9	%

        The following table sets forth summarized balance sheet data as of December 31, 2011, 2010, 2009, 2008 and 2007:

	As at December 31,
	2011		2010		2009		2008		2007
	(Dollars in thousands, except share and per share amounts)
Summary Balance Sheet Data:
Investments at fair value	$	5,191,123	$	5,118,859	$	5,388,759	$	2,831,537	$	2,662,021
Cash and cash equivalents		832,844		620,740		387,585		449,848		444,698
Total assets		7,618,471		7,060,878		7,019,140		4,322,480		4,144,224
Reserve for losses and loss expenses		2,631,143		2,035,973		1,622,134		1,305,303		926,117
Unearned premiums		772,382		728,516		724,104		539,450		557,344
Senior notes payable		246,982		246,874		—		—		—
Debentures payable		289,800		289,800		289,800		304,300		350,000
Total shareholders' equity		3,448,425		3,504,831		4,031,120		1,978,734		1,934,800
Book value per common share(l)		34.67		35.76		31.38		25.64		26.08
Diluted book value per common share(m)		32.28		32.98		29.68		23.78		24.00

(a)

The gain on bargain purchase, net of expenses, arises from the acquisition of IPC Holdings, Ltd. on September 4, 2009 and is net of transaction related expenses.

(b)

During the first quarter of 2007, the Company adopted authoritative guidance on "Fair Value Measurements and Disclosures" and "Financial Instruments" and elected the fair value option on all securities previously accounted for as available-for-sale. Unrealized gains and losses on available-for-sale investments at December 31, 2006 of $875,000, previously included in accumulated other comprehensive income, were treated as a cumulative-effect adjustment as of January 1, 2007. The cumulative-effect adjustment transferred the balance of unrealized gains and losses from accumulated other comprehensive income to retained earnings and has no impact on the results of operations for the annual or interim periods beginning January 1, 2007. The Company's investments were accounted for as trading for the annual or interim periods beginning January 1, 2007 and as such all unrealized gains and losses are included in net income.

(c)

General and administrative expenses for the year ended December 31, 2007 include $4,000,000 related to our Advisory Agreement with Aquiline. Our Advisory Agreement with Aquiline terminated upon completion of our IPO, in connection with which the Company recorded general and administrative expense of $3,000,000 in the third quarter of the year ended December 31, 2007.

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(d)

The transaction expenses relate to cost incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

(e)

U.S. GAAP fair value recognition provisions for "Stock Compensation" require that any unrecognized stock-based compensation expense that will be recorded in future periods be included as proceeds for purposes of treasury stock repurchases, which is applied against the unvested restricted shares balance. On March 1, 2007, we effected a 1.75 for one reverse stock split of our outstanding common shares. The stock split does not affect our financial statements other than to the extent it decreases the number of outstanding shares and correspondingly increases per share information for all periods presented. The share consolidation has been reflected retroactively in these financial statements.

(f)

The loss and loss expense ratio is calculated by dividing losses and loss expenses by net premiums earned.

(g)

The policy acquisition cost ratio is calculated by dividing policy acquisition costs by net premiums earned.

(h)

The general and administrative expense ratio is calculated by dividing the sum of general and administrative expenses and share compensation expenses by net premiums earned. The general and administrative expense ratio for the year ended December 31, 2007 is calculated by dividing the total of general and administrative expenses plus share compensation expenses less the $3,000,000 Aquiline termination fee by net premiums earned.

(i)

The expense ratio is calculated by combining the policy acquisition cost ratio and the general and administrative expense ratio.

(j)

The combined ratio is calculated by combining the loss ratio, the policy acquisition cost ratio and the general and administrative expense ratio.

(k)

Return on average equity is calculated by dividing the net income for the period by the average shareholders' equity during the period. Quarterly average shareholders' equity is the average of the beginning and ending shareholders' equity balances. Annual average shareholders' equity is the average of the beginning, ending and intervening quarter end shareholders' equity balances.

(l)

Book value per common share is defined as total shareholders' equity divided by the number of common shares outstanding as at the end of the period, giving no effect to dilutive securities.

(m)

Diluted book value per common share is calculated based on total shareholders' equity plus the assumed proceeds from the exercise of outstanding options and warrants, divided by the sum of common shares, unvested restricted shares, options and warrants outstanding (assuming their exercise).

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following is a discussion and analysis of the Company's consolidated results of operations for the three months ended December 31, 2011 and 2010 and for years ended December 31, 2011, 2010 and 2009 and the Company's consolidated financial condition, liquidity and capital resources at December 31, 2011 and 2010. The Company completed the acquisition of IPC on September 4, 2009. IPC is included in the Company's consolidated results only for the four months ended December 31, 2009 and subsequent fiscal periods and year ends. This discussion and analysis pertains to the results of the Company inclusive of IPC from the date of acquisition. This discussion and analysis should be read in conjunction with the Company's audited consolidated financial statements and related notes thereto included elsewhere within this filing.

        For a variety of reasons, the Company's historical financial results may not accurately indicate future performance. See "Cautionary Note Regarding Forward-Looking Statements." The Risk Factors set forth in Item 1A above present a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein.

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Executive Overview

        The Company underwrites from two distinct global operating subsidiaries, Validus Re and Talbot. Validus Re, the Company's principal reinsurance operating subsidiary, operates as a Bermuda-based provider of short-tail reinsurance products on a global basis and incorporates historical IPC business. Talbot, the Company's principal insurance operating subsidiary, operates through Talbot Underwriting Ltd, which manages Syndicate 1183 at Lloyd's which writes short-tail insurance products on a worldwide basis.

        The Company's strategy is to concentrate primarily on short-tail risks, which is an area where management believes current prices and terms provide an attractive risk adjusted return and the management team has proven expertise. The Company's profitability in any given period is based upon premium and investment revenues less net losses and loss expenses, acquisition expenses and operating expenses. Financial results in the insurance and reinsurance industry are influenced by the frequency and/or severity of claims and losses, including as a result of catastrophic events, changes in interest rates, financial markets and general economic conditions, the supply of insurance and reinsurance capacity and changes in legal, regulatory and judicial environments.

        On September 4, 2009, the Company acquired all of the outstanding shares of IPC (the "IPC Acquisition") in exchange for common shares and cash. IPC's operations focused on short-tail lines of reinsurance. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. The IPC Acquisition was undertaken to increase the Company's capital base and gain a strategic advantage in the then current reinsurance market. This acquisition created a leading Bermuda carrier in the short-tail reinsurance market that facilitates stronger relationships with major reinsurance intermediaries.

        On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, a special purpose "sidecar" reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. At the time of formation, Validus Re had an equity interest in AlphaCat Re 2011 and as Validus Re held a majority of AlphaCat Re 2011's outstanding voting rights, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company.

        On December 23, 2011, the Company completed a secondary offering of common shares of AlphaCat Re 2011 to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors. As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re 2011; however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%. As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 have been derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 is treated as an equity method investment as at December 31, 2011. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 is recorded in the Consolidated Statements of Operations and Comprehensive Income as net income attributable to noncontrolling interest.

        Written premiums are a function of the number and type of contracts written and the prevailing market prices. Renewal dates for reinsurance business tend to be concentrated at the beginning of quarters, with the timing of premiums written varying by line of business. Most property catastrophe business incepts January 1, April 1, June 1 and July 1 with an annual policy, while most insurance and specialty lines renewals are more evenly spread throughout the year. Written premiums are generally highest in the first quarter and lowest during the fourth quarter of the year. Gross premiums written for pro rata programs are initially recorded as estimates and are then adjusted as actual results become known. Pro rata reinsurance is a type of reinsurance whereby the reinsurer indemnifies the policyholder against a predetermined portion of losses in return for a proportional share of the direct premiums. Premiums are then generally earned over a 24 month period and paid in monthly or quarterly installments.

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        The following are the primary lines in which the Company conducts business:

        Property:    Validus Re underwrites property catastrophe reinsurance, property per risk reinsurance and property pro rata reinsurance. Property catastrophe includes reinsurance for insurance companies' exposures to an accumulation of property and related losses from separate policies, typically relating to natural disasters or other catastrophic events. Property per risk provides reinsurance for insurance companies' excess retention on individual property and related risks, such as highly-valued buildings. In property pro rata contracts the reinsurer shares the premiums as well as the losses and expenses in an agreed proportion with the cedant. Talbot primarily writes direct and facultative property insurance, lineslips and binding authorities and property treaty. The business written is principally onshore energy, commercial and industrial insurance. The business is short-tail with premiums generally earned within one year and claims generally paid within two years.

        Marine:    The Company underwrites insurance and reinsurance on marine risks covering damage to or losses of marine vessels or cargo, yachts and marinas, third-party liability for marine accidents and physical loss and liability from principally offshore energy properties. Talbot underwrites both marine treaty reinsurance and insurance on a direct and facultative basis. Validus Re underwrites marine reinsurance on an excess of loss basis, and to a lesser extent, on a pro rata basis.

        Specialty:    The Company underwrites other specialty lines with very limited exposure correlation with its property, marine and energy portfolios. Validus Re underwrites other lines of business depending on an evaluation of pricing and market conditions, which include aerospace, terrorism, life and accident & health and workers' compensation catastrophe. With the exception of the aerospace line of business, which has a meaningful portion of its gross premiums written volume on a proportional basis, Validus Re's other specialty lines are primarily written on an excess of loss basis. Talbot underwrites war, political risks, political violence, financial institutions, contingency, accident and health, and aviation. Most of the Talbot specialty business is written on a direct or facultative basis or through a binding authority or coverholder in conjunction with a significant aviation treaty account.

        Income from the Company's investment portfolio primarily comprises interest income on fixed maturity investments net of investment expenses and net realized/unrealized gains/losses on investments. A significant portion of the Company's contracts provide short-tail coverage for damages resulting mainly from natural and man-made catastrophes, which means that the Company could become liable for a significant amount of losses on short notice. Accordingly, the Company has structured its investment portfolio to preserve capital and maintain a high level of liquidity, which means that the large majority of the Company's investment portfolio consists of short-term fixed maturity investments. The Company's fixed income investments are classified as trading. Under U.S. GAAP, these securities are carried at fair value, and unrealized gains and losses are included in net income in the Company's consolidated statements of operations and comprehensive income.

        The Company's expenses consist primarily of losses and loss expenses, acquisition costs, general and administrative expenses, and finance expenses related to debentures, senior notes and our credit facilities.

        Losses and loss expenses are a function of the amount and type of insurance and reinsurance contracts written and of the loss experience of the underlying risks. Reserves for losses and loss expenses include a component for outstanding case reserves for claims which have been reported and a component for losses incurred but not reported. The uncertainties inherent in the reserving process, together with the potential for unforeseen developments, may result in losses and loss expenses materially different than the reserve initially established. Changes to prior year loss reserves will affect current underwriting results by increasing net income if a portion of the prior year reserves prove to be redundant or decreasing net income if the prior year reserves prove to be insufficient. Adjustments resulting from new information will be reflected in income in the period in which they become known. The Company's ability to estimate losses

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and loss expenses accurately, and the resulting impact on contract pricing, is a critical factor in determining profitability.

        Since most of the lines of business underwritten have large aggregate exposures to natural and man-made catastrophes, the Company expects that claims experience will often be the result of irregular and significant events. The occurrence of claims from catastrophic events is likely to result in substantial volatility in, and could potentially have a material adverse effect on, the Company's financial condition, results of operations, and ability to write new business. The business written by Talbot helps to mitigate these risks by providing us with significant benefits in terms of product line and geographic diversification.

        Acquisition costs consist principally of brokerage expenses and commissions which are driven by contract terms on reinsurance contracts written, and are normally a specific percentage of premiums. Under certain contracts, cedants may also receive profit commissions which will vary depending on the loss experience on the contract. Acquisition costs are presented net of commissions or fees received on any ceded premium.

        General and administrative expenses are generally comprised of expenses which do not vary with the amount of premiums written or losses incurred. Applicable expenses include salaries and benefits, professional fees, office expenses, risk management, and stock compensation expenses. Stock compensation expenses include costs related to the Company's long-term incentive plan, under which restricted stock are granted to certain employees.

Business Outlook and Trends

        We underwrite global specialty property insurance and reinsurance and have large aggregate exposures to natural and man-made disasters. The occurrence of claims from catastrophic events results in substantial volatility, and can have material adverse effects on the Company's financial condition and results and ability to write new business. This volatility affects results for the period in which the loss occurs because U.S. accounting principles do not permit reinsurers to reserve for such catastrophic events until they occur. Catastrophic events of significant magnitude historically have been relatively infrequent, although management believes the property catastrophe reinsurance market has experienced a higher level of worldwide catastrophic losses in terms of both frequency and severity in the period from 1992 to the present. We also expect that increases in the values and concentrations of insured property will increase the severity of such occurrences in the future. The Company seeks to reflect these trends when pricing contracts.

        Property and other reinsurance premiums have historically risen in the aftermath of significant catastrophic losses. As loss reserves are established, industry surplus is depleted and the industry's capacity to write new business diminishes. At the same time, management believes that there is a heightened awareness of exposure to natural catastrophes on the part of cedants, rating agencies and catastrophe modeling firms, resulting in an increase in the demand for reinsurance protection.

        The global property and casualty insurance and reinsurance industry has historically been highly cyclical. The Company was formed in October 2005 in response to the supply/demand imbalance resulting from the large industry losses in 2004 and 2005. In the aggregate, the Company observed substantial increases in premium rates in 2006 compared to 2005 levels. During the years ended December 31, 2007 and 2008, the Company experienced increased competition in most lines of business. Capital provided by new entrants or by the commitment of additional capital by existing insurers and reinsurers increased the supply of insurance and reinsurance which resulted in a softening of rates in most lines. However, during 2008, the insurance and reinsurance industry incurred material losses and capital declines due to Hurricanes Ike and Gustav and the global financial crisis. In the wake of these events, the January 2009 renewal season saw decreased competition and increased premium rates due to relatively scarce capital and increased demand. During 2009, the Company observed reinsurance demand stabilization and industry capital recovery from investment portfolio gains. In 2009, there were few notable large losses affecting the

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worldwide (re)insurance industry and no major hurricanes making landfall in the United States. During 2010, the Company continued to see increased competition and decreased premium rates in most classes of business with the exception of offshore energy, Latin America, financial institutions and political risk lines. During 2010 there was an increased level of catastrophe activity, principally the Chilean earthquake and the Deepwater Horizon events.

        During the January 2011 renewal season, Validus Re increased gross premiums written on its U.S. Cat XOL lines and decreased gross premiums written in the proportional lines. In addition, Validus Re decreased gross premiums written in the International Property lines as market conditions dictated. In the aftermath of 2010's Deepwater Horizon loss, Validus Re saw additional opportunities and rate increases in the marine lines. Within its specialty lines, Validus Re increased gross premiums written in the terrorism lines among other sub-classes.

        Until the third quarter of 2011, premiums within Talbot remained relatively stable, then significant price increases were seen across offshore energy, onshore energy and property classes. Most other classes also experienced low level rate increases as the Lloyd's market responded to the year's highly publicized catastrophes (including the Christchurch earthquake, Brisbane floods, Tohuku earthquake and the Thailand floods) together with high frequency risk losses. These increases were offset by some pricing pressure remaining in places, resulting in an overall price increase at a whole account level of 3.1% for the year to date.

        During the January 2012 renewal season, the Validus Re segment underwrote $581.6 million in gross premiums written, an increase of 10.7% from the prior year period. This renewal data does not include Talbot's operations as its business is distributed relatively evenly throughout the year.

Financial Measures

        The Company believes the following financial indicators are important in evaluating performance and measuring the overall growth in value generated for shareholders:

Annualized return on average equity represents the level of net income available to shareholders generated from the average shareholders' equity during the period. Annualized return on average equity is calculated by dividing the net income for the period by the average shareholders' equity during the period. Average shareholders' equity is the average of the beginning, ending and intervening quarter end shareholders' equity balances. The Company's objective is to generate superior returns on capital that appropriately reward shareholders for the risks assumed and to grow revenue only when returns meet or exceed internal requirements. Details of annualized return on average equity are provided below.

	Three Months Ended December 31,									Years Ended December 31,
	2011			2010			2009			2011			2010			2009
Annualized return on average equity		3.2	%		11.3	%		16.6	%		0.6	%		10.8	%		31.8	%

        The decrease in annualized return on average equity were driven primarily by a decrease in net income available to Validus for the three months and year ended December 31, 2011. Net income available to Validus for the three months ended December 31, 2011 decreased by $75.4 million, or 73.4% compared to the three months ended December 31, 2010 due primarily to a decrease in underwriting income. Net income available to Validus for the year ended December 31, 2011 decreased by $381.2 million, or 94.7% compared to the year ended December 31, 2010 due primarily to increased notable loss events for the year ended December 31, 2011.

Diluted book value per common share is considered by management to be an appropriate measure of our returns to common shareholders, as we believe growth in our book value on a diluted basis ultimately translates into growth of our stock price. Diluted book value per common share decreased by $0.70, or

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2.1%, from $32.98 at December 31, 2010 to $32.28 at December 31, 2011. The decrease was due to dividends paid exceeding net income during the year ended December 31, 2011. Diluted book value per common share is a Non-GAAP financial measure. The most comparable U.S. GAAP financial measure is book value per common share. Diluted book value per common share is calculated based on total shareholders' equity plus the assumed proceeds from the exercise of outstanding options and warrants, divided by the sum of common shares, unvested restricted shares, options and warrants outstanding (assuming their exercise). A reconciliation of diluted book value per common share to book value per common share is presented below in the section entitled "Non-GAAP Financial Measures."

Cash dividends per common share are an integral part of the value created for shareholders. The Company declared quarterly cash dividends of $0.25 per common share and common share equivalent in each of the four quarters of 2011. On February 9, 2012, the Company announced a quarterly cash dividend of $0.25 per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable, payable on March 30, 2012 to holders of record on March 15, 2012.

Underwriting income measures the performance of the Company's core underwriting function, excluding revenues and expenses such as net investment income (loss), other income, finance expenses, net realized and unrealized gains (losses) on investments, foreign exchange gains (losses) and gain on bargain purchase, net of 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 operations. Underwriting income for the three months ended December 31, 2011 and 2010 was $12.8 million and $139.7 million, respectively. Underwriting income for the year ended December 31, 2011 and 2010 was $11.8 million and $242.4 million, respectively. Underwriting income is a Non-GAAP financial measure as described in detail and reconciled in the section below entitled "Underwriting Income."

Critical Accounting Policies and Estimates

        The Company's consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect reported and disclosed amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management believes the following accounting policies are critical to the Company's financial reporting as the application of these policies requires management to make significant judgments. Management believes the items that require the most subjective and complex estimates are (1) reserve for losses and loss expenses, (2) premiums, (3) reinsurance premiums ceded and reinsurance recoverable, and (4) investment valuation.

        Reserve for Losses and Loss Expenses.    For insurance and reinsurance companies, a significant judgment made by management is the estimation of the reserve for losses and loss expenses. The Company establishes its reserve for losses and loss expenses to cover the estimated remaining liability incurred for both reported claims ("case reserves") and unreported amounts ("incurred but not reported" or "IBNR reserves"). For insurance and reinsurance business, the IBNR reserves include provision for loss incidents that have occurred but have not yet been reported to the Company as well as for future variation in case reserves (where the claim has been reported but the ultimate cost is not yet known). Within the reinsurance business, the portion of total IBNR related to future variation on known claims is calculated at the individual claim level in some instances (either as an additional case reserve or individual claim IBNR).Within the insurance business, the provision for future variation in current case reserves is generally calculated using actuarial estimates of total IBNR, while individual claim IBNR amounts are sometimes calculated for larger claims. During 2010 and 2011, given the complexity and severity of notable loss events, an explicit reserve for potential development on 2010 and 2011 notable loss events (RDE) was included within the Company's IBNR reserving process. As uncertainties surrounding initial estimates on notable loss events develop, it is expected that this reserve will be allocated to specific notable loss events.

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        The requirement for a reserve for potential development on notable loss events in a quarter is a function of (a) the number of significant events occurring in that quarter and (b) the complexity and volatility of those events. These factors are considered in the aggregate for the events occurring in the quarter, recognizing that it is more likely that one or some of the events may deteriorate significantly, rather than all deteriorating proportionately. The evaluation of each quarter's requirement for a reserve for potential development on notable loss events takes place as part of the quarterly evaluation of the Company's overall reserve requirements. It is not directly linked in isolation to any one significant/notable loss in the quarter, and therefore it is not 'assigned to a contract on the basis of a specific review'. The reserve for potential development on notable loss events is evaluated by our in-house actuaries as part of their normal process in setting of indicated reserves for the quarter. In ensuing quarters the Loss Reserve Committee revisits and re-estimates each event previously considered in the catastrophe loss event process, as well as events that have subsequently emerged in the current quarter. Changes to the reserve for potential development on notable loss events will be considered in light of changes to previous loss estimates from notable losses in this re-estimation process.

        Loss reserve estimates for insurance and reinsurance business are not precise in that they deal with the inherent uncertainty in the outcome of insurance and reinsurance claims made on the Company, many of which have not yet been reported to the Company. Estimating loss reserves requires management to make assumptions, both explicit and implicit, regarding future paid and reported loss development patterns, frequency and severity trends, claims settlement practices, potential changes in the legal environment and other factors. These estimates and judgments are based on numerous factors, and may be revised over time as additional experience or other data becomes available, as new or improved methodologies are developed or as current laws change.

        As predominantly a broker market insurer and reinsurer, the Company must rely on loss information reported to us by brokers from clients, where such information is often incomplete or changing. The quality and type of information received varies by client and by the nature of the business, insurance or reinsurance.

        In the insurance business, for risks that the Company leads, the Company receives from brokers details of potential claims, on the basis of which the Company's loss adjusters make estimates of the likely ultimate outcome of the claims. In determining these reserves, the Company takes into account a number of factors including the facts and circumstances of the individual claim, the nature of the coverage and historical information about its experience on similar types of claims. For insurance business where another company is the lead, the case reserves are established by the lead underwriter and validated centrally by the Lloyd's market claims bureau, with a sample reviewed by the Company. The sum of the individual claim estimates for lead and follow business constitutes the case reserves.

        For reinsurance business, the Company typically receives from brokers details of paid losses and estimated case reserves recorded by the ceding company. In addition to this, the ceding company's estimated provision for IBNR losses is sometimes also available, although this in itself introduces additional uncertainty owing to the differing and typically unknown reserving practices of ceding companies.

        There will also be a time lag between a loss occurring and it being reported, first by the original claimant to its insurer, via the insurance broker, and for reinsurance business, subsequently from the insurer to the reinsurer via the reinsurance broker.

        The Company writes a mix of predominantly short-tail business, both insurance and reinsurance. The combination of low claim frequency and high claim severity that is characteristic of much of this short-tail business makes the available data more volatile and less reliable for predicting ultimate losses. For example, in property lines, there can be additional uncertainty in loss estimation related to large catastrophe events, whether natural or man-made. With winds events, such as hurricanes, the damage assessment process may take more than a year. The cost of claims is also subject to volatility due to supply

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shortages for construction materials and labor. In the case of earthquakes, the damage assessment process may take longer as buildings are discovered to have structural weaknesses not initially detected.

        The Company also writes longer tail insurance lines of business, predominantly financial institutions ($37.5 million of gross premiums written on a claims made basis) and marine and energy liabilities ($51.7 million of gross premiums substantially written on a losses occurring basis) for the year ended December 31, 2011. These longer tail lines represent 8.8% of Talbot's gross premiums written for the year ended December 31, 2011. For marine and energy liability, the time from the occurrence of a claim to its first report to the Company can be years. For both marine and energy liability and financial institutions, the subsequent time between reporting of a claim and its settlement can be years. In these intervening periods between occurrence, reporting and settlement, additional facts regarding individual claims and trends often will become known and current laws and case law may change, affecting the ultimate value of the claim.

        Taken together, these issues add considerable uncertainty to the process of estimating ultimate losses, hence loss reserves, and this uncertainty is increased for reinsurance business compared with insurance business due to the additional parties in the chain of reporting from the original claimant to the reinsurer.

        As a result of the uncertainties described above, the Company must estimate IBNR reserves, which consist of a provision for future development on known loss events, as well as a provision for claims which have occurred but which have not yet been reported to us by clients. Because of the degree of reliance that is necessarily placed on brokers and (re)insured companies for claims reporting, the associated time lag, the low frequency/high severity nature of much of the business underwritten, the rapidly emerging and changing nature of facts and circumstances surrounding large events and, for reinsurance business, the varying reserving practices among ceding companies as described above, reserve estimates are highly dependent on management's judgment and are subject to uncertainty.

        The Company strives to take account of these uncertainties in the judgments and assumptions made when establishing loss reserves, but it is not possible to eliminate the uncertainties. As a result, there is a risk that the Company's actual losses may be higher or lower than the reserves booked.

        For the Company's insurance business written by Talbot, where a longer reserving history exists, the Company examines the development of its own historical paid and incurred losses to identify trends, which it then incorporates into the reserving process where it deems appropriate.

        For the Company's reinsurance business, especially that written by Validus Re where the Company relies more heavily on information provided by clients in order to assist it in estimating reserves, the Company performs certain processes in order to help assess the completeness and accuracy of such information as follows:

        1.     In addition to information received from clients on reported claims, the Company also uses information on the patterns of client loss reporting and loss settlements from previous events in order to estimate the Company's ultimate liability related to these events;

        2.     The Company uses reinsurance industry information in order to perform consistency checks on the data provided by ceding companies and to identify trends in loss reporting and settlement activity. Where it deems appropriate, the Company incorporates such information in establishing reinsurance reserves; and

        3.     For both insurance and reinsurance business, the Company supplements the loss information received from clients with loss estimates developed by market share techniques and third party catastrophe models when such information is available.

        Although there is normally a lag in receiving reinsurance data from cedants, the Company currently has no backlog related to the processing of assumed reinsurance information. The Company actively manages its relationships with brokers and clients and considers existing disputes with counterparties to be in the normal course of business.

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        As described above, the reserve for losses and loss expenses includes both a component for outstanding case reserves for claims which have been reported and a component for IBNR reserves. IBNR reserves are the difference between ultimate losses and reported losses, where reported losses are the sum of paid losses and outstanding case reserves. Ultimate losses are estimated by management using various actuarial methods, including exposure-based and loss-based methods, as well as other qualitative assessments regarding claim trends.

        The Company uses a reserving methodology that establishes a point estimate for ultimate losses. The point estimate represents management's best estimate of ultimate losses and loss expenses. The Company does not select a range as part of its loss reserving process. The extent of reliance on management judgment in the reserving process differs depending on the circumstances surrounding the estimations, including the volume and credibility of data, the perceived relevance of historical data to future conditions, the stability or lack of stability in the Company's operational processes for handling losses (including claims practices and systems) and other factors. The Company reviews its reserving assumptions and methodologies on a quarterly basis. Two of the most critical assumptions in establishing reserves are loss emergence patterns and expected loss ratios. Loss emergence patterns are critical to the reserving process as they can be one key indicator of the ultimate liability. A pattern of reported loss emergence different from expectations may indicate a change in the loss climate and may thus influence the estimate of future payments that should be reflected in reserves. Expected loss ratios are a primary component in the Company's calculation of estimated ultimate losses for business at an early stage in its development.

        Loss emergence patterns for the business written by Talbot are generally derived from Talbot's own historic loss development triangulations, supplemented in some instances by Lloyd's market data. For the business written by Validus Re, where its own historic loss development triangulations are currently more limited, greater use is made of market data including reinsurance industry data available from organizations such as statistical bureaus and consulting firms, where appropriate. Expected loss ratios are estimated in a variety of ways, largely dependent upon the data available. Wherever it deems appropriate, management incorporates the Company's own loss experience in establishing initial expected loss ratios and reserves. This is particularly true for the business written by Talbot where a longer reserving history exists and expected losses and loss ratios consider, among other things, rate increases and changes in terms and conditions that have been observed in the market. For reinsurance business, expected losses and loss ratios are typically developed using vendor and proprietary computer models. The information used in these models is collected by underwriters and actuaries during the initial pricing of the business.

        The Company has catastrophe event ultimate loss reserve estimation procedures for the investigation, analysis, and estimation of ultimate losses resulting from large catastrophe events. The determination regarding which events follow these procedures is made by members of senior management from relevant departments within the Company. The procedures are designed to facilitate the communication of information between various relevant functions and provide an efficient approach to determining the estimated loss for the event.

        In developing estimates for large catastrophe events, the Company considers various sources of information including; specific loss estimates reported by our cedants and policyholders, ceding company and overall insurance industry loss estimates reported by our brokers and by claims reporting services, proprietary and third party vendor models and internal data regarding insured or reinsured exposures related to the geographical location of the event. Use of these various sources enables management to estimate the ultimate loss for known events with a higher degree of accuracy and timeliness than if the Company relied solely on one data source. Generally, catastrophe event ultimate loss estimates are established without regard to whether we may subsequently contest any claim resulting from the event. Indicated ultimate loss estimates for catastrophe events are compiled by a committee of management, and these indicated ultimate losses are incorporated into the process of selecting management's best estimate of reserves.

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        As with large catastrophe events, the Company separately estimates ultimate losses for certain large claims using a number of methods, including estimation based on vendor models, analyses of specific industry occurrences and facts, as well as information from cedants and policyholders on individual contract involvements.

        Management's loss estimates are subject to annual corroborative review by independent actuaries using generally accepted actuarial techniques and other analytical and qualitative methods.

        The Company's three lines of business, property, marine and specialty, are exposed to event-related risks that are generally reported and paid within three years of the event except for financial institutions and energy and marine liability. The Company estimates that 83.2% of its current reserves will be paid within three years. The Company writes longer tail business in its financial institutions marine and energy liabilities lines. Factors contributing to uncertainty in reserving for these lines include longer duration of loss development patterns, difficulty applying older loss experience to newer years, and the possibility of future litigation. The Company considers these factors when reserving for longer tail lines.

        As described above, for all lines of business, the Company's reserve for losses and loss adjustment expenses and loss reserves recoverable consist of three categories: (1) case reserves, (2) in certain circumstances, additional case reserves (ACR), and (3) IBNR reserves. For both Talbot and Validus Re, IBNR is established separately for large or catastrophe losses and smaller "attritional" losses. The reserves and recoverables for attritional and large or catastrophe losses are established on an annual and interim basis as follows:

        1.     Case reserves:    Case reserves generally are analyzed and established by each segment's claims department on all lines, making use of third party input where appropriate (including, for the reinsurance business, reports of losses from the ceding companies). For insurance business where Talbot is not the lead underwriter on the business, the case reserves are established by the lead underwriter and validated by central Lloyd's market claims bureau, with a sample reviewed by Talbot.

        2.     ACR reserves:    ACRs are established for Validus Re business by our claims department in cases where we believe the case reserves reported by the cedant require adjustment. ACRs supplement case reserves based on information obtained through ceding company audits or other sources. ACRs are not generally used at Talbot as claim volumes are generally greater and thus the potential for future variation in case reserve estimates on known claims often can be analyzed at an aggregate level using historical data.

        3.     IBNR reserves:

        a.     Large or catastrophe events—IBNR reserves are established for all lines based on each segment's estimates for known loss events for which not all claims have been reported to the Company. In establishing such IBNR reserves, the Company accumulates loss information from modeling agencies, where possible, publicly available sources and information contained in client reports and estimates. The loss information is applied to the Company's book of in-force contracts to establish an estimate of the Company's ultimate exposure to the loss event. For some large loss events, the Company estimates an ultimate loss expectation for the individual event. Paid losses, case reserves and any additional case reserves are then deducted from the ultimate loss to ascertain the IBNR estimate for these individual large claims or catastrophe events. The size of event for which the Company establishes a separate ultimate loss estimate may vary based on an assessment of the materiality of the event, as well as on other factors. During 2010 and 2011, given the complexity and severity of notable loss events in the year, an explicit reserve for potential development on 2010 and 2011 notable loss events was included within the Company's IBNR reserving process. As uncertainties surrounding initial notable loss events develop, it is expected that the reserve will be allocated to specific notable loss events.

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        b.     Attritional losses—IBNR reserves are established using some combination of the actuarial methods described above, including the Chain Ladder method, the Generalized Cape Cod method and the Bornhuetter-Ferguson method. In situations where limited historic development data is available and/or the year being analyzed is more recent (less mature), the expected loss method and the Bornhuetter-Ferguson method are more commonly used. Under all methods used at both Validus Re and Talbot, an ultimate loss amount is established. Paid losses, case reserves and any additional case reserves are then deducted from the ultimate loss to ascertain the attritional IBNR reserves.

        For all sources of IBNR, net reserves are estimated by first estimating gross IBNR reserves, then estimating reinsurance recoverables on IBNR.

        The Company's reserving methodology was not changed materially in the year ended December 31, 2011 from the methodology used in the year ended December 31, 2010 for either Validus Re or Talbot. Management's best estimate of the gross reserve for losses and loss expenses and loss reserves recoverable at December 31, 2011 were $2,631.1 million and $372.5 million, respectively. The following table sets forth a breakdown between gross case reserves and gross IBNR by segment at December 31, 2011.

	As at December 31, 2011
(Dollars in thousands)	Gross Case Reserves			Gross IBNR			Total Gross Reserve for Losses and Loss Expenses
Validus Re	$	765,299		$	595,550		$	1,360,849
Talbot		703,965			673,596			1,377,561
Eliminations		(54,822	)		(52,445	)		(107,267	)
Total	$	1,414,442		$	1,216,701		$	2,631,143

        Management's best estimate of the gross reserve for losses and loss expenses and loss reserves recoverable at December 31, 2010 were $2,036.0 million and $283.1 million, respectively. The following table sets forth a breakdown between gross case reserves and gross IBNR by segment at December 31, 2010.

	As at December 31, 2010
(Dollars in thousands)	Gross Case Reserves			Gross IBNR			Total Gross Reserve for Losses and Loss Expenses
Validus Re	$	523,388		$	474,777		$	998,165
Talbot		601,760			589,788			1,191,548
Eliminations		(89,267	)		(64,473	)		(153,740	)
Total	$	1,035,881		$	1,000,092		$	2,035,973

        To the extent insurance and reinsurance industry data is relied upon to aid in establishing reserve estimates, there is a risk that the data may not match the Company's risk profile or that the industry's reserving practices overall differ from those of the Company and its clients. In addition, reserving can prove especially difficult should a significant loss event take place near the end of an accounting period, particularly if it involves a catastrophic event. These factors further contribute to the degree of uncertainty in the reserving process.

        The uncertainties inherent in the reserving process, together with the potential for unforeseen developments, including changes in laws and the prevailing interpretation of policy terms, may result in losses and loss expenses materially different from the reserves initially established. Changes to prior year

67

reserves will affect current period underwriting income by increasing income if the prior year ultimate losses are reduced or decreasing income if the prior year ultimate losses are increased. The Company expects volatility in results in periods when significant loss events occur because U.S. GAAP does not permit insurers or reinsurers to reserve for loss events until they have both occurred and are expected to give rise to a claim. As a result, the Company is not allowed to record contingency reserves to account for expected future losses. The Company anticipates that claims arising from future events will require the establishment of substantial reserves in future periods.

        Given the risks and uncertainties associated with the process for estimating reserves for losses and loss expenses, management has performed an evaluation of the potential variability in loss reserves and the impact this variability may have on reported results, financial condition and liquidity. Management's best estimate of the net reserve for losses and loss expenses at December 31, 2011 is $ 2,258.7 million. The following tables show the effect on estimated net reserves for losses and loss expenses as of December 31, 2011 of a change in two of the most critical assumptions in establishing reserves: (1) loss emergence patterns, accelerated or decelerated by three and six months; and (2) expected loss ratios varied by plus or minus five and ten percent. Management believes that a reasonably likely scenario is represented by such a standard, as used by some professional actuaries as part of their review of an insurer's or reinsurer's reserves. Utilizing this standard as a guide, management has selected these variances to determine reasonably likely scenarios of variability in the loss emergence and loss ratio assumptions. These scenarios consider normal levels of catastrophe events. Loss reserves may vary beyond these scenarios in periods of heightened or reduced claim activity. The reserves resulting from the changes in the assumptions are not additive and should be considered separately. The following tables vary the assumptions employed therein independently. In addition, the tables below do not adjust any parameters other than the ones described above. Specifically, reinsurance collectability was not explicitly stressed as part of the calculations below.

Net reserve for losses and loss expenses at December 31, 2011—Sensitivity to loss emergence patterns

Change in assumption	Reserve for losses and loss expenses
	(Dollars in thousands)
Six month acceleration	$	1,912,066
Three month acceleration		2,073,070
No change (selected)		2,258,658
Three month deceleration		2,481,091
Six month deceleration		2,784,423

Net reserve for losses and loss expenses at December 31, 2011—Sensitivity to expected loss expenses

Change in assumption	Reserve for losses and loss expenses
	(Dollars in thousands)
10% favorable	$	2,165,548
5% favorable		2,207,223
No change (selected)		2,258,658
5% unfavorable		2,310,440
10% unfavorable		2,352,115

        The most significant variance in the above scenarios, six month deceleration in loss emergence patterns, would have the effect of increasing losses and loss expenses by $525.8 million.

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        Management believes that the reserve for losses and loss expenses is sufficient to cover expected claims incurred before the evaluation date on the basis of the methodologies and judgments used to support its estimates. However, there can be no assurance that actual payments will not vary significantly from total reserves. The reserve for losses and loss expenses and the methodology of estimating such reserve are regularly reviewed and updated as new information becomes known. Any resulting adjustments are reflected in income in the period in which they become known.

        Premiums.    For insurance business, written premium estimates are determined from the business plan estimates of premiums by class, the aggregate of underwriters' estimates on a policy-by-policy basis, and projections of ultimate premiums using generally accepted actuarial methods. In particular, direct insurance premiums are recognized in accordance with the type of contract written.

        The majority of our insurance premium is accepted on a direct open market or facultative basis. We receive a premium which is identified in the policy and recorded as unearned premium on the inception date of the contract. This premium will typically adjust only if the underlying insured values adjust. We actively monitor underlying insured values and record adjustment premiums in the period in which amounts are reasonably determinable.

        For business written on a facultative basis, although a premium estimate is not contractually stated for the amount of business to be written under any particular facility, an initial estimate of the expected premium written is received from the coverholder via the broker. Our estimate of premium is derived by reference to one or more of the following: the historical premium volume experienced by any facility; historical premium volume of similar facilities; the estimates provided by the broker; and industry information on the underlying business. We actively monitor the development of actual reported premium against the estimates made; where actual reported premiums deviate from the estimate, we carry out an analysis to determine the cause and may, if necessary, adjust the estimated premiums. In the year ended December 31, 2011, premiums written on a facultative basis accounted for approximately $303.2 million of total gross premiums written at Talbot.

        For contracts written on a losses occurring basis or claims made basis, premium income is generally earned proportionately over the expected risk period, usually 12 months. For all other contracts, comprising contracts written on a risks attaching basis, premiums are generally earned over a 24 month period due to the fact that some of the underlying exposures may attach towards the end of the contract, and such underlying exposures generally have a 12 month coverage period. The portion of the premium related to the unexpired portion of the policy at the end of any reporting period is presented on the consolidated balance sheet as unearned premiums.

	Year Ended December 31, 2011					Year Ended December 31, 2010					Year Ended December 31, 2009(a)
(Dollars in thousands)	Gross Written Premiums		Gross Written Premiums (%)			Gross Written Premiums		Gross Written Premiums (%)			Gross Written Premiums		Gross Written Premiums (%)
Proportional	$	267,378		12.6	%	$	260,149		13.1	%	$	180,752		11.1	%
Non-proportional		1,857,313		87.4	%		1,730,417		86.9	%		1,440,489		88.9	%
Total	$	2,124,691		100.0	%	$	1,990,566		100.0	%	$	1,621,241		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition. No pre-acquisition results of operations for IPC are presented in the analysis above.

        For reinsurance business where the assumed reinsurance premium is written on an excess of loss or on a pro rata basis, reinsurance contracts are generally written prior to the time the underlying direct policies are written by cedants and accordingly cedants must estimate such premiums when purchasing reinsurance coverage. For excess of loss contracts, the deposit premium is defined in the contract. The deposit

69

premium is based on the client's estimated premiums, and this estimate is the amount recorded as written premium in the period the risk incepts. In the majority of cases, these contracts are adjustable at the end of the contract period to reflect the changes in underlying risks during the contract period. Subsequent adjustments, based on reports by the clients of actual premium, are recorded in the period in which the cedant reports are received, which would normally be reported within six months to one year subsequent to the expiration of the contract. For pro rata reinsurance contracts, an estimate of written premium is recorded in the period in which the risk incepts. The written premiums estimate is based on the pro rata cession percentage, on information provided by ceding companies and on management's judgment. Management critically evaluates the information provided by ceding companies based on experience with the cedant, broker and the underlying book of business.

        Throughout the term of the policy, periodic review of the estimated premium takes place based on the latest information available, which may include actual reported premium to date, the latest premium estimates as provided by cedants and brokers, historical experience, management's professional judgment, information obtained during the underwriting renewal process, as well as an assessment of relevant economic conditions. If necessary, subsequent adjustments are recorded at the time of review.

        On a quarterly basis, the Company evaluates the appropriateness of these premium estimates based on the latest information available, which may include actual reported premium to date, the latest premium estimates as provided by cedants and brokers, historical experience, management's professional judgment, information obtained during the underwriting renewal process, as well as an assessment of relevant economic conditions. As the Company's reinsurance lines have a short operating history, we have limited past history that reflects how our premium estimates will develop. Furthermore, past experience may not be indicative of how future premium estimates develop. The Company believes that reasonably likely changes in assumptions made in the estimation process would not have a significant impact on gross premiums written as recorded.

        Where contract terms on excess of loss contracts require the mandatory reinstatement of coverage after a client's loss, the mandatory reinstatement premiums are recorded as written and earned premiums when the loss event occurs.

        Management includes an assessment of the creditworthiness of cedants in the review process above, primarily based on market knowledge, reports from rating agencies, the timeliness of cedants' payments and the status of current balances owing. Based on this assessment, management believes that as at December 31, 2011 no provision for doubtful accounts is necessary for receivables from cedants.

        Reinsurance Premiums Ceded and Reinsurance Recoverables.    As discussed in Item 1 "Business—Underwriting Risk Management," the Company primarily uses ceded reinsurance for risk mitigation purposes. Talbot purchases reinsurance on an excess of loss and a proportional basis together with a relatively small amount of facultative reinsurance and ILWs. Validus Re purchases reinsurance on an excess of loss and a proportional basis together with ILW coverage.

        For excess of loss business, the amount of premium payable is usually contractually documented at inception and management judgment is only necessary in respect of any loss-related elements of the premium, for example reinstatement or adjustment premiums, and loss-related commissions. The full premium is recorded at inception and if the contract is purchased on a "losses occurring during" basis, the premium is earned on a straight line basis over the life of the contract. If the policy is purchased on a "risks attaching during" basis, the premium is earned in line with the inwards gross premiums to which the risk attaching relates. After the contract has expired, a No Claims Bonus may be received for certain policies, and this is recorded as a reinsurance premium adjustment in the period in which it can be reasonably determined.

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        Reinsurance receivable and reinsurance recoverable balances include amounts owed to us in respect of paid and unpaid ceded losses and loss expenses, respectively. The balances are presented net of a reserve for non-recoverability. As at December 31, 2011, reinsurance recoverable balances were $372.5 million and paid losses recoverable balances were $90.5 million. In establishing our reinsurance recoverable balances, significant judgment is exercised by management in determining the amount of unpaid losses and loss expenses to be ceded as well as our ability to cede losses and loss expenses under our reinsurance contracts.

        Our ceded unpaid losses and loss expense consists of two elements, those for reported losses and those for losses incurred but not reported ("IBNR"). Ceded amounts for IBNR are developed as part of our loss reserving process. Consequently, the estimation of ceded unpaid losses and loss expenses is subject to similar risks and uncertainties in the estimation of gross IBNR (see "Reserve for Losses and Loss Expenses"). As at December 31, 2011, ceded IBNR recoverable balances were $135.3 million.

        Although our reinsurance receivable and reinsurance recoverable balances are derived from our determination of contractual provisions, the recoverability of such amounts may ultimately differ due to the potential for a reinsurer to become financially impaired or insolvent or for a contractual dispute over contract language or coverage. Consequently, we review our reinsurance recoverable balances on a regular basis to determine if there is a need to establish a provision for non-recoverability. In performing this review, we use judgment in assessing the credit worthiness of our reinsurers and the contractual provisions of our reinsurance agreements. As at December 31, 2011, we had a provision for non-recoverability of $6.8 million. In the event that the credit worthiness of our reinsurers were to deteriorate, actual uncollectible amounts could be significantly greater than our provision for non-recoverability.

        The Company uses a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are reinsurance recoverable balances by reinsurer and default factors used to determine the portion of a reinsurer's balance deemed to be uncollectible. Default factors require considerable judgment and are determined using the current rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions.

        At December 31, 2011, the use of different assumptions within the model could have an effect on the provision for uncollectible reinsurance reflected in the Company's consolidated financial statements. To the extent the creditworthiness of the Company's reinsurers was to deteriorate due to an adverse event affecting the reinsurance industry, such as a large number of major catastrophes, actual uncollectible amounts could be significantly greater than the Company's provision.

        Investment Valuation.    Consistent with U.S. GAAP, the Company recognizes fixed maturity and short-term investments at their fair value in the consolidated balance sheets. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also established a three level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon whether the inputs to the valuation of an asset or liability are observable or unobservable in the market at the measurement date, with quoted market prices being the highest level ("Level 1") and unobservable inputs being the lowest level ("Level 3"). Generally, the degree of judgment used in measuring the fair value of financial instruments inversely correlates with the availability of observable inputs. All of the Company's fixed maturity and short-term investment fair value measurements have either quoted market prices or other observable inputs.

        The Company's external investment accounting service provider receives prices from independent pricing sources to measure the fair values of its fixed maturity investments. These independent pricing sources are prioritized with respect to reliability to ensure that only the highest priority pricing inputs are used. The independent pricing sources are received via automated feeds from indices, pricing and broker-dealers services. Pricing is also obtained from other external investment managers. This information is

71

applied consistently across all portfolios. The Company's external investment accounting service provider confirms and documents all prices received from broker-dealers on a daily basis for quality control and audit purposes.

        In addition to internal controls, management relies on the effectiveness of the valuation controls in place at the Company's external investment accounting service provider (supported by a SSAE 16 Report) in conjunction with regular discussion and analysis of the investment portfolio's structure and performance. To date, management has not noted any issues or discrepancies related to investment valuation. The Company's investment custodian performs independent monthly valuations of the investment portfolio using available market prices. Management obtains this information from the Company's investment custodian's internet-based reporting system and compares it to valuations received from the Company's external investment accounting service provider.

        Other investments consist of an investment in a fund of hedge funds, a private equity investment and a deferred compensation trust held in mutual funds. The fund administrator provides monthly reported net asset values ("NAV") with a one-month delay in its valuation. As a result, the fund administrator's November 30, 2011 NAV was used as a partial basis for fair value measurement in the Company's December 31, 2011 balance sheet. The fund investment manager provides an estimate of the performance of the fund for the following month based on the estimated performance provided from the underlying third-party funds. The Company utilizes the fund investment manager's primary market approach estimated NAV that incorporates relevant valuation sources on a timely basis. As this valuation technique incorporates both observable and significant unobservable inputs, the fund of hedge funds is classified as a Level 3 asset. To determine the reasonableness of the estimated NAV, the Company assesses the variance between the estimated NAV and the one-month delayed fund administrator's NAV. Immaterial variances are recorded in the following reporting period. During the fourth quarter of 2009, a majority of the fund of hedge funds was redeemed. The remaining portion is a side pocket of $5.6 million at December 31, 2011. While a redemption request has been submitted, the timing of receipt of proceeds on the side pocket is indeterminable

        Refer to Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" for further discussion of interest rate risk and a sensitivity analysis of the impact of interest rate variances on the valuation of the Company's fixed maturity and short-term investments.

Segment Reporting

        Management has determined that the Company operates in two reportable segments. The two segments are its significant operating subsidiaries, Validus Re and Talbot. For segmental reporting purposes, the results of IPC's operations since the acquisition date have been included within the Validus Re segment in the consolidated financial statements.

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Results of Operations

        The Company commenced operations on December 16, 2005. On September 4, 2009, the Company acquired all of the outstanding shares of IPC. The Company's fiscal year ends on December 31. Financial statements are prepared in accordance with U.S. GAAP and relevant SEC guidance.

        The following table presents results of operations for the three months ended December 31, 2011 and 2010 and years ended December 31, 2011, 2010 and 2009:

	Three Months Ended December 31,						Years Ended December 31,
																Pro Forma 2009(b)
(Dollars in thousands)	2011			2010			2011			2010			2009(a)
Gross premiums written	$	278,279		$	258,731		$	2,124,691		$	1,990,566			1,621,241		$	2,008,578
Reinsurance premiums ceded		(16,489	)		(35,376	)		(289,241	)		(229,482	)		(232,883	)		(239,412	)
Net premiums written		261,790			223,355			1,835,450			1,761,084			1,388,358			1,769,166
Change in unearned premiums		226,556			209,456			(33,307	)		39			61,219			(57,338	)
Net premiums earned		488,346			432,811			1,802,143			1,761,123			1,449,577			1,711,828
Losses and loss expenses		334,829			155,225			1,244,401			987,586			523,757			556,550
Policy acquisition costs		81,253			75,523			314,184			292,899			262,966			289,600
General and administrative expenses		52,253			54,511			197,497			209,290			185,568			209,510
Share compensation expenses		7,237			7,871			34,296			28,911			27,037			33,751
Total underwriting deductions		475,572			293,130			1,790,378			1,518,686			999,328			1,089,411
Underwriting income(c)		12,774			139,681			11,765			242,437			450,249			622,417
Net investment income		28,080			30,962			112,296			134,103			118,773			163,944
Other income		3,517			552			5,718			5,219			4,634			4,603
Finance expenses		(13,520	)		(13,786	)		(54,817	)		(55,870	)		(44,130	)		(44,513	)
Operating income before taxes(c)		30,851			157,409			74,962			325,889			529,526			746,451
Tax benefit (expense)		226			(1,058	)		(824	)		(3,126	)		3,759			3,759
Net operating income(c)		31,077			156,351			74,138			322,763			533,285			750,210
Gain on bargain purchase, net of expenses		—			—			—			—			287,099			—
Realized gain on repurchase of debentures		—			—			—			—			4,444			4,444
Net realized (losses) gains on investments		5,355			(14,399	)		28,532			32,498			(11,543	)		(4,717	)
Net unrealized gains (losses) on investments		2,159			(42,689	)		(19,991	)		45,952			84,796			189,789
Foreign exchange gains (losses)		266			3,424			(22,124	)		1,351			(674	)		4,294
Transaction expenses(d)		(3,850	)		—			(17,433	)		—			—			—
Net income		35,007			102,687			43,122			402,564			897,407			944,020
Net income attributable to noncontrolling interest		(7,683	)		—			(21,793	)		—			—			—
Net income available to Validus	$	27,324		$	102,687		$	21,329		$	402,564		$	897,407		$	944,020
Selected ratios:
Net premiums written / Gross premiums written		94.1	%		86.3	%		86.4	%		88.5	%		85.6	%		88.1	%
Losses and loss expenses		68.6	%		35.9	%		69.1	%		56.1	%		36.1	%		32.5	%
Policy acquisition costs		16.6	%		17.4	%		17.4	%		16.6	%		18.1	%		16.9	%
General and administrative expenses(e)		12.2	%		14.4	%		12.9	%		13.5	%		14.7	%		14.2	%
Expense ratio		28.8	%		31.8	%		30.3	%		30.1	%		32.8	%		31.1	%
Combined ratio		97.4	%		67.7	%		99.4	%		86.2	%		68.9	%		63.6	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

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(b)

Pro Forma combined Validus Holdings, Ltd. and IPC Holdings Ltd. income statement for the year ended December 31, 2009.

(c)

Non-GAAP Financial Measures. In presenting the Company's results, management has included and discussed underwriting income and operating income 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. Reconciliations of these measures to the most comparable U.S. GAAP financial measure, are presented in the section below entitled "Underwriting Income."

(d)

The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

(e)

The general and administrative expense ratio includes share compensation expenses.

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	Three Months Ended December 31,						Years Ended December 31,
																Pro Forma 2009(c)
(Dollars in thousands)	2011			2010			2011			2010			2009(a)
Validus Re
Gross premiums written	$	54,528		$	33,986		$	1,190,220		$	1,101,239		$	768,084		$	1,155,421
Reinsurance premiums ceded		(49	)		(399	)		(150,718	)		(63,147	)		(95,446	)		(101,975	)
Net premiums written		54,479			33,587			1,039,502			1,038,092			672,638			1,053,446
Change in unearned premiums		224,513			212,737			(7,611	)		13,108			122,912			4,305
Net premiums earned		278,992			246,324			1,031,891			1,051,200			795,550			1,057,751
Losses and loss expenses		225,903			49,799			759,305			601,610			186,704			219,497
Policy acquisition costs		41,465			39,299			160,134			160,599			127,433			154,127
General and administrative expenses		12,109			12,659			46,353			45,617			65,710			89,652
Share compensation expenses		2,191			1,934			9,309			7,181			7,576			14,290
Total underwriting deductions		281,668			103,691			975,101			815,007			387,423			477,566
Underwriting (loss) income(b)		(2,676	)		142,633			56,790			236,193			408,127			580,185
Talbot
Gross premiums written	$	235,242		$	238,100		$	1,014,122		$	981,073		$	919,906		$	919,906
Reinsurance premiums ceded		(27,931	)		(48,332	)		(218,174	)		(258,081	)		(204,186	)		(204,186	)
Net premiums written		207,311			189,768			795,948			722,992			715,720			715,720
Change in unearned premiums		2,043			(3,281	)		(25,696	)		(13,069	)		(61,693	)		(61,693	)
Net premiums earned		209,354			186,487			770,252			709,923			654,027			654,027
Losses and loss expenses		108,926			105,426			485,096			385,976			337,053			337,053
Policy acquisition costs		41,160			37,726			157,334			143,769			139,932			139,932
General and administrative expenses		30,878			30,334			117,482			114,043			96,352			96,352
Share compensation expenses		1,934			2,142			8,582			6,923			7,171			7,171
Total underwriting deductions		182,898			175,628			768,494			650,711			580,508			580,508
Underwriting income(b)		26,456			10,859			1,758			59,212			73,519			73,519
Corporate & Eliminations
Gross premiums written	$	(11,491	)	$	(13,355	)	$	(79,651	)	$	(91,746	)	$	(66,749	)	$	(66,749	)
Reinsurance premiums ceded		11,491			13,355			79,651			91,746			66,749			66,749
Net premiums written		—			—			—			—			—			—
Change in unearned premiums		—			—			—			—			—			—
Net premiums earned		—			—			—			—			—			—
Losses and loss expenses		—			—			—			—			—			—
Policy acquisition costs		(1,372	)		(1,502	)		(3,284	)		(11,469	)		(4,399	)		(4,399	)
General and administrative expenses		9,266			11,518			33,662			49,630			23,506			23,506
Share compensation expenses		3,112			3,795			16,405			14,807			12,290			12,290
Total underwriting deductions		11,006			13,811			46,783			52,968			31,397			31,397
Underwriting (loss)(b)		(11,006	)		(13,811	)		(46,783	)		(52,968	)		(31,397	)		(31,397	)
Total underwriting income(b)	$	12,774		$	139,681		$	11,765		$	242,437		$	450,249		$	622,307

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

(b)

Non-GAAP Financial Measures. In presenting the Company's results, management has included and discussed underwriting income that is 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 this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income."

(c)

Pro Forma combined Validus Holdings, Ltd. and IPC Holdings Ltd. income statement for the year ended December 31, 2009.

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Three Months Ended December 31, 2011 compared to Three Months Ended December 31, 2010

        Net income available to Validus for the three months ended December 31, 2011 was $27.3 million compared to $102.7 million for the three months ended December 31, 2010, a decrease of $75.4 million or 73.4%. The primary factors driving the decrease in net income were:

•

Decrease in underwriting income of $126.9 million due primarily to:

•

A $179.6 million increase in loss and loss expenses.

•

Offset by a $55.5 million increase in net premiums earned.

The above item was partially offset by the following factor:

•

Favorable movement in net realized and unrealized losses on investments of $19.8 million and $44.8 million, respectively;

The change in net income available to Validus for the three months ended December 31, 2011 of $75.4 million as compared to the three months ended December 31, 2010 is described in the following table:

	Three Months Ended December 31, 2011 Increase (Decrease) Over the Three Months Ended December 31, 2010
(Dollars in thousands)	Validus Re			Talbot			Corporate and Eliminations			Total(a)
Notable losses—decrease (increase) in net loss and loss expenses(a)	$	5,340		$	(7,715	)	$	—		$	(2,375	)
Less: Notable losses—increase in net reinstatment premium(a)		4,387			1,027			—			5,414
Other underwriting income (loss)		(155,036	)		22,285			2,805			(129,946	)
Underwriting income (loss)(b)		(145,309	)		15,597			2,805			(126,907	)
Net investment income		(1,231	)		(1,135	)		(516	)		(2,882	)
Other income		2,649			(1,959	)		2,275			2,965
Finance expenses		(1,811	)		(13	)		2,090			266
		(145,702	)		12,490			6,654			(126,558	)
Taxes		(15	)		1,084			215			1,284
		(145,717	)		13,574			6,869			(125,274	)
Net realized gains (losses) on investments		20,487			(733	)		—			19,754
Net unrealized gains (losses) on investments		32,013			12,835			—			44,848
Foreign exchange (losses) gains		(2,250	)		(894	)		(14	)		(3,158	)
Transaction expenses		—			—			(3,850	)		(3,850	)
Net income (loss)		(95,467	)		24,782			3,005			(67,680	)
Net income (loss) attributable to noncontrolling interest		(7,683	)		—			—			(7,683	)
Net income (loss) available to Validus	$	(103,150	)	$	24,782		$	3,005		$	(75,363	)

(a)

Notable losses for the three months ended December 31, 2011 include: the Thai floods and excludes the reserve for potential development on 2011 notable loss events. Notable losses for the three months ended December 31, 2010 include: the Queensland floods, a political violence loss, satellite failure and financial institutions loss and excludes the reserve for potential development on 2010 notable loss events.

76

(b)

Non-GAAP Financial Measures. In presenting the Company's results, management has included and discussed underwriting income (loss) that is 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 this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income."

Gross Premiums Written

        Gross premiums written for the three months ended December 31, 2011 were $278.3 million compared to $258.7 million for the three months ended December 31, 2010, an increase of $19.5 million or 7.6%. The property and marine lines increased by $9.9 million and $12.7 million respectively, while the specialty lines decreased by $3.1 million. Details of gross premiums written by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			% Change
Property	$	73,200		26.3	%	$	63,253		24.4	%		15.7	%
Marine		84,247		30.3	%		71,556		27.7	%		17.7	%
Specialty		120,832		43.4	%		123,922		47.9	%		(2.5	)%
Total	$	278,279		100.0	%	$	258,731		100.0	%		7.6	%

        Validus Re.    Validus Re gross premiums written for the three months ended December 31, 2011 were $54.5 million compared to $34.0 million for the three months ended December 31, 2010, an increase of $20.5 million or 60.4%. Details of Validus Re gross premiums written by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			% Change
Property	$	32,730		60.0	%	$	17,301		50.9	%		89.2	%
Marine		9,742		17.9	%		4,244		12.5	%		129.5	%
Specialty		12,056		22.1	%		12,441		36.6	%		(3.1	)%
Total	$	54,528		100.0	%	$	33,986		100.0	%		60.4	%

        The increase in gross premiums written in the property lines of $15.4 million was primarily due to a $17.0 million increase in premium adjustments and a $4.8 million increase in reinstatement premiums arising from current year notable losses, partially offset by a $4.6 million decrease in new and renewing business due to changes in renewal dates and contracts not meeting underwriting requirements. The increase in gross premiums written of $5.5 million in the marine lines was primarily due to a $4.4 million increase in reinstatement premiums arising from current and prior year notable losses and $3.8 million increase in premium adjustments, partially offset by a $1.9 million decrease in new and renewing business.

        Gross premiums written under the quota share, surplus treaty and excess of loss contracts between Validus Re and Talbot decreased by $1.9 million compared to the three months ended December 31, 2010. These reinsurance agreements with Talbot are eliminated upon consolidation.

        Talbot.    Talbot gross premiums written for the three months ended December 31, 2011 were $235.2 million compared to $238.1 million for the three months ended December 31, 2010, a decrease of

77

$2.9 million or 1.2%. The $235.2 million of gross premiums written translated at 2010 rates of exchange would have been $235.1 million during the three months ended December 31, 2011 giving an effective decrease of $0.1 million. Details of Talbot gross premiums written by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			% Change
Property	$	51,793		22.0	%	$	58,165		24.5	%		(11.0	)%
Marine		74,235		31.6	%		68,452		28.7	%		8.4	%
Specialty		109,214		46.4	%		111,483		46.8	%		(2.0	)%
Total	$	235,242		100.0	%	$	238,100		100.0	%		(1.2	)%

        The decrease in gross premiums written in the property lines of $6.4 million was due primarily to a $3.4 million decrease in gross premiums written in the construction lines and a $1.9 million decrease in the onshore energy lines. The increase of $5.8 million in the marine lines was due primarily to a $2.6 million increase in premiums written in the hull lines, a $1.7 million increase in the cargo lines and a $1.4 million increase in the marine liability lines.

Reinsurance Premiums Ceded

        Reinsurance premiums ceded for the three months ended December 31, 2011 were $16.5 million compared to $35.4 million for the three months ended December 31, 2010, a decrease of $18.9 million or 53.4%. Details of reinsurance premiums ceded by line of business are described below.

	Three Months Ended December 31, 2011						Three Months Ended December 31, 2010
(Dollars in thousands)	Reinsurance Premiums Ceded			Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)			% Change
Property	$	11,979			72.7	%	$	14,221		40.2	%		(15.8	)%
Marine		(1,363	)		(8.3	)%		1,775		5.0	%		(176.8	)%
Specialty		5,873			35.6	%		19,380		54.8	%		(69.7	)%
Total	$	16,489			100.0	%	$	35,376		100.0	%		(53.4	)%

        Validus Re.    Validus Re reinsurance premiums ceded for the three months ended December 31, 2011 were $0.0 million compared to $0.4 million for the three months ended December 31, 2010, a decrease of $0.4 million. Details of Validus Re reinsurance premiums ceded by line of business are described below.

	Three Months Ended December 31, 2011						Three Months Ended December 31, 2010
(Dollars in thousands)	Reinsurance Premiums Ceded			Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded			Reinsurance Premiums Ceded (%)			% Change
Property	$	980			NM		$	2,084			522.3	%		(53.0	)%
Marine		(931	)		NM			(1,685	)		(422.3	)%		(44.7	)%
Specialty		—			0.0	%		—			0.0	%		0.0	%
Total	$	49			0.0	%	$	399			100.0	%		(87.7	)%

78

        Reinsurance premiums ceded across all lines have remained generally consistent with the three months ended December 31, 2010.

        Talbot.    Talbot reinsurance premiums ceded for the three months ended December 31, 2011 were $27.9 million compared to $48.3 million for the three months ended December 31, 2010, a decrease of $20.4 million or 42.2%. Details of Talbot reinsurance premiums ceded by line of business are described below.

	Three Months Ended December 31, 2011						Three Months Ended December 31, 2010
(Dollars in thousands)	Reinsurance Premiums Ceded			Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)			% Change
Property	$	22,322			79.9	%	$	24,350		50.4	%		(8.3	)%
Marine		(702	)		(2.5	)%		4,600		9.5	%		(115.3	)%
Specialty		6,311			22.6	%		19,382		40.1	%		(67.4	)%
Total	$	27,931			100.0	%	$	48,332		100.0	%		(42.2	)%

        The decrease in reinsurance premiums ceded in the marine lines of $5.3 million was due primarily to a $3.5 million decrease in reinstatement premiums in the marine energy lines. Reinsurance premiums ceded in the specialty lines decreased by $13.1 million due primarily to $10.3 million of ceded premium on the direct aviation lines being renewed in January 2012, this coverage was written in the fourth quarter in 2010.

Net Premiums Written

        Net premiums written for the three months ended December 31, 2011 were $261.8 million compared to $223.4 million for the three months ended December 31, 2010, an increase of $38.4 million, or 17.2%. The ratios of net premiums written to gross premiums written for the three months ended December 31, 2011 and 2010 were 94.1% and 86.3%, respectively. Details of net premiums written by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)			% Change
Property	$	61,221		23.4	%	$	49,032		22.0	%		24.9	%
Marine		85,610		32.7	%		69,781		31.2	%		22.7	%
Specialty		114,959		43.9	%		104,542		46.8	%		10.0	%
Total	$	261,790		100.0	%	$	223,355		100.0	%		17.2	%

        Validus Re.    Validus Re net premiums written for the three months ended December 31, 2011 were $54.5 million compared to $33.6 million for the three months ended December 31, 2010, an increase of $20.9 million or 62.2%. Details of Validus Re net premiums written by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)			% Change
Property	$	31,750		58.3	%	$	15,217		45.3	%		108.6	%
Marine		10,673		19.6	%		5,929		17.7	%		80.0	%
Specialty		12,056		22.1	%		12,441		37.0	%		(3.1	)%
Total	$	54,479		100.0	%	$	33,587		100.0	%		62.2	%

        The increase in Validus Re net premiums written was driven by the factors highlighted above in respect of gross premiums written and reinsurance premiums ceded. The ratios of net premiums written to

79

gross premiums written were 99.9% and 98.8% for the three months ended December 31, 2011 and 2010, respectively.

        Talbot.    Talbot net premiums written for the three months ended December 31, 2011 were $207.3 million compared to $189.8 million for the three months ended December 31, 2010, an increase of $17.5 million or 9.2%. Details of Talbot net premiums written by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)			% Change
Property	$	29,471		14.2	%	$	33,815		17.9	%		(12.8	)%
Marine		74,937		36.1	%		63,852		33.6	%		17.4	%
Specialty		102,903		49.7	%		92,101		48.5	%		11.7	%
Total	$	207,311		100.0	%	$	189,768		100.0	%		9.2	%

        The increase in net premiums written was driven by the factors highlighted above in respect of gross premiums written and reinsurance premiums ceded. The ratios of net premiums written to gross premiums written for the three months ended December 31, 2011 and 2010 were 88.1% and 79.7%, respectively, reflecting the decreased ceded premiums.

Net Change in Unearned Premiums

        Net change in unearned premiums for the three months ended December 31, 2011 was $226.6 million compared to $209.5 million for the three months ended December 31, 2010, an increase of $17.1 million or 8.2%.

	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premium	$	286,211		$	226,720			26.2	%
Change in prepaid reinsurance premium		(50,250	)		(17,264	)		191.1	%
Deconsolidation of AlphaCat Re 2011		(9,405	)		—			NM
Net change in unearned premium	$	226,556		$	209,456			8.2	%

NM:    Not meaningful

        Validus Re.    Validus Re's net change in unearned premiums for the three months ended December 31, 2011 was $224.5 million compared to $212.7 million for the three months ended December 31, 2010, an increase of $11.8 million or 5.5%.

	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premium	$	256,581		$	219,981			16.6	%
Change in prepaid reinsurance premium		(22,663	)		(7,244	)		212.9	%
Deconsolidation of AlphaCatRe 2011		(9,405	)		—			NM
Net change in unearned premium	$	224,513		$	212,737			5.5	%

NM:    Not meaningful

80

        Validus Re net change in unearned premiums has increased for the three months ended December 31, 2011 compared to the three months ended December 31, 2010 due to the earnings pattern of gross premiums written and reinsurance premium ceded during 2011 as well as larger amounts of retrocessional coverage in 2011 as compared to 2010.

        Talbot.    The Talbot net change in unearned premiums for the three months ended December 31, 2011 was $2.0 million compared to ($3.3) million for the three months ended December 31, 2010, an increase of $5.3 million, or 162.3%.

	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premium	$	29,630		$	6,739			339.7	%
Change in prepaid reinsurance premium		(27,587	)		(10,020	)		(175.3	)%
Net change in unearned premium	$	2,043		$	(3,281	)		162.3	%

        Talbot net change in unearned premiums has increased for the three months ended December 31, 2011 compared to the three months ended December 31, 2010 due to the earnings pattern of gross premiums written and reinsurance premium ceded during 2011.

Net Premiums Earned

        Net premiums earned for the three months ended December 31, 2011 were $488.3 million compared to $432.8 million for the three months ended December 31, 2010, an increase of $55.5 million or 12.8%. Details of net premiums earned by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)			% Change
Property	$	236,671		48.5	%	$	218,171		50.4	%		8.5	%
Marine		146,953		30.1	%		119,704		27.7	%		22.8	%
Specialty		104,722		21.4	%		94,936		21.9	%		10.3	%
Total	$	488,346		100.0	%	$	432,811		100.0	%		12.8	%

        Validus Re.    Validus Re net premiums earned for the three months ended December 31, 2011 were $279.0 million compared to $246.3 million for the three months ended December 31, 2010, an increase of $32.7 million or 13.3%. Details of Validus Re net premiums earned by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)			% Change
Property	$	195,563		70.1	%	$	176,750		71.7	%		10.6	%
Marine		57,524		20.6	%		45,524		18.5	%		26.4	%
Specialty		25,905		9.3	%		24,050		9.8	%		7.7	%
Total	$	278,992		100.0	%	$	246,324		100.0	%		13.3	%

        The increase in net premiums earned is consistent with the relevant patterns of net premiums written influencing the earned premiums for the three months ended December 31, 2011 compared to the three months ended December 31, 2010.

81

        Talbot.    Talbot net premiums earned for the three months ended December 31, 2011 were $209.4 million compared to $186.5 million for the three months ended December 31, 2010, an increase of $22.9 million or 12.3%. Details of Talbot net premiums earned by line of business are provided below.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)			% Change
Property	$	41,108		19.6	%	$	41,421		22.2	%		(0.8	)%
Marine		89,429		42.8	%		74,180		39.8	%		20.6	%
Specialty		78,817		37.6	%		70,886		38.0	%		11.2	%
Total	$	209,354		100.0	%	$	186,487		100.0	%		12.3	%

        The increase in net premiums earned is consistent with the relevant patterns of net premiums written influencing the earned premium for the three months ended December 31, 2011, as compared to the three months ended December 31, 2010, as discussed above.

Losses and Loss Expenses

        Losses and loss expenses for the three months ended December 31, 2011 were $334.8 million compared to $155.2 million for the three months ended December 31, 2010, an increase of $179.6 million or 115.7%. The loss ratios, defined as losses and loss expenses divided by net premiums earned, for the three months ended December 31, 2011 and 2010 were 68.6% and 35.9%, respectively. Details of loss ratios by line of business are provided below.

	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010			% Change
Property		90.0	%		25.2	%		64.8
Marine		53.0	%		27.9	%		25.1
Specialty		42.0	%		70.4	%		(28.4	)
All lines		68.6	%		35.9	%		32.7

        For the three months ended December 31, 2011, the Company incurred $54.1 million from notable loss events, which represented 11.1 percentage points of the loss ratio excluding the reserve for potential development on notable loss events, as described below. Including the impact of ($1.3) million of reinstatement premiums, the effect of these events on net income was a decrease of $55.5 million. For the three months ended December 31, 2010, the Company incurred $51.8 million from notable loss events, which represented 12.0 percentage points of the loss ratio, excluding the reserve for potential development on notable loss events, as described below. Including the impact of ($1.6) million of reinstatement premiums, the effect of these events on net income was a decrease of $53.4 million. The three months ended December 31, 2011, includes $38.6 million of additional loss expense attributable to upward revisions of ultimate expected losses on notable loss events occurring in previous quarters of 2011, primarily the Tohoku earthquake, Gryphon Alpha and U.S. tornado losses. The Company's loss ratio, excluding prior year development, notable loss events and reserves for potential development on notable loss events for the three months ended December 31, 2011 and 2010 was 50.3% and 32.3%, respectively.

		Three months ended December 31, 2011
Fourth Quarter 2011 Notable Loss Events(a)		Validus Re					Talbot					Total
(Dollars in thousands)	Description	Net Losses and Loss Expenses(b)		% of NPE			Net Losses and Loss Expenses(b)		% of NPE			Net Losses and Loss Expenses(b)		% of NPE
Thailand floods	Multiple flooding events	$	22,964		8.2	%	$	31,184		14.9	%	$	54,148		11.1	%
Total		$	22,964		8.2	%	$	31,184		14.9	%	$	54,148		11.1	%

82

		Three months ended December 31, 2010
Fourth Quarter 2010 Notable Loss Events(a)		Validus Re					Talbot						Total
(Dollars in thousands)	Description	Net Losses and Loss Expenses(b)		% of NPE			Net Losses and Loss Expenses(b)			% of NPE			Net Losses and Loss Expenses(b)			% of NPE
Queensland floods	Flood	$	10,000		4.0	%	$	15,000			8.0	%	$	25,000			5.8	%
Political violence	Terror attack		12,500		5.1	%		—			—			12,500			2.9	%
Satellite loss	Failure		5,804		2.4	%		2,982			1.6	%		8,786			2.0	%
Financial institution	Investment house failure		—		—			5,487	(c)		3.0%	(c)		5,487	(c)		1.3%	(c)
Total		$	28,304		11.5	%	$	23,469			12.6	%	$	51,773			12.0	%

(a)

These notable loss event amounts exclude the reserve for potential development on 2010 and 2011 notable loss events and are based on management's estimates following a review of the Company's potential exposure and discussions with certain clients and brokers. Given the magnitude and recent occurrence of these events in relation to the corresponding period end date, and other uncertainties inherent in loss estimation, meaningful uncertainty exists at the relevant reporting date regarding losses from these events and the Company's actual ultimate net losses from these events can vary materially from these estimates.

(b)

Net of reinsurance but not including the impact of reinstatement premiums. Total reinstatement premiums were ($1.3) million for the three months ended December 31, 2011 and ($1.6) million for the three months ended December 31, 2010.

(c)

The financial institution loss occurred in a prior period but developed over the notable loss threshold in the three months ended December 31, 2010. In 2010, this loss was included in the change in prior year development and excluded as a notable loss as presented above.

83

        Details of loss ratios by line of business and period of occurrence are provided below.

	Three Months Ended December 31,
	2011			2010			Percentage Point Change
Property—current period—excluding items below		46.9	%		19.8	%		27.1
Property—current period—notable losses		20.3	%		11.5	%		8.8
Property—current period—reserve for potential development on notable loss events		30.8	%		0.0	%		30.8
Property—change in prior accident years		(8.0	)%		(6.1	)%		(1.9	)
Property—loss ratio		90.0	%		25.2	%		64.8
Marine—current period—excluding items below		53.8	%		42.5	%		11.3
Marine—current period—notable losses		2.9	%		0.0	%		2.9
Marine—current period—reserve for potential development on notable loss events		3.4	%		0.0	%		3.4
Marine—change in prior accident years		(7.1	)%		(14.6	)%		7.5
Marine—loss ratio		53.0	%		27.9	%		25.1
Specialty—current period—excluding items below		53.0	%		47.8	%		5.2
Specialty—current period—notable losses(a)		1.8	%		22.4	%		(20.6	)
Specialty—change in prior accident years(a)		(12.8	)%		0.2	%		(13.0	)
Specialty—loss ratio		42.0	%		70.4	%		(28.4	)
All lines—current period—excluding items below		50.3	%		32.3	%		18.0
All lines—current period—notable losses(a)		11.1	%		10.7	%		0.4
All lines—current period—reserve for potential development on notable loss events		16.0	%		0.0	%		16.0
All lines—change in prior accident years(a)		(8.8	)%		(7.1	)%		(1.7	)
All lines—loss ratio		68.6	%		35.9	%		32.7

(a)

The financial institution loss occurred in a prior period but developed over the notable loss threshold in the three months ended December 31, 2010. In 2010, this loss was included in the change in prior year development and excluded as a notable loss as presented above.

        Validus Re.    Validus Re losses and loss expenses for the three months ended December 31, 2011 were $225.9 million compared to $49.8 million for the three months ended December 31, 2010, an increase of $176.1 million or 353.6%. The loss ratio, defined as losses and loss expenses divided by net premiums earned, was 81.0% and 20.2% for the three months ended December 31, 2011 and 2010, respectively. For the three months ended December 31, 2011, Validus Re incurred losses of $233.0 million related to current year losses and $7.1 million of favorable development relating to prior accident years. For the three months ended December 31, 2011, favorable loss development on prior accident years benefited the Validus Re loss ratio by 2.6 percentage points. For the three months ended December 31, 2010, Validus Re incurred losses of $71.9 million related to current year losses and $22.1 million of favorable development relating to prior accident years. For the three months ended December 31, 2010, favorable loss development on prior years benefited the Validus Re loss ratio by 9.0 percentage points.

        For the three months ended December 31, 2011, Validus Re incurred $23.0 million from notable loss events, which represented 8.2 percentage points of the loss ratio excluding the reserve for potential development on notable loss events. Including the impact of reinstatement premiums of $1.6 million, the effect of these events on Validus Re segment income was a decrease of $21.4 million. For the three months ended December 31, 2010, Validus Re incurred $28.3 million from notable loss events, which represented 11.5 percentage points of the loss ratio, excluding the reserve for potential development on notable loss

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events. Including the impact of reinstatement premiums of $2.2 million, the effect of these events on Validus Re segment income was a decrease of $26.1 million. Validus Re segment loss ratios, excluding prior year development, notable loss events identified above and reserve for potential development on notable loss events, for the three months ended December 31, 2011 and 2010 were 47.4% and 17.7%, respectively. Details of Validus Re loss ratios by line of business and period of occurrence are provided below.

	Three Months Ended December 31,
	2011			2010			Percentage Point Change
Property—current period excluding items below		39.1	%		10.6	%		28.5
Property—current period—notable losses		10.1	%		5.7	%		4.4
Property—current period—reserves for potential development on notable loss events		37.3	%		0.0	%		37.3
Property—change in prior accident years		(2.4	)%		(6.1	)%		3.7
Property—loss ratio		84.1	%		10.2	%		73.9
Marine—current period excluding items below		62.5	%		42.0	%		20.5
Marine—current period—notable losses		5.6	%		0.0	%		5.6
Marine—current period—reserves for potential development on notable loss events		8.7	%		0.0	%		8.7
Marine—change in prior accident years		(0.5	)%		(20.4	)%		19.9
Marine—loss ratio		76.3	%		21.6	%		54.7
Specialty—current period excluding items below		75.6	%		23.0	%		52.6
Specialty—current period—notable losses		0.0	%		76.1	%		(76.1	)
Specialty—change in prior accident years		(8.1	)%		(8.2	)%		0.1
Specialty—loss ratio		67.5	%		90.9	%		(23.4	)
All lines—current period excluding items below		47.4	%		17.7	%		29.7
All lines—current period—notable losses		8.2	%		11.5	%		(3.3	)
All lines—current period—reserves for potential development on notable loss events		28.0	%		0.0	%		28.0
All lines—change in prior accident years		(2.6	)%		(9.0	)%		6.4
All lines—loss ratio		81.0	%		20.2	%		60.8

        For the three months ended December 31, 2011, Validus Re property lines losses and loss expenses included $169.3 million related to current year losses and $4.7 million of favorable development relating to prior accident years. For the three months ended December 31, 2010, Validus Re property lines losses and loss expenses included $28.9 million related to current year losses and $10.8 million of favorable development relating to prior accident years. The favorable development was attributable to lower than expected claims development.

        For the three months ended December 31, 2011, Validus Re property lines incurred $19.8 million from notable loss events, which represented 10.1 percentage points of the property lines loss ratio, excluding the reserve for potential development on notable loss events. For the three months ended December 31, 2010, Validus Re's property lines incurred $10.0 million from notable loss events, which represented 5.7 percentage points of the property lines loss ratio, excluding the reserve for potential development on notable loss events. Validus Re property lines loss ratios, excluding prior year development, notable loss events identified above and reserve for potential development on notable loss events, for the three months ended December 31, 2011 and 2010 were 39.1% and 10.6%, respectively. The three months ended December 31, 2011 property line loss ratio includes $28.0 million of development on current accident year, prior quarters notable losses.

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        For the three months ended December 31, 2011, Validus Re marine lines losses and loss expenses included $44.2 million related to current year losses and $0.3 million of favorable development relating to prior accident years. For the three months ended December 31, 2010, Validus Re marine lines losses and loss expenses included $19.1 million related to current year losses and $9.3 million of favorable development relating to prior accident years.

        For the three months ended December 31, 2011, Validus Re marine lines incurred $3.2 million from notable loss events, which represented 5.6 percentage points of the property lines loss ratio, excluding the reserve for potential development on notable loss events. For the three months ended December 31, 2010, Validus Re marine lines did not incur any notable loss events. Validus Re marine lines loss ratios, excluding prior year development, notable loss events identified above and reserve for potential development on notable loss events, for the three months ended December 31, 2011 and 2010 were 62.5% and 42.0%, respectively. The three months ended December 31, 2011, marine line loss ratio includes $9.0 million of development on current accident year, prior quarters notable losses.

        For the three months ended December 31, 2011, Validus Re specialty lines included $19.6 million related to current year losses and $2.1 million of favorable development relating to prior accident years. For the three months ended December 31, 2010, Validus Re specialty lines losses and loss expenses included $23.8 million related to current year losses and $2.0 million of favorable development relating to prior accident years.

        For the three months ended December 31, 2011, Validus Re specialty lines did not incur any notable losses. For the three months ended December 31, 2010, Validus Re's specialty lines incurred $18.3 million from notable loss events, which represented 76.1 percentage points of the specialty lines loss ratio, excluding the reserve for potential development on notable loss events. Validus Re specialty lines loss ratios, excluding prior year development, for the three months ended December 31, 2011 and 2010 were 75.6% and 23.0%, respectively.

        Talbot.    Talbot losses and loss expenses for the three months ended December 31, 2011 were $108.9 million compared to $105.4 million for the three months ended December 31, 2010, an increase of $3.5 million or 3.3%. The loss ratio defined as losses and loss expenses divided by net premiums earned, was 52.0% and 56.5% for the three months ended December 31, 2011 and 2010, respectively. For the three months ended December 31, 2011, Talbot incurred losses of $144.6 million related to current year losses and $35.7 million of favorable development relating to prior accident years. For the three months ended December 31, 2011, favorable loss development on prior accident years benefited the Talbot loss ratio by 17.0 percentage points. For the three months ended December 31, 2010, Talbot incurred losses of $113.9 million related to current year losses and $8.5 million in favorable development relating to prior accident years. For the three months ended December 31, 2010, favorable loss development on prior accident years benefited the Talbot loss ratio by 4.6 percentage points.

        For the three months ended December 31, 2011, Talbot incurred $31.2 million from notable loss events, which represented 14.9 percentage points of the loss ratio. Including the impact of reinstatement premiums of ($2.9) million, the effect of these events on Talbot segment income was a decrease of $34.1 million. For the three months ended December 31, 2010, Talbot incurred $23.5 million from notable loss events, which represented 9.6 percentage points of the Talbot loss ratio. However, including the impact of reinstatement premiums of ($3.8) million, the effect of these events on Talbot segment income was a decrease of $27.3 million. Talbot loss ratios, excluding prior year loss development and notable loss events

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identified above, for the three months ended December 31, 2011 and 2010 were 54.1% and 51.5%, respectively. Details of Talbot loss ratios by line of business and period of occurrence are provided below.

	Three Months Ended December 31,
	2011			2010			Percentage Point Change
Property—current period excluding items below		83.8	%		58.8	%		25.0
Property—current period—notable losses		68.9	%		36.2	%		32.7
Property—change in prior accident years		(34.8	)%		(6.1	)%		(28.7	)
Property—loss ratio		117.9	%		88.9	%		29.0
Marine—current period excluding items below		48.2	%		42.8	%		5.4
Marine—current period—notable losses		1.1	%		0.0	%		1.1
Marine—change in prior accident years		(11.3	)%		(11.0	)%		(0.3	)
Marine—loss ratio		38.0	%		31.8	%		6.2
Specialty—current period excluding items below		45.6	%		56.2	%		(10.6	)
Specialty—current period—notable losses(a)		2.3	%		4.2	%		(1.9	)
Specialty—change in prior accident years(a)		(14.3	)%		3.1	%		(17.4	)
Specialty—loss ratio		33.6	%		63.5	%		(29.9	)
All lines—current period excluding items below		54.1	%		51.5	%		2.6
All lines—current period—notable losses(a)		14.9	%		9.6	%		5.3
All lines—change in prior accident years(a)		(17.0	)%		(4.6	)%		(12.4	)
All lines—loss ratio		52.0	%		56.5	%		(4.5	)

(a)

The financial institution loss occurred in a prior period but developed over the notable loss threshold in the three months ended December 31, 2010. In 2010, this loss is included in the change in prior year development and excluded as a notable loss as presented above.

        For the three months ended December 31, 2011, Talbot property lines losses and loss expenses include $62.8 million related to current year losses and $14.3 million of favorable development relating to prior accident years. This favorable development was attributable to lower than expected development on large losses. For the three months ended December 31, 2010, Talbot property lines losses and loss expenses included $39.4 million related to current year losses and $2.5 million of favorable development relating to prior accident years. The prior year favorable development was attributable to lower than expected claims development on the property facultative and binder accounts.

        For the three months ended December 31, 2011, Talbot property lines incurred $28.3 million from notable loss events, which represented 68.9 percentage points of the property lines loss ratio. For the three months ended December 31, 2010, Talbot property lines incurred $15.0 million from notable loss events, which represented 36.2 percentage points of the property lines loss ratio. Talbot property line loss ratio, excluding prior year development and notable loss events identified above for the three months ended December 31, 2011 and 2010 were 83.8% and 58.8%, respectively.

        For the three months ended December 31, 2011, Talbot marine lines losses and loss expenses included $44.1 million related to current year losses and $10.1 million of favorable development relating to prior accident years. This favorable development was due primarily to favorable development on attritional losses. For the three months ended December 31, 2010, Talbot marine lines losses and loss expenses included $31.7 million related to current year losses and $8.2 million of favorable development relating to prior accident years. The prior year favorable development was primarily due to lower than expected loss development across a number of lines but most notably on the offshore energy lines.

        For the three months ended December 31, 2011, Talbot marine lines incurred $1.0 million from notable loss events, which represented 1.1 percentage points of the marine lines loss ratio. For the three

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months ended December 31, 2010, Talbot marine lines did not incur any notable losses. Talbot marine lines loss ratios, excluding prior year development and notable loss events identified above, for the three months ended December 31, 2011 and 2010 were 48.2% and 42.8%, respectively.

        For the three months ended December 31, 2011, Talbot specialty lines losses and loss expenses included $37.8 million relating to current year losses and $11.3 million of favorable development relating to prior accident years. This favorable development was due primarily to favorable development on attritional losses. For the three months ended December 31, 2010, Talbot specialty lines losses and loss expenses included $42.8 million relating to current year losses and $2.2 million of adverse development relating to prior accident years.

        For the three months ended December 31, 2011, Talbot specialty lines incurred $1.9 million from notable loss events, which represented 2.3 percentage points of the specialty lines loss ratio. For the three months ended December 31, 2010, Talbot specialty lines incurred $8.5 million from notable loss events, which represented 4.2 percentage points of the specialty lines loss ratio. Talbot specialty lines loss ratios, excluding prior year development and notable loss events identified above for the three months ended December 31, 2011 and 2010 were 45.6% and 56.2%, respectively.

        At December 31, 2011 and 2010, gross and net reserves for losses and loss expenses were estimated using the methodology as outlined in the critical accounting policies and estimates as discussed in Item 7, Management's Discussion and Analysis of Results of Operations and Financial Condition—Critical Accounting Policies. The Company did not make any significant changes in assumptions or methodology used in its reserving process for the year ended December 31, 2011.

	As at December 31, 2011
(Dollars in thousands)	Gross Case Reserves		Gross IBNR		Total Gross Reserve for Losses and Loss Expenses
Property	$	736,448	$	575,556	$	1,312,004
Marine		437,367		350,833		788,200
Specialty		240,627		290,312		530,939
Total	$	1,414,442	$	1,216,701	$	2,631,143

	As at December 31, 2011
(Dollars in thousands)	Net Case Reserves		Net IBNR		Total Net Reserve for Losses and Loss Expenses
Property	$	601,385	$	522,730	$	1,124,115
Marine		375,364		326,218		701,582
Specialty		190,506		242,455		432,961
Total	$	1,167,255	$	1,091,403	$	2,258,658

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        The following table sets forth a reconciliation of gross and net reserves for losses and loss expenses by segment for the three months ended December 31, 2011:

	Three Months Ended December 31, 2011
(Dollars in thousands)	Validus Re			Talbot			Eliminations			Total
Gross reserves at period beginning	$	1,321,568		$	1,357,235		$	(112,891	)	$	2,565,912
Losses recoverable		(122,817	)		(376,274	)		112,891			(386,200	)
Net reserves at period beginning		1,198,751			980,961			—			2,179,712
Incurred losses—current year		233,026			144,619			—			377,645
Change in prior accident years		(7,123	)		(35,693	)		—			(42,816	)
Incurred losses		225,903			108,926			—			334,829
Foreign exchange		2,861			(277	)		—			2,584
Paid losses		(162,175	)		(96,292	)		—			(258,467	)
Net reserves at period end		1,265,340			993,318			—			2,258,658
Losses recoverable		95,509			384,243			(107,267	)		372,485
Gross reserves at period end		1,360,849			1,377,561			(107,267	)		2,631,143

        The amount of recorded reserves represents management's best estimate of expected losses and loss expenses on premiums earned. For the three months ended December 31, 2011, favorable loss reserve development on prior accident years totaled $42.8 million of which $7.1 million of the favorable loss reserve development related to the Validus Re segment and $35.7 million related to the Talbot segment. Favorable loss reserve development benefited the Company's loss ratio by 8.8 percentage points for the three months ended December 31, 2011. For the three months ended December 31, 2010, favorable loss reserve development on prior accident years totaled $30.6 million. Of this, $22.1 million related to the Validus Re segment and $8.5 million related to the Talbot segment. Favorable loss reserve development benefited the Company's loss ratio by 7.1 percentage points for the three months ended December 31, 2010.

        Management of insurance and reinsurance companies use significant judgment in the estimation of reserves for losses and loss expenses. Given the magnitude of recent loss events and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding the estimation for recent notable loss events. The Company's actual ultimate net loss may vary materially from these estimates. Validus Re ultimate losses for notable loss events are estimated through detailed review of contracts which are identified by the Company as potentially exposed to the specific notable loss event. However, there can be no assurance that the ultimate loss amount estimated for a specific contract will be accurate, or that all contracts with exposure to a specific notable loss event will be identified in a timely manner. Potential losses in excess of the estimated ultimate loss assigned to a contract on the basis of a specific review, or loss amounts from contracts not specifically included in the detailed review are reserved for in the reserve for potential development on notable loss events. As at September 30, 2011, the total reserve for potential development on both 2010 and 2011 notable loss events was $24.5 million. During the three months ended December 31, 2011 $5.9 million of the reserve for potential development on 2010 notable loss events was allocated to the Deepwater Horizon and the Company incurred $78.0 million of reserve for potential development on 2011 notable loss events. Therefore as at December 31, 2011 the total reserve for potential development on both 2010 and 2011 notable loss events was $96.6 million. As at September 30, 2010, the total reserve for potential development on 2010 notable loss events was $50.0 million. During the three months ended December 31, 2010, $16.6 milllion of the reserve for potential development on 2010 notable loss events was allocated to the New Zealand Earthquake. As at December 31, 2010 the total reserve for potential development on 2010 notable loss events was $33.4 million.

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Policy Acquisition Costs

        Policy acquisition costs for the three months ended December 31, 2011 were $81.3 million compared to $75.5 million for the three months ended December 31, 2010, an increase of $5.7 million or 7.6%. Policy acquisition costs as a percent of net premiums earned for the three months ended December 31, 2011 and 2010 were 16.6% and 17.4%, respectively. The changes in policy acquisition costs are due to the factors provided below.

	Three Months Ended December 31, 2011								Three Months Ended December 31, 2010
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			% Change
Property	$	26,753		32.9	%		11.3	%	$	29,488		39.1	%		13.5	%		(9.3	)%
Marine		31,603		38.9	%		21.5	%		26,765		35.4	%		22.4	%		18.1	%
Specialty		22,897		28.2	%		21.9	%		19,270		25.5	%		20.3	%		18.8	%
Total	$	81,253		100.0	%		16.6	%	$	75,523		100.0	%		17.4	%		7.6	%

        Validus Re.    Validus Re policy acquisition costs for the three months ended December 31, 2011 were $41.5 million compared to $39.3 million for the three months ended December 31, 2010, an increase of $2.2 million or 5.5%.

	Three Months Ended December 31, 2011								Three Months Ended December 31, 2010
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			% Change
Property	$	26,972		65.1	%		13.8	%	$	25,775		65.6	%		14.6	%		4.6	%
Marine		11,165		26.9	%		19.4	%		10,062		25.6	%		22.1	%		11.0	%
Specialty		3,328		8.0	%		12.8	%		3,462		8.8	%		14.4	%		(3.9	)%
Total	$	41,465		100.0	%		14.9	%	$	39,299		100.0	%		16.0	%		5.5	%

        Policy acquisition costs include brokerage, commission and excise tax, are generally driven by contract terms, are normally a set percentage of premiums and are also net of ceding commission income on retrocessions. Validus Re policy acquisition costs as a percent of net premiums earned (the policy acquisition cost ratio) for the three months ended December 31, 2011 and 2010 were 14.9% and 16.0%, respectively. Items such as ceded premium, earned premium adjustments and reinstatement premiums that are recognized in the period have an effect on the policy acquisition cost ratio as they have lower, or zero, associated acquisition costs. The Validus Re policy acquisition cost ratio has decreased for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 primarily due to the increase in reinstatement premiums received in the marine and specialty lines.

        Talbot.    Talbot policy acquisition costs for the three months ended December 31, 2011 were $41.2 million compared to $37.7 million for the three months ended December 31, 2010, an increase of $3.4 million or 9.1%.

	Three Months Ended December 31, 2011								Three Months Ended December 31, 2010
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			% Change
Property	$	1,053		2.6	%		2.6	%	$	5,315		14.1	%		12.8	%		(80.2	)%
Marine		20,523		49.9	%		22.9	%		16,603		44.0	%		22.4	%		23.6	%
Specialty		19,584		47.5	%		24.8	%		15,808		41.9	%		22.3	%		23.9	%
Total	$	41,160		100.0	%		19.7	%	$	37,726		100.0	%		20.2	%		9.1	%

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        The Talbot policy acquisition cost ratio on the property line in the three months ended December 31, 2011 has been impacted by a reduction in acquisition costs associated with the change in segmentation of the New York operations from the Corporate Segment to the Talbot segment. Policy acquisition costs as a percent of net premiums earned (the policy acquisition cost ratio) for the three months ended December 31, 2011 and 2010 were 19.7% and 20.2%, respectively.

General and Administrative Expenses

        General and administrative expenses for the three months ended December 31, 2011 were $52.3 million compared to $54.5 million for the three months ended December 31, 2010, a decrease of $2.3 million or 4.1%. The decrease was a result of increased expenses in the Talbot segment, offset by a decrease in the Validus Re and Corporate segments.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	General and Administrative Expenses		General and Administrative Expenses (%)			General and Administrative Expenses		General and Administrative Expenses (%)			% Change
Validus Re	$	12,109		23.2	%	$	12,659		23.3	%		(4.3	)%
Talbot		30,878		59.1	%		30,334		55.6	%		1.8	%
Corporate & Eliminations		9,266		17.7	%		11,518		21.1	%		(19.6	)%
Total	$	52,253		100.0	%	$	54,511		100.0	%		(4.1	)%

        General and administrative expenses of $52.3 million in the three months ended December 31, 2011 represents 10.7 percentage points of the expense ratio. Share compensation expense is discussed in the following section.

        Validus Re.    Validus Re general and administrative expenses for the three months ended December 31, 2011 were $12.1 million compared to $12.7 million for the three months ended December 31, 2010, a decrease of $0.6 million or 4.3%. General and administrative expenses have decreased primarily due to a decrease in performance bonus expense. General and administrative expenses include salaries and benefits, professional fees, rent and office expenses. Validus Re general and administrative expenses as a percent of net premiums earned for the three months ended December 31, 2011 and 2010 were 4.3% and 5.1%, respectively.

        Talbot.    Talbot general and administrative expenses for the three months ended December 31, 2011 were $30.9 million compared to $30.3 million for the three months ended December 31, 2010, an increase of $0.5 million or 1.8%. To better align the Company's operating and reporting structure with its current strategy, there was an internal reallocation of $1.2 million relating to the New York operations from the Corporate segment to the Talbot segment. Other contributing factors to the increase in general and administrative expenses are an increase in staff costs related to an increase in head count offset by a decrease in performance bonus expense. Talbot's general and administrative expenses as a percent of net premiums earned for the three months ended December 31, 2011 and 2010 were 14.7% and 16.3%, respectively.

        Corporate & Eliminations.    Corporate general and administrative expenses for the three months ended December 31, 2011 were $9.3 million compared to $11.5 million for the three months ended December 31, 2010, a decrease of $2.3 million or 19.6%. To better align the Company's operating and reporting structure with its current strategy, there was an internal reallocation of $1.2 million relating to the New York operations from the Corporate segment to the Talbot segment. General and administrative expenses have also decreased due to a decrease in performance bonus expense. Corporate general and administrative expenses are comprised of executive and board expenses, internal and external audit expenses and other costs relating to the Company as a whole.

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Share Compensation Expenses

        Share compensation expenses for the three months ended December 31, 2011 were $7.2 million compared to $7.9 million for the three months ended December 31, 2010, a decrease of $0.6 million or 8.1%. This expense is non-cash and has no net effect on total shareholders' equity, as it is balanced by an increase in additional paid-in capital.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Share Compensation Expenses		Share Compensation Expenses (%)			Share Compensation Expenses		Share Compensation Expenses (%)			% Change
Validus Re	$	2,191		30.3	%	$	1,934		24.6	%		13.3	%
Talbot		1,934		26.7	%		2,142		27.2	%		(9.7	)%
Corporate & Eliminations		3,112		43.0	%		3,795		48.2	%		(18.0	)%
Total	$	7,237		100.0	%	$	7,871		100.0	%		(8.1	)%

        Share compensation expenses of $7.2 million in the three months ended December 31, 2011 represents 1.5 percentage points of the general and administrative expense ratio.

        Validus Re.    Validus Re share compensation expenses for the three months ended December 31, 2011 were $2.2 million compared to $1.9 million for the three months ended December 31, 2010, an increase of $0.3 million or 13.3%. Share compensation expense as a percent of net premiums earned for the three months ended December 31, 2011 and 2010 were 0.8% and 0.8%, respectively.

        Talbot.    Talbot share compensation expenses for the three months ended December 31, 2011 was $1.9 million compared to $2.1 million for the three months ended December 31, 2010 a decrease of $0.2 million or 9.7%. Share compensation expense as a percent of net premiums earned for the three months ended December 31, 2011 and 2010 were 0.9% and 1.1%, respectively.

        Corporate & Eliminations.    Corporate share compensation expenses for the three months ended December 31, 2011 were $3.1 million compared to $3.8 million for the three months ended December 31, 2010, a decrease of $0.7 million or 18.0%.

Selected Ratios

        The underwriting results of an insurance or reinsurance company are often measured by reference to its combined ratio, which is the sum of the loss ratio and the expense ratio. The net loss ratio is calculated by dividing losses and loss expenses incurred (including estimates for incurred but not reported losses) by net premiums earned. The expense ratio is calculated by dividing acquisition costs combined with general and administrative expenses (including share compensation expenses) by net premiums earned. The following table presents the losses and loss expenses ratio, policy acquisition cost ratio, general and

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administrative expense ratio, expense ratio and combined ratio for the three months ended December 31, 2011 and 2010.

	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010			% Change
Consolidated
Losses and loss expense ratio		68.6	%		35.9	%		32.7
Policy acquisition cost ratio		16.6	%		17.4	%		(0.8	)
General and administrative expense ratio(a)		12.2	%		14.4	%		(2.2	)
Expense ratio		28.8	%		31.8	%		(3.0	)
Combined ratio		97.4	%		67.7	%		29.7
Validus Re
Losses and loss expense ratio		81.0	%		20.2	%		60.8
Policy acquisition cost ratio		14.9	%		16.0	%		(1.1	)
General and administrative expense ratio(a)		5.1	%		5.9	%		(0.8	)
Expense ratio		20.0	%		21.9	%		(1.9	)
Combined ratio		101.0	%		42.1	%		58.9
Talbot
Losses and loss expense ratio		52.0	%		56.5	%		(4.5	)
Policy acquisition cost ratio		19.7	%		20.2	%		(0.5	)
General and administrative expense ratio(a)		15.7	%		17.4	%		(1.7	)
Expense ratio		35.4	%		37.6	%		(2.2	)
Combined ratio		87.4	%		94.1	%		(6.7	)

(a)

Includes general and administrative expenses and share compensation expenses.

        General and administrative expense ratios for the three months ended December 31, 2011 and 2010 were 12.2% and 14.4%, respectively. General and administrative expense ratio is the sum of general and administrative expenses and share compensation expense divided by net premiums earned.

	Three Months Ended December 31, 2011					Three Months Ended December 31, 2010
(Dollars in thousands)	Expenses		Expenses as % of Net Earned Premiums			Expenses		Expenses as % of Net Earned Premiums
General and administrative expenses	$	52,253		10.7	%	$	54,511		12.6	%
Share compensation expenses		7,237		1.5	%		7,871		1.8	%
Total	$	59,490		12.2	%	$	62,382		14.4	%

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Underwriting Income

        Underwriting income for the three months ended December 31, 2011 was $12.8 million compared to underwriting income of $139.7 million for the three months ended December 31, 2010, a decrease of $126.9 million, or 90.9%.

(Dollars in thousands)	Three Months Ended December 31, 2011			% of Sub-total			Three Months Ended December 31, 2010			% of Sub-total			% Change
Validus Re	$	(2,676	)		(11.3	)%	$	142,633			92.9	%		(101.9	)%
Talbot		26,456			111.3	%		10,859			7.1	%		143.6	%
Sub-total		23,780			100.0	%		153,492			100.0	%		(84.5	)%
Corporate & Eliminations		(11,006	)					(13,811	)					(20.3	)%
Total	$	12,774					$	139,681						(90.9	)%

        The underwriting results of an insurance or reinsurance company are also often measured by reference to its underwriting income, which is a non-GAAP financial measure. Underwriting income, as set out in the table below, is reconciled to net income (the most directly comparable GAAP financial measure) by the addition or subtraction of certain Consolidated Statement of Operations and Comprehensive Income line items, as illustrated below.

(Dollars in thousands)	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010
Underwriting income	$	12,774		$	139,681
Net investment income		28,080			30,962
Other income		3,517			552
Finance expenses		(13,520	)		(13,786	)
Net realized gains (losses) on investments		5,355			(14,399	)
Net unrealized gains (losses) on investments		2,159			(42,689	)
Foreign exchange gains		266			3,424
Transaction expenses		(3,850	)		—
Tax (expense) benefit		226			(1,058	)
Net income	$	35,007		$	102,687

        Underwriting income indicates the performance of the Company's core underwriting function, excluding revenues and expenses such as the reconciling items in the table above. 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.

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        The Company excludes the U.S. GAAP measures noted above, in particular net realized and unrealized gains and losses on investments, from its calculation of underwriting income because the amount of these gains and losses is heavily influenced by, and fluctuates in part, according to availability of investment market opportunities. The Company believes these amounts are largely independent of its underwriting business and including them distorts the analysis of trends in its operations. In addition to presenting net income determined in accordance with U.S. GAAP, the Company believes that showing underwriting income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the Company's results of operations in a manner similar to how management analyzes the Company's underlying business performance. The Company uses underwriting income as a primary measure of underwriting results in its analysis of historical financial information and when performing its budgeting and forecasting processes. Analysts, investors and rating agencies who follow the Company request this non-GAAP financial information on a regular basis. In addition, underwriting income is one of the factors considered by the compensation committee of our Board of Directors in determining the total annual incentive compensation.

        Underwriting income should not be viewed as a substitute for U.S. GAAP net income as there are inherent material limitations associated with the use of underwriting income as compared to using net income, which is the most directly comparable U.S. GAAP financial measure. The most significant limitation is the ability of users of the financial information to make comparable assessments of underwriting income with other companies, particularly as underwriting income may be defined or calculated differently by other companies. Therefore, the Company provides more prominence in this filing to the use of the most comparable U.S. GAAP financial measure, net income, which includes the reconciling items in the table above. The Company compensates for these limitations by providing both clear and transparent disclosure of net income and reconciliation of underwriting income to net income.

Net Investment Income

        Net investment income for the three months ended December 31, 2011 was $28.1 million compared to $31.0 million for the three months ended December 31, 2010, a decrease of $2.9 million or 9.3%. Net investment income decreased due to falling yields in fixed maturity investments. Net investment income includes accretion of premium or discount on fixed maturities, interest on coupon-paying bonds, short-term investments and cash and cash equivalents, partially offset by investment management fees. The components of net investment income for the three months ended December 31, 2011 and 2010 are as presented below.

(Dollars in thousands)	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010			% Change
Fixed maturities and short-term investments	$	27,740		$	30,033			(7.6	)%
Cash and cash equivalents		2,153			2,328			(7.5	)%
Securities lending income		27			32			(15.6	)%
Total gross investment income		29,920			32,393			(7.6	)%
Investment expenses		(1,840	)		(1,431	)		28.6	%
Net investment income	$	28,080		$	30,962			(9.3	)%

        Annualized effective investment yield is based on the weighted average investments held calculated on a simple period average and excludes net unrealized gains (losses), realized gains (losses) on investments, foreign exchange gains (losses) on investments and the foreign exchange effect of insurance balances. The Company's annualized effective investment yield was 1.84% and 2.12% for the three months ended December 31, 2011 and 2010, respectively, and the average duration at December 31, 2011 was 1.63 years (December 31, 2010—2.27 years).

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Other Income

        Other income for the three months ended December 31, 2011 was $3.5 million compared to $0.6 million for the three months ended December 31, 2010. Other income increased partially due to a $0.5 million gain on disposal of a portion of the investment in AlphaCat Re 2011.

Finance Expenses

        Finance expenses for the three months ended December 31, 2011 were $13.5 million compared to $13.8 million for the three months ended December 31, 2010, a decrease of $0.3 million or 1.9%. Finance expenses also include the amortization of debt offering costs and discounts, and fees related to our credit facilities.

	Three Months Ended December 31,
(Dollars in thousands)	2011		2010		% Change
2006 Junior Subordinated Deferrable Debentures	$	1,496	$	3,589		(58.3	)%
2007 Junior Subordinated Deferrable Debentures		3,029		3,028		0.0	%
2010 Senior Notes due 2040		5,597		5,598		NM
Credit facilities		1,889		1,571		20.2	%
AlphaCat Re 2011 preferred dividend(a)		1,497		—		NM
Talbot FAL facility		12		—		NM
Finance expenses	$	13,520	$	13,786		(1.9	)%

(a)

Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.

NM:    Not Meaningful

Finance expense on the 2006 Junior Subordinated Deferrable Debentures decreased by $2.1 million for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 because the interest payable was changed from 9.069% per annum through June 15, 2011 to a floating rate of three-month LIBOR plus 355 basis points reset quarterly, resulting in lower interest payments.

Tax Benefit (Expense)

        Tax benefit for the three months ended December 31, 2011 was $0.2 million compared to an expense of ($1.1) million for the three months ended December 31, 2010, a decrease of $1.3 million.

Net Realized Gains (Losses) on Investments

        Net realized gains on investments for the three months ended December 31, 2011 were $5.4 million compared to losses of ($14.4) million for the three months ended December 31, 2010, a favorable movement of $19.8 million or 137.2%.

Net Unrealized Gains (Losses) on Investments

        Net unrealized gains on investments for the three months ended December 31, 2011 were $2.2 million compared to losses of ($42.7) million for the three months ended December 31, 2010 a favorable movement of $44.8 million or 105.1%. The net unrealized gains experienced in the three months ended December 31, 2011 were due to a small decrease in interest rates which increased the value of the fixed income portfolio.

        Net unrealized gains on investments are recorded as a component of net income. The Company has adopted all authoritative guidance on U.S. GAAP fair value measurements in effect as of the balance sheet date. Consistent with these standards, certain market conditions allow for fair value measurements that

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incorporate unobservable inputs where active market transaction based measurements are unavailable. Certain non-Agency RMBS securities were previously identified as trading in inactive markets.

Foreign Exchange Gains (Losses)

        Foreign exchange gains for the three months ended December 31, 2011 were $0.3 million compared to $3.4 million for the three months ended December 31, 2010, an unfavorable movement of $3.2 million or 92.2%. The unfavorable movement in foreign exchange was due primarily to the decreased value of assets denominated in foreign currencies relative to the U.S. dollar reporting currency for the three months ended December 31, 2011, as compared to the three months ended December 31, 2010. For the three months ended December 31, 2011, Validus Re recognized foreign exchange losses of ($0.3) million, Talbot recognized foreign exchange gains of $0.4 million. The Euro to U.S. dollar exchange rates were 1.30 and 1.34 at December 31, 2011 and September 30, 2011, respectively. The British pound sterling to U.S. dollar exchange rates were 1.55 and 1.56 at December 31, 2011 and September 30, 2011, respectively. During the quarter, the Euro depreciated by 3.0%, while the British pound depreciated by 0.6%.

        For the three months ended December 31, 2011, Validus Re segment foreign exchange losses were ($0.3) million compared to gains of $1.9 million for the three months ended December 31, 2010, an unfavorable movement of $2.3 million.

        For the three months ended December 31, 2011, Talbot segment foreign exchange gains were $0.4 million compared to $1.3 million for the three months ended December 31, 2010, an unfavorable movement of $0.9 million. Certain premiums receivable and liabilities for losses incurred in currencies other than the U.S. dollar are exposed to the risk of changes in value resulting from fluctuations in foreign exchange rates and may affect financial results in the future.

        At December 31, 2011, Talbot's balance sheet includes net unearned premiums and deferred acquisition costs denominated in foreign currencies of approximately $94.0 million and $19.2 million, respectively. These balances consisted of British pound sterling and Canadian dollars of $66.4 million and $8.4 million, respectively. Net unearned premiums and deferred acquisition costs are classified as non-monetary items and are translated at historic exchange rates. All of Talbot's other balance sheet items are classified as monetary items and are translated at period end exchange rates. During the three months ended December 31, 2011, this translation process resulted in foreign exchange gains that will reverse in future periods as net unearned premiums and deferred acquisition costs are earned together with (losses) arising from the reversal of losses incurred in previous periods. Additional foreign exchange (losses) gains may be incurred on the translation of net unearned premiums and deferred acquisition costs arising from insurance and reinsurance premiums written in future periods.

Net Income Attributable to Noncontrolling Interest

        Net income attributable to noncontrolling interest for the three months ended December 31, 2011 was $7.7 million compared to $0.0 million for the three months ended December 31, 2010, an increase of $7.7 million. The net income attributable to noncontrolling interest relates to the AlphaCat Re 2011 operations.

Transaction Expenses

        During the three months ended December 31, 2011, the Company incurred $3.9 million in transaction expenses related to its proposed acquisition of Transatlantic Holdings, Inc. ("Transatlantic"). Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

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        The following table presents results of operations for the three months ended December 31, 2011 and 2010 and years ended December 31, 2011, 2010 and 2009:

	Three Months Ended December 31,						Years Ended December 31,
																Pro Forma 2009(b)
(Dollars in thousands)	2011			2010			2011			2010			2009(a)
Gross premiums written	$	278,279		$	258,731		$	2,124,691		$	1,990,566			1,621,241		$	2,008,578
Reinsurance premiums ceded		(16,489	)		(35,376	)		(289,241	)		(229,482	)		(232,883	)		(239,412	)
Net premiums written		261,790			223,355			1,835,450			1,761,084			1,388,358			1,769,166
Change in unearned premiums		226,556			209,456			(33,307	)		39			61,219			(57,338	)
Net premiums earned		488,346			432,811			1,802,143			1,761,123			1,449,577			1,711,828
Losses and loss expenses		334,829			155,225			1,244,401			987,586			523,757			556,550
Policy acquisition costs		81,253			75,523			314,184			292,899			262,966			289,600
General and administrative expenses		52,253			54,511			197,497			209,290			185,568			209,510
Share compensation expenses		7,237			7,871			34,296			28,911			27,037			33,751
Total underwriting deductions		475,572			293,130			1,790,378			1,518,686			999,328			1,089,411
Underwriting income(c)		12,774			139,681			11,765			242,437			450,249			622,417
Net investment income		28,080			30,962			112,296			134,103			118,773			163,944
Other income		3,517			552			5,718			5,219			4,634			4,603
Finance expenses		(13,520	)		(13,786	)		(54,817	)		(55,870	)		(44,130	)		(44,513	)
Operating income before taxes(c)		30,851			157,409			74,962			325,889			529,526			746,451
Tax benefit (expense)		226			(1,058	)		(824	)		(3,126	)		3,759			3,759
Net operating income(c)		31,077			156,351			74,138			322,763			533,285			750,210
Gain on bargain purchase, net of expenses		—			—			—			—			287,099			—
Realized gain on repurchase of debentures		—			—			—			—			4,444			4,444
Net realized (losses) gains on investments		5,355			(14,399	)		28,532			32,498			(11,543	)		(4,717	)
Net unrealized gains (losses) on investments		2,159			(42,689	)		(19,991	)		45,952			84,796			189,789
Foreign exchange gains (losses)		266			3,424			(22,124	)		1,351			(674	)		4,294
Transaction expenses(d)		(3,850	)		—			(17,433	)		—			—			—
Net income		35,007			102,687			43,122			402,564			897,407			944,020
Net income attributable to noncontrolling interest		(7,683	)		—			(21,793	)		—			—			—
Net income available to Validus	$	27,324		$	102,687		$	21,329		$	402,564		$	897,407		$	944,020
Selected ratios:
Net premiums written / Gross premiums written		94.1	%		86.3	%		86.4	%		88.5	%		85.6	%		88.1	%
Losses and loss expenses		68.6	%		35.9	%		69.1	%		56.1	%		36.1	%		32.5	%
Policy acquisition costs		16.6	%		17.4	%		17.4	%		16.6	%		18.1	%		16.9	%
General and administrative expenses(e)		12.2	%		14.4	%		12.9	%		13.5	%		14.7	%		14.2	%
Expense ratio		28.8	%		31.8	%		30.3	%		30.1	%		32.8	%		31.1	%
Combined ratio		97.4	%		67.7	%		99.4	%		86.2	%		68.9	%		63.6	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

(b)

Pro Forma combined Validus Holdings, Ltd. and IPC Holdings Ltd. income statement for the year ended December 31, 2009.

(c)

Non-GAAP Financial Measures. In presenting the Company's results, management has included and discussed underwriting income and operating income 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. Reconciliations of these measures to the most comparable U.S. GAAP financial measure, are presented in the section below entitled "Underwriting Income."

(d)

The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

(e)

The general and administrative expense ratio includes share compensation expenses.

98

	Three Months Ended December 31,						Years Ended December 31,
																Pro Forma 2009(c)
(Dollars in thousands)	2011			2010			2011			2010			2009(a)
Validus Re
Gross premiums written	$	54,528		$	33,986		$	1,190,220		$	1,101,239		$	768,084		$	1,155,421
Reinsurance premiums ceded		(49	)		(399	)		(150,718	)		(63,147	)		(95,446	)		(101,975	)
Net premiums written		54,479			33,587			1,039,502			1,038,092			672,638			1,053,446
Change in unearned premiums		224,513			212,737			(7,611	)		13,108			122,912			4,305
Net premiums earned		278,992			246,324			1,031,891			1,051,200			795,550			1,057,751
Losses and loss expenses		225,903			49,799			759,305			601,610			186,704			219,497
Policy acquisition costs		41,465			39,299			160,134			160,599			127,433			154,127
General and administrative expenses		12,109			12,659			46,353			45,617			65,710			89,652
Share compensation expenses		2,191			1,934			9,309			7,181			7,576			14,290
Total underwriting deductions		281,668			103,691			975,101			815,007			387,423			477,566
Underwriting (loss) income(b)		(2,676	)		142,633			56,790			236,193			408,127			580,185
Talbot
Gross premiums written	$	235,242		$	238,100		$	1,014,122		$	981,073		$	919,906		$	919,906
Reinsurance premiums ceded		(27,931	)		(48,332	)		(218,174	)		(258,081	)		(204,186	)		(204,186	)
Net premiums written		207,311			189,768			795,948			722,992			715,720			715,720
Change in unearned premiums		2,043			(3,281	)		(25,696	)		(13,069	)		(61,693	)		(61,693	)
Net premiums earned		209,354			186,487			770,252			709,923			654,027			654,027
Losses and loss expenses		108,926			105,426			485,096			385,976			337,053			337,053
Policy acquisition costs		41,160			37,726			157,334			143,769			139,932			139,932
General and administrative expenses		30,878			30,334			117,482			114,043			96,352			96,352
Share compensation expenses		1,934			2,142			8,582			6,923			7,171			7,171
Total underwriting deductions		182,898			175,628			768,494			650,711			580,508			580,508
Underwriting income(b)		26,456			10,859			1,758			59,212			73,519			73,519
Corporate & Eliminations
Gross premiums written	$	(11,491	)	$	(13,355	)	$	(79,651	)	$	(91,746	)	$	(66,749	)	$	(66,749	)
Reinsurance premiums ceded		11,491			13,355			79,651			91,746			66,749			66,749
Net premiums written		—			—			—			—			—			—
Change in unearned premiums		—			—			—			—			—			—
Net premiums earned		—			—			—			—			—			—
Losses and loss expenses		—			—			—			—			—			—
Policy acquisition costs		(1,372	)		(1,502	)		(3,284	)		(11,469	)		(4,399	)		(4,399	)
General and administrative expenses		9,266			11,518			33,662			49,630			23,506			23,506
Share compensation expenses		3,112			3,795			16,405			14,807			12,290			12,290
Total underwriting deductions		11,006			13,811			46,783			52,968			31,397			31,397
Underwriting (loss)(b)		(11,006	)		(13,811	)		(46,783	)		(52,968	)		(31,397	)		(31,397	)
Total underwriting income(b)	$	12,774		$	139,681		$	11,765		$	242,437		$	450,249		$	622,307

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

(b)

Non-GAAP Financial Measures. In presenting the Company's results, management has included and discussed underwriting income that is 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 this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income."

(c)

Pro Forma combined Validus Holdings, Ltd. and IPC Holdings Ltd. income statement for the year ended December 31, 2009.

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Year Ended December 31, 2011 compared to Year Ended December 31, 2010

        Net income available to Validus for the year ended December 31, 2011 was $21.3 million compared to $402.6 million for the year ended December 31, 2010, a decrease of $381.2 million or 94.7%. The primary factors driving the decrease in net income were:

•

Decrease in underwriting income of $230.7 million due primarily to a $256.8 million increase in loss and loss expenses from increased severity of catastrophe events. This was partially offset by a $41.0 million increase in net premiums earned;

•

Decrease in net investment income of $21.8 million;

•

Unfavorable movement in net unrealized gains on investments of $65.9 million; and

•

Unfavorable movement in foreign exchange of $23.5 million.

        The change in net income available to Validus for the year ended December 31, 2011 of $381.2 million as compared to the year ended December 31, 2010 is described in the following table:

	Year Ended December 31, 2011 (Decrease) increase over the year ended December 31, 2010
(Dollars in thousands)	Validus Re			Talbot			Corporate and other reconciling items			Total
Notable losses—(increase) in net losses and loss expenses(a)	$	(56,972	)	$	(50,718	)	$	—		$	(107,690	)
Less: Notable losses—(decrease) in net reinstatement premiums(a)		(12,125	)		(5,680	)		—			(17,805	)
Other underwriting (loss) income		(110,306	)		(1,056	)		6,185			(105,177	)
Underwriting (loss) income(b)		(179,403	)		(57,454	)		6,185			(230,672	)
Net investment income		(17,476	)		(3,907	)		(424	)		(21,807	)
Other income		3,787			(3,907	)		619			499
Finance expenses		(4,818	)		2,913			2,958			1,053
		(197,910	)		(62,355	)		9,338			(250,927	)
Taxes		157			2,079			66			2,302
		(197,753	)		(60,276	)		9,404			(248,625	)
Net realized gains on investments		(1,968	)		(1,998	)		—			(3,966	)
Net unrealized (losses) gains on investments		(61,315	)		(4,628	)		—			(65,943	)
Foreign exchange gains (losses)		(18,802	)		(4,279	)		(394	)		(23,475	)
Transaction expenses		—			—			(17,433	)		(17,433	)
Net income (loss)		(279,838	)		(71,181	)		(8,423	)		(359,442	)
Net income attributable to noncontrolling interest		(21,793	)		—			—			(21,793	)
Net income (loss) available to Validus	$	(301,631	)	$	(71,181	)	$	(8,423	)	$	(381,235	)

(a)

Notable losses for the year ended December 31, 2011 include: Tohoku earthquake, Gryphon Alpha, Christchurch earthquake, Brisbane floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish floods, Hurricane Irene and the Thailand floods. Notable losses for the year ended December 31, 2010 include: the Chilean earthquake, Melbourne hailstorm, windstorm Xynthia, Deepwater Horizon, Aban Pearl, Bangkok riots, Perth hailstorm, New Zealand earthquake, Oklahoma windstorm, two Political risk losses, Hurricane Karl, Queensland floods, a Political violence loss, a Satellite failure and a Financial institutions loss.

(b)

Non-GAAP Financial Measures. In presenting the Company's results, management has included and discussed underwriting income (loss) that is 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

100

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 this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income."

Gross Premiums Written

        Gross premiums written for the year ended December 31, 2011 were $2,124.7 million compared to $1,990.6 million for the year ended December 31, 2010, an increase of $134.1 million or 6.7%. The property, marine and specialty lines increased by $62.2 million, $44.7 million and $27.2 million, respectively. Details of gross premiums written by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009(a)
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)
Property	$	1,099,303		51.7	%	$	1,037,061		52.1	%	$	750,741		46.3	%
Marine		569,981		26.9	%		525,307		26.4	%		446,962		27.6	%
Specialty		455,407		21.4	%		428,198		21.5	%		423,538		26.1	%
Total	$	2,124,691		100.0	%	$	1,990,566		100.0	%	$	1,621,241		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Validus Re.    Validus Re gross premiums written for the year ended December 31, 2011 were $1,190.2 million compared to $1,101.2 million for the year ended December 31, 2010, an increase of $89.0 million or 8.1%. Details of Validus Re gross premiums written by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009(a)
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)
Property	$	862,664		72.5	%	$	790,590		71.8	%	$	526,428		68.5	%
Marine		232,401		19.5	%		227,135		20.6	%		152,853		19.9	%
Specialty		95,155		8.0	%		83,514		7.6	%		88,803		11.6	%
Total	$	1,190,220		100.0	%	$	1,101,239		100.0	%	$	768,084		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        The increase in the Validus Re property lines of $72.1 million was due primarily to a $60.0 million increase in premiums written by AlphaCat Re 2011 and a $32.3 million increase in reinstatement premiums relating to the notable loss events for the year ended December 31, 2011. This was partially offset by a $29.9 million decrease in new and renewing premiums written on a proportional basis due primarily to several large contracts being withdrawn from the market. The increase in gross premiums written in the Validus Re marine lines of $5.3 million was due primarily to an increase in new and renewing business on a proportional basis, with two large contracts contributing $12.5 million in additional premiums. This was offset by an $8.5 million decrease in premium adjustments. The increase in gross premiums written in the Validus Re specialty lines of $11.6 million was due primarily to a $7.7 million increase in new and renewing business and a $6.8 million increase in premium adjustments.

        Gross premiums written under the quota share, surplus treaty and excess of loss contracts between Validus Re and Talbot for the year ended December 31, 2011 decreased by $12.1 million as compared to the year ended December 31, 2010. The decrease in premiums written was due to a decrease of $12.7 million and $0.8 million in the marine and specialty lines respectively, offset by an increase of

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$1.4 million in the property lines. These reinsurance agreements with Talbot are eliminated upon consolidation.

        Talbot.    Talbot gross premiums written for the year ended December 31, 2011 were $1,014.1 million compared to $981.1 million for the year ended December 31, 2010, an increase of $33.0 million or 3.4%. The $1,014.1 million of gross premiums written translated at fourth quarter 2010 rates of exchange would have been $1,006.5 million for the year ended December 31, 2011, an effective decrease of $7.6 million or 0.8%. Details of Talbot gross premiums written by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)			Gross Premiums Written		Gross Premiums Written (%)
Property	$	306,317		30.2	%	$	314,769		32.1	%	$	269,583		29.3	%
Marine		341,821		33.7	%		315,102		32.1	%		307,385		33.4	%
Specialty		365,984		36.1	%		351,202		35.8	%		342,938		37.3	%
Total	$	1,014,122		100.0	%	$	981,073		100.0	%	$	919,906		100.0	%

        Talbot gross premiums written decreased across the property lines by $8.5 million and increased across the marine and specialty lines by $26.7 million and $14.8 million, respectively. The decrease in the property lines was due primarily to a $14.5 million decrease in premiums written in the onshore energy lines, partially offset by a $4.6 million increase in premiums written in the property treaty lines. The increase in the marine lines is due primarily to a $29.4 million increase in premiums written across the offshore energy, marine liability and hull lines, partially offset by a $3.0 million decrease in premiums written in the other treaty lines. The increase in the specialty lines is due primarily to a $28.7 million increase in premiums written in the war, political risk and violence lines. This was partially offset by a $5.6 million decrease in premiums written in the direct airline and financial institutions lines and an $8.8 million decrease in the bloodstock and livestock lines as this book of business ceased direct writing at the end of 2010.

Reinsurance Premiums Ceded

        Reinsurance premiums ceded for the year ended December 31, 2011 were $289.2 million compared to $229.5 million for the year ended December 31, 2010, an increase of $59.8 million, or 26.0%. Reinsurance premiums ceded on the property lines increased by $85.6 million and decreased by $5.9 million and $20.0 million, on the marine and specialty lines, respectively. Details of reinsurance premiums ceded by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009(a)
(Dollars in thousands)	Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)
Property	$	208,968		72.2	%	$	123,383		53.7	%	$	149,979		64.4	%
Marine		32,847		11.4	%		38,701		16.9	%		31,140		13.4	%
Specialty		47,426		16.4	%		67,398		29.4	%		51,764		22.2	%
Total	$	289,241		100.0	%	$	229,482		100.0	%	$	232,883		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

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        Validus Re.    Validus Re reinsurance premiums ceded for the year ended December 31, 2011 were $150.7 million compared to $63.1 million for the year ended December 31, 2010, an increase of $87.6 million, or 138.7%. Details of Validus Re reinsurance premiums ceded by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010						Year ended December 31, 2009(a)
(Dollars in thousands)	Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded			Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)
Property	$	136,369		90.5	%	$	45,536			72.2	%	$	80,475		84.3	%
Marine		13,848		9.2	%		17,643			27.9	%		13,120		13.7	%
Specialty		501		0.3	%		(32	)		(0.1	)%		1,851		2.0	%
Total	$	150,718		100.0	%	$	63,147			100.0	%	$	95,446		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Reinsurance premiums ceded in the Validus Re property line increased by $90.8 million, this was due primarily to $45.4 million of proportional retrocessional coverage on the worldwide catastrophe portfolio purchased for the first time in 2011. In addition, increased U.S. retrocessional coverage of $28.6 million was purchased to ensure that the Company would be well positioned to take advantage of opportunities in a post loss environment. Furthermore it was necessary to reinstate retrocessional coverage for the international property book following the notable loss events in the year which lead to a $16.8 million increase in reinsurance premiums ceded. Reinsurance premiums ceded on the Validus Re marine lines decreased by $3.8 million primarily due to a $4.4 million decrease in ceded reinstatement premiums.

        Talbot.    Talbot reinsurance premiums ceded for the year ended December 31, 2011 were $218.2 million compared to $258.1 million for the year ended December 31, 2010, a decrease of $39.9 million or 15.5%. Details of Talbot reinsurance premiums ceded by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009
(Dollars in thousands)	Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)			Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)
Property	$	142,277		65.2	%	$	146,145		56.6	%	$	114,774		56.2	%
Marine		23,240		10.7	%		37,988		14.7	%		31,296		15.3	%
Specialty		52,657		24.1	%		73,948		28.7	%		58,116		28.5	%
Total	$	218,174		100.0	%	$	258,081		100.0	%	$	204,186		100.0	%

        Reinsurance premiums ceded in the Talbot property lines decreased by $3.9 million for the year ended December 31, 2011. Reinsurance premiums ceded in the Talbot marine lines decreased by $14.7 million for the year ended December 31, 2011 primarily due to a $13.2 million decrease in surplus line marine treaty premiums ceded. Reinsurance premiums ceded in the Talbot specialty lines decreased by $21.3 million for the year ended December 31, 2011 due primarily to a $9.7 million decrease in premiums ceded in the aviation lines and a $5.8 million decrease in premiums ceded in the financial institutions lines due to a combination of lower reinstatement premiums and lower cost of reinsurance.

Net Premiums Written

        Net premiums written for the year ended December 31, 2011 were $1,835.5 million compared to $1,761.1 million for the year ended December 31, 2010, an increase of $74.4 million, or 4.2%. The ratios of

103

net premiums written to gross premiums written for the year ended December 31, 2011 and 2010 were 86.4% and 88.5%, respectively. Details of net premiums written by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009(a)
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)
Property	$	890,335		48.5	%	$	913,678		51.9	%	$	600,762		43.2	%
Marine		537,134		29.3	%		486,606		27.6	%		415,822		30.0	%
Specialty		407,981		22.2	%		360,800		20.5	%		371,774		26.8	%
Total	$	1,835,450		100.0	%	$	1,761,084		100.0	%	$	1,388,358		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Validus Re.    Validus Re net premiums written for the year ended December 31, 2011 were $1,039.5 million compared to $1,038.1 million for the year ended December 31, 2010, an increase of $1.4 million or 0.1%. Details of Validus Re net premiums written by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009(a)
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)
Property	$	726,295		69.9	%	$	745,054		71.8	%	$	445,953		66.3	%
Marine		218,553		21.0	%		209,492		20.2	%		139,733		20.8	%
Specialty		94,654		9.1	%		83,546		8.0	%		86,952		12.9	%
Total	$	1,039,502		100.0	%	$	1,038,092		100.0	%	$	672,638		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        The increase in Validus Re net premiums written was driven by factors highlighted above in respect of gross premiums written and reinsurance premiums ceded. The ratios of net premiums written to gross premiums written were 87.3% and 94.3% for the year ended December 31, 2011 and 2010, respectively. This reflects the increase in reinsurance premiums ceded as a result of the purchase of additional and replacement retrocessional coverage as described above.

        Talbot.    Talbot net premiums written for the year ended December 31, 2011 were $795.9 million compared to $723.0 million for the year ended December 31, 2010, an increase of $73.0 million or 10.1%. Details of Talbot net premiums written by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)			Net Premiums Written		Net Premiums Written (%)
Property	$	164,040		20.6	%	$	168,624		23.4	%	$	154,809		21.6	%
Marine		318,581		40.0	%		277,114		38.3	%		276,089		38.6	%
Specialty		313,327		39.4	%		277,254		38.3	%		284,822		39.8	%
Total	$	795,948		100.0	%	$	722,992		100.0	%	$	715,720		100.0	%

        The increase in Talbot net premiums written was driven by the factors highlighted above in respect of gross premiums written and reinsurance premiums ceded. The ratios of net premiums written to gross premiums written for the year ended December 31, 2011 and 2010 were 78.5% and 73.7%, respectively reflecting the lower reinsurance premiums ceded.

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Net Change in Unearned Premiums

        Net change in unearned premiums for the year ended December 31, 2011 was ($33.3) million compared to $0.0 million for the year ended December 31, 2010, a decrease of $33.3 million.

	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009(a)
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			Net Change in Unearned Premiums
Change in gross unearned premium	$	(43,866	)	$	(12,079	)	$	2,258
Change in prepaid reinsurance premium		19,964			12,118			58,961
Deconsolidation of AlphaCat Re 2011		(9,405	)		—			—
Net change in unearned premium	$	(33,307	)	$	39		$	61,219

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Validus Re.    Validus Re net change in unearned premiums for the year ended December 31, 2011 was ($7.6) million compared to $13.1 million for the year ended December 31, 2010, a decrease of $20.7 million, or 158.1%.

	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009(a)
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			Net Change in Unearned Premiums
Change in gross unearned premium	$	(17,532	)	$	15,563		$	112,349
Change in prepaid reinsurance premium		19,326			(2,455	)		10,563
Deconsolidation of AlphaCat Re 2011		(9,405	)		—			—
Net change in unearned premium	$	(7,611	)	$	13,108		$	122,912

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        The net change in unearned premiums has decreased compared to the prior year due to the earnings patterns of gross premiums written and reinsurance premiums ceded during the year ended December 31, 2011 compared to the year ended December 31, 2010. The change in prepaid reinsurance is reflective of the higher level of ceded reinsurance, due to additional retrocessional coverage being placed in the year ended December 31, 2011.

        Talbot.    The Talbot net change in unearned premiums for the year ended December 31, 2011 was ($25.7) million compared to ($13.1) million for the year ended December 31, 2010, a decrease of $12.6 million, or 96.6%.

	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			Net Change in Unearned Premiums
Change in gross unearned premium	$	(26,334	)	$	(27,642	)	$	(110,091	)
Change in prepaid reinsurance premium		638			14,573			48,398
Net change in unearned premium	$	(25,696	)	$	(13,069	)	$	(61,693	)

        Talbot net change in unearned premiums has decreased for the year ended December 31, 2011 due to the earnings patterns of gross premiums written and reinsurance premiums ceded during the year ended December 31, 2011 compared to the year ended December 31, 2010.

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Net Premiums Earned

        Net premiums earned for the year ended December 31, 2011 were $1,802.1 million compared to $1,761.1 million for the year ended December 31, 2010, an increase of $41.0 million or 2.3%. The increase in net premiums earned was driven by increased net premiums earned in the Talbot segment of $60.3 million, partially offset by a $19.3 million decrease in net premiums earned in the Validus Re segment. Details of net premiums earned by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009(a)
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)
Property	$	891,448		49.5	%	$	923,370		52.4	%	$	712,662		49.2	%
Marine		517,376		28.7	%		445,426		25.3	%		397,061		27.4	%
Specialty		393,319		21.8	%		392,327		22.3	%		339,854		23.4	%
Total	$	1,802,143		100.0	%	$	1,761,123		100.0	%	$	1,449,577		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Validus Re.    Validus Re net premiums earned for the year ended December 31, 2011 were $1,031.9 million compared to $1,051.2 million for the year ended December 31, 2010, a decrease of $19.3 million or 1.8%. Details of Validus Re net premiums earned by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009(a)
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)
Property	$	730,210		70.7	%	$	765,665		72.8	%	$	578,452		72.7	%
Marine		211,344		20.5	%		176,601		16.8	%		123,273		15.5	%
Specialty		90,337		8.8	%		108,934		10.4	%		93,825		11.8	%
Total	$	1,031,891		100.0	%	$	1,051,200		100.0	%	$	795,550		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

The decrease in Validus Re net premiums earned is generally consistent with the increase in ceded premiums for the year ended December 31, 2011.

        Talbot.    Talbot net premiums earned for the year ended December 31, 2011 were $770.3 million compared to $709.9 million for the year ended December 31, 2010, an increase of $60.3 million or 8.5%. Details of Talbot net premiums earned by line of business are provided below.

	Year ended December 31, 2011					Year ended December 31, 2010					Year ended December 31, 2009
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)			Net Premiums Earned		Net Premiums Earned (%)
Property	$	161,238		21.0	%	$	157,705		22.2	%	$	134,210		20.5	%
Marine		306,032		39.7	%		268,825		37.9	%		273,788		41.9	%
Specialty		302,982		39.3	%		283,393		39.9	%		246,029		37.6	%
Total	$	770,252		100.0	%	$	709,923		100.0	%	$	654,027		100.0	%

        The increase in Talbot net premiums earned is generally consistent with the increase in net premiums written for the year ended December 31, 2011.

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Losses and Loss Expenses

        Losses and loss expenses for the year ended December 31, 2011 were $1,244.4 million compared to $987.6 million for the year ended December 31, 2010, an increase of $256.8 million or 26.0%. The loss ratios, defined as losses and loss expenses divided by net premiums earned, for the year ended December 31, 2011 and 2010 were 69.1% and 56.1%, respectively. Details of loss ratios by line of business are provided below.

	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009(a)
Property		87.1	%		60.5	%		15.9	%
Marine		61.7	%		50.3	%		61.1	%
Specialty		37.8	%		52.2	%		49.4	%
All lines		69.1	%		56.1	%		36.1	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

	Year Ended December 31,
	2011			2010			2009
Property—current period—excluding items below		28.2	%		21.7	%		25.6	%
Property—current period—notable losses		58.7	%		45.7	%		3.3	%
Property—current period—reserve for potential development on notable loss events		8.2	%		0.9	%		0.0	%
Property—change in prior accident years		(8.0	)%		(7.8	)%		(13.0	)%
Property—loss ratio		87.1	%		60.5	%		15.9	%
Marine—current period—excluding items below		48.4	%		44.9	%		60.0	%
Marine—current period—notable losses		20.3	%		15.5	%		0.0	%
Marine—current period—reserve for potential development on notable loss events		1.0	%		5.6	%		0.0	%
Marine—change in prior accident years		(8.0	)%		(15.7	)%		1.1	%
Marine—loss ratio		61.7	%		50.3	%		61.1	%
Specialty—current period—excluding items below		47.3	%		45.7	%		50.9	%
Specialty—current period—notable losses(a)		1.5	%		10.1	%		2.5	%
Specialty—change in prior accident years(a)		(11.0	)%		(3.6	)%		(4.0	)%
Specialty—loss ratio		37.8	%		52.2	%		49.4	%
All lines—current period—excluding items below		38.3	%		33.0	%		40.9	%
All lines—current period—notable losses(a)		35.2	%		30.1	%		2.2	%
All lines—current period—reserve for potential development on notable loss events		4.3	%		1.9	%		0.0	%
All lines—change in prior accident years(a)		(8.7	)%		(8.9	)%		(7.0	)%
All lines—loss ratio		69.1	%		56.1	%		36.1	%

(a)

The financial institution loss occurred in a prior period but developed over the notable loss threshold in the three months ended December 31, 2010. In 2010, this loss was included in the change in prior year development and excluded as a notable loss as presented above.

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        Validus Re.    Validus Re losses and loss expenses for the year ended December 31, 2011 were $759.3 million compared to $601.6 million for the year ended December 31, 2010, an increase of $157.7 million or 26.2%. The loss ratio, defined as losses and loss expenses divided by net premiums earned, was 73.6% and 57.2% for the year ended December 31, 2011 and 2010, respectively. For the year ended December 31, 2011, Validus Re incurred $827.9 million related to current year losses and $68.6 million of favorable loss development relating to prior accident years. For the year ended December 31, 2011, favorable loss development on prior accident years benefited the Validus Re loss ratio by 6.6 percentage points. For the year ended December 31, 2010, Validus Re incurred $672.2 million related to current year losses and $70.6 million of favorable loss development relating to prior accident years. For the year ended December 31, 2010, favorable loss development on prior accident years benefited the Validus Re loss ratio by 6.7 percentage points. For the year ended December 31, 2011, Validus Re incurred $474.8 million from notable loss events, which represented 46.0 percentage points of the Validus Re segment loss ratio, excluding reserve for potential development on notable loss events. For the year ended December 31, 2010, Validus Re incurred $427.8 million from notable loss events, which represented 40.7 percentage points of the Validus Re segment loss ratio. Validus Re segment loss ratios, excluding prior year development and notable loss events and reserve for potential development on notable loss events for the years ended December 31, 2011 and 2010 were 26.6% and 20.0%, respectively. Details of Validus Re loss ratios by line of business and period of occurrence are provided below.

	Year Ended December 31,
	2011			2010			2009
Property—current period excluding items below		20.4	%		16.4	%		19.9	%
Property—current period—notable losses		55.6	%		45.8	%		4.1	%
Property—current period—reserve for potential development on notable loss events		10.0	%		1.1	%		0.0	%
Property—change in prior accident years		(6.7	)%		(6.5	)%		(11.3	)%
Property—loss ratio		79.3	%		56.8	%		12.7	%
Marine—current period excluding items below		44.0	%		36.5	%		49.1	%
Marine—current period—notable losses		32.7	%		29.1	%		0.0	%
Marine—current period—reserve for potential development on notable loss events		2.4	%		14.2	%		0.0	%
Marine—change in prior accident years		(4.8	)%		(10.0	)%		15.9	%
Marine—loss ratio		74.3	%		69.8	%		65.0	%
Specialty—current period excluding items below		36.3	%		19.2	%		41.0	%
Specialty—current period—notable losses		0.0	%		23.7	%		2.2	%
Specialty—change in prior accident years		(10.4	)%		(2.9	)%		(8.0	)%
Specialty—loss ratio		25.9	%		40.0	%		35.2	%
All lines—current period excluding items below		26.6	%		20.0	%		27.0	%
All lines—current period—notable losses		46.0	%		40.7	%		3.2	%
All lines—current period—reserve for potential development on notable loss events		7.6	%		3.2	%		0.0	%
All lines—change in prior accident years		(6.6	)%		(6.7	)%		(6.7	)%
All lines—loss ratio		73.6	%		57.2	%		23.5	%

        For the year ended December 31, 2011, the Validus Re property line incurred $628.0 million related to current year losses and $49.0 million of favorable development relating to prior accident years. This favorable development was primarily due to a reduction in the loss estimates on large loss events and favorable development on attritional losses and various smaller loss events. For the year ended

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December 31, 2010, the Validus Re property lines included $484.6 million related to current year losses and $49.8 million of favorable development relating to prior accident years. This favorable development was attributable to lower than expected claims development. For the year ended December 31, 2011, Validus Re property line incurred $405.6 million from notable loss events, which represented 55.6 percentage points of the Validus Re property line loss ratio, excluding the reserve for potential development on notable loss events. For the year ended December 31, 2010, Validus Re property line incurred $350.7 million from notable loss events, which represented 45.8 percentage points of the Validus Re property line loss ratio. Validus Re property line loss ratios, excluding prior year development, notable loss events and reserve for potential development on notable loss events, for the year ended December 31, 2011 and 2010 were 20.4% and 16.4%, respectively.

        For the year ended December 31, 2011, the Validus Re marine line incurred $167.2 million related to current year losses and $10.2 million of favorable development relating to prior accident years. This favorable development was due primarily to favorable development on large loss events and attritional losses and various smaller loss events. For the year ended December 31, 2010, the Validus Re marine lines included $140.8 million related to current year losses and $17.6 million of favorable development relating to prior accident years. For the year ended December 31, 2011, Validus Re marine line incurred $69.2 million from notable loss events, which represented 32.7 percentage points of the Validus Re marine line loss ratio, excluding reserve for potential development on notable loss events. For the year ended December 31, 2010, Validus Re marine line incurred $51.3 million from notable loss events, which represented 29.1 percentage points of the Validus Re marine loss ratio. Validus Re marine line loss ratios, excluding prior year development, notable loss events and reserve for potential development on notable loss events, for the year ended December 31, 2011 and 2010 were 44.0% and 36.5%, respectively.

        For the year ended December 31, 2011, the Validus Re specialty line incurred $32.7 million related to current year losses and $9.4 million of favorable development relating to prior accident years. This favorable development was attributable to favorable development on attritional losses partially offset by adverse development on large loss events. For the year ended December 31, 2010, the Validus Re specialty lines included $46.7 million related to current year losses and $3.2 million of favorable development relating to prior accident years. For the year ended December 31, 2011, Validus Re specialty line did not incur any notable loss events. For the year ended December 31, 2010, the Validus Re specialty line incurred $25.8 million from notable loss events, which represented 23.7 percentage points of the Validus Re specialty loss ratio. Validus Re specialty line loss ratios, excluding prior year development, notable loss events identified above and reserve for potential development on notable loss events, for the year ended December 31, 2011 and 2010 were 36.3% and 19.2%, respectively.

        Talbot.    Talbot losses and loss expenses for the year ended December 31, 2011 were $485.1 million compared to $386.0 million for the year ended December 31, 2010, an increase of $99.1 million, or 25.7%. The loss ratio, defined as losses and loss expenses divided by net premiums earned, was 63.0% and 54.4% for the year ended December 31, 2011 and 2010, respectively. For the year ended December 31, 2011, Talbot incurred $572.6 million related to current year losses and $87.5 million of favorable loss development relating to prior accident years. For the year ended December 31, 2011, favorable loss development on prior accident years benefited the Talbot loss ratio by 11.4 percentage points. For the year ended December 31, 2010, Talbot incurred $472.0 million related to current year losses and $86.0 million of favorable loss development relating to prior accident years. For the year ended December 31, 2010, favorable loss development on prior accident years benefited the Talbot loss ratio by 12.1 percentage points. For the year ended December 31, 2011, Talbot incurred $159.1 million of notable losses, which represented 20.7 percentage points of the Talbot segment loss ratio. For the year ended December 31, 2010, Talbot incurred $108.4 million of notable losses, which represented 14.5 percentage points of the Talbot segment loss ratio. Talbot loss ratios, excluding prior year development and notable loss events for

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the year ended December 31, 2011 and 2010 were 53.7% and 52.0%, respectively. Details of Talbot loss ratios by line of business and period of occurrence are provided below.

	Year Ended December 31,
	2011			2010			2009
Property—current period excluding items below		63.6	%		47.5	%		49.8	%
Property—current period—notable losses		72.8	%		45.3	%		0.2	%
Property—change in prior accident years		(13.7	)%		(14.2	)%		(20.6	)%
Property—loss ratio		122.7	%		78.6	%		29.4	%
Marine—current period excluding items below		51.5	%		50.5	%		65.0	%
Marine—current period—notable losses		11.7	%		6.6	%		0.0	%
Marine—change in prior accident years		(10.2	)%		(19.5	)%		(5.6	)%
Marine—loss ratio		53.0	%		37.6	%		59.4	%
Specialty—current period excluding items below		50.6	%		55.8	%		54.8	%
Specialty—current period—notable losses(a)		1.9	%		4.9	%		2.6	%
Specialty—change in prior accident years(a)		(11.2	)%		(3.9	)%		(2.5	)%
Specialty—loss ratio		41.3	%		56.8	%		54.9	%
All lines—current period excluding items below		53.7	%		52.0	%		58.0	%
All lines—current period—notable losses(a)		20.7	%		14.5	%		1.0	%
All lines—change in prior accident years(a)		(11.4	)%		(12.1	)%		(7.5	)%
All lines—loss ratio		63.0	%		54.4	%		51.5	%

(a)

The financial institution loss occurred in a prior period but developed over the notable loss threshold in the three months ended December 31, 2010. In 2010, this loss was included in the change in prior year development and excluded as a notable loss as presented above.

        For the year ended December 31, 2011, the Talbot property line incurred $220.0 million related to current year losses and $22.2 million of favorable loss development relating to prior accident years. This favorable development was attributable to lower than expected development on large losses as well as favorable development on attritional losses. For the year ended December 31, 2010, the Talbot property line included $146.3 million related to current year losses and $22.5 million of favorable loss development relating to prior accident years. The prior year favorable development was primarily due to lower than expected claim development on the property facultative and binder accounts, together with favorable development on hurricanes Katrina and Ike. For the year ended December 31, 2011, the Talbot property line incurred $117.5 million from notable loss events, which represented 72.8 percentage points of the Talbot property line loss ratio. For the year ended December 31, 2010, the Talbot property line incurred $71.4 million from notable loss events, which represented 45.3 percentage points of the Talbot property line loss ratio. Talbot property line loss ratio, excluding prior year development and notable loss events, for the year ended December 31, 2011 and 2010 were 63.6% and 47.5%, respectively.

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        For the year ended December 31, 2011, the Talbot marine line incurred $193.5 million related to current year losses and $31.4 million of favorable development relating to prior accident years. This favorable development was due primarily to favorable development on attritional losses. For the year ended December 31, 2010, the Talbot marine line included $153.4 million related to current year losses and $52.4 million of favorable development relating to prior accident years. The prior year favorable development was due to lower than expected attritional loss development across a number of lines, in particular on the hull and energy lines. For the year ended December 31, 2011, the Talbot marine line incurred $35.8 million from notable loss events, which represented 11.7 percentage points of the Talbot marine line loss ratio. For the year ended December 31, 2010, the Talbot marine line incurred $17.6 million from notable loss events, which represented 6.6 percentage points of the Talbot marine loss ratio. Talbot marine line loss ratios, excluding prior year development and notable loss events, for the year ended December 31, 2011 and 2010 were 51.5% and 50.5%, respectively.

        For the year ended December 31, 2011, the Talbot specialty line incurred $159.1 million relating to current year losses and $34.0 million due to favorable development on prior accident years. This favorable development was attributable to lower than expected development on large losses as well as favorable development on attritional losses. For the year ended December 31, 2010, the Talbot specialty line included $172.2 million relating to current year losses and $11.1 million due to favorable development on prior accident years. The prior year favorable development was primarily due to lower than expected claims across most of the specialty sub-classes, partially offset by one notable loss on the financial institutions lines. For the year ended December 31, 2011, Talbot incurred $5.8 million from notable loss events, which represented 1.9 percentage points of the Talbot specialty line loss ratio. For the year ended December 31, 2010, the Talbot specialty line incurred $19.3 million from notable loss events, which represented 4.9 percentage points of the Talbot loss ratio. Talbot specialty line loss ratios, excluding prior year development and the notable loss events, for the year ended December 31, 2011 and 2010 were 50.6% and 55.8%, respectively.

        At December 31, 2011 and 2010, gross and net reserves for losses and loss expenses were estimated using the methodology as outlined in the critical accounting policies and estimates as discussed in Item 7, Management's Discussion and Analysis of Results of Operations and Financial Condition—Critical Accounting Policies.

	As at December 31, 2011
(Dollars in thousands)	Gross Case Reserves		Gross IBNR		Total Gross Reserve for Losses and Loss Expenses
Property	$	736,448	$	575,556	$	1,312,004
Marine		437,367		350,833		788,200
Specialty		240,627		290,312		530,939
Total	$	1,414,442	$	1,216,701	$	2,631,143

	As at December 31, 2011
(Dollars in thousands)	Net Case Reserves		Net IBNR		Total Net Reserve for Losses and Loss Expenses
Property	$	601,385	$	522,730	$	1,124,115
Marine		375,364		326,218		701,582
Specialty		190,506		242,455		432,961
Total	$	1,167,255	$	1,091,403	$	2,258,658

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        The following table sets forth a reconciliation of gross and net reserves for losses and loss expenses by segment for the year ended December 31, 2011.

	Year Ended December 31, 2011
(Dollars in thousands)	Validus Re			Talbot			Eliminations			Total
Gross reserves at period beginning	$	998,165		$	1,191,548		$	(153,740	)	$	2,035,973
Losses recoverable		(80,219	)		(356,655	)		153,740			(283,134	)
Net reserves at period beginning		917,946			834,893			—			1,752,839
Incurred losses- current year		827,915			572,605			—			1,400,520
Change in prior accident years		(68,610	)		(87,509	)		—			(156,119	)
Incurred losses		759,305			485,096			—			1,244,401
Foreign exchange		5,723			(1,279	)		—			4,444
Paid losses		(417,634	)		(325,392	)		—			(743,026	)
Net reserves at period end		1,265,340			993,318			—			2,258,658
Losses recoverable		95,509			384,243			(107,267	)		372,485
Gross reserves at period end	$	1,360,849		$	1,377,561		$	(107,267	)	$	2,631,143

        The amount of recorded reserves represents management's best estimate of expected losses and loss expenses on premiums earned. For the year ended December 31, 2011, favorable loss reserve development on prior accident years totaled $156.1 million of which $68.6 million related to the Validus Re segment and $87.5 million related to the Talbot segment. Favorable loss reserve development benefited the Company's loss ratio by 8.7 percentage points for the year ended December 31, 2011. For the year ended December 31, 2010, favorable loss reserve development on prior accident years totaled $156.6 million of which $70.6 million related to the Validus Re segment and $86.0 million related to the Talbot segment. This favorable loss reserve development benefited the Company's loss ratio by 8.9 percentage points.

        During the three months ended December 31, 2011, the Company recorded losses of $54.1 million for the Thailand floods. During the year ended December 31, 2011, in addition to the loss events for the three months ended December 31, 2011, the Company recorded losses of $216.7 million for the Tohoku earthquake, $61.6 million for the Gryphon Alpha mooring failure, $78.9 million for the Christchurch earthquake, $35.9 million for the Brisbane floods, $10.8 million for the CNRL Horizon explosion, $62.4 million for the Cat 46 tornado, $40.7 million for the Cat 48 tornado, $14.9 million for the Jupiter 1 platform failure, $25.4 million for the Danish flood, and $32.5 million for Hurricane Irene. For the year ended December 31, 2011, the Company incurred $633.9 million of notable losses, which represented 35.2 percentage points of the loss ratio, excluding reserve for potential development on notable loss events, as described below. Including the impact of $44.7 million in reinstatement premiums, the effect of these events on net income was a decrease of $589.2 million.

        Management of insurance and reinsurance companies use significant judgment in the estimation of reserves for losses and loss expenses. Given the magnitude of recent loss events and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding the estimation of recent notable loss events. The Company's actual ultimate net loss may vary materially from estimates. Validus Re ultimate losses for notable loss events are estimated through detailed review of contracts which are identified by the Company as potentially exposed to the specific notable loss event. However, there can be no assurance that the ultimate loss amount estimated for a specific contract will be accurate, or that all contracts with exposure to a specific notable loss event will be identified in a timely manner. Potential losses in excess of the estimated ultimate loss assigned to a contract on the basis of a specific review, or loss amounts from contracts not specifically included in the detailed review are reserved for in the reserve for potential development on notable loss events.

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        As at December 31, 2010, the reserve for potential development on 2010 notable loss events was $33.4 million. During the year ended December 31, 2011, $14.8 million was allocated to the Deepwater Horizon loss. During the first quarter of 2011, the Company incurred $50.0 million for a reserve for potential development on 2011 notable loss events. During the second quarter of 2011, $20.1 million and $20.2 million were allocated to the Tohoku earthquake and Christchurch earthquake, respectively. During the third quarter of 2011, $9.7 million was allocated to the Tohoku earthquake. During the fourth quarter of 2011, the Company incurred $78.0 million for a reserve for potential development of 2011 notable loss events. As at December 31, 2011 the reserve for potential development on 2010 and 2011 notable loss events was $96.6 million.

        In the first quarter of 2010, the Company incurred $19.2 million for a reserve for potential development on 2010 notable loss events, which in the second quarter of 2010 was allocated to development on the Chilean Earthquake. In the second quarter of 2010, the Company made a provision for losses and loss expenses of $20.0 million in the reserve for potential development on 2010 notable loss events. In the third quarter of 2010, the reserve was increased by an additional provision of $30.0 million. In the fourth quarter of 2010 $16.6 million of the reserve was allocated to the New Zealand earthquake. As at December 31, 2010, the reserve for potential development on 2010 notable loss events was $33.4 million.

Policy Acquisition Costs

        Policy acquisition costs for the year ended December 31, 2011 were $314.2 million compared to $292.9 million for the year ended December 31, 2010, an increase of $21.3 million or 7.3%. Policy acquisition costs as a percentage of net premiums earned for the year ended December 31, 2011 and 2010 were 17.4% and 16.6%, respectively. Details of policy acquisition costs by line of business are provided below.

	Year Ended December 31, 2011								Year Ended December 31, 2010								Year Ended December 31, 2009(a)
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio
Property	$	112,261		35.8	%		12.6	%	$	119,894		40.9	%		13.0	%	$	104,912		39.9	%		14.7	%
Marine		113,845		36.2	%		22.0	%		92,271		31.5	%		20.7	%		86,295		32.8	%		21.7	%
Specialty		88,078		28.0	%		22.4	%		80,734		27.6	%		20.6	%		71,759		27.3	%		21.1	%
Total	$	314,184		100.0	%		17.4	%	$	292,899		100.0	%		16.6	%	$	262,966		100.0	%		18.1	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Validus Re.    Validus Re policy acquisition costs for the year ended December 31, 2011 were $160.1 million compared to $160.6 million for the year ended December 31, 2010, a decrease of $0.5 million or 0.3%. Details of Validus Re policy acquisition costs by line of business are provided below.

	Year Ended December 31, 2011								Year Ended December 31, 2010								Year Ended December 31, 2009(a)
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio
Property	$	101,445		63.4	%		13.9	%	$	112,550		70.1	%		14.7	%	$	88,589		69.5	%		15.3	%
Marine		44,431		27.7	%		21.0	%		33,691		21.0	%		19.1	%		25,311		19.9	%		20.5	%
Specialty		14,258		8.9	%		15.8	%		14,358		8.9	%		13.2	%		13,533		10.6	%		14.4	%
Total	$	160,134		100.0	%		15.5	%	$	160,599		100.0	%		15.3	%	$	127,433		100.0	%		16.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

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        Policy acquisition costs include brokerage, commission and excise tax, are generally driven by contract terms, are normally a set percentage of premiums and are also net of ceding commission income on retrocessions. Items such as ceded premium, earned premium adjustments and reinstatement premiums that are recognized in the period have an effect on policy acquisition costs. Validus Re policy acquisition costs as a percent of net premiums earned for the year ended December 31, 2011 and 2010 were 15.5% and 15.3%, respectively. The Validus Re policy acquisition ratio has remained relatively stable for the year ended December 31, 2011 as compared to the year ended December 31, 2010. The increase in the specialty policy acquisition ratio of 2.6 percentage points was due primarily to the combined effect of reduced reinstatement premium impact and earned premium adjustments.

        Talbot.    Talbot policy acquisition costs for the year ended December 31, 2011 were $157.3 million compared to $143.8 million for the year ended December 31, 2010, an increase of $13.6 million or 9.4%. Details of Talbot policy acquisition costs by line of business are provided below.

	Year Ended December 31, 2011								Year Ended December 31, 2010								Year Ended December 31, 2009
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio			Policy Acquisition Costs		Policy Acquisition Costs (%)			Acquisition Cost Ratio
Property	$	13,814		8.7	%		8.6	%	$	18,628		12.9	%		11.8	%	$	20,722		14.8	%		15.4	%
Marine		69,624		44.3	%		22.8	%		58,614		40.8	%		21.8	%		60,984		43.6	%		22.3	%
Specialty		73,896		47.0	%		24.4	%		66,527		46.3	%		23.5	%		58,226		41.6	%		23.7	%
Total	$	157,334		100.0	%		20.4	%	$	143,769		100.0	%		20.3	%	$	139,932		100.0	%		21.4	%

        The Talbot policy acquisition cost ratio on the property line for the year ended December 31, 2011 has been impacted by a reduction in acquisition costs associated with the change in segmentation of the New York operations from the Corporate segment to the Talbot segment. Talbot policy acquisition costs as a percent of net premiums earned were 20.4% and 20.3%, respectively, for the year ended December 31, 2011 and 2010.

General and Administrative Expenses

        General and administrative expenses for the year ended December 31, 2011 were $197.5 million compared to $209.3 million for the year ended December 31, 2010, a decrease of $11.8 million or 5.6%. The decrease was primarily due to a decrease in Corporate expenses of $16.0 million, partially offset by increased expenses of $0.7 million in the Validus Re segment and a $3.4 million increase in the Talbot segment.

	Year Ended December 31, 2011					Year Ended December 31, 2010					Year Ended December 31, 2009(a)
(Dollars in thousands)	General and Administrative Expenses		General and Administrative Expenses (%)			General and Administrative Expenses		General and Administrative Expenses (%)			General and Administrative Expenses		General and Administrative Expenses (%)
Validus Re	$	46,353		23.5	%	$	45,617		21.8	%	$	65,710		35.4	%
Talbot		117,482		59.5	%		114,043		54.5	%		96,352		51.9	%
Corporate & Eliminations		33,662		17.0	%		49,630		23.7	%		23,506		12.7	%
Total	$	197,497		100.0	%	$	209,290		100.0	%	$	185,568		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        General and administrative expenses of $197.5 million in the year ended December 31, 2011 represents 11.0 percentage points of the expense ratio. General and administrative expenses of

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$209.3 million in the year ended December 31, 2010 represented 11.9 percentage points of the expense ratio. Share compensation expenses are discussed in the following section.

        Validus Re.    Validus Re general and administrative expenses for the year ended December 31, 2011 were $46.4 million compared to $45.6 million for the year ended December 31, 2010, an increase of $0.7 million or 1.6%. General and administrative expenses have increased primarily due to an increase in office costs offset by a decrease in performance bonus expense. Validus Re's general and administrative expenses as a percent of net premiums earned for the years ended December 31, 2011 and 2010 were 4.5% and 4.3%, respectively.

        Talbot.    Talbot general and administrative expenses for the year ended December 31, 2011 were $117.5 million compared to $114.0 million for the year ended December 31, 2010, an increase of $3.4 million or 3.0%. To better align the Company's operating and reporting structure with its current strategy, there was an internal reallocation of $6.0 million relating to the New York operations from the Corporate segment to the Talbot segment. Other contributing factors to the increase in general and administrative expenses are an increase in staff costs related to an increase in head count offset by a decrease in performance bonus expense. Talbot's general and administrative expenses as a percent of net premiums earned for the years ended December 31, 2011 and 2010 were 15.3% and 16.1%, respectively.

        Corporate & Eliminations.    Corporate general and administrative expenses for the year ended December 31, 2011 were $33.7 million compared to $49.6 million for the year ended December 31, 2010, a decrease of $16.0 million or 32.2%. To better align the Company's operating and reporting structure with its current strategy, there was an internal reallocation of $6.0 million relating to the New York operations from the Corporate segment to the Talbot segment. There was also an allocation of corporate expenses of $3.6 million to the operating segments relating to group-wide costs. Corporate general and administrative expenses are comprised of executive and board expenses, internal and external audit expenses and other costs relating to the Company as a whole.

Share Compensation Expenses

        Share compensation expenses for the year ended December 31, 2011 were $34.3 million compared to $28.9 million for the year ended December 31, 2010, an increase of $5.4 million or 18.6%. This expense is non-cash and has no net effect on total shareholders' equity, as it is balanced by an increase in additional paid-in capital.

	Year Ended December 31, 2011					Year Ended December 31, 2010					Year Ended December 31, 2009(a)
(Dollars in thousands)	Share Compensation Expense		Share Compensation Expense Expenses (%)			Share Compensation Expense		Share Compensation Expense Expenses (%)			Share Compensation Expense		Share Compensation Expense Expenses (%)
Validus Re	$	9,309		27.2	%	$	7,181		24.9	%	$	7,576		28.0	%
Talbot		8,582		25.0	%		6,923		23.9	%		7,171		26.5	%
Corporate & Eliminations		16,405		47.8	%		14,807		51.2	%		12,290		45.5	%
Total	$	34,296		100.0	%	$	28,911		100.0	%	$	27,037		100.0	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Share compensation expenses of $34.3 million in the year ended December 31, 2011 represents 1.9 percentage points of the general and administrative expense ratio.

        Validus Re.    Validus Re share compensation expenses for the year ended December 31, 2011 were $9.3 million compared to $7.2 million for the year ended December 31, 2010, an increase of $2.1 million or 29.6%. Share compensation expenses as a percent of net premiums earned for the year ended December 31, 2011 and 2010 were 0.9% and 0.7%, respectively.

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        Talbot.    Talbot share compensation expenses for the year ended December 31, 2011 were $8.6 million compared to $6.9 million for the year ended December 31, 2010 an increase of $1.7 million or 24.0%. Share compensation expenses as a percent of net premiums earned for the year ended December 31, 2011 and 2010 were 1.1% and 1.0%, respectively.

        Corporate & Eliminations.    Corporate share compensation expenses for the year ended December 31, 2011 were $16.4 million compared to $14.8 million for the year ended December 31, 2010, an increase of $1.6 million or 10.8%.

Selected Ratios

        The underwriting results of an insurance or reinsurance company are often measured by reference to its combined ratio, which is the sum of the loss ratio and the expense ratio. The loss ratio is calculated by dividing losses and loss expenses incurred (including estimates for incurred but not reported losses) by net premiums earned. The expense ratio is calculated by dividing acquisition costs combined with general and administrative expenses by net premiums earned. The following table presents the losses and loss expenses ratio, policy acquisition cost ratio, general and administrative expense ratio, expense ratio and combined ratio for the years ended December 31, 2011, 2010 and 2009.

	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009(a)
Consolidated
Losses and loss expenses ratio		69.1	%		56.1	%		36.1	%
Policy acquisition costs ratio		17.4	%		16.6	%		18.1	%
General and administrative expenses ratio(b)		12.9	%		13.5	%		14.7	%
Expense ratio		30.3	%		30.1	%		32.8	%
Combined ratio		99.4	%		86.2	%		68.9	%
Validus Re
Losses and loss expenses ratio		73.6	%		57.2	%		23.5	%
Policy acquisition costs ratio		15.5	%		15.3	%		16.0	%
General and administrative expenses ratio(b)		5.4	%		5.0	%		9.2	%
Expense ratio		20.9	%		20.3	%		25.2	%
Combined ratio		94.5	%		77.5	%		48.7	%
Talbot
Losses and loss expenses ratio		63.0	%		54.4	%		51.5	%
Policy acquisition costs ratio		20.4	%		20.3	%		21.4	%
General and administrative expenses ratio(b)		16.4	%		17.0	%		15.8	%
Expense ratio		36.8	%		37.3	%		37.2	%
Combined ratio		99.8	%		91.7	%		88.7	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

(b)

Includes general and administrative expenses and share compensation expenses.

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        General and administrative expense ratios for the year ended December 31, 2011 and 2010 were 12.9% and 13.5%, respectively. General and administrative expense ratio is the sum of general and administrative expenses and share compensation expense divided by net premiums earned.

	Year Ended December 31, 2011					Year Ended December 31, 2010					Year Ended December 31, 2009(a)
(Dollars in thousands)	Expenses		Expenses as % of Net Earned Premiums			Expenses		Expenses as % of Net Earned Premiums			Expenses		Expenses as % of Net Earned Premiums
General and administrative expenses	$	197,497		11.0	%	$	209,290		11.9	%	$	185,568		12.8	%
Share compensation expenses		34,296		1.9	%		28,911		1.6	%		27,037		1.9	%
Total	$	231,793		12.9	%	$	238,201		13.5	%	$	212,605		14.7	%

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

Underwriting Income

        Underwriting income for the year ended December 31, 2011 was $11.8 million compared to $242.4 million for the year ended December 31, 2010, a decrease of $230.7 million or 95.1%.

(Dollars in thousands)	Year ended December 31, 2011			% of Sub- total			Year ended December 31, 2010			% of Sub- total			Year ended December 31, 2009(a)			% of Sub- total
Validus Re	$	56,790			97.0	%	$	236,193			80.0	%	$	408,127			84.7	%
Talbot		1,758			3.0	%		59,212			20.0	%		73,519			15.3	%
Sub total		58,548			100.0	%		295,405			100.0	%		481,646			100.0	%
Corporate & Eliminations		(46,783	)					(52,968	)					(31,397	)
Total	$	11,765					$	242,437					$	450,249

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        The underwriting results of an insurance or reinsurance company are also often measured by reference to its underwriting income, which is a non-GAAP measure as previously defined. Underwriting income, as set out in the table below, is reconciled to net income (the most directly comparable GAAP financial measure) by the addition or subtraction of net investment income, other income, finance

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expenses, gain on bargain purchase, realized gain on repurchase of debentures, net realized and unrealized gains (losses) on investments, foreign exchange gains (losses) and transaction expenses,.

(Dollars in thousands)	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009(a)
Underwriting income	$	11,765		$	242,437		$	450,249
Net investment income		112,296			134,103			118,773
Other income		5,718			5,219			4,634
Finance expenses		(54,817	)		(55,870	)		(44,130	)
Gain on bargain purchase, net of expenses		—			—			287,099
Realized gain on repurchase of debentures		—			—			4,444
Net realized gains (losses) on investments		28,532			32,498			(11,543	)
Net unrealized (losses) gains on investments		(19,991	)		45,952			84,796
Foreign exchange (losses) gains		(22,124	)		1,351			(674	)
Transaction expenses		(17,433	)		—			—
Tax (expense) benefit		(824	)		(3,126	)		3,759
Net income	$	43,122		$	402,564		$	897,407

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Underwriting income indicates the performance of the Company's core underwriting function, excluding revenues and expenses such as the reconciling items in the table above. 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.

        The Company excludes the U.S. GAAP measures noted above, in particular net realized and unrealized gains and losses on investments, from its calculation of underwriting income because the amount of these gains and losses is heavily influenced by, and fluctuates in part, according to availability of investment market opportunities. The Company believes these amounts are largely independent of its underwriting business and including them distorts the analysis of trends in its operations. In addition to presenting net income determined in accordance with U.S. GAAP, the Company believes that showing underwriting income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the Company's results of operations in a manner similar to how management analyzes the Company's underlying business performance. The Company uses underwriting income as a primary measure of underwriting results in its analysis of historical financial information and when performing its budgeting and forecasting processes. Analysts, investors and rating agencies who follow the Company request this non-GAAP financial information on a regular basis. In addition, underwriting income is one of the factors considered by the compensation committee of our Board of Directors in determining total annual incentive compensation.

        Underwriting income should not be viewed as a substitute for U.S. GAAP net income as there are inherent material limitations associated with the use of underwriting income as compared to using net

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income, which is the most directly comparable U.S. GAAP financial measure. The most significant limitation is the ability of users of the financial information to make comparable assessments of underwriting income with other companies, particularly as underwriting income may be defined or calculated differently by other companies. Therefore, the Company provides more prominence in this filing to the use of the most comparable U.S. GAAP financial measure, net income, which includes the reconciling items in the table above. The Company compensates for these limitations by providing both clear and transparent disclosure of net income and reconciliation of underwriting income to net income.

Net Investment Income

        Net investment income for the year ended December 31, 2011 was $112.3 million compared to $134.1 million for the year ended December 31, 2010, a decrease of $21.8 million or 16.3%. Net investment income decreased due to a decrease in interest rates during 2011. Net investment income includes accretion of premium or discount on fixed maturities, interest on coupon-paying bonds, short-term investments and cash and cash equivalents, partially offset by investment management fees. The components of net investment income for the years ended December 31, 2011, 2010 and 2009 are as presented below.

(Dollars in thousands)	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009(a)
Fixed maturities and short-term investments	$	111,983		$	132,669		$	117,631
Cash and cash equivalents		7,285			8,180			3,374
Securities lending income		58			200			772
Total gross investment income		119,326			141,049			121,777
Investment expenses		(7,030	)		(6,946	)		(3,004	)
Net investment income	$	112,296		$	134,103		$	118,773

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        Annualized effective investment yield is based on the weighted average investments held calculated on a simple period average and excludes net unrealized gains (losses), realized gains (losses) on investments, foreign exchange gains (losses) on investments and the foreign exchange effect of insurance balances. The Company's annualized effective investment yield was 1.87% and 2.29% for the years ended December 31, 2011 and 2010, respectively and the average duration at December 31, 2011 was 1.63 years (December 31, 2010—2.27 years).

Other Income

        Other income for the year ended December 31, 2011 was $5.7 million compared to $5.2 million for the year ended December 31, 2010, an increase of $0.5 million or 9.6%.

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Finance Expenses

        Finance expenses for the year ended December 31, 2011 were $54.8 million compared to $55.9 million for the year ended December 31, 2010, a decrease of $1.1 million or 1.9%. Finance expenses also include the amortization of debt offering costs and discounts, and fees related to our credit facilities.

	Year Ended December 31, 2011
(Dollars in thousands)	2011		2010		2009(a)
2006 Junior Subordinated Deferrable Debentures	$	9,768	$	14,354		14,354
2007 Junior Subordinated Deferrable Debentures		12,115		12,114		12,732
2010 Senior Notes due 2040		22,388		20,770		—
Credit facilities		6,710		5,492		2,319
AlphaCat Re 2011 preferred dividend(b)		3,609		—		—
Talbot FAL Facility		227		333		542
Talbot third party FAL facility		—		2,807		14,183
Finance expenses	$	54,817	$	55,870		44,130

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

(b)

Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.

        The decrease in finance expenses on the 2006 Junior Subordinated Deferrable Debentures was due primarily to the basis of repayment changing from a fixed interest rate of 9.069% per annum through June 15, 2011 to a floating rate of three month LIBOR plus 355 basis points reset quarterly, resulting in lower interest payments.

Tax (Expense)

        Tax expense for the year ended December 31, 2011 was ($0.8) million compared to ($3.1) million for the year ended December 31, 2010, a change of $2.3 million or 73.6%. For the year ended December 31, 2011, the Talbot tax expense decreased primarily due to the decrease in profit commission earned and underwriting profit, offset by a reduction in the accrual of performance bonus for the year ended December 31, 2011.

Net Realized Gains on Investments

        Net realized gains on investments for the year ended December 31, 2011 were $28.5 million compared to gains of $32.5 million for the year ended December 31, 2010, a decrease of $4.0 million or 12.2%.

Net Unrealized (Losses) Gains on Investments

        Net unrealized losses on investments for the year ended December 31, 2011 were ($20.0) million compared to gains of $46.0 million for the year ended December 31, 2010, an unfavorable movement of $65.9 million or 143.5%. The net unrealized losses for the year ended December 31, 2011 were primarily a result of losses experienced in the corporate bond and bank loan portfolios.

        Net unrealized (losses) gains on investments are recorded as a component of net income. The Company has adopted all authoritative guidance on U.S. GAAP fair value measurements in effect as of the balance sheet date. Consistent with these standards, certain market conditions allow for fair value measurements that incorporate unobservable inputs where active market transaction based measurements are unavailable. Certain non-Agency RMBS securities were previously identified as trading in inactive markets. During the three months ended September 30, 2010, management, with assistance from external

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investment advisors, determined that market activity had increased substantially for the identified non-Agency RMBS securities. Further details are provided in the Investments section below.

Foreign Exchange (Losses) Gains

        Foreign exchange losses for the year ended December 31, 2011 were ($22.1) million compared to gains of $1.4 million for the year ended December 31, 2010, an unfavorable movement of $23.5 million or 1737.6%. The Euro to U.S. dollar exchange rates were 1.33 and 1.30 at December 31, 2010 and December 31, 2011, respectively. The British pound sterling to U.S. dollar exchange rates were 1.55 and 1.55 at December 31, 2010 and December 31, 2011, respectively. During the year ended December 31, 2011, the Euro depreciated by 2.3%. For the year ended December 31, 2011, Validus Re recognized foreign exchange losses of ($20.0) million and Talbot recognized foreign exchange losses of ($2.2) million.

        For the year ended December 31, 2011, the Validus Re segment foreign exchange losses were ($20.0) million compared to losses of ($1.2) million for the year ended December 31, 2010, an unfavorable movement of ($18.8) million or 1586.7%. The unfavorable movement in Validus Re foreign exchange losses was due primarily to a $5.3 million loss incurred as a result of the Company having liabilities in both New Zealand dollars and Japanese Yen during a period when both of these currencies strengthened against the U.S. dollar and a $5.3 million loss on a forward exchange contract to hedge currency movements in Chilean peso.

        For the year ended December 31, 2011, the Talbot segment foreign exchange losses were ($2.2) million compared to gains of $2.1 million for the year ended December 31, 2010, an unfavorable movement of $4.3 million or 204.6%. The foreign exchange loss was due primarily to $2.2 million of losses incurred as a result of the revaluation of assets held in Euros and other currencies. Certain premiums receivable and liabilities for losses incurred in currencies other than the U.S. dollar are exposed to the risk of changes in value resulting from fluctuations in foreign exchange rates and may affect financial results in the future.

        At December 31, 2011, Talbot's balance sheet includes net unearned premiums and deferred acquisition costs denominated in foreign currencies of approximately $94.0 million and $19.2 million, respectively. These balances consisted of British pound sterling and Canadian dollars of $66.4 million and $8.4m, respectively. Net unearned premiums and deferred acquisition costs are classified as non-monetary items and are translated at historic exchange rates. All of Talbot's other balance sheet items are classified as monetary items and are translated at period end exchange rates. During the three months ended December 31, 2011, this translation process resulted in foreign exchange gains that will reverse in future periods as net unearned premiums and deferred acquisition costs are earned together with (losses) arising from the reversal of losses incurred in previous periods. Additional foreign exchange (losses) gains may be incurred on the translation of net unearned premiums and deferred acquisition costs arising from insurance and reinsurance premiums written in future periods.

Net Income Attributable to Noncontrolling Interest

        Net income attributable to noncontrolling interest for the year ended December 31, 2011 was $21.8 million compared to $0.0 million for the year ended December 31, 2010, an increase of $21.8 million or 100.0%. The net income attributable to noncontrolling interest relates to the AlphaCat Re 2011 operations.

Transaction Expenses

        During the year ended December 31, 2011, the Company incurred $17.4 million in transaction expenses related to its proposed acquisition of Transatlantic. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

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Year Ended December 31, 2010 compared to Year Ended December 31, 2009

        Net income for the year ended December 31, 2010 was $402.6 million compared to net income of $897.4 million for the year ended December 31, 2009, a decrease of $494.8 million. The primary factors driving the decrease in net income were:

•

Decrease in the gain on bargain purchase, net of expenses of $287.1 million relating to the IPC Acquisition;

•

Decrease in underwriting income of $207.8 million due primarily to increased notable loss events. For the year ended December 31, 2010, the Company incurred a $463.8 million increase in losses and loss expenses over the year ended December 31, 2009. This was partially offset by a $311.5 million increase in net premiums earned primarily relating to the IPC Acquisition;

•

Decrease in unrealized gains on investments of $38.8 million; and

•

Increase in finance expenses of $11.7 million.

        The items above were partially offset by the following factor:

•

Increase in net investment income and net realized gains on investments of $15.3 million and $44.0 million, respectively.

        The change in net income for the year ended December 31, 2010 of $494.8 million is described in the following table:

	Year Ended December 31, 2010 (Decrease) increase over the Year Ended December 31, 2009(a)
(Dollars in thousands)	Validus Re			Talbot			Corporate and other reconciling items			Total
Notable losses—(increase) decrease in net losses and loss expenses(b)	$	(402,320	)	$	(101,631	)	$	—		$	(503,951	)
Less: Notable losses—increase (decrease) net reinstatement premiums(b)		28,722			(9,037	)		—			19,685
Other underwriting income (loss)		201,664			96,361			(21,571	)		276,454
Underwriting income(c)		(171,934	)		(14,307	)		(21,571	)		(207,812	)
Net investment income		18,995			(827	)		(2,838	)		15,330
Other income		(938	)		7,577			(6,054	)		585
Finance expenses		(3,697	)		11,585			(19,628	)		(11,740	)
		(157,574	)		4,028			(50,091	)		(203,637	)
Taxes		(12	)		(6,652	)		(221	)		(6,885	)
		(157,586	)		(2,624	)		(50,312	)		(210,522	)
Gain on bargain purchase, net of expenses		—			—			(287,099	)		(287,099	)
Realized gain on repurchase of debentures		—			—			(4,444	)		(4,444	)
Net realized gains on investments		29,065			14,976			—			44,041
Net unrealized (losses) gains on investments		(29,933	)		(8,911	)		—			(38,844	)
Foreign exchange gains (losses)		221			1,415			389			2,025
Net income	$	(158,233	)	$	4,856		$	(341,466	)	$	(494,843	)

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition. No pre-acquisition results of operations for IPC are presented in the analysis above.

(b)

Notable losses for the year ended December 31, 2010 include: the Chilean earthquake, Melbourne hailstorm, windstorm Xynthia, Deepwater Horizon, Aban Pearl, Bangkok riots, Perth hailstorm, New Zealand earthquake, Oklahoma windstorm, two Political risk losses, Hurricane Karl, Queensland

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floods, a Political violence loss, a Satellite failure and a Financial institutions loss. Excludes reserve for potential development on 2010 notable loss events. Notable losses for the year ended December 31, 2009 include: Windstorm Klaus, a Commercial flight loss and the Dublin floods.

(c)

Non-GAAP Financial Measures. In presenting the Company's results, management has included and discussed underwriting income (loss) that is 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 this measure to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled "Underwriting Income."

Other Non-GAAP Financial Measures

        In presenting the Company's results, management has included and discussed certain schedules containing net operating income, underwriting income (loss), 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. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The calculation of annualized return on average equity is discussed in the section above entitled "Financial Measures." A reconciliation of underwriting income to net income, the most comparable U.S. GAAP financial measure, is presented above in the section entitled "Underwriting Income." A reconciliation of diluted book value per share to book value per share, the most comparable U.S. GAAP financial measure, is presented below. Operating income is calculated based on net income (loss) 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. A reconciliation of operating income to net income, the most comparable U.S. GAAP financial measure, is embedded in the table presenting results of operations for the year ended December 31, 2011 and 2010 in the section above entitled "Results of Operations." 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.

        The following tables present reconciliations of diluted book value per share to book value per share, the most comparable U.S. GAAP financial measure, at December 31, 2011 and December 31, 2010.

	As at December 31, 2011
	Equity Amount		Shares		Exercise Price		Book Value Per Share
Book value per common share
Total shareholders' equity	$	3,448,425		99,471,080			$	34.67
Diluted book value per common share
Total shareholders' equity		3,448,425		99,471,080
Assumed exercise of outstanding warrants		121,445		6,916,678	$	17.56
Assumed exercise of outstanding stock options		45,530		2,263,012	$	20.12
Unvested restricted shares		—		3,340,728
Diluted book value per common share	$	3,615,400		111,991,498			$	32.28

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	As at December 31, 2010
	Equity Amount		Shares		Exercise Price		Book Value Per Share
Book value per common share
Total shareholders' equity	$	3,504,831		98,001,226			$	35.76
Diluted book value per common share
Total shareholders' equity		3,504,831		98,001,226
Assumed exercise of outstanding warrants		139,272		7,934,860	$	17.55
Assumed exercise of outstanding stock options		54,997		2,723,684	$	20.19
Unvested restricted shares		—		3,496,096
Diluted book value per common share	$	3,699,100		112,155,866			$	32.98

Financial Condition and Liquidity

        Validus Holdings, Ltd. is a holding company and conducts no operations of its own. The Company relies primarily on cash dividends and other permitted payments from Validus Re and Talbot to pay finance expenses and other holding company expenses. There are restrictions on the payment of dividends from Validus Re and Talbot to the Company. Please refer to Part II, Item 5, "Market for Registrants, Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities" for further discussion of the Company's dividend policy. We believe the dividend/distribution capacity of the Company's subsidiaries will provide the Company with sufficient liquidity for the foreseeable future.

        Three main sources provide cash flows for the Company: operating activities, investing activities and financing activities. Cash flow from operating activities is derived primarily from the net receipt of premiums less claims and expenses related to underwriting activities. Cash flow from investing activities is derived primarily from the receipt of net proceeds on the Company's investment portfolio. Cash flow from financing activities is derived primarily from the issuance of common shares and debentures payable. The movement in net cash provided by operating activities, net cash provided by (used in) investing activities, net cash (used in) provided by financing activities and the effect of foreign currency rate changes on cash and cash equivalents for the year ended December 31, 2011, 2010 and 2009 is described in the following table.

	Year Ended December 31,
(Dollars in thousands)	2011			2010			2009(a)
Net cash provided by operating activities	$	545,140		$	630,001		$	555,116
Net cash (used in) provided by investing activities		(392,834	)		378,426			(442,633	)
Net cash provided by (used in) financing activities		68,681			(774,842	)		(187,067	)
Effect of foreign currency rate changes on cash and cash equivalents		(8,883	)		(430	)		12,321
Net increase (decrease) in cash	$	212,104		$	233,155		$	(62,263	)

(a)

The results of operations for IPC are consolidated only from the September 2009 date of acquisition.

        During the year ended December 31, 2011, net cash provided by operating activities of $545.1 million was driven primarily by a significant portion of the 2011 incurred losses which have yet to be paid. Net cash used in investing activities of $392.8 million was driven primarily by a net purchase of investments of

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$703.7 million and $67.8 million of cash redeemed in deconsolidation of AlphaCat Re 2011, partially offset by $353.0 million in proceeds on maturities of investments. Net cash provided by financing activities of $68.7 million was driven primarily by the net cash received for the third party investment in non-controlling interest of $192.1 million, partially offset by $107.7 million of quarterly dividends.

        During the year ended December 31, 2010, net cash provided by operating activities of $630.0 million was driven primarily by increased levels of underwriting net premiums written arising from the impact of the IPC Acquisition in late 2009. A significant portion of the 2010 incurred losses had yet to be paid as of December 31, 2010, which resulted in cash provided from operating activities for the period being higher than net income for the period. Net cash provided by investing activities of $378.4 million was driven primarily by the net sales of short term securities of $208.3 million and a decrease in securities lending collateral of $67.0 million. The decrease in securities lending collateral was due to the winding down of the securities lending program beginning in the third quarter of 2010. Net cash used in financing activities of $774.8 million was driven primarily by the purchase of $856.9 million of common shares under the Company's share repurchase program and the payment of $105.7 million in quarterly dividends, partially offset by the issuance $246.8 million of 8.875% Senior Notes due 2040.

        We anticipate that cash flows from operations will continue to be sufficient to cover cash outflows under our contractual commitments as well as most loss scenarios through the foreseeable future. Refer to the "Capital Resources" section below for further information on our anticipated obligations.

        As at December 31, 2011, the Company's portfolio was composed of fixed income investments, short-term and other investments amounting to $5,191.1 million or 86.2% of total cash and investments. Please refer to Note 7 (c) to the Consolidated Financial Statements (Part II, Item 8) for further details of investments pledged as collateral. Details of the Company's debt and financing arrangements at December 31, 2011 are provided below.

(Dollars in thousands)	Maturity Date / Term		In Use/ Outstanding
2006 Junior Subordinated Deferrable Debentures		June 15, 2036	$	150,000
2007 Junior Subordinated Deferrable Debentures		June 15, 2037		139,800
2010 Senior Notes due 2040		January 26, 2040		250,000
$340,000 syndicated unsecured letter of credit facility		March 12, 2013		—
$60,000 bilateral unsecured letter of credit facility		March 12, 2013		—
$500,000 secured letter of credit facility		March 12, 2012		333,179
Talbot FAL facility		December 31, 2015		25,000
IPC Bi-Lateral Facility		December 31, 2012		57,146
Total			$	955,125

Capital Resources

        Shareholders' equity at December 31, 2011 was $3,448.4 million.

        On February 9, 2012, the Company announced a quarterly cash dividend of $0.25 per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable, payable on March 30, 2012 to holders of record on March 15, 2012. The timing and amount of any future cash dividends, however, will be at the discretion of the Board and will depend upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory, rating agency and contractual constraints or restrictions and any other factors that the Board deems relevant.

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        On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, a special purpose "sidecar" reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. At the time of formation, Validus Re had an equity interest in AlphaCat Re 2011 and as Validus Re held a majority of AlphaCat Re 2011's outstanding voting rights, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company.

        On December 23, 2011, the Company completed a secondary offering of common shares of AlphaCat Re 2011 to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors. As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re 2011; however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%. As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 have been derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 is therefore treated as an equity method investment as at December 31, 2011. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 is recorded in the Consolidated Statements of Operations and Comprehensive Income as net income attributable to noncontrolling interest.

        On August 5, 2011, the Company filed a shelf registration statement on Form S-3 (No. 333-176116) with the U.S Securities Exchange Committee in which we may offer from time to time common shares, preference shares, depository shares representing common shares or preference shares, senior or subordinated debt securities, warrants to purchase common shares, preference shares and debt securities, share purchase contracts, share purchase units and units which may consist of any combination of the securities listed above. In addition, the shelf registration statement will provide for secondary sales of common shares sold by the Company's shareholders. The registration statement is intended to provide the Company with additional flexibility to access capital markets for general corporate purposes, subject to market conditions and the Company's capital needs.

        The timing and amount of any future cash dividends, however, will be at the discretion of the Board and will depend upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory, rating agency and contractual constraints or restrictions and any other factors that the Board deems relevant.

        The Company may from time to time repurchase its securities, including common shares, Junior Subordinated Deferrable Debentures and Senior Notes. In November 2009, the Board of Directors of the Company authorized an initial $400.0 million share repurchase program. On February 17, 2010, the Board of Directors of the Company authorized the Company to return up to $750.0 million to shareholders. This amount was in addition to, and in excess of, the $135.5 million of common shares purchased by the Company through February 17, 2010 under its previously authorized $400.0 million share repurchase program. On May 6, 2010, the Board of Directors authorized a self tender offer pursuant to which the Company has repurchased $300.0 million in common shares. On November 4, 2010, the Board of Directors authorized a self tender offer pursuant to which the Company has repurchased $238.4 million in common shares. In addition, the Board of Directors authorized separate repurchase agreements with funds affiliated with or managed by each of Aquiline Capital Partners LLC, New Mountain Capital LLC, and Vestar Capital Partners pursuant to which the Company has repurchased $61.6 million in common shares. On December 20, 2010, the Board of Directors authorized the Company to return up to $400.0 million to shareholders. This amount is in addition to the $929.2 million of common shares purchased by the Company through December 23, 2010 under its previously authorized share repurchase program.

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        The Company expects the purchases under its share repurchase program 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 of Directors at any time.

        The Company repurchased 35.0 million shares at a cost of $947.2 million under the share repurchase programs for the period November 4, 2009 through February 15, 2012.

Contractual Obligations and Commitments

        The Company's contractual obligations and commitments as at December 31, 2011 are set out below:

	Payment Due by Period
(Dollars in thousands)	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
Reserve for losses and loss expenses(a)	$	2,631,143	$	1,316,866	$	872,805	$	336,035		105,437
2010 Senior Notes due 2040—principal(b)		250,000		—		—		—		250,000
2010 Senior Notes due 2040—interest(b)		n/a		22,188		44,375		44,375		22,188 p.a.
2006 Junior Subordinated Deferrable Debentures—principal(c)		150,000		—		—		—		150,000
2006 Junior Subordinated Deferrable Debentures—interest(c)		n/a		6,144		12,289		12,289		6,144 p.a.
2007 Junior Subordinated Deferrable Debentures—principal(d)		200,000								200,000
2007 Junior Subordinated Deferrable Debentures—interest(d)		n/a		11,561		13,985		1,398		6, 992 pa
Operating lease obligations		68,969		4,874		14,138		12,922		37,035
Aquiline Financial Services Fund II L.P.(e)		46,744		46,744		—		—		—

(a)

The reserve for losses and loss expenses represents an estimate, including actuarial and statistical projections at a given point in time of an insurer's or reinsurer's expectations of the ultimate settlement and administration costs of claims incurred. As a result, it is likely that the ultimate liability will differ from such estimates, perhaps significantly. Such estimates are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends in loss severity and frequency and other variable factors such as inflation, litigation and tort reform. This uncertainty is heightened by the short time in which the Company has operated, thereby providing limited claims loss emergence patterns specifically for the Company. The lack of historical information for the Company has necessitated the use of industry loss emergence patterns in deriving IBNR. Further, expected losses and loss ratios are typically developed using vendor and proprietary computer models and these expected loss ratios are a material component in the calculation deriving IBNR. Actual loss ratios will deviate from expected loss ratios and ultimate loss ratios will be greater or less than expected loss ratios. During the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, ultimate liability will exceed or be less than the revised estimates. The actual payment of the reserve for losses and loss expenses will differ from estimated payouts.

(b)

The 2010 Senior Notes mature on January 26, 2040, and are redeemable at the Company's option in whole or any time or in part from time to time at a make-whole redemption price. The Company may redeem the notes in whole, but not in part, at any time upon the occurrence of certain tax events as described in the notes prospectus supplement. The 2010 Senior Notes bear interest at the rate of 8.875% per annum from January 26, 2010 to maturity or early redemption.

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(c)

The 2006 Junior Subordinated Deferrable Debentures mature on mature on June 15, 2036, are redeemable at the Company's option at par beginning June 15, 2011, and require quarterly interest payments by the Company to the holders of the 2006 Junior Subordinated Deferrable Debentures. Interest is payable at 9.069% per annum through June 15, 2011, and thereafter at a floating rate of three-month LIBOR plus 355 basis points, reset quarterly. We have estimated the interest due in 2012 and future years using the December 31, 2011 LIBOR rate.

(d)

The 2007 Junior Subordinated Deferrable Debentures mature on mature on June 15, 2037, are redeemable at the Company's option at par beginning June 15, 2012, and require quarterly interest payments by the Company to the holders of the 2007 Junior Subordinated Deferrable Debentures. Interest will be payable at 8.480% per annum through June 15, 2012, and thereafter at a floating rate of three-month LIBOR plus 295 basis points, reset quarterly We have estimated the interest due subsequent to June 15, 2012 and future years using the December 31, 2011 LIBOR rate.

(e)

Please refer to Note 19 (f) to the Consolidated Financial Statements (Part II, Item 8) for further details describing the Aquiline commitment. While the commitment expires on July 2, 2015, it does not have a defined contractual commitment date and therefore it is included in the less than one year category.

        The following table details the capital resources of the Company's more significant subsidiaries on an unconsolidated basis:

(Dollars in thousands)	Capital at December 31, 2011
Validus Reinsurance, Ltd. (consolidated), excluding Validus Re Americas, Ltd.	$	3,277,570
Validus Re Americas, Ltd. (formerly IPCRe, Ltd)		130,912
Total Validus Reinsurance, Ltd. (consolidated)		3,408,482
Talbot Holdings, Ltd		688,572
Other subsidiaries, net		4,335
Other, net		(116,182	)
Total consolidated capitalization		3,985,207
Senior notes payable		(246,982	)
Debentures payable		(289,800	)
Total shareholders' equity	$	3,448,425

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Ratings

        The following table summarizes the financial strength ratings of the Company and its principal reinsurance and insurance subsidiaries from internationally recognized rating agencies as of February 17, 2012:

	A.M. Best(a)	S&P(b)	Moody's(c)	Fitch(d)
Validus Holdings, Ltd.
Issuer credit rating	bbb	BBB	Baa2	BBB+
Senior debt	bbb	BBB	Baa2	BBB
Subordinated debt	bbb-	BBB-	Baa3	BB+
Preferred stock	bb+	BB+	Ba1	—
Outlook on ratings	Stable	Stable	Stable	Positive
Validus Reinsurance, Ltd.
Financial strength rating	A	A-	A3	A-
Issuer credit rating	a	—	—	—
Outlook on ratings	Stable	Stable	Stable	Positive
Validus Re Americas, Ltd. (formerly IPCRe, Ltd.)
Financial strength rating	A-	—	—	—
Issuer credit rating	a-	—	—	—
Outlook on rating	Stable	—	—	—
Validus Re Europe Ltd.
Financial strength rating	A-	—	—	—
Issuer credit rating	a-	—	—	—
Outlook on rating	Stable	—	—	—
Talbot
Financial strength rating applicable to all Lloyd's syndicates	A	A+	—	A+

(a)

The A.M. Best ratings were most recently upgraded on February 6, 2012

(b)

The S&P ratings were upgraded to the levels noted above on August 24, 2010

(c)

All Moody's ratings were most recently affirmed on December 29, 2011

(d)

All Fitch ratings were most recently affirmed on November 7, 2011

Recent accounting pronouncements

        Please refer to Note 4 to the Consolidated Financial Statements (Part II, Item 8) for further discussion of relevant recent accounting pronouncements.

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Debt and Financing Arrangements

        The following table details the Company's borrowings and credit facilities as at December 31, 2011.

(Dollars in thousands)	Commitments(a)		Outstanding
2006 Junior Subordinated Deferrable Debentures	$	150,000	$	150,000
2007 Junior Subordinated Deferrable Debentures		200,000		139,800
2010 Senior Notes due 2040		250,000		250,000
$340,000 syndicated unsecured letter of credit facility		340,000		—
$60,000 bilateral unsecured letter of credit facility		60,000		—
$500,000 secured letter of credit facility		500,000		333,179
Talbot FAL Facility(b)		25,000		25,000
IPC Bi-Lateral Facility		80,000		57,146
Total	$	1,605,000	$	955,125

(a)

Indicates utilization of commitment amount, not drawn borrowings.

(b)

Talbot operates in Lloyd's through a corporate member, Talbot 2002 Underwriting Capital Ltd ("T02"), which is the sole participant in Syndicate 1183. Lloyd's sets T02's required capital annually based on syndicate 1183's business plan, rating environment, reserving environment together with input arising from Lloyd's discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd's ("FAL"), comprises: cash, investments and undrawn letters of credit provided by various banks.

        Please refer to Note 17 to the Consolidated Financial Statements (Part II, Item 8) for further discussion of the Company's debt and financing arrangements.

Regulation

        Validus Re, Validus Re Americas, Ltd., AlphaCat Re 2011, Ltd. and Talbot Insurance (Bermuda) Ltd. ("TIBL") (the "Bermuda registered companies") are registered under the Insurance Act 1978 of Bermuda ("the Act"). Under the Act, the Bermuda registered companies are required annually to prepare and file Statutory Financial Statements and a Statutory Financial Return. The Act also requires the Bermuda registered companies to meet minimum solvency and liquidity requirements. For the year ended December 31, 2011, the Bermuda registered companies satisfied these requirements. Please refer to Note 23 to the Consolidated Financial Statements (Part II, Item 8) for further discussion of statutory and regulatory requirements.

        Bermuda law limits the maximum amount of annual dividends or distributions payable by Bermuda registered companies to the Company and in certain cases requires the prior notification to, or the approval of, the Bermuda Monetary Authority. Subject to such laws, the directors of the Bermuda registered companies have the unilateral authority to declare or not declare dividends to the Company. There is no assurance that dividends will be declared or paid in the future.

        Talbot's underwriting activities are regulated by the Financial Services Authority ("FSA"). The FSA has substantial powers of intervention in relation to the Lloyd's managing agents which it regulates including the power to remove their authorization to manage Lloyd's syndicates. In addition, Talbot's managing agent operates under the Lloyd's "franchise." Lloyd's approves annually Syndicate 1183's business plan and any subsequent material changes, and the amount of capital required to support that plan. Lloyd's may require changes to any business plan presented to it or additional capital to be provided to support the underwriting (known as Funds at Lloyd's).

        The UK government has set out proposals to replace the current system of financial regulation, which it believes has weaknesses, with a new regulatory framework. The key weakness it identified was that no single institution has the responsibility, authority and tools to monitor the financial system as a whole, and respond accordingly. That power will be given to the Bank of England. The U.K. government intends to create a new

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Financial Policy Committee (FPC) within the Bank, which will look at the wider economic and financial risks to the stability of the system.

        In addition, the FSA will cease to exist in its current form, and the U.K. government will create two new focused financial regulators:

•

A new Financial Conduct Authority (FCA) will have a strong mandate for promoting confidence and transparency in financial services and to give greater protection for consumers of financial services.

        The Financial Services Bill was introduced to Parliament on January 26, 2012. Subject to the parliamentary timetable the U.K. government's aim is for the bill to gain Royal Assent by the end of 2012, and for the new system to be operational in early 2013.

        Lloyd's is keeping abreast of these developments and lobbying on behalf of the Market when necessary. It is likely that Lloyd's itself and managing agency businesses will come under the day-to-day supervision of the PRA in due course although Talbot will also have to interact with the FCA.

Off-Balance Sheet Arrangements

        The Company is not party to any off-balance sheet transaction, agreement or other contractual arrangement as defined by Item 303(a) (4) of Regulation S-K to which an entity unconsolidated with the Company is a party that management believes is reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that the Company believes is material to investors.

Investments

        A significant portion of (re)insurance contracts written by the Company provide short-tail reinsurance coverage for losses resulting mainly from natural and man-made catastrophes, which could result in a significant amount of losses on short notice. Accordingly, the Company's investment portfolio is structured to provide significant liquidity and preserve capital, which means the investment portfolio contains a significant amount of relatively short-term fixed maturity investments, such as U.S. government securities, U.S. government-sponsored enterprises securities, corporate debt securities and mortgage-backed and asset-backed securities.

        Substantially all of the fixed maturity investments held at December 31, 2011 were publicly traded. At December 31, 2011, the average duration of the Company's fixed maturity portfolio was 1.63 years (December 31, 2010: 2.27 years) and the average rating of the portfolio was AA- (December 31, 2010: AA+). At December 31, 2011, the total fixed maturity portfolio was $4,894.1 million (December 31, 2010: $4,823.9 million), of which $882.9 million (December 31, 2010: $2,946.5 million) were rated AAA.

        On September 4, 2009, as part of the IPC Acquisition, the Company assumed IPC's investment portfolio containing $1,820.9 million of corporate bonds, $112.9 million of agency residential mortgage-backed securities, $234.7 million of equity mutual funds, $114.8 million fund of hedge funds and $11.0 million of equity mutual funds contained within a deferred compensation trust. On September 9, 2009, the Company realized a gain of $4.5 million on the disposition of $234.7 million of equity mutual funds. A redemption request for the fund of hedge funds has been submitted for value as at October 31, 2009. The redemption amounted to $89.4 million and the Company has received full proceeds. As of December 31, 2011, the Company held a fund of hedge fund side pocket of $5.6 million. While a redemption request has been submitted, the timing of receipt of proceeds on the side pocket is indeterminable.

        With the exception of the bank loan portfolio, the Company's investment guidelines require that investments be rated BBB- or higher at the time of purchase. The Company reports the ratings of its investment portfolio securities at the lower of Moody's or Standard & Poor's rating for each investment security and, as a result, the Company's investment portfolio now has $24.7 million of non-agency mortgage backed securities rated less than investment grade. The other components of less than investment grade securities held by the Company at December 31, 2011 were $3.4 million of Non-U.S.

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Government and Government Agency bonds, $30.0 million of catastrophe bonds, $448.9 million of bank loans and $2.4 million of corporate bonds.

        Cash and cash equivalents and investments held by Talbot of $1,686.6 million at December 31, 2011 were held in trust for the benefit of cedants and policyholders and to facilitate the accreditation as an alien insurer/reinsurer by certain regulators (December 31, 2010: $1,489.2 million). Total cash and cash equivalents and investments in Talbot were $1,743.0 million at December 31, 2011 (December 31, 2010: $1,592.1 million).

        As of December 31, 2011, the Company had approximately $1.0 million of asset-backed securities with sub-prime collateral (December 31, 2010: $1.6 million) and $4.4 million of Alt-A RMBS (December 31, 2010: $9.9 million).

Goodwill and Intangible Assets

        The Company has performed an impairment analysis of its carried goodwill and indefinite lived intangible assets as required by U.S. GAAP. The impairment analysis of goodwill was performed in line with Accounting Standards Update No. 2011-08, "Testing Goodwill for Impairment" ("ASU 2011-08") which was released in September 2011. The assessment included a qualitative analysis in determining whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Reporting units are consistent with the segmental basis. Based on this analysis, management has concluded that an impairment valuation is not required against the carried goodwill.

        The impairment analysis for intangibles was performed which included an evaluation of the fair value of Talbot relative to its book value on the following basis:

1)

Gross premium written for 2010 and 2011;



2)

Internal demand for and valuation of syndicate capacity, and utilization of Lloyd's licenses; and



3)

External demand for syndicate capacity.

        Based on this analysis, management has concluded that an impairment valuation is not required against the carried indefinite lived intangible assets.

Cash Flows

        During the year ended December 31, 2011 and 2010, the Company generated net cash from operating activities of $545.1 million and $630.0 million, respectively. Cash flows from operations generally represent premiums collected, investment earnings realized and investment gains realized less losses and loss expenses paid and underwriting and other expenses paid. Cash flows from operations may differ substantially from net income.

        As of December 31, 2011 and December 31, 2010, the Company had cash and cash equivalents of $832.8 million and $620.7 million, respectively.

        The Company has written certain (re)insurance business that has loss experience generally characterized as having low frequency and high severity. This results in volatility in both results and operational cash flows. The potential for large claims or a series of claims under one or more reinsurance contracts means that substantial and unpredictable payments may be required within relatively short periods of time. As a result, cash flows from operating activities may fluctuate, perhaps significantly, between individual quarters and years. Management believes the Company's unused credit facility amounts and highly liquid investment portfolio are sufficient to support any potential operating cash flow deficiencies. Please refer to the table detailing the Company's borrowings and credit facilities as at December 31, 2011, presented above.

        In addition to relying on premiums received and investment income from the investment portfolio, the Company intends to meet these cash flow demands by carrying a substantial amount of short and medium term investments that would mature, or possibly be sold, prior to the settlement of expected liabilities. The Company cannot provide assurance, however, that it will successfully match the structure of its investments with its liabilities due to uncertainty related to the timing and severity of loss events.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        The Private Securities Litigation Reform Act of 1995 ("PSLRA") provides a "safe harbor" for forward-looking statements. Any prospectus, prospectus supplement, the Company's Annual Report to shareholders, any proxy statement, any other Form 10-K, Form 10-Q or Form 8-K of the Company or any other written or oral statements made by or on behalf of the Company may include forward-looking statements that reflect the Company's current views with respect to future events and financial performance. Such statements include forward-looking statements both with respect to the Company in general, and to the insurance and reinsurance sectors in particular. 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 for purposes of the PSLRA or otherwise. 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 statement.

        We believe that these factors include, but are not limited to, the following:

•

unpredictability and severity of catastrophic events;

•

our ability to obtain and maintain ratings, which may affect by our ability to raise additional equity or debt financings, as well as other factors described herein;

•

adequacy of the Company's risk management and loss limitation methods;

•

cyclicality of demand and pricing in the insurance and reinsurance markets;

•

the Company's ability to implement its business strategy during "soft" as well as "hard" markets;

•

adequacy of the Company's loss reserves;

•

continued availability of capital and financing;

•

the Company's ability to identify, hire and retain, on a timely and unimpeded basis and on anticipated economic and other terms, experienced and capable senior management, as well as underwriters, claims professionals and support staff;

•

acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and (re)insureds;

•

competition, including increased competition, on the basis of pricing, capacity, coverage terms or other factors;

•

potential loss of business from one or more major insurance or reinsurance brokers;

•

the Company's 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;

•

general economic and market conditions (including inflation, volatility in the credit and capital markets, interest rates and foreign currency exchange rates) and conditions specific to the insurance and reinsurance markets in which we operate;

•

the integration of businesses we may acquire or new business ventures, including overseas offices, we may start;

•

accuracy of those estimates and judgments used in the preparation of our financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, taxes, contingencies, litigation and

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any determination to use the deposit method of accounting, which, for a relatively new insurance and reinsurance company like our company, are even more difficult to make than those made in a mature company because of limited historical information;

•

the effect on the Company's investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and other factors;

•

acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events;

•

availability and cost of reinsurance and retrocession coverage;

•

the failure of reinsurers, retrocessionaires, producers or others to meet their obligations to us;

•

the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us;

•

changes in domestic or foreign laws or regulations, or their interpretations;

•

changes in accounting principles or the application of such principles by regulators;

•

statutory or regulatory or rating agency developments, including as to tax policy and reinsurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers; and

•

the other factors set forth herein under Part I Item 1A "Risk Factors" and under Part II Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the other sections of this Annual Report on Form 10-K for the year ended December 31, 2011, as well as the risk and other factors set forth in the Company's other filings with the SEC, as well as management's response to any of the aforementioned factors.

        In addition, other general factors could affect our results, including: (a) developments in the world's financial and capital markets and our access to such markets; (b) changes in regulations or tax laws applicable to us, including, without limitation, any such changes resulting from the recent investigations relating to the insurance industry and any attendant litigation; and (c) the effects of business disruption or economic contraction due to terrorism or other hostilities.

        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. Any forward-looking statements made in this report 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.

ITEM 7A.    Quantitative And Qualitative Disclosures About Market Risk

        We are principally exposed to five types of market risk:

•

interest rate risk;

•

foreign currency risk;

•

credit risk;

•

liquidity risk; and

•

inflation risk.

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        Interest Rate Risk:    The Company's fixed maturity portfolio is exposed to interest rate risk. Fluctuations in interest rates have a direct impact on the market valuation of these investments. As interest rates rise, the market value of the Company's fixed maturity portfolio falls and the Company has the risk that cash outflows will have to be funded by selling assets, which will be trading at depreciated values. As interest rates decline, the market value of the Company's fixed income portfolio increases and the Company has reinvestment risk, as funds reinvested will earn less than is necessary to match anticipated liabilities. We manage interest rate risk by selecting investments with characteristics such as duration, yield, currency and liquidity tailored to the anticipated cash outflow characteristics of the insurance and reinsurance liabilities the Company assumes.

        As at December 31, 2011, the impact on the Company's fixed maturity and short-term investments from an immediate 100 basis point increase in market interest rates (based on U.S. treasury yield) would have resulted in an estimated decrease in market value of 1.6%, or approximately $84.0 million. As at December 31, 2011, the impact on the Company's fixed maturity portfolio from an immediate 100 basis point decrease in market interest rates would have resulted in an estimated increase in market value of 0.7% or approximately $34.8 million.

        As at December 31, 2010, the impact on the Company's fixed maturity and short-term investments from an immediate 100 basis point increase in market interest rates (based on U.S. treasury yield) would have resulted in an estimated decrease in market value of 2.3%, or approximately $118.7 million. As at December 31, 2010, the impact on the Company's fixed maturity portfolio from an immediate 100 basis point decrease in market interest rates would have resulted in an estimated increase in market value of 2.0% or approximately $103.8 million.

        As at December 31, 2011, the Company held $829.5 million (December 31, 2010: $644.4 million), or 16.9% (December 31, 2010: 13.4%), of the Company's fixed maturity portfolio in asset-backed and mortgage-backed securities. These assets are exposed to prepayment risk, which occurs when holders of underlying loans increase the frequency with which they prepay the outstanding principal before the maturity date and refinance at a lower interest rate cost. The adverse impact of prepayment is more evident in a declining interest rate environment. As a result, the Company will be exposed to reinvestment risk, as cash flows received by the Company will be accelerated and will be reinvested at the prevailing interest rates.

        Foreign Currency Risk:    Certain of the Company's reinsurance contracts provide that ultimate losses may be payable in foreign currencies depending on the country of original loss. Foreign currency exchange rate risk exists to the extent that there is an increase in the exchange rate of the foreign currency in which losses are ultimately owed. Therefore, we manage our foreign currency risk by seeking to match our liabilities under insurance and reinsurance policies that are payable in foreign currencies with cash and investments that are denominated in such currencies. As of December 31, 2011, $797.0 million, or 10.5% of our total assets and $890.5 million, or 21.4% of our total liabilities were held in foreign currencies. As of December 31, 2011, $88.8 million, or 2.1% of our total liabilities held in foreign currencies was non-monetary items which do not require revaluation at each reporting date. As of December 31, 2010, $545.2 million, or 7.7% of our total assets and $638.3 million, or 18.0% of our total liabilities were held in foreign currencies. As of December 31, 2010, $87.0 million, or 2.4% of our total liabilities held in foreign currencies were non-monetary items which do not require revaluation at each reporting date. When necessary, we may also use derivatives to economically hedge un-matched foreign currency exposures, specifically forward contracts. Foreign currency forward contracts do not eliminate fluctuations in the value of our assets and liabilities denominated in foreign currencies but rather allow us to establish a rate of exchange for a future point in time. For further information on the accounting treatment of our foreign currency derivatives, refer to Item 8, Note 9 "Derivative Instruments Used in Hedging Activities", of the Consolidated Financial Statements. To the extent foreign currency exposure is not hedged or otherwise matched, the Company may experience exchange losses, which in turn would adversely affect the results of operations and financial condition.

135

        Credit Risk:    We are exposed to credit risk from the possibility that counterparties may default on their obligations to us. The Company's primary credit risks reside in investment in U.S. corporate bonds and recoverable from reinsurers. We limit our credit exposure by purchasing high quality fixed income investments to maintain an average portfolio credit quality of AA- or higher with mortgage and commercial mortgage-backed issues having an aggregate weighted average credit quality of AAA. In addition, we have limited our exposure to any single issuer to 3.0% or less of total investments, excluding treasury and agency securities. With the exception of the bank loan portfolio the Company's investment guidelines require that investments be rated BBB- or higher at the time of purchase. Where investments are downgraded below BBB-/Baa3, we permit our investment managers to hold up to 2.0% in aggregate market value, or up to 10.0% with written authorization of the Company. At December 31, 2011, 1.2% of the portfolio, excluding bank loans was below BBB-/Baa3 and we did not have an aggregate exposure to any single issuer of more than 1.0% of total investments, other than with respect to government securities.

        The amount of the maximum exposure to credit risk is indicated by the carrying value of the Company's financial assets. The Company's primary credit risks reside in investment in U.S. corporate bonds and recoverables from reinsurers. The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers. The reinsurance program is generally placed with reinsurers whose rating, at the time of placement, was A- or better rated by S & P or the equivalent with other rating agencies. Exposure to a single reinsurer is also controlled with restrictions dependent on rating. At December 31, 2011, 99.4% of reinsurance recoverables (which includes loss reserves recoverable and recoverables on paid losses) were from reinsurers rated A- or above, (December 31, 2010 97.4% rated A-) or from reinsurers posting full collateral.

        Liquidity risk:    Certain of the Company's investments may become illiquid. Disruption in the credit markets may materially affect the liquidity of the Company's investments, including non-agency residential mortgage-backed securities and bank loans which represent 8.3% (December 31, 2010: 1.9%) of total cash and investments. If the Company requires significant amounts of cash on short notice in excess of normal cash requirements (which could include claims on a major catastrophic event) in a period of market illiquidity, the investments may be difficult to sell in a timely manner and may have to be disposed of for less than what may otherwise have been possible under other conditions. At December 31, 2011, the Company had $1,382.9 million of unrestricted, liquid assets, defined as unpledged cash and cash equivalents, short term investments, government and government agency securities. Details of the Company's debt and financing arrangements at December 31, 2011 are provided below.

(Dollars in thousands)	Maturity Date / Term		In Use/ Outstanding
2006 Junior Subordinated Deferrable Debentures		June 15, 2036	$	150,000
2007 Junior Subordinated Deferrable Debentures		June 15, 2037		139,800
2010 Senior Notes due 2040		January 26, 2040		250,000
$340,000 syndicated unsecured letter of credit facility		March 12, 2013		—
$60,000 bilateral unsecured letter of credit facility		March 12, 2013		—
$500,000 secured letter of credit facility		March 12, 2012		333,179
Talbot FAL facility		December 31, 2015		25,000
IPC Bi-Lateral Facility		December 31, 2012		57,146
Total			$	955,125

        Inflation Risk:    We do not believe that inflation has had or will have a material effect on our combined results of operations, except insofar as (a) inflation may affect interest rates, and (b) losses and loss expenses may be affected by inflation.

136

Item 8.    Financial Statements and Supplementary Data

        Reference is made to Item 15 (a) of this Report for the Consolidated Financial Statements of Validus Holdings, Ltd. and the Notes thereto, as well as the Schedules to the Consolidated Financial Statements.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

Item 9A.    Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

        The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to provide reasonable assurance that all material information relating to the Company required to be filed in this report has been made known to them in a timely fashion.

Management's Report on Internal Control Over Financial Reporting

        The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended.

        The Company's internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

        The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2011. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (the "Framework"). Based on its assessment, management concluded that, as of December 31, 2011, the Company's internal control over financial reporting was effective based on the Framework criteria.

        The effectiveness of the Company's internal control over financial reporting as of December 31, 2011 has been audited by PricewaterhouseCoopers, an independent registered public accounting firm, as stated in their report included in this filing.

Changes in Internal Control Over Financial Reporting

        There have been no changes in internal control over financial reporting identified in connection with the Company's evaluation required pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934, as amended, that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Item 9B.    Other Information

        None.

137

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

        Certain of the information required by this item relating to the executive officers of the Company may be found starting at page 49. The balance of the information required by this item is omitted because a definitive proxy statement that involves the election of directors will be filed with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year pursuant to Regulation 14A, which proxy statement is incorporated herein by reference.

Item 11.    Executive Compensation

        This item is omitted because a definitive proxy statement that involves the election of directors will be filed with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year pursuant to Regulation 14A, which proxy statement is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Equity Compensation Plan Information

        The following table displays certain information regarding our equity compensation plan at December 31, 2011:

(Dollars in thousands)	Number of Securities to be Issued Upon Exercise of Outstanding Options and Restricted Stock	Weighted-Average Exercise Price of Outstanding Options		Number of Securities Remaining Available for Future Issuance Under Equity compensation plans
2005 Amended and Restated Long-Term Incentive Plan	5,279,700	$	20.12	$	4,109,215
Director Stock Compensation Plan	4,850		—		52,293

        The balance of the information required by this item is omitted because a definitive proxy statement that involves the election of directors will be filed with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year pursuant to Regulation 14A, which proxy statement is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

        This item is omitted because a definitive proxy statement that involves the election of directors will be filed with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year pursuant to Regulation 14A, which proxy statement is incorporated herein by reference.

Item 14.    Principal Accountant Fees and Services

        This item is omitted because a definitive proxy statement that involves the election of directors will be filed with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year pursuant to Regulation 14A, which proxy statement is incorporated herein by reference.

138

PART IV

Item 15.    Exhibits and Financial Statement Schedules

        Financial Statements, Financial Statement Schedules and Exhibits.

a)

Financial Statements and Financial Statement Schedules are included as pages F-1 to F-77.



b)

The exhibits numbers followed by an asterisk (*) indicate exhibits physically filed with this Annual Report on Form 10-K. All other exhibit numbers indicate exhibits filed by incorporation by reference.

139

EXHIBITS

Exhibit Number		Description of Document
	3.1	Memorandum of Association dated October 10, 2005 (Incorporated by reference from S-1 SEC File No. 333-139989)
	3.2	Amended and Restated Bye-laws (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.1	Specimen Common Share Certificate (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.2	Certificate of Deposit of Memorandum of Increase of Share Capital dated October 28, 2005 (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.3	Form of Warrant (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.4	Form of Amendment to Warrants dated as of December 21, 2007 (Incorporated by reference from 8-K filed with the SEC on December 1, 2007)
	4.5	9.069% Junior Subordinated Deferrable Debentures Indenture dated as of June 15, 2006 (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.6	Form of 9.069% Junior Subordinated Deferrable Debentures (Included in Exhibit 4.5 hereto) (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.7	First Supplemental Indenture to the 9.069% Junior Subordinated Deferrable Debentures Indenture dated as of September 15, 2006 (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.8	8.480% Junior Subordinated Deferrable Debentures Indenture dated as of June 29, 2007 (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.9	Form 8.480% Junior Subordinated Deferrable Debentures (Included in Exhibit 4.8 hereto) (Incorporated by reference from S-1 SEC File No. 333-139989)
	4.10	Senior Note Indenture, by and between Validus Holdings, Ltd. and The Bank of New York Mellon, dated January 26, 2010 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on January 26, 2010)
	4.11	8.875% Senior Notes Supplemental Indenture, by and between Validus Holdings, Ltd. and The Bank of New York Mellon, dated January 26, 2010 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on January 26, 2010)
	4.12	Form of 8.875% Senior Note (Included in Exhibit 4.10 hereto) (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on January 26, 2010)
	4.13	Shareholders' Agreement dated as of December 12, 2005 among Validus Holdings, Ltd. and the Shareholders Named Therein (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.1	Repurchase Agreement, entered into as of November 4, 2010, by and between Validus Holdings, Ltd. and the Aquiline Capital Partners LLC entities listed on Schedule A thereto (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 5, 2010)

140

Exhibit Number		Description of Document
	10.2	Repurchase Agreement, entered into as of November 4, 2010, by and between Validus Holdings, Ltd. and the New Mountain Capital, LLC entities listed on Schedule A thereto (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 5, 2010)
	10.3	Repurchase Agreement, entered into as of November 4, 2010, by and between Validus Holdings, Ltd. and the Vestar Capital Partners entities listed on Schedule A thereto (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 5, 2010)
	10.4	Five-Year Secured Letter of Credit Facility Agreement (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.5	Three-Year Unsecured Letter of Credit Facility Agreement (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.6	First Amendment to each of the Three-Year Unsecured Letter of Credit Facility Agreement and the Five-Year Secured Letter of Credit Facility Agreement (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on October 26, 2007)
	10.7	Second Amendment, dated as of July 24, 2009, to each of the Three-Year Unsecured Letter of Credit Facility Agreement dated as of March 12, 2007, as amended by the First Amendment dated October 25, 2007, and the Five-Year Secured Letter of Credit Facility Agreement dated as of March 12, 2007, as amended by the First Amendment dated October 25, 2007, among Validus Holdings, Ltd., Validus Reinsurance, Ltd., the Lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent for the Lenders (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on July 23, 2009)
	10.8	Third Amendment, dated as of March 12, 2010, to the Five-Year Secured Letter of Credit Facility Agreement dated as of March 12, 2007, as amended by the First Amendment dated October 25, 2007 and the Second Amendment dated as of July 24, 2009, among Validus Holdings, Ltd., Validus Reinsurance, Ltd., the Lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent for the Lenders (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on March 17, 2010)
	10.9	Fourth Amendment, dated as of August 2, 2011, to the Five-Year Secured Letter of Credit Facility Agreement, dated as of March 12, 2007, among Validus Holdings, Ltd., agent Validus Reinsurance, Ltd., the other designated subsidiary account parties from time to time party thereto, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and issuing agent, and Deutsche Bank AG, New York Branch, as syndication (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on August 3, 2011)
	10.10	Talbot $100 Million Standby Letter of Credit Facility dated as of November 28, 2007 (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on December 4, 2007)
	10.11	Amendment No. 1, dated as of July 23, 2009, to the Talbot $100 million Standby Letter of Credit Facility dated as of November 28, 2007, among Talbot Holdings Ltd., Validus Holdings, Ltd., the Lenders party thereto and Lloyds TSB Bank plc, as Agent (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on July 23, 2009)

141

Exhibit Number		Description of Document
	10.12	Amendment and Restatement Agreement dated as of November 19, 2009 relating to the Talbot $100 million Standby Letter of Credit Facility dated as of November 28, 2007, among Talbot Holdings Ltd., as Borrower, Validus Holdings, Ltd., as Guarantor, Lloyds TSB Bank plc, as joint Mandated Lead Arranger, Agent, and Security Trustee, and ING Bank N.V., London Branch, as joint Mandated Lead Arranger (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 20, 2009)
	10.13	Amendment and Restatement Agreement dated as of November 18, 2011 relating to the Talbot $25 million Standby Letter of Credit Facility dated as of November 28, 2007, among Talbot Holdings Ltd., as Borrower, Validus Holdings, Ltd., as Guarantor, Lloyds TSB Bank plc, as joint Mandated Lead Arranger, Agent, and Security Trustee, and ING Bank N.V., London Branch, as joint Mandated Lead Arranger (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 23, 2011)
	10.14	Amendment Letter dated as of November 23, 2011 relating to a $25 million Standby Letter of Credit Facility dated as of November 28, 2007, among Talbot Holdings Ltd., as Borrower, Validus Holdings,  Ltd., as Guarantor, Lloyds TSB Bank plc, as joint Mandated Lead Arranger, Agent, and Security Trustee, and ING Bank N.V., London Branch, as joint Mandated Lead Arranger, as amended and restated on November 18, 2011(Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on November 29, 2011)
	10.15	Three-Year Unsecured Letter of Credit Facility, dated as of March 12, 2010, among Validus Holdings, Ltd., Validus Reinsurance, Ltd., the Lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent for the Lenders and Deutsche Bank Securities Inc, as syndication agent (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on March 17, 2010)
	10.16	First Amendment, dated as of August 2, 2011, to the Three-Year Unsecured Letter of Credit Facility Agreement, dated as of March 12, 2010, among Validus Holdings, Ltd., Validus Reinsurance, Ltd., the other designated subsidiary account parties from time to time party thereto, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Deutsche Bank Securities Inc., as syndication agent (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on August 3, 2011)
	10.17	Three-Year Unsecured Bi-Lateral Revolving Credit Facility, dated as of March 12, 2010, among Talbot Holdings Ltd., as Borrower, Validus Holdings, Ltd., as Guarantor and Lloyds TSB Bank plc (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on March 17, 2010)
	10.18	First Amendment, dated as of August 2, 2011, to the Three-Year Unsecured Bi-Lateral Revolving Credit Facility Agreement, dated as of March 12, 2010, among Talbot Holdings Ltd., Validus Holdings,  Ltd., the lenders from time to time party hereto and Lloyds TSB Bank Plc, as administrative agent (Incorporated by reference from the Company's Current Report of Form 8-K filed with the SEC on August 8, 2011)
	10.19	Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)

142

Exhibit Number		Description of Document
	10.19.1	Amendment to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from Quarterly Report on Form 10-Q for the period ended September 30, 2008, filed with the SEC on November 13, 2008)
	10.20	Retirement and Advisory Agreement dated as of October 20, 2010 between Validus Holdings, Ltd. and George P. Reeth (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on October 22, 2010)
	10.21	Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Joseph E. (Jeff) Consolino dated as of February 17, 2011 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
	10.22	Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Stuart W. Mercer (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.22.1	Amendment to Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Stuart W. Mercer (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2008, filed with the SEC on November 13, 2008)
	10.23	Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Conan M. Ward dated as of March 17, 2010 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2010, filed with the SEC on May 7, 2010)
	10.24	Employment Agreement between Validus Holdings, Ltd. and Jerome Dill (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.25	Employment Agreement dated as of September 1, 2010 between Validus Holdings, Ltd. and Jonathan P. Ritz. (Incorporated by reference from the Company's Current Report on Form 8-K filed with the SEC on September 8, 2010)
	10.25.1	Amendment No. 1 to Employment Agreement between Validus Holdings, Ltd. and Jonathan P. Ritz dated as of October 1, 2010 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
	10.26	Service Agreement between Talbot Underwriting Services, Ltd. and Charles Neville Rupert Atkin (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 6, 2008)
	10.27	Service Agreement between Talbot Underwriting Services, Ltd. and Michael Edward Arscott Carpenter (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 6, 2008)
	10.27.1	Amendment No. 1 to Service Agreement between Talbot Underwriting Services, Ltd. and Michael Edward Arscott Carpenter (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2008, filed with the SEC on August 13, 2008)

143

Exhibit Number		Description of Document
	10.28	Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Andrew Gibbs dated as of November 10, 2009 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed with the SEC on November 4, 2011)
	10.29	Amended and Restated Employment Agreement between Validus Holdings, Ltd. and Robert F. Kuzloski dated as of April 1, 2011 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed with the SEC on November 4, 2011)
	10.30	Employment Agreement between Validus Holdings, Ltd. and Andrew Kudera dated as of February 2, 2010 (Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed with the SEC on November 4, 2011)
	10.31	Investment Manager Agreement with BlackRock Financial Management, Inc. (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.32	Risk Reporting & Investment Accounting Services Agreement with BlackRock Financial Management, Inc. (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.33	Discretionary Advisory Agreement with Goldman Sachs Asset Management (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.34	Validus Holdings, Ltd. 2005 Amended & Restated Long-Term Incentive Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.35	Form of Amended Post-IPO Restricted Share Award Agreement for Validus Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
	10.36	Form of Pre-IPO Restricted Share Agreement for Executive Officers (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.37	Form of Restricted Share Agreement at Talbot Acquisition Date for Messrs. Atkin and Carpenter (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 6, 2008)
	10.38	Form of Amended Restricted Share Agreement for Talbot Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
	10.39	Amended and Restated Restricted Share Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.40	Stock Option Agreement between Validus Holdings, Ltd. and Edward J. Noonan (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.41	Form of Stock Option Agreement for Executive Officers prior to 2008 (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.42	Form of Stock Option Agreement for Executive Officers commencing in 2008 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 6, 2008)

144

Exhibit Number			Description of Document
	10.43		Form of Performance Share Award Agreement for Validus Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
	10.44		Form of Performance Share Award Agreement for Talbot Executive Officers (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011)
	10.45		Nonqualified Supplemental Deferred Compensation Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.46		Validus Holdings, Ltd. Director Stock Compensation Plan (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.46.1		Amendment No. 1 to Validus Holdings, Ltd. Directors Stock Compensation Plan dated as of January 5, 2009 (Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on February 27, 2009)
	10.47		Share Sale Agreement between Validus Holdings, Ltd. and the Shareholders of Talbot Holdings Ltd. (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.48		Agreement to Provide Information between Validus Holdings, Ltd. and Talbot Holdings Ltd. (Incorporated by reference from S-1 SEC File No. 333-139989)
	10.49	*	Assignment and Assumption Agreement dated as of December 20, 2011, by and among Aquiline Capital Partners LLC, Validus Reinsurance, Ltd. and Aquiline Capital Partners II GP (Offshore)  Ltd.
	21	*	Subsidiaries of the Registrant
	23	*	Consent of PricewaterhouseCoopers
	24		Power of attorney (Incorporated by Reference from signature page)
	31	*	Rule 13a-14(a)/15d-14(a) Certifications
	32	*	Section 1350 Certification
	101.INS	*	XBRL Instance Document
	101.SCH	*	XBRL Taxonomy Extension Schema Document
	101.CAL	*	XBRL Taxonomy Calculation Linkbase Document
	101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document
	101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document

*

Filed herewith

145

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hamilton, Bermuda, on February 17, 2012.

Validus Holdings, Ltd.
By:	/s/ EDWARD J. NOONAN
	Name:	Edward J. Noonan
	Title:	Chief Executive Officer
By:	/s/ JOSEPH E. (JEFF) CONSOLINO
	Name:	Joseph E. (Jeff) Consolino
	Title:	President and Chief Financial Officer

146

POWER OF ATTORNEY

        We, the undersigned directors and executive officers of Validus Holdings, Ltd. hereby severally constitute Edward J. Noonan and Joseph E. (Jeff) Consolino, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, and in our names in the capacities indicated below, any and all amendments to the Annual Report on Form 10-K filed with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys to any and all amendments to said Annual Report on Form 10-K.

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ EDWARD J. NOONAN Name: Edward J. Noonan	Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)	February 17, 2012
/s/ JOSEPH E. (JEFF) CONSOLINO Name: Joseph E. (Jeff) Consolino	President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	February 17, 2012
/s/ MICHAEL CARPENTER Name: Michael Carpenter	Director	February 17, 2012
/s/ MATTHEW J. GRAYSON Name: Matthew J. Grayson	Director	February 17, 2012
/s/ JEFFREY W. GREENBERG Name: Jeffrey W. Greenberg	Director	February 17, 2012
/s/ JOHN J. HENDRICKSON Name: John J. Hendrickson	Director	February 17, 2012
/s/ JEAN-MARIE NESSI Name: Jean-Marie Nessi	Director	February 17, 2012
/s/ MANDAKINI PURI Name: Mandakini Puri	Director	February 17, 2012
/s/ ALOK SINGH Name: Alok Singh	Director	February 17, 2012
/s/ CHRISTOPHER E. WATSON Name: Christopher E. Watson	Director	February 17, 2012

147

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES

	Page No.
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm		149
Consolidated Balance Sheets as at December 31, 2011 and 2010		F-1
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2011, 2010 and 2009		F-2
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2011, 2010 and 2009		F-3
Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009		F-4
Notes to Consolidated Financial Statements		F-5
Financial Statement Schedules:
I. Summary of Investments Other than Investments in Related Parties		F-71
II. Condensed Financial Information of Registrant		F-72
III. Supplementary Insurance Information		F-75
IV. Reinsurance		F-76
VI. Supplemental Information Concerning Property/Casualty Insurance Operations		F-77

        Schedules other than those listed are omitted for the reason that they are not required, are not applicable or that equivalent information has been included in the financial statements, notes thereto, or elsewhere herein.

148

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
Validus Holdings, Ltd.

        In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Validus Holdings, Ltd. and its subsidiaries at December 31, 2011 and December 31, 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers
PricewaterhouseCoopers
Hamilton, Bermuda
February 17, 2012

149

PART I. FINANCIAL INFORMATION

ITEM I.    FINANCIAL STATEMENTS

Validus Holdings, Ltd.

Consolidated Balance Sheets

As at December 31, 2011 and 2010

(Expressed in thousands of U.S. dollars, except share and per share information)

	December 31, 2011			December 31, 2010
Assets
Fixed maturities, at fair value (amortized cost: 2011—$4,859,705; 2010—$4,772,037)	$	4,894,145		$	4,823,867
Short-term investments, at fair value (amortized cost: 2011—$280,299; 2010—$273,444)		280,191			273,514
Other investments, at fair value (amortized cost: 2011—$15,002; 2010—$18,392)		16,787			21,478
Cash and cash equivalents		832,844			620,740
Total investments and cash		6,023,967			5,739,599
Investment in non-consolidated affiliate		53,031			—
Premiums receivable		646,354			568,761
Deferred acquisition costs		121,505			123,897
Prepaid reinsurance premiums		91,381			71,417
Securities lending collateral		7,736			22,328
Loss reserves recoverable		372,485			283,134
Paid losses recoverable		90,495			27,996
Income taxes recoverable		—			1,142
Intangible assets		114,731			118,893
Goodwill		20,393			20,393
Accrued investment income		25,906			33,726
Other assets		50,487			49,592
Total assets	$	7,618,471		$	7,060,878
Liabilities
Reserve for losses and loss expenses	$	2,631,143		$	2,035,973
Unearned premiums		772,382			728,516
Reinsurance balances payable		119,899			63,667
Securities lending payable		8,462			23,093
Deferred income taxes		16,720			24,908
Net payable for investments purchased		1,256			43,896
Accounts payable and accrued expenses		83,402			99,320
Senior notes payable		246,982			246,874
Debentures payable		289,800			289,800
Total liabilities		4,170,046			3,556,047
Commitments and contingent liabilities
Shareholders' equity
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2011—134,503,065; 2010—132,838,111; Outstanding: 2011—99,471,080; 2010—98,001,226)		23,538			23,247
Treasury shares (2011—35,031,985; 2010—34,836,885)		(6,131	)		(6,096	)
Additional paid-in-capital		1,893,890			1,860,960
Accumulated other comprehensive (loss)		(6,601	)		(5,455	)
Retained earnings		1,543,729			1,632,175
Total shareholders' equity		3,448,425			3,504,831
Total liabilities and shareholders' equity	$	7,618,471		$	7,060,878

The accompanying notes are an integral part of these consolidated financial statements.

F-1

Validus Holdings, Ltd.

Consolidated Statements of Operations and Comprehensive Income

For the Years Ended December 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars, except share and per share information)

	December 31, 2011			December 31, 2010			December 31, 2009
Revenues
Gross premiums written	$	2,124,691		$	1,990,566		$	1,621,241
Reinsurance premiums ceded		(289,241	)		(229,482	)		(232,883	)
Net premiums written		1,835,450			1,761,084			1,388,358
Change in unearned premiums		(33,307	)		39			61,219
Net premiums earned		1,802,143			1,761,123			1,449,577
Gain on bargain purchase, net of expenses		—			—			287,099
Net investment income		112,296			134,103			118,773
Realized gain on repurchase of debentures		—			—			4,444
Net realized gains (losses) on investments		28,532			32,498			(11,543	)
Net unrealized (losses) gains on investments		(19,991	)		45,952			84,796
Other income		5,718			5,219			4,634
Foreign exchange (losses) gains		(22,124	)		1,351			(674	)
Total revenues		1,906,574			1,980,246			1,937,106
Expenses
Losses and loss expenses		1,244,401			987,586			523,757
Policy acquisition costs		314,184			292,899			262,966
General and administrative expenses		197,497			209,290			185,568
Share compensation expenses		34,296			28,911			27,037
Finance expenses		54,817			55,870			44,130
Transaction expenses		17,433			—			—
Total expenses		1,862,628			1,574,556			1,043,458
Net income before taxes		43,946			405,690			893,648
Tax (expense) benefit		(824	)		(3,126	)		3,759
Net income	$	43,122		$	402,564		$	897,407
Net income attributable to noncontrolling interest		(21,793	)		—			—
Net income available to Validus	$	21,329		$	402,564		$	897,407
Comprehensive income
Foreign currency translation adjustments		(1,146	)		(604	)		3,007
Comprehensive income available to Validus	$	20,183		$	401,960		$	900,414
Earnings per share
Weighted average number of common shares and common share equivalents outstanding
Basic		98,607,439			116,018,364			93,697,194
Diluted		100,928,284			120,630,945			97,168,409
Basic earnings per share available to common shareholders	$	0.14		$	3.41		$	9.51
Diluted earnings per share available to common shareholders	$	0.14		$	3.34		$	9.24
Cash dividends declared per share	$	1.00		$	0.88		$	0.80

The accompanying notes are an integral part of these consolidated financial statements.

F-2

Validus Holdings, Ltd.

Consolidated Statements of Shareholders' Equity

For the Years Ended December 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars, except share and per share information)

	December 31, 2011			December 31, 2010			December 31, 2009
Common shares
Balance—Beginning of period	$	23,247		$	23,033		$	13,235
Common shares issued, net		291			214			9,798
Balance—End of period	$	23,538		$	23,247		$	23,033
Treasury shares
Balance—Beginning of period	$	(6,096	)	$	(553	)	$	—
Repurchase of common shares		(35	)		(5,543	)		(553	)
Balance—End of period	$	(6,131	)	$	(6,096	)	$	(553	)
Additional paid-in capital
Balance—Beginning of period	$	1,860,960		$	2,675,680		$	1,412,635
Common shares issued, net		4,594			7,752			1,314,188
Repurchase of common shares		(5,960	)		(851,383	)		(83,611	)
Share compensation expenses		34,296			28,911			32,468
Balance—End of period	$	1,893,890		$	1,860,960		$	2,675,680
Accumulated other comprehensive (loss)
Balance—Beginning of period	$	(5,455	)	$	(4,851	)	$	(7,858	)
Foreign currency translation adjustments		(1,146	)		(604	)		3,007
Balance—End of period	$	(6,601	)	$	(5,455	)	$	(4,851	)
Retained earnings
Balance—Beginning of period	$	1,632,175		$	1,337,811		$	520,722
Dividends		(109,775	)		(108,200	)		(80,318	)
Net income		43,122			402,564			897,407
Net income attributable to noncontrolling interest		(21,793	)		—			—
Balance—End of period	$	1,543,729		$	1,632,175		$	1,337,811
Total shareholders' equity	$	3,448,425		$	3,504,831		$	4,031,120

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Validus Holdings, Ltd.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars, except share and per share information)

	December 31, 2011			December 31, 2010			December 31, 2009
Cash flows provided by (used in) operating activities
Net income	$	43,122		$	402,564		$	897,407
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Share compensation expenses		34,296			28,911			32,468
Realized gain on repurchase of debentures		—			—			(4,444	)
Gain on bargain purchase		—			—			(352,349	)
Amortization of discount on senior notes		108			81			—
Net realized (gains) losses on investments		(28,532	)		(32,498	)		11,543
Net unrealized losses (gains) on investments		19,991			(45,952	)		(84,796	)
Amortization of intangible assets		4,162			4,162			25,833
Foreign exchange losses (gains) on cash and cash equivalents included in net income		9,659			(1,451	)		(9,579	)
Amortization of premium on fixed maturities		31,150			32,175			16,277
Change in:
Premiums receivable		(77,634	)		(19,011	)		37,163
Deferred acquisition costs		2,392			(11,568	)		17,914
Prepaid reinsurance premiums		(19,964	)		1,747			(47,070	)
Loss reserves recoverable		(89,232	)		(102,268	)		32,922
Paid losses recoverable		(62,566	)		(13,244	)		(13,424	)
Income taxes recoverable		1,216			994			(546	)
Accrued investment income		7,750			4,351			5,176
Other assets		(574	)		(13,198	)		(3,622	)
Reserve for losses and loss expenses		596,325			419,350			(10,238	)
Unearned premiums		43,866			4,412			(20,846	)
Reinsurance balances payable		56,041			(659	)		28,733
Deferred income taxes		(8,146	)		277			3,089
Accounts payable and accrued expenses		(18,290	)		(29,174	)		(6,495	)
Net cash provided by operating activities		545,140			630,001			555,116
Cash flows provided by (used in) investing activities
Proceeds on sales of investments		4,058,495			5,349,053			3,481,772
Proceeds on maturities of investments		353,006			349,851			568,030
Purchases of fixed maturities		(4,551,070	)		(5,612,979	)		(4,421,787	)
(Purchases) sales of short-term investments, net		(215,055	)		208,278			200,253
Sales of other investments		3,967			17,210			90,395
Decrease in securities lending collateral		14,631			67,013			15,582
Purchase of subsidiary, net of cash acquired		—			—			(376,878	)
Proceeds on sale of AlphaCat Re 2011		11,000			—			—
Cash (redeemed) in deconsolidation of AlphaCat Re 2011		(67,808	)		—			—
Net cash (used in) provided by investing activities		(392,834	)		378,426			(442,633	)
Cash flows provided by (used in) financing activities
Net proceeds on issuance of senior notes		—			246,793			—
Repurchase of debentures		—			—			(10,056	)
Issuance of common shares, net		4,885			7,966			1,250
Purchases of common shares under share repurchase program		(5,995	)		(856,926	)		(84,164	)
Dividends paid		(107,691	)		(105,662	)		(78,515	)
Decrease in securities lending payable		(14,631	)		(67,013	)		(15,582	)
Third party investment in noncontrolling interest		192,113			—			—
Net cash provided by (used in) financing activities		68,681			(774,842	)		(187,067	)
Effect of foreign currency rate changes on cash and cash equivalents		(8,883	)		(430	)		12,321
Net increase (decrease) in cash		212,104			233,155			(62,263	)
Cash and cash equivalents—beginning of period		620,740			387,585			449,848
Cash and cash equivalents—end of period	$	832,844		$	620,740		$	387,585
Taxes (recovered) paid during the period	$	(4,632	)	$	2,379		$	1,673
Interest paid during the period	$	43,777		$	36,552		$	26,575

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, except share and per share information)

1. Nature of the business

        Validus Holdings, Ltd. (the "Company") was incorporated under the laws of Bermuda on October 19, 2005. The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. ("Validus Re") and Talbot Holdings Ltd. ("Talbot"). Validus Re is registered as a Class 4 insurer under The Insurance Act 1978 of Bermuda, amendments thereto and related regulations ("The Act"). On July 2, 2007, the Company acquired all of the outstanding shares of Talbot from a group of institutional and other investors, and Talbot employees, management, former employees and trusts on behalf of certain employees and their families. Talbot is the Bermuda parent of a specialty insurance group primarily operating within the Lloyd's insurance market through Syndicate 1183. The Company, through its subsidiaries, provides reinsurance coverage in the Property, Marine and Specialty lines markets, effective January 1, 2006, and insurance coverage in the same markets effective July 2, 2007.

        On July 30, 2007, the Company completed its initial public offering ("IPO"), selling 15,244,888 common shares at a price of $22.00 per share. The net proceeds to the Company from the IPO were approximately $310,731, after deducting the underwriters' discount and fees. On August 27, 2007, the Company issued an additional 453,933 common shares at a price of $22.00 per share pursuant to the underwriters' option to purchase additional common shares; the net proceeds to the Company were approximately $9,349 and total IPO proceeds inclusive of the underwriters' option to purchase additional common shares were $320,080.

        On September 4, 2009, pursuant to an Amalgamation Agreement, the Company acquired all of IPC Holdings, Ltd. ("IPC") outstanding common shares in exchange for 0.9727 Company common shares and $7.50 cash per IPC common share (the "IPC Acquisition"). IPC's operations were focused on short-tail lines of reinsurance. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. The acquisition of IPC was undertaken to gain a strategic advantage in the then current reinsurance market and increase the Company's capital base.

        On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, Ltd. ("AlphaCat Re 2011"), a special purpose "sidecar" reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. At the time of formation, Validus Re had an equity interest in AlphaCat Re 2011 and as Validus Re held a majority of AlphaCat Re 2011's outstanding voting rights, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company.

        On December 23, 2011, the Company completed a secondary offering of common shares of AlphaCat Re 2011 to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors. As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re 2011; however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%. As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 have been derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 is treated as an equity method investment as at December 31, 2011. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 is recorded in the Consolidated Statements of Operations and Comprehensive Income as net income attributable to noncontrolling interest. Refer to Note 8 "Investment in AlphaCat Re 2011, Ltd.".

F-5

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

2. Basis of preparation and consolidation

        These consolidated financial statements include Validus Holdings, Ltd. and its wholly and majority owned subsidiaries (together, the "Company") and have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP").

        In the opinion of management, these consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position and results of operations as at the end of and for the periods presented. Certain amounts in prior periods have been reclassified to conform to current period presentation. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The major estimates reflected in the Company's consolidated financial statements include the reserve for losses and loss expenses, premium estimates for business written on a line slip or proportional basis, the valuation of goodwill and intangible assets, reinsurance recoverable balances including the provision for unrecoverable reinsurance recoverable balances and investment valuation. Actual results could differ from those estimates. The term "ASC" used in these notes refers to Accounting Standard Codifications issued by the United States Financial Accounting Standards Board ("FASB").

3. Significant accounting policies

        The following is a summary of significant accounting policies adopted by the Company.

(a)   Premiums

        Insurance premiums written are recorded in accordance with the terms of underlying policies. Reinsurance premiums written are recorded at the inception of the policy and are estimated based on information received from brokers, ceding companies and reinsureds, and any subsequent differences arising on such estimates will be recorded in the periods in which they are determined. Premiums written are earned on a pro-rata basis over the term of the policy. For contracts and policies written on a losses occurring basis, the risk period is generally the same as the contract or policy terms. For contracts written on a policies attaching basis, the risk period is based on the terms of the underlying contracts and policies and is generally assumed to be 24 months. The portion of the premiums written applicable to the unexpired terms of the underlying contracts and policies in force are recorded as unearned premiums. Mandatory reinstatement premiums are recorded at the time a loss event occurs.

(b)   Policy acquisition costs

        Policy acquisition costs are costs that vary with, and are directly related to, the successful production of new and renewal business, and consist principally of commissions and brokerage expenses. Acquisition costs are shown net of commissions earned on reinsurance ceded. These costs are deferred and amortized over the periods in which the related premiums are earned. Deferred acquisition costs are limited to their estimated realizable value based on the related unearned premiums and anticipated claims expenses. The realizable value of the Company's deferred acquisition costs is determined without consideration of

F-6

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

3. Significant accounting policies (Continued)

investment income. Policy acquisition costs also include profit commission. Profit commissions are recognized when earned.

(c)   Reserve for losses and loss expenses

        The reserve for losses and loss expenses includes reserves for unpaid reported losses and for losses incurred but not reported ("IBNR"). The reserve for unpaid reported losses and loss expenses is established by management based on reports from brokers, ceding companies and insureds and represents the estimated ultimate cost of events or conditions that have been reported to, or specifically identified by the Company. The reserve for incurred but not reported losses and loss expenses is established by management based on actuarially determined estimates of ultimate losses and loss expenses. Inherent in the estimate of ultimate losses and loss expenses are expected trends in claim severity and frequency and other factors which may vary significantly as claims are settled. Accordingly, ultimate losses and loss expenses may differ materially from the amounts recorded in the consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments, if any, will be recorded in earnings in the period in which they become known. Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves established in previous calendar years.

(d)   Reinsurance

        In the normal course of business, the Company seeks to reduce the potential amount of loss arising from claims events by reinsuring certain levels of risk assumed in various areas of exposure with other insurers or reinsurers. The accounting for reinsurance ceded depends on the method of reinsurance. If the policy is on a "losses occurring during" basis, reinsurance premiums ceded are expensed (and any commissions thereon are earned) on a pro-rata basis over the period the reinsurance coverage is provided. If the policy is a "risks attaching during" policy, reinsurance premiums ceded are expensed (and any commissions thereon are earned) in line with the gross premiums earned to which the risk attaching policy relates. Prepaid reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force. Mandatory reinstatement premiums ceded are recorded and expensed at the time a loss event occurs. Reinsurance recoverables are based on contracts in force. The method for determining the reinsurance recoverable on unpaid loss and loss expenses involves actuarial estimates of unpaid losses and loss expenses as well as a determination of the Company's ability to cede unpaid losses and loss expenses under its reinsurance treaties. The use of different assumptions could have a material effect on the provision for uncollectible reinsurance. To the extent the creditworthiness of the Company's reinsurers was to deteriorate due to adverse events affecting the reinsurance industry, such as a large number of major catastrophes, actual uncollectible amounts could be significantly greater than the Company's provision. Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying liabilities.

(e)   Investments

        Fair value is defined as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting the highest and best use valuation concepts. The guidance for "Fair Value Measurement and Disclosure" provides a framework

F-7

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

3. Significant accounting policies (Continued)

for measuring fair value by creating a hierarchy of fair value measurements that distinguishes market data between observable independent market inputs and unobservable market assumptions by the reporting entity. The guidance further expands disclosures about such fair value measurements. The guidance applies broadly to most existing accounting pronouncements that require or permit fair value measurements (including both financial and non-financial assets and liabilities) but does not require any new fair value measurements. The Company has adopted all authoritative guidance in effect as of the balance sheet date regarding certain market conditions that allow for fair value measurements that incorporate unobservable inputs where active market transaction based measurements are unavailable.

        Short-term investments comprise investments with a remaining maturity of less than one year at time of purchase and money market funds held at the Company's investment managers.

        All investment transactions are recorded on a first-in-first-out basis and realized gains and losses on the sale of investments are determined on the basis of amortized cost. Interest on fixed maturity securities is recorded in net investment income when earned and is adjusted for any amortization of premium or discount.

        For mortgage-backed securities, and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the resultant change in effective yields and maturities are recognized retrospectively. Prepayment fees or call premiums that are only payable to the Company when a security is called prior to its maturity, are earned when received and reflected in net investment income.

(f)    Derivative instruments

        The Company uses derivative instruments in the form of foreign currency forward exchange contracts to manage foreign currency risk. A foreign currency forward exchange contract involves an obligation to purchase or sell a specified amount of a specified currency at a future date at a price set at the time of the contract. Foreign currency forward exchange contracts will not eliminate fluctuations in the value of our assets and liabilities denominated in foreign currencies but rather allow the Company to establish a rate of exchange for a future point in time. The foreign currency forward exchange contracts are recorded as derivatives at fair value as either assets or liabilities, depending on their rights or obligations, with changes in fair value recorded as a net foreign exchange gain or loss in the Company's statement of operations.

        To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in value or cash flow of the hedged item. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The documentation process includes linking derivatives to specific assets or liabilities on the balance sheet. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The Company assesses the effectiveness of its designated hedges on an individual currency basis. If the ratio obtained with this method is within the range of 80% to 125%, the Company considers the hedge effective.

        The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative is de-designated as a hedging instrument; or the derivative expires or is sold, terminated or

F-8

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

3. Significant accounting policies (Continued)

exercised. To the extent that the Company discontinues hedge accounting, because, based on management's assessment, the derivative no longer qualifies as an effective hedge, the derivative will continue to be carried in the Consolidated Balance Sheets at its fair value, with changes in its fair value recognized in current period net income through foreign exchange gains (losses).

(g)   Cash and cash equivalents

        The Company considers time deposits and money market funds with an original maturity of 30 days or less as equivalent to cash.

(h)   Foreign exchange

        The U.S. Dollar is the functional currency of the Company and the majority of the subsidiaries. For these companies, monetary assets and liabilities denominated in foreign currencies are revalued at the exchange rates in effect at the balance sheet date and revenues and expenses denominated in foreign currencies are translated at the prevailing exchange rate on the transaction date with the resulting foreign exchange gains and losses included in earnings.

        Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar are translated at prevailing year end exchange rates. Revenue and expenses of such foreign operations are translated at average exchange rates during the year. The net effect of translation differences between functional and reporting currencies in foreign operations, net of applicable deferred income taxes, are included in "accumulated other comprehensive income (loss)."

(i)    Stock plans

        The Company accounts for its stock plans in accordance with the U.S. GAAP fair value recognition provisions for "Stock Compensation." Accordingly, the Company recognizes the compensation expense for stock option grants, restricted share grants and performance share awards based on the fair value of the award on the date of grant over the requisite service period.

(j)    Warrants

        The Company has accounted for certain warrant contracts issued to our sponsoring investors in conjunction with the capitalization of the Company, and which may be settled by the Company using either the physical settlement or net-share settlement methods, in accordance with U.S. GAAP guidance for "Derivatives and Hedging, Contracts in Entity's Own Equity." Accordingly, the fair value of these warrants has been recorded in equity as an addition to additional paid-in capital.

(k)   Earnings per share

        Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share are based on the weighted average number of common shares and share equivalents excluding any anti-dilutive effects of warrants, options and other awards under stock plans.

F-9

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

3. Significant accounting policies (Continued)

(l)    Income taxes and uncertain tax provisions

        Deferred tax assets and liabilities are recorded in accordance with U.S. GAAP "Income Taxes" guidance. Consistent with this guidance, the Company records deferred income taxes which reflect the tax effect of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases.

        The Company is not subject to any income, withholding or capital gains taxes under current Bermuda law. The Company has operations in subsidiary form in various other jurisdictions around the world, including but not limited to the U.K., U.S. and Canada that are subject to relevant taxes in those jurisdictions.

        The Company recognizes the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. The Company did not recognize any resulting liabilities for unrecognized tax benefits.

(m)  Business combinations

        The Company accounts for business combinations in accordance with ASC Topic 805 "Business Combinations."

        On September 4, 2009, the Company acquired all of the outstanding shares of IPC. The transaction was accounted for as an acquisition method business combination. Accordingly, the purchase price was allocated to assets and liabilities based on their estimated fair value at the acquisition date. The consideration for the net assets acquired was concluded upon prior to the assessment of the fair value of the net assets at the acquisition date. Therefore, the excess of the value of the net assets acquired over the purchase price was recorded as gain on bargain purchase and is shown as a separate component of revenues in the Company's Consolidated Statements of Operations and Comprehensive Income for year ended December 31, 2009. IPC's accounting policies have been conformed to those of the Company.

(n)   Goodwill and other intangible assets

        The Company accounts for goodwill and other intangible assets recognized in business combinations in accordance with U.S. GAAP guidance. A purchase price paid that is in excess of net assets ("goodwill") arising from a business combination is recorded as an asset, and is not amortized. Goodwill is deemed to have an indefinite life and is not amortized, but tested at least annually for impairment. Where the total fair value of net assets acquired exceeds consideration paid ("negative goodwill"), the acquirer will record a gain as a result of the bargain purchase, to be recognized through the income statement at the close of the transaction.

        Intangible assets with a finite life are amortized over the estimated useful life of the asset. Intangible assets with an indefinite useful life are not amortized. Syndicate capacity is deemed to have an indefinite life. Intangible assets with definite lives are amortized on a straight line basis over the estimated useful lives. Trademark and Distribution Network are deemed to have definite lives and are therefore amortized. Refer also to Note 5 "Business combination."

F-10

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

3. Significant accounting policies (Continued)

        Goodwill and intangible assets are tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. Such events or circumstances may include an economic downturn in a geographic market or change in the assessment of future operations.

        In September 2011, the FASB issued Accounting Standards Update No. 2011-08, "Testing Goodwill for Impairment" ("ASU 2011-08"). The objective of ASU 2011-08 is to simplify how entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350 "Intangibles—Goodwill and Other." If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two step goodwill impairment test should be performed as described below. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted and the Company has chosen to early adopt.

        The first step identifies potential impairments by comparing the fair value of a reporting unit with its book value, including goodwill. Reporting units are consistent with the segmental basis. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down would be recorded. The measurement of fair values in reporting units is determined on a number of factors and assumptions including ranges of future discounted earnings, forecast revenue and operating expenses and effective tax rates.

        If the goodwill or intangible asset is impaired, it is written down to its realizable value with a corresponding expense reflected in the consolidated statements of operations.

(o)   Other investments

        Other investments consist of an investment in a fund of hedge funds, a private equity investment and a deferred compensation trust held in mutual funds. All investment transactions are recorded on a first-in-first-out basis and realized gains and losses on the sale of investments are determined on the basis of amortized cost. Other investments are carried at fair value with interest and dividend income, income distributions and realized and unrealized gains and losses included in net investment income. The fair value of other investments is generally established on the basis of the net valuation criteria established by the managers of the investments. These net valuations are determined based upon the valuation criteria established by the governing documents of such investments. In addition, due to a lag in reporting, some of the Company's fund managers, fund administrators, or both, are unable to provide final fund valuations as of the Company's current reporting date. In these circumstances, the Company estimates the fair value of these funds by starting with the prior month's fund valuation, adjusting these valuations for capital calls, redemptions or distributions and the impact of changes in foreign currency exchange rates, and then estimating the return for the current period. In circumstances in which the Company estimates the return for the current period, it uses all credible information available. This principally includes preliminary estimates reported by its fund managers, obtaining the valuation of underlying portfolio investments where such underlying investments are publicly traded and therefore have a readily observable price, using

F-11

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

3. Significant accounting policies (Continued)

information that is available to the Company with respect to the underlying investments, reviewing various indices for similar investments or asset classes, as well as estimating returns based on the results of similar types of investments for which the Company has reported results, or other valuation methods, as necessary. Actual final fund valuations may differ, perhaps materially so, from the Company's estimates and these differences are recorded in the period they become known as a change in estimate.

(p)   Investment in non-consolidated affiliate

        Investments in which the Company has significant influence over the operating and financial policies of the investee are accounted for under the equity method of accounting. Under this method, the Company records its proportionate share of income or loss from such investments in its results for the period.

4. Recent accounting pronouncements

        In May 2011, the FASB issued Accounting Standards Update No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" ("ASU 2011-04"). The objective of ASU 2011-04 is to provide common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the amendments do not result in a change in the application of the requirements in ASC Topic 820 "Fair Value Measurements". ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact of this guidance, however it is not expected to have a material impact on the Company's consolidated financial statements.

        In June 2011, the FASB issued Accounting Standards Update No. 2011-05, "Presentation of Comprehensive Income" ("ASU 2011-05"). The objective of ASU 2011-05 is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011. In December 2011, the FASB issued Accounting Standards Update No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05". ASU 2011-12 indefinitely defers certain reclassification adjustment provisions of ASU 2011-05. ASU 2011-12 is also effective for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact of the guidance; however, since these updates affect disclosures only, they are not expected to have a material impact on the Company's consolidated financial statements.

        In December 2011, the FASB issued Accounting Standards Update No. 2011-11, "Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"). The objective of ASU 2011-11 is to enhance disclosures by requiring improved information about financial instruments and derivative instruments in relation to netting arrangements. ASU 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. The Company is currently evaluating the impact of this guidance; however, since this update affects disclosures only, it is not expected to have a material impact on the Company's consolidated financial statements.

F-12

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

5. Business combination

        On September 4, 2009, pursuant to an amalgamation agreement, the Company acquired all of the outstanding common shares of IPC in exchange for 0.9727 Company common shares and $7.50 cash per IPC common share. IPC's operations were focused on short-tail lines of reinsurance. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. The IPC Acquisition was undertaken to gain a strategic advantage in the then current reinsurance market where capacity had been depleted and to increase the Company's capital base.

        The aggregate purchase price paid by the Company was $1,746,224 for adjusted tangible net assets acquired of $2,076,902. During 2009, the global financial crisis and related market illiquidity led to several publicly traded companies trading at substantial discounts. This was the primary factor responsible for a purchase price less than the book value of IPC's net assets, and the recognition of a bargain purchase gain on acquisition.

        The estimates of fair values for tangible assets acquired and liabilities assumed were determined by management based on various market and income analyses and asset appraisals. Significant judgment was required to arrive at these estimates of fair value and changes to assumptions used could have led to materially different results.

        An adjustment of $50,000 was made to IPC's net assets acquired in respect of the termination fee (the "Max Termination Fee") paid under the Agreement and Plan of Amalgamation among Max Capital Group Ltd. ("Max"), IPC and IPC Limited. The Max Termination Fee was advanced to IPC by the Company on July 9, 2009, but was repayable in certain circumstances.

        In addition, at closing, the Company recorded a $21,671 intangible asset for the acquired IPC customer relationships. This intangible asset was related to the acquired broker distribution network and was fair valued using a variation of the income approach. Under this approach, the Company estimated the present value of expected future cash flows to an assumed hypothetical market participant resulting from the existing IPC customer relationships, considering attrition, and discounting at a weighted average cost of capital.

F-13

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

5. Business combination (Continued)

        The composition of purchase price and fair value of net assets acquired is summarized as follows:

Total allocable purchase price
IPC shares outstanding at September 4, 2009		56,110,096
Exchange ratio		0.9727
Validus common shares issued		54,578,268
Validus closing share price on September 4, 2009	$	24.10
Total value of Validus shares to be issued			$	1,315,337
Total cash consideration paid at $7.50 per IPC share				420,826
Share compensation awards issued to IPC employees pursuant to the Amalgamation Agreement and earned prior to the Amalgamation				10,061
Total allocable purchase price				1,746,224
Tangible Assets Acquired
Cash and investments	$	2,463,374
Receivables(a)		202,278
Tangible Assets Acquired				2,665,652
Liabilities Acquired
Net loss reserves and paid losses recoverable	$	304,957
Unearned premiums, net of expenses		180,370
Other liabilities		53,423
Liabilities acquired				538,750
Net tangible assets acquired, at fair value				2,126,902
Max Termination Fee				(50,000	)
Net tangible assets acquired, at fair value, adjusted				2,076,902
Bargain purchase gain before establishment of intangible assets				330,678
Intangible asset—customer relationships				21,671
Bargain purchase gain on acquisition of IPC			$	352,349

(a)

The fair value of receivables approximates the gross contractual amounts receivable.

        The Company also incurred transaction and termination expenses related to the IPC Acquisition. Transaction expenses included legal, financial advisory, and audit related services. Termination expenses included severance costs and accelerated share compensation costs in connection with certain IPC employment contracts that were terminated. Finally, the customer relationships intangible asset has been fully amortized as it was not expected to significantly contribute to the Company's future cash flows beyond December 31, 2009. The gain on bargain purchase, net of expenses has been presented as a separate line

F-14

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

5. Business combination (Continued)

item in the Company's Consolidated Statements of Operations and Comprehensive Income, and is composed of the following:

	Year ended December 31, 2009
Bargain purchase gain on acquisition of IPC	$	352,349
Transaction expenses		(29,448	)
Termination expenses		(14,131	)
Amortization of intangible asset—customer relationships		(21,671	)
Gain on bargain purchase, net of expenses	$	287,099

        The following selected audited information has been provided to present a summary of the results of IPC since the acquisition date, that have been included within the Validus Re segment in the consolidated financial statements for the year ended December 31, 2009.

	From Acquisition Date to December 31, 2009
Net premiums written	$	(4,974	)
Total revenue		161,188
Total expenses		33,370
Net income	$	127,818

Supplemental Pro Forma Information

        Operating results of IPC have been included in the consolidated financial statements from the September 4, 2009 acquisition date. The following selected unaudited pro forma financial information has been provided to present a summary of the combined results of the Company and IPC, assuming the transaction had been effected on January 1, 2009. The unaudited pro forma data is for informational

F-15

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

5. Business combination (Continued)

purposes only and does not necessarily represent results that would have occurred if the transaction had taken place on the basis assumed above.

	Year ended
	December 31, 2009
	(unaudited)
Revenues
Gross premiums written	$	2,008,578
Reinsurance premiums ceded		(239,412	)
Net premiums written		1,769,166
Change in unearned premiums		(57,338	)
Net premiums earned		1,711,828
Net investment income		163,944
Net realized (losses) on investments		(4,717	)
Net unrealized gains on investments		189,789
Other income		4,603
Realized gain on repurchase of debentures		4,444
Foreign exchange gains		4,294
Total revenues		2,074,185
Expenses
Losses and loss expenses		556,550
Policy acquisition costs		289,600
General and administrative expenses		209,510
Share compensation expenses		33,751
Finance expenses		44,513
Total expenses		1,133,924
Net income before taxes		940,261
Tax benefit		3,759
Net income		944,020
Basic earnings per share	$	10.01
Diluted earnings per share	$	9.72

6. Goodwill and other intangible assets

        Following the acquisition of IPC on September 4, 2009, the Company recorded intangible assets (including certain amortization thereon) and negative goodwill. Intangible assets of $21,671 were recognized as a result of the acquisition of IPC (relating to customer relationships). As of December 31, 2009, the customer relationships intangible asset had been fully amortized.

        Following the acquisition of Talbot Holdings Ltd. on July 2, 2007, the Company recorded intangible assets in the name of Syndicate Capacity, Trademark and Distribution Network (including certain

F-16

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

6. Goodwill and other intangible assets (Continued)

amortization thereon) and goodwill. Syndicate Capacity represents Talbot's authorized premium income limit to write insurance business in the Lloyd's market. Talbot has owned 100% of Syndicate 1183's capacity since 2002 and there are no third party tenure rights. The capacity is renewed annually at no cost to Talbot, but may be freely purchased or sold, subject to Lloyd's approval. The ability to write insurance business under the syndicate capacity is indefinite with the premium income limit being set yearly by Talbot, subject to Lloyd's approval. Trademark and Distribution Network are estimated to have finite useful lives of 10 years and are amortized on a straight line basis over such periods. Syndicate Capacity and goodwill are estimated to have indefinite useful lives. Goodwill includes amounts related to the value of the workforce. The goodwill and intangibles are recorded entirely in the Company's Talbot segment.

        The following table shows an analysis of goodwill and other intangible assets included in the Talbot segment:

	Goodwill		Intangible assets with an indefinite life		Intangible assets with a finite life			Total
Gross balance at December 31, 2011	$	20,393	$	91,843	$	41,616		$	153,852
Accumulated amortization		—		—		(18,728	)		(18,728	)
Net balance at December 31, 2011	$	20,393	$	91,843	$	22,888		$	135,124
Gross balance at December 31, 2010	$	20,393	$	91,843	$	41,616		$	153,852
Accumulated amortization		—		—		(14,566	)		(14,566	)
Net balance at December 31, 2010	$	20,393	$	91,843	$	27,050		$	139,286
Gross balance at December 31, 2009	$	20,393	$	91,843	$	41,616		$	153,852
Accumulated amortization		—		—		(10,404	)		(10,404	)
Net balance at December 31, 2009	$	20,393	$	91,843	$	31,212		$	143,448

        The estimated remaining amortization expense for the Trademark and Distribution network is as follows:

2012	$	4,162
2013		4,162
2014		4,162
2015		4,162
2016 and there after		6,240
	$	22,888

        As described in "Significant accounting policies", the annual impairment test was performed and neither goodwill nor the other intangible assets were deemed to be impaired.

F-17

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments

        The Company's investments in fixed maturities are classified as trading and carried at fair value, with related net unrealized gains or losses included in earnings. The Company has adopted all authoritative guidance in effect as of the balance sheet date regarding certain market conditions that allow for fair value measurements that incorporate unobservable inputs where active market transaction based measurements are unavailable.

(a)   Classification within the fair value hierarchy

        Under U.S. GAAP, a company must determine the appropriate level in the fair value hierarchy for each fair value measurement. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or liability, into three levels. It gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

        Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement. Level 3 inputs are unobservable inputs for the asset or liability.

        Level 1 primarily consists of financial instruments whose value is based on quoted market prices or alternative indices including overnight repos and commercial paper. Level 2 includes financial instruments that are valued through independent external sources using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. The Company performs internal procedures on the valuations received from independent external sources. Financial instruments in this category include U.S. and U.K. Treasuries, sovereign debt, corporate debt, catastrophe bonds, U.S. agency and non-agency mortgage and asset-backed securities and bank loans. Level 3 includes financial instruments that are valued using market approach and income approach valuation techniques. These models incorporate both observable and unobservable inputs. An investment in a fund of hedge funds and a private equity investment are the only financial instruments in this category as at December 31, 2011.

        The Company's management and external investment advisors had noted illiquidity and dislocation in the non-Agency RMBS market for the period September 30, 2008 through to June 30, 2010. During this period, the Company identified certain non-Agency RMBS securities in its portfolio trading in inactive markets ("identified RMBS securities"). In order to gauge market activity for the identified RMBS securities, the Company, with assistance from external investment advisors, reviewed the pricing sources for each security in the portfolio. The Company utilized various pricing vendors to obtain market pricing information for investment securities.

F-18

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

        Consistent with U.S. GAAP, market approach fair value measurements for securities trading in inactive markets are not determinative. In weighing the fair value measurements resulting from market approach and income approach valuation techniques, the Company had previously placed less reliance on the market approach fair value measurements. The income approach valuation technique determines the fair value of each security on the basis of contractual cash flows, discounted using a risk-adjusted discount rate. As the income approach valuation technique incorporates both observable and significant unobservable inputs, the securities were included as Level 3 assets with respect to the fair value hierarchy. The foundation for the income approach was the amount and timing of future cash flows.

        During the three month period ended September 30, 2010, the Company, with assistance from external investment advisors, determined that market activity had increased for the identified RMBS securities. Therefore, a market approach valuation technique was adopted for the identified RMBS securities. Because the market approach incorporated observable inputs, the identified RMBS securities are classified as Level 2 with respect to the fair value hierarchy at September 30, 2010. During the three months ended December 31, 2010, the Company liquidated substantially all of the identified RMBS securities which had previously been classified as Level 3 securities.

        Other investments consist of an investment in a fund of hedge funds, a private equity investment and a deferred compensation trust held in mutual funds. The fund of hedge funds is a side pocket valued at $5,627 at December 31, 2011. While a redemption request has been submitted, the timing of receipt of proceeds on the side pocket is unknown. The fund administrator provides monthly reported net asset values ("NAV") with a one-month delay in its valuation. As a result, the fund administrator's November 30, 2011 NAV was used as a partial basis for fair value measurement in the Company's December 31, 2011 balance sheet. The fund manager provides an estimate of the performance of the fund for the following month based on the estimated performance provided from the underlying third-party funds. The Company utilizes the fund investment manager's primary market approach estimated NAV that incorporates relevant valuation sources on a timely basis. As this valuation technique incorporates both observable and significant unobservable inputs, the fund of hedge funds is classified as a Level 3 asset. To determine the reasonableness of the estimated NAV, the Company assesses the variance between the estimated NAV and the one-month delayed fund administrator's NAV. Immaterial variances are recorded in the following reporting period.

F-19

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

        At December 31, 2011, the Company's investments were allocated between Levels 1, 2 and 3 as follows:

	Level 1		Level 2		Level 3		Total
U.S. Government and Government Agency	$	—	$	1,182,393	$	—	$	1,182,393
Non-U.S. Government and Government Agency		—		449,358		—		449,358
States, municipalities, political subdivision		—		26,291		—		26,291
Agency residential mortgage-backed securities		—		468,054		—		468,054
Non-Agency residential mortgage-backed securities		—		32,706		—		32,706
U.S. corporate		—		1,329,758		—		1,329,758
Non-U.S. corporate		—		579,675		—		579,675
Bank loans		—		467,256		—		467,256
Catastrophe bonds		—		29,952		—		29,952
Asset-backed securities		—		328,299		—		328,299
Commercial mortgage-backed securities		—		403		—		403
Total fixed maturities		—		4,894,145		—		4,894,145
Short-term investments		257,854		22,337		—		280,191
Fund of hedge funds / Private equity investment		—		—		8,880		8,880
Mutual funds		—		7,907		—		7,907
Total	$	257,854	$	4,924,389	$	8,880	$	5,191,123

        At December 31, 2010, the Company's investments were allocated between Levels 1, 2 and 3 as follows:

	Level 1		Level 2		Level 3		Total
U.S. Government and Government Agency	$	—	$	1,677,166	$	—	$	1,677,166
Non-U.S. Government and Government Agency		—		554,199		—		554,199
States, municipalities, political subdivision		—		26,285		—		26,285
Agency residential mortgage-backed securities		—		445,859		—		445,859
Non-Agency residential mortgage-backed securities		—		56,470		—		56,470
U.S. corporate		—		1,308,406		—		1,308,406
Non-U.S. corporate		—		502,067		—		502,067
Bank loans		—		52,566		—		52,566
Catastrophe bonds		—		58,737		—		58,737
Asset-backed securities		—		123,569		—		123,569
Commercial mortgage-backed securities		—		18,543		—		18,543
Total fixed maturities		—		4,823,867		—		4,823,867
Short-term investments		259,261		14,253		—		273,514
Fund of hedge funds		—		—		12,892		12,892
Mutual funds		—		8,586		—		8,586
Total	$	259,261	$	4,846,706	$	12,892	$	5,118,859

F-20

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

        At December 31, 2011, Level 3 investments totaled $8,880, representing 0.2% of total investments measured at fair value on a recurring basis. At December 31, 2010, Level 3 investments totaled $12,892 representing 0.3% of total investments measured at fair value on a recurring basis.

        The following tables present a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs as at December 31, 2011 and 2010:

	Year Ended December 31, 2011
	Fixed maturity investments		Other investments			Total fair market value
Level 3 investments—Beginning of period	$	—	$	12,892		$	12,892
Purchases		—		3,253			3,253
Sales		—		(7,220	)		(7,220	)
Issuances		—		—			—
Settlements		—		—			—
Realized gains		—		697			697
Unrealized (losses)		—		(742	)		(742	)
Amortization		—		—			—
Transfers		—		—			—
Level 3 investments—End of period	$	—	$	8,880		$	8,880

	Year Ended December 31, 2010
	Fixed maturity investments			Other investments			Total fair market value
Level 3 investments—Beginning of period	$	85,336		$	25,670		$	111,006
Purchases		—			—			—
Sales		—			(13,850	)		(13,850	)
Issuances		—			—			—
Settlements		—			—			—
Realized gains		—			662			662
Unrealized (losses)		(6,307	)		410			(5,897	)
Amortization		(11,841	)		—			(11,841	)
Transfers		(67,188	)		—			(67,188	)
Level 3 investments—End of period	$	—		$	12,892		$	12,892

F-21

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

(b)   Net investment income

        Net investment income was derived from the following sources:

	Years Ended
	December 31, 2011			December 31, 2010			December 31, 2009
Fixed maturities and short-term investments	$	111,983		$	132,669		$	117,631
Cash and cash equivalents		7,285			8,180			3,374
Securities lending income		58			200			772
Total gross investment income		119,326			141,049			121,777
Investment expenses		(7,030	)		(6,946	)		(3,004	)
Net investment income	$	112,296		$	134,103		$	118,773

(c)   Fixed maturity and short-term investments

        The following represents an analysis of net realized gains (losses) and the change in net unrealized (losses) gains on investments:

	Years Ended
	December 31, 2011			December 31, 2010			December 31, 2009
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains	$	45,026		$	76,920		$	33,063
Gross realized (losses)		(16,494	)		(44,422	)		(44,606	)
Net realized gains (losses) on investments		28,532			32,498			(11,543	)
Net unrealized gains (losses) on securities lending		39			(1,009	)		6,978
Change in net unrealized (losses) gains on investments		(20,030	)		46,961			77,818
Total net realized gains (losses) and change in net unrealized (losses) gains on investments	$	8,541		$	78,450		$	73,253

F-22

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

        The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2011 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government and Government Agency	$	1,170,810	$	11,630	$	(47	)	$	1,182,393
Non-U.S. Government and Government Agency		446,258		9,173		(6,073	)		449,358
States, municipalities, political subdivision		25,715		586		(10	)		26,291
Agency residential mortgage-backed securities		451,751		16,622		(319	)		468,054
Non-Agency residential mortgage-backed securities		39,134		143		(6,571	)		32,706
U.S. corporate		1,314,375		24,932		(9,549	)		1,329,758
Non-U.S. corporate		577,743		6,320		(4,388	)		579,675
Bank loans		475,770		2,435		(10,949	)		467,256
Catastrophe bonds		29,250		702		—			29,952
Asset-backed securities		328,497		900		(1,098	)		328,299
Commercial mortgage-backed securities		402		1		—			403
Total fixed maturities		4,859,705		73,444		(39,004	)		4,894,145
Total short-term investments		280,299		1		(109	)		280,191
Total other investments		15,002		1,785		—			16,787
Total	$	5,155,006	$	75,230	$	(39,113	)	$	5,191,123

F-23

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

        The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2010 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government and Government Agency	$	1,665,050	$	20,134	$	(8,018	)	$	1,677,166
Non-U.S. Government and Government Agency		550,759		11,635		(8,195	)		554,199
States, municipalities, political subdivision		26,365		90		(170	)		26,285
Agency residential mortgage-backed securities		430,873		15,491		(505	)		445,859
Non-Agency residential mortgage-backed securities		62,020		64		(5,614	)		56,470
U.S. corporate		1,288,078		28,526		(8,198	)		1,308,406
Non-U.S. corporate		497,689		7,939		(3,561	)		502,067
Bank loans		52,612		58		(104	)		52,566
Catastrophe bonds		56,991		2,042		(296	)		58,737
Asset-backed securities		123,354		605		(390	)		123,569
Commercial mortgage-backed securities		18,246		299		(2	)		18,543
Total fixed maturities		4,772,037		86,883		(35,053	)		4,823,867
Total short-term investments		273,444		70		—			273,514
Total other investments		18,392		3,086		—			21,478
Total	$	5,063,873	$	90,039	$	(35,053	)	$	5,118,859

F-24

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

        The following table sets forth certain information regarding the investment ratings of the Company's fixed maturities portfolio as at December 31, 2011 and 2010. Investment ratings are the lower of Moody's or Standard & Poor's rating for each investment security, presented in Standard & Poor's equivalent rating. For investments where Moody's and Standard & Poor's ratings are not available, Fitch ratings are used and presented in Standard & Poor's equivalent rating.

	December 31, 2011					December 31, 2010
	Estimated Fair Value		% of Total			Estimated Fair Value		% of Total
AAA	$	882,912		18.0	%	$	2,946,514		61.2	%
AA		2,077,981		42.5	%		428,972		8.9	%
A		1,078,793		22.0	%		1,077,389		22.3	%
BBB		345,091		7.1	%		219,523		4.6	%
Investment grade		4,384,777		89.6	%		4,672,398		97.0	%
BB		254,409		5.2	%		74,475		1.5	%
B		231,420		4.7	%		45,660		0.9	%
CCC		12,578		0.3	%		29,219		0.6	%
CC		4,605		0.1	%		—		0.0	%
D/NR		6,356		0.1	%		2,115		0.0	%
Non-Investment grade		509,368		10.4	%		151,469		3.0	%
Total Fixed Maturities	$	4,894,145		100.0	%	$	4,823,867		100.0	%

        The amortized cost and estimated fair value amounts for fixed maturity securities held at December 31, 2011 and 2010 are shown by contractual maturity. Actual maturity may differ from contractual maturity because certain borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

	December 31, 2011				December 31, 2010
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	520,631	$	523,107	$	424,327	$	426,167
Due after one year through five years		3,160,647		3,186,711		3,498,334		3,540,408
Due after five years through ten years		350,459		346,654		207,918		206,317
Due after ten years		8,184		8,211		6,965		6,534
		4,039,921		4,064,683		4,137,544		4,179,426
Asset-backed and mortgage-backed securities		819,784		829,462		634,493		644,441
Total	$	4,859,705	$	4,894,145	$	4,772,037	$	4,823,867

        The Company has a five year, $500,000 secured letter of credit facility provided by a syndicate of commercial banks (the "Five Year Facility"). At December 31, 2011, approximately $333,179 (December 31, 2010: $268,944) of letters of credit were issued and outstanding under this facility for which $392,822 of investments were pledged as collateral (December 31, 2010: $325,532). In 2007, the Company entered into a $100,000 standby letter of credit facility which provides Funds at Lloyd's (the "Talbot FAL Facility"). On November 19, 2009, the Company entered into a Second Amendment to the Talbot FAL

F-25

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

Facility to reduce the commitment from $100,000 to $25,000. At December 31, 2011, $25,000 (December 31, 2010: $25,000) of letters of credit were issued and outstanding under the Talbot FAL Facility for which $44,623 of investments were pledged as collateral (December 31, 2010: $45,504). In addition, $2,129,570 of investments were held in trust at December 31, 2011 (December 31, 2010: $1,729,631). Of those, $1,686,586 were held in trust for the benefit of Talbot's cedants and policyholders, and to facilitate the accreditation of Talbot as an alien insurer/reinsurer by certain regulators (December 31, 2010: $1,489,243).

        The Company assumed two letters of credit facilities as part of the acquisition of IPC Holdings, Ltd. (the "IPC Acquisition"): a Credit Facility between IPC, IPCRe Limited, the Lenders party thereto and Wachovia Bank, National Association (the "IPC Syndicated Facility") and a Letters of Credit Master Agreement between Citibank N.A. and IPCRe Limited (the "IPC Bi-Lateral Facility"). At March 31, 2010, the IPC Syndicated Facility was closed. At December 31, 2011, the IPC Bi-Lateral Facility had $57,146 (December 31, 2010: $68,063) letters of credit issued and outstanding for which $105,428 (December 31, 2010: $105,310) of investments were held in an associated collateral account.

(d)   Securities lending

        The Company participates in a securities lending program whereby certain securities from its portfolio are loaned to third parties for short periods of time through a lending agent. The Company retains all economic interest in the securities it lends and receives a fee from the borrower for the temporary use of the securities. Collateral in the form of cash, government securities and letters of credit is required at a rate of 102% of the market value of the loaned securities and is held by a third party. As at December 31, 2011, the Company had $8,286 (December 31, 2010: $22,566) in securities on loan. During the year ended December 31, 2011, the Company recorded a $39 unrealized gain on this collateral in its Statements of Operations (December 31, 2010: unrealized loss ($1,009)).

        Securities lending collateral reinvested includes corporate floating rate securities and overnight repos with an average reset period of 3.9 days (December 31, 2010: 17.6 days). As at December 31, 2011, the securities lending collateral reinvested by the Company in connection with its securities lending program was allocated between Levels 1, 2 and 3 as follows:

	Level 1		Level 2		Level 3		Total
Corporate	$	—	$	255	$	—	$	255
Cash and cash equivalents		7,481		—		—		7,481
Total	$	7,481	$	255	$	—	$	7,736

        As at December 31, 2010, the securities lending collateral reinvested by the Company in connection with its securities lending program was allocated between Levels 1, 2 and 3 as follows:

	Level 1		Level 2		Level 3		Total
Corporate	$	—	$	229	$	—	$	229
Asset-backed securities		—		5,005		—		5,005
Short-term investments		2,644		14,450		—		17,094
Total	$	2,644	$	19,684	$	—	$	22,328

F-26

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

7. Investments (Continued)

        The following table sets forth certain information regarding the investment ratings of the Company's securities lending collateral reinvested as at December 31, 2011 and 2010. Investment ratings are the lower of Moody's or Standard & Poor's rating for each investment security, presented in Standard & Poor's equivalent rating. For investments where Moody's and Standard & Poor's ratings are not available, Fitch ratings are used and presented in Standard & Poor's equivalent rating.

	December 31, 2011					December 31, 2010
	Estimated Fair Value		% of Total			Estimated Fair Value		% of Total
AAA	$	—		0.0	%	$	5,454		24.4	%
AA+		—		0.0	%		11,003		49.3	%
AA		—		0.0	%		—		0.0	%
AA-		—		0.0	%		2,998		13.5	%
A+		—		0.0	%		—		0.0	%
A		—		0.0	%		—		0.0	%
NR		255		3.3	%		229		1.0	%
		255		3.3	%		19,684		88.2	%
NR- Short-term investments(a)		7,481		96.7	%		2,644		11.8	%
Total	$	7,736		100.0	%	$	22,328		100.0	%

(a)

This amount relates to certain short-term investments with short original maturities which are generally not rated.

        The amortized cost and estimated fair value amounts for securities lending collateral reinvested by the Company at December 31, 2011 and 2010 are shown by contractual maturity below. Actual maturity may differ from contractual maturity because certain borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

	December 31, 2011				December 31, 2010
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	7,462	$	7,481	$	17,093	$	17,094
Due after one year through five years		1,000		255		6,000		5,234
Total	$	8,462	$	7,736	$	23,093	$	22,328

8. Investment in AlphaCat Re 2011, Ltd.

        On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, a special purpose "sidecar" reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. At the time of formation, Validus Re had an equity interest in AlphaCat Re 2011 and as Validus Re held a majority of AlphaCat Re 2011's outstanding voting rights, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company.

        On December 23, 2011, the Company completed a secondary offering of common shares of AlphaCat Re 2011 to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors. As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re

F-27

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

8. Investment in AlphaCat Re 2011, Ltd. (Continued)

2011; however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%. As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 have been derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 is treated as an equity method investment as at December 31, 2011. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 is recorded in the Consolidated Statements of Operations and Comprehensive Income as net income attributable to noncontrolling interest.

        The following table presents a reconciliation of the beginning and ending noncontrolling interest and investment in non-consolidated affiliate balances for the year ended December 31, 2011:

	Year Ended December 31, 2011
	Noncontrolling interest			Investment in non-consolidated affiliate
As at December 31, 2010	$	—		$	—
Initial purchase of shares		134,301			50,000
Secondary purchase of shares		60,000			—
Purchase (sale) of shares		11,000			(11,000	)
Gain on sale of shares		—			553
Accretion of discount on preferred shares		233			—
Initial transaction costs		(2,304	)		—
Net income		21,793			11,642
Derecognition of noncontrolling interest		(225,023	)		—
Fair value adjustment		—			1,836
As at December 31, 2011	$	—		$	53,031

        The following table presents the Company's equity investment in AlphaCat Re 2011 at December 31, 2011:

	Investment in non-consolidated affiliate
	Investment		Voting ownership %			Equity ownership %			Carrying value
AlphaCat Re 2011	$	41,389		43.7	%		22.3	%	$	53,031

        The following table presents certain summarized financial information of the investee as a whole at December 31, 2011 and for the year ended:

	Combined investee summarized financial data
	Total assets		Total liabilities		Total revenue		Net income
AlphaCat Re 2011	$	293,691	$	17,973	$	50,640	$	33,435

F-28

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

9. Derivative Instruments Used in Hedging Activities

        The Company enters into derivative instruments for risk management purposes, specifically to hedge unmatched foreign currency exposures. During the three months ended June 30, 2011, the Company entered into a foreign currency forward exchange contract to mitigate the risk of foreign currency exposure of unpaid losses denominated in Japanese Yen. The Yen foreign currency forward contract was renewed during the three months ended December 31, 2011. During the three months ended March 31, 2011, the Company entered into three foreign currency forward exchange contracts to mitigate the risk of fluctuations in the Euro and Australian dollar to U.S. dollar rates. Two of the contracts were renewed during the three months ended December 31, 2011. During the three months ended December 31, 2011, the Company entered into an additional foreign currency forward contract to mitigate the risk of fluctuations in the Euro to U.S. dollar rates. During the year ended December 31, 2010, the Company entered into a foreign currency forward contract to mitigate the risk of foreign currency exposure of unpaid losses denominated in Chilean Pesos (CLP). The CLP foreign currency forward contract was renewed during the three months ended December 31, 2011. The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at December 31, 2011:

			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contracts	$	75,323	Other assets	$	476	Accounts payable and accrued expenses	$	—

        The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at December 31, 2010:

			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contract	$	75,000	Other assets	$	2,905	Accounts payable and accrued expenses	$	—

(a)   Classification within the fair value hierarchy

        As described in Note 7 "Investments", under U.S. GAAP, a company must determine the appropriate level in the fair value hierarchy for each fair value measurement. The assumptions used within the valuation are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Accordingly, these derivatives were classified within Level 2 of the fair value hierarchy.

(b)   Derivative instruments designated as a fair value hedge

        The Company designates its derivative instruments as fair value hedges and formally and contemporaneously documents all relationships between the hedging instruments and hedged items and links the hedging derivatives to specific assets and liabilities. The Company assesses the effectiveness of the hedges, both at inception and on an on-going basis and determines whether the hedges are highly effective in offsetting changes in fair value of the linked hedged items.

F-29

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

9. Derivative Instruments Used in Hedging Activities (Continued)

        The following table provides the total impact on earnings relating to the derivative instruments formally designated as fair value hedges along with the impact of the related hedged items for the years ended December 31, 2011 and 2010:

		Year ended December 31, 2011
Derivatives designated as fair value hedges and related hedged item:	Location of gain (loss) recognized in income	Amount of gain (loss) recognized in income on derivatives			Amount of gain (loss) recognized on hedged items recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivatives (ineffective portion)
Foreign exchange	Foreign exchange gain (loss)	$	(3,994	)	$	3,994	$	—

		Year ended December 31, 2010
Derivatives designated as fair value hedges and related hedged item:	Location of gain (loss) recognized in income	Amount of gain (loss) recognized in income on derivatives		Amount of gain (loss) recognized on hedged items recognized in income attributable to risk being hedged			Amount of gain (loss) recognized in income on derivatives (ineffective portion)
Foreign exchange	Foreign exchange gain (loss)	$	2,905	$	(2,905	)	$	—

10. Premiums receivable

        Premiums receivable are composed of premiums in the course of collection, net of commissions and brokerage, and premiums accrued but unbilled, net of commissions and brokerage. The following is a breakdown of the components of receivables at December 31, 2011 and 2010:

	Premiums in course of collection			Premiums accrued but unbilled		Total
Balance as at December 31, 2010	$	118,342		$	450,419	$	568,761
Change during 2011		56,769			20,824		77,593
Balance as at December 31, 2011	$	175,111		$	471,243	$	646,354
Balance as at December 31, 2009	$	243,930		$	307,686	$	551,616
Change during 2010		(125,588	)		142,733		17,145
Balance as at December 31, 2010	$	118,342		$	450,419	$	568,761

11. Reserve for losses and loss expenses

        Reserves for losses and loss expenses are based in part upon the estimation of case losses reported from brokers, insureds and ceding companies. The Company also uses statistical and actuarial methods to estimate ultimate expected losses and loss expenses. The period of time from the occurrence of a loss, the reporting of a loss to the Company and the settlement of the Company's liability may be several months or years. During this period, additional facts and trends may be revealed. As these factors become apparent, case reserves will be adjusted, sometimes requiring an increase or decrease in the overall reserves of the

F-30

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

11. Reserve for losses and loss expenses (Continued)

Company, and at other times requiring a reallocation of incurred but not reported reserves to specific case reserves. These estimates are reviewed regularly, and such adjustments, if any, are reflected in earnings in the period in which they become known. While management believes that it has made a reasonable estimate of ultimate losses, there can be no assurances that ultimate losses and loss expenses will not exceed the total reserves.

        The following table represents an analysis of paid and unpaid losses and loss expenses incurred and a reconciliation of the beginning and ending unpaid loss expenses as at December 31, 2011, 2010 and 2009:

	Years Ended
	December 31, 2011			December 31, 2010			December 31, 2009
Reserve for losses and loss expenses, beginning of period	$	2,035,973		$	1,622,134		$	1,305,303
Losses and loss expenses recoverable		(283,134	)		(181,765	)		(208,796	)
Net reserves for losses and loss expenses, beginning of period		1,752,839			1,440,369			1,096,507
Net reserves acquired in purchase of IPC		—			—			304,957
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year		1,400,520			1,144,196			625,810
Prior years		(156,119	)		(156,610	)		(102,053	)
Total incurred losses and loss expenses		1,244,401			987,586			523,757
Less net losses and loss expenses paid in respect of losses occurring in:
Current year		(272,479	)		(288,974	)		(122,351	)
Prior years		(470,547	)		(384,448	)		(385,084	)
Total net paid losses		(743,026	)		(673,422	)		(507,435	)
Foreign exchange		4,444			(1,694	)		22,583
Net reserve for losses and loss expenses, end of period		2,258,658			1,752,839			1,440,369
Losses and loss expenses recoverable		372,485			283,134			181,765
Reserve for losses and loss expenses, end of period	$	2,631,143		$	2,035,973		$	1,622,134

        Incurred losses and loss adjustment expenses comprise:

	Years Ended
	December 31, 2011			December 31, 2010			December 31, 2009
Gross losses and loss adjustment expenses	$	1,555,275		$	1,411,192		$	598,877
Reinsurance recoverable		(310,874	)		(423,606	)		(75,120	)
Total incurred losses and loss adjustment expenses	$	1,244,401		$	987,586		$	523,757

        The December 31, 2011 and 2010 gross reserves balance comprises reserves for reported claims of $1,414,442 and $1,035,881, respectively, and reserves for claims incurred but not reported of $1,216,701

F-31

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

11. Reserve for losses and loss expenses (Continued)

and $1,000,092, respectively. The net favorable development on prior years by segment and line of business is as follows:

	Year Ended December 31, 2011
	Property			Marine			Specialty			Total
Validus Re	$	(49,020	)	$	(10,234	)	$	(9,356	)	$	(68,610	)
Talbot		(22,169	)		(31,382	)		(33,958	)		(87,509	)
Net favorable development	$	(71,189	)	$	(41,616	)	$	(43,314	)	$	(156,119	)

        The amount recorded represents management's best estimate of expected losses and loss expenses on premiums earned. Favorable loss development on prior years totaled $156,119. For Validus Re, the property lines experienced favorable development of $49,020 primarily due to a reduction in the loss estimates on large loss events and favorable development on attritional losses and various smaller loss events. The marine lines experienced favorable development of $10,234 primarily due to favorable development on large loss events and attritional losses and various smaller loss events. The specialty lines experienced favorable development of $9,356 primarily due to favorable development on attritional losses partially offset by adverse development on large loss events. For Talbot, the property lines experienced $22,169 of favorable development primarily due to lower than expected claims development on large losses and catastrophe events as well as favorable development on attritional losses. The marine lines experienced $31,382 of favorable development primarily due to favorable development on attritional losses. The specialty lines experienced $33,958 of favorable development primarily due to lower than expected development on large losses and catastrophe events as well as favorable development on attritional losses.

	Year Ended December 31, 2010
	Property			Marine			Specialty			Total
Validus Re	$	(49,831	)	$	(17,616	)	$	(3,170	)	$	(70,617	)
Talbot		(22,450	)		(52,415	)		(11,128	)		(85,993	)
Net favorable development	$	(72,281	)	$	(70,031	)	$	(14,298	)	$	(156,610	)

        The amount recorded represents management's best estimate of expected losses and loss expenses on premiums earned. Favorable loss development on prior years totaled $156,610. For Validus Re, the property and specialty lines experienced favorable development of $49,831 and $3,170, respectively, primarily due to lower than expected claims development. The marine lines experienced $17,616 of favorable development primarily due to higher than expected recoveries associated with the 2007 California wildfires, as well as lower than expected claims development. For Talbot, the property lines experienced $22,450 of favorable development primarily due to lower than expected claims development on the property facultative and binder lines, together with favorable development on hurricanes Katrina and Ike. The marine lines experienced $52,415 of favorable development primarily due to lower than expected attritional loss development across a number of lines, in particular on the hull and energy lines. The specialty lines experienced $11,128 of favorable development primarily due to lower than expected

F-32

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

11. Reserve for losses and loss expenses (Continued)

claims across most of the specialty sub-classes, partially offset by one notable loss on the financial institutions lines.

	Year Ended December 31, 2009
	Property			Marine			Specialty			Total
Validus Re	$	(65,109	)	$	19,628		$	(7,491	)	$	(52,972	)
Talbot		(27,630	)		(15,306	)		(6,145	)		(49,081	)
Net favorable development	$	(92,739	)	$	4,322		$	(13,636	)	$	(102,053	)

        The amount recorded represents management's best estimate of expected losses and loss expenses on premiums earned. Favorable loss development on prior years totaled $102,053. For Validus Re, the property lines experienced $65,109 of favorable development primarily due to the reclassification of losses from onshore energy exposures during the 2007 California wildfires to the marine line and reduced loss estimates for Hurricane Ike, the June 2008 Midwest flood event and October 2007 Peruvian mining loss, as well as lower than expected claim development elsewhere. The marine lines experienced $19,628 of adverse development primarily due to the reclassification from the property line and increased loss estimates for Hurricanes Ike and Gustav. For Talbot, the property lines experienced $27,630 of favorable loss development primarily due to lower than expected claims development together with a favorable development relating to Hurricane Katrina. The marine lines experienced $15,306 of favorable development due to continued low claims activity and reduced provisions for late reported claims in the more developed underwriting years of the marine liabilities lines.

12. Accounts payable and accrued expenses

        The following are components of accounts payable and accrued expenses:

	Years Ended
	December 31, 2011		December 31, 2010
Accrued interest on debt	$	10,454	$	10,765
Amounts due to brokers		18,996		21,524
Trade and compensation payables		53,952		67,031
Total	$	83,402	$	99,320

13. Reinsurance

        The Company enters into reinsurance and retrocession agreements in order to mitigate its accumulation of loss, reduce its liability on individual risks, enable it to underwrite policies with higher limits, and increase its aggregate capacity. The cession of insurance and reinsurance does not legally discharge the Company from its primary liability for the full amount of the policies, and the Company is required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance or retrocession agreement. Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying liabilities.

F-33

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

13. Reinsurance (Continued)

(a)   Effects of reinsurance on premiums written and earned

        The effects of reinsurance on premiums written and earned for the years ended December 31, 2011, 2010 and 2009 are as follows:

	Year Ended December 31, 2011
	Validus Re						Talbot						Total
	Written			Earned			Written			Earned			Elimination			Written			Earned
Direct	$	—		$	—		$	510,200		$	480,432		$	—		$	510,200		$	480,432
Assumed		1,190,220			1,158,917			503,922			507,383			(79,651	)		1,614,491			1,666,300
Ceded		(150,718	)		(127,026	)		(218,174	)		(217,563	)		79,651			(289,241	)		(344,589	)
Total	$	1,039,502		$	1,031,891		$	795,948		$	770,252		$	—		$	1,835,450		$	1,802,143

	Year Ended December 31, 2010
	Validus Re						Talbot						Total
	Written			Earned			Written			Earned			Elimination			Written			Earned
Direct	$	—		$	—		$	460,337		$	450,348		$	—		$	460,337		$	450,348
Assumed		1,101,239			1,127,249			520,736			503,021			(91,746	)		1,530,229			1,630,270
Ceded		(63,147	)		(76,049	)		(258,081	)		(243,446	)		91,746			(229,482	)		(319,495	)
Total	$	1,038,092		$	1,051,200		$	722,992		$	709,923		$	—		$	1,761,084		$	1,761,123

	Year Ended December 31, 2009
	Validus Re						Talbot						Total
	Written			Earned			Written			Earned			Elimination			Written			Earned
Direct	$	—		$	—		$	459,771		$	427,280		$	—		$	459,771		$	427,280
Assumed		768,084			880,434			460,135			382,535			(66,749	)		1,161,470			1,262,969
Ceded		(95,446	)		(84,884	)		(204,186	)		(155,788	)		66,749			(232,883	)		(240,672	)
Total	$	672,638		$	795,550		$	715,720		$	654,027		$	—		$	1,388,358		$	1,449,577

(b)   Credit risk

        The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers. The reinsurance program is generally placed with reinsurers whose rating, at the time of placement, was A- or better rated by Standard & Poor's or the equivalent with other rating agencies. Exposure to a single reinsurer is also controlled with restrictions dependent on rating. At December 31, 2011, 99.4% of reinsurance recoverables (which includes loss reserves recoverable and recoverables on paid losses) were from reinsurers rated A- or better and

F-34

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

13. Reinsurance (Continued)

included $125,298 of IBNR recoverable (December 31, 2010: $146,519). Reinsurance recoverables by reinsurer are as follows:

	Years Ended
	December 31, 2011					December 31, 2010
	Reinsurance Recoverable		% of Total			Reinsurance Recoverable		% of Total
Top 10 reinsurers	$	323,315		69.8	%	$	222,420		71.5	%
Other reinsurers' balances > $1 million		132,417		28.6	%		80,221		25.8	%
Other reinsurers' balances < $1 million		7,248		1.6	%		8,489		2.7	%
Total	$	462,980		100.0	%	$	311,130		100.0	%

	December 31, 2011
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	77,419		24.0	%
Allianz	AA-		59,764		18.5	%
Hannover Re	AA-		39,762		12.3	%
Everest Re	A+		38,618		11.9	%
Transatlantic Re	A+		21,344		6.6	%
Tokio Millennium Re Ltd	AA-		20,432		6.3	%
Fully collateralized reinsurers	NR		18,140		5.6	%
Odyssey Reinsurance Company	A-		16,737		5.2	%
Platinum Underwriters	A		15,833		4.9	%
Munich Re	AA-		15,266		4.7	%
Total		$	323,315		100.0	%

	December 31, 2010
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	60,716		27.2	%
Hannover Re	AA-		32,392		14.6	%
Fully collateralized reinsurers	NR		23,750		10.7	%
Montpelier Re	A-		20,000		9.0	%
Munich Re	AA-		17,411		7.8	%
Everest Re	A+		16,611		7.5	%
Allianz	AA		14,184		6.4	%
Transatlantic Re	A+		13,758		6.2	%
Tokio Millennium Re	AA		11,980		5.4	%
Platinum Re	A		11,618		5.2	%
Total		$	222,420		100.0	%

F-35

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

13. Reinsurance (Continued)

        At December 31, 2011 and December 31, 2010, the provision for uncollectible reinsurance relating to losses recoverable was $6,821 and $5,652, respectively. To estimate the provision for uncollectible reinsurance recoverable, the reinsurance recoverable is first allocated to applicable reinsurers. This determination is based on a process rather than an estimate, although an element of judgment is applied. As part of this process, ceded IBNR is allocated by reinsurer. Of the $462,980 reinsurance recoverable at December 31, 2011, $18,140 was fully collateralized (December 31, 2010: $23,750).

        The Company uses a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are reinsurance recoverable balances by reinsurer and default factors used to determine the portion of a reinsurer's balance deemed to be uncollectible. Default factors require considerable judgment and are determined using the current rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions.

14. Share capital

(a)   Authorized and issued

        The Company's authorized share capital is 571,428,571 voting and non-voting shares with a par value of $0.175 per share. The holders of voting and non-voting common shares are entitled to receive dividends. Holders of voting common shares are allocated one vote per share, provided that, if the controlled shares of any shareholder or group of related shareholders constitute more than 9.09 percent of the outstanding common shares of the Company, their voting power will be reduced to 9.09 percent.

        On September 4, 2009, the Company acquired all of the outstanding shares of IPC from a group of institutional and other investors. Pursuant to the Amalgamation Agreement, the Company acquired all of IPC's outstanding common shares in exchange for the Company's common shares and cash. The Company issued 54,556,762 common shares (and 21,506 restricted share awards) valued at $24.10 per share as partial consideration for the acquisition.

        The Company may from time to time repurchase its securities, including common shares, Junior Subordinated Deferrable Debentures and Senior Notes. In November 2009, the Board of Directors of the Company authorized an initial $400,000 share repurchase program. On February 17, 2010, the Board of Directors of the Company authorized the Company to return up to $750,000 to shareholders. This amount was in addition to, and in excess of, the $135,494 of common shares purchased by the Company through February 17, 2010 under its previously authorized $400,000 share repurchase program. On May 6, 2010, the Board of Directors authorized a self tender offer pursuant to which the Company repurchased $300,000 in common shares. On November 4, 2010, the Board of Directors authorized a self tender offer pursuant to which the Company repurchased $238,362 in common shares. In addition, the Board of Directors authorized separate repurchase agreements with funds affiliated with or managed by each of Aquiline Capital Partners LLC, New Mountain Capital LLC, and Vestar Capital Partners pursuant to which the Company repurchased $61,638 in common shares. On December 20, 2010, the Board of Directors authorized the Company to return up to an additional $400,000 to shareholders. This amount is in addition to the $929,173 of common shares purchased by the Company through December 23, 2010 under its previously authorized share repurchase program.

F-36

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

14. Share capital (Continued)

        The Company expects the purchases under its share repurchase program 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 of Directors at any time.

        The following table is a summary of the common shares issued and outstanding:

	Common Shares
Common shares issued, December 31, 2010		132,838,111
Restricted share awards vested, net of shares withheld		569,104
Restricted share units vested, net of shares withheld		9,497
Employee seller shares vested		197,174
Options exercised		459,932
Warrants exercised		428,884
Direct issuance of common stock		363
Common shares issued, December 31, 2011		134,503,065
Shares repurchased, December 31, 2011		(35,031,985	)
Common shares outstanding, December 31, 2011		99,471,080

	Common Shares
Common shares issued, December 31, 2009		131,616,349
Restricted share awards vested, net of shares withheld		405,055
Restricted share units vested, net of shares withheld		57,192
Employee seller shares vested		203,544
Options exercised		550,014
Warrants exercised		5,957
Common shares issued, December 31, 2010		132,838,111
Shares repurchased, December 31, 2010		(34,836,885	)
Common shares outstanding, December 31, 2010		98,001,226

F-37

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

14. Share capital (Continued)

	Common Shares
Common shares issued, December 31, 2008		75,624,697
Restricted share awards vested, net of shares withheld		423,746
Restricted share units vested, net of shares withheld		360,383
Employee seller shares vested		248,085
Options exercised		164,834
Warrants exercised		237,842
Direct issuance of common stock		54,556,762
Common shares issued, December 31, 2009		131,616,349
Shares repurchased, December 31, 2009		(3,156,871	)
Common shares outstanding, December 31, 2009		128,459,478

(b)   Warrants

        In consideration for the founder's and sponsoring investors' commitments, the Company had outstanding as at December 31, 2011 warrants to the founding shareholder and sponsoring investors to purchase, in the aggregate, up to 6,916,678 (December 31, 2010: 7,934,860) common shares. Of those outstanding, 1,726,011 (December 31, 2010: 2,090,815) of the warrants are to purchase non-voting common shares.

        The warrants may be settled using either the physical settlement or net-share settlement methods. The warrants have been classified as equity instruments, in accordance with U.S. GAAP guidance for "Derivatives and Hedging, Contracts in Entity's own Equity." The warrants were measured at fair value and recorded in additional paid-in capital.

        The fair value of each warrant issued was estimated on the date of grant using the Black-Scholes option-pricing model. The volatility assumption used, of approximately 30.0%, was derived from the historical volatility of the share price of a range of publicly-traded Bermuda reinsurance companies of a similar business nature to the Company. No allowance was made for any potential illiquidity associated with the private trading of the Company's shares. The other assumptions in the warrant-pricing model were as follows:

	July 24, 2007 Issuance			February 3, 2006 Issuance			December 15, 2005 Issuance
Warrants issued		256,409			8,593			8,446,727
Average strike price	$	20.00		$	17.50		$	17.50
Volatility		30.0	%		30.0	%		30.0	%
Risk-free rate		4.5	%		4.5	%		4.5	%
Expected dividend yield		0.0	%		0.0	%		0.0	%
Expected term (years)		8			10			10
Calculated fair value per warrant	$	11.28		$	8.89		$	8.89

F-38

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

14. Share capital (Continued)

        No further warrants are anticipated to be issued. The holder of the warrant is entitled to exercise the warrant in whole or in part at any time until the expiration date.

        During the year ended December 31, 2011, 1,018,184 (2010: 17,278) warrants were exercised which resulted in the net share issuance of 428,884 (2010: 5,957) common shares.

(c)   Deferred share units

        Under the terms of the Company's Director Stock Compensation Plan, non-management directors may elect to receive their director fees in deferred share units rather than cash. The number of share units distributed in case of election under the plan is equal to the amount of the annual retainer fee otherwise payable to the director on such payment date divided by 100% of the fair market value of a share on such payment date. Additional deferred share units are issued in lieu of dividends that accrue on these deferred share units. The total outstanding deferred share units at December 31, 2011 was 4,850 (December 31, 2010: 4,727).

(d)   Dividends

        On February 9, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on March 31, 2011 to holders of record on March 15, 2011.

        On May 4, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on June 30, 2011 to holders of record on June 15, 2011.

        On August 3, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on September 30, 2011 to holders of record on September 15, 2011.

        On November 2, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on December 30, 2011 to holders of record on December 15, 2011.

15. Retirement plans

        The Company provides pension benefits to eligible employees through various plans which are managed externally and sponsored by the Company. All pension plans are structured as defined contribution retirement plans. The Company's contributions are expensed as incurred. The Company's expenses for its defined contribution retirement plans for the years ended December 31, 2011, 2010 and 2009 were $7,591, $7,564 and $5,606, respectively.

F-39

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans

(a)   Long Term Incentive Plan and Short Term Incentive Plan

        The Company's Amended and Restated 2005 Long Term Incentive Plan ("LTIP") provides for grants to employees of options, stock appreciation rights ("SARs"), restricted shares, restricted share units, performance shares, dividend equivalents or other share-based awards. In addition, the Company may issue restricted share awards or restricted share units in connection with awards issued under its annual Short Term Incentive Plan ("STIP"). The total number of shares reserved for issuance under the LTIP and STIP are 13,126,896 shares of which 4,109,215 shares are remaining. The LTIP and STIP are administered by the Compensation Committee of the Board of Directors. No SARs have been granted to date. Grant prices are established at the fair market value of the Company's common shares at the date of grant.

i.    Options

        Options may be exercised for voting common shares upon vesting. Options have a life of 10 years and vest either ratably or at the end of the required service period from the date of grant. Grant prices are established at the estimated fair value of the Company's common shares at the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used for all grants to date:

Year	Weighted average risk free interest rate			Weighted average dividend yield			Expected life (years)		Expected volatility
2009		3.9	%		3.7	%		2		34.6	%
2010(a)		n/a			n/a			n/a		n/a
2011(a)		n/a			n/a			n/a		n/a

(a)

The Company did not grant any stock option awards during the years ended December 31, 2011 and 2010.

        Expected volatility is based on stock price volatility of comparable publicly-traded companies. The Company used the simplified method consistent with U.S. GAAP authoritative guidance on stock compensation expenses to estimate expected lives for options granted during the period as historical exercise data was not available and the options met the requirement as set out in the guidance.

        Share compensation expenses of $1,770 were recorded in respect of options for the year ended December 31, 2011 (2010: $3,845; 2009: $4,158). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

F-40

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans (Continued)

        Activity with respect to options for the year ended December 31, 2011 was as follows:

	Options			Weighted Average Grant Date Fair Value		Weighted Average Grant Date Exercise Price
Options outstanding, December 31, 2010		2,723,684		$	6.74	$	20.19
Options granted		—			—		—
Options exercised		(459,932	)		6.98		20.55
Options forfeited		(740	)		10.30		20.39
Options outstanding, December 31, 2011		2,263,012		$	6.69	$	20.12
Options exercisable at December 31, 2011		2,188,566		$	6.63	$	20.01

        Activity with respect to options for year ended December 31, 2010 was as follows:

	Options			Weighted Average Grant Date Fair Value		Weighted Average Grant Date Exercise Price
Options outstanding, December 31, 2009		3,278,015		$	6.83	$	19.88
Options granted		—			—		—
Options exercised		(550,014	)		7.22		18.32
Options forfeited		(4,317	)		10.30		20.39
Options outstanding, December 31, 2010		2,723,684		$	6.74	$	20.19
Options exercisable at December 31, 2010		2,505,905		$	6.61	$	20.07

F-41

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans (Continued)

        Activity with respect to options for year ended December 31, 2009 was as follows:

	Options			Weighted Average Grant Date Fair Value		Weighted Average Grant Date Exercise Price
Options outstanding, December 31, 2008		2,799,938		$	7.57	$	18.23
Options granted		650,557			3.42		27.27
Options exercised		(164,834	)		5.80		21.01
Options forfeited		(7,646	)		10.30		20.39
Options outstanding, December 31, 2009		3,278,015		$	6.83	$	19.88
Options exercisable at December 31, 2009		2,468,928		$	6.52	$	20.10

        At December 31, 2011, there were $141 (December 31, 2010: $851; December 31, 2009: $4,906) of total unrecognized share compensation expenses that are expected to be recognized over a weighted-average period of 0.2 year (December 31, 2010: 1.2 years; December 31, 2009: 1.3 years).

ii.    Restricted share awards

        Restricted shares granted under the LTIP and STIP vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment and transferability. Share compensation expenses of $27,428 were recorded in respect of restricted share awards for the year ended December 31, 2011 (2010: $20,038; 2009: $16,775). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

        Activity with respect to unvested restricted share awards for the year ended December 31, 2011 was as follows:

	Restricted Share Awards			Weighted Average Grant Date Fair Value
Restricted share awards outstanding, December 31, 2010		3,114,039		$	24.33
Restricted share awards granted		621,254			31.92
Restricted share awards vested		(712,692	)		24.85
Restricted share awards forfeited		(19,054	)		26.63
Restricted share awards outstanding, December 31, 2011		3,003,547		$	25.77

F-42

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans (Continued)

        Activity with respect to unvested restricted share awards for the year ended December 31, 2010 was as follows:

	Restricted Share Awards			Weighted Average Grant Date Fair Value
Restricted share awards outstanding, December 31, 2009		2,525,958		$	23.39
Restricted share awards granted		1,191,873			25.94
Restricted share awards vested		(503,322	)		23.43
Restricted share awards forfeited		(100,470	)		24.22
Restricted share awards outstanding, December 31, 2010		3,114,039		$	24.33

        Activity with respect to unvested restricted share awards for the year ended December 31, 2009 was as follows:

	Restricted Share Awards			Weighted Average Grant Date Fair Value
Restricted share awards outstanding, December 31, 2008		2,307,402		$	22.69
Restricted share awards granted		772,672			24.15
Restricted share awards vested		(512,847	)		21.33
Restricted share awards forfeited		(41,269	)		24.05
Restricted share awards outstanding, December 31, 2009		2,525,958		$	23.39

        At December 31, 2011, there were $40,809 (December 31, 2010: $44,290; December 31, 2009: $38,124) of total unrecognized share compensation expenses in respect of restricted share awards that are expected to be recognized over a weighted-average period of 2.4 years (December 31, 2010: 2.5 years; December 31, 2009: 2.7 years).

iii.    Restricted share units

        Restricted share units under the LTIP and STIP vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment and transferability. Share compensation expenses of $456 were recorded in respect of restricted share units for the year ended December 31, 2011 (2010: $393; 2009: $5,513). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

F-43

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans (Continued)

        Activity with respect to unvested restricted share units for the year ended December 31, 2011 was as follows:

	Restricted Share Units			Weighted Average Grant Date Fair Value
Restricted share units outstanding, December 31, 2010		47,049		$	25.04
Restricted share units granted		18,388			32.10
Restricted share units vested		(13,340	)		24.72
Restricted share units issued in lieu of cash dividends		1,215			27.30
Restricted share units forfeited		—			—
Restricted share units outstanding, December 31, 2011		53,312		$	27.60

        Activity with respect to unvested restricted share units for the year ended December 31, 2010 was as follows:

	Restricted Share Units			Weighted Average Grant Date Fair Value
Restricted share units outstanding, December 31, 2009		79,447		$	19.02
Restricted share units granted		26,782			25.65
Restricted share units vested		(59,193	)		17.31
Restricted share units issued in lieu of cash dividends		1,107			25.45
Restricted share units forfeited		(1,094	)		21.49
Restricted share units outstanding, December 31, 2010		47,049		$	25.04

        Activity with respect to unvested restricted share units for the year ended December 31, 2009 was as follows:

	Restricted Share Units			Weighted Average Grant Date Fair Value
Restricted share units outstanding, December 31, 2008		12,274		$	25.28
Restricted share units granted		427,451			13.83
Restricted share units vested		(360,769	)		13.10
Restricted share units issued in lieu of cash dividends		491			25.22
Restricted share units forfeited		—			—
Restricted share units outstanding, December 31, 2009		79,447		$	19.02

        At December 31, 2011, there were $985 (December 31, 2010: $809; December 31, 2009: $985) of total unrecognized share compensation expenses in respect of restricted share units that are expected to be recognized over a weighted-average period of 2.7 years (December 31, 2010: 2.7 years; December 31, 2009: 1.4 years).

F-44

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans (Continued)

iv.    Performance share awards

        The Performance Share Awards contain a performance based component. The performance component relates to the compounded growth in the Dividend Adjusted Diluted Book Value per Share over a three year period. For performance share awards granted during the period, the grant date Diluted Book Value per Share ("DBVPS") is based on the DBVPS at the end of the most recent financial reporting year. The Dividend Adjusted Performance Period End DBVPS will be the DBVPS three years after the grant date DBVPS. The fair value estimate earns over the requisite attribution period and the estimate will be reassessed at the end of each performance period which will be reflected in the consolidated statements of income in the period in which they are determined.

        Share compensation expenses of $2,349 were recorded in respect of performance share awards for the year ended December 31, 2011 (2010: $232; 2009: $nil). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

        Activity with respect to unvested performance share awards for the year ended December 31, 2011 was as follows:

	Performance Share Awards		Weighted Average Grant Date Fair Value
Performance share awards outstanding, December 31, 2010		132,401	$	28.70
Performance share awards granted		146,618		32.64
Performance share awards vested		—		—
Performance share awards forfeited		—		—
Performance share awards outstanding, December 31, 2011		279,019	$	30.77

        Activity with respect to unvested performance share awards for the year ended December 31, 2010 was as follows:

	Performance Share Awards		Weighted Average Grant Date Fair Value
Performance share awards outstanding, December 31, 2009		—	$	—
Performance share awards granted		132,401		28.70
Performance share awards vested		—		—
Performance share awards forfeited		—		—
Performance share awards outstanding, December 31, 2010		132,401	$	28.70

        There was no activity with respect to unvested performance share awards for the year ended December 31, 2009.

F-45

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans (Continued)

        At December 31, 2011, there were $5,677 (December 31, 2010: $3,375; December 31, 2009: $nil) of total unrecognized share compensation expenses in respect of performance share awards that are expected to be recognized over a weighted-average period of 2.1 years (December 31, 2010: 2.4 years; December 31, 2009: 0 years).

(b)   Employee seller shares

        Pursuant to the Share Sale Agreement for the purchase of Talbot Holdings, Ltd. ("Talbot"), the Company issued 1,209,741 restricted shares to Talbot employees (the "employee seller shares"). Upon consummation of the acquisition, the employee seller shares were validly issued, fully-paid and non-assessable and entitled to vote and participate in distributions and dividends in accordance with the Company's Bye-laws. However, the employee seller shares were subject to a restricted period during which they were subject to forfeiture (as implemented by repurchase by the Company for a nominal amount). Forfeiture of employee seller shares would have generally occurred in the event that any such Talbot employee's employment terminated, with certain exceptions, prior to the end of the restricted period. The restricted period ended for 25% of the employee seller shares on each anniversary of the closing date of July 2, 2007 for all Talbot employees other than Talbot's Chairman, such that on July 2, 2011, potential for forfeiture was completely extinguished.

        Share compensation expenses of $2,293 were recorded in respect of employee seller shares for the year ended December 31, 2011 (2010: $4,403; 2009: $6,022). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

        Activity with respect to unvested employee seller shares for the year ended December 31, 2011 was as follows:

	Employee Seller Shares			Weighted Average Grant Date Fair Value
Employee seller shares outstanding, December 31, 2010		197,879		$	22.01
Employee seller shares granted		—			—
Employee seller shares vested		(197,174	)		22.01
Employee seller shares forfeited		(705	)		22.01
Employee seller shares outstanding, December 31, 2011		—		$	—

F-46

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

16. Stock plans (Continued)

        Activity with respect to unvested employee seller shares for the year ended December 31, 2010 was as follows:

	Employee Seller Shares			Weighted Average Grant Date Fair Value
Employee seller shares outstanding, December 31, 2009		410,667		$	22.01
Employee seller shares granted		—			—
Employee seller shares vested		(203,544	)		22.01
Employee seller shares forfeited		(9,244	)		22.01
Employee seller shares outstanding, December 31, 2010		197,879		$	22.01

        Activity with respect to unvested employee seller shares for the year ended December 31, 2009 was as follows:

	Employee Seller Shares			Weighted Average Grant Date Fair Value
Employee seller shares outstanding, December 31, 2008		663,375		$	22.01
Employee seller shares granted		—			—
Employee seller shares vested		(248,085	)		22.01
Employee seller shares forfeited		(4,623	)		22.01
Employee seller shares outstanding, December 31, 2009		410,667		$	22.01

        At December 31, 2011, there were total unrecognized share compensation expenses of $nil in respect of employee seller shares. At December 31, 2010 and 2009, there were $2,141 and $6,635, of total unrecognized share compensation expenses that were expected to be recognized in respect of employee seller shares over a weighted-average period of 0.5 and 1.5 years, respectively.

(c)   Total share compensation expenses

        Total share compensation expenses for the year ended December 31, 2009 included $5,431 of IPC related termination expenses which were included in the gain on bargain purchase, net of expenses, in the Statement of Operations. The breakdown of share compensation expenses by award type for the years ended December 31, 2011, 2010 and 2009 is as follows:

	Years Ended
	December 31, 2011		December 31, 2010		December 31, 2009
Options	$	1,770	$	3,845	$	4,158
Restricted share awards		27,428		20,038		16,775
Restricted share units		456		393		5,513
Performance share awards		2,349		232		—
Employee seller shares		2,293		4,403		6,022
Total	$	34,296	$	28,911	$	32,468

F-47

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

17. Debt and financing arrangements

(a)   Financing structure and finance expenses

        The financing structure at December 31, 2011 was:

	Commitment		Outstanding(a)		Drawn
2006 Junior Subordinated Deferrable Debentures	$	150,000	$	150,000	$	150,000
2007 Junior Subordinated Deferrable Debentures		200,000		139,800		139,800
2010 Senior Notes due 2040		250,000		250,000		246,982
$340,000 syndicated unsecured letter of credit facility		340,000		—		—
$60,000 bilateral unsecured letter of credit facility		60,000		—		—
$500,000 secured letter of credit facility		500,000		333,179		—
Talbot FAL Facility(b)		25,000		25,000		—
IPC Bi-Lateral Facility		80,000		57,146		—
Total	$	1,605,000	$	955,125	$	536,782

        The financing structure at December 31, 2010 was:

	Commitment		Outstanding(a)		Drawn
2006 Junior Subordinated Deferrable Debentures	$	150,000	$	150,000	$	150,000
2007 Junior Subordinated Deferrable Debentures		200,000		139,800		139,800
2010 Senior Notes due 2040		250,000		250,000		246,874
$340,000 syndicated unsecured letter of credit facility		340,000		—		—
$60,000 bilateral unsecured letter of credit facility		60,000		—		—
$500,000 secured letter of credit facility		500,000		268,944		—
Talbot FAL Facility(b)		25,000		25,000		—
IPC Bi-Lateral Facility		80,000		68,063		—
Total	$	1,605,000	$	901,807	$	536,674

(a)

Indicates utilization of commitment amount, not drawn borrowings.

(b)

Talbot operates in Lloyd's through a corporate member, Talbot 2002 Underwriting Capital Ltd ("T02"), which is the sole participant in Syndicate 1183. Lloyd's sets T02's required capital annually based on Syndicate 1183's business plan, rating environment, reserving environment together with input arising from Lloyd's discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd's ("FAL"), comprises: cash, investments and undrawn letters of credit provided by various banks.

F-48

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

17. Debt and financing arrangements (Continued)

        Finance expenses consist of interest on our junior subordinated deferrable debentures and senior notes, the amortization of debt offering costs, fees relating to our credit facilities, preferred share dividends and the costs of FAL as follows:

	Years Ended
	December 31, 2011		December 31, 2010		December 31, 2009
2006 Junior Subordinated Deferrable Debentures	$	9,768	$	14,354	$	14,354
2007 Junior Subordinated Deferrable Debentures		12,115		12,114		12,732
2010 Senior Notes due 2040		22,388		20,770		—
Credit facilities		6,710		5,492		2,319
AlphaCat Re 2011 preferred dividend(a)		3,609		—		—
Talbot FAL Facility		227		333		542
Talbot third party FAL facility		—		2,807		14,183
Total	$	54,817	$	55,870	$	44,130

(a)

Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.

(b)   $250,000 2010 Senior Notes due 2040

        On January 21, 2010, the Company offered and sold $250,000 of Senior Notes due 2040 (the "2010 Senior Notes") in a registered public offering. The 2010 Senior Notes mature on January 26, 2040, and are redeemable at the Company's option in whole any time or in part from time to time at a make-whole redemption price. The Company may redeem the notes in whole, but not in part, at any time upon the occurrence of certain tax events as described in the notes prospectus supplement. The 2010 Senior Notes bear interest at the rate of 8.875% per annum from January 26, 2010 to maturity or early redemption. Interest on the 2010 Senior Notes is payable semi-annually in arrears on January 26 and July 26 of each year, commencing on July 26, 2010. The net proceeds of $243,967 from the sale of the 2010 Senior Notes, after the deduction of commissions paid to the underwriters in the transaction and other expenses, was used by the Company for general corporate purposes, which included the repurchase of its outstanding capital stock and payment of dividends to shareholders. Debt issuance costs of $2,808 were deferred as an asset and amortized over the life of the 2010 Senior Notes.

        The 2010 Senior Notes are unsecured and unsubordinated obligations of the Company and rank equally in right of payment with all of the Company's existing and future unsecured and unsubordinated indebtedness. The 2010 Senior Notes will be effectively junior to all of the Company's future secured debt, to the extent of the value of the collateral securing such debt, and will rank senior to all our existing and future subordinated debt. The 2010 Senior Notes are structurally subordinated to all obligations of the Company's subsidiaries.

F-49

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

17. Debt and financing arrangements (Continued)

        Future expected payments of principal on the 2010 Senior Notes are as follows:

2012	$	—
2013		—
2014		—
2015		—
2016 and thereafter		250,000
Total minimum future payments	$	250,000

(c)   Junior subordinated deferrable debentures

        On June 15, 2006, the Company participated in a private placement of $150,000 of junior subordinated deferrable interest debentures due 2036 (the "2006 Junior Subordinated Deferrable Debentures"). The 2006 Junior Subordinated Deferrable Debentures mature on June 15, 2036, are redeemable at the Company's option at par beginning June 15, 2011, and require quarterly interest payments by the Company to the holders of the 2006 Junior Subordinated Deferrable Debentures. Interest is payable at 9.069% per annum through June 15, 2011, and thereafter at a floating rate of three-month LIBOR plus 355 basis points, reset quarterly. The proceeds of $150,000 from the sale of the 2006 Junior Subordinated Deferrable Debentures, after the deduction of commissions paid to the placement agents in the transaction and other expenses, were used by the Company to fund Validus Re segment operations and for general working capital purposes. Debt issuance costs of $3,750 were deferred as an asset and were amortized to income over the five year optional redemption period.

        On June 21, 2007, the Company participated in a private placement of $200,000 of junior subordinated deferrable interest debentures due 2037 (the "2007 Junior Subordinated Deferrable Debentures"). The 2007 Junior Subordinated Deferrable Debentures mature on June 15, 2037, are redeemable at the Company's option at par beginning June 15, 2012, and require quarterly interest payments by the Company to the holders of the 2007 Junior Subordinated Deferrable Debentures. Interest will be payable at 8.480% per annum through June 15, 2012, and thereafter at a floating rate of three-month LIBOR plus 295 basis points, reset quarterly. The proceeds of $200,000 from the sale of the 2007 Junior Subordinated Deferrable Debentures, after the deduction of commissions paid to the placement agents in the transaction and other expenses, were used by the Company to fund the purchase of Talbot Holdings Ltd. Debt issuance costs of $2,000 were deferred as an asset and are amortized to income over the five year optional redemption period.

        During 2008 and 2009, the Company repurchased from an unaffiliated financial institution $60,200 principal amount of its 2007 Junior Subordinated Deferrable Debentures due 2037.

F-50

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

17. Debt and financing arrangements (Continued)

        Future expected payments of principal on the 2006 and 2007 Junior Subordinated Deferrable Debentures are as follows:

2012	$	—
2013		—
2014		—
2015		—
2016 and thereafter		289,800
Total minimum future payments	$	289,800

(d)   Credit facilities

(i)  $340,000 syndicated unsecured letter of credit facility, $60,000 bilateral unsecured letter of credit facility and $500,000 secured letter of credit facility

        On March 12, 2007, the Company entered into a $500,000 five-year secured letter of credit facility, as subsequently amended on October 25, 2007, July 24, 2009, and March 12, 2010, which provides for letter of credit availability for Validus Re and the Company's other subsidiaries (the "Five Year Facility" and, together with the Company's then outstanding unsecured credit facility as replaced by the Three Year Facilities, as defined below, the "Credit Facilities"). The Credit Facilities were provided by a syndicate of commercial banks arranged by J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. On October 25, 2007, the Company entered into the First Amendment to the Credit Facilities to provide for, among other things, additional capacity to incur up to $100,000 under a new Funds at Lloyd's Letter of Credit Facility (as described below) to support underwriting capacity provided to Talbot 2002 Underwriting Ltd through Syndicate 1183 at Lloyd's for the 2008 and 2009 underwriting years of account. The amendment also modified certain provisions in the Credit Facilities in order to permit dividend payments on existing and future preferred and hybrid securities notwithstanding certain events of default.

        On September 4, 2009, the Company announced that it had entered into Amendments to its $500,000 five-year secured letter of credit facility and its then outstanding $200,000 three-year unsecured facility and $100,000 Talbot FAL Facility to amend a specific investment restriction clause in order to permit the completion of the IPC Acquisition. The amendment also modified and updated certain pricing and covenant terms.

        On March 12, 2010, the Company entered into a three-year $340,000 syndicated unsecured letter of credit facility and a $60,000 bilateral unsecured letter of credit facility which provide for letter of credit availability for Validus Re and the Company's other subsidiaries and revolving credit availability for the Company (the "Three Year Facilities") (the full $400,000 of which is available for letters of credit and/or revolving loans).

        As amended, the Credit Facilities contain covenants that include, among other things, (i) the requirement that the Company initially maintain a minimum level of consolidated net worth of at least 70% of consolidated net worth ($2,925,590) and, commencing with the end of the fiscal quarter ending December 31, 2009 to be increased quarterly by an amount equal to 50% of its consolidated net income (if positive) for such quarter plus 50% of any net proceeds received from any issuance of common shares

F-51

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

17. Debt and financing arrangements (Continued)

during such quarter, (ii) the requirement that the Company maintain at all times a consolidated total debt to consolidated total capitalization ratio not greater than 0.35:1.00, and (iii) the requirement that Validus Re and any other material insurance subsidiaries maintain a financial strength rating by A.M. Best of not less than "B++" (Fair). For purposes of covenant compliance (i) "net worth is calculated with investments carried at amortized cost and (ii) "consolidated total debt" does not include the Company's junior subordinated deferrable debentures. The credit facilities also contain restrictions on our ability to pay dividends and other payments in respect of equity interests at any time that we are otherwise in default with respect to certain provisions under the credit facilities, make investments, incur debt at our subsidiaries, incur liens, sell assets and merge or consolidate with others.

        On August 2, 2011, the Company announced that it had entered into Amendments to the Credit Facilities in order to modify certain provisions thereof, including definitions, affirmative covenants, negative covenants (including those relating to consolidations, mergers and sales of assets, indebtedness, liens, limitations on certain restrictions on subsidiaries and investments) and events of default, in each case, in order to reflect and permit the proposed exchange offer, the proposed second-step merger and the other proposed transactions contemplated by the Registration Statement on Form S-4 of the Company originally filed with the Securities Exchange Commission on July 25, 2011 (the "Exchange Offer Transactions") in connection with its proposed acquisition of Transatlantic.

        As of December 31, 2011, there was $333,179 in outstanding letters of credit under the Five Year Facility (December 31, 2010: $268,944) and $nil outstanding under the Three Year Facilities (December 31, 2010: $nil).

        As of December 31, 2011 and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Credit Facilities.

(ii)  Talbot FAL Facility

        On November 28, 2007, Talbot entered into a $100,000 standby Letter of Credit facility (the "Talbot FAL Facility") to provide Funds at Lloyd's for the 2008 and 2009 underwriting years of account; this facility is guaranteed by the Company and is secured against the assets of Validus Re. The Talbot FAL Facility was provided by a syndicate of commercial banks arranged by Lloyds TSB Bank plc and ING Bank N.V., London Branch.

        On November 19, 2009, the Company entered into an Amendment and Restatement of the Talbot FAL Facility to reduce the commitment from $100,000 to $25,000, and to extend the support to the 2010 and 2011 underwriting years of account.

        On November 18, 2011, the Company entered into an Amendment and Restatement of the Talbot FAL Facility.

        As amended, the Talbot FAL Facility contains affirmative covenants that include, among other things, (i) the requirement that the Company initially maintain a minimum level of consolidated net worth of at least ($2,589,615), and commencing with the end of the fiscal quarter ending December 31, 2011 to be increased quarterly by an amount equal to 50% of our consolidated net income (if positive) for such quarter plus 50% of any net proceeds received from any issuance of common shares during such quarter, and (ii) the requirement that we maintain at all times a consolidated total debt to consolidated total capitalization ratio not greater than 0.35:1.00.

F-52

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

17. Debt and financing arrangements (Continued)

        The Talbot FAL Facility also contains restrictions on our ability to incur debt at our subsidiaries, incur liens, sell assets and merge or consolidate with others. Other than in respect of existing and future preferred and hybrid securities, the payment of dividends and other payments in respect of equity interests are not permitted at any time that we are in default with respect to certain provisions under the Credit Facilities. As of December 31, 2011 the Company had $25,000 (December 31, 2010: $25,000) in outstanding letters of credit under this facility.

        As of December 31, 2011 and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Talbot FAL Facility.

(iii)  IPC Syndicated Facility and IPC Bi-Lateral Facility

        IPC obtained letters of credit through the IPC Syndicated Facility and the IPC Bi-Lateral Facility (the "IPC Facilities"). In July 2009, certain terms of these facilities were amended including suspending IPC's ability to increase existing letters of credit or to issue new letters of credit. Effective March 31, 2010, the IPC Syndicated Facility was closed. As of December 31, 2011, $57,146 (December 31, 2010: $68,063) of outstanding letters of credit were issued under the IPC Bi-Lateral Facility.

        As of December 31, 2011and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the IPC Bi-Lateral Facility.

18. Income taxes

        The Company provides for income taxes based upon amounts reported in the financial statements and the provisions of currently enacted tax laws. The Company is registered in Bermuda and is subject to Bermuda law with respect to taxation. Under current Bermuda law, the Company is not taxed on any Bermuda income or capital gains taxes and has received an undertaking from the Bermuda Minister of Finance that, in the event of any Bermuda income or capital gains taxes being imposed, the Company will be exempt from those taxes until March 31, 2035.

        The Company has subsidiaries with operations in several locations outside Bermuda, including the United Kingdom, the United States, Singapore, Chile, Dubai, Ireland and Canada that are subject to the tax laws of those countries. Under current law, corporate income tax losses incurred in the United Kingdom can be carried forward, for application against future income, indefinitely. On July 19, 2011, the U.K. government passed the Finance Act 2011 which reduced the U.K. corporate income tax rate from 27% to 26% (treated as having come into force from April 1, 2011) and provided for a further reduction in the UK corporate income tax rate from 26% to 25% (effective April 1, 2012).

	Years Ended
	December 31, 2011		December 31, 2010		December 31, 2009
Income before tax—Bermuda	$	42,230	$	400,631	$	892,425
Income before tax—United Kingdom		1,415		4,275		814
Income before tax—Canada		301		784		409
Income before tax—Total	$	43,946	$	405,690	$	893,648

F-53

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

18. Income taxes (Continued)

        Income tax expense (benefit) is comprised of current and deferred tax. Income tax expense (benefit) is as follows:

	Years Ended
	December 31, 2011			December 31, 2010		December 31, 2009
Current	$	8,977		$	2,941	$	(9	)
Deferred		(8,153	)		185		(3,750	)
Income tax expense (benefit)	$	824		$	3,126	$	(3,759	)

        The table below details the tax charge by jurisdiction:

	Years Ended
	December 31, 2011			December 31, 2010		December 31, 2009
Expected tax provision at Bermuda
Statutory Rate of 0%	$	—		$	—	$	—
Effect of taxable income generated in:
United Kingdom		389			1,374		4,158
Canada		151			1,231		760
Other jurisdictions		1,233			114		38
		986			2,719		4,956
Adjustments to prior period tax		(949	)		407		(8,715	)
Income tax expense (benefit)	$	824		$	3,126	$	(3,759	)

	Years Ended
	December 31, 2011			December 31, 2010
Deferred tax asset
UK tax losses carried forward	$	(11,206	)	$	(9,684	)
Timing differences		(3,162	)		(780	)
Deferred tax asset		(14,368	)		(10,464	)
Deferred tax liability
Underwriting profit taxable in future periods		31,088			35,372
Revenue to be taxed in future periods		—			—
Deferred tax liability		31,088			35,372
Net deferred tax liability	$	16,720		$	24,908

        Net deferred tax assets and liabilities represent the tax effect of temporary differences between the value of assets and liabilities for financial statement purposes and such values as measured by tax laws and regulations in countries in which the operations are taxable.

F-54

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

18. Income taxes (Continued)

        The deferred tax liability for underwriting profit taxable in future periods arises because of a difference in timing, for tax payment purposes, between when Talbot syndicate underwriting income is subject to tax and when corresponding corporate name reinsurance premiums are allowable for tax. Under current U.K. tax legislation, syndicate underwriting income for a particular underwriting year of account is taxed in the year the syndicate closes. However the corresponding corporate name reinsurance premiums are allowable for tax as they are accounted for on an accruals basis.

        In assessing whether deferred tax assets can be realized, management considers whether it is more likely than not that the tax benefit of the deferred tax asset will be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income in the period during which those temporary differences and operating losses become deductible. Management considers the reversal of the deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax asset considered realizable could be reduced in the future if estimates of future taxable income are reduced.

        As of December 31, 2011, net operating loss carry forwards in the U.K. were approximately $43,100 (inclusive of cumulative currency translation adjustments) and have no expiration.

19. Commitments and contingencies

(a)   Concentrations of credit risk

        The Company's investments are managed following prudent standards of diversification. The Company attempts to limit its credit exposure by purchasing high quality fixed income investments to maintain an average portfolio credit quality of AA- or higher with mortgage and commercial mortgage-backed issues having an aggregate weighted average credit quality of AAA. In addition, the Company limits its exposure to any single issuer to 3% or less, excluding government and agency securities. With the exception of the Company's bank loan portfolio, the minimum credit rating of any security purchased is Baa3/BBB- and where investments are downgraded, the Company permits a holding of up to 2% in aggregate market value, or 10% with written pre-authorization. At December 31, 2011, 1.2% of the portfolio, excluding bank loans, had a split rating below Baa3/BBB- and the Company did not have an aggregate exposure to any single issuer of more than 1.0% of its investment portfolio, other than with respect to government and agency securities.

        The Company underwrites a significant amount of its reinsurance business through three particular brokers as set out below. Credit risk exists should any of these brokers be unable to fulfill their contractual obligations with respect to the payments of insurance and reinsurance balances to the Company. These companies are large, well established, and there are no indications that any of them are financially troubled. No other broker and no one insured or reinsured accounted for more than 10% of gross premiums written for the periods mentioned.

F-55

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

19. Commitments and contingencies (Continued)

        The following table shows the percentage of gross premiums written by broker for the years ended December 31, 2011, 2010 and 2009:

	Years Ended
	December 31, 2011			December 31, 2010			December 31, 2009
Marsh & McLennan		25.9	%		25.5	%		23.3	%
Willis Group Holdings Ltd.		17.0	%		17.1	%		14.0	%
Aon Benfield Group Ltd.		23.8	%		22.6	%		25.7	%

(b)   Employment agreements

        The Company has entered into employment agreements with certain individuals that provide for option awards, executive benefits and severance payments under certain circumstances.

(c)   Operating leases

        The Company leases office space and office equipment under operating leases. Total rent expense with respect to these operating leases for the year ended December 31, 2011 was approximately $5,752 (2010: $5,309, 2009: $4,308). Future minimum lease commitments are as follows:

2012	$	4,874
2013		7,231
2014		6,907
2015		6,719
2016 and thereafter		43,238
	$	68,969

(d)   Funds at Lloyd's

        The amounts provided under the Talbot FAL Facility would become a liability of the Company in the event of Syndicate 1183 declaring a loss at a level which would call on this arrangement.

        Talbot operates in Lloyd's through a corporate member, Talbot 2002 Underwriting Capital Ltd ("T02"), which is the sole participant in Syndicate 1183. Lloyd's sets T02's required capital annually based on syndicate 1183's business plan, rating environment, reserving environment together with input arising from Lloyd's discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd's ("FAL"), comprises: cash, investments and undrawn letters of credit provided by various banks. The amounts of cash, investments and letters of credit at December 31, 2011 amounted to $473,800 (December 31, 2010: $441,000) of which $25,000 is provided under the Talbot FAL Facility (December 31, 2010: $25,000).

F-56

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

19. Commitments and contingencies (Continued)

        The FAL are provided for each year of account as follows:

	2012 Underwriting Year		2011 Underwriting Year		2010 Underwriting Year
Talbot FAL facility	$	25,000	$	25,000	$	25,000
Group funds		448,800		416,000		427,000
Total	$	473,800	$	441,000	$	452,000

        The amounts which the Company provides as FAL are not available for distribution to the Company for the payment of dividends. Talbot's corporate member may also be required to maintain funds under the control of Lloyd's in excess of its capital requirement and such funds also may not be available for distribution to the Company for the payment of dividends.

(e)   Lloyd's Central Fund

        Whenever a member of Lloyd's is unable to pay its debts to policyholders, such debts may be payable by the Lloyd's Central Fund. If Lloyd's determines that the Central Fund needs to be increased, it has the power to assess premium levies on current Lloyd's members up to 3% of a member's underwriting capacity in any one year. The Company does not believe that any assessment is likely in the foreseeable future and has not provided any allowance for such an assessment. However, based on the Company's 2012 estimated premium income at Lloyd's of £600,000, the December 31, 2011 exchange rate of £1 equals $1.5523 and assuming the maximum 3% assessment the Company would be assessed approximately $27,941.

(f)    Aquiline Commitment

        On December 20, 2011, Validus Re, a wholly owned subsidiary of the Company, entered into an Assignment and Assumption Agreement (the "Agreement") with Aquiline Capital Partners LLC, a Delaware limited liability company (the "Assignor") and Aquiline Capital Partners II GP (Offshore) Ltd., a Cayman Islands company limited by shares (the "General Partner") pursuant to which Validus Re has assumed 100% of the Assignor's interest in Aquiline Financial Services Fund II L.P. (the "Partnership") representing a total capital commitment of $50,000 (the "Commitment"), as a limited partner in the Partnership (the "Transferred Interest"). The Transferred Interest is governed by the terms of an Amended and Restated Exempted Limited Partnership Agreement dated as of July 2, 2010 (the "Limited Partnership Agreement"). Pursuant to the terms of the Limited Partnership Agreement, the Commitment will expire on July 2, 2015. The Company's remaining commitment at December 31, 2011 was $46,744.

20. Related party transactions

        The transactions listed below are classified as related party transactions as each counterparty has either a direct or indirect shareholding in the Company.

        a)    On December 8, 2005, the Company entered into agreements with Goldman Sachs Asset Management and its affiliates ("GSAM") under which GSAM provides investment management services for a portion of the Company's investment portfolio. For the years ended December 31, 2010 and 2009, GSAM was deemed to be a related party due to a combination of GSAM being a shareholder in the

F-57

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

20. Related party transactions (Continued)

Company and having an employee on the Company's Board of Directors during this period. For the year ended December 31, 2011, GSAM was no longer a related party due to the resignation of Sumit Rajpal from the Board of Directors effective February 7, 2011. Investment management fees earned by GSAM for the years ended December 31, 2010 and 2009 were $1,728 and $1,280, respectively. Management believes that the fees charged were consistent with those that would have been charged in arm's-length transactions with unrelated third parties.

        b)    Aquiline Capital Partners, LLC and its related companies ("Aquiline"), which own 6,255,943 shares in the Company, hold warrants to purchase 2,756,088 shares, and have two employees on the Company's Board of Directors who do not receive compensation from the Company, are shareholders of Group Ark Insurance Holdings Ltd. ("Group Ark"). Christopher E. Watson, a director of the Company, also serves as a director of Group Ark. Pursuant to reinsurance agreements with a subsidiary of Group Ark, the Company recognized gross premiums written during the year ended December 31, 2011 of $1,464 (2010: $2,239; 2009: $nil) of which $330 was included in premiums receivable at December 31, 2011 (December 31, 2010: $378). The Company also recognized reinsurance premiums ceded during the year ended December 31, 2011 of $163 (2010: $738; 2009: $953), of which $21 were included in reinsurance balances payable at December 31, 2011 (December 31, 2010: $132). Earned premium adjustments of $1,524 were incurred during the year ended December 31, 2011 (2010: $1,024; 2009: $nil).

        Aquiline is also a shareholder of Tiger Risk Partners LLC ("Tiger Risk"). Christopher E. Watson, a director of the Company serves as a director of Tiger Risk. Pursuant to certain reinsurance contracts, the Company recognized brokerage expenses paid to Tiger Risk during the year ended December 31, 2011 of $1,142 (2010: $1,461; 2009: $1,231), of which $86 were included in accounts payable and accrued expenses at December 31, 2011 (December 31, 2010: $792).

        On November 24, 2009, the Company entered into an Investment Management Agreement with Conning, Inc. ("Conning") to manage a portion of the Company's investment portfolio. Aquiline acquired Conning on June 16, 2009. John J. Hendrickson and Jeffrey W. Greenberg, directors of the Company, each serve as a director of Conning Holdings Corp., the parent company of Conning, and Michael Carpenter, the Chairman of Talbot Holdings Ltd. and a director of the Company, serves as a director of a subsidiary company of Conning Holdings Corp. Investment management fees earned by Conning for the year ended December 31, 2011 were $783 (2010: $379; 2009: $13), of which $203 were included in accounts payable and accrued expenses at December 31, 2011 (December 31, 2010: $97).

        On December 20, 2011, Validus Re, a wholly owned subsidiary of the Company, entered into an Assignment and Assumption Agreement (the "Agreement") with Aquiline Capital Partners LLC, a Delaware limited liability company (the "Assignor") and Aquiline Capital Partners II GP (Offshore) Ltd., a Cayman Islands company limited by shares (the "General Partner") pursuant to which Validus Re has assumed 100% of the Assignor's interest in Aquiline Financial Services Fund II L.P. (the "Partnership") representing a total capital commitment of $50,000 (the "Commitment"), as a limited partner in the Partnership (the "Transferred Interest"). Pursuant to the Agreement, Validus Re paid $3,253 in paid and outstanding capital contributions, net of interest received, to the Partnership and in consideration, the Assignor assigned to Validus Re all of its rights and interests as a limited partner in the Partnership with respect to the Transferred Interest, including all amounts due and to become due to the Assignor with respect thereto. Messrs. Greenberg and Watson, directors of the Company, serve as managing principal and senior principal, respectively, of Aquiline Capital Partners LLC.

F-58

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

20. Related party transactions (Continued)

        c)     On December 8, 2005, the Company entered into agreements with BlackRock Financial Management, Inc. ("BlackRock") under which BlackRock provided investment management services for part of the Company's investment portfolio. For the year ended December 31, 2009, BlackRock was deemed to be a related party due to a combination of Merrill Lynch (a shareholder of BlackRock) being a shareholder in the Company and having an employee on the Company's Board of Directors during this period. For the years ended December 31, 2011 and 2010, BlackRock was no longer a related party. Investment management fees earned by BlackRock for the year ended December 31, 2009 were $2,036. Management believes that the fees charged were consistent with those that would have been charged in arm's-length transactions with unrelated third parties.

        d)    Vestar Capital entities have an employee on the Company's Board of Directors who does not receive compensation from the Company. Sander M. Levy, a director of the Company, serves as Managing Director of Vestar Capital Partners. During 2009, Vestar Capital entities were shareholders of PARIS RE Holdings, Limited ("Paris Re"). On July 4, 2009, PartnerRe Ltd. ("PartnerRe") acquired the outstanding shares of Paris Re and as a result Paris Re was not a related party of the Company during the years ended December 31, 2011 and 2010. However, for the year ended December 31, 2009, pursuant to reinsurance agreements with Paris Re, the Company recognized gross premiums written of $5,176 and earned premium adjustments of $5,918.

F-59

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

21. Earnings per share

        The following table sets forth the computation of basic and diluted earnings per share available to common shareholders for the years ended December 31, 2011, 2010 and 2009:

	Years Ended
	December 31, 2011			December 31, 2010			December 31, 2009
Basic earnings per share
Income	$	43,122		$	402,564		$	897,407
Income attributable to noncontrolling interest		(21,793	)		—			—
Income available to Validus	$	21,329		$	402,564		$	897,407
less: Dividends and distributions declared on outstanding warrants		(7,644	)		(6,991	)		(6,507	)
Income available to common shareholders	$	13,685		$	395,573		$	890,900
Weighted average number of common shares outstanding		98,607,439			116,018,364			93,697,194
Basic earnings per share available to common shareholders	$	0.14		$	3.41		$	9.51
Diluted earnings per share
Income	$	43,122		$	402,564		$	897,407
Income attributable to noncontrolling interest		(21,793	)		—			—
Income available to Validus	$	21,329		$	402,564		$	897,407
less: Dividends and distributions declared on outstanding warrants		(7,644	)		—			—
Income available to common shareholders	$	13,685		$	402,564		$	897,407
Weighted average number of common shares outstanding		98,607,439			116,018,364			93,697,194
Share equivalents:
Warrants		—			2,657,258			2,220,096
Stock options		776,204			888,281			478,472
Unvested restricted shares		1,544,641			1,067,042			772,647
Weighted average number of diluted common shares outstanding		100,928,284			120,630,945			97,168,409
Diluted earnings per share available to common shareholders	$	0.14		$	3.34		$	9.24

        Share equivalents that would result in the issuance of common shares of 181,105, 136,881 and 172,425 were outstanding for the years ended December 31, 2011, 2010 and 2009 respectively, but were not included in the computation of diluted earnings per share because the effect would be antidilutive.

F-60

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

22. Segment information

        The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. and Talbot Holdings Ltd. from which two operating segments have been determined under U.S. GAAP segment reporting. The Company's operating segments are strategic business units that offer different products and services. They are managed and have capital allocated separately because each business requires different strategies.

Validus Re

        The Validus Re segment is focused on short-tail lines of reinsurance. The primary lines in which the segment conducts business are property, marine and specialty, which includes agriculture, aerospace and aviation, financial lines of business, nuclear, terrorism, life, accident & health, workers' compensation, crisis management and motor.

        On September 4, 2009, the Company acquired all of the outstanding shares of IPC from a group of institutional and other investors. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. For segmental reporting purposes, the results of IPC's operations since the acquisition date have been included within the Validus Re segment in the consolidated financial statements.

Talbot

        The Talbot segment focuses on a wide range of marine and energy, war, political violence, commercial property, financial institutions, contingency, accident & health and aviation classes of business on an insurance or facultative reinsurance basis and principally property, aerospace and marine classes of business on a treaty reinsurance basis.

Corporate and other reconciling items

        The Company has a "Corporate" function, which includes the activities of the parent company, and which carries out certain functions for the group. "Corporate" includes 'non-core' underwriting expenses, predominantly general and administrative and stock compensation expenses. "Corporate" also denotes the activities of certain key executives such as the Chief Executive Officer and Chief Financial Officer. For internal reporting purposes, "Corporate" is reflected separately, however "Corporate" is not considered an operating segment under these circumstances. Other reconciling items include, but are not limited to, the elimination of intersegment revenues and expenses and unusual items that are not allocated to segments.

F-61

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

22. Segment information (Continued)

Year Ended December 31, 2011	Validus Re			Talbot			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	1,190,220		$	1,014,122		$	(79,651	)	$	2,124,691
Reinsurance premiums ceded		(150,718	)		(218,174	)		79,651			(289,241	)
Net premiums written		1,039,502			795,948			—			1,835,450
Change in unearned premiums		(7,611	)		(25,696	)		—			(33,307	)
Net premiums earned		1,031,891			770,252			—			1,802,143
Underwriting deductions
Losses and loss expenses		759,305			485,096			—			1,244,401
Policy acquisition costs		160,134			157,334			(3,284	)		314,184
General and administrative expenses		46,353			117,482			33,662			197,497
Share compensation expenses		9,309			8,582			16,405			34,296
Total underwriting deductions		975,101			768,494			46,783			1,790,378
Underwriting income (loss)	$	56,790		$	1,758		$	(46,783	)	$	11,765
Net investment income		96,492			25,380			(9,576	)		112,296
Other income		7,998			8,895			(11,175	)		5,718
Finance expenses		(10,289	)		(227	)		(44,301	)		(54,817	)
Operating income (loss) before taxes		150,991			35,806			(111,835	)		74,962
Tax (expense)		(18	)		(651	)		(155	)		(824	)
Net operating income (loss)	$	150,973		$	35,155		$	(111,990	)	$	74,138
Net realized gains on investments		21,669			6,863			—			28,532
Net unrealized (losses) on investments		(16,039	)		(3,952	)		—			(19,991	)
Foreign exchange (losses) gains		(19,987	)		(2,188	)		51			(22,124	)
Transaction expenses(a)		—			—			(17,433	)		(17,433	)
Net income (loss)	$	136,616		$	35,878		$	(129,372	)	$	43,122
Net income attributable to noncontrolling interest		(21,793	)		—			—			(21,793	)
Net income (loss) available to Validus	$	114,823		$	35,878		$	(129,372	)	$	21,329
Selected ratios:
Net premiums written / Gross premiums written		87.3	%		78.5	%					86.4	%
Losses and loss expenses		73.6	%		63.0	%					69.1	%
Policy acquisition costs		15.5	%		20.4	%					17.4	%
General and administrative expenses(b)		5.4	%		16.4	%					12.9	%
Expense ratio		20.9	%		36.8	%					30.3	%
Combined ratio		94.5	%		99.8	%					99.4	%
Total assets	$	4,826,234		$	2,775,632		$	16,605		$	7,618,471

(a)

The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

(b)

Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

F-62

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

22. Segment information (Continued)

Year Ended December 31, 2010	Validus Re			Talbot			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	1,101,239		$	981,073		$	(91,746	)	$	1,990,566
Reinsurance premiums ceded		(63,147	)		(258,081	)		91,746			(229,482	)
Net premiums written		1,038,092			722,992			—			1,761,084
Change in unearned premiums		13,108			(13,069	)		—			39
Net premiums earned		1,051,200			709,923			—			1,761,123
Underwriting deductions
Losses and loss expenses		601,610			385,976			—			987,586
Policy acquisition costs		160,599			143,769			(11,469	)		292,899
General and administrative expenses		45,617			114,043			49,630			209,290
Share compensation expenses		7,181			6,923			14,807			28,911
Total underwriting deductions		815,007			650,711			52,968			1,518,686
Underwriting income (loss)	$	236,193		$	59,212		$	(52,968	)	$	242,437
Net investment income		113,968			29,287			(9,152	)		134,103
Other income		4,211			12,802			(11,794	)		5,219
Finance expenses		(5,471	)		(3,140	)		(47,259	)		(55,870	)
Operating income (loss) before taxes		348,901			98,161			(121,173	)		325,889
Tax (expense)		(175	)		(2,730	)		(221	)		(3,126	)
Net operating income (loss)	$	348,726		$	95,431		$	(121,394	)	$	322,763
Net realized gains on investments		23,637			8,861			—			32,498
Net unrealized gains on investments		45,276			676			—			45,952
Foreign exchange (losses) gains		(1,185	)		2,091			445			1,351
Net income (loss)	$	416,454		$	107,059		$	(120,949	)	$	402,564
Net income attributable to noncontrolling interest		—			—			—			—
Net income (loss) available (attributable) to Validus	$	416,454		$	107,059		$	(120,949	)	$	402,564
Selected ratios:
Net premiums written / Gross premiums written		94.3	%		73.7	%					88.5	%
Losses and loss expenses		57.2	%		54.4	%					56.1	%
Policy acquisition costs		15.3	%		20.3	%					16.6	%
General and administrative expenses(a)		5.0	%		17.0	%					13.5	%
Expense ratio		20.3	%		37.3	%					30.1	%
Combined ratio		77.5	%		91.7	%					86.2	%
Total Assets	$	4,431,001		$	2,599,158		$	30,719		$	7,060,878

(a)

Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

F-63

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

22. Segment information (Continued)

Year Ended December 31, 2009	Validus Re(b)			Talbot			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	768,084		$	919,906		$	(66,749	)	$	1,621,241
Reinsurance premiums ceded		(95,446	)		(204,186	)		66,749			(232,883	)
Net premiums written		672,638			715,720			—			1,388,358
Change in unearned premiums		122,912			(61,693	)		—			61,219
Net premiums earned		795,550			654,027			—			1,449,577
Underwriting deductions
Losses and loss expenses		186,704			337,053			—			523,757
Policy acquisition costs		127,433			139,932			(4,399	)		262,966
General and administrative expenses		65,710			96,352			23,506			185,568
Share compensation expenses		7,576			7,171			12,290			27,037
Total underwriting deductions		387,423			580,508			31,397			999,328
Underwriting income (loss)	$	408,127		$	73,519		$	(31,397	)	$	450,249
Net investment income		94,973			30,114			(6,314	)		118,773
Other income		5,149			5,225			(5,740	)		4,634
Finance expenses		(1,774	)		(14,725	)		(27,631	)		(44,130	)
Operating income (loss) before taxes		506,475			94,133			(71,082	)		529,526
Tax (expense) benefit		(163	)		3,922			—			3,759
Net operating income (loss)	$	506,312		$	98,055		$	(71,082	)	$	533,285
Gain on bargain purchase, net of expenses		—			—			287,099			287,099
Realized gain on repurchase of debentures		—			—			4,444			4,444
Net realized (losses) on investments		(5,428	)		(6,115	)		—			(11,543	)
Net unrealized gains on investments		75,209			9,587			—			84,796
Foreign exchange (losses) gains		(1,406	)		676			56			(674	)
Net income	$	574,687		$	102,203		$	220,517		$	897,407
Net income attributable to noncontrolling interest		—			—			—			—
Net income available to Validus	$	574,687		$	102,203		$	220,517		$	897,407
Selected ratios:
Net premiums written / Gross premiums written		87.6	%		77.8	%					85.6	%
Losses and loss expenses		23.5	%		51.5	%					36.1	%
Policy acquisition costs		16.0	%		21.4	%					18.1	%
General and administrative expenses(a)		9.2	%		15.8	%					14.7	%
Expense ratio		25.2	%		37.2	%					32.8	%
Combined ratio		48.7	%		88.7	%					68.9	%
Total assets	$	4,865,771		$	2,137,393		$	15,976		$	7,019,140

(a)

Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

(b)

Operating results of IPC have been included from the September 2009 date of acquisition.

F-64

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

22. Segment information (Continued)

        The Company's exposures are generally diversified across geographic zones. The following tables set forth the gross premiums written allocated to the territory of coverage exposure for the periods indicated:

	Year ended December 31, 2011 Gross premiums written
	Validus Re		Talbot		Eliminations			Total		%
United States	$	520,241	$	117,178	$	(9,494	)	$	627,925		29.6	%
Worldwide excluding United States(a)		48,047		247,367		(14,146	)		281,268		13.2	%
Europe		89,705		52,018		(1,988	)		139,735		6.6	%
Latin America and Caribbean		43,627		94,859		(27,857	)		110,629		5.2	%
Japan		43,032		7,380		(458	)		49,954		2.3	%
Canada		518		10,583		(507	)		10,594		0.5	%
Rest of the world(b)		58,908		—		—			58,908		2.8	%
Sub-total, non United States		283,837		412,207		(44,956	)		651,088		30.6	%
Worldwide including United States		121,941		50,723		(2,852	)		169,812		8.0	%
Marine and Aerospace(c)		264,201		434,014		(22,349	)		675,866		31.8	%
Total	$	1,190,220	$	1,014,122	$	(79,651	)	$	2,124,691		100.0	%

	Year ended December 31, 2010 Gross premiums written
	Validus Re		Talbot		Eliminations			Total		%
United States	$	486,133	$	110,944	$	(8,543	)	$	588,534		29.6	%
Worldwide excluding United States(a)		55,462		265,760		(7,051	)		314,171		15.8	%
Europe		105,321		50,074		(1,239	)		154,156		7.7	%
Latin America and Caribbean		70,650		83,274		(52,632	)		101,292		5.1	%
Japan		26,449		5,982		(177	)		32,254		1.6	%
Canada		177		11,892		(177	)		11,892		0.6	%
Rest of the world(b)		23,006		—		—			23,006		1.2	%
Sub-total, non United States		281,065		416,982		(61,276	)		636,771		32.0	%
Worldwide including United States		91,259		49,212		(2,492	)		137,979		6.9	%
Marine and Aerospace(c)		242,782		403,935		(19,435	)		627,282		31.5	%
Total	$	1,101,239	$	981,073	$	(91,746	)	$	1,990,566		100.0	%

F-65

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

22. Segment information (Continued)

	Year ended December 31, 2009 Gross premiums written
	Validus Re		Talbot		Eliminations			Total		%
United States	$	353,119	$	77,528	$	(7,031	)	$	423,616		26.1	%
Worldwide excluding United States(a)		39,970		264,057		(13,385	)		290,642		17.9	%
Europe		56,806		65,013		(3,287	)		118,532		7.3	%
Latin America and Caribbean		39,745		83,909		(36,592	)		87,062		5.4	%
Japan		19,812		4,986		(470	)		24,328		1.5	%
Canada		463		9,303		(470	)		9,296		0.6	%
Rest of the world(b)		24,303		—		—			24,303		1.5	%
Sub-total, non United States		181,099		427,268		(54,204	)		554,163		34.2	%
Worldwide including United States		56,962		50,118		(3,053	)		104,027		6.4	%
Marine and Aerospace(c)		176,904		364,992		(2,461	)		539,435		33.3	%
Total	$	768,084	$	919,906	$	(66,749	)	$	1,621,241		100.0	%

(a)

Represents risks in two or more geographic zones.

(b)

Represents risks in one geographic zone.

(c)

Not classified as geographic area as marine and aerospace risks can span multiple geographic areas and are not fixed locations in some instances.

23. Statutory and regulatory requirements

        As disclosed in Note 19 (d), Syndicate 1183 and Talbot 2002 Underwriting Capital Ltd ("T02") are subject to regulation by the Council of Lloyd's. Syndicate 1183 and T02 are also subject to regulation by the U.K. Financial Services Authority ("FSA") under the Financial Services and Markets Act 2000.

        T02 is a corporate member of Lloyd's. As a corporate member of Lloyd's, T02 is bound by the rules of the Society of Lloyd's, which are prescribed by Bye-laws and Requirements made by the Council of Lloyd's under powers conferred by the Lloyd's Act 1982. These rules (among other matters) prescribe T02's membership subscription, the level of its contribution to the Lloyd's central fund and the assets it must deposit with Lloyd's in support of its underwriting. The Council of Lloyd's has broad powers to sanction breaches of its rules, including the power to restrict or prohibit a member's participation on Lloyd's syndicates.

        The Company has four Bermuda-based subsidiaries, Validus Re, Validus Re Americas, Ltd. (formerly, IPCRe Limited), Talbot Insurance (Bermuda) Ltd. ("TIBL") and AlphaCat Reinsurance, Ltd. registered under The Insurance Act 1978 (Bermuda), Amendments Thereto and Related Regulations ("The Act"). Under the Insurance Act, these subsidiaries are required to prepare Statutory Financial Statements and to file Statutory Financial Returns. These subsidiaries have to meet certain requirements for minimum solvency and liquidity ratios. Effective for statutory filings for the year ended December 31, 2008, the BMA introduced a risk-based capital model, or Bermuda Solvency Capital Requirement ("BSCR"), as a tool to assist the BMA in measuring risk and determining appropriate capitalization. As at December 31, 2011 and 2010, these requirements were met.

F-66

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

23. Statutory and regulatory requirements (Continued)

        Statutory amounts based on draft regulatory filings for Validus Re, Validus Re Americas, Ltd. TIBL, and AlphaCat Reinsurance, Ltd. are set out below. The actual amounts significantly exceeded the relevant minimum amounts.

	Validus Re				Validus Re Americas, Ltd.
	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Actual statutory capital and surplus	$	3,304,837	$	4,035,000	$	125,000	$	296,854
Actual share capital		2,670,447		2,667,249		125,000		250,000
Actual relevant assets		4,536,108		3,869,217		146,591		512,509

	AlphaCat Reinsurance, Ltd				TIBL
	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Actual statutory capital and surplus	$	133	$	123	$	457,374	$	432,281
Actual share capital		120		120		62,731		62,731
Actual relevant assets		124,516		94,870		680,814		520,671

        The Bermuda Companies Act 1981 (the "Companies Act") limits the Company's ability to pay dividends and distributions to shareholders.

24. Subsequent events

(a)    Loss Events

        On February 2, 2012, the Company provided an initial estimate of losses from the Costa Concordia marine event that occurred on January 13, 2012. Based on a total industry insured loss estimate of $845,000 to $950,000, Validus expects its loss to be in the range of $50,000 to $65,000, net of reinstatement premiums and reinsurance. The Company has additional reinsurance in place if the ultimate industry loss increases above the current estimate.

        The above estimates are based on Validus' current evaluation of impacted contracts and information provided by customers and intermediaries. Due to the preliminary nature of reports and estimates of loss to date, Validus' actual losses from this event may vary materially from these estimates.

(b)    Quarterly Dividend

        On February 9, 2012, the Company announced a quarterly cash dividend of $0.25 per each common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable, payable on March 30, 2012 to holders of record on March 15, 2012.

F-67

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

25. Condensed unaudited quarterly financial data

	Quarters Ended
	December 31, 2011			September 30, 2011			June 30, 2011			March 31, 2011
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Underwriting income
Gross premiums written	$	278,279		$	391,129		$	605,387		$	849,896
Reinsurance premiums ceded		(16,489	)		(30,586	)		(132,346	)		(109,820	)
Net premiums written		261,790			360,543			473,041			740,076
Change in unearned premiums		226,556			98,081			(47,401	)		(310,543	)
Net premiums earned		488,346			458,624			425,640			429,533
Underwriting deductions
Losses and loss expenses		334,829			226,067			207,307			476,198
Policy acquisition costs		81,253			77,405			78,230			77,296
General and administrative expenses		52,253			35,926			60,841			48,477
Share compensation expenses		7,237			7,382			7,628			12,049
Total underwriting deductions		475,572			346,780			354,006			614,020
Underwriting income (loss)	$	12,774		$	111,844		$	71,634		$	(184,487	)
Net investment income		28,080			27,747			26,494			29,975
Other income		3,517			—			595			1,606
Finance expenses		(13,520	)		(10,935	)		(16,361	)		(14,001	)
Operating income (loss) before taxes		30,851			128,656			82,362			(166,907	)
Tax benefit (expense)		226			(2,538	)		29			1,459
Net operating income (loss)	$	31,077		$	126,118		$	82,391		$	(165,448	)
Net realized gains on investments		5,355			5,246			11,552			6,379
Net unrealized gains (losses) on investments		2,159			(27,848	)		18,526			(12,828	)
Foreign exchange gains (losses)		266			(19,932	)		(1,991	)		(467	)
Transaction expenses(a)		(3,850	)		(13,583	)		—			—
Net income (loss)	$	35,007		$	70,001		$	110,478		$	(172,364	)
Net income attributable to noncontrolling interest		(7,683	)		(13,516	)		(594	)		—
Net income (loss) available (attributable) to Validus	$	27,324		$	56,485		$	109,884		$	(172,364	)
Earnings per share
Weighted average number of common shares and common share equivalents outstanding
Basic		99,137,696			98,961,795			98,385,924			97,944,340
Diluted		101,324,291			100,823,335			104,562,450			97,944,340
Basic earnings (loss) per share available (attributable) to common shareholders	$	0.26		$	0.55		$	1.10		$	(1.78	)
Diluted earnings (loss) per share available (attributable) to common shareholders	$	0.25		$	0.54		$	1.05		$	(1.78	)
Selected ratios:
Losses and loss expenses		68.6	%		49.3	%		48.7	%		110.9	%
Expense ratio		28.8	%		26.3	%		34.5	%		32.1	%
Combined ratio		97.4	%		75.6	%		83.2	%		143.0	%

(a)

The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

F-68

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

25. Condensed unaudited quarterly financial data (Continued)

	Quarters Ended
	December 31, 2010			September 30, 2010			June 30, 2010			March 31, 2010
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Underwriting income
Gross premiums written	$	258,731		$	344,040		$	516,861		$	870,934
Reinsurance premiums ceded		(35,376	)		(35,641	)		(67,726	)		(90,739	)
Net premiums written		223,355			308,399			449,135			780,195
Change in unearned premiums		209,456			124,275			(11,191	)		(322,501	)
Net premiums earned		432,811			432,674			437,944			457,694
Underwriting deductions
Losses and loss expenses		155,225			158,936			194,894			478,531
Policy acquisition costs		75,523			67,074			74,126			76,176
General and administrative expenses		54,511			48,831			52,379			53,569
Share compensation expenses		7,871			7,618			6,846			6,576
Total underwriting deductions		293,130			282,459			328,245			614,852
Underwriting income (loss)	$	139,681		$	150,215		$	109,699		$	(157,158	)
Net investment income		30,962			34,033			34,809			34,299
Other income		552			1,082			2,697			888
Finance expenses		(13,786	)		(13,715	)		(13,218	)		(15,151	)
Operating income (loss) before taxes		157,409			171,615			133,987			(137,122	)
Tax (expense) benefit		(1,058	)		1,422			(4,187	)		697
Net operating income (loss)	$	156,351		$	173,037		$	129,800		$	(136,425	)
Net realized (losses) gains on investments		(14,399	)		23,058			12,441			11,398
Net unrealized (losses) gains on investments		(42,689	)		31,588			41,640			15,413
Foreign exchange gains (losses)		3,424			10,790			(4,099	)		(8,764	)
Net income (loss)	$	102,687		$	238,473		$	179,782		$	(118,378	)
Net income attributable to noncontrolling interest		—			—			—			—
Net income (loss) available (attributable) to Validus	$	102,687		$	238,473		$	179,782		$	(118,378	)
Earnings per share
Weighted average number of common shares and common share equivalents outstanding
Basic		105,828,739			110,601,888			121,009,553			126,633,277
Diluted		111,316,736			114,842,742			125,152,300			126,633,277
Basic earnings (loss) per share available (attributable) to common shareholders	$	0.95		$	2.14		$	1.47		$	(0.95	)
Diluted earnings (loss) per share available (attributable) to common shareholders	$	0.92		$	2.08		$	1.44		$	(0.95	)
Selected Ratios:
Losses and loss expenses		35.9	%		36.7	%		44.5	%		104.6	%
Expense ratio		31.8	%		28.5	%		30.4	%		29.7	%
Combined ratio		67.7	%		65.2	%		74.9	%		134.3	%

F-69

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (Continued)

(Expressed in thousands of U.S. dollars, except share and per share information)

25. Condensed unaudited quarterly financial data (Continued)

	Quarters Ended(a)
	December 31, 2009			September 30, 2009			June 30, 2009			March 31, 2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Underwriting income
Gross premiums written	$	255,289		$	331,028		$	425,032		$	609,892
Reinsurance premiums ceded		(30,393	)		(67,687	)		(62,291	)		(72,512	)
Net premiums written		224,896			263,341			362,741			537,380
Change in unearned premiums		203,005			111,376			(34,541	)		(218,621	)
Net premiums earned		427,901			374,717			328,200			318,759
Underwriting deductions
Losses and loss expenses		133,020			134,152			124,751			131,834
Policy acquisition costs		72,843			64,236			64,438			61,449
General and administrative expenses		60,253			46,036			41,200			38,079
Share compensation expenses		8,189			5,862			5,632			7,354
Total underwriting deductions		274,305			250,286			236,021			238,716
Underwriting income	$	153,596		$	124,431		$	92,179		$	80,043
Net investment income		35,506			29,532			26,963			26,772
Other income		1,759			1,101			1,017			757
Finance expenses		(14,398	)		(11,257	)		(10,752	)		(7,723	)
Operating income before taxes		176,463			143,807			109,407			99,849
Tax benefit		458			1,799			976			526
Net operating income	$	176,921		$	145,606		$	110,383		$	100,375
Gain on bargain purchase, net of expenses		—			302,950			(15,851	)		—
Realized gain on repurchase of debentures		4,444			—			—			—
Net realized gains (losses) on investments		9,099			5,429			(2,650	)		(23,421	)
Net unrealized (losses) gains on investments		(25,043	)		50,437			37,249			22,153
Foreign exchange gains (losses)		338			(5,244	)		8,432			(4,200	)
Net income	$	165,759		$	499,178		$	137,563		$	94,907
Net income attributable to noncontrolling interest		—			—			—			—
Net income available to Validus	$	165,759		$	499,178		$	137,563		$	94,907
Earnings per share
Weighted average number of common shares and common share equivalents outstanding
Basic		130,413,790			92,492,373			76,138,038			75,744,577
Diluted		134,794,120			95,834,809			78,942,065			79,102,643
Basic earnings per share available to common shareholders	$	1.26		$	5.38		$	1.79		$	1.23
Diluted earnings per share available to common shareholders	$	1.23		$	5.21		$	1.74		$	1.20
Selected Ratios:
Losses and loss expenses		31.1	%		35.8	%		38.0	%		41.4	%
Expense ratio		33.0	%		30.9	%		33.9	%		33.6	%
Combined ratio		64.1	%		66.7	%		71.9	%		75.0	%

(a)

Operating results of IPC have been included from the September 2009 date of acquisition.

F-70

SCHEDULE I
VALIDUS HOLDINGS, LTD.
SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES
At December 31, 2011
(Expressed in thousands of U.S. dollars)

	Amortized cost		Fair value		Amount at which shown on the Balance Sheet
U.S. Government and Government Agency	$	1,170,810	$	1,182,393	$	1,182,393
Non-U.S. Government and Government Agency		446,258		449,358		449,358
States, municipalities, political subdivision		25,715		26,291		26,291
Agency residential mortgage-backed securities		451,751		468,054		468,054
Non-Agency residential mortgage-backed securities		39,134		32,706		32,706
U.S. corporate		1,314,375		1,329,758		1,329,758
Non-U.S. corporate		577,743		579,675		579,675
Bank loans		475,770		467,256		467,256
Catastrophe bonds		29,250		29,952		29,952
Asset-backed securities		328,497		328,299		328,299
Commercial mortgage-backed securities		402		403		403
Total fixed maturities		4,859,705		4,894,145		4,894,145
Total short-term investments		280,299		280,191		280,191
Total other investments		15,002		16,787		16,787
Total	$	5,155,006	$	5,191,123	$	5,191,123

F-71

SCHEDULE II
VALIDUS HOLDINGS, LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
As at December 31, 2011 and 2010
(Expressed in thousands of U.S. dollars, except share and per share information)

	December 31, 2011			December 31, 2010
ASSETS
Cash and cash equivalents	$	4,944		$	22,235
Investment in subsidiaries on an equity basis		4,101,389			4,142,322
Other assets		4,747			5,805
Total assets	$	4,111,080		$	4,170,362
LIABILITIES
Balances due to subsidiaries	$	45,808		$	46,537
Accounts payable and accrued expenses		19,865			22,120
Senior notes payable		246,982			246,874
Debentures payable		350,000			350,000
Total liabilities		662,655			665,531
Commitments and contingent liabilities
SHAREHOLDERS' EQUITY
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2011—134,503,065; 2010—132,838,111; Outstanding: 2011—99,471,080; 2010—98,001,226)		23,538			23,247
Treasury shares (2011—35,031,985; 2010—34,836,885)		(6,131	)		(6,096	)
Additional paid-in capital		1,893,890			1,860,960
Accumulated other comprehensive (loss)		(6,601	)		(5,455	)
Retained earnings		1,543,729			1,632,175
Total shareholders' equity		3,448,425			3,504,831
Total liabilities and shareholders' equity	$	4,111,080		$	4,170,362

F-72

VALIDUS HOLDINGS, LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
STATEMENTS OF OPERATIONS
For the years ended December 31, 2011, 2010 and 2009
(Expressed in thousands of U.S. dollars)

	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009
Revenues
Net investment income	$	6		$	2		$	14
Other income		5,321			—			—
Foreign exchange gains		158			154			56
Total revenues		5,485			156			70
Expenses
General and administrative expenses		44,276			37,601			25,404
Share compensation expenses		11,598			8,899			—
Finance expenses		49,530			52,485			31,716
Transaction expenses		16,285			—			—
Total expenses		121,689			98,985			57,120
(Loss) before equity in net earnings of subsidiaries		(116,204	)		(98,829	)		(57,050	)
Equity in net earnings of subsidiaries		137,533			501,393			954,457
Net income	$	21,329		$	402,564		$	897,407

F-73

VALIDUS HOLDINGS, LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2011, 2010 and 2009
(Expressed in thousands of U.S. dollars)

	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009
Cash flows provided by (used in) operating activities
Net income	$	21,329		$	402,564		$	897,407
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net earnings of subsidiary		(137,533	)		(501,393	)		(954,457	)
Dividends received from subsidiaries		200,000			760,000			223,959
Share compensation expenses		11,598			8,899			—
Amortization of discount on senior notes		108			81			—
Change in:
Other assets		1,058			(2,203	)		52
Balances due from subsidiaries		—			5,336			(5,336	)
Balances due to subsidiaries		(729	)		46,537			(679	)
Accounts payable and accrued expenses		(4,321	)		3,597			13,360
Net cash provided by operating activities		91,510			723,418			174,306
Cash flows provided by (used in) investing activities
Investment in subsidiaries		—			—			(7,459	)
Net cash (used in) investing activities		—			—			(7,459	)
Cash flows provided by (used in) financing activities
Net proceeds on issuance of senior notes		—			246,793			—
Issuance of common shares, net		4,885			7,966			1,250
Purchases of common shares under repurchase program		(5,995	)		(856,926	)		(84,164	)
Dividends paid		(107,691	)		(105,662	)		(80,318	)
Net cash (used in) financing activities		(108,801	)		(707,829	)		(163,232	)
Net (decrease) increase in cash		(17,291	)		15,589			3,615
Cash and cash equivalents—beginning of period		22,235			6,646			3,031
Cash and cash equivalents—end of period	$	4,944		$	22,235		$	6,646

F-74

SCHEDULE III
VALIDUS HOLDINGS, LTD.
SUPPLEMENTARY INSURANCE INFORMATION
As at and for the years ended December 31, 2011, 2010 and 2009
(Expressed in thousands of U.S. dollars)

	As at and for the year ended December 31, 2011
	Deferred Acquisition Costs			Reserve for Losses and Loss Expenses			Unearned Premiums			Net Premiums Earned		Net Investment Income			Losses and Loss Expenses		Amortization of Deferred Acquisition Costs			Other Operating Expenses		Net Premiums Written
Validus Re	$	57,807		$	1,360,849		$	321,147		$	1,031,891	$	96,492		$	759,305	$	160,134		$	55,662	$	1,039,502
Talbot		74,345			1,377,561			481,261			770,252		25,380			485,096		157,334			126,064		795,948
Corporate & Eliminations		(10,647	)		(107,267	)		(30,026	)		—		(9,576	)		—		(3,284	)		50,067		—
Total	$	121,505		$	2,631,143		$	772,382		$	1,802,143	$	112,296		$	1,244,401	$	314,184		$	231,793	$	1,835,450

	As at and for the year ended December 31, 2010
	Deferred Acquisition Costs			Reserve for Losses and Loss Expenses			Unearned Premiums			Net Premiums Earned		Net Investment Income			Losses and Loss Expenses		Amortization of Deferred Acquisition Costs			Other Operating Expenses		Net Premiums Written
Validus Re	$	57,982		$	998,165		$	299,250		$	1,051,200	$	113,968		$	601,610	$	160,599		$	52,798	$	1,038,092
Talbot		74,846			1,191,548			454,927			709,923		29,287			385,976		143,769			120,966		722,992
Corporate & Eliminations		(8,931	)		(153,740	)		(25,661	)		—		(9,152	)		—		(11,469	)		64,437		—
Total	$	123,897		$	2,035,973		$	728,516		$	1,761,123	$	134,103		$	987,586	$	292,899		$	238,201	$	1,761,084

	As at and for the year ended December 31, 2009
	Deferred Acquisition Costs			Reserve for Losses and Loss Expenses			Unearned Premiums			Net Premiums Earned		Net Investment Income			Losses and Loss Expenses		Amortization of Deferred Acquisition Costs			Other Operating Expenses		Net Premiums Written
Validus Re	$	54,325		$	742,510		$	325,260		$	795,550	$	94,973		$	186,704	$	127,433		$	73,286	$	672,638
Talbot		68,341			903,986			427,284			654,027		30,114			337,053		139,932			103,523		715,720
Corporate & Eliminations		(10,337	)		(24,362	)		(28,440	)		—		(6,314	)		—		(4,399	)		35,796		—
Total	$	112,329		$	1,622,134		$	724,104		$	1,449,577	$	118,773		$	523,757	$	262,966		$	212,605	$	1,388,358

F-75

SCHEDULE IV
VALIDUS HOLDINGS, LTD.
REINSURANCE
As at and for the years ended December 31, 2011, 2010 and 2009
(Expressed in thousands of U.S. dollars)

	Gross		Ceded to other companies		Assumed from other companies		Net amount		Percentage of amount assumed to net
Year Ended December 31, 2011	$	510,200	$	289,241	$	1,614,491	$	1,835,450		88	%
Year Ended December 31, 2010		460,337		229,482		1,530,229		1,761,084		87	%
Year Ended December 31, 2009		459,771		232,883		1,161,470		1,388,358		84	%

F-76

SCHEDULE VI
VALIDUS HOLDINGS, LTD.
SUPPLEMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY
INSURANCE OPERATIONS
As at and for the years ended December 31, 2011, 2010 and 2009
(Expressed in thousands of U.S. dollars)

											Losses and loss expenses incurred related to
			Reserves for losses and loss expenses													Net paid losses and loss expenses		Amortization of deferred acquisition costs
Affiliation with registrant	Deferred acquisition costs				Reserves for unearned premiums		Net earned premiums		Net investment income		Current year		Prior year							Net premiums written
Consolidated Subsidiaries
2011	$	121,505	$	2,631,143	$	772,382	$	1,802,143	$	112,296	$	1,400,520	$	(156,119	)	$	743,026	$	314,184	$	1,835,450
2010		123,897		2,035,973		728,516		1,761,123		134,103		1,144,196		(156,610	)		673,422		292,899		1,761,084
2009		112,329		1,622,134		724,104		1,449,577		118,773		625,810		(102,053	)		507,435		262,966		1,388,358

F-77

EX-10.49

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Exhibit 10.49

EXECUTION COPY

ASSIGNMENT AND ASSUMPTION AGREEMENT

FOR NON-U.S. ASSIGNEES

        This ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is made and entered into as of the 20^th day of December, 2011 by and among AQUILINE CAPITAL PARTNERS LLC, a Delaware limited liability company (the "Assignor"), VALIDUS REINSURANCE, LTD., a reinsurance company organized under the laws of Bermuda (the "Assignee"), and AQUILINE CAPITAL PARTNERS II GP (OFFSHORE) LTD., a Cayman Islands company limited by shares (the "General Partner").

        WHEREAS the Assignor is a Limited Partner of Aquiline Financial Services Fund II L.P., a Cayman Islands exempted limited partnership (the "Partnership"), pursuant to the Amended and Restated Limited Partnership Agreement dated July 2, 2010, as amended by Amendment No. 1 thereto dated February 14, 2011 and Amendment No. 2 thereto dated May 31, 2011 (the "Partnership Agreement"), among the General Partner and the additional parties, including the Assignor, admitted to the Partnership as Limited Partners;

        WHEREAS the Assignor desires to transfer and assign 100% of its interest in the Partnership, representing a total Capital Commitment of $50,000,000 (the "Transferred Interest"), as a Limited Partner in the Partnership to the Assignee; and

        WHEREAS the Assignee has agreed to acquire the Transferred Interest and to become a party to and be bound by the terms of the Partnership Agreement and to be admitted to the Partnership as a Substituted Limited Partner with respect to the Transferred Interest as provided in the Partnership Agreement;

        NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and intending to be legally bound, the parties hereto hereby agree as follows:

        1.     Capitalized terms used herein which are not herein defined shall have the meanings set forth in the Partnership Agreement.

        2.     In consideration of the payment by the Assignee of $853,859.00 (the "Purchase Price"), the Assignor hereby assigns to the Assignee all its rights and interests as a Limited Partner in the Partnership with respect to the Transferred Interest, including all amounts due and to become due to the Assignor with respect thereto. The Assignee agrees to make payment of the Purchase Price to the Assignor on the date hereof by wire transfer of immediately available funds to the account and in accordance with the instructions set forth on Schedule I.2 hereto.

        3.     The Assignee hereby assumes, and agrees to pay and perform, all unperformed obligations of the Assignor under and pursuant to the Partnership Agreement relating to the Transferred Interest, including, for the avoidance of doubt, the Outstanding Capital Contributions (defined below). The Assignee agrees that by virtue of executing and delivering this Agreement, the Assignee will become a party to the Partnership Agreement in respect of the Transferred Interest (and will be deemed to have been admitted to the Partnership as a Substituted Limited Partner with respect thereto and to have executed and delivered a counterpart to the Partnership Agreement) and the Assignee hereby accepts and agrees to be bound by all of the terms and provisions of the Partnership Agreement, including, without limitation, appointment of the General Partner as attorney-in-fact of the Assignee under the Partnership Agreement.

        4.     All the parties hereto agree that as a result of the assignments and assumptions hereunder, for purposes of the Partnership Agreement, the Assignee shall be a Substituted Limited Partner of the Partnership, in respect of the Transferred Interest. The General Partner acknowledges that, based on the representations and warranties made by the Assignor and the Assignee herein and in the Assignee Questionnaire attached hereto as Exhibit A (including Annex 1 thereto), all requirements and

conditions for the transfer of the Transferred Interest and the admission of the Assignee as a Substituted Limited Partner in the Partnership have been satisfied or otherwise waived.

        5.     The Assignee agrees to make payment of $467,559.00 (the "Outstanding Capital Contributions") to the Partnership on the date hereof by wire transfer of immediately available funds to the account and in accordance with the instructions set forth on Schedule I.5 hereto.

        6.     The Assignor and the Assignee each hereby represent and warrant that (i) the assignment of the Transferred Interest made hereby is in accordance with all applicable laws and regulations and (ii) this Agreement constitutes its legal, valid and binding agreement, enforceable against it in accordance with its terms. The Assignee hereby makes the representations, warranties and agreements set forth in the Assignee Questionnaire attached hereto as Exhibit A (including Annex 1 thereto), which is incorporated herein by reference and forms a part of this Agreement. The Assignor represents and warrants that (i) it is the record, legal and beneficial owner of, and has good title to, the Transferred Interest and has full right, power and authority to enter into this Agreement and to transfer and assign the Transferred Interest in accordance with the terms of the Partnership Agreement, (ii) the Transferred Interest is being transferred to the Assignee free and clear of any pledge, lien, security interest, encumbrance, claim or equity, other than in respect of the Unpaid Capital Commitment and other obligations set forth in the Partnership Agreement, (iii) there are no legal, regulatory or other actions or proceedings, either real or threatened, against the Assignor that could interfere with the Assignor's ability to perform fully under this Agreement or the assignment contemplated hereby, (iv) there are no other outstanding agreements to which the Assignor is a party that would affect its performance under this Agreement or the assignment contemplated hereby and (v) the transfer of the Transferred Interest (or any interest therein) to the Assignee is not occurring on or through an "established securities market" or a "secondary market or the substantial equivalent thereof," as such terms are used in Section 1.7704-1 of the United States Treasury Regulations.

        7.     To the fullest extent permitted by law, the Assignee agrees to indemnify and hold harmless the Partnership, the General Partner and each Limited Partner, including their respective affiliates and their respective directors, officers, employees, partners, members, shareholders, agents and representatives, from and against any loss, damage or liability due to or arising out of a breach of any representation, warranty or agreement of the Assignee contained in this Agreement (including the Assignee Questionnaire), in any other document provided by the Assignee to the Partnership or in any agreement (other than the Partnership Agreement) executed by the Assignee with the Partnership or the General Partner in connection with the Assignee's investment in the Transferred Interest (which in no way includes documents or other agreements executed by the General Partner utilizing the power of attorney set forth in this Agreement or in the Partnership Agreement).

        8.     The Assignee by executing this Agreement hereby appoints the General Partner, with full power of substitution, as the Assignee's true and lawful representative and attorney-in-fact, and agent of the Assignee, to execute, acknowledge, verify, swear to, deliver, record and file, in the Assignee's name, place and stead, the Partnership Agreement, any amendments to the Partnership Agreement (approved in accordance therewith), or any other agreement or instrument which the General Partner deems appropriate to admit the Assignee as a Limited Partner of the Partnership. To the fullest extent permitted by law, this power of attorney is coupled with an interest, is irrevocable and shall survive, and shall not be affected by, the subsequent death, disability, incapacity, incompetency, termination, bankruptcy, insolvency or dissolution of the Assignee. The Assignee acknowledges and agrees that under the terms of the Partnership Agreement, each Limited Partner grants a further power of attorney to the General Partner as provided for therein.

        9.     The General Partner hereby waives the opinion requirements provided for by Section 11.3(b) of the Partnership Agreement and consents to (i) the assignment of the Transferred

2

Interest to the Assignee and (ii) the substitution of the Assignee as a Substituted Limited Partner in the Partnership in the stead of the Assignor with respect to the Transferred Interest.

        10.   The Assignee acknowledges and agrees that the Partnership, the General Partner, the Manager, their affiliates and their respective directors, officers, employees, partners, members, shareholders and agents (collectively, the "Partnership Sponsor") expressly disclaims any and all liability, and shall have no liability whatsoever, for representations or warranties, express or implied, contained in, or for omissions from, any written or oral information made available by the Partnership Sponsor to Assignee or in connection with the transactions contemplated by this Agreement. The Assignee expressly acknowledges that it is not relying upon any information, representation or warranty by the Partnership Sponsor in determining to purchase the Transferred Interest and that the Partnership Sponsor has not made any representations or warranties to the Assignee in connection therewith. The Assignee acknowledges that it has, independently and without reliance upon the Partnership Sponsor, and based on such documents and information as the Assignee has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition, investment merits and consequences of its purchase of the Transferred Interest and made its own decision with respect to its purchase of the Transferred Interest. The Assignee represents that it has consulted to the extent deemed appropriate by it with its own advisers as to the financial, tax, legal and related matters concerning a purchase of the Transferred Interest and on that basis understands the financial, legal, tax and related consequences of a purchase of the Transferred Interest, and believes that a purchase of the Transferred Interest is suitable and appropriate for it. The Assignee acknowledges that the Partnership Sponsor has confidential information relating to the Partnership and its investments that has not been disclosed to the Assignee and that notwithstanding such non-disclosure the Assignee has received information deemed by it to be sufficient to allow it to make an independent and informed decision with respect to its purchase of the Transferred Interest.

        11.   The Assignor hereby agrees to promptly provide the Partnership with such information on the Assignor's loss (if any) upon its transfer of the Transferred Interest and any other information as the Partnership may reasonably request and is necessary to permit the Partnership and its partners to comply with the requirements of Section 743(e) of the Internal Revenue Code of 1986, as the same may be amended from time to time.

        12.   This Agreement may be executed in several counterparts, all of which will together constitute a single agreement among the parties. This Agreement will be governed by, and construed in accordance with, the laws of the State of New York and the parties hereto submit to the non-exclusive jurisdiction of the State of New York.

        13.   The Assignee understands that the information provided herein (and in the Assignee Questionnaire) will be relied upon by the Partnership for the purpose of determining the eligibility of the Assignee to purchase the Transferred Interest in the Partnership. The Assignee agrees to provide to the Partnership, if requested, any additional information that may reasonably be required to determine the eligibility of the Assignee to purchase the Transferred Interest.

3

        IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

THE ASSIGNOR
AQUILINE CAPITAL PARTNERS LLC
By:	/s/ GEOFFREY O. KALISH
Name: Geoffrey O. Kalish Title: Authorized Person
THE ASSIGNEE
VALIDUS REINSURANCE, LTD.
By:	/s/ JOSEPH E. (JEFF) CONSOLINO
Name: Joseph E. (Jeff) Consolino Title: Director
THE GENERAL PARTNER
AQUILINE CAPITAL PARTNERS II GP (OFFSHORE) LTD.
By:	/s/ GEOFFREY O. KALISH
Name: Geoffrey O. Kalish Title: Authorized Person

[Signature Page to Assignment and Assumption Agreement]

ASSIGNOR ACKNOWLEDGMENT

State of	)
	):ss:
County of	)

        The undersigned hereby acknowledges that as of the    day of                        2011 there did appear before him/her the forenamed who, being duly sworn, did depose and acknowledge, that he/she is a                                    of                                 , the Assignor, and, as such, did execute the foregoing Assignment and Assumption Agreement for the uses and purposes therein stated, being thereunto duly authorized.

Notary Public

ASSIGNEE ACKNOWLEDGMENT

State of	)
	):ss:
County of	)

        The undersigned hereby acknowledges that as of the            day of                        2011 there did appear before him/her the forenamed who, being duly sworn, did depose and acknowledge, that he/she is a                                    of                                     , the Assignee, and, as such, did execute the foregoing Assignment and Assumption Agreement for the uses and purposes therein stated, being thereunto duly authorized.

Notary Public

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Exhibit 10.49
EXECUTION COPY

ASSIGNMENT AND ASSUMPTION AGREEMENT FOR NON-U.S. ASSIGNEES

EX-21

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Exhibit 21

VALIDUS HOLDINGS, LTD. SUBSIDIARIES	%*			JURISDICTION
Validus Holdings, Ltd.				Bermuda
Underwriting Risk Services Holdings (Bermuda) Ltd.				Bermuda
Validus Reinsurance, Ltd.				Bermuda
Validus Amalgamation Subsidiary Ltd.				Bermuda
Validus Underwriting Services, Ltd.				Bermuda
Validus Re Europe Limited				Ireland
Validus Re Chile S.A.		99	%	Chile
Underwriting Risk Services S.A.		99	%	Chile
Validus Specialty, Inc.				Delaware
Validus Reaseguros, Inc.				Florida
Validus Services, Inc.				Delaware
Validus Re Americas, Ltd.				Bermuda
AlphaCat Re 2011, Ltd.		22.3	%	Bermuda
Pac Re, Ltd.				Bermuda
Validus Research, Inc.				Ontario
Validus America, Inc.				Delaware
Validus Ventures Ltd.				Bermuda
Validus Managers Ltd.				Bermuda
AlphaCat High Return Fund Ltd.				Bermuda
AlphaCat Reinsurance Ltd.		50	%	Bermuda
AlphaCat Master Fund Ltd.		50	%	Bermuda
AlphaCat Fund Ltd.				Bermuda
AlphaCat Reinsurance Ltd.		50	%	Bermuda
AlphaCat Master Fund Ltd.		50	%	Bermuda
Talbot Holdings Ltd.				Bermuda
Talbot 2002 Underwriting Capital Ltd.				UK
Talbot Insurance (Bermuda) Ltd.				Bermuda
Talbot Underwriting Holdings Ltd.				UK
Talbot Underwriting Ltd.				UK
Talbot Risk Services Pte Ltd.				Singapore
Underwriting Risk Services (Middle East) Ltd.		50	%	Dubai
Underwriting Risk Services, Inc.				Delaware
Talbot Underwriting Services Ltd.				UK
Underwriting Risk Services Ltd.				UK

*

100% unless otherwise indicated

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Exhibit 21

EX-23

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Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-176116) and Form S-8 (No. 333-159148) of Validus Holdings, Ltd. of our report dated February 17, 2012 relating to the financial statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers
PricewaterhouseCoopers
Hamilton, Bermuda
February 17, 2012

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Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.1

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Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
VALIDUS HOLDINGS, LTD.
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(Chapter 98, Title 15 U.S.C. SS. 7241)

I, Edward J. Noonan, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Validus Holdings, Ltd.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: February 17, 2012

/s/ EDWARD J. NOONAN
Edward J. Noonan
Chief Executive Officer

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Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER VALIDUS HOLDINGS, LTD. PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (Chapter 98, Title 15 U.S.C. SS. 7241)

EX-31.2

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Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
VALIDUS HOLDINGS, LTD.
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(Chapter 98, Title 15 U.S.C. SS. 7241)

I, Joseph E. (Jeff) Consolino, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Validus Holdings, Ltd.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: February 17, 2012

/s/ JOSEPH E. (JEFF) CONSOLINO
Joseph E. (Jeff) Consolino
President and Chief Financial Officer

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Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER VALIDUS HOLDINGS, LTD. PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (Chapter 98, Title 15 U.S.C. SS. 7241)

EX-32

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Exhibit 32

CERTIFICATION ACCOMPANYING FORM 10-K REPORT
OF
VALIDUS HOLDINGS, LTD. PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
(Chapter 63, Title 18 U.S.C. SS.SS. 1350(a) and (b))

        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C. ss.ss. 1350(a) and (b)), each of the undersigned hereby certifies that the Annual Report on Form 10-K for the year ended December 31, 2011 of Validus Holdings, Ltd. (the "Company") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 17, 2012

/s/ EDWARD J. NOONAN
Edward J. Noonan
Chief Executive Officer
Validus Holdings, Ltd.

Dated: February 17, 2012

/s/ JOSEPH E. (JEFF) CONSOLINO
Joseph E. (Jeff) Consolino
President and Chief Financial Officer
Validus Holdings, Ltd.

        A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Validus Holdings, Ltd. and will be retained by Validus Holdings, Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32

CERTIFICATION ACCOMPANYING FORM 10-K REPORT OF VALIDUS HOLDINGS, LTD. PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (Chapter 63, Title 18 U.S.C. SS.SS. 1350(a) and (b))

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Goodwill and intangible assets (Tables)

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets Disclosure [Abstract]

Analysis of goodwill and other intangible assets - Talbot

			Intangible assets		Intangible assets
			with an		with a
	Goodwill		indefinite life		finite life		Total
Gross balance at December 31, 2011	$	20,393	$	91,843	$	41,616	$	153,852
Accumulated amortization		-		-		(18,728)		(18,728)
Net balance at December 31, 2011	$	20,393	$	91,843	$	22,888	$	135,124
Gross balance at December 31, 2010	$	20,393	$	91,843	$	41,616	$	153,852
Accumulated amortization		-		-		(14,566)		(14,566)
Net balance at December 31, 2010	$	20,393	$	91,843	$	27,050	$	139,286
Gross balance at December 31, 2009	$	20,393	$	91,843	$	41,616	$	153,852
Accumulated amortization		-		-		(10,404)		(10,404)
Net balance at December 31, 2009	$	20,393	$	91,843	$	31,212	$	143,448

Estimated remaining amortization expense

The estimated remaining amortization expense for the Trademark and Distribution network is as follows:
2012	$	4,162
2013		4,162
2014		4,162
2015		4,162
2016 and there after		6,240
	$	22,888

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Condensed unaudited quarterly financial data (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Underwriting income
Gross premiums written	$ 278,279	$ 391,129	$ 605,387	$ 849,896	$ 258,731	$ 344,040	$ 516,861	$ 870,934	$ 255,289	$ 331,028	$ 425,032	$ 609,892	$ 2,124,691	$ 1,990,566	$ 1,621,241
Reinsurance premiums ceded	(16,489)	(30,586)	(132,346)	(109,820)	(35,376)	(35,641)	(67,726)	(90,739)	(30,393)	(67,687)	(62,291)	(72,512)	(289,241)	(229,482)	(232,883)
Net premiums written	261,790	360,543	473,041	740,076	223,355	308,399	449,135	780,195	224,896	263,341	362,741	537,380	1,835,450	1,761,084	1,388,358
Change in unearned premiums	226,556	98,081	(47,401)	(310,543)	209,456	124,275	(11,191)	(322,501)	203,005	111,376	(34,541)	(218,621)	(33,307)	39	61,219
Net premiums earned	488,346	458,624	425,640	429,533	432,811	432,674	437,944	457,694	427,901	374,717	328,200	318,759	1,802,143	1,761,123	1,449,577
Underwriting deductions
Losses and loss expenses	334,829	226,067	207,307	476,198	155,225	158,936	194,894	478,531	133,020	134,152	124,751	131,834	1,244,401	987,586	523,757
Policy acquisition costs	81,253	77,405	78,230	77,296	75,523	67,074	74,126	76,176	72,843	64,236	64,438	61,449	314,184	292,899	262,966
General and administrative expenses	52,253	35,926	60,841	48,477	54,511	48,831	52,379	53,569	60,253	46,036	41,200	38,079	197,497	209,290	185,568
Share compensation expenses	7,237	7,382	7,628	12,049	7,871	7,618	6,846	6,576	8,189	5,862	5,632	7,354	34,296	28,911	27,037
Total underwriting deductions	475,572	346,780	354,006	614,020	293,130	282,459	328,245	614,852	274,305	250,286	236,021	238,716	1,790,378	1,518,686	999,328
Underwriting income (loss)	12,774	111,844	71,634	(184,487)	139,681	150,215	109,699	(157,158)	153,596	124,431	92,179	80,043	11,765	242,437	450,249
Net investment income	28,080	27,747	26,494	29,975	30,962	34,033	34,809	34,299	35,506	29,532	26,963	26,772	112,296	134,103	118,773
Other income	3,517	0	595	1,606	552	1,082	2,697	888	1,759	1,101	1,017	757	5,718	5,219	4,634
Finance expenses	(13,520)	(10,935)	(16,361)	(14,001)	(13,786)	(13,715)	(13,218)	(15,151)	(14,398)	(11,257)	(10,752)	(7,723)	(54,817)	(55,870)	(44,130)
Operating income (loss) before taxes	30,851	128,656	82,362	(166,907)	157,409	171,615	133,987	(137,122)	176,463	143,807	109,407	99,849	74,962	325,889	529,526
Tax (expense) benefit	226	(2,538)	29	1,459	(1,058)	1,422	(4,187)	697	458	1,799	976	526	(824)	(3,126)	3,759
Net operating income (loss)	31,077	126,118	82,391	(165,448)	156,351	173,037	129,800	(136,425)	176,921	145,606	110,383	100,375	74,138	322,763	533,285
Gain on bargain purchase, net of expenses									0	302,950	(15,851)	0			287,099
Realized gain on repurchase of debentures									4,444	0	0	0	0	0	4,444
Net realized gains (losses) on investments	5,355	5,246	11,552	6,379	(14,399)	23,058	12,441	11,398	9,099	5,429	(2,650)	(23,421)	28,532	32,498	(11,543)
Net unrealized gains (losses) on investments	2,159	(27,848)	18,526	(12,828)	(42,689)	31,588	41,640	15,413	(25,043)	50,437	37,249	22,153	(19,991)	45,952	84,796
Foreign exchange (losses)	266	(19,932)	(1,991)	(467)	3,424	10,790	(4,099)	(8,764)	338	(5,244)	8,432	(4,200)	(22,124)	1,351	(674)
Transaction expenses	(3,850)	(13,583)	0	0									(17,433)	0	0
Net income	35,007	70,001	110,478	(172,364)	102,687	238,473	179,782	(118,378)	165,759	499,178	137,563	94,907	43,122	402,564	897,407
Net income attributable to noncontrolling interest	(7,683)	(13,516)	(594)	0	0	0	0	0	0	0	0	0	(21,793)	0	0
Net income (loss) available (attributable) to Validus	$ 27,324	$ 56,485	$ 109,884	$ (172,364)	$ 102,687	$ 238,473	$ 179,782	$ (118,378)	$ 165,759	$ 499,178	$ 137,563	$ 94,907	$ 21,329	$ 402,564	$ 897,407
Weighted average number of common shares and common share equivalents outstanding
Basic	99,137,696	98,961,795	98,385,924	97,944,340	105,828,739	110,601,888	121,009,553	126,633,277	130,413,790	92,492,373	76,138,038	75,744,577	98,607,439	116,018,364	93,697,194
Diluted	101,324,291	100,823,335	104,562,450	97,944,340	111,316,736	114,842,742	125,152,300	126,633,277	134,794,120	95,834,809	78,942,065	79,102,643	100,928,284	120,630,945	97,168,409
Earnings per share
Basic earnings (loss) per share available (attributable) to common shareholders	$ 0.26	$ 0.55	$ 1.10	$ (1.78)	$ 0.95	$ 2.14	$ 1.47	$ (0.95)	$ 1.26	$ 5.38	$ 1.79	$ 1.23	$ 0.14	$ 3.41	$ 9.51
Diluted earnings (loss) per share available (attributable) to common shareholders	$ 0.25	$ 0.54	$ 1.05	$ (1.78)	$ 0.92	$ 2.08	$ 1.44	$ (0.95)	$ 1.23	$ 5.21	$ 1.74	$ 1.20	$ 0.14	$ 3.34	$ 9.24
Selected ratios:
Losses and loss expenses	68.60%	49.30%	48.70%	110.90%	35.90%	36.70%	44.50%	104.60%	31.10%	35.80%	38.00%	41.40%	69.10%	56.10%	36.10%
Expense ratio	28.80%	26.30%	34.50%	32.10%	31.80%	28.50%	30.40%	29.70%	33.00%	30.90%	33.90%	33.60%	30.30%	30.10%	32.80%
Combined ratio	97.40%	75.60%	83.20%	143.00%	67.70%	65.20%	74.90%	134.30%	64.10%	66.70%	71.90%	75.00%	99.40%	86.20%	68.90%

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Statutory and regulatory requirements (Tables)

12 Months Ended

Dec. 31, 2011

Statutory And Regulatory Requirements [Abstract]

Statutory And Regulatory Requirements [Table Text Block]

		Validus Re					Validus Re Americas, Ltd.
		December 31,		December 31,			December 31,		December 31,
		2011		2010		2011		2010
Actual statutory capital and surplus		$	3,304,837	$	4,035,000	$	125,000	$	296,854
Actual share capital			2,670,447		2,667,249		125,000		250,000
Actual relevant assets			4,536,108		3,869,217		146,591		512,509
			AlphaCat Reinsurance, Ltd				TIBL
			December 31,		December 31,		December 31,		December 31,
			2011		2010		2011		2010
Actual statutory capital and surplus		$	133	$	123	$	457,374	$	432,281
Actual share capital			120		120		62,731		62,731
Actual relevant assets			124,516		94,870		680,814		520,671
	The Bermuda Companies Act 1981 (the "Companies Act") limits the Company's ability to pay dividends and
	distributions to shareholders.

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Stock plans (Tables)

12 Months Ended

Dec. 31, 2011

Stock plans [Abstract]

Options, weighted average assumptions

Year	Weighted average risk free interest rate	Weighted average dividend yield	Expected life (years)	Expected volatility
2009	3.9%	3.7%	2	34.6%
2010 (a)	n/a	n/a	n/a	n/a
2011 (a)	n/a	n/a	n/a	n/a
(a) The Company did not grant any stock option awards during the years ended December 31, 2011 and 2010.

Options, activity during the period

			Weighted Average		Weighted Average
			Grant Date		Grant Date
		Options	Fair Value		Exercise Price
Options outstanding, December 31, 2010		2,723,684	$	6.74	$	20.19
Options granted		-		-		-
Options exercised		(459,932)		6.98		20.55
Options forfeited		(740)		10.30		20.39
Options outstanding, December 31, 2011		2,263,012	$	6.69	$	20.12
Options exercisable at December 31, 2011		2,188,566	$	6.63	$	20.01
	Activity with respect to options for year ended December 31, 2010 was as follows:
			Weighted Average		Weighted Average
			Grant Date		Grant Date
		Options	Fair Value		Exercise Price
Options outstanding, December 31, 2009		3,278,015	$	6.83	$	19.88
Options granted		-		-		-
Options exercised		(550,014)		7.22		18.32
Options forfeited		(4,317)		10.30		20.39
Options outstanding, December 31, 2010		2,723,684	$	6.74	$	20.19
Options exercisable at December 31, 2010		2,505,905	$	6.61	$	20.07
	Activity with respect to options for year ended December 31, 2009 was as follows:
			Weighted Average		Weighted Average
			Grant Date		Grant Date
		Options	Fair Value		Exercise Price
Options outstanding, December 31, 2008		2,799,938	$	7.57	$	18.23
Options granted		650,557		3.42		27.27
Options exercised		(164,834)		5.80		21.01
Options forfeited		(7,646)		10.30		20.39
Options outstanding, December 31, 2009		3,278,015	$	6.83	$	19.88
Options exercisable at December 31, 2009		2,468,928	$	6.52	$	20.10

Other awards, activity during the period

		Restricted		Weighted Average
		Share		Grant Date
		Awards		Fair Value
Restricted share awards outstanding, December 31, 2010			3,114,039	$	24.33
Restricted share awards granted			621,254		31.92
Restricted share awards vested			(712,692)		24.85
Restricted share awards forfeited			(19,054)		26.63
Restricted share awards outstanding, December 31, 2011			3,003,547	$	25.77
	Activity with respect to unvested restricted share awards for the year ended December 31, 2010 was as follows:
		Restricted		Weighted Average
		Share		Grant Date
		Awards		Fair Value
Restricted share awards outstanding, December 31, 2009			2,525,958	$	23.39
Restricted share awards granted			1,191,873		25.94
Restricted share awards vested			(503,322)		23.43
Restricted share awards forfeited			(100,470)		24.22
Restricted share awards outstanding, December 31, 2010			3,114,039	$	24.33
	Activity with respect to unvested restricted share awards for the year ended December 31, 2009 was as follows:
		Restricted		Weighted Average
		Share		Grant Date
		Awards		Fair Value
Restricted share awards outstanding, December 31, 2008			2,307,402	$	22.69
Restricted share awards granted			772,672		24.15
Restricted share awards vested			(512,847)		21.33
Restricted share awards forfeited			(41,269)		24.05
Restricted share awards outstanding, December 31, 2009			2,525,958	$	23.39

				Weighted Average
		Restricted		Grant Date
		Share Units		Fair Value
Restricted share units outstanding, December 31, 2010			47,049	$	25.04
Restricted share units granted			18,388		32.10
Restricted share units vested			(13,340)		24.72
Restricted share units issued in lieu of cash dividends			1,215		27.30
Restricted share units forfeited			-		-
Restricted share units outstanding, December 31, 2011			53,312	$	27.60
	Activity with respect to unvested restricted share units for the year ended December 31, 2010 was as follows:
				Weighted Average
		Restricted		Grant Date
		Share Units		Fair Value
Restricted share units outstanding, December 31, 2009			79,447	$	19.02
Restricted share units granted			26,782		25.65
Restricted share units vested			(59,193)		17.31
Restricted share units issued in lieu of cash dividends			1,107		25.45
Restricted share units forfeited			(1,094)		21.49
Restricted share units outstanding, December 31, 2010			47,049	$	25.04
	Activity with respect to unvested restricted share units for the year ended December 31, 2009 was as follows:
				Weighted Average
		Restricted		Grant Date
		Share Units		Fair Value
Restricted share units outstanding, December 31, 2008			12,274	$	25.28
Restricted share units granted			427,451		13.83
Restricted share units vested			(360,769)		13.10
Restricted share units issued in lieu of cash dividends			491		25.22
Restricted share units forfeited			-		-
Restricted share units outstanding, December 31, 2009			79,447	$	19.02

				Weighted Average
		Performance		Grant Date
		Share Awards		Fair Value
Performance share awards outstanding, December 31, 2010			132,401	$	28.70
Performance share awards granted			146,618		32.64
Performance share awards vested			-		-
Performance share awards forfeited			-		-
Performance share awards outstanding, December 31, 2011			279,019	$	30.77
	Activity with respect to unvested performance share awards for the year ended December 31, 2010 was as follows:
				Weighted Average
		Performance		Grant Date
		Share Awards		Fair Value
Performance share awards outstanding, December 31, 2009			-	$	-
Performance share awards granted			132,401		28.70
Performance share awards vested			-		-
Performance share awards forfeited			-		-
Performance share awards outstanding, December 31, 2010			132,401	$	28.70
	There was no activity with respect to unvested performance share awards for the year ended December 31, 2009.

Activity with respect to unvested employee seller shares for the year ended December 31, 2011 was as follows:

			Weighted Average
		Employee	Grant Date
		Seller Shares	Fair Value
Employee seller shares outstanding, December 31, 2010		197,879	$	22.01
Employee seller shares granted		-		-
Employee seller shares vested		(197,174)		22.01
Employee seller shares forfeited		(705)		22.01
Employee seller shares outstanding, December 31, 2011		-	$	-
	Activity with respect to unvested employee seller shares for the year ended December 31, 2010 was as follows:
			Weighted Average
		Employee	Grant Date
		Seller Shares	Fair Value
Employee seller shares outstanding, December 31, 2009		410,667	$	22.01
Employee seller shares granted		-		-
Employee seller shares vested		(203,544)		22.01
Employee seller shares forfeited		(9,244)		22.01
Employee seller shares outstanding, December 31, 2010		197,879	$	22.01
	Activity with respect to unvested employee seller shares for the year ended December 31, 2009 was as follows:
			Weighted Average
		Employee	Grant Date
		Seller Shares	Fair Value
Employee seller shares outstanding, December 31, 2008		663,375	$	22.01
Employee seller shares granted		-		-
Employee seller shares vested		(248,085)		22.01
Employee seller shares forfeited		(4,623)		22.01
Employee seller shares outstanding, December 31, 2009		410,667	$	22.01

Total share compensation expenses

The breakdown of share compensation expenses by award type for the years endedDecember 31, 2011, 2010 and 2009 is as follows:

	Years Ended
	December 31, 2011		December 31, 2010		December 31, 2009
Options	$	1,770	$	3,845	$	4,158
Restricted share awards		27,428		20,038		16,775
Restricted share units		456		393		5,513
Performance share awards		2,349		232		-
Employee seller shares		2,293		4,403		6,022
Total	$	34,296	$	28,911	$	32,468

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Investments (Maturity profile of fixed maturity investments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Maturity profile
Amortized cost	$ 4,859,705	$ 4,772,037
Total fixed maturities	4,894,145	4,823,867
No single maturity date [Member]
Maturity profile
Amortized cost	819,784	634,493
Total fixed maturities	829,462	644,441
Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	4,039,921	4,137,544
Total fixed maturities	4,064,683	4,179,426
Due in one year or less [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	520,631	424,327
Total fixed maturities	523,107	426,167
Due after one year through five years [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	3,160,647	3,498,334
Total fixed maturities	3,186,711	3,540,408
Due after five years through ten years [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	350,459	207,918
Total fixed maturities	346,654	206,317
Due after ten years [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	8,184	6,965
Total fixed maturities	$ 8,211	$ 6,534

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Condensed unaudited quarterly financial data (Tables)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Information Disclosure [Abstract]

Schedule Of Condensed Quarterly Financial Information [Table Text Block]

	Quarters Ended
	December 31,		September 30,		June 30,		March 31,
	2011		2011		2011		2011
Underwriting income	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Gross premiums written	$	278,279	$	391,129	$	605,387	$	849,896
Reinsurance premiums ceded		(16,489)		(30,586)		(132,346)		(109,820)
Net premiums written		261,790		360,543		473,041		740,076
Change in unearned premiums		226,556		98,081		(47,401)		(310,543)
Net premiums earned		488,346		458,624		425,640		429,533
Underwriting deductions
Losses and loss expenses		334,829		226,067		207,307		476,198
Policy acquisition costs		81,253		77,405		78,230		77,296
General and administrative expenses		52,253		35,926		60,841		48,477
Share compensation expenses		7,237		7,382		7,628		12,049
Total underwriting deductions		475,572		346,780		354,006		614,020
Underwriting income (loss)	$	12,774	$	111,844	$	71,634	$	(184,487)
Net investment income		28,080		27,747		26,494		29,975
Other income		3,517		-		595		1,606
Finance expenses		(13,520)		(10,935)		(16,361)		(14,001)
Operating income (loss) before taxes		30,851		128,656		82,362		(166,907)
Tax benefit (expense)		226		(2,538)		29		1,459
Net operating income (loss)	$	31,077	$	126,118	$	82,391	$	(165,448)
Net realized gains on investments		5,355		5,246		11,552		6,379
Net unrealized gains (losses) on investments		2,159		(27,848)		18,526		(12,828)
Foreign exchange gains (losses)		266		(19,932)		(1,991)		(467)
Transaction expenses (a)		(3,850)		(13,583)		-		-
Net income (loss)	$	35,007	$	70,001	$	110,478	$	(172,364)
Net income attributable to noncontrolling interest		(7,683)		(13,516)		(594)		-
Net income (loss) available (attributable) to Validus	$	27,324	$	56,485	$	109,884	$	(172,364)
Earnings per share
Weighted average number of common shares
and common share equivalents outstanding
Basic		99,137,696		98,961,795		98,385,924		97,944,340
Diluted		101,324,291		100,823,335		104,562,450		97,944,340
Basic earnings (loss) per share available (attributable) to common shareholders	$	0.26	$	0.55	$	1.10	$	(1.78)
Diluted earnings (loss) per share available (attributable) to common shareholders	$	0.25	$	0.54	$	1.05	$	(1.78)
Selected ratios:
Losses and loss expenses		68.6%		49.3%		48.7%		110.9%
Expense ratio		28.8%		26.3%		34.5%		32.1%
Combined ratio		97.4%		75.6%		83.2%		143.0%
(a) The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

	Quarters Ended
	December 31,		September 30,		June 30,		March 31,
	2010		2010		2010		2010
Underwriting income	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Gross premiums written	$	258,731	$	344,040	$	516,861	$	870,934
Reinsurance premiums ceded		(35,376)		(35,641)		(67,726)		(90,739)
Net premiums written		223,355		308,399		449,135		780,195
Change in unearned premiums		209,456		124,275		(11,191)		(322,501)
Net premiums earned		432,811		432,674		437,944		457,694
Underwriting deductions
Losses and loss expenses		155,225		158,936		194,894		478,531
Policy acquisition costs		75,523		67,074		74,126		76,176
General and administrative expenses		54,511		48,831		52,379		53,569
Share compensation expenses		7,871		7,618		6,846		6,576
Total underwriting deductions		293,130		282,459		328,245		614,852
Underwriting income (loss)	$	139,681	$	150,215	$	109,699	$	(157,158)
Net investment income		30,962		34,033		34,809		34,299
Other income		552		1,082		2,697		888
Finance expenses		(13,786)		(13,715)		(13,218)		(15,151)
Operating income (loss) before taxes		157,409		171,615		133,987		(137,122)
Tax (expense) benefit		(1,058)		1,422		(4,187)		697
Net operating income (loss)	$	156,351	$	173,037	$	129,800	$	(136,425)
Net realized (losses) gains on investments		(14,399)		23,058		12,441		11,398
Net unrealized (losses) gains on investments		(42,689)		31,588		41,640		15,413
Foreign exchange gains (losses)		3,424		10,790		(4,099)		(8,764)
Net income (loss)	$	102,687	$	238,473	$	179,782	$	(118,378)
Net income attributable to noncontrolling interest		-		-		-		-
Net income (loss) available (attributable) to Validus	$	102,687	$	238,473	$	179,782	$	(118,378)
Earnings per share
Weighted average number of common shares
and common share equivalents outstanding
Basic		105,828,739		110,601,888		121,009,553		126,633,277
Diluted		111,316,736		114,842,742		125,152,300		126,633,277
Basic earnings (loss) per share available (attributable) to common shareholders	$	0.95	$	2.14	$	1.47	$	(0.95)
Diluted earnings (loss) per share available (attributable) to common shareholders	$	0.92	$	2.08	$	1.44	$	(0.95)
Selected Ratios:
Losses and loss expenses		35.9%		36.7%		44.5%		104.6%
Expense ratio		31.8%		28.5%		30.4%		29.7%
Combined ratio		67.7%		65.2%		74.9%		134.3%

	Quarters Ended (a)
	December 31,		September 30,		June 30,		March 31,
	2009		2009		2009		2009
Underwriting income	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Gross premiums written	$	255,289	$	331,028	$	425,032	$	609,892
Reinsurance premiums ceded		(30,393)		(67,687)		(62,291)		(72,512)
Net premiums written		224,896		263,341		362,741		537,380
Change in unearned premiums		203,005		111,376		(34,541)		(218,621)
Net premiums earned		427,901		374,717		328,200		318,759
Underwriting deductions
Losses and loss expenses		133,020		134,152		124,751		131,834
Policy acquisition costs		72,843		64,236		64,438		61,449
General and administrative expenses		60,253		46,036		41,200		38,079
Share compensation expenses		8,189		5,862		5,632		7,354
Total underwriting deductions		274,305		250,286		236,021		238,716
Underwriting income	$	153,596	$	124,431	$	92,179	$	80,043
Net investment income		35,506		29,532		26,963		26,772
Other income		1,759		1,101		1,017		757
Finance expenses		(14,398)		(11,257)		(10,752)		(7,723)
Operating income before taxes		176,463		143,807		109,407		99,849
Tax benefit		458		1,799		976		526
Net operating income	$	176,921	$	145,606	$	110,383	$	100,375
Gain on bargain purchase, net of expenses		-		302,950		(15,851)		-
Realized gain on repurchase of debentures		4,444		-		-		-
Net realized gains (losses) on investments		9,099		5,429		(2,650)		(23,421)
Net unrealized (losses) gains on investments		(25,043)		50,437		37,249		22,153
Foreign exchange gains (losses)		338		(5,244)		8,432		(4,200)
Net income	$	165,759	$	499,178	$	137,563	$	94,907
Net income attributable to noncontrolling interest		-		-		-		-
Net income available to Validus	$	165,759	$	499,178	$	137,563	$	94,907
Earnings per share
Weighted average number of common shares
and common share equivalents outstanding
Basic	130,413,790			92,492,373		76,138,038		75,744,577
Diluted	134,794,120			95,834,809		78,942,065		79,102,643
Basic earnings per share available to common shareholders	$	1.26	$	5.38	$	1.79	$	1.23
Diluted earnings per share available to common shareholders	$	1.23	$	5.21	$	1.74	$	1.20
Selected Ratios:
Losses and loss expenses		31.1%		35.8%		38.0%		41.4%
Expense ratio		33.0%		30.9%		33.9%		33.6%
Combined ratio		64.1%		66.7%		71.9%		75.0%
(a) Operating results of IPC have been included from the September 2009 date of acquisition.

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Derivative instruments used in hedging activities (Amount and balance sheet location) (Details) (Designated as Hedging Instrument [Member], Foreign exchange contract [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Other assets [Member]
Summary of amount of derivatives designated as hedging instruments
Fair value, derivative assets	$ 476	$ 2,905
Notional amount	75,323	75,000
Accounts payable and accrued expenses [Member]
Summary of amount of derivatives designated as hedging instruments
Fair value, derivative liabilities	$ 0	$ 0

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Commitments and continencies (Significant brokers) (Details) (Gross premiums written [Member], Customer Concentration Risk [Member])	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2011 Marsh & McLennan [Member]	Dec. 31, 2010 Marsh & McLennan [Member]	Dec. 31, 2009 Marsh & McLennan [Member]	Dec. 31, 2011 Willis Group Holdings Ltd. [Member]	Dec. 31, 2010 Willis Group Holdings Ltd. [Member]	Dec. 31, 2009 Willis Group Holdings Ltd. [Member]	Dec. 31, 2011 Aon Benfield Group Ltd. [Member]	Dec. 31, 2010 Aon Benfield Group Ltd. [Member]	Dec. 31, 2009 Aon Benfield Group Ltd. [Member]
Concentration Risk [Line Items]
Aggregate exposure to single issuer, actual		25.90%	25.50%	23.30%	17.00%	17.10%	14.00%	23.80%	22.60%	25.70%
Percentage threshold required for significant brokers	10.00%

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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2011

Reinsurance [Abstract]

Effects of reinsurance on premiums written and earned

	Year Ended December 31, 2011
	Validus Re				Talbot				Total
	Written		Earned		Written		Earned		Elimination		Written		Earned
Direct	$	-	$	-	$	510,200	$	480,432	$	-	$	510,200	$	480,432
Assumed		1,190,220		1,158,917		503,922		507,383		(79,651)		1,614,491		1,666,300
Ceded		(150,718)		(127,026)		(218,174)		(217,563)		79,651		(289,241)		(344,589)
Total	$	1,039,502	$	1,031,891	$	795,948	$	770,252	$	-	$	1,835,450	$	1,802,143
	Year Ended December 31, 2010
	Validus Re				Talbot				Total
	Written		Earned		Written		Earned		Elimination		Written		Earned
Direct	$	-	$	-	$	460,337	$	450,348	$	-	$	460,337	$	450,348
Assumed		1,101,239		1,127,249		520,736		503,021		(91,746)		1,530,229		1,630,270
Ceded		(63,147)		(76,049)		(258,081)		(243,446)		91,746		(229,482)		(319,495)
Total	$	1,038,092	$	1,051,200	$	722,992	$	709,923	$	-	$	1,761,084	$	1,761,123
	Year Ended December 31, 2009
	Validus Re				Talbot				Total
	Written		Earned		Written		Earned		Elimination		Written		Earned
Direct	$	-	$	-	$	459,771	$	427,280	$	-	$	459,771	$	427,280
Assumed		768,084		880,434		460,135		382,535		(66,749)		1,161,470		1,262,969
Ceded		(95,446)		(84,884)		(204,186)		(155,788)		66,749		(232,883)		(240,672)
Total	$	672,638	$	795,550	$	715,720	$	654,027	$	-	$	1,388,358	$	1,449,577

Reinsurance recoverables by reinsurer

	December 31, 2011				December 31, 2010
	Reinsurance Recoverable		% of Total		Reinsurance Recoverable		% of Total
Top 10 reinsurers	$	323,315		69.8%	$	222,420		71.5%
Other reinsurers' balances > $1 million		132,417		28.6%		80,221		25.8%
Other reinsurers' balances < $1 million		7,248		1.6%		8,489		2.7%
Total	$	462,980		100.0%	$	311,130		100.0%

	December 31, 2011
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	77,419	24.0%
Allianz	AA-		59,764	18.5%
Hannover Re	AA-		39,762	12.3%
Everest Re	A+		38,618	11.9%
Transatlantic Re	A+		21,344	6.6%
Tokio Millennium Re Ltd	AA-		20,432	6.3%
Fully collateralized reinsurers	NR		18,140	5.6%
Odyssey Reinsurance Company	A-		16,737	5.2%
Platinum Underwriters	A		15,833	4.9%
Munich Re	AA-		15,266	4.7%
Total		$	323,315	100.0%

	December 31, 2010
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	60,716	27.2%
Hannover Re	AA-		32,392	14.6%
Fully collateralized reinsurers	NR		23,750	10.7%
Montpelier Re	A-		20,000	9.0%
Munich Re	AA-		17,411	7.8%
Everest Re	A+		16,611	7.5%
Allianz	AA		14,184	6.4%
Transatlantic Re	A+		13,758	6.2%
Tokio Millennium Re	AA		11,980	5.4%
Platinum Re	A		11,618	5.2%
Total		$	222,420	100.0%

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Schedule II - Condensed financial information

12 Months Ended

Dec. 31, 2011

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

SCHEDULE II

VALIDUS HOLDINGS, LTD.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS

As at December 31, 2011 and 2010

(Expressed in thousands of U.S. dollars, except share and per share information)

	December 31,		December 31,
	2011		2010
ASSETS
Cash and cash equivalents	$	4,944	$	22,235
Investment in subsidiaries on an equity basis		4,101,389		4,142,322
Other assets		4,747		5,805
Total assets	$	4,111,080	$	4,170,362
LIABILITIES
Balances due to subsidiaries	$	45,808	$	46,537
Accounts payable and accrued expenses		19,865		22,120
Senior notes payable		246,982		246,874
Debentures payable		350,000		350,000
Total liabilities		662,655		665,531
Commitments and contingent liabilities
SHAREHOLDERS' EQUITY
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2011 - 134,503,065;
2010 - 132,838,111; Outstanding: 2011 - 99,471,080; 2010 - 98,001,226)		23,538		23,247
Treasury shares (2011 - 35,031,985; 2010 - 34,836,885)		(6,131)		(6,096)
Additional paid-in capital		1,893,890		1,860,960
Accumulated other comprehensive (loss)		(6,601)		(5,455)
Retained earnings		1,543,729		1,632,175
Total shareholders' equity		3,448,425		3,504,831
Total liabilities and shareholders' equity	$	4,111,080	$	4,170,362

VALIDUS HOLDINGS, LTD.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONTINUED

STATEMENTS OF OPERATIONS

For the years endedDecember 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars)

	Year Ended		Year Ended		Year Ended
	December 31, 2011		December 31, 2010		December 31, 2009
Revenues
Net investment income	$	6	$	2	$	14
Other income		5,321		-		-
Foreign exchange gains		158		154		56
Total revenues		5,485		156		70
Expenses
General and administrative expenses		44,276		37,601		25,404
Share compensation expenses		11,598		8,899		-
Finance expenses		49,530		52,485		31,716
Transaction expenses		16,285		-		-
Total expenses		121,689		98,985		57,120
(Loss) before equity in net earnings of subsidiaries		(116,204)		(98,829)		(57,050)
Equity in net earnings of subsidiaries		137,533		501,393		954,457
Net income	$	21,329	$	402,564	$	897,407

VALIDUS HOLDINGS, LTD.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT – CONTINUED

STATEMENTS OF CASH FLOWS

For the years endedDecember 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars)

	Year Ended		Year Ended		Year Ended
	December 31, 2011		December 31, 2010		December 31, 2009
Cash flows provided by (used in) operating activities
Net income	$	21,329	$	402,564	$	897,407
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in net earnings of subsidiary		(137,533)		(501,393)		(954,457)
Dividends received from subsidiaries		200,000		760,000		223,959
Share compensation expenses		11,598		8,899		-
Amortization of discount on senior notes		108		81		-
Change in:
Other assets		1,058		(2,203)		52
Balances due from subsidiaries		-		5,336		(5,336)
Balances due to subsidiaries		(729)		46,537		(679)
Accounts payable and accrued expenses		(4,321)		3,597		13,360
Net cash provided by operating activities		91,510		723,418		174,306
Cash flows provided by (used in) investing activities
Investment in subsidiaries		-		-		(7,459)
Net cash (used in) investing activities		-		-		(7,459)
Cash flows provided by (used in) financing activities
Net proceeds on issuance of senior notes		-		246,793		-
Issuance of common shares, net		4,885		7,966		1,250
Purchases of common shares under repurchase program		(5,995)		(856,926)		(84,164)
Dividends paid		(107,691)		(105,662)		(80,318)
Net cash (used in) financing activities		(108,801)		(707,829)		(163,232)
Net (decrease) increase in cash		(17,291)		15,589		3,615
Cash and cash equivalents - beginning of period		22,235		6,646		3,031
Cash and cash equivalents - end of period	$	4,944	$	22,235	$	6,646

XML

Derivative instruments used in hedging activities (Amount included in statement of operations) (Details) (Fair value hedge [Member], Foreign exchange contract [Member], Foreign Currency Gain (Loss) [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Fair value hedge [Member] | Foreign exchange contract [Member] | Foreign Currency Gain (Loss) [Member]
Derivatives designated as fair value hedges and related hedged item
Amount of gain (loss) recognized in income on derivatives	$ (3,994)	$ 2,905
Amount of gain (loss) recognized on hedged item in income attributable to risk being hedged	3,994	(2,905)
Amount of gain (loss) recognized in income on derivatives (ineffective portion)	$ 0	$ 0

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Schedule IV - Supplementary reinsurance information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract]
Gross	$ 510,200	$ 460,337	$ 459,771
Ceded to other companies	289,241	229,482	232,883
Assumed from other companies	1,614,491	1,530,229	1,161,470
Net amount	$ 1,835,450	$ 1,761,084	$ 1,388,358
Percentage of amount assumed to net	88.00%	87.00%	84.00%

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Investments (Maturity profile of securities lending collateral) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Securities Financing Transaction [Line Items]
Amortized cost	$ 8,462	$ 23,093
Securities lending collateral reinvested, estimated fair value	7,736	22,328
Due in one year or less [Member]
Securities Financing Transaction [Line Items]
Amortized cost	7,462	17,093
Securities lending collateral reinvested, estimated fair value	7,481	17,094
Due after one year through five years [Member]
Securities Financing Transaction [Line Items]
Amortized cost	1,000	6,000
Securities lending collateral reinvested, estimated fair value	$ 255	$ 5,234

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Stock plans (Options valuation assumptions) (Details)	12 Months Ended
	Dec. 31, 2011 year		Dec. 31, 2010 year		Dec. 31, 2009 year
Options, weighted average assumptions
Weighted average risk free interest rate	0.00%	[1]	0.00%	[1]	3.90%
Weighted average dividend yield	0.00%	[1]	0.00%	[1]	3.70%
Expected life (years)	0	[1]	0	[1]	2
Expected volatility	0.00%	[1]	0.00%	[1]	34.60%

[1] The Company did not grant any stock option awards for this period.

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Significant accounting policies (Details)	12 Months Ended
	Dec. 31, 2011
Premiums [Member]
Significant Accounting Policies [Line Items]
Assumed risk period, in months	24 months
Maximum [Member] | Short-term investments [Member]
Significant Accounting Policies [Line Items]
Time period for recognition, as shown	1 year
Maximum [Member] | Cash and cash equivalents [Member]
Significant Accounting Policies [Line Items]
Time period for recognition, as shown	30 days
Maximum [Member] | Derivative instruments [Member]
Significant Accounting Policies [Line Items]
Hedge effectiveness criteria, percent	125.00%
Minimum [Member] | Derivative instruments [Member]
Significant Accounting Policies [Line Items]
Hedge effectiveness criteria, percent	80.00%

XML

Segment information (Segment geographic) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	$ 278,279	$ 391,129	$ 605,387	$ 849,896	$ 258,731	$ 344,040	$ 516,861	$ 870,934	$ 255,289	$ 331,028	$ 425,032	$ 609,892	$ 2,124,691	$ 1,990,566	$ 1,621,241
Percent of gross premiums written													100.00%	100.00%	100.00%
United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													627,925	588,534	423,616
Percent of gross premiums written													29.60%	29.60%	26.10%
Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													651,088	636,771	554,163
Percent of gross premiums written													30.60%	32.00%	34.20%
Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													281,268	314,171	290,642
Percent of gross premiums written													13.20%	15.80%	17.90%
Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													139,735	154,156	118,532
Percent of gross premiums written													6.60%	7.70%	7.30%
Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													110,629	101,292	87,062
Percent of gross premiums written													5.20%	5.10%	5.40%
Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													49,954	32,254	24,328
Percent of gross premiums written													2.30%	1.60%	1.50%
Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													10,594	11,892	9,296
Percent of gross premiums written													0.50%	0.60%	0.60%
Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													58,908	23,006	24,303
Percent of gross premiums written													2.80%	1.20%	1.50%
Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													169,812	137,979	104,027
Percent of gross premiums written													8.00%	6.90%	6.40%
Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													675,866	627,282	539,435
Percent of gross premiums written													31.80%	31.50%	33.30%
Validus Re [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													1,190,220	1,101,239	768,084	[1]
Validus Re [Member] | United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													520,241	486,133	353,119
Validus Re [Member] | Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													283,837	281,065	181,099
Validus Re [Member] | Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													48,047	55,462	39,970
Validus Re [Member] | Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													89,705	105,321	56,806
Validus Re [Member] | Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													43,627	70,650	39,745
Validus Re [Member] | Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													43,032	26,449	19,812
Validus Re [Member] | Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													518	177	463
Validus Re [Member] | Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													58,908	23,006	24,303
Validus Re [Member] | Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													121,941	91,259	56,962
Validus Re [Member] | Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													264,201	242,782	176,904
Talbot [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													1,014,122	981,073	919,906
Talbot [Member] | United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													117,178	110,944	77,528
Talbot [Member] | Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													412,207	416,982	427,268
Talbot [Member] | Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													247,367	265,760	264,057
Talbot [Member] | Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													52,018	50,074	65,013
Talbot [Member] | Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													94,859	83,274	83,909
Talbot [Member] | Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													7,380	5,982	4,986
Talbot [Member] | Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													10,583	11,892	9,303
Talbot [Member] | Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													0	0	0
Talbot [Member] | Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													50,723	49,212	50,118
Talbot [Member] | Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													434,014	403,935	364,992
Eliminations [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(79,651)	(91,746)	(66,749)
Eliminations [Member] | United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(9,494)	(8,543)	(7,031)
Eliminations [Member] | Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(44,956)	(61,276)	(54,204)
Eliminations [Member] | Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(14,146)	(7,051)	(13,385)
Eliminations [Member] | Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(1,988)	(1,239)	(3,287)
Eliminations [Member] | Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(27,857)	(52,632)	(36,592)
Eliminations [Member] | Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(458)	(177)	(470)
Eliminations [Member] | Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(507)	(177)	(470)
Eliminations [Member] | Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													0	0	0
Eliminations [Member] | Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													(2,852)	(2,492)	(3,053)
Eliminations [Member] | Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written													$ (22,349)	$ (19,435)	$ (2,461)

[1] Operating results of IPC have been included from the September 2009 date of acquisition.

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Investment in AlphaCat Re 2011, Ltd. (Rollforward of investment in non-consolidated affiliate) (Details) (USD $) In Thousands, unless otherwise specified			12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011 Alphacat Re 2011 Ltd [Member]
Schedule of Equity Method Investments [Line Items]
Balance, beginning of period	$ 53,031	$ 0	$ 0
Initial purchase of shares			50,000
Sale of shares			(11,000)
Gain on sale of shares			553
Net income			11,642
Fair value adjustment			1,836
Balance, end of period	$ 53,031	$ 0	$ 53,031

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Share capital (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				12 Months Ended			0 Months Ended								3 Months Ended				12 Months Ended
	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Nov. 02, 2011 Common Share Equivalents [Member]	Aug. 03, 2011 Common Share Equivalents [Member]	May 04, 2011 Common Share Equivalents [Member]	Feb. 09, 2011 Common Share Equivalents [Member]	Nov. 02, 2011 Common Stock [Member]	Aug. 03, 2011 Common Stock [Member]	May 04, 2011 Common Stock [Member]	Feb. 09, 2011 Common Stock [Member]	Sep. 30, 2011 Common Stock [Member]	Dec. 31, 2010 Common Stock [Member]	Jun. 30, 2010 Common Stock [Member]	Mar. 31, 2010 Common Stock [Member]	Dec. 31, 2011 Common Stock [Member]	Dec. 31, 2011 Self Tender Offer November 2010 [Member]	Dec. 31, 2011 Share Repurchase Program [Member] November 2009 - February 17, 2010 [Member]	Dec. 31, 2011 Share Repurchase Program Initial November 2009 [Member]	Dec. 31, 2011 Share Repurchase Program under self tender offer May 2010 [Member]	Dec. 31, 2011 Amended Share Repurchase Program February 2010 [Member]	Dec. 31, 2011 Share Repurchase Program November 2010 [Member]	Dec. 31, 2011 Share Repurchase Program December 2010 [Member]	Dec. 31, 2011 Share Repurchase Program December 2010 [Member] November 2009 - December 23, 2010 [Member]	Dec. 31, 2011 Restricted share awards [Member]	Dec. 31, 2010 Restricted share awards [Member]	Dec. 31, 2009 Restricted share awards [Member]	Dec. 31, 2011 Restricted share units [Member]	Dec. 31, 2010 Restricted share units [Member]	Dec. 31, 2009 Restricted share units [Member]	Dec. 31, 2011 Employee seller shares [Member]	Dec. 31, 2010 Employee seller shares [Member]	Dec. 31, 2009 Employee seller shares [Member]
Summary of common shares issued and outstanding
Common shares issued, beginning balance				75,624,697	132,838,111	131,616,349	75,624,697
Vested, net of shares withheld																													569,104	405,055	423,746	9,497	57,192	360,383	197,174	203,544	248,085
Options exercised					459,932	550,014	164,834
Warrants exercised					428,884	5,957	237,842
Direct issuance of common stock					363		54,556,762
Common shares issued, ending balance	131,616,349				134,503,065	132,838,111	131,616,349
Shares repurchased, ending balance	(3,156,871)				(35,031,985)	(34,836,885)	(3,156,871)
Common shares outstanding, ending balance	128,459,478				99,471,080	98,001,226	128,459,478
Share repurchases
Shares repurchased, value																					$ 238,362	$ 135,484		$ 300,000		$ 61,638		$ 929,173
Shares repurchase authorization, value																							$ 400,000		$ 750,000		$ 400,000
Share Capital (Textuals) [Abstract]
Common shares, shares authorized					571,428,571	571,428,571
Common shares, par value					$ 0.175	$ 0.175
Restriction on percentage of voting power																				9.09%
Common stock, voting rights					one vote per share
Cash dividends declared per share	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 1.00	$ 0.88	$ 0.80	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.22	$ 0.22	$ 0.22	$ 0.22

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Reserve for losses and loss expenses (Loss reserve rollforward) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Reserve for paid losses and unpaid loss expenses
Reserve for losses and loss expenses, beginning of period				$ 2,035,973				$ 1,622,134				$ 1,305,303	$ 2,035,973	$ 1,622,134	$ 1,305,303
Losses and loss expenses recoverable				(283,134)				(181,765)				(208,796)	(283,134)	(181,765)	(208,796)
Net reserves for losses and loss expenses, beginning of period				1,752,839				1,440,369				1,096,507	1,752,839	1,440,369	1,096,507
Net reserves acquired in purchase of IPC									304,957						304,957
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year													1,400,520	1,144,196	625,810
Prior years													(156,119)	(156,610)	(102,053)
Total incurred losses and loss expenses													1,244,401	987,586	523,757
Less net losses and loss expenses paid in respect of losses occuring in:
Current year													(272,479)	(288,974)	(122,351)
Prior years													(470,547)	(384,448)	(385,084)
Total net paid losses													(743,026)	(673,422)	(507,435)
Foreign exchange													4,444	(1,694)	22,583
Net reserve for losses and loss expenses, end of period	2,258,658				1,752,839				1,440,369				2,258,658	1,752,839	1,440,369
Losses and loss expenses recoverable, end of period	372,485				283,134				181,765				372,485	283,134	181,765
Reserve for losses and loss expenses, end of period	2,631,143				2,035,973				1,622,134				2,631,143	2,035,973	1,622,134
Liability for unpaid losses and loss expenses by type
Gross reserves	2,631,143				2,035,973				1,622,134				2,631,143	2,035,973	1,622,134
Incurred losses and loss adjustment expenses comprise:
Gross losses and loss adjustment expenses													1,555,275	1,411,192	598,877
Reinsurance recoverable													(310,874)	(423,606)	(75,120)
Total incurred losses and loss expenses	$ 334,829	$ 226,067	$ 207,307	$ 476,198	$ 155,225	$ 158,936	$ 194,894	$ 478,531	$ 133,020	$ 134,152	$ 124,751	$ 131,834	$ 1,244,401	$ 987,586	$ 523,757

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Share capital (Information on warrants) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Class of Warrant or Right [Line Items]
Number of warrants exercised during period	1,018,184	17,278
Number of shares issued upon exercise of warrants	428,884	5,957	237,842
Warrant Member
Class of Warrant or Right [Line Items]
Number of shares called by warrants outstanding	6,916,678	7,934,860
Nonvoting Common Stock [Member]
Class of Warrant or Right [Line Items]
Warrants outstanding	1,726,011	2,090,815
July 24, 2007
Warrant Valuation Assumptions [Abstract]
Warrants issued	256,409
Average strike price	20.00
Volatility	30.00%
Risk-free rate	4.50%
Expected dividend yield	0.00%
Expected term (years)	8 years
Calculated fair-value per warrant	11.28
February 3, 2006
Warrant Valuation Assumptions [Abstract]
Warrants issued	8,593
Average strike price	17.50
Volatility	30.00%
Risk-free rate	4.50%
Expected dividend yield	0.00%
Expected term (years)	10 years
Calculated fair-value per warrant	8.89
December 15, 2005
Warrant Valuation Assumptions [Abstract]
Warrants issued	8,446,727
Average strike price	17.50
Volatility	30.00%
Risk-free rate	4.50%
Expected dividend yield	0.00%
Expected term (years)	10 years
Calculated fair-value per warrant	8.89

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Investment in AlphaCat Re 2011, Ltd. (Summarized information of investment in non-consolidated affiliate) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Investment:
Carrying value	$ 53,031	$ 0
AlphaCat Re 2011, Ltd.
Investment:
Investment	41,389
Voting ownership %	43.70%
Equity ownership %	22.30%
Carrying value	53,031	0
Summarized financial information of investee
Total assets	293,691
Total liabilities	17,973
Total revenue	50,640
Net income	$ 33,435

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Investments (Fair value hierarchy of securities lending) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	$ 7,736	$ 22,328
Level 1 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	7,481	2,644
Level 2 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	255	19,684
Level 3 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	0	0
Corporate [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	255	229
Corporate [Member] | Level 1 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	0	0
Corporate [Member] | Level 2 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	255	229
Corporate [Member] | Level 3 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	0	0
Asset-backed securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		5,005
Asset-backed securities [Member] | Level 1 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		0
Asset-backed securities [Member] | Level 2 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		5,005
Asset-backed securities [Member] | Level 3 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		0
Short-term investments [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		17,094
Short-term investments [Member] | Level 1 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		2,644
Short-term investments [Member] | Level 2 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		14,450
Short-term investments [Member] | Level 3 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value		0
Cash and cash equivalents [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	7,481
Cash and cash equivalents [Member] | Level 1 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	7,481
Cash and cash equivalents [Member] | Level 2 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	0
Cash and cash equivalents [Member] | Level 3 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	$ 0

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Income taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income taxes

18.Income taxes

The Company provides for income taxes based upon amounts reported in the financial statements and the provisions of currently enacted tax laws. The Company is registered in Bermuda and is subject to Bermuda law with respect to taxation. Under current Bermuda law, the Company is not taxed on any Bermuda income or capital gains taxes and has received an undertaking from the Bermuda Minister of Finance that, in the event of any Bermuda income or capital gains taxes being imposed, the Company will be exempt from those taxes until March 31, 2035.

The Company has subsidiaries with operations in several locations outside Bermuda, including the United Kingdom, the United States, Singapore, Chile, Dubai, Ireland and Canada that are subject to the tax laws of those countries. Under current law, corporate income tax losses incurred in the United Kingdom can be carried forward, for application against future income, indefinitely. On July 19, 2011, the U.K. government passed the Finance Act 2011 which reduced the U.K. corporate income tax rate from 27% to 26% (treated as having come into force from April 1, 2011) and provided for a further reduction in the UK corporate income tax rate from 26% to 25% (effective April 1, 2012).

	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Income before tax — Bermuda	$	42,230	$	400,631	$	892,425
Income before tax — United Kingdom		1,415		4,275		814
Income before tax — Canada		301		784		409
Income before tax — Total	$	43,946	$	405,690	$	893,648

Income tax expense (benefit) is comprised of current and deferred tax. Income tax expense (benefit) is as follows:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Current	$	8,977	$	2,941	$	(9)
Deferred		(8,153)		185		(3,750)
Income tax expense (benefit)	$	824	$	3,126	$	(3,759)

The table below details the tax charge by jurisdiction:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Expected tax provision at Bermuda
Statutory Rate of 0%	$	-	$	-	$	-
Effect of taxable income generated in:
United Kingdom		389		1,374		4,158
Canada		151		1,231		760
Other jurisdictions		1,233		114		38
		1,773		2,719		4,956
Adjustments to prior period tax		(949)		407		(8,715)
Income tax expense (benefit)	$	824	$	3,126	$	(3,759)

	Years Ended
	December 31,		December 31,
	2011		2010
Deferred tax asset
UK tax losses carried forward	$	(11,206)	$	(9,684)
Timing differences		(3,162)		(780)
Deferred tax asset		(14,368)		(10,464)
Deferred tax liability
Underwriting profit taxable in future periods		31,088		35,372
Revenue to be taxed in future periods		-		-
Deferred tax liability		31,088		35,372
Net deferred tax liability	$	16,720	$	24,908

Net deferred tax assets and liabilities represent the tax effect of temporary differences between the value of assets and liabilities for financial statement purposes and such values as measured by tax laws and regulations in countries in which the operations are taxable.

The deferred tax liability for underwriting profit taxable in future periods arises because of a difference in timing, for tax payment purposes, between when Talbot syndicate underwriting income is subject to tax and when corresponding corporate name reinsurance premiums are allowable for tax.  Under current U.K. tax legislation, syndicate underwriting income for a particular underwriting year of account is taxed in the year the syndicate closes.  However the corresponding corporate name reinsurance premiums are allowable for tax as they are accounted for on an accruals basis.

 In assessing whether deferred tax assets can be realized, management considers whether it is more likely than not that the tax benefit of the deferred tax asset will be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income in the period during which those temporary differences and operating losses become deductible. Management considers the reversal of the deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax asset considered realizable could be reduced in the future if estimates of future taxable income are reduced.

 As of December 31, 2011, net operating loss carry forwards in the U.K. were approximately $43,100 (inclusive of cumulative currency translation adjustments) and have no expiration.

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Income taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Income before tax — Bermuda	$	42,230	$	400,631	$	892,425
Income before tax — United Kingdom		1,415		4,275		814
Income before tax — Canada		301		784		409
Income before tax — Total	$	43,946	$	405,690	$	893,648

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Income tax expense (benefit) is comprised of current and deferred tax. Income tax expense (benefit) is as follows:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Current	$	8,977	$	2,941	$	(9)
Deferred		(8,153)		185		(3,750)
Income tax expense (benefit)	$	824	$	3,126	$	(3,759)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The table below details the tax charge by jurisdiction:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Expected tax provision at Bermuda
Statutory Rate of 0%	$	-	$	-	$	-
Effect of taxable income generated in:
United Kingdom		389		1,374		4,158
Canada		151		1,231		760
Other jurisdictions		1,233		114		38
		1,773		2,719		4,956
Adjustments to prior period tax		(949)		407		(8,715)
Income tax expense (benefit)	$	824	$	3,126	$	(3,759)

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	Years Ended
	December 31,		December 31,
	2011		2010
Deferred tax asset
UK tax losses carried forward	$	(11,206)	$	(9,684)
Timing differences		(3,162)		(780)
Deferred tax asset		(14,368)		(10,464)
Deferred tax liability
Underwriting profit taxable in future periods		31,088		35,372
Revenue to be taxed in future periods		-		-
Deferred tax liability		31,088		35,372
Net deferred tax liability	$	16,720	$	24,908

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Derivative instruments used in hedging activities (Tables)

12 Months Ended

Dec. 31, 2011

Derivative instruments used in hedging activities [Abstract]

Location and fair value amount of derivative instruments reported on the balance sheet

			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contracts	$	75,323	Other assets	$	476	Accounts payable and accrued expenses	$	-
The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at December 31, 2010:
			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contract	$	75,000	Other assets	$	2,905	Accounts payable and accrued expenses	$	-

Location and amount of gains and losses related to derivative instruments reported on in the income statement

		Year ended December 31, 2011
Derivatives designated as fair value hedges and related hedged item:	Location of gain (loss) recognized in income	Amount of gain (loss) recognized in income on derivatives		Amount of gain (loss) recognized on hedged items recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivatives (ineffective portion)
Foreign exchange	Foreign exchange gain (loss)	$	(3,994)	$	3,994	$	-
		Year ended December 31, 2010
Derivatives designated as fair value hedges and related hedged item:	Location of gain (loss) recognized in income	Amount of gain (loss) recognized in income on derivatives		Amount of gain (loss) recognized on hedged items recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivatives (ineffective portion)
Foreign exchange	Foreign exchange gain (loss)	$	2,905	$	(2,905)	$	-

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Investment in AlphaCat Re 2011, Ltd. (Rollforward of noncontrolling interest) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Reconciliation of the beginning and ending noncontrolling interest and investment in non-consolidated affiliate balances:
Net income	$ 7,683	$ 13,516	$ 594	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 21,793	$ 0	$ 0
AlphaCat Re 2011 [Member]
Reconciliation of the beginning and ending noncontrolling interest and investment in non-consolidated affiliate balances:
Balance, beginning of period				0									0
Accretion of discount on preferred shares													233
Initial transaction costs													(2,304)
Net income													21,793
Derecognition of noncontrolling interest													(225,023)
Balance, end of period	0												0
AlphaCat Re 2011 [Member] | Initial purchase of shares
Reconciliation of the beginning and ending noncontrolling interest and investment in non-consolidated affiliate balances:
Purchase of shares by noncontrolling interest													134,301
AlphaCat Re 2011 [Member] | Secondary purchase of shares
Reconciliation of the beginning and ending noncontrolling interest and investment in non-consolidated affiliate balances:
Purchase of shares by noncontrolling interest													60,000
AlphaCat Re 2011 [Member] | Purchase of shares
Reconciliation of the beginning and ending noncontrolling interest and investment in non-consolidated affiliate balances:
Purchase of shares by noncontrolling interest													$ 11,000

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Debt and financing arrangements (Text) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended		12 Months Ended				12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended			12 Months Ended		12 Months Ended				12 Months Ended
	Dec. 31, 2011 Secured letter of credit facility [Member]	Dec. 31, 2010 Secured letter of credit facility [Member]	Dec. 31, 2011 Bilateral unsecured letter of credit facility [Member]	Dec. 31, 2010 Bilateral unsecured letter of credit facility [Member]	Dec. 31, 2011 IPC Bi-Lateral Facility [Member]	Dec. 31, 2010 IPC Bi-Lateral Facility [Member]	Dec. 31, 2011 Talbot FAL Facility [Member]	Dec. 31, 2010 Talbot FAL Facility [Member]	Dec. 31, 2011 Syndicated unsecured letter of credit facility [Member]	Dec. 31, 2010 Syndicated unsecured letter of credit facility [Member]	Dec. 31, 2011 Three Year Facilities Credit Facilities [Member]	Sep. 04, 2009 Three Year Facilities Credit Facilities [Member]	Dec. 31, 2011 Credit Facilities [Member]	Dec. 31, 2011 2006 Junior Subordinated Deferrable Debentures [Member]	Dec. 31, 2010 2006 Junior Subordinated Deferrable Debentures [Member]	Dec. 31, 2011 2007 Junior Subordinated Deferrable Debentures [Member]	Dec. 31, 2010 2007 Junior Subordinated Deferrable Debentures [Member]	Dec. 31, 2011 2010 Senior Notes due 2040 [Member]	Dec. 31, 2010 2010 Senior Notes due 2040 [Member]	Dec. 31, 2011 Jun 15 2006 - Jun 15 2011 [Member] 2006 Junior Subordinated Deferrable Debentures [Member]	Dec. 31, 2011 Jun 21 2007 - Jun 15 2012 [Member] 2007 Junior Subordinated Deferrable Debentures [Member]	Dec. 31, 2011 Jun 15 2011 - Jun 15 2036 [Member] 2006 Junior Subordinated Deferrable Debentures [Member]	Dec. 31, 2011 Jun 15 2012 - Jun 15 2037 [Member] 2007 Junior Subordinated Deferrable Debentures [Member]
Senior Notes and Junior Debentures
Net proceeds on issuance of senior notes																		$ 243,967
Length of optional redemption period														5 years		5 years
Interest rate																		8.875%		9.069%	8.48%
Debt issuance cost														3,705		2,000		2,808
Cumulative amount repurchased from an unaffiliated financial institution																60,200
Debt instrument issuance date														2006-06-15		2007-06-21		2010-01-21
Debt instrument maturity date														Jun. 15, 2036		Jun. 15, 2037		Jan. 26, 2040
Date of first required payment																		2010-07-26
Debt instrument, commitment														150,000	150,000	200,000	200,000	250,000	250,000
Description of variable rate basis																						3 month LIBOR	3 month LIBOR
Basis spread on variable rate																						3.55%	2.95%
Frequency of required payments														quarterly		quarterly		semi-annually
Start of optional redemption period																Jun. 15, 2012						Jun. 15, 2011
Gross proceeds on issuance of junior subordinated deferrable debentures														150,000		200,000
Credit Facilities
Letter of credit facility period	5 years		3 years						3 years		3 years
Letter of credit facility amount issued and outstanding	333,179	268,944	0	0	57,146	68,063	25,000	25,000	0	0
Letter of credit facility, original commitment amount							100,000
Line of credit facility initiation date	2007-03-12		2010-03-12				2007-11-28		2010-03-12		2010-03-12
Credit facility, commitment	500,000	500,000	60,000	60,000	80,000	80,000	25,000	25,000	340,000	340,000	400,000	200,000
Percent of consolidated net income quarterly increase under covenant							50.00%						50.00%
Percent of minimum level of consolidated net worth under covenant													70.00%
Percent of any net proceeds from issuance of common shares							50.00%						50.00%
Ratio consolidated total debt to net worth under covenant							0.35:1.00						0.35:1.00
Minimum level of consolidated net worth							$ 2,589,615						$ 2,925,590

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Significant accounting policies (Policies)

12 Months Ended

Dec. 31, 2011

Significant Accounting Policies [Abstract]

Basis of preparation and consolidation

These consolidated financial statements include Validus Holdings, Ltd. and its wholly and majority owned subsidiaries (together, the “Company”) and have been prepared in accordance with generally accepted accounting principles in the United States of America(“U.S. GAAP”).

In the opinion of management, these consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position and results of operations as at the end of and for the periods presented. Certain amounts in prior periods have been reclassified to conform to current period presentation. All significant intercompany accounts and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The major estimates reflected in the Company's consolidated financial statements include the reserve for losses and loss expenses, premium estimates for business written on a line slip or proportional basis, the valuation of goodwill and intangible assets, reinsurance recoverable balances including the provision for unrecoverable reinsurance recoverable balances and investment valuation. Actual results could differ from those estimates.

Premiums

Insurance premiums written are recorded in accordance with the terms of underlying policies. Reinsurance premiums written are recorded at the inception of the policy and are estimated based on information received from brokers, ceding companies and reinsureds, and any subsequent differences arising on such estimates will be recorded in the periods in which they are determined. Premiums written are earned on a pro-rata basis over the term of the policy. For contracts and policies written on a losses occurring basis, the risk period is generally the same as the contract or policy terms. For contracts written on a policies attaching basis, the risk period is based on the terms of the underlying contracts and policies and is generally assumed to be 24 months. The portion of the premiums written applicable to the unexpired terms of the underlying contracts and policies in force are recorded as unearned premiums. Mandatory reinstatement premiums are recorded at the time a loss event occurs.

Policy acquisition costs

Policy acquisition costs are costs that vary with, and are directly related to, the successful production of new and renewal business, and consist principally of commissions and brokerage expenses. Acquisition costs are shown net of commissions earned on reinsurance ceded. These costs are deferred and amortized over the periods in which the related premiums are earned. Deferred acquisition costs are limited to their estimated realizable value based on the related unearned premiums and anticipated claims expenses. The realizable value of the Company's deferred acquisition costs is determined without consideration of investment income. Policy acquisition costs also include profit commission. Profit commissions are recognized when earned.

Reserves for losses and loss expenses

The reserve for losses and loss expenses includes reserves for unpaid reported losses and for losses incurred but not reported (“IBNR”). The reserve for unpaid reported losses and loss expenses is established by management based on reports from brokers, ceding companies and insureds and represents the estimated ultimate cost of events or conditions that have been reported to, or specifically identified by the Company. The reserve for incurred but not reported losses and loss expenses is established by management based on actuarially determined estimates of ultimate losses and loss expenses. Inherent in the estimate of ultimate losses and loss expenses are expected trends in claim severity and frequency and other factors which may vary significantly as claims are settled. Accordingly, ultimate losses and loss expenses may differ materially from the amounts recorded in the consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments, if any, will be recorded in earnings in the period in which they become known. Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves established in previous calendar years.

Reinsurance

In the normal course of business, the Company seeks to reduce the potential amount of loss arising from claims events by reinsuring certain levels of risk assumed in various areas of exposure with other insurers or reinsurers. The accounting for reinsurance ceded depends on the method of reinsurance. If the policy is on a “losses occurring during” basis, reinsurance premiums ceded are expensed (and any commissions thereon are earned) on a pro-rata basis over the period the reinsurance coverage is provided. If the policy is a “risks attaching during” policy, reinsurance premiums ceded are expensed (and any commissions thereon are earned) in line with the gross premiums earned to which the risk attaching policy relates. Prepaid reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force. Mandatory reinstatement premiums ceded are recorded and expensed at the time a loss event occurs. Reinsurance recoverables are based on contracts in force. The method for determining the reinsurance recoverable on unpaid loss and loss expenses involves actuarial estimates of unpaid losses and loss expenses as well as a determination of the Company's ability to cede unpaid losses and loss expenses under its reinsurance treaties. The use of different assumptions could have a material effect on the provision for uncollectible reinsurance. To the extent the creditworthiness of the Company's reinsurers was to deteriorate due to adverse events affecting the reinsurance industry, such as a large number of major catastrophes, actual uncollectible amounts could be significantly greater than the Company's provision. Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying liabilities.

Investments

Fair value is defined as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting the highest and best use valuation concepts. The guidance for “Fair Value Measurement and Disclosure” provides a framework for measuring fair value by creating a hierarchy of fair value measurements that distinguishes market data between observable independent market inputs and unobservable market assumptions by the reporting entity. The guidance further expands disclosures about such fair value measurements. The guidance applies broadly to most existing accounting pronouncements that require or permit fair value measurements (including both financial and non-financial assets and liabilities) but does not require any new fair value measurements. The Company has adopted all authoritative guidance in effect as of the balance sheet date regarding certain market conditions that allow for fair value measurements that incorporate unobservable inputs where active market transaction based measurements are unavailable.

Short-term investments comprise investments with a remaining maturity of less than one year at time of purchase and money market funds held at the Company's investment managers.

All investment transactions are recorded on a first-in-first-out basis and realized gains and losses on the sale of investments are determined on the basis of amortized cost. Interest on fixed maturity securities is recorded in net investment income when earned and is adjusted for any amortization of premium or discount.

For mortgage-backed securities, and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the resultant change in effective yields and maturities are recognized retrospectively. Prepayment fees or call premiums that are only payable to the Company when a security is called prior to its maturity, are earned when received and reflected in net investment income.

Derivative instruments

The Company uses derivative instruments in the form of foreign currency forward exchange contracts to manage foreign currency risk. A foreign currency forward exchange contract involves an obligation to purchase or sell a specified amount of a specified currency at a future date at a price set at the time of the contract. Foreign currency forward exchange contracts will not eliminate fluctuations in the value of our assets and liabilities denominated in foreign currencies but rather allow the Company to establish a rate of exchange for a future point in time. The foreign currency forward exchange contracts are recorded as derivatives at fair value as either assets or liabilities, depending on their rights or obligations, with changes in fair value recorded as a net foreign exchange gain or loss in the Company's statement of operations.

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in value or cash flow of the hedged item. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The documentation process includes linking derivatives to specific assets or liabilities on the balance sheet.  The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.  The Company assesses the effectiveness of its designated hedges on an individual currency basis. If the ratio obtained with this method is within the range of 80% to 125%, the Company considers the hedge effective.

The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative is de-designated as a hedging instrument; or the derivative expires or is sold, terminated or exercised.  To the extent that the Company discontinues hedge accounting, because, based on management's assessment, the derivative no longer qualifies as an effective hedge, the derivative will continue to be carried in the Consolidated Balance Sheets at its fair value, with changes in its fair value recognized in current period net income through foreign exchange gains (losses).

Cash and cash equivalents

The Company considers time deposits and money market funds with an original maturity of 30 days or less as equivalent to cash.

Foreign exchange

The U.S. Dollar is the functional currency of the Company and the majority of the subsidiaries. For these companies, monetary assets and liabilities denominated in foreign currencies are revalued at the exchange rates in effect at the balance sheet date and revenues and expenses denominated in foreign currencies are translated at the prevailing exchange rate on the transaction date with the resulting foreign exchange gains and losses included in earnings.

Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar are translated at prevailing year end exchange rates. Revenue and expenses of such foreign operations are translated at average exchange rates during the year. The net effect of translation differences between functional and reporting currencies in foreign operations, net of applicable deferred income taxes, are included in “accumulated other comprehensive income (loss).”

Stock plans

The Company accounts for its stock plans in accordance with the U.S. GAAP fair value recognition provisions for “Stock Compensation.” Accordingly, the Company recognizes the compensation expense for stock option grants, restricted share grants and performance share awards based on the fair value of the award on the date of grant over the requisite service period.

Warrants

The Company has accounted for certain warrant contracts issued to our sponsoring investors in conjunction with the capitalization of the Company, and which may be settled by the Company using either the physical settlement or net-share settlement methods, in accordance with U.S. GAAP guidance for “Derivatives and Hedging, Contracts in Entity's Own Equity.” Accordingly, the fair value of these warrants has been recorded in equity as an addition to additional paid-in capital.

Earnings per share

Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share are based on the weighted average number of common shares and share equivalents excluding any anti-dilutive effects of warrants, options and other awards under stock plans.

Income taxes and uncertain tax provisions

Deferred tax assets and liabilities are recorded in accordance with U.S. GAAP “Income Taxes” guidance. Consistent with this guidance, the Company records deferred income taxes which reflect the tax effect of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases.

The Company is not subject to any income, withholding or capital gains taxes under current Bermuda law. The Company has operations in subsidiary form in various other jurisdictions around the world, including but not limited to the U.K., U.S.and Canada that are subject to relevant taxes in those jurisdictions.

The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Company did not recognize any resulting liabilities for unrecognized tax benefits.

Business combinations

The Company accounts for business combinations in accordance with ASC Topic 805 “Business Combinations.”

On September 4, 2009, the Company acquired all of the outstanding shares of IPC. The transaction was accounted for as an acquisition method business combination. Accordingly, the purchase price was allocated to assets and liabilities based on their estimated fair value at the acquisition date. The consideration for the net assets acquired was concluded upon prior to the assessment of the fair value of the net assets at the acquisition date. Therefore, the excess of the value of the net assets acquired over the purchase price was recorded as gain on bargain purchase and is shown as a separate component of revenues in the Company's Consolidated Statements of Operations and Comprehensive Income for year ended December 31, 2009. IPC's accounting policies have been conformed to those of the Company.

Goodwill and other intangible assets

The Company accounts for goodwill and other intangible assets recognized in business combinations in accordance with U.S. GAAP guidance. A purchase price paid that is in excess of net assets (“goodwill”) arising from a business combination is recorded as an asset, and is not amortized. Goodwill is deemed to have an indefinite life and is not amortized, but tested at least annually for impairment. Where the total fair value of net assets acquired exceeds consideration paid (“negative goodwill”), the acquirer will record a gain as a result of the bargain purchase, to be recognized through the income statement at the close of the transaction.

Intangible assets with a finite life are amortized over the estimated useful life of the asset. Intangible assets with an indefinite useful life are not amortized. Syndicate capacity is deemed to have an indefinite life. Intangible assets with definite lives are amortized on a straight line basis over the estimated useful lives. Trademark and Distribution Network are deemed to have definite lives and are therefore amortized. Refer also to Note 5 “Business combination.''

Goodwill and intangible assets are tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. Such events or circumstances may include an economic downturn in a geographic market or change in the assessment of future operations.

In September 2011, the FASB issued Accounting Standards Update No. 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”). The objective of ASU 2011-08 is to simplify how entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350 “Intangibles – Goodwill and Other.” If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two step goodwill impairment test should be performed as described below. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted and the Company has chosen to early adopt.

The first step identifies potential impairments by comparing the fair valueof a reporting unit with its book value, including goodwill. Reporting units are consistent with the segmental basis. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down would be recorded. The measurement of fair values in reporting units is determined on a number of factors and assumptions including ranges of future discounted earnings, forecast revenue and operating expenses and effective tax rates.

If the goodwill or intangible asset is impaired, it is written down to its realizable value with a corresponding expense reflected in the consolidated statements of operations.

Other investments

Other investments consist of an investment ina fund of hedge funds, a private equity investmentand a deferred compensation trust held in mutual funds.All investment transactions are recorded on a first-in-first-out basis and realized gains and losses on thesale of investments are determined on the basis of amortized cost. Other investments are carried at fair value with interest and dividend income, income distributions and realized and unrealized gains and lossesincluded in net investment income. The fair value of other investments is generally established on the basis of the net valuation criteria establishedby the managers of the investments. These net valuations are determined based upon the valuation criteria established by the governingdocuments of such investments. In addition, due to a lag inreporting, some of the Company's fund managers, fund administrators, or both, are unable to provide final fund valuations as of the Company'scurrent reporting date. In these circumstances, the Company estimates the fair value of these funds by starting with the prior month's fund valuation, adjusting these valuations for capital calls, redemptions or distributions and the impact of changes in foreign currency exchange rates, and then estimating the return for the current period. In circumstances in which the Company estimates the return for the current period, it uses all credible information available. This principally includes preliminary estimates reported by its fund managers, obtaining the valuation of underlying portfolio investments where such underlying investments are publicly traded and therefore have a readily observable price, using information that is available to the Company with respect to the underlying investments, reviewing various indices for similar investments or asset classes, as well as estimating returns based on the results of similar types of investments for which the Company has reported results, or other valuation methods, as necessary. Actual final fund valuations may differ, perhaps materially so, from the Company's estimates and these differences are recorded in the period they become known as a change in estimate.

Investment in non-consolidated affiliate

Investments in which the Company has significant influence over the operating and financial policies of the investee are accounted for under the equity method of accounting.  Under this method, the Company records its proportionate share of income or loss from such investments in its results for the period. 

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Earnings per share (Tables)

12 Months Ended

Dec. 31, 2011

Earnings per share [Abstract]

Computation of basic and diluted earnings per share

	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Basic earnings per share
Income	$	43,122	$	402,564	$	897,407
Income attributable to noncontrolling interest		(21,793)		-		-
Income available to Validus	$	21,329	$	402,564	$	897,407
less: Dividends and distributions declared on outstanding warrants		(7,644)		(6,991)		(6,507)
Income available to common shareholders	$	13,685	$	395,573	$	890,900
Weighted average number of common shares outstanding		98,607,439		116,018,364		93,697,194
Basic earnings per share available to common shareholders	$	0.14	$	3.41	$	9.51
Diluted earnings per share
Income	$	43,122	$	402,564	$	897,407
Income attributable to noncontrolling interest		(21,793)		-		-
Income available to Validus	$	21,329	$	402,564	$	897,407
less: Dividends and distributions declared on outstanding warrants		(7,644)		-		-
Income available to common shareholders	$	13,685	$	402,564	$	897,407
Weighted average number of common shares outstanding		98,607,439		116,018,364		93,697,194
Share equivalents:
Warrants		-		2,657,258		2,220,096
Stock options		776,204		888,281		478,472
Unvested restricted shares		1,544,641		1,067,042		772,647
Weighted average number of diluted common shares outstanding		100,928,284		120,630,945		97,168,409
Diluted earnings per share available to common shareholders	$	0.14	$	3.34	$	9.24

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Investments (Realized and unrealized gains) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains													$ 45,026	$ 76,920	$ 33,063
Gross realized (losses)													(16,494)	(44,422)	(44,606)
Net realized gains (losses) on investments	5,355	5,246	11,552	6,379	(14,399)	23,058	12,441	11,398	9,099	5,429	(2,650)	(23,421)	28,532	32,498	(11,543)
Net unrealized (losses) gains on investments	2,159	(27,848)	18,526	(12,828)	(42,689)	31,588	41,640	15,413	(25,043)	50,437	37,249	22,153	(19,991)	45,952	84,796
Net unrealized gains (losses) on securities lending													39	(1,009)	6,978
Total net realized gains and change in net unrealized gains on investments													8,541	78,450	73,253
Investments excluding securities lending [Member]
Fixed maturities, short-term and other investments and cash equivalents
Net unrealized (losses) gains on investments													$ (20,030)	$ 46,961	$ 77,818

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Subsequent events (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	0 Months Ended
	Feb. 09, 2012 Dividend declared [Member] Common Shares [Member]	Feb. 09, 2012 Dividend declared [Member] Common Share Equivalents [Member]	Feb. 02, 2012 Costa Concordia marine event
Subsequent events (Textuals) [Abstract]
Subsequent event date			Jan. 13, 2012
Subsequent event, dividends declared	$ 0.25	$ 0.25
Industry estimate, lower bound			$ 845,000
Industry estimate, upper bound			950,000
Subsequent event, amount, lower bound			50,000
Subsequent event, amount, upper bound			$ 650,000

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Goodwill and intangible assets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Goodwill And Other Intangible Assets [Line Items]
Goodwill, gross and net balance	$ 20,393	$ 20,393
Talbot [Member]
Goodwill And Other Intangible Assets [Line Items]
Goodwill, gross and net balance	20,393	20,393	20,393
Intangible assets with an indefinite life, gross and net balance	91,843	91,843	91,843
Total, gross	153,852	153,852	153,852
Accumulated amortization	(18,728)	(14,566)	(10,404)
Total, net	135,124	139,286	143,448
Talbot [Member] | Intangible Assets Finite Life [Member]
Goodwill And Other Intangible Assets [Line Items]
Intangible assets with a finite life, gross balance	41,616	41,616	41,616
Intangible assets with a finite life, net balance	22,888	27,050	31,212
Accumulated amortization	$ (18,728)	$ (14,566)	$ (10,404)

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Share capital (Tables)

12 Months Ended

Dec. 31, 2011

Share capital [Abstract]

Summary of common shares issued and outstanding

	Common Shares
Common shares issued, December 31, 2010		132,838,111
Restricted share awards vested, net of shares withheld		569,104
Restricted share units vested, net of shares withheld		9,497
Employee seller shares vested		197,174
Options exercised		459,932
Warrants exercised		428,884
Direct issuance of common stock		363
Common shares issued, December 31, 2011		134,503,065
Shares repurchased, December 31, 2011		(35,031,985)
Common shares outstanding, December 31, 2011		99,471,080
	Common Shares
Common shares issued, December 31, 2009		131,616,349
Restricted share awards vested, net of shares withheld		405,055
Restricted share units vested, net of shares withheld		57,192
Employee seller shares vested		203,544
Options exercised		550,014
Warrants exercised		5,957
Common shares issued, December 31, 2010		132,838,111
Shares repurchased, December 31, 2010		(34,836,885)
Common shares outstanding, December 31, 2010		98,001,226
	Common Shares
Common shares issued, December 31, 2008		75,624,697
Restricted share awards vested, net of shares withheld		423,746
Restricted share units vested, net of shares withheld		360,383
Employee seller shares vested		248,085
Options exercised		164,834
Warrants exercised		237,842
Direct issuance of common stock		54,556,762
Common shares issued, December 31, 2009		131,616,349
Shares repurchased, December 31, 2009		(3,156,871)
Common shares outstanding, December 31, 2009		128,459,478

Assumptions in the warrant pricing model

	July 24,		February 3,		December 15,
	2007		2006		2005
	Issuance		Issuance		Issuance
Warrants issued		256,409		8,593		8,446,727
Average strike price	$	20.00	$	17.50	$	17.50
Volatility		30.0%		30.0%		30.0%
Risk-free rate		4.5%		4.5%		4.5%
Expected dividend yield		0.0%		0.0%		0.0%
Expected term (years)		8		10		10
Calculated fair value per warrant	$	11.28	$	8.89	$	8.89

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Significant accounting policies

12 Months Ended

Dec. 31, 2011

Significant Accounting Policies [Abstract]

Significant accounting policies

3. Significant accounting policies

The following is a summary of significant accounting policies adopted by the Company.

(a) Premiums

Insurance premiums written are recorded in accordance with the terms of underlying policies. Reinsurance premiums written are recorded at the inception of the policy and are estimated based on information received from brokers, ceding companies and reinsureds, and any subsequent differences arising on such estimates will be recorded in the periods in which they are determined. Premiums written are earned on a pro-rata basis over the term of the policy. For contracts and policies written on a losses occurring basis, the risk period is generally the same as the contract or policy terms. For contracts written on a policies attaching basis, the risk period is based on the terms of the underlying contracts and policies and is generally assumed to be 24 months. The portion of the premiums written applicable to the unexpired terms of the underlying contracts and policies in force are recorded as unearned premiums. Mandatory reinstatement premiums are recorded at the time a loss event occurs.

(b) Policy acquisition costs

Policy acquisition costs are costs that vary with, and are directly related to, the successful production of new and renewal business, and consist principally of commissions and brokerage expenses. Acquisition costs are shown net of commissions earned on reinsurance ceded. These costs are deferred and amortized over the periods in which the related premiums are earned. Deferred acquisition costs are limited to their estimated realizable value based on the related unearned premiums and anticipated claims expenses. The realizable value of the Company's deferred acquisition costs is determined without consideration of investment income. Policy acquisition costs also include profit commission. Profit commissions are recognized when earned.

(c) Reserve for losses and loss expenses

The reserve for losses and loss expenses includes reserves for unpaid reported losses and for losses incurred but not reported (“IBNR”). The reserve for unpaid reported losses and loss expenses is established by management based on reports from brokers, ceding companies and insureds and represents the estimated ultimate cost of events or conditions that have been reported to, or specifically identified by the Company. The reserve for incurred but not reported losses and loss expenses is established by management based on actuarially determined estimates of ultimate losses and loss expenses. Inherent in the estimate of ultimate losses and loss expenses are expected trends in claim severity and frequency and other factors which may vary significantly as claims are settled. Accordingly, ultimate losses and loss expenses may differ materially from the amounts recorded in the consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments, if any, will be recorded in earnings in the period in which they become known. Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves established in previous calendar years.

(d) Reinsurance

In the normal course of business, the Company seeks to reduce the potential amount of loss arising from claims events by reinsuring certain levels of risk assumed in various areas of exposure with other insurers or reinsurers. The accounting for reinsurance ceded depends on the method of reinsurance. If the policy is on a “losses occurring during” basis, reinsurance premiums ceded are expensed (and any commissions thereon are earned) on a pro-rata basis over the period the reinsurance coverage is provided. If the policy is a “risks attaching during” policy, reinsurance premiums ceded are expensed (and any commissions thereon are earned) in line with the gross premiums earned to which the risk attaching policy relates. Prepaid reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force. Mandatory reinstatement premiums ceded are recorded and expensed at the time a loss event occurs. Reinsurance recoverables are based on contracts in force. The method for determining the reinsurance recoverable on unpaid loss and loss expenses involves actuarial estimates of unpaid losses and loss expenses as well as a determination of the Company's ability to cede unpaid losses and loss expenses under its reinsurance treaties. The use of different assumptions could have a material effect on the provision for uncollectible reinsurance. To the extent the creditworthiness of the Company's reinsurers was to deteriorate due to adverse events affecting the reinsurance industry, such as a large number of major catastrophes, actual uncollectible amounts could be significantly greater than the Company's provision. Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying liabilities.

(e) Investments

Fair value is defined as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting the highest and best use valuation concepts. The guidance for “Fair Value Measurement and Disclosure” provides a framework for measuring fair value by creating a hierarchy of fair value measurements that distinguishes market data between observable independent market inputs and unobservable market assumptions by the reporting entity. The guidance further expands disclosures about such fair value measurements. The guidance applies broadly to most existing accounting pronouncements that require or permit fair value measurements (including both financial and non-financial assets and liabilities) but does not require any new fair value measurements. The Company has adopted all authoritative guidance in effect as of the balance sheet date regarding certain market conditions that allow for fair value measurements that incorporate unobservable inputs where active market transaction based measurements are unavailable.

Short-term investments comprise investments with a remaining maturity of less than one year at time of purchase and money market funds held at the Company's investment managers.

All investment transactions are recorded on a first-in-first-out basis and realized gains and losses on the sale of investments are determined on the basis of amortized cost. Interest on fixed maturity securities is recorded in net investment income when earned and is adjusted for any amortization of premium or discount.

For mortgage-backed securities, and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the resultant change in effective yields and maturities are recognized retrospectively. Prepayment fees or call premiums that are only payable to the Company when a security is called prior to its maturity, are earned when received and reflected in net investment income.

(f) Derivative instruments

The Company uses derivative instruments in the form of foreign currency forward exchange contracts to manage foreign currency risk. A foreign currency forward exchange contract involves an obligation to purchase or sell a specified amount of a specified currency at a future date at a price set at the time of the contract. Foreign currency forward exchange contracts will not eliminate fluctuations in the value of our assets and liabilities denominated in foreign currencies but rather allow the Company to establish a rate of exchange for a future point in time. The foreign currency forward exchange contracts are recorded as derivatives at fair value as either assets or liabilities, depending on their rights or obligations, with changes in fair value recorded as a net foreign exchange gain or loss in the Company's statement of operations.

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in value or cash flow of the hedged item. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The documentation process includes linking derivatives to specific assets or liabilities on the balance sheet.  The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.  The Company assesses the effectiveness of its designated hedges on an individual currency basis. If the ratio obtained with this method is within the range of 80% to 125%, the Company considers the hedge effective.

The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative is de-designated as a hedging instrument; or the derivative expires or is sold, terminated or exercised.  To the extent that the Company discontinues hedge accounting, because, based on management's assessment, the derivative no longer qualifies as an effective hedge, the derivative will continue to be carried in the Consolidated Balance Sheets at its fair value, with changes in its fair value recognized in current period net income through foreign exchange gains (losses).

(g)Cash and cash equivalents

The Company considers time deposits and money market funds with an original maturity of 30 days or less as equivalent to cash.

(h) Foreign exchange

The U.S. Dollar is the functional currency of the Company and the majority of the subsidiaries. For these companies, monetary assets and liabilities denominated in foreign currencies are revalued at the exchange rates in effect at the balance sheet date and revenues and expenses denominated in foreign currencies are translated at the prevailing exchange rate on the transaction date with the resulting foreign exchange gains and losses included in earnings.

Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar are translated at prevailing year end exchange rates. Revenue and expenses of such foreign operations are translated at average exchange rates during the year. The net effect of translation differences between functional and reporting currencies in foreign operations, net of applicable deferred income taxes, are included in “accumulated other comprehensive income (loss).”

(i) Stock plans

The Company accounts for its stock plans in accordance with the U.S. GAAP fair value recognition provisions for “Stock Compensation.” Accordingly, the Company recognizes the compensation expense for stock option grants, restricted share grants and performance share awards based on the fair value of the award on the date of grant over the requisite service period.

(j) Warrants

The Company has accounted for certain warrant contracts issued to our sponsoring investors in conjunction with the capitalization of the Company, and which may be settled by the Company using either the physical settlement or net-share settlement methods, in accordance with U.S. GAAP guidance for “Derivatives and Hedging, Contracts in Entity's Own Equity.” Accordingly, the fair value of these warrants has been recorded in equity as an addition to additional paid-in capital.

(k) Earnings per share

Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share are based on the weighted average number of common shares and share equivalents excluding any anti-dilutive effects of warrants, options and other awards under stock plans.

(l) Income taxes and uncertain tax provisions

Deferred tax assets and liabilities are recorded in accordance with U.S. GAAP “Income Taxes” guidance. Consistent with this guidance, the Company records deferred income taxes which reflect the tax effect of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases.

The Company is not subject to any income, withholding or capital gains taxes under current Bermuda law. The Company has operations in subsidiary form in various other jurisdictions around the world, including but not limited to the U.K., U.S.and Canada that are subject to relevant taxes in those jurisdictions.

The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Company did not recognize any resulting liabilities for unrecognized tax benefits.

(m) Business combinations

The Company accounts for business combinations in accordance with ASC Topic 805 “Business Combinations.”

On September 4, 2009, the Company acquired all of the outstanding shares of IPC. The transaction was accounted for as an acquisition method business combination. Accordingly, the purchase price was allocated to assets and liabilities based on their estimated fair value at the acquisition date. The consideration for the net assets acquired was concluded upon prior to the assessment of the fair value of the net assets at the acquisition date. Therefore, the excess of the value of the net assets acquired over the purchase price was recorded as gain on bargain purchase and is shown as a separate component of revenues in the Company's Consolidated Statements of Operations and Comprehensive Income for year ended December 31, 2009. IPC's accounting policies have been conformed to those of the Company.

(n) Goodwill and other intangible assets

The Company accounts for goodwill and other intangible assets recognized in business combinations in accordance with U.S. GAAP guidance. A purchase price paid that is in excess of net assets (“goodwill”) arising from a business combination is recorded as an asset, and is not amortized. Goodwill is deemed to have an indefinite life and is not amortized, but tested at least annually for impairment. Where the total fair value of net assets acquired exceeds consideration paid (“negative goodwill”), the acquirer will record a gain as a result of the bargain purchase, to be recognized through the income statement at the close of the transaction.

Intangible assets with a finite life are amortized over the estimated useful life of the asset. Intangible assets with an indefinite useful life are not amortized. Syndicate capacity is deemed to have an indefinite life. Intangible assets with definite lives are amortized on a straight line basis over the estimated useful lives. Trademark and Distribution Network are deemed to have definite lives and are therefore amortized. Refer also to Note 5 “Business combination.''

Goodwill and intangible assets are tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. Such events or circumstances may include an economic downturn in a geographic market or change in the assessment of future operations.

In September 2011, the FASB issued Accounting Standards Update No. 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”). The objective of ASU 2011-08 is to simplify how entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350 “Intangibles – Goodwill and Other.” If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two step goodwill impairment test should be performed as described below. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted and the Company has chosen to early adopt.

The first step identifies potential impairments by comparing the fair valueof a reporting unit with its book value, including goodwill. Reporting units are consistent with the segmental basis. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down would be recorded. The measurement of fair values in reporting units is determined on a number of factors and assumptions including ranges of future discounted earnings, forecast revenue and operating expenses and effective tax rates.

If the goodwill or intangible asset is impaired, it is written down to its realizable value with a corresponding expense reflected in the consolidated statements of operations.

(o) Other investments

Other investments consist of an investment ina fund of hedge funds, a private equity investmentand a deferred compensation trust held in mutual funds.All investment transactions are recorded on a first-in-first-out basis and realized gains and losses on thesale of investments are determined on the basis of amortized cost. Other investments are carried at fair value with interest and dividend income, income distributions and realized and unrealized gains and lossesincluded in net investment income. The fair value of other investments is generally established on the basis of the net valuation criteria establishedby the managers of the investments. These net valuations are determined based upon the valuation criteria established by the governingdocuments of such investments. In addition, due to a lag inreporting, some of the Company's fund managers, fund administrators, or both, are unable to provide final fund valuations as of the Company'scurrent reporting date. In these circumstances, the Company estimates the fair value of these funds by starting with the prior month's fund valuation, adjusting these valuations for capital calls, redemptions or distributions and the impact of changes in foreign currency exchange rates, and then estimating the return for the current period. In circumstances in which the Company estimates the return for the current period, it uses all credible information available. This principally includes preliminary estimates reported by its fund managers, obtaining the valuation of underlying portfolio investments where such underlying investments are publicly traded and therefore have a readily observable price, using information that is available to the Company with respect to the underlying investments, reviewing various indices for similar investments or asset classes, as well as estimating returns based on the results of similar types of investments for which the Company has reported results, or other valuation methods, as necessary. Actual final fund valuations may differ, perhaps materially so, from the Company's estimates and these differences are recorded in the period they become known as a change in estimate.

(p) Investment in non-consolidated affiliate

Investments in which the Company has significant influence over the operating and financial policies of the investee are accounted for under the equity method of accounting.  Under this method, the Company records its proportionate share of income or loss from such investments in its results for the period. 

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Schedule II - Condensed financial information (Cash Flow) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash flows provided by (used in) operating activities
Net income	$ 35,007	$ 70,001	$ 110,478	$ (172,364)	$ 102,687	$ 238,473	$ 179,782	$ (118,378)	$ 165,759	$ 499,178	$ 137,563	$ 94,907	$ 43,122	$ 402,564	$ 897,407
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Share compensation expenses													34,296	28,911	32,468
Amortization of discount on senior notes													108	81	0
Change in:
Other assets													(574)	(13,198)	(3,622)
Accounts payable and accrued expenses													(18,290)	(29,174)	(6,495)
Net cash provided by operating activities													545,140	630,001	555,116
Cash flows provided by (used in) investing activities
Net cash (used in) provided by investing activities													(392,834)	378,426	(442,633)
Cash flows provided by (used in) financing activities
Net proceeds on issuance of senior notes													0	246,793	0
Issuance of common shares, net													4,885	7,966	1,250
Purchases of common shares under share repurchase program													(5,995)	(856,926)	(84,164)
Dividends paid													(107,691)	(105,662)	(78,515)
Net cash (used in) financing activities													68,681	(774,842)	(187,067)
Net increase (decrease) in cash													212,104	233,155	(62,263)
Cash and cash equivalents - beginning of period				620,740				387,585				449,848	620,740	387,585	449,848
Cash and cash equivalents - end of period	832,844				620,740				387,585				832,844	620,740	387,585
Parent Company [Member]
Cash flows provided by (used in) operating activities
Net income													21,329	402,564	897,407
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Equity in net earnings of subsidiaries													(137,533)	(501,393)	(954,457)
Dividends received from subsidiaries													200,000	760,000	223,959
Share compensation expenses													11,598	8,899	0
Amortization of discount on senior notes													108	81	0
Change in:
Other assets													1,058	(2,203)	52
Balances due from subsidiaries													0	5,336	(5,336)
Balances due to subsidiaries													(729)	46,537	(679)
Accounts payable and accrued expenses													(4,321)	3,597	13,360
Net cash provided by operating activities													91,510	723,418	174,306
Cash flows provided by (used in) investing activities
Investment in subsidiaries													0	0	(7,459)
Net cash (used in) provided by investing activities													0	0	(7,459)
Cash flows provided by (used in) financing activities
Net proceeds on issuance of senior notes													0	246,793	0
Issuance of common shares, net													4,885	7,966	1,250
Purchases of common shares under share repurchase program													(5,995)	(856,926)	(84,164)
Dividends paid													(107,691)	(105,662)	(80,318)
Net cash (used in) financing activities													(108,801)	(707,829)	(163,232)
Net increase (decrease) in cash													(17,291)	15,589	3,615
Cash and cash equivalents - beginning of period				22,235				6,646				3,031	22,235	6,646	3,031
Cash and cash equivalents - end of period	$ 4,944				$ 22,235				$ 6,646				$ 4,944	$ 22,235	$ 6,646

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Goodwill and intangible assets (Future amortization expense) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011
Estimated remaining amortization expense - Trademark and distribution network
2012	$ 4,162
2013	4,162
2014	4,162
2015	4,162
2016 and thereafter	6,240
Total future amortization expense	$ 22,888

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Premiums receivable (Tables)

12 Months Ended

Dec. 31, 2011

Premiums Receivable, Balance [Abstract]

Premiums receivable reconciliation

	Premiums		Premiums
	in course		accrued
	of collection		but unbilled		Total
Balance as at December 31, 2010	$	118,342	$	450,419	$	568,761
Change during 2011		56,769		20,824		77,593
Balance as at December 31, 2011	$	175,111	$	471,243	$	646,354
Balance as at December 31, 2009	$	243,930	$	307,686	$	551,616
Change during 2010		(125,588)		142,733		17,145
Balance as at December 31, 2010	$	118,342	$	450,419	$	568,761

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Statutory and regulatory requirements

12 Months Ended

Dec. 31, 2011

Statutory And Regulatory Requirements [Abstract]

Statutory and regulatory requirements

23. Statutory and regulatory requirements

As disclosed in Note 19 (d), Syndicate 1183 and Talbot 2002 Underwriting Capital Ltd (“T02”) are subject to regulation by the Council of Lloyd's. Syndicate 1183 and T02 are also subject to regulation by the U.K. Financial Services Authority (“FSA”) under the Financial Services and Markets Act 2000.

T02 is a corporate member of Lloyd's. As a corporate member of Lloyd's, T02 is bound by the rules of the Society of Lloyd's, which are prescribed by Bye-laws and Requirements made by the Council of Lloyd's under powers conferred by the Lloyd's Act 1982. These rules (among other matters) prescribe T02's membership subscription, the level of its contribution to the Lloyd's central fund and the assets it must deposit with Lloyd's in support of its underwriting. The Council of Lloyd's has broad powers to sanction breaches of its rules, including the power to restrict or prohibit a member's participation on Lloyd's syndicates.

The Company has four Bermuda-based subsidiaries, Validus Re, Validus Re Americas, Ltd. (formerly, IPCRe Limited), Talbot Insurance (Bermuda) Ltd. (“TIBL”) and AlphaCat Reinsurance, Ltd. registered under The Insurance Act 1978 (Bermuda), Amendments Thereto and Related Regulations (“The Act”). Under the Insurance Act, these subsidiaries are required to prepare Statutory Financial Statements and to file Statutory Financial Returns. These subsidiaries have to meet certain requirements for minimum solvency and liquidity ratios. Effective for statutory filings for the year ended December 31, 2008, the BMA introduced a risk-based capital model, or Bermuda Solvency Capital Requirement (“BSCR”), as a tool to assist the BMA in measuring risk and determining appropriate capitalization. As at December 31, 2011 and 2010, these requirements were met.

Statutory amounts based on draft regulatory filings for Validus Re,Validus Re Americas, Ltd.TIBL, and AlphaCat Reinsurance, Ltd.are set out below.

		Validus Re					Validus Re Americas, Ltd.
		December 31,		December 31,			December 31,		December 31,
		2011		2010		2011		2010
Actual statutory capital and surplus		$	3,304,837	$	4,035,000	$	125,000	$	296,854
Actual share capital			2,670,447		2,667,249		125,000		250,000
Actual relevant assets			4,536,108		3,869,217		146,591		512,509
			AlphaCat Reinsurance, Ltd				TIBL
			December 31,		December 31,		December 31,		December 31,
			2011		2010		2011		2010
Actual statutory capital and surplus		$	133	$	123	$	457,374	$	432,281
Actual share capital			120		120		62,731		62,731
Actual relevant assets			124,516		94,870		680,814		520,671
	The Bermuda Companies Act 1981 (the "Companies Act") limits the Company's ability to pay dividends and
	distributions to shareholders.

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Segment information

12 Months Ended

Dec. 31, 2011

Segment information [Abstract]

Segment information

22. Segment information

The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. and TalbotHoldings Ltd. from which two operating segments have been determined under U.S. GAAP segment reporting.The Company's operating segments are strategic business units that offer different products andservices. They are managed and have capital allocated separately because each business requires different strategies.

Validus Re

The Validus Re segment is focused on short-tail lines of reinsurance. The primary lines in which the segment conducts business are property, marine and specialty, which includes agriculture, aerospaceand aviation, financial lines of business, nuclear, terrorism, life, accident & health, workers' compensation, crisis management and motor.

On September 4, 2009, the Company acquired all of the outstanding shares of IPC from a group of institutional and other investors. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. For segmental reporting purposes, the results of IPC's operations since the acquisition date have been included within the Validus Re segment in the consolidated financial statements.

Talbot

The Talbot segment focuses on a wide range of marine and energy, war, political violence, commercial property, financial institutions,contingency, accident & health and aviationclasses of business on an insurance or facultative reinsurance basis and principally property, aerospace and marine classes of business on a treaty reinsurance basis.

Corporate and other reconciling items

The Company has a “Corporate” function, which includes the activities of the parent company, and which carries out certain functions for thegroup. “Corporate” includes 'non-core' underwriting expenses, predominantly general and administrative and stock compensation expenses. “Corporate” also denotes the activities of certain key executives such as the Chief Executive Officer and Chief FinancialOfficer.For internal reporting purposes, “Corporate” is reflected separately, however “Corporate” is notconsidered an operating segment under these circumstances. Other reconciling items include, but are not limited to, theelimination of intersegment revenues and expenses and unusual items that are not allocated to segments.

Year Ended December 31, 2011	Validus Re		Talbot		Corporate & Eliminations		Total
Underwriting income
Gross premiums written	$	1,190,220	$	1,014,122	$	(79,651)	$	2,124,691
Reinsurance premiums ceded		(150,718)		(218,174)		79,651		(289,241)
Net premiums written		1,039,502		795,948		-		1,835,450
Change in unearned premiums		(7,611)		(25,696)		-		(33,307)
Net premiums earned		1,031,891		770,252		-		1,802,143
Underwriting deductions
Losses and loss expenses		759,305		485,096		-		1,244,401
Policy acquisition costs		160,134		157,334		(3,284)		314,184
General and administrative expenses		46,353		117,482		33,662		197,497
Share compensation expenses		9,309		8,582		16,405		34,296
Total underwriting deductions		975,101		768,494		46,783		1,790,378
Underwriting income (loss)	$	56,790	$	1,758	$	(46,783)	$	11,765
Net investment income		96,492		25,380		(9,576)		112,296
Other income		7,998		8,895		(11,175)		5,718
Finance expenses		(10,289)		(227)		(44,301)		(54,817)
Operating income (loss) before taxes		150,991		35,806		(111,835)		74,962
Tax (expense)		(18)		(651)		(155)		(824)
Net operating income (loss)	$	150,973	$	35,155	$	(111,990)	$	74,138
Net realized gains on investments		21,669		6,863		-		28,532
Net unrealized (losses) on investments		(16,039)		(3,952)		-		(19,991)
Foreign exchange (losses) gains		(19,987)		(2,188)		51		(22,124)
Transaction expenses (a)		-		-		(17,433)		(17,433)
Net income (loss)	$	136,616	$	35,878	$	(129,372)	$	43,122
Net income attributable to noncontrolling interest		(21,793)		-		-		(21,793)
Net income (loss) available to Validus	$	114,823	$	35,878	$	(129,372)	$	21,329
Selected ratios:
Net premiums written / Gross premiums written		87.3%		78.5%				86.4%
Losses and loss expenses		73.6%		63.0%				69.1%
Policy acquisition costs		15.5%		20.4%				17.4%
General and administrative expenses (b)		5.4%		16.4%				12.9%
Expense ratio		20.9%		36.8%				30.3%
Combined ratio		94.5%		99.8%				99.4%
Total assets	$	4,826,234	$	2,775,632	$	16,605	$	7,618,471
(a) The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
(b) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

Year Ended December 31, 2010	Validus Re		Talbot		Corporate & Eliminations		Total
Underwriting income
Gross premiums written	$	1,101,239	$	981,073	$	(91,746)	$	1,990,566
Reinsurance premiums ceded		(63,147)		(258,081)		91,746		(229,482)
Net premiums written		1,038,092		722,992		-		1,761,084
Change in unearned premiums		13,108		(13,069)		-		39
Net premiums earned		1,051,200		709,923		-		1,761,123
Underwriting deductions
Losses and loss expenses		601,610		385,976		-		987,586
Policy acquisition costs		160,599		143,769		(11,469)		292,899
General and administrative expenses		45,617		114,043		49,630		209,290
Share compensation expenses		7,181		6,923		14,807		28,911
Total underwriting deductions		815,007		650,711		52,968		1,518,686
Underwriting income (loss)	$	236,193	$	59,212	$	(52,968)	$	242,437
Net investment income		113,968		29,287		(9,152)		134,103
Other income		4,211		12,802		(11,794)		5,219
Finance expenses		(5,471)		(3,140)		(47,259)		(55,870)
Operating income (loss) before taxes		348,901		98,161		(121,173)		325,889
Tax (expense)		(175)		(2,730)		(221)		(3,126)
Net operating income (loss)	$	348,726	$	95,431	$	(121,394)	$	322,763
Net realized gains on investments		23,637		8,861		-		32,498
Net unrealized gains on investments		45,276		676		-		45,952
Foreign exchange (losses) gains		(1,185)		2,091		445		1,351
Net income (loss)	$	416,454	$	107,059	$	(120,949)	$	402,564
Net income attributable to noncontrolling interest		-		-		-		-
Net income (loss) available (attributable) to Validus	$	416,454	$	107,059	$	(120,949)	$	402,564
Selected ratios:
Net premiums written / Gross premiums written		94.3%		73.7%				88.5%
Losses and loss expenses		57.2%		54.4%				56.1%
Policy acquisition costs		15.3%		20.3%				16.6%
General and administrative expenses (a)		5.0%		17.0%				13.5%
Expense ratio		20.3%		37.3%				30.1%
Combined ratio		77.5%		91.7%				86.2%
Total Assets	$	4,431,001	$	2,599,158	$	30,719	$	7,060,878
(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

Year Ended December 31, 2009	Validus Re (b)		Talbot		Corporate & Eliminations		Total
Underwriting income
Gross premiums written	$	768,084	$	919,906	$	(66,749)	$	1,621,241
Reinsurance premiums ceded		(95,446)		(204,186)		66,749		(232,883)
Net premiums written		672,638		715,720		-		1,388,358
Change in unearned premiums		122,912		(61,693)		-		61,219
Net premiums earned		795,550		654,027		-		1,449,577
Underwriting deductions
Losses and loss expenses		186,704		337,053		-		523,757
Policy acquisition costs		127,433		139,932		(4,399)		262,966
General and administrative expenses		65,710		96,352		23,506		185,568
Share compensation expenses		7,576		7,171		12,290		27,037
Total underwriting deductions		387,423		580,508		31,397		999,328
Underwriting income (loss)	$	408,127	$	73,519	$	(31,397)	$	450,249
Net investment income		94,973		30,114		(6,314)		118,773
Other income		5,149		5,225		(5,740)		4,634
Finance expenses		(1,774)		(14,725)		(27,631)		(44,130)
Operating income (loss) before taxes		506,475		94,133		(71,082)		529,526
Tax (expense) benefit		(163)		3,922		-		3,759
Net operating income (loss)	$	506,312	$	98,055	$	(71,082)	$	533,285
Gain on bargain purchase, net of expenses		-		-		287,099		287,099
Realized gain on repurchase of debentures		-		-		4,444		4,444
Net realized (losses) on investments		(5,428)		(6,115)		-		(11,543)
Net unrealized gains on investments		75,209		9,587		-		84,796
Foreign exchange (losses) gains		(1,406)		676		56		(674)
Net income	$	574,687	$	102,203	$	220,517	$	897,407
Net income attributable to noncontrolling interest		-		-		-		-
Net income available to Validus	$	574,687	$	102,203	$	220,517	$	897,407
Selected ratios:
Net premiums written / Gross premiums written		87.6%		77.8%				85.6%
Losses and loss expenses		23.5%		51.5%				36.1%
Policy acquisition costs		16.0%		21.4%				18.1%
General and administrative expenses (a)		9.2%		15.8%				14.7%
Expense ratio		25.2%		37.2%				32.8%
Combined ratio		48.7%		88.7%				68.9%
Total assets	$	4,865,771	$	2,137,393	$	15,976	$	7,019,140
(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
(b) Operating results of IPC have been included from the September 2009 date of acquisition.

The Company's exposures are generally diversified across geographic zones. The following tables set forth the gross premiums written allocated to the territory of coverage exposure for the periods indicated:
		Year ended December 31, 2011
		Gross premiums written
		Validus Re		Talbot		Eliminations		Total		%
United States		$	520,241	$	117,178	$	(9,494)	$	627,925	29.6%
Worldwide excluding United States (a)			48,047		247,367		(14,146)		281,268	13.2%
Europe			89,705		52,018		(1,988)		139,735	6.6%
Latin America and Caribbean			43,627		94,859		(27,857)		110,629	5.2%
Japan			43,032		7,380		(458)		49,954	2.3%
Canada			518		10,583		(507)		10,594	0.5%
Rest of the world (b)			58,908		-		-		58,908	2.8%
	Sub-total, non United States		283,837		412,207		(44,956)		651,088	30.6%
Worldwide including United States			121,941		50,723		(2,852)		169,812	8.0%
Marine and Aerospace (c)			264,201		434,014		(22,349)		675,866	31.8%
Total		$	1,190,220	$	1,014,122	$	(79,651)	$	2,124,691	100.0%
		Year ended December 31, 2010
		Gross premiums written
		Validus Re		Talbot		Eliminations		Total		%
United States		$	486,133	$	110,944	$	(8,543)	$	588,534	29.6%
Worldwide excluding United States (a)			55,462		265,760		(7,051)		314,171	15.8%
Europe			105,321		50,074		(1,239)		154,156	7.7%
Latin America and Caribbean			70,650		83,274		(52,632)		101,292	5.1%
Japan			26,449		5,982		(177)		32,254	1.6%
Canada			177		11,892		(177)		11,892	0.6%
Rest of the world (b)			23,006		-		-		23,006	1.2%
	Sub-total, non United States		281,065		416,982		(61,276)		636,771	32.0%
Worldwide including United States			91,259		49,212		(2,492)		137,979	6.9%
Marine and Aerospace (c)			242,782		403,935		(19,435)		627,282	31.5%
Total		$	1,101,239	$	981,073	$	(91,746)	$	1,990,566	100.0%
		Year ended December 31, 2009
		Gross premiums written
		Validus Re		Talbot		Eliminations		Total		%
United States		$	353,119	$	77,528	$	(7,031)	$	423,616	26.1%
Worldwide excluding United States (a)			39,970		264,057		(13,385)		290,642	17.9%
Europe			56,806		65,013		(3,287)		118,532	7.3%
Latin America and Caribbean			39,745		83,909		(36,592)		87,062	5.4%
Japan			19,812		4,986		(470)		24,328	1.5%
Canada			463		9,303		(470)		9,296	0.6%
Rest of the world (b)			24,303		0		0		24,303	1.5%
	Sub-total, non United States		181,099		427,268		(54,204)		554,163	34.2%
Worldwide including United States			56,962		50,118		(3,053)		104,027	6.4%
Marine and Aerospace (c)			176,904		364,992		(2,461)		539,435	33.3%
Total		$	768,084	$	919,906	$	(66,749)	$	1,621,241	100.0%
	(a) Represents risks in two or more geographic zones.
	(b) Represents risks in one geographic zone.
	(c) Not classified as geographic area as marine and aerospace risks can span multiple geographic areas and are not fixed locations
	in some instances.

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Income taxes (Components of net deferred tax liability) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Deferred tax asset:
UK tax losses carried forward	$ (11,206)	$ (9,684)
Timing differences	(3,162)	(780)
Deferred tax asset	(14,368)	(10,464)
Deferred tax liability:
Underwriting profit taxable in future periods	31,088	35,372
Revenue to be taxed in future periods	0	0
Deferred tax liability	31,088	35,372
Net deferred tax liability	$ 16,720	$ 24,908

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Nature of the business (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 Alphacat Re 2011 Ltd [Member]	Dec. 31, 2009 Ipc Holdings Ltd [Member]	Dec. 31, 2011 Initial Public Offering Excluding Underwriters Option [Member]	Dec. 31, 2011 Underwriters Option To Purchase Additional Common Shares [Member]	Dec. 31, 2011 IPO [Member]
Equity Issuance [Line Items]
IPO date			Jul. 30, 2007	Aug. 27, 2007
Net proceeds of offering			$ 310,731	$ 9,349	$ 320,080
Shares issued			15,244,888	453,933
Price per share			$ 22.00	$ 22.00
Business Acquisition [Line Items]
Percentage of voting interests acquired		100.00%
Date of Amalgamation Agreement		2009-09-04
Cash price per share		$ 7.50
In kind share payment, per share		0.9727
Schedule of Equity Method Investments [Line Items]
Equity Method Investment Voting Percentage	43.70%

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Reserve for losses and loss expenses (Tables)

12 Months Ended

Dec. 31, 2011

Reserve for losses and loss expenses [Abstract]

Reserve for losses and loss expenses

	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Reserve for losses and loss expenses, beginning of period	$	2,035,973	$	1,622,134	$	1,305,303
Losses and loss expenses recoverable		(283,134)		(181,765)		(208,796)
Net reserves for losses and loss expenses, beginning of period		1,752,839		1,440,369		1,096,507
Net reserves acquired in purchase of IPC		-		-		304,957
Increase (decrease) in net losses and loss expenses incurred
in respect of losses occurring in:
Current year		1,400,520		1,144,196		625,810
Prior years		(156,119)		(156,610)		(102,053)
Total incurred losses and loss expenses		1,244,401		987,586		523,757
Less net losses and loss expenses paid in respect of losses
occurring in:
Current year		(272,479)		(288,974)		(122,351)
Prior years		(470,547)		(384,448)		(385,084)
Total net paid losses		(743,026)		(673,422)		(507,435)
Foreign exchange		4,444		(1,694)		22,583
Net reserve for losses and loss expenses, end of period		2,258,658		1,752,839		1,440,369
Losses and loss expenses recoverable		372,485		283,134		181,765
Reserve for losses and loss expenses, end of period	$	2,631,143	$	2,035,973	$	1,622,134

Incurred losses and loss adjustment expenses comprise:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Gross losses and loss adjustment expenses	$	1,555,275	$	1,411,192	$	598,877
Reinsurance recoverable		(310,874)		(423,606)		(75,120)
Total incurred losses and loss adjustment expenses	$	1,244,401	$	987,586	$	523,757

Prior year development by segment and line of business

	Year Ended December 31, 2011
	Property		Marine		Specialty		Total
Validus Re	$	(49,020)	$	(10,234)	$	(9,356)	$	(68,610)
Talbot		(22,169)		(31,382)		(33,958)		(87,509)
Net favorable development	$	(71,189)	$	(41,616)	$	(43,314)	$	(156,119)

	Year Ended December 31, 2010
	Property		Marine		Specialty		Total
Validus Re	$	(49,831)	$	(17,616)	$	(3,170)	$	(70,617)
Talbot		(22,450)		(52,415)		(11,128)		(85,993)
Net favorable development	$	(72,281)	$	(70,031)	$	(14,298)	$	(156,610)

	Year Ended December 31, 2009
	Property		Marine		Specialty		Total
Validus Re	$	(65,109)	$	19,628	$	(7,491)	$	(52,972)
Talbot		(27,630)		(15,306)		(6,145)		(49,081)
Net favorable development	$	(92,739)	$	4,322	$	(13,636)	$	(102,053)

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Subsequent events

12 Months Ended

Dec. 31, 2011

Subsequent events [Abstract]

Subsequent events

24. Subsequent events

(a) Loss Events

On February 2, 2012, the Company provided an initial estimate of losses from the Costa Concordia marine event that occurred on January 13, 2012. Based on a total industry insured loss estimate of $845,000 to $950,000, Validus expects its loss to be in the range of $50,000 to $65,000, net of reinstatement premiums and reinsurance. The Company has additional reinsurance in place if the ultimate industry loss increases above the current estimate.

The above estimates are based on Validus' current evaluation of impacted contracts and information provided by customers and intermediaries. Due to the preliminary nature of reports and estimates of loss to date, Validus' actual losses from this event may vary materially from these estimates.

(b) Quarterly Dividend

On February 9, 2012, the Company announced a quarterly cash dividend of $0.25 per each common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable, payable on March 30, 2012 to holders of record on March 15, 2012.

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Condensed unaudited quarterly financial data

12 Months Ended

Dec. 31, 2011

Quarterly Financial Information Disclosure [Abstract]

Condensed unaudited quarterly financial data

25.Condensed unaudited quarterly financial data

	Quarters Ended
	December 31,		September 30,		June 30,		March 31,
	2011		2011		2011		2011
Underwriting income	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Gross premiums written	$	278,279	$	391,129	$	605,387	$	849,896
Reinsurance premiums ceded		(16,489)		(30,586)		(132,346)		(109,820)
Net premiums written		261,790		360,543		473,041		740,076
Change in unearned premiums		226,556		98,081		(47,401)		(310,543)
Net premiums earned		488,346		458,624		425,640		429,533
Underwriting deductions
Losses and loss expenses		334,829		226,067		207,307		476,198
Policy acquisition costs		81,253		77,405		78,230		77,296
General and administrative expenses		52,253		35,926		60,841		48,477
Share compensation expenses		7,237		7,382		7,628		12,049
Total underwriting deductions		475,572		346,780		354,006		614,020
Underwriting income (loss)	$	12,774	$	111,844	$	71,634	$	(184,487)
Net investment income		28,080		27,747		26,494		29,975
Other income		3,517		-		595		1,606
Finance expenses		(13,520)		(10,935)		(16,361)		(14,001)
Operating income (loss) before taxes		30,851		128,656		82,362		(166,907)
Tax benefit (expense)		226		(2,538)		29		1,459
Net operating income (loss)	$	31,077	$	126,118	$	82,391	$	(165,448)
Net realized gains on investments		5,355		5,246		11,552		6,379
Net unrealized gains (losses) on investments		2,159		(27,848)		18,526		(12,828)
Foreign exchange gains (losses)		266		(19,932)		(1,991)		(467)
Transaction expenses (a)		(3,850)		(13,583)		-		-
Net income (loss)	$	35,007	$	70,001	$	110,478	$	(172,364)
Net income attributable to noncontrolling interest		(7,683)		(13,516)		(594)		-
Net income (loss) available (attributable) to Validus	$	27,324	$	56,485	$	109,884	$	(172,364)
Earnings per share
Weighted average number of common shares
and common share equivalents outstanding
Basic		99,137,696		98,961,795		98,385,924		97,944,340
Diluted		101,324,291		100,823,335		104,562,450		97,944,340
Basic earnings (loss) per share available (attributable) to common shareholders	$	0.26	$	0.55	$	1.10	$	(1.78)
Diluted earnings (loss) per share available (attributable) to common shareholders	$	0.25	$	0.54	$	1.05	$	(1.78)
Selected ratios:
Losses and loss expenses		68.6%		49.3%		48.7%		110.9%
Expense ratio		28.8%		26.3%		34.5%		32.1%
Combined ratio		97.4%		75.6%		83.2%		143.0%
(a) The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

	Quarters Ended
	December 31,		September 30,		June 30,		March 31,
	2010		2010		2010		2010
Underwriting income	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Gross premiums written	$	258,731	$	344,040	$	516,861	$	870,934
Reinsurance premiums ceded		(35,376)		(35,641)		(67,726)		(90,739)
Net premiums written		223,355		308,399		449,135		780,195
Change in unearned premiums		209,456		124,275		(11,191)		(322,501)
Net premiums earned		432,811		432,674		437,944		457,694
Underwriting deductions
Losses and loss expenses		155,225		158,936		194,894		478,531
Policy acquisition costs		75,523		67,074		74,126		76,176
General and administrative expenses		54,511		48,831		52,379		53,569
Share compensation expenses		7,871		7,618		6,846		6,576
Total underwriting deductions		293,130		282,459		328,245		614,852
Underwriting income (loss)	$	139,681	$	150,215	$	109,699	$	(157,158)
Net investment income		30,962		34,033		34,809		34,299
Other income		552		1,082		2,697		888
Finance expenses		(13,786)		(13,715)		(13,218)		(15,151)
Operating income (loss) before taxes		157,409		171,615		133,987		(137,122)
Tax (expense) benefit		(1,058)		1,422		(4,187)		697
Net operating income (loss)	$	156,351	$	173,037	$	129,800	$	(136,425)
Net realized (losses) gains on investments		(14,399)		23,058		12,441		11,398
Net unrealized (losses) gains on investments		(42,689)		31,588		41,640		15,413
Foreign exchange gains (losses)		3,424		10,790		(4,099)		(8,764)
Net income (loss)	$	102,687	$	238,473	$	179,782	$	(118,378)
Net income attributable to noncontrolling interest		-		-		-		-
Net income (loss) available (attributable) to Validus	$	102,687	$	238,473	$	179,782	$	(118,378)
Earnings per share
Weighted average number of common shares
and common share equivalents outstanding
Basic		105,828,739		110,601,888		121,009,553		126,633,277
Diluted		111,316,736		114,842,742		125,152,300		126,633,277
Basic earnings (loss) per share available (attributable) to common shareholders	$	0.95	$	2.14	$	1.47	$	(0.95)
Diluted earnings (loss) per share available (attributable) to common shareholders	$	0.92	$	2.08	$	1.44	$	(0.95)
Selected Ratios:
Losses and loss expenses		35.9%		36.7%		44.5%		104.6%
Expense ratio		31.8%		28.5%		30.4%		29.7%
Combined ratio		67.7%		65.2%		74.9%		134.3%

	Quarters Ended (a)
	December 31,		September 30,		June 30,		March 31,
	2009		2009		2009		2009
Underwriting income	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Gross premiums written	$	255,289	$	331,028	$	425,032	$	609,892
Reinsurance premiums ceded		(30,393)		(67,687)		(62,291)		(72,512)
Net premiums written		224,896		263,341		362,741		537,380
Change in unearned premiums		203,005		111,376		(34,541)		(218,621)
Net premiums earned		427,901		374,717		328,200		318,759
Underwriting deductions
Losses and loss expenses		133,020		134,152		124,751		131,834
Policy acquisition costs		72,843		64,236		64,438		61,449
General and administrative expenses		60,253		46,036		41,200		38,079
Share compensation expenses		8,189		5,862		5,632		7,354
Total underwriting deductions		274,305		250,286		236,021		238,716
Underwriting income	$	153,596	$	124,431	$	92,179	$	80,043
Net investment income		35,506		29,532		26,963		26,772
Other income		1,759		1,101		1,017		757
Finance expenses		(14,398)		(11,257)		(10,752)		(7,723)
Operating income before taxes		176,463		143,807		109,407		99,849
Tax benefit		458		1,799		976		526
Net operating income	$	176,921	$	145,606	$	110,383	$	100,375
Gain on bargain purchase, net of expenses		-		302,950		(15,851)		-
Realized gain on repurchase of debentures		4,444		-		-		-
Net realized gains (losses) on investments		9,099		5,429		(2,650)		(23,421)
Net unrealized (losses) gains on investments		(25,043)		50,437		37,249		22,153
Foreign exchange gains (losses)		338		(5,244)		8,432		(4,200)
Net income	$	165,759	$	499,178	$	137,563	$	94,907
Net income attributable to noncontrolling interest		-		-		-		-
Net income available to Validus	$	165,759	$	499,178	$	137,563	$	94,907
Earnings per share
Weighted average number of common shares
and common share equivalents outstanding
Basic	130,413,790			92,492,373		76,138,038		75,744,577
Diluted	134,794,120			95,834,809		78,942,065		79,102,643
Basic earnings per share available to common shareholders	$	1.26	$	5.38	$	1.79	$	1.23
Diluted earnings per share available to common shareholders	$	1.23	$	5.21	$	1.74	$	1.20
Selected Ratios:
Losses and loss expenses		31.1%		35.8%		38.0%		41.4%
Expense ratio		33.0%		30.9%		33.9%		33.6%
Combined ratio		64.1%		66.7%		71.9%		75.0%
(a) Operating results of IPC have been included from the September 2009 date of acquisition.

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Basis of preparation and consolidation

12 Months Ended

Dec. 31, 2011

Basis of preparation and consolidation [Abstract]

Basis of preparation and consolidation

2. Basis of preparation and consolidation

These consolidated financial statements include Validus Holdings, Ltd. and its wholly and majority owned subsidiaries (together, the “Company”) and have been prepared in accordance with generally accepted accounting principles in the United States of America(“U.S. GAAP”).

In the opinion of management, these consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position and results of operations as at the end of and for the periods presented. Certain amounts in prior periods have been reclassified to conform to current period presentation. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The major estimates reflected in the Company's consolidated financial statements include the reserve for losses and loss expenses, premium estimates for business written on a line slip or proportional basis, the valuation of goodwill and intangible assets, reinsurance recoverable balances including the provision for unrecoverable reinsurance recoverable balances and investment valuation. Actual results could differ from those estimates.The term “ASC” used in these notes refers to Accounting Standard Codifications issued by the United States Financial Accounting Standards Board (“FASB”).

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Schedule I - Summary of investments

12 Months Ended

Dec. 31, 2011

Summary of Investments, Other than Investments in Related Parties [Abstract]

Summary of Investments, Other than Investments in Related Parties [Text Block]

SCHEDULE I

VALIDUS HOLDINGS, LTD.

SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES

At December 31, 2011

(Expressed in thousands of U.S. dollars)

						Amount at which
		Amortized		Fair		shown on the
		cost		value		Balance Sheet
U.S. Government and Government Agency	$	1,170,810	$	1,182,393	$	1,182,393
Non-U.S. Government and Government
Agency		446,258		449,358		449,358
States, municipalities, political subdivision		25,715		26,291		26,291
Agency residential mortgage-backed
securities		451,751		468,054		468,054
Non-Agency residential mortgage-backed
securities		39,134		32,706		32,706
U.S. corporate		1,314,375		1,329,758		1,329,758
Non-U.S. corporate		577,743		579,675		579,675
Bank loans		475,770		467,256		467,256
Catastrophe bonds		29,250		29,952		29,952
Asset-backed securities		328,497		328,299		328,299
Commercial mortgage-backed securities		402		403		403
Total fixed maturities		4,859,705		4,894,145		4,894,145
Total short-term investments		280,299		280,191		280,191
Total other investments		15,002		16,787		16,787
Total	$	5,155,006	$	5,191,123	$	5,191,123

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Accounts payable and accrued expenses (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Accounts Payable and Accrued Expenses [Abstract]
Accrued interest on debt	$ 10,454	$ 10,765
Amounts due to brokers	18,996	21,524
Trade and compensation payable	53,952	67,031
Total	$ 83,402	$ 99,320

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Schedule II - Condensed financial information (Balance Sheet) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Assets
Cash and cash equivalents	$ 832,844	$ 620,740	$ 387,585	$ 449,848
Other assets	50,487	49,592
Total assets	7,618,471	7,060,878	7,019,140
Liabilities
Accounts payable and accrued expenses	83,402	99,320
Senior notes payable	246,982	246,874
Debentures payable	289,800	289,800
Total liabilities	4,170,046	3,556,047
Commitments and contingent liabilities	0	0
Shareholders' equity
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2011 - 134,503,065; 2010 - 132,838,111; Outstanding: 2011 - 99,471,080; 2010 - 98,001,226)	23,538	23,247
Treasury shares (2011 - 35,031,985; 2010 - 34,836,885)	(6,131)	(6,096)
Additional paid-in-capital	1,893,890	1,860,960
Accumulated other comprehensive (loss)	(6,601)	(5,455)
Retained earnings	1,543,729	1,632,175
Total shareholders' equity	3,448,425	3,504,831	4,031,120
Total liabilities and shareholders' equity	7,618,471	7,060,878
Balance sheet parenthetical data
Common shares, shares authorized	571,428,571	571,428,571
Common shares, par value	$ 0.175	$ 0.175
Common shares, shares issued	134,503,065	132,838,111	131,616,349	75,624,697
Common shares, shares outstanding	99,471,080	98,001,226	128,459,478
Treasury shares	35,031,985	34,836,885
Parent Company [Member]
Assets
Cash and cash equivalents	4,944	22,235	6,646	3,031
Investment in subsidiaries on an equity basis	4,101,389	4,142,322
Other assets	4,747	5,805
Total assets	4,111,080	4,170,362
Liabilities
Balances due to subsidiaries	45,808	46,537
Accounts payable and accrued expenses	19,865	22,120
Senior notes payable	246,982	246,874
Debentures payable	350,000	350,000
Total liabilities	662,655	665,531
Commitments and contingent liabilities	0	0
Shareholders' equity
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2011 - 134,503,065; 2010 - 132,838,111; Outstanding: 2011 - 99,471,080; 2010 - 98,001,226)	23,538	23,247
Treasury shares (2011 - 35,031,985; 2010 - 34,836,885)	(6,131)	(6,096)
Additional paid-in-capital	1,893,890	1,860,960
Accumulated other comprehensive (loss)	(6,601)	(5,455)
Retained earnings	1,543,729	1,632,175
Total shareholders' equity	3,448,425	3,504,831
Total liabilities and shareholders' equity	$ 4,111,080	$ 4,170,362
Balance sheet parenthetical data
Common shares, shares authorized	571,428,571
Common shares, par value	$ 0.175
Common shares, shares issued	134,503,065	132,838,111
Common shares, shares outstanding	99,471,080	98,001,226
Treasury shares	35,031,985	34,836,885

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Investments (Tables)

12 Months Ended

Dec. 31, 2011

Investments [Abstract]

Fair value hierarchy - allocation of investments

	At December 31, 2011, the Company's investments were allocated between Levels 1, 2 and 3 as follows:
		Level 1		Level 2		Level 3		Total
U.S. Government and Government Agency		$	-	$	1,182,393	$	-	$	1,182,393
Non-U.S. Government and Government Agency			-		449,358		-		449,358
States, municipalities, political subdivision			-		26,291		-		26,291
Agency residential mortgage-backed securities			-		468,054		-		468,054
Non-Agency residential mortgage-backed securities			-		32,706		-		32,706
U.S. corporate			-		1,329,758		-		1,329,758
Non-U.S. corporate			-		579,675		-		579,675
Bank loans			-		467,256		-		467,256
Catastrophe bonds			-		29,952		-		29,952
Asset-backed securities			-		328,299		-		328,299
Commercial mortgage-backed securities			-		403		-		403
Total fixed maturities			-		4,894,145		-		4,894,145
Short-term investments			257,854		22,337		-		280,191
Fund of hedge funds / Private equity investment			-		-		8,880		8,880
Mutual funds			-		7,907		-		7,907
Total		$	257,854	$	4,924,389	$	8,880	$	5,191,123
	At December 31, 2010, the Company's investments were allocated between Levels 1, 2 and 3 as follows:
		Level 1		Level 2		Level 3		Total
U.S. Government and Government Agency		$	-	$	1,677,166	$	-	$	1,677,166
Non-U.S. Government and Government Agency			-		554,199		-		554,199
States, municipalities, political subdivision			-		26,285		-		26,285
Agency residential mortgage-backed securities			-		445,859		-		445,859
Non-Agency residential mortgage-backed securities			-		56,470		-		56,470
U.S. corporate			-		1,308,406		-		1,308,406
Non-U.S. corporate			-		502,067		-		502,067
Bank loans			-		52,566		-		52,566
Catastrophe bonds			-		58,737		-		58,737
Asset-backed securities			-		123,569		-		123,569
Commercial mortgage-backed securities			-		18,543		-		18,543
Total fixed maturities			-		4,823,867		-		4,823,867
Short-term investments			259,261		14,253		-		273,514
Fund of hedge funds			-		-		12,892		12,892
Mutual funds			-		8,586		-		8,586
Total		$	259,261	$	4,846,706	$	12,892	$	5,118,859

Reconciliation of beginning and ending balances for all Level 3 investments measured at fair value on recurring basis

	Year Ended December 31, 2011
	Fixed maturity investments		Other investments		Total fair market value
Level 3 investments - Beginning of period	$	-	$	12,892	$	12,892
Purchases		-		3,253		3,253
Sales		-		(7,220)		(7,220)
Issuances		-		-		-
Settlements		-		-		-
Realized gains		-		697		697
Unrealized (losses)		-		(742)		(742)
Amortization		-		-		-
Transfers		-		-		-
Level 3 investments - End of period	$	-	$	8,880	$	8,880
	Year Ended December 31, 2010
	Fixed maturity investments		Other investments		Total fair market value
Level 3 investments - Beginning of period	$	85,336	$	25,670	$	111,006
Purchases		-		-		-
Sales		-		(13,850)		(13,850)
Issuances		-		-		-
Settlements		-		-		-
Realized gains		-		662		662
Unrealized (losses)		(6,307)		410		(5,897)
Amortization		(11,841)		-		(11,841)
Transfers		(67,188)		-		(67,188)
Level 3 investments - End of period	$	-	$	12,892	$	12,892

Net investment income

(b) Net investment income
Net investment income was derived from the following sources:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Fixed maturities and short-term investments	$	111,983	$	132,669	$	117,631
Cash and cash equivalents		7,285		8,180		3,374
Securities lending income		58		200		772
Total gross investment income		119,326		141,049		121,777
Investment expenses		(7,030)		(6,946)		(3,004)
Net investment income	$	112,296	$	134,103	$	118,773

Analysis of net realized gains (losses) and change in unrealized (losses) gains on investments

(c) Fixed maturity and short-term investments
	The following represents an analysis of net realized gains (losses) and the change in net unrealized (losses) gains on
investments:
		Years Ended
		December 31,		December 31,		December 31,
		2011		2010		2009
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains		$	45,026	$	76,920	$	33,063
Gross realized (losses)			(16,494)		(44,422)		(44,606)
Net realized gains (losses) on investments			28,532		32,498		(11,543)
Net unrealized gains (losses) on securities lending			39		(1,009)		6,978
Change in net unrealized (losses) gains on investments			(20,030)		46,961		77,818
Total net realized gains (losses) and change in
net unrealized (losses) gains on investments		$	8,541	$	78,450	$	73,253

Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments

The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2011 were as follows:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Government and Government Agency	$	1,170,810	$	11,630	$	(47)	$	1,182,393
Non-U.S. Government and Government
Agency		446,258		9,173		(6,073)		449,358
States, municipalities, political subdivision		25,715		586		(10)		26,291
Agency residential mortgage-backed
securities		451,751		16,622		(319)		468,054
Non-Agency residential mortgage-backed
securities		39,134		143		(6,571)		32,706
U.S. corporate		1,314,375		24,932		(9,549)		1,329,758
Non-U.S. corporate		577,743		6,320		(4,388)		579,675
Bank loans		475,770		2,435		(10,949)		467,256
Catastrophe bonds		29,250		702		-		29,952
Asset-backed securities		328,497		900		(1,098)		328,299
Commercial mortgage-backed securities		402		1		-		403
Total fixed maturities		4,859,705		73,444		(39,004)		4,894,145
Total short-term investments		280,299		1		(109)		280,191
Total other investments		15,002		1,785		-		16,787
Total	$	5,155,006	$	75,230	$	(39,113)	$	5,191,123
The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2010 were as follows:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Government and Government Agency	$	1,665,050	$	20,134	$	(8,018)	$	1,677,166
Non-U.S. Government and Government
Agency		550,759		11,635		(8,195)		554,199
States, municipalities, political subdivision		26,365		90		(170)		26,285
Agency residential mortgage-backed
securities		430,873		15,491		(505)		445,859
Non-Agency residential mortgage-backed
securities		62,020		64		(5,614)		56,470
U.S. corporate		1,288,078		28,526		(8,198)		1,308,406
Non-U.S. corporate		497,689		7,939		(3,561)		502,067
Bank loans		52,612		58		(104)		52,566
Catastrophe bonds		56,991		2,042		(296)		58,737
Asset-backed securities		123,354		605		(390)		123,569
Commercial mortgage-backed securities		18,246		299		(2)		18,543
Total fixed maturities		4,772,037		86,883		(35,053)		4,823,867
Total short-term investments		273,444		70		-		273,514
Total other investments		18,392		3,086		-		21,478
Total	$	5,063,873	$	90,039	$	(35,053)	$	5,118,859

Investment ratings on fixed maturities

	December 31, 2011				December 31, 2010
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
AAA	$	882,912		18.0%	$	2,946,514		61.2%
AA		2,077,981		42.5%		428,972		8.9%
A		1,078,793		22.0%		1,077,389		22.3%
BBB		345,091		7.1%		219,523		4.6%
Investment grade		4,384,777		89.6%		4,672,398		97.0%
BB		254,409		5.2%		74,475		1.5%
B		231,420		4.7%		45,660		0.9%
CCC		12,578		0.3%		29,219		0.6%
CC		4,605		0.1%		-		0.0%
D/NR		6,356		0.1%		2,115		0.0%
Non-Investment grade		509,368		10.4%		151,469		3.0%
Total Fixed Maturities	$	4,894,145		100.0%	$	4,823,867		100.0%

Fixed maturities investments by contractual maturity

	December 31, 2011				December 31, 2010
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	520,631	$	523,107	$	424,327	$	426,167
Due after one year through five years		3,160,647		3,186,711		3,498,334		3,540,408
Due after five years through ten years		350,459		346,654		207,918		206,317
Due after ten years		8,184		8,211		6,965		6,534
		4,039,921		4,064,683		4,137,544		4,179,426
Asset-backed and mortgage-backed
securities		819,784		829,462		634,493		644,441
Total	$	4,859,705	$	4,894,145	$	4,772,037	$	4,823,867

Fair value hierarchy - allocation of securities lending collateral reinvested

		Level 1		Level 2		Level 3		Total
Corporate		$	-	$	255	$	-	$	255
Cash and cash equivalents			7,481		-		-		7,481
Total		$	7,481	$	255	$	-	$	7,736
	As at December 31, 2010, the securities lending collateral reinvested by the Company in connection with its
securities lending program was allocated between Levels 1, 2 and 3 as follows:
		Level 1		Level 2		Level 3		Total
Corporate		$	-	$	229	$	-	$	229
Asset-backed securities			-		5,005		-		5,005
Short-term investments			2,644		14,450		-		17,094
Total		$	2,644	$	19,684	$	-	$	22,328

Investment ratings on securities lending collateral reinvested

	December 31, 2011				December 31, 2010
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
AAA	$	-		0.0%	$	5,454		24.4%
AA+		-		0.0%		11,003		49.3%
AA		-		0.0%		-		0.0%
AA-		-		0.0%		2,998		13.5%
A+		-		0.0%		-		0.0%
A		-		0.0%		-		0.0%
NR		255		3.3%		229		1.0%
		255		3.3%		19,684		88.2%
NR- Short-term investments (a)		7,481		96.7%		2,644		11.8%
Total	$	7,736		100.0%	$	22,328		100.0%
(a) This amount relates to certain short-term investments with short original maturities which are generally not rated.

Securities lending collateral reinvested, by contractual maturity

	December 31, 2011				December 31, 2010
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	7,462	$	7,481	$	17,093	$	17,094
Due after one year through five years		1,000		255		6,000		5,234
Total	$	8,462	$	7,736	$	23,093	$	22,328

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Segment information (Tables)

12 Months Ended

Dec. 31, 2011

Segment information [Abstract]

Results of operating segments and corporate segment

Year Ended December 31, 2011	Validus Re		Talbot		Corporate & Eliminations		Total
Underwriting income
Gross premiums written	$	1,190,220	$	1,014,122	$	(79,651)	$	2,124,691
Reinsurance premiums ceded		(150,718)		(218,174)		79,651		(289,241)
Net premiums written		1,039,502		795,948		-		1,835,450
Change in unearned premiums		(7,611)		(25,696)		-		(33,307)
Net premiums earned		1,031,891		770,252		-		1,802,143
Underwriting deductions
Losses and loss expenses		759,305		485,096		-		1,244,401
Policy acquisition costs		160,134		157,334		(3,284)		314,184
General and administrative expenses		46,353		117,482		33,662		197,497
Share compensation expenses		9,309		8,582		16,405		34,296
Total underwriting deductions		975,101		768,494		46,783		1,790,378
Underwriting income (loss)	$	56,790	$	1,758	$	(46,783)	$	11,765
Net investment income		96,492		25,380		(9,576)		112,296
Other income		7,998		8,895		(11,175)		5,718
Finance expenses		(10,289)		(227)		(44,301)		(54,817)
Operating income (loss) before taxes		150,991		35,806		(111,835)		74,962
Tax (expense)		(18)		(651)		(155)		(824)
Net operating income (loss)	$	150,973	$	35,155	$	(111,990)	$	74,138
Net realized gains on investments		21,669		6,863		-		28,532
Net unrealized (losses) on investments		(16,039)		(3,952)		-		(19,991)
Foreign exchange (losses) gains		(19,987)		(2,188)		51		(22,124)
Transaction expenses (a)		-		-		(17,433)		(17,433)
Net income (loss)	$	136,616	$	35,878	$	(129,372)	$	43,122
Net income attributable to noncontrolling interest		(21,793)		-		-		(21,793)
Net income (loss) available to Validus	$	114,823	$	35,878	$	(129,372)	$	21,329
Selected ratios:
Net premiums written / Gross premiums written		87.3%		78.5%				86.4%
Losses and loss expenses		73.6%		63.0%				69.1%
Policy acquisition costs		15.5%		20.4%				17.4%
General and administrative expenses (b)		5.4%		16.4%				12.9%
Expense ratio		20.9%		36.8%				30.3%
Combined ratio		94.5%		99.8%				99.4%
Total assets	$	4,826,234	$	2,775,632	$	16,605	$	7,618,471
(a) The transaction expenses relate to costs incurred in connection with the Company's proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.
(b) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

Year Ended December 31, 2010	Validus Re		Talbot		Corporate & Eliminations		Total
Underwriting income
Gross premiums written	$	1,101,239	$	981,073	$	(91,746)	$	1,990,566
Reinsurance premiums ceded		(63,147)		(258,081)		91,746		(229,482)
Net premiums written		1,038,092		722,992		-		1,761,084
Change in unearned premiums		13,108		(13,069)		-		39
Net premiums earned		1,051,200		709,923		-		1,761,123
Underwriting deductions
Losses and loss expenses		601,610		385,976		-		987,586
Policy acquisition costs		160,599		143,769		(11,469)		292,899
General and administrative expenses		45,617		114,043		49,630		209,290
Share compensation expenses		7,181		6,923		14,807		28,911
Total underwriting deductions		815,007		650,711		52,968		1,518,686
Underwriting income (loss)	$	236,193	$	59,212	$	(52,968)	$	242,437
Net investment income		113,968		29,287		(9,152)		134,103
Other income		4,211		12,802		(11,794)		5,219
Finance expenses		(5,471)		(3,140)		(47,259)		(55,870)
Operating income (loss) before taxes		348,901		98,161		(121,173)		325,889
Tax (expense)		(175)		(2,730)		(221)		(3,126)
Net operating income (loss)	$	348,726	$	95,431	$	(121,394)	$	322,763
Net realized gains on investments		23,637		8,861		-		32,498
Net unrealized gains on investments		45,276		676		-		45,952
Foreign exchange (losses) gains		(1,185)		2,091		445		1,351
Net income (loss)	$	416,454	$	107,059	$	(120,949)	$	402,564
Net income attributable to noncontrolling interest		-		-		-		-
Net income (loss) available (attributable) to Validus	$	416,454	$	107,059	$	(120,949)	$	402,564
Selected ratios:
Net premiums written / Gross premiums written		94.3%		73.7%				88.5%
Losses and loss expenses		57.2%		54.4%				56.1%
Policy acquisition costs		15.3%		20.3%				16.6%
General and administrative expenses (a)		5.0%		17.0%				13.5%
Expense ratio		20.3%		37.3%				30.1%
Combined ratio		77.5%		91.7%				86.2%
Total Assets	$	4,431,001	$	2,599,158	$	30,719	$	7,060,878
(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

Year Ended December 31, 2009	Validus Re (b)		Talbot		Corporate & Eliminations		Total
Underwriting income
Gross premiums written	$	768,084	$	919,906	$	(66,749)	$	1,621,241
Reinsurance premiums ceded		(95,446)		(204,186)		66,749		(232,883)
Net premiums written		672,638		715,720		-		1,388,358
Change in unearned premiums		122,912		(61,693)		-		61,219
Net premiums earned		795,550		654,027		-		1,449,577
Underwriting deductions
Losses and loss expenses		186,704		337,053		-		523,757
Policy acquisition costs		127,433		139,932		(4,399)		262,966
General and administrative expenses		65,710		96,352		23,506		185,568
Share compensation expenses		7,576		7,171		12,290		27,037
Total underwriting deductions		387,423		580,508		31,397		999,328
Underwriting income (loss)	$	408,127	$	73,519	$	(31,397)	$	450,249
Net investment income		94,973		30,114		(6,314)		118,773
Other income		5,149		5,225		(5,740)		4,634
Finance expenses		(1,774)		(14,725)		(27,631)		(44,130)
Operating income (loss) before taxes		506,475		94,133		(71,082)		529,526
Tax (expense) benefit		(163)		3,922		-		3,759
Net operating income (loss)	$	506,312	$	98,055	$	(71,082)	$	533,285
Gain on bargain purchase, net of expenses		-		-		287,099		287,099
Realized gain on repurchase of debentures		-		-		4,444		4,444
Net realized (losses) on investments		(5,428)		(6,115)		-		(11,543)
Net unrealized gains on investments		75,209		9,587		-		84,796
Foreign exchange (losses) gains		(1,406)		676		56		(674)
Net income	$	574,687	$	102,203	$	220,517	$	897,407
Net income attributable to noncontrolling interest		-		-		-		-
Net income available to Validus	$	574,687	$	102,203	$	220,517	$	897,407
Selected ratios:
Net premiums written / Gross premiums written		87.6%		77.8%				85.6%
Losses and loss expenses		23.5%		51.5%				36.1%
Policy acquisition costs		16.0%		21.4%				18.1%
General and administrative expenses (a)		9.2%		15.8%				14.7%
Expense ratio		25.2%		37.2%				32.8%
Combined ratio		48.7%		88.7%				68.9%
Total assets	$	4,865,771	$	2,137,393	$	15,976	$	7,019,140
(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.
(b) Operating results of IPC have been included from the September 2009 date of acquisition.

Gross premiums written allocated to the territory of coverage exposure

The Company's exposures are generally diversified across geographic zones. The following tables set forth the gross premiums written allocated to the territory of coverage exposure for the periods indicated:
		Year ended December 31, 2011
		Gross premiums written
		Validus Re		Talbot		Eliminations		Total		%
United States		$	520,241	$	117,178	$	(9,494)	$	627,925	29.6%
Worldwide excluding United States (a)			48,047		247,367		(14,146)		281,268	13.2%
Europe			89,705		52,018		(1,988)		139,735	6.6%
Latin America and Caribbean			43,627		94,859		(27,857)		110,629	5.2%
Japan			43,032		7,380		(458)		49,954	2.3%
Canada			518		10,583		(507)		10,594	0.5%
Rest of the world (b)			58,908		-		-		58,908	2.8%
	Sub-total, non United States		283,837		412,207		(44,956)		651,088	30.6%
Worldwide including United States			121,941		50,723		(2,852)		169,812	8.0%
Marine and Aerospace (c)			264,201		434,014		(22,349)		675,866	31.8%
Total		$	1,190,220	$	1,014,122	$	(79,651)	$	2,124,691	100.0%
		Year ended December 31, 2010
		Gross premiums written
		Validus Re		Talbot		Eliminations		Total		%
United States		$	486,133	$	110,944	$	(8,543)	$	588,534	29.6%
Worldwide excluding United States (a)			55,462		265,760		(7,051)		314,171	15.8%
Europe			105,321		50,074		(1,239)		154,156	7.7%
Latin America and Caribbean			70,650		83,274		(52,632)		101,292	5.1%
Japan			26,449		5,982		(177)		32,254	1.6%
Canada			177		11,892		(177)		11,892	0.6%
Rest of the world (b)			23,006		-		-		23,006	1.2%
	Sub-total, non United States		281,065		416,982		(61,276)		636,771	32.0%
Worldwide including United States			91,259		49,212		(2,492)		137,979	6.9%
Marine and Aerospace (c)			242,782		403,935		(19,435)		627,282	31.5%
Total		$	1,101,239	$	981,073	$	(91,746)	$	1,990,566	100.0%
		Year ended December 31, 2009
		Gross premiums written
		Validus Re		Talbot		Eliminations		Total		%
United States		$	353,119	$	77,528	$	(7,031)	$	423,616	26.1%
Worldwide excluding United States (a)			39,970		264,057		(13,385)		290,642	17.9%
Europe			56,806		65,013		(3,287)		118,532	7.3%
Latin America and Caribbean			39,745		83,909		(36,592)		87,062	5.4%
Japan			19,812		4,986		(470)		24,328	1.5%
Canada			463		9,303		(470)		9,296	0.6%
Rest of the world (b)			24,303		0		0		24,303	1.5%
	Sub-total, non United States		181,099		427,268		(54,204)		554,163	34.2%
Worldwide including United States			56,962		50,118		(3,053)		104,027	6.4%
Marine and Aerospace (c)			176,904		364,992		(2,461)		539,435	33.3%
Total		$	768,084	$	919,906	$	(66,749)	$	1,621,241	100.0%
	(a) Represents risks in two or more geographic zones.
	(b) Represents risks in one geographic zone.
	(c) Not classified as geographic area as marine and aerospace risks can span multiple geographic areas and are not fixed locations
	in some instances.

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Investments (Securities lending collateral by investment rating) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Securities Financing Transaction [Line Items]
Securities lending collateral	$ 7,736	$ 22,328
Percentage of total	100.00%	100.00%
Short-term investments [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral		17,094
Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	255	19,684
Percentage of total	3.30%	88.20%
AAA [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	0	5,454
Percentage of total	0.00%	24.40%
AA+ [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	0	11,003
Percentage of total	0.00%	49.30%
AA [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	0	0
Percentage of total	0.00%	0.00%
AA- [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	0	2,998
Percentage of total	0.00%	13.50%
A+ [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	0	0
Percentage of total	0.00%	0.00%
A [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	0	0
Percentage of total	0.00%	0.00%
NR [Member] | Short-term investments [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	7,481	2,644
Percentage of total	96.70%	11.80%
NR [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	$ 255	$ 229
Percentage of total	3.30%	1.00%

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Assets
Fixed maturities, at fair value (amortized cost: 2011 - $4,859,705; 2010 - $4,772,037)	$ 4,894,145	$ 4,823,867
Short-term investments, at fair value (amortized cost: 2011 - $280,299; 2010 - $273,444)	280,191	273,514
Other investments, at fair value (amortized cost: 2011 - $15,002; 2010 - $18,392)	16,787	21,478
Cash and cash equivalents	832,844	620,740
Total investments and cash	6,023,967	5,739,599
Investment in non-consolidated affiliate	53,031	0
Premiums receivable	646,354	568,761
Deferred acquisition costs	121,505	123,897
Prepaid reinsurance premiums	91,381	71,417
Securities lending collateral	7,736	22,328
Loss reserves recoverable	372,485	283,134
Paid losses recoverable	90,495	27,996
Income taxes recoverable	0	1,142
Intangible assets	114,731	118,893
Goodwill	20,393	20,393
Accrued investment income	25,906	33,726
Other assets	50,487	49,592
Total assets	7,618,471	7,060,878
Liabilities
Reserve for losses and loss expenses	2,631,143	2,035,973
Unearned premiums	772,382	728,516
Reinsurance balances payable	119,899	63,667
Securities lending payable	8,462	23,093
Deferred income taxes	16,720	24,908
Net payable for investments purchased	1,256	43,896
Accounts payable and accrued expenses	83,402	99,320
Senior notes payable	246,982	246,874
Debentures payable	289,800	289,800
Total liabilities	4,170,046	3,556,047
Commitments and contingent liabilities	0	0
Shareholders' equity
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2011 - 134,503,065; 2010 - 132,838,111; Outstanding: 2011 - 99,471,080; 2010 - 98,001,226)	23,538	23,247
Treasury shares (2011 - 35,031,985; 2010 - 34,836,885)	(6,131)	(6,096)
Additional paid-in-capital	1,893,890	1,860,960
Accumulated other comprehensive (loss)	(6,601)	(5,455)
Retained earnings	1,543,729	1,632,175
Total shareholders' equity	3,448,425	3,504,831
Total liabilities and shareholders' equity	$ 7,618,471	$ 7,060,878

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Accounts payable and accrued liabilities (Tables)

12 Months Ended

Dec. 31, 2011

Accounts Payable and Accrued Expenses [Abstract]

Accounts payable and accrued expenses

	Years Ended
	December 31,		December 31,
	2011		2010
Accrued interest on debt	$	10,454	$	10,765
Amounts due to brokers		18,996		21,524
Trade and compensation payables		53,952		67,031
Total	$	83,402	$	99,320

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Debt and financing arrangements (Future payments of principal) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
2010 Senior Notes due 2040 [Member]
Future expected payments of principal
2012	$ 0
2013	0
2014	0
2015	0
2016 and thereafter	250,000
Total minimum future payments	250,000
Junior subordinated deferrable debentures [Member]
Future expected payments of principal
2012	0
2013	0
2014	0
2015	0
2016 and thereafter	289,800
Total minimum future payments	$ 289,800

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Schedule I - Summary of investments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	$ 0
Fair value	0
Amount at which shown on the balance sheet	0
Fixed Maturities Member
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	4,859,705
Fair value	4,894,145
Amount at which shown on the balance sheet	4,894,145
U.S. Government and Government Agency [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	1,170,810
Fair value	1,182,393
Amount at which shown on the balance sheet	1,182,393
Non-US Government and Government Agency [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	446,258
Fair value	449,358
Amount at which shown on the balance sheet	449,358
States, municipalities, political subdivision [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	25,715
Fair value	26,291
Amount at which shown on the balance sheet	26,291
Agency residential mortgage-backed securities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	451,751
Fair value	468,054
Amount at which shown on the balance sheet	468,054
Non-Agency residential mortgage-backed securities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	39,134
Fair value	32,706
Amount at which shown on the balance sheet	32,706
U.S. corporate [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	1,314,375
Fair value	1,329,758
Amount at which shown on the balance sheet	1,329,758
Non-U.S. corporate [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	577,743
Fair value	579,675
Amount at which shown on the balance sheet	579,675
Bank loans [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	475,770
Fair value	467,256
Amount at which shown on the balance sheet	467,256
Catastrophe bonds [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	29,250
Fair value	29,952
Amount at which shown on the balance sheet	29,952
Asset-backed securities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	328,497
Fair value	328,299
Amount at which shown on the balance sheet	328,299
Commercial mortgage-backed securities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	402
Fair value	403
Amount at which shown on the balance sheet	403
Short-term investments [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	280,299
Fair value	280,191
Amount at which shown on the balance sheet	280,191
Other investments [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amortized cost	15,002
Fair value	16,787
Amount at which shown on the balance sheet	$ 16,787

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash flows provided by (used in) operating activities
Net income	$ 43,122	$ 402,564	$ 897,407
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Share compensation expenses	34,296	28,911	32,468
Realized gain on repurchase of debentures	0	0	(4,444)
Gain on bargain purchase	0	0	(352,349)
Amortization of discount on senior notes	108	81	0
Net realized (gains) losses on investments	(28,532)	(32,498)	11,543
Net unrealized losses (gains) on investments	19,991	(45,952)	(84,796)
Amortization of intangible assets	4,162	4,162	25,833
Foreign exchange losses (gains) on cash and cash equivalents included in net income	9,659	(1,451)	(9,579)
Amortization of premium on fixed maturities	31,150	32,175	16,277
Change in:
Premiums receivable	(77,634)	(19,011)	37,163
Deferred acquisition costs	2,392	(11,568)	17,914
Prepaid reinsurance premiums	(19,964)	1,747	(47,070)
Loss reserves recoverable	(89,232)	(102,268)	32,922
Paid losses recoverable	(62,566)	(13,244)	(13,424)
Income taxes recoverable	1,216	994	(546)
Accrued investment income	7,750	4,351	5,176
Other assets	(574)	(13,198)	(3,622)
Reserve for losses and loss expenses	596,325	419,350	(10,238)
Unearned premiums	43,866	4,412	(20,846)
Reinsurance balances payable	56,041	(659)	28,733
Deferred income taxes	(8,146)	277	3,089
Accounts payable and accrued expenses	(18,290)	(29,174)	(6,495)
Net cash provided by operating activities	545,140	630,001	555,116
Cash flows provided by (used in) investing activities
Proceeds on sales of investments	4,058,495	5,349,053	3,481,772
Proceeds on maturities of investments	353,006	349,851	568,030
Purchases of fixed maturities	(4,551,070)	(5,612,979)	(4,421,787)
(Purchases) sales of short-term investments, net	(215,055)	208,278	200,253
Sales of other investments	3,967	17,210	90,395
Decrease in securities lending collateral	14,631	67,013	15,582
Purchase of subsidiary, net of cash acquired	0	0	(376,878)
Proceeds on sale of AlphaCat Re 2011	11,000	0	0
Cash (redeemed) in deconsolidation of AlphaCat Re 2011	(67,808)	0	0
Net cash (used in) provided by investing activities	(392,834)	378,426	(442,633)
Cash flows provided by (used in) financing activities
Net proceeds on issuance of senior notes	0	246,793	0
Repurchase of debentures	0	0	(10,056)
Issuance of common shares, net	4,885	7,966	1,250
Purchases of common shares under share repurchase program	(5,995)	(856,926)	(84,164)
Dividends paid	(107,691)	(105,662)	(78,515)
Decrease in securities lending payable	(14,631)	(67,013)	(15,582)
Third party investment in noncontrolling interest	192,113	0	0
Net cash (used in) financing activities	68,681	(774,842)	(187,067)
Effect of foreign currency rate changes on cash and cash equivalents	(8,883)	(430)	12,321
Net increase (decrease) in cash	212,104	233,155	(62,263)
Cash and cash equivalents - beginning of period	620,740	387,585	449,848
Cash and cash equivalents - end of period	832,844	620,740	387,585
Supplemental cash flow information:
Taxes (recovered) paid during the period	(4,632)	2,379	1,673
Interest paid during the period	$ 43,777	$ 36,552	$ 26,575

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Debt and financing arrangements (Schedule of finance structure) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Schedule of financing structure and finance expenses
Debt instrument, drawn	$ 536,782	$ 536,674
Debt instrument and line of credit facility commitment, total	1,605,000	1,605,000
Debt instrument and line of credit facility outstanding, total	955,125	901,807
2006 Junior Subordinated Deferrable Debentures [Member]
Schedule of financing structure and finance expenses
Debt instrument, commitment	150,000	150,000
Debt instrument, outstanding	150,000	150,000
Debt instrument, drawn	150,000	150,000
2007 Junior Subordinated Deferrable Debentures [Member]
Schedule of financing structure and finance expenses
Debt instrument, commitment	200,000	200,000
Debt instrument, outstanding	139,800	139,800
Debt instrument, drawn	139,800	139,800
2010 Senior Notes due 2040 [Member]
Schedule of financing structure and finance expenses
Debt instrument, commitment	250,000	250,000
Debt instrument, outstanding	250,000	250,000
Debt instrument, drawn	246,982	246,874
Syndicated unsecured letter of credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	340,000	340,000
Credit facility, outstanding	0	0
Bilateral unsecured letter of credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	60,000	60,000
Credit facility, outstanding	0	0
Secured letter of credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	500,000	500,000
Credit facility, outstanding	333,179	268,944
Talbot FAL Facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	25,000	25,000
Credit facility, outstanding	25,000	25,000
IPC Bi-Lateral Facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	80,000	80,000
Credit facility, outstanding	$ 57,146	$ 68,063

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Business combination (Results since acquisition) (Details) (Ipc Holdings Ltd [Member], Validus Re [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2009
Ipc Holdings Ltd [Member] | Validus Re [Member]
Summary of results of IPC since acquisition date, included within Validus Re segment in consolidated financial statements
Net premiums written	$ (4,974)
Total revenue	161,188
Total expenses	33,370
Net income	$ 127,818

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Income taxes (Tax charge by jurisdiction) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Tax charge by jurisdiction:
Expected tax provision at Bermuda Statutory rate of 0%													$ 0	$ 0	$ 0
Subtotal													1,773	2,719	4,956
Adjustments to prior period tax													(949)	407	(8,715)
Income tax expense (benefit)	(226)	2,538	(29)	(1,459)	1,058	(1,422)	4,187	(697)	(458)	(1,799)	(976)	(526)	824	3,126	(3,759)
Bermuda excluding net income attributable to noncontrolling interest
Tax charge by jurisdiction:
Bermuda statutory tax rate													0.00%
United Kingdom excluding net income attributable to noncontrolling interest
Tax charge by jurisdiction:
Effect of taxable income generated in foreign jurisdictions													389	1,374	4,158
Canada excluding net income attributable to noncontrolling interest
Tax charge by jurisdiction:
Effect of taxable income generated in foreign jurisdictions													151	1,231	760
Other jurisdictions
Tax charge by jurisdiction:
Effect of taxable income generated in foreign jurisdictions													$ 1,233	$ 114	$ 38

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Schedule IV - Supplementary reinsurance information

12 Months Ended

Dec. 31, 2011

Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract]

Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Text Block]

SCHEDULE IV

VALIDUS HOLDINGS, LTD.

REINSURANCE

As at and for the years endedDecember 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars)

						Assumed				Percentage
				Ceded to		from other				of amount
	Gross		other companies		companies		Net amount		assumed to net
Year Ended December 31, 2011	$	510,200	$	289,241	$	1,614,491	$	1,835,450		88%
Year Ended December 31, 2010		460,337		229,482		1,530,229		1,761,084		87%
Year Ended December 31, 2009		459,771		232,883		1,161,470		1,388,358		84%

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Investments (Level 3 rollforward) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis
Level 3 investments-Beginning of period	$ 12,892	$ 111,006
Purchases	3,253	0
Sales	(7,220)	(13,850)
Issuances	0	0
Settlements	0	0
Realized gains	697	662
Unrealized (losses)	(742)	(5,897)
Amortization	0	(11,841)
Transfers	0	(67,188)
Level 3 investments-End of period	8,880	12,892
Fixed maturities [Member]
Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis
Level 3 investments-Beginning of period	0	85,336
Purchases	0	0
Sales	0	0
Issuances	0	0
Settlements	0	0
Realized gains	0	0
Unrealized (losses)	0	(6,307)
Amortization	0	(11,841)
Transfers	0	(67,188)
Level 3 investments-End of period	0	0
Other investments level three [Member]
Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis
Level 3 investments-Beginning of period	12,892	25,670
Purchases	3,253	0
Sales	(7,220)	(13,850)
Issuances	0	0
Settlements	0	0
Realized gains	697	662
Unrealized (losses)	(742)	410
Amortization	0	0
Transfers	0	0
Level 3 investments-End of period	$ 8,880	$ 12,892

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Stock plans

12 Months Ended

Dec. 31, 2011

Stock plans [Abstract]

Stock plans

16. Stock plans

(a) Long Term Incentive Plan and Short Term Incentive Plan

The Company's Amended and Restated 2005 Long Term Incentive Plan (“LTIP”) provides for grants to employees of options, stock appreciation rights (“SARs”), restricted shares, restricted share units, performance shares, dividend equivalents or other share-based awards. In addition, the Company may issue restricted share awards or restricted share units in connection with awards issued under its annual Short Term Incentive Plan (“STIP”). The total number of shares reserved for issuance under the LTIP and STIP are 13,126,896 shares of which 4,109,215shares are remaining. The LTIP and STIP are administered by the Compensation Committee of the Board of Directors. No SARshave been granted to date. Grant prices are established at thefair market value of the Company's common shares at the date of grant.

i.        Options

Options may be exercised for voting common shares upon vesting. Options have a life of 10 years and vest either ratably or at the end of the required service period from the date of grant. Grant prices are established at the estimated fair value of the Company's common shares at the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used for all grants to date:

Year	Weighted average risk free interest rate	Weighted average dividend yield	Expected life (years)	Expected volatility
2009	3.9%	3.7%	2	34.6%
2010 (a)	n/a	n/a	n/a	n/a
2011 (a)	n/a	n/a	n/a	n/a
(a) The Company did not grant any stock option awards during the years ended December 31, 2011 and 2010.

Expected volatility is based on stock price volatility of comparable publicly-traded companies. The Company used the simplified method consistent with U.S. GAAP authoritative guidance on stock compensation expenses to estimate expected lives for options granted during the period as historical exercise data was not available and the options met the requirement as set out in the guidance.

Share compensation expenses of $1,770 were recorded in respect of options for the year ended December 31, 2011 (2010: $3,845; 2009: $4,158). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

Activity with respect to options for the year ended December 31, 2011 was as follows:

			Weighted Average		Weighted Average
			Grant Date		Grant Date
		Options	Fair Value		Exercise Price
Options outstanding, December 31, 2010		2,723,684	$	6.74	$	20.19
Options granted		-		-		-
Options exercised		(459,932)		6.98		20.55
Options forfeited		(740)		10.30		20.39
Options outstanding, December 31, 2011		2,263,012	$	6.69	$	20.12
Options exercisable at December 31, 2011		2,188,566	$	6.63	$	20.01
	Activity with respect to options for year ended December 31, 2010 was as follows:
			Weighted Average		Weighted Average
			Grant Date		Grant Date
		Options	Fair Value		Exercise Price
Options outstanding, December 31, 2009		3,278,015	$	6.83	$	19.88
Options granted		-		-		-
Options exercised		(550,014)		7.22		18.32
Options forfeited		(4,317)		10.30		20.39
Options outstanding, December 31, 2010		2,723,684	$	6.74	$	20.19
Options exercisable at December 31, 2010		2,505,905	$	6.61	$	20.07
	Activity with respect to options for year ended December 31, 2009 was as follows:
			Weighted Average		Weighted Average
			Grant Date		Grant Date
		Options	Fair Value		Exercise Price
Options outstanding, December 31, 2008		2,799,938	$	7.57	$	18.23
Options granted		650,557		3.42		27.27
Options exercised		(164,834)		5.80		21.01
Options forfeited		(7,646)		10.30		20.39
Options outstanding, December 31, 2009		3,278,015	$	6.83	$	19.88
Options exercisable at December 31, 2009		2,468,928	$	6.52	$	20.10

At December 31, 2011, there were $141(December 31, 2010: $851; December 31, 2009: $4,906) of total unrecognized share compensation expenses that are expected to be recognized over a weighted-average period of 0.2 year(December 31, 2010: 1.2 years; December 31, 2009:1.3years).

ii.        Restricted share awards

Restricted shares granted under the LTIP and STIP vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment and transferability. Share compensation expenses of $27,428were recorded in respect of restricted share awards for the year ended December 31, 2011 (2010: $20,038; 2009: $16,775). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

Activity with respect to unvested restricted share awards for the year ended December 31, 2011was as follows:

		Restricted		Weighted Average
		Share		Grant Date
		Awards		Fair Value
Restricted share awards outstanding, December 31, 2010			3,114,039	$	24.33
Restricted share awards granted			621,254		31.92
Restricted share awards vested			(712,692)		24.85
Restricted share awards forfeited			(19,054)		26.63
Restricted share awards outstanding, December 31, 2011			3,003,547	$	25.77
	Activity with respect to unvested restricted share awards for the year ended December 31, 2010 was as follows:
		Restricted		Weighted Average
		Share		Grant Date
		Awards		Fair Value
Restricted share awards outstanding, December 31, 2009			2,525,958	$	23.39
Restricted share awards granted			1,191,873		25.94
Restricted share awards vested			(503,322)		23.43
Restricted share awards forfeited			(100,470)		24.22
Restricted share awards outstanding, December 31, 2010			3,114,039	$	24.33
	Activity with respect to unvested restricted share awards for the year ended December 31, 2009 was as follows:
		Restricted		Weighted Average
		Share		Grant Date
		Awards		Fair Value
Restricted share awards outstanding, December 31, 2008			2,307,402	$	22.69
Restricted share awards granted			772,672		24.15
Restricted share awards vested			(512,847)		21.33
Restricted share awards forfeited			(41,269)		24.05
Restricted share awards outstanding, December 31, 2009			2,525,958	$	23.39

At December 31, 2011, there were $40,809 (December 31, 2010: $44,290;December 31, 2009: $38,124) of total unrecognized share compensation expenses in respect of restricted share awards that are expected to be recognized over a weighted-average period of 2.4years (December 31, 2010: 2.5 years; December 31, 2009: 2.7 years).

iii.        Restricted share units

Restricted share units under the LTIP and STIP vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment and transferability. Share compensation expenses of $456 were recorded in respect of restricted share units for the yearended December 31, 2011(2010: $393;2009: $5,513). The expenses representthe proportionate accrual of the fair value of each grant based on the remaining vesting period.

Activity with respect to unvested restricted share units for the year ended December 31, 2011was as follows:

				Weighted Average
		Restricted		Grant Date
		Share Units		Fair Value
Restricted share units outstanding, December 31, 2010			47,049	$	25.04
Restricted share units granted			18,388		32.10
Restricted share units vested			(13,340)		24.72
Restricted share units issued in lieu of cash dividends			1,215		27.30
Restricted share units forfeited			-		-
Restricted share units outstanding, December 31, 2011			53,312	$	27.60
	Activity with respect to unvested restricted share units for the year ended December 31, 2010 was as follows:
				Weighted Average
		Restricted		Grant Date
		Share Units		Fair Value
Restricted share units outstanding, December 31, 2009			79,447	$	19.02
Restricted share units granted			26,782		25.65
Restricted share units vested			(59,193)		17.31
Restricted share units issued in lieu of cash dividends			1,107		25.45
Restricted share units forfeited			(1,094)		21.49
Restricted share units outstanding, December 31, 2010			47,049	$	25.04
	Activity with respect to unvested restricted share units for the year ended December 31, 2009 was as follows:
				Weighted Average
		Restricted		Grant Date
		Share Units		Fair Value
Restricted share units outstanding, December 31, 2008			12,274	$	25.28
Restricted share units granted			427,451		13.83
Restricted share units vested			(360,769)		13.10
Restricted share units issued in lieu of cash dividends			491		25.22
Restricted share units forfeited			-		-
Restricted share units outstanding, December 31, 2009			79,447	$	19.02

At December 31, 2011, there were $985(December 31, 2010: $809;December 31, 2009: $985) of total unrecognized share compensation expenses in respect of restricted share units that are expected to be recognized over a weighted-average period of 2.7 years (December 31, 2010:2.7 years; December 31, 2009: 1.4 years).

iv.        Performance share awards

The Performance Share Awards contain a performance based component. The performance component relates to the compounded growth in the Dividend Adjusted Diluted Book Value per Share over a three year period. For performance share awards granted during the period, the grant date Diluted Book Value per Share (“DBVPS”) is based on the DBVPS at the end of the most recent financial reporting year. The Dividend Adjusted Performance Period End DBVPS will be the DBVPS three years after the grant date DBVPS. The fair value estimate earns over the requisite attribution period and the estimate will be reassessed at the end of each performance period which will be reflected in the consolidated statements of income in the period in which they are determined.

Share compensation expenses of $2,349 were recorded in respect of performance share awards for the year ended December 31, 2011(2010: $232; 2009: $nil). The expenses representthe proportionate accrual of the fair value of each grant based on the remaining vesting period.

Activity with respect to unvested performance share awards for the year ended December 31, 2011was as follows

				Weighted Average
		Performance		Grant Date
		Share Awards		Fair Value
Performance share awards outstanding, December 31, 2010			132,401	$	28.70
Performance share awards granted			146,618		32.64
Performance share awards vested			-		-
Performance share awards forfeited			-		-
Performance share awards outstanding, December 31, 2011			279,019	$	30.77
	Activity with respect to unvested performance share awards for the year ended December 31, 2010 was as follows:
				Weighted Average
		Performance		Grant Date
		Share Awards		Fair Value
Performance share awards outstanding, December 31, 2009			-	$	-
Performance share awards granted			132,401		28.70
Performance share awards vested			-		-
Performance share awards forfeited			-		-
Performance share awards outstanding, December 31, 2010			132,401	$	28.70
	There was no activity with respect to unvested performance share awards for the year ended December 31, 2009.

At December 31, 2011, there were $5,677(December 31, 2010: $3,375; December 31, 2009: $nil) of total unrecognized share compensation expenses in respect of performance share awards that are expected to be recognized over a weighted-average period of 2.1 years (December 31, 2010:2.4 years; December 31, 2009: 0 years).

(b) Employee seller shares

Pursuant to the Share Sale Agreement for the purchase of Talbot Holdings, Ltd. (“Talbot”), the Company issued 1,209,741 restricted shares to Talbot employees (the “employee seller shares”). Upon consummation of the acquisition, the employee seller shares were validly issued, fully-paid and non-assessable and entitled to vote and participate in distributions and dividends in accordance with the Company's Bye-laws. However, the employee seller shares were subject to a restricted period during which they were subject to forfeiture (as implemented by repurchase by the Company for a nominal amount). Forfeiture of employee seller shares would have generally occurred in the event that any such Talbot employee's employment terminated, with certain exceptions, prior to the end of the restricted period. The restricted period ended for 25% of the employee seller shares on each anniversary of the closing date of July 2, 2007 for all Talbot employees other than Talbot's Chairman, such that on July 2, 2011, potential for forfeiture was completely extinguished.

Share compensation expenses of $2,293 were recorded in respect of employee seller shares for the year ended December 31, 2011 (2010: $4,403;2009: $6,022). The expenses represent the proportionate accrual of the fair value of each grant based on the remaining vesting period.

Activity with respect to unvested employee seller shares for the year ended December 31, 2011 was as follows:

			Weighted Average
		Employee	Grant Date
		Seller Shares	Fair Value
Employee seller shares outstanding, December 31, 2010		197,879	$	22.01
Employee seller shares granted		-		-
Employee seller shares vested		(197,174)		22.01
Employee seller shares forfeited		(705)		22.01
Employee seller shares outstanding, December 31, 2011		-	$	-
	Activity with respect to unvested employee seller shares for the year ended December 31, 2010 was as follows:
			Weighted Average
		Employee	Grant Date
		Seller Shares	Fair Value
Employee seller shares outstanding, December 31, 2009		410,667	$	22.01
Employee seller shares granted		-		-
Employee seller shares vested		(203,544)		22.01
Employee seller shares forfeited		(9,244)		22.01
Employee seller shares outstanding, December 31, 2010		197,879	$	22.01
	Activity with respect to unvested employee seller shares for the year ended December 31, 2009 was as follows:
			Weighted Average
		Employee	Grant Date
		Seller Shares	Fair Value
Employee seller shares outstanding, December 31, 2008		663,375	$	22.01
Employee seller shares granted		-		-
Employee seller shares vested		(248,085)		22.01
Employee seller shares forfeited		(4,623)		22.01
Employee seller shares outstanding, December 31, 2009		410,667	$	22.01

At December 31, 2011, there were total unrecognized share compensation expensesof $nil in respect of employee seller shares. At December 31, 2010 and 2009, there were $2,141 and $6,635, of total unrecognized share compensation expenses that were expected to be recognized in respect of employee seller sharesover a weighted-average period of 0.5and1.5 years, respectively.

(c) Total share compensation expenses

Total share compensation expenses for the year ended December 31, 2009 included $5,431 of IPC related termination expenses which were included in the gain on bargain purchase, net of expenses, in the Statement of Operations. The breakdown of share compensation expenses by award type for the years endedDecember 31, 2011, 2010 and 2009 is as follows:

	Years Ended
	December 31, 2011		December 31, 2010		December 31, 2009
Options	$	1,770	$	3,845	$	4,158
Restricted share awards		27,428		20,038		16,775
Restricted share units		456		393		5,513
Performance share awards		2,349		232		-
Employee seller shares		2,293		4,403		6,022
Total	$	34,296	$	28,911	$	32,468

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Schedule VI - Supplementary information for property-casualty underwriters

12 Months Ended

Dec. 31, 2011

Supplemental Information for Property, Casualty Insurance Underwriters [Abstract]

Schedule of Supplemental Information for Property, Casualty Insurance Underwriters [Text Block]

SCHEDULE VI

VALIDUS HOLDINGS, LTD.

SUPPLEMENTALINFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS

As at and for the years endedDecember 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars)

			Reserves for losses and loss expenses		Reserves for unearned premiums		Net earned premiums		Net investment income		Losses and loss expenses incurred related to				Net paid losses and loss expenses		Amortization of deferred acquisition costs			Net premiums written
Affiliation with registrant	Deferred acquisition costs													Current year					Prior year
Consolidated Subsidiaries
2011	$	121,505	$	2,631,143	$	772,382	$	1,802,143	$	112,296	$	1,400,520	$	(156,119)	$	743,026	$	314,184		$	1,835,450
2010		123,897		2,035,973		728,516		1,761,123		134,103		1,144,196		(156,610)		673,422		292,899			1,761,084
2009		112,329		1,622,134		724,104		1,449,577		118,773		625,810		(102,053)		507,435		262,966			1,388,358

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Income taxes (Components of tax expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Income tax disclosures:
Net income before taxes													$ 43,946	$ 405,690	$ 893,648
Components of income tax expense:
Current tax													8,977	2,941	(9)
Deferred tax													(8,153)	185	(3,750)
Income tax expense (benefit)	(226)	2,538	(29)	(1,459)	1,058	(1,422)	4,187	(697)	(458)	(1,799)	(976)	(526)	824	3,126	(3,759)
Bermuda excluding net income attributable to noncontrolling interest
Income tax disclosures:
Income before tax - Bermuda													42,230	400,631	892,425
United Kingdom excluding net income attributable to noncontrolling interest
Income tax disclosures:
Income before tax - foreign													1,415	4,275	814
Canada excluding net income attributable to noncontrolling interest
Income tax disclosures:
Income before tax - foreign													$ 301	$ 784	$ 409

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Commitments and contingencies

12 Months Ended

Dec. 31, 2011

Commitments and contingencies [Abstract]

Commitments and contingencies

19.Commitments and contingencies

(a) Concentrations of credit risk

The Company's investments are managed following prudent standards of diversification. The Company attempts to limit its credit exposure by purchasing high quality fixed income investments to maintain an average portfolio credit quality of AA- or higher with mortgage and commercial mortgage-backed issues having an aggregate weighted average credit quality of AAA.  In addition, the Company limits its exposure to any single issuer to 3% or less, excluding government and agency securities.  With the exception of the Company's bank loan portfolio, the minimum credit rating of any security purchased is Baa3/BBB- and where investments are downgraded, the Company permits a holding of up to 2% in aggregate market value, or 10% with written pre-authorization.  At December 31, 2011,1.2% of the portfolio, excluding bank loans, had a split rating belowBaa3/BBB- and the Company did not have an aggregate exposure to any single issuer of more than 1.0% of its investment portfolio, other than with respect to government and agency securities.

The Company underwrites a significant amount of its reinsurance business through three particular brokers as set out below. Credit risk exists should any of these brokers be unable to fulfill their contractual obligations with respect to the payments of insurance and reinsurance balances to the Company. These companies are large, well established, and there are no indications that any of them are financially troubled. No other broker and no one insured or reinsured accounted for more than 10% of gross premiums written for the periods mentioned.

The following table shows the percentage of gross premiums written by brokerfor the years ended December 31, 2011, 2010 and 2009:

	Years Ended
	December 31,	December 31,	December 31,
	2011	2010	2009
Marsh & McLennan	25.9%	25.5%	23.3%
Willis Group Holdings Ltd.	17.0%	17.1%	14.0%
Aon Benfield Group Ltd.	23.8%	22.6%	25.7%

(b) Employment agreements

The Company has entered into employment agreements with certain individuals that provide for option awards, executive benefits and severance payments under certain circumstances.

(c) Operating leases

The Company leases office space and office equipment under operating leases. Total rent expense with respect to these operating leases for the year ended December 31, 2011 was approximately $5,752(2010: $5,309, 2009: $4,308). Future minimum lease commitments are as follows:

2012	$	4,874
2013		7,231
2014		6,907
2015		6,719
2016 and thereafter		43,238
	$	68,969

(d) Funds at Lloyd's

The amounts provided under the Talbot FAL Facility would become a liability of the Company in the event of Syndicate 1183 declaring a loss at a level which would call on this arrangement.

Talbot operates in Lloyd's through a corporate member, Talbot 2002 Underwriting Capital Ltd (“T02”), which is the sole participant in Syndicate 1183. Lloyd's sets T02's required capital annually based on syndicate 1183's business plan, rating environment, reserving environment together with input arising from Lloyd's discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd's (“FAL”), comprises: cash, investments and undrawn letters of credit provided by various banks. The amounts of cash, investments and letters of credit at December 31, 2011 amounted to $473,800 (December 31, 2010: $441,000) of which $25,000 is provided under the Talbot FAL Facility (December 31, 2010: $25,000).

The FAL are provided for each year of account as follows:

	2012		2011		2010
	Underwriting		Underwriting		Underwriting
	Year		Year		Year
Talbot FAL facility	$	25,000	$	25,000	$	25,000
Group funds		448,800		416,000		427,000
Total	$	473,800	$	441,000	$	452,000

The amounts which the Company provides as FAL are not available for distribution to the Company for the payment of dividends. Talbot's corporate member may also be required to maintain funds under the control of Lloyd's in excess of its capital requirement and such funds also may not be available for distribution to the Company for the payment of dividends.

(e) Lloyd's Central Fund

Whenever a member of Lloyd's is unable to pay its debts to policyholders, such debts may be payable by the Lloyd's Central Fund. If Lloyd's determines that the Central Fund needs to be increased, it has the power to assess premium levies on current Lloyd's members up to 3% of a member's underwriting capacity in any one year. The Company does not believe that any assessment is likely in the foreseeable future and has not provided any allowance for such an assessment. However, based on the Company's 2012 estimated premium income at Lloyd's of £600,000, the December 31, 2011 exchange rate of £1 equals $1.5523 and assuming the maximum 3% assessment the Company would be assessed approximately $27,941.

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Investments (Gross unrealized gains and losses on fixed maturities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	$ 5,155,006	$ 5,063,873
Gross unrealized gains	75,230	90,039
Gross unrealized losses	(39,113)	(35,053)
Estimated fair value	5,191,123	5,118,859
Fixed maturities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	4,859,705	4,772,037
Gross unrealized gains	73,444	86,883
Gross unrealized losses	(39,004)	(35,053)
Estimated fair value	4,894,145	4,823,867
U.S. Government and Government Agency [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	1,170,810	1,665,050
Gross unrealized gains	11,630	20,134
Gross unrealized losses	(47)	(8,018)
Estimated fair value	1,182,393	1,677,166
Non-US Government and Government Agency [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	446,258	550,759
Gross unrealized gains	9,173	11,635
Gross unrealized losses	(6,073)	(8,195)
Estimated fair value	449,358	554,199
States, municipalities, political subdivision [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	25,715	26,365
Gross unrealized gains	586	90
Gross unrealized losses	(10)	(170)
Estimated fair value	26,291	26,285
Agency residential mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	451,751	430,873
Gross unrealized gains	16,622	15,491
Gross unrealized losses	(319)	(505)
Estimated fair value	468,054	445,859
Non-Agency residential mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	39,134	62,020
Gross unrealized gains	143	64
Gross unrealized losses	(6,571)	(5,614)
Estimated fair value	32,706	56,470
U.S. corporate [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	1,314,375	1,288,078
Gross unrealized gains	24,932	28,526
Gross unrealized losses	(9,549)	(8,198)
Estimated fair value	1,329,758	1,308,406
Non-U.S. corporate [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	577,743	497,689
Gross unrealized gains	6,320	7,939
Gross unrealized losses	(4,388)	(3,561)
Estimated fair value	579,675	502,067
Bank loans [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	475,770	52,612
Gross unrealized gains	2,435	58
Gross unrealized losses	(10,949)	(104)
Estimated fair value	467,256	52,566
Catastrophe bonds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	29,250	56,991
Gross unrealized gains	702	2,042
Gross unrealized losses	0	(296)
Estimated fair value	29,952	58,737
Asset-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	328,497	123,354
Gross unrealized gains	900	605
Gross unrealized losses	(1,098)	(390)
Estimated fair value	328,299	123,569
Commercial mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	402	18,246
Gross unrealized gains	1	299
Gross unrealized losses	0	(2)
Estimated fair value	403	18,543
Short-term investments [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	280,299	273,444
Gross unrealized gains	1	70
Gross unrealized losses	(109)	0
Estimated fair value	280,191	273,514
Other investments [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Amortized cost	15,002	18,392
Gross unrealized gains	1,785	3,086
Gross unrealized losses	0	0
Estimated fair value	$ 16,787	$ 21,478

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Segment information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Underwriting income
Gross premiums written	$ 278,279	$ 391,129	$ 605,387	$ 849,896	$ 258,731	$ 344,040	$ 516,861	$ 870,934	$ 255,289	$ 331,028	$ 425,032	$ 609,892	$ 2,124,691		$ 1,990,566		$ 1,621,241
Reinsurance premiums ceded	(16,489)	(30,586)	(132,346)	(109,820)	(35,376)	(35,641)	(67,726)	(90,739)	(30,393)	(67,687)	(62,291)	(72,512)	(289,241)		(229,482)		(232,883)
Net premiums written	261,790	360,543	473,041	740,076	223,355	308,399	449,135	780,195	224,896	263,341	362,741	537,380	1,835,450		1,761,084		1,388,358
Change in unearned premiums	226,556	98,081	(47,401)	(310,543)	209,456	124,275	(11,191)	(322,501)	203,005	111,376	(34,541)	(218,621)	(33,307)		39		61,219
Net premiums earned	488,346	458,624	425,640	429,533	432,811	432,674	437,944	457,694	427,901	374,717	328,200	318,759	1,802,143		1,761,123		1,449,577
Underwriting deductions
Losses and loss expenses	334,829	226,067	207,307	476,198	155,225	158,936	194,894	478,531	133,020	134,152	124,751	131,834	1,244,401		987,586		523,757
Policy acquisition costs	81,253	77,405	78,230	77,296	75,523	67,074	74,126	76,176	72,843	64,236	64,438	61,449	314,184		292,899		262,966
General and administrative expenses	52,253	35,926	60,841	48,477	54,511	48,831	52,379	53,569	60,253	46,036	41,200	38,079	197,497		209,290		185,568
Share compensation expenses	7,237	7,382	7,628	12,049	7,871	7,618	6,846	6,576	8,189	5,862	5,632	7,354	34,296		28,911		27,037
Total underwriting deductions	475,572	346,780	354,006	614,020	293,130	282,459	328,245	614,852	274,305	250,286	236,021	238,716	1,790,378		1,518,686		999,328
Underwriting income (loss)	12,774	111,844	71,634	(184,487)	139,681	150,215	109,699	(157,158)	153,596	124,431	92,179	80,043	11,765		242,437		450,249
Net investment income	28,080	27,747	26,494	29,975	30,962	34,033	34,809	34,299	35,506	29,532	26,963	26,772	112,296		134,103		118,773
Other income	3,517	0	595	1,606	552	1,082	2,697	888	1,759	1,101	1,017	757	5,718		5,219		4,634
Finance expenses	(13,520)	(10,935)	(16,361)	(14,001)	(13,786)	(13,715)	(13,218)	(15,151)	(14,398)	(11,257)	(10,752)	(7,723)	(54,817)		(55,870)		(44,130)
Operating income (loss) before taxes	30,851	128,656	82,362	(166,907)	157,409	171,615	133,987	(137,122)	176,463	143,807	109,407	99,849	74,962		325,889		529,526
Tax (expense) benefit	226	(2,538)	29	1,459	(1,058)	1,422	(4,187)	697	458	1,799	976	526	(824)		(3,126)		3,759
Net operating income (loss)	31,077	126,118	82,391	(165,448)	156,351	173,037	129,800	(136,425)	176,921	145,606	110,383	100,375	74,138		322,763		533,285
Gain on bargain purchase, net of expenses									0	302,950	(15,851)	0					287,099
Realized gain on repurchase of debentures									4,444	0	0	0	0		0		4,444
Net realized gains (losses) on investments	5,355	5,246	11,552	6,379	(14,399)	23,058	12,441	11,398	9,099	5,429	(2,650)	(23,421)	28,532		32,498		(11,543)
Net unrealized (losses) gains on investments	2,159	(27,848)	18,526	(12,828)	(42,689)	31,588	41,640	15,413	(25,043)	50,437	37,249	22,153	(19,991)		45,952		84,796
Foreign exchange (losses) gains	266	(19,932)	(1,991)	(467)	3,424	10,790	(4,099)	(8,764)	338	(5,244)	8,432	(4,200)	(22,124)		1,351		(674)
Transaction expenses	(3,850)	(13,583)	0	0									(17,433)		0		0
Net income	35,007	70,001	110,478	(172,364)	102,687	238,473	179,782	(118,378)	165,759	499,178	137,563	94,907	43,122		402,564		897,407
Net income attributable to noncontrolling interest	(7,683)	(13,516)	(594)	0	0	0	0	0	0	0	0	0	(21,793)		0		0
Net income available to Validus	27,324	56,485	109,884	(172,364)	102,687	238,473	179,782	(118,378)	165,759	499,178	137,563	94,907	21,329		402,564		897,407
Selected ratios:
Net premiums written / Gross premiums written													86.40%		88.50%		85.60%
Losses and loss expenses	68.60%	49.30%	48.70%	110.90%	35.90%	36.70%	44.50%	104.60%	31.10%	35.80%	38.00%	41.40%	69.10%		56.10%		36.10%
Policy acquisition costs													17.40%		16.60%		18.10%
General and administrative expenses													12.90%	[1]	13.50%	[1]	14.70%	[1]
Expense ratio	28.80%	26.30%	34.50%	32.10%	31.80%	28.50%	30.40%	29.70%	33.00%	30.90%	33.90%	33.60%	30.30%		30.10%		32.80%
Combined ratio	97.40%	75.60%	83.20%	143.00%	67.70%	65.20%	74.90%	134.30%	64.10%	66.70%	71.90%	75.00%	99.40%		86.20%		68.90%
Total assets	7,618,471				7,060,878				7,019,140				7,618,471		7,060,878		7,019,140
Validus Re [Member]
Underwriting income
Gross premiums written													1,190,220		1,101,239		768,084	[2]
Reinsurance premiums ceded													(150,718)		(63,147)		(95,446)	[2]
Net premiums written													1,039,502		1,038,092		672,638	[2]
Change in unearned premiums													(7,611)		13,108		122,912	[2]
Net premiums earned													1,031,891		1,051,200		795,550	[2]
Underwriting deductions
Losses and loss expenses													759,305		601,610		186,704	[2]
Policy acquisition costs													160,134		160,599		127,433	[2]
General and administrative expenses													46,353		45,617		65,710	[2]
Share compensation expenses													9,309		7,181		7,576	[2]
Total underwriting deductions													975,101		815,007		387,423	[2]
Underwriting income (loss)													56,790		236,193		408,127	[2]
Net investment income													96,492		113,968		94,973	[2]
Other income													7,998		4,211		5,149	[2]
Finance expenses													(10,289)		(5,471)		(1,774)	[2]
Operating income (loss) before taxes													150,991		348,901		506,475	[2]
Tax (expense) benefit													(18)		(175)		(163)	[2]
Net operating income (loss)													150,973		348,726		506,312	[2]
Gain on bargain purchase, net of expenses																	0	[2]
Realized gain on repurchase of debentures																	0	[2]
Net realized gains (losses) on investments													21,669		23,637		(5,428)	[2]
Net unrealized (losses) gains on investments													(16,039)		45,276		75,209	[2]
Foreign exchange (losses) gains													(19,987)		(1,185)		(1,406)	[2]
Transaction expenses													0	[3]
Net income													136,616		416,454		574,687	[2]
Net income attributable to noncontrolling interest													(21,793)		0		0	[2]
Net income available to Validus													114,823		416,454		574,687	[2]
Selected ratios:
Net premiums written / Gross premiums written													87.30%		94.30%		87.60%	[2]
Losses and loss expenses													73.60%		57.20%		23.50%	[2]
Policy acquisition costs													15.50%		15.30%		16.00%	[2]
General and administrative expenses													5.40%	[1]	5.00%	[1]	9.20%	[1],[2]
Expense ratio													20.90%		20.30%		25.20%	[2]
Combined ratio													94.50%		77.50%		48.70%	[2]
Total assets	4,826,234				4,431,001				4,865,771				4,826,234		4,431,001		4,865,771
Talbot [Member]
Underwriting income
Gross premiums written													1,014,122		981,073		919,906
Reinsurance premiums ceded													(218,174)		(258,081)		(204,186)
Net premiums written													795,948		722,992		715,720
Change in unearned premiums													(25,696)		(13,069)		(61,693)
Net premiums earned													770,252		709,923		654,027
Underwriting deductions
Losses and loss expenses													485,096		385,976		337,053
Policy acquisition costs													157,334		143,769		139,932
General and administrative expenses													117,482		114,043		96,352
Share compensation expenses													8,582		6,923		7,171
Total underwriting deductions													768,494		650,711		580,508
Underwriting income (loss)													1,758		59,212		73,519
Net investment income													25,380		29,287		30,114
Other income													8,895		12,802		5,225
Finance expenses													(227)		(3,140)		(14,725)
Operating income (loss) before taxes													35,806		98,161		94,133
Tax (expense) benefit													(651)		(2,730)		3,922
Net operating income (loss)													35,155		95,431		98,055
Gain on bargain purchase, net of expenses																	0
Realized gain on repurchase of debentures																	0
Net realized gains (losses) on investments													6,863		8,861		(6,115)
Net unrealized (losses) gains on investments													(3,952)		676		9,587
Foreign exchange (losses) gains													(2,188)		2,091		676
Transaction expenses													0	[3]
Net income													35,878		107,059		102,203
Net income attributable to noncontrolling interest													0		0		0
Net income available to Validus													35,878		107,059		102,203
Selected ratios:
Net premiums written / Gross premiums written													78.50%		73.70%		77.80%
Losses and loss expenses													63.00%		54.40%		51.50%
Policy acquisition costs													20.40%		20.30%		21.40%
General and administrative expenses													16.40%	[1]	17.00%	[1]	15.80%	[1]
Expense ratio													36.80%		37.30%		37.20%
Combined ratio													99.80%		91.70%		88.70%
Total assets	2,775,632				2,599,158				2,137,393				2,775,632		2,599,158		2,137,393
Corporate & Eliminations [Member]
Underwriting income
Gross premiums written													(79,651)		(91,746)		(66,749)
Reinsurance premiums ceded													79,651		91,746		66,749
Net premiums written													0		0		0
Change in unearned premiums													0		0		0
Net premiums earned													0		0		0
Underwriting deductions
Losses and loss expenses													0		0		0
Policy acquisition costs													(3,284)		(11,469)		(4,399)
General and administrative expenses													33,662		49,630		23,506
Share compensation expenses													16,405		14,807		12,290
Total underwriting deductions													46,783		52,968		31,397
Underwriting income (loss)													(46,783)		(52,968)		(31,397)
Net investment income													(9,576)		(9,152)		(6,314)
Other income													(11,175)		(11,794)		(5,740)
Finance expenses													(44,301)		(47,259)		(27,631)
Operating income (loss) before taxes													(111,835)		(121,173)		(71,082)
Tax (expense) benefit													(155)		(221)		0
Net operating income (loss)													(111,990)		(121,394)		(71,082)
Gain on bargain purchase, net of expenses																	287,099
Realized gain on repurchase of debentures																	4,444
Net realized gains (losses) on investments													0		0		0
Net unrealized (losses) gains on investments													0		0		0
Foreign exchange (losses) gains													51		445		56
Transaction expenses													(17,433)	[3]
Net income													(129,372)		(120,949)		220,517
Net income attributable to noncontrolling interest													0		0		0
Net income available to Validus													(129,372)		(120,949)		220,517
Selected ratios:
Total assets	$ 16,605				$ 30,719				$ 15,976				$ 16,605		$ 30,719		$ 15,976

[1] Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

[2] Operating results of IPC have been included from the September 2009 date of acquisition.

[3] The transaction expenses relate to costs incurred in connection with the proposed acquisition of Transatlantic Holdings, Inc. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

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Nature of the business

12 Months Ended

Dec. 31, 2011

Nature Of Business [Abstract]

Nature of the business

1.Nature of the business

Validus Holdings, Ltd. (the “Company”) was incorporated under the laws of Bermuda on October 19, 2005. The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. (“Validus Re”) and Talbot Holdings Ltd. (“Talbot”). Validus Re is registered as a Class 4 insurer under The Insurance Act 1978 of Bermuda, amendments thereto and related regulations (“The Act”). On July 2, 2007, the Company acquired all of the outstanding shares of Talbot from a group of institutional and other investors, and Talbot employees, management, former employees and trusts on behalf of certain employees and their families. Talbot is the Bermuda parent of a specialty insurance group primarily operating within the Lloyd'sinsurance market through Syndicate 1183. The Company, through its subsidiaries, provides reinsurance coverage in the Property, Marine and Specialty lines markets, effective January 1, 2006, and insurance coverage in the same markets effective July 2, 2007.

 On July 30, 2007, the Company completed its initial public offering (“IPO”), selling 15,244,888 common shares at a price of $22.00 per share. The net proceeds to the Company from the IPO were approximately $310,731, after deducting the underwriters' discount and fees. On August 27, 2007, the Company issued an additional 453,933 common shares at a price of $22.00 per share pursuant to the underwriters' option to purchase additional common shares; the net proceeds to the Company were approximately $9,349 and total IPO proceeds inclusive of the underwriters' option to purchase additional common shares were $320,080.

On September 4, 2009, pursuant to an Amalgamation Agreement, the Company acquired all of IPC Holdings, Ltd. (“IPC”) outstanding common shares in exchange for 0.9727 Company common shares and $7.50 cash per IPC common share (the “IPC Acquisition”). IPC's operations were focused on short-tail lines of reinsurance. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. The acquisition of IPC was undertaken to gain a strategic advantage in the then current reinsurance market and increase the Company's capital base.

On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, Ltd. (“AlphaCat Re 2011”), a special purpose “sidecar” reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance.  At the time of formation, Validus Rehad an equity interest in AlphaCat Re 2011 and as Validus Re held a majority of AlphaCat Re 2011's outstanding voting rights, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company.

On December 23, 2011, the Company completed a secondary offering of common shares of AlphaCat Re 2011 to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors.  As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re 2011; however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%.  As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 have been derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 is treated as an equity method investment as at December 31, 2011. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 is recorded in the Consolidated Statements of Operations and Comprehensive Income as net income attributable to noncontrolling interest. Refer to Note 8 “Investment in AlphaCat Re 2011, Ltd.”.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Assets
Fixed maturities, at amortized cost	$ 4,859,705	$ 4,772,037
Short-term investments, at amortized cost	280,299	273,444
Other investments, at amortized cost	$ 15,002	$ 18,392
Shareholders' equity
Common shares, par value	$ 0.175	$ 0.175
Common shares, shares authorized	571,428,571	571,428,571
Common shares, shares issued	134,503,065	132,838,111
Common shares, shares outstanding	99,471,080	98,001,226
Treasury shares	35,031,985	34,836,885

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Reserve for losses and loss expenses

12 Months Ended

Dec. 31, 2011

Reserve for losses and loss expenses [Abstract]

Reserve for losses and loss expenses

11. Reserve for losses and loss expenses

Reserves for losses and loss expenses are based in part upon the estimation of case losses reported from brokers, insureds and ceding companies. The Company also uses statistical and actuarial methods to estimate ultimate expected losses and loss expenses. The period of time from the occurrence of a loss, the reporting of a loss to the Company and the settlement of the Company's liability may be several months or years. During this period, additional facts and trends may be revealed. As these factors become apparent, case reserves will be adjusted, sometimes requiring an increase or decrease in the overall reserves of the Company, and at other times requiring a reallocation of incurred but not reported reserves to specific case reserves. These estimates are reviewed regularly, and such adjustments, if any, are reflected in earnings in the period in which they become known. While management believes that it has made a reasonable estimate of ultimate losses, there can be no assurances that ultimate losses and loss expenses will not exceed the total reserves.

The following table represents an analysis of paid and unpaid losses and loss expenses incurred and a reconciliation of the beginning and ending unpaid loss expenses as at December 31, 2011,2010 and 2009:

	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Reserve for losses and loss expenses, beginning of period	$	2,035,973	$	1,622,134	$	1,305,303
Losses and loss expenses recoverable		(283,134)		(181,765)		(208,796)
Net reserves for losses and loss expenses, beginning of period		1,752,839		1,440,369		1,096,507
Net reserves acquired in purchase of IPC		-		-		304,957
Increase (decrease) in net losses and loss expenses incurred
in respect of losses occurring in:
Current year		1,400,520		1,144,196		625,810
Prior years		(156,119)		(156,610)		(102,053)
Total incurred losses and loss expenses		1,244,401		987,586		523,757
Less net losses and loss expenses paid in respect of losses
occurring in:
Current year		(272,479)		(288,974)		(122,351)
Prior years		(470,547)		(384,448)		(385,084)
Total net paid losses		(743,026)		(673,422)		(507,435)
Foreign exchange		4,444		(1,694)		22,583
Net reserve for losses and loss expenses, end of period		2,258,658		1,752,839		1,440,369
Losses and loss expenses recoverable		372,485		283,134		181,765
Reserve for losses and loss expenses, end of period	$	2,631,143	$	2,035,973	$	1,622,134

Incurred losses and loss adjustment expenses comprise:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Gross losses and loss adjustment expenses	$	1,555,275	$	1,411,192	$	598,877
Reinsurance recoverable		(310,874)		(423,606)		(75,120)
Total incurred losses and loss adjustment expenses	$	1,244,401	$	987,586	$	523,757

The December 31, 2011 and 2010 gross reserves balance comprises reserves for reported claims of $1,414,442 and $1,035,881, respectively, and reserves for claims incurred but not reported of $1,216,701 and $1,000,092, respectively. The net favorable development on prior years by segment and line of business is as follows:

	Year Ended December 31, 2011
	Property		Marine		Specialty		Total
Validus Re	$	(49,020)	$	(10,234)	$	(9,356)	$	(68,610)
Talbot		(22,169)		(31,382)		(33,958)		(87,509)
Net favorable development	$	(71,189)	$	(41,616)	$	(43,314)	$	(156,119)

The amount recorded represents management's best estimate of expected losses and loss expenses on premiums earned. Favorable loss development on prior years totaled $156,119. For Validus Re, the property lines experienced favorable development of $49,020primarily due to a reduction in the loss estimates on large loss events and favorable development on attritional losses and various smaller loss events. The marine lines experienced favorable development of $10,234 primarily due to favorable development on large loss events and attritional losses and various smaller loss events. The specialty lines experienced favorable development of $9,356 primarily due to favorable development on attritional losses partially offset by adverse development on large loss events. For Talbot, the property lines experienced $22,169 of favorable development primarily due to lower than expected claims development on large losses as well as favorable development on attritional losses. The marine lines experienced $31,382 of favorable development primarily due to favorable development on attritional losses. The specialty lines experienced $33,958 of favorable developmentprimarily due to lower than expected development on large losses as well as favorable development on attritional losses.

	Year Ended December 31, 2010
	Property		Marine		Specialty		Total
Validus Re	$	(49,831)	$	(17,616)	$	(3,170)	$	(70,617)
Talbot		(22,450)		(52,415)		(11,128)		(85,993)
Net favorable development	$	(72,281)	$	(70,031)	$	(14,298)	$	(156,610)

The amount recorded represents management's best estimate of expected losses and loss expenses on premiums earned. Favorable loss development on prior years totaled $156,610. For Validus Re, the property and specialty lines experienced favorable development of $49,831 and $3,170, respectively, primarily due to lower than expected claims development. The marine lines experienced $17,616 of favorable development primarily due to higher than expected recoveries associated with the 2007 California wildfires, as well as lower than expected claims development. For Talbot, the property lines experienced $22,450 of favorable development primarily due to lower than expected claims development on the property facultative and binder lines, together with favorable development on hurricanes Katrina and Ike. The marine lines experienced $52,415 of favorable development primarily due to lower than expected attritional loss development across a number of lines, in particular on the hull and energy lines. The specialty lines experienced $11,128 of favorable development primarily due to lower than expected claims across most of the specialty sub-classes, partially offset by one notable loss on the financial institutions lines.

	Year Ended December 31, 2009
	Property		Marine		Specialty		Total
Validus Re	$	(65,109)	$	19,628	$	(7,491)	$	(52,972)
Talbot		(27,630)		(15,306)		(6,145)		(49,081)
Net favorable development	$	(92,739)	$	4,322	$	(13,636)	$	(102,053)

The amount recorded represents management's best estimate of expected losses and loss expenses on premiums earned. Favorable loss development on prior years totaled $102,053. For Validus Re, the property lines experienced $65,109 of favorable development primarily due to the reclassification of losses from onshore energy exposures during the 2007 California wildfires to the marine line and reduced loss estimates for Hurricane Ike, the June 2008 Midwest flood event and October 2007 Peruvian mining loss, as well as lower than expected claim development elsewhere. The marine lines experienced $19,628 of adverse development primarily due to the reclassification from the property line and increased loss estimates for Hurricanes Ike and Gustav. For Talbot, the property lines experienced $27,630 of favorable loss development primarily due to lower than expected claims development together with a favorable development relating to Hurricane Katrina. The marine lines experienced $15,306 of favorable development due to continued low claims activity and reduced provisions for late reported claims in the more developed underwriting years of the marine liabilities lines.

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Commitments and contingencies (Future minimum lease payments) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Future minimum lease commitments are as follows:
2012	$ 4,874
2013	7,231
2014	6,907
2015	6,719
2016 and thereafter	43,238
Total	68,969
Office space and office equipment [Member]
Total rent expense with respect to operating leases:
Rent expense	$ 5,752	$ 5,309	$ 4,308

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Stock plans (Text) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 year	Dec. 31, 2010 year	Dec. 31, 2009 year
Stock plans (other details)
Number of shares reserved for issuance under the LTIP and STIP	13,126,896
Remaining number of shares reserved for issuance	4,109,215
Options [Member]
Stock plans (other details)
Unrecognized share compensation expenses	$ 141	$ 851	$ 4,906
Weighted average period of recognizing share based compensation expenses	0.2	1.2	1.3
Maturity period of options	P10Y
Restricted share awards [Member]
Stock plans (other details)
Unrecognized share compensation expenses	40,809	44,290	38,124
Weighted average period of recognizing share based compensation expenses	2.4	2.5	2.7
Restricted share units [Member]
Stock plans (other details)
Unrecognized share compensation expenses	985	809	985
Weighted average period of recognizing share based compensation expenses	2.7	2.7	1.4
Performance share awards [Member]
Stock plans (other details)
Unrecognized share compensation expenses	5,677	3,375	0
Weighted average period of recognizing share based compensation expenses	2.1	2.4	0
Employee seller shares [Member]
Stock plans (other details)
Unrecognized share compensation expenses	$ 0	$ 2,141	$ 6,635
Restricted stock issued under Share Sale Agreement	1,209,741
Weighted average period of recognizing share based compensation expenses		0.5	1.5
Percentage of employee seller shares vesting annually	25.00%

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Stock plans (Other awards activity) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Restricted share awards [Member]
Activities
Beginning balance	3,114,039	2,525,958	2,307,402
Granted	621,254	1,191,873	772,672
Vested	(712,692)	(503,322)	(512,847)
Forfeited	(19,054)	(100,470)	(41,269)
Ending balance	3,003,547	3,114,039	2,525,958
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, beginning balance	$ 24.33	$ 23.39	$ 22.69
Weighted average grant date fair value, granted	$ 31.92	$ 25.94	$ 24.15
Weighted average grant date fair value, vested	$ 24.85	$ 23.43	$ 21.33
Weighted average grant date fair value, forfeited	$ 26.63	$ 24.22	$ 24.05
Weighted average grant date fair value, ending balance	$ 25.77	$ 24.33	$ 23.39
Restricted share units [Member]
Activities
Beginning balance	47,049	79,447	12,274
Granted	18,388	26,782	427,451
Vested	(13,340)	(59,193)	(360,769)
Issued in lieu of cash dividends	1,215	1,107	491
Forfeited	0	(1,094)	0
Ending balance	53,312	47,049	79,447
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, beginning balance	$ 25.04	$ 19.02	$ 25.28
Weighted average grant date fair value, granted	$ 32.10	$ 25.65	$ 13.83
Weighted average grant date fair value, vested	$ 24.72	$ 17.31	$ 13.10
Weighted average grant date fair value, issued in lieu of cash dividends	$ 27.30	$ 25.45	$ 25.22
Weighted average grant date fair value, forfeited	$ 0	$ 21.49	$ 0
Weighted average grant date fair value, ending balance	$ 27.60	$ 25.04	$ 19.02
Performance share awards [Member]
Activities
Beginning balance	132,401	0	0
Granted	146,618	132,401	0
Vested	0	0	0
Forfeited	0	0	0
Ending balance	279,019	132,401	0
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, beginning balance	$ 28.70	$ 0	$ 0
Weighted average grant date fair value, granted	$ 32.64	$ 28.70	$ 0
Weighted average grant date fair value, vested	$ 0	$ 0	$ 0
Weighted average grant date fair value, forfeited	$ 0	$ 0	$ 0
Weighted average grant date fair value, ending balance	$ 30.77	$ 28.70	$ 0
Employee seller shares [Member]
Activities
Beginning balance	197,879	410,667	663,375
Granted	0	0	0
Vested	(197,174)	(203,544)	(248,085)
Forfeited	(705)	(9,244)	(4,623)
Ending balance	0	197,879	410,667
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, beginning balance	$ 22.01	$ 22.01	$ 22.01
Weighted average grant date fair value, granted	$ 0	$ 0	$ 0
Weighted average grant date fair value, vested	$ 22.01	$ 22.01	$ 22.01
Weighted average grant date fair value, forfeited	$ 22.01	$ 22.01	$ 22.01
Weighted average grant date fair value, ending balance	$ 0	$ 22.01	$ 22.01

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Schedule VI - Supplementary information for property-casualty underwriters (Details) (Consolidated entity [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Consolidated entity [Member]
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items]
Deferred acquisition costs	$ 121,505	$ 123,897	$ 112,329
Reserves for losses and loss expenses	2,631,143	2,035,973	1,622,134
Reserves for unearned premiums	772,382	728,516	724,104
Net earned premiums	1,802,143	1,761,123	1,449,577
Net investment income	112,296	134,103	118,773
Losses and loss expenses incurred related to current year	1,400,520	1,144,196	625,810
Losses and loss expenses incurred related to prior year	(156,119)	(156,610)	(102,053)
Net paid losses and loss expenses	743,026	673,422	507,435
Amortization of deferred acquisition costs	314,184	292,899	262,966
Net premiums written	$ 1,835,450	$ 1,761,084	$ 1,388,358

XML

Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Feb. 15, 2012	Jun. 30, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	VALIDUS HOLDINGS LTD
Entity Central Index Key	0001348259
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		99,478,305
Entity Public Float			$ 2,393.6

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Accounts payable and accrued expenses

12 Months Ended

Dec. 31, 2011

Accounts Payable and Accrued Expenses [Abstract]

Accounts payable and accrued expenses

12.Accounts payable and accrued expenses

The following are components of accounts payable and accrued expenses:

	Years Ended
	December 31,		December 31,
	2011		2010
Accrued interest on debt	$	10,454	$	10,765
Amounts due to brokers		18,996		21,524
Trade and compensation payables		53,952		67,031
Total	$	83,402	$	99,320

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Premiums receivable (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Premiums receivable
Premiums receivable, beginning of year	$ 568,761	$ 551,616
Change during the year	77,593	17,145
Premiums receivable, end of year	646,354	568,761
Premiums In Course Of Collection [Member]
Premiums receivable
Premiums receivable, beginning of year	118,342	243,930
Change during the year	56,769	(125,588)
Premiums receivable, end of year	175,111	118,342
Premiums Accrued But Unbilled [Member]
Premiums receivable
Premiums receivable, beginning of year	450,419	307,686
Change during the year	20,824	142,733
Premiums receivable, end of year	$ 471,243	$ 450,419

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Stock plans (Options activity) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Options Activities
Options outstanding, beginning balance	2,723,684	3,278,015	2,799,938
Options granted	0	0	650,557
Options exercised	(459,932)	(550,014)	(164,834)
Options forfeited	(740)	(4,317)	(7,646)
Options outstanding, ending balance	2,263,012	2,723,684	3,278,015
Options exercisable	2,188,566	2,505,905	2,468,928
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, beginning balance	$ 6.74	$ 6.83	$ 7.57
Weighted average grant date fair value, options granted	$ 0	$ 0	$ 3.42
Weighted average grant date fair value, options exercised	$ 6.98	$ 7.22	$ 5.80
Weighted average grant date fair value, options forfeited	$ 10.30	$ 10.30	$ 10.30
Weighted average grant date fair value, ending balance	$ 6.69	$ 6.74	$ 6.83
Weighted average grant date fair value, options exercisable	$ 6.63	$ 6.61	$ 6.52
Weighted Average Grant Date Exercise Price
Weighted average grant date exercise price, beginning balance	$ 20.19	$ 19.88	$ 18.23
Weighted average grant date exercise price, options granted	$ 0	$ 0	$ 27.27
Weighted average grant date exercise price, options exercised	$ 20.55	$ 18.32	$ 21.01
Weighted average grant date exercise price, options forfeited	$ 20.39	$ 20.39	$ 20.39
Weighted average grant date exercise price, ending balance	$ 20.12	$ 20.19	$ 19.88
Weighted average grant date exercise price, options exercisable	$ 20.01	$ 20.07	$ 20.10

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Consolidated Statements of Operations and Comprehensive Income (Loss) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Revenues
Gross premiums written	$ 2,124,691	$ 1,990,566	$ 1,621,241
Reinsurance premiums ceded	(289,241)	(229,482)	(232,883)
Net premiums written	1,835,450	1,761,084	1,388,358
Change in unearned premiums	(33,307)	39	61,219
Net premiums earned	1,802,143	1,761,123	1,449,577
Gain on bargain purchase, net of expenses			287,099
Net investment income	112,296	134,103	118,773
Realized gain on repurchase of debentures	0	0	4,444
Net realized gains (losses) on investments	28,532	32,498	(11,543)
Net unrealized (losses) gains on investments	(19,991)	45,952	84,796
Other income	5,718	5,219	4,634
Foreign exchange (losses) gains	(22,124)	1,351	(674)
Total revenues	1,906,574	1,980,246	1,937,106
Expenses
Losses and loss expenses	1,244,401	987,586	523,757
Policy acquisition costs	314,184	292,899	262,966
General and administrative expenses	197,497	209,290	185,568
Share compensation expenses	34,296	28,911	27,037
Finance expenses	54,817	55,870	44,130
Transaction expenses	17,433	0	0
Total expenses	1,862,628	1,574,556	1,043,458
Net income before taxes	43,946	405,690	893,648
Tax (expense) benefit	(824)	(3,126)	3,759
Net income	43,122	402,564	897,407
Net income attributable to noncontrolling interest	(21,793)	0	0
Net income available to Validus	21,329	402,564	897,407
Comprehensive income
Foreign currency translation adjustments	(1,146)	(604)	3,007
Comprehensive income available to Validus	$ 20,183	$ 401,960	$ 900,414
Weighted average number of common shares and common share equivalents outstanding
Basic	98,607,439	116,018,364	93,697,194
Diluted	100,928,284	120,630,945	97,168,409
Basic earnings per share available to common shareholders	$ 0.14	$ 3.41	$ 9.51
Diluted earnings per share available to common shareholders	$ 0.14	$ 3.34	$ 9.24
Cash dividends declared per share	$ 1.00	$ 0.88	$ 0.80

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Goodwill and intangible assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets Disclosure [Abstract]

Goodwill and other intangible assets

6.Goodwill and other intangible assets

Following the acquisition of IPC on September 4, 2009, the Company recorded intangible assets (including certain amortization thereon) and negative goodwill. Intangible assets of $21,671 were recognized as a result of the acquisition of IPC (relating to customer relationships). As of December 31, 2009, the customer relationships intangible asset had been fully amortized.

Following the acquisition of Talbot Holdings Ltd. on July 2, 2007, the Company recorded intangible assets in the name of Syndicate Capacity, Trademark and Distribution Network (including certain amortization thereon) and goodwill.Syndicate Capacity represents Talbot's authorized premium income limit to write insurance business in the Lloyd's market. Talbot has owned 100% of Syndicate 1183's capacity since 2002 and there are no third party tenure rights. The capacity is renewed annually at no cost to Talbot, but may be freely purchased or sold, subject to Lloyd's approval. The ability to write insurance business under the syndicate capacity is indefinite with the premium income limit being set yearly by Talbot, subject to Lloyd's approval. Trademark and Distribution Network are estimated to have finite useful lives of 10 years and are amortized on a straight line basis over such periods. Syndicate Capacity and goodwill are estimated to have indefinite useful lives. Goodwill includes amounts related to the value of the workforce. The goodwill and intangibles are recorded entirely in the Company's Talbot segment.

The following table shows an analysis of goodwill and other intangible assets included in the Talbot segment:

			Intangible assets		Intangible assets
			with an		with a
	Goodwill		indefinite life		finite life		Total
Gross balance at December 31, 2011	$	20,393	$	91,843	$	41,616	$	153,852
Accumulated amortization		-		-		(18,728)		(18,728)
Net balance at December 31, 2011	$	20,393	$	91,843	$	22,888	$	135,124
Gross balance at December 31, 2010	$	20,393	$	91,843	$	41,616	$	153,852
Accumulated amortization		-		-		(14,566)		(14,566)
Net balance at December 31, 2010	$	20,393	$	91,843	$	27,050	$	139,286
Gross balance at December 31, 2009	$	20,393	$	91,843	$	41,616	$	153,852
Accumulated amortization		-		-		(10,404)		(10,404)
Net balance at December 31, 2009	$	20,393	$	91,843	$	31,212	$	143,448

The estimated remaining amortization expense for the Trademark and Distribution network is as follows:
2012	$	4,162
2013		4,162
2014		4,162
2015		4,162
2016 and there after		6,240
	$	22,888

As described in “Significant accounting policies”, the annual impairment test was performed and neither goodwill nor the other intangible assets were deemed to be impaired.

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Business combination

12 Months Ended

Dec. 31, 2011

Business Combinations [Abstract]

Business combination

5. Business combination

On September 4, 2009, pursuant to an amalgamation agreement, the Company acquired all of the outstanding common shares of IPC in exchange for 0.9727 Company common shares and $7.50 cash per IPC common share. IPC's operations were focused on short-tail lines of reinsurance. The primary lines in which IPC conducted business were property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. The IPC Acquisition was undertaken to gain a strategic advantage in thethen current reinsurance market where capacity had been depleted and to increase the Company's capital base.

The aggregate purchase price paid by the Company was $1,746,224 for adjusted tangible net assets acquired of $2,076,902. During 2009, the global financial crisis and related market illiquidity led to several publicly traded companies trading at substantial discounts. This was the primary factor responsible for a purchase price less than the book value of IPC's net assets, and the recognition of a bargain purchase gain on acquisition.

The estimates of fair values for tangible assets acquired and liabilities assumed were determined by management based on various market and income analyses and asset appraisals. Significant judgment was required to arrive at these estimates of fair value and changes to assumptions used could have led to materially different results.

An adjustment of $50,000 was made to IPC's net assets acquired in respect of the termination fee (the “Max Termination Fee”) paid under the Agreement and Plan of Amalgamation among Max Capital Group Ltd. (“Max”), IPC and IPC Limited. The Max Termination Fee was advanced to IPC by the Company on July 9, 2009, but was repayable in certain circumstances.

In addition, at closing, the Company recorded a $21,671 intangible asset for the acquired IPC customer relationships. This intangible asset was related to the acquired broker distribution network and was fair valued using a variation of the income approach. Under this approach, the Company estimated the present value of expected future cash flows to an assumed hypothetical market participant resulting from the existing IPC customer relationships, considering attrition, and discounting at a weighted average cost of capital.

The composition of purchase price and fair value of net assets acquired is summarized as follows:

Total allocable purchase price
	IPC shares outstanding at September 4, 2009		56,110,096
	Exchange ratio		0.9727
	Validus common shares issued		54,578,268
	Validus closing share price on September 4, 2009	$	24.10
	Total value of Validus shares to be issued			$	1,315,337
	Total cash consideration paid at $7.50 per IPC share				420,826
	Share compensation awards issued to IPC employees pursuant
	to the Amalgamation Agreement and earned prior to the
	Amalgamation				10,061
	Total allocable purchase price				1,746,224
Tangible Assets Acquired
	Cash and investments	$	2,463,374
	Receivables (a)		202,278
	Tangible Assets Acquired				2,665,652
Liabilities Acquired
	Net loss reserves and paid losses recoverable	$	304,957
	Unearned premiums, net of expenses		180,370
	Other liabilities		53,423
Liabilities acquired					538,750
Net tangible assets acquired, at fair value					2,126,902
	Max Termination Fee				(50,000)
	Net tangible assets acquired, at fair value, adjusted				2,076,902
Bargain purchase gain before establishment of intangible assets					330,678
	Intangible asset - customer relationships				21,671
Bargain purchase gain on acquisition of IPC				$	352,349

• The fair value of receivables approximates the gross contractual amounts receivable.

The Company also incurred transaction and termination expenses related to the IPC Acquisition.Transaction expenses included legal, financial advisory,and audit related services. Termination expenses included severance costs and accelerated share compensation costs in connection with certain IPC employment contracts that were terminated. Finally, the customer relationships intangible asset has been fully amortized as it was not expected to significantly contribute to the Company's future cash flows beyond December 31, 2009. The gain on bargain purchase, net of expenses has been presented as a separate line item in the Company's Consolidated Statements of Operations and Comprehensive Income, and is composed of the following:

	Year ended
	December 31, 2009
Bargain purchase gain on acquisition of IPC	$	352,349
Transaction expenses		(29,448)
Termination expenses		(14,131)
Amortization of intangible asset – customer relationships		(21,671)
Gain on bargain purchase, net of expenses	$	287,099

The following selected audited information has been provided to present a summary of the results of IPCsince the acquisition date, that have been included within the Validus Re segmentin the consolidated financial statements for the year ended December 31, 2009.

	From Acquisition Date to
	December 31, 2009
Net premiums written	$	(4,974)
Total revenue		161,188
Total expenses		33,370
Net income	$	127,818

Supplemental Pro Forma Information

Operating results of IPC have been included in the consolidated financial statements from the September 4, 2009 acquisition date. The following selected unaudited pro forma financial information has been provided to present a summary of the combined results of the Company and IPC, assuming the transaction had been effected on January 1, 2009. The unaudited pro forma data is for informational purposes only and does not necessarily represent results that would have occurred if the transaction had taken place on the basis assumed above.

	Year ended
	December 31, 2009
Revenues	(unaudited)
Gross premiums written	$	2,008,578
Reinsurance premiums ceded		(239,412)
Net premiums written		1,769,166
Change in unearned premiums		(57,338)
Net premiums earned		1,711,828
Net investment income		163,944
Net realized (losses) on investments		(4,717)
Net unrealized gains on investments		189,789
Other income		4,603
Realized gain on repurchase of debentures		4,444
Foreign exchange gains		4,294
Total revenues		2,074,185
Expenses
Losses and loss expenses		556,550
Policy acquisition costs		289,600
General and administrative expenses		209,510
Share compensation expenses		33,751
Finance expenses		44,513
Total expenses		1,133,924
Net income before taxes		940,261
Tax benefit		3,759
Net income		944,020
Basic earnings per share	$	10.01
Diluted earnings per share	$	9.72

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Debt and financing arrangements

12 Months Ended

Dec. 31, 2011

Debt and financing arrangements [Abstract]

Debt and financing arrangements

17. Debt and financing arrangements

a) Financing structure and finance expenses
	The financing structure at December 31, 2011 was:
		Commitment		Outstanding (a)		Drawn
2006 Junior Subordinated Deferrable Debentures		$	150,000	$	150,000	$	150,000
2007 Junior Subordinated Deferrable Debentures			200,000		139,800		139,800
2010 Senior Notes due 2040			250,000		250,000		246,982
$340,000 syndicated unsecured letter of credit facility			340,000		-		-
$60,000 bilateral unsecured letter of credit facility			60,000		-		-
$500,000 secured letter of credit facility			500,000		333,179		-
Talbot FAL Facility (b)			25,000		25,000		-
IPC Bi-Lateral Facility			80,000		57,146		-
Total		$	1,605,000	$	955,125	$	536,782
	The financing structure at December 31, 2010 was:
		Commitment		Outstanding (a)		Drawn
2006 Junior Subordinated Deferrable Debentures		$	150,000	$	150,000	$	150,000
2007 Junior Subordinated Deferrable Debentures			200,000		139,800		139,800
2010 Senior Notes due 2040			250,000		250,000		246,874
$340,000 syndicated unsecured letter of credit facility			340,000		-		-
$60,000 bilateral unsecured letter of credit facility			60,000		-		-
$500,000 secured letter of credit facility			500,000		268,944		-
Talbot FAL Facility (b)			25,000		25,000		-
IPC Bi-Lateral Facility			80,000		68,063		-
Total		$	1,605,000	$	901,807	$	536,674

(a) Indicates utilization of commitment amount, not drawn borrowings.

(b) Talbot operates in Lloyd's through a corporate member, Talbot 2002 Underwriting Capital Ltd ("T02"), which is the sole participant in Syndicate 1183. Lloyd's sets T02's required capital annually based on Syndicate 1183's business plan, rating environment, reserving environment together with input arising from Lloyd's discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd's ("FAL"), comprises: cash, investments and undrawn letters of credit provided by various banks.

Finance expenses consist of interest on our junior subordinated deferrable debentures and senior notes, the amortization of debt offering costs, fees relating to our credit facilities, preferred share dividendsand the costs of FAL as follows:

			Years Ended
			December 31,		December 31,	December 31,
		2011		2010		2009
2006 Junior Subordinated Deferrable Debentures		$	9,768	$	14,354	$	14,354
2007 Junior Subordinated Deferrable Debentures			12,115		12,114		12,732
2010 Senior Notes due 2040			22,388		20,770		-
Credit facilities			6,710		5,492		2,319
AlphaCat Re 2011 preferred dividend (a)			3,609		-		-
Talbot FAL Facility			227		333		542
Talbot third party FAL facility			-		2,807		14,183
Total		$	54,817	$	55,870	$	44,130
	(a) Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.

• $250,000 2010 Senior Notes due 2040

On January 21, 2010, the Company offered and sold $250,000 of Senior Notes due 2040 (the “2010 Senior Notes”) in a registered public offering. The 2010 Senior Notes mature on January 26, 2040, and are redeemable at the Company's option in whole any time or in part from time to time at a make-whole redemption price. The Company may redeem the notes in whole, but not in part, at any time upon the occurrence of certain tax events as described in the notes prospectus supplement. The 2010Senior Notes bear interest at the rate of 8.875% per annum from January 26, 2010 to maturity or early redemption. Interest on the 2010Senior Notes is payable semi-annually in arrears on January 26 and July 26 of each year, commencing on July 26, 2010.  The net proceeds of $243,967 from the sale of the 2010 Senior Notes, after the deduction of commissions paid to the underwriters in the transaction and other expenses, was used by the Company for general corporate purposes, which included the repurchase of its outstanding capital stock and payment of dividends to shareholders.  Debt issuance costs of $2,808 were deferred as an asset and amortized over the life of the 2010Senior Notes.

The 2010 Senior Notesare unsecured and unsubordinated obligations of the Company and rank equally in right of payment with all of the Company's existing and future unsecured and unsubordinated indebtedness. The 2010 Senior Notes will be effectively junior to all of the Company's future secured debt, to the extent of the value of the collateral securing such debt, and will rank senior to all our existing and future subordinated debt. The 2010 Senior Notesare structurally subordinated to all obligations of the Company's subsidiaries.

Future expected payments of principal on the 2010Senior Notes are as follows:

2012	$	-
2013		-
2014		-
2015		-
2016 and thereafter		250,000
Total minimum future payments	$	250,000

• Junior subordinated deferrable debentures

On June 15, 2006, the Company participated in a private placement of $150,000 of junior subordinated deferrable interest debentures due 2036 (the “2006 Junior Subordinated Deferrable Debentures”). The 2006 Junior Subordinated Deferrable Debentures mature on June 15, 2036, are redeemable at the Company's option at par beginning June 15, 2011, and require quarterly interest payments by the Company to the holders of the 2006 Junior Subordinated Deferrable Debentures. Interest is payable at 9.069% per annum through June 15, 2011, and thereafter at a floating rate of three-month LIBOR plus 355 basis points, reset quarterly. The proceeds of $150,000 from the sale of the 2006 Junior Subordinated Deferrable Debentures, after the deduction of commissions paid to the placement agents in the transaction and other expenses, were used by the Company to fund Validus Re segment operations and for general working capital purposes. Debt issuance costs of $3,750 were deferred as an asset and were amortized to income over the five year optional redemption period.

On June 21, 2007, the Company participated in a private placement of $200,000 of junior subordinated deferrable interest debentures due 2037 (the “2007 Junior Subordinated Deferrable Debentures”). The 2007 Junior Subordinated Deferrable Debentures mature on June 15, 2037, are redeemable at the Company's option at par beginning June 15, 2012, and require quarterly interest payments by the Company to the holders of the 2007 Junior Subordinated Deferrable Debentures. Interest will be payable at 8.480% per annum through June 15, 2012, and thereafter at a floating rate of three-month LIBOR plus 295 basis points, reset quarterly. The proceeds of $200,000 from the sale of the 2007 Junior Subordinated Deferrable Debentures, after the deduction of commissions paid to the placement agents in the transaction and other expenses, were used by the Company to fund the purchase of Talbot Holdings Ltd. Debt issuance costs of $2,000 were deferred as an asset and are amortized to income over the five year optional redemption period.

During 2008 and 2009, the Company repurchased from an unaffiliated financial institution $60,200 principal amount of its 2007 Junior Subordinated Deferrable Debentures due 2037.

Future expected payments of principal on the2006 and 2007Junior Subordinated Deferrable Debentures are as follows:

2012	$	-
2013		-
2014		-
2015		-
2016 and thereafter		289,800
Total minimum future payments	$	289,800

• Credit facilities

(i)        $340,000 syndicated unsecured letter of credit facility, $60,000 bilateral unsecured letter of credit facility and $500,000 secured letter of credit facility

On March 12, 2007, the Company entered into a $500,000 five-year secured letter of credit facility, as subsequently amended on October 25, 2007,July 24, 2009, and March 12, 2010, which provides for letter of credit availability for Validus Re and the Company's other subsidiaries (the “Five Year Facility” and, together with the Company's then outstanding unsecured credit facility as replaced by the Three Year Facilities, as defined below, the “Credit Facilities”). The Credit Facilities were provided by a syndicate of commercial banks arranged by J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. On October 25, 2007, the Company entered into the First Amendment to the Credit Facilities to provide for, among other things, additional capacity to incur up to $100,000 under a new Funds at Lloyd's Letter of Credit Facility (as described below) to support underwriting capacity provided to Talbot 2002 Underwriting Ltd through Syndicate 1183 at Lloyd'sfor the 2008 and 2009 underwriting years of account. The amendment also modified certain provisions in the Credit Facilities in order to permit dividend payments on existing and future preferred and hybrid securities notwithstanding certain events of default.

On September 4, 2009, the Company announced that it had entered into Amendments to its $500,000 five-year secured letter of credit facility and its then outstanding $200,000 three-year unsecured facility and $100,000 Talbot FAL Facility to amend a specific investment restriction clause in order to permit the completion of the IPC Acquisition. The amendment also modified and updated certain pricing and covenant terms.

On March 12, 2010, the Company entered into a three-year $340,000 syndicated unsecured letter of credit facility and a $60,000 bilateral unsecured letter of credit facility which provide for letter of credit availability for Validus Re and the Company's other subsidiaries and revolving credit availability for the Company (the “Three Year Facilities”) (the full $400,000 of which is available for letters of credit and/or revolving loans).

As amended, the Credit Facilities contain covenants that include, among other things, (i) the requirement that the Company initially maintain a minimum level of consolidated net worth of at least 70% of consolidated net worth ($2,925,590) and, commencing with the end of the fiscal quarter ending December 31, 2009 to be increased quarterly by an amount equal to 50% of its consolidated net income (if positive) for such quarter plus 50% of any net proceeds received from any issuance of common shares during such quarter, (ii) the requirement that the Company maintain at all times a consolidated total debt to consolidated total capitalization ratio not greater than 0.35:1.00, and (iii) the requirement that Validus Re and any other material insurance subsidiaries maintain a financial strength rating by A.M. Best of not less than “B++” (Fair). For purposes of covenant compliance (i) “net worth is calculated with investments carried at amortized cost and (ii) “consolidated total debt” does not include the Company's junior subordinated deferrable debentures. The credit facilities also contain restrictions on our ability to pay dividends and other payments in respect of equity interests at any time that we are otherwise in default with respect to certain provisions under the credit facilities, make investments, incur debt at our subsidiaries, incur liens, sell assets and merge or consolidate with others.

On August 2, 2011, the Company announced that it had entered into Amendments to the Credit Facilities in order to modify certain provisions thereof, including definitions, affirmative covenants, negative covenants (including those relating to consolidations, mergers and sales of assets, indebtedness, liens, limitations on certain restrictions on subsidiaries and investments) and events of default, in each case, in order to reflect and permit the proposed exchange offer, the proposed second-step merger and the other proposed transactions contemplated by the Registration Statement on Form S-4 of the Company originally filed with the Securities Exchange Commission on July 25, 2011 (the “Exchange Offer Transactions”) in connection with its proposed acquisition of Transatlantic.

As of December 31, 2011, there was $333,179 in outstanding letters of credit under the Five Year Facility (December 31, 2010: $268,944) and $nil outstanding under the Three Year Facilities (December 31, 2010: $nil).

As of December 31, 2011 and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Credit Facilities.

(ii)        Talbot FAL Facility

On November 28, 2007, Talbot entered into a $100,000 standby Letter of Credit facility (the “Talbot FAL Facility”) to provide Funds at Lloyd's for the 2008 and 2009 underwriting years of account; this facility is guaranteed by the Company and is secured against the assets of Validus Re. The Talbot FAL Facility was provided by a syndicate of commercial banks arranged by Lloyds TSB Bank plc and ING Bank N.V., London Branch.

On November 19, 2009, the Company entered into an Amendment and Restatement of the Talbot FAL Facility to reduce the commitment from $100,000 to $25,000, and to extend the support to the 2010 and 2011 underwriting years of account.

On November 18, 2011, the Company entered into an Amendment and Restatement of the Talbot FAL Facility.

As amended, the Talbot FAL Facility contains affirmative covenants that include, among other things, (i) the requirement that the Company initially maintain a minimum level of consolidated net worth of at least ($2,589,615), and commencing with the end of the fiscal quarter ending December 31, 2011 to be increased quarterly by an amount equal to 50% of our consolidated net income (if positive) for such quarter plus 50% of any net proceeds received from any issuance of common shares during such quarter, and (ii) the requirement that we maintain at all times a consolidated total debt to consolidated total capitalization ratio not greater than 0.35:1.00.

The Talbot FAL Facility also contains restrictions on our ability to incur debt at our subsidiaries, incur liens, sell assets and merge or consolidate with others. Other than in respect of existing and future preferred and hybrid securities, the payment of dividends and other payments in respect of equity interests are not permitted at any time that we are in default with respect to certain provisions under the Credit Facilities. As of December 31, 2011 the Company had $25,000 (December 31, 2010: $25,000) in outstanding letters of credit under this facility.

As of December 31, 2011 and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Talbot FAL Facility.

(iii)        IPC Syndicated Facility and IPC Bi-Lateral Facility

IPC obtained letters of credit through the IPC Syndicated Facility and the IPC Bi-Lateral Facility (the “IPC Facilities”). In July 2009, certain terms of these facilities were amended including suspending IPC's ability to increase existing letters of credit or to issue new letters of credit. Effective March 31, 2010, the IPC Syndicated Facility was closed. As of December 31, 2011, $57,146 (December 31, 2010: $68,063) of outstanding letters of credit were issued under the IPC Bi-Lateral Facility.

As of December 31, 2011and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the IPC Bi-Lateral Facility.

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Reinsurance

12 Months Ended

Dec. 31, 2011

Reinsurance [Abstract]

Reinsurance

13.Reinsurance

The Company enters into reinsurance and retrocession agreements in order to mitigate its accumulation of loss, reduce its liability on individual risks, enable it to underwrite policies with higher limits, and increase its aggregate capacity. The cession of insurance and reinsurance does not legally discharge the Company from its primary liability for the full amount of the policies, and the Company is required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance or retrocession agreement. Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying liabilities.

(a) Effects of reinsurance on premiums written and earned

The effects of reinsurance on premiums written and earned for the years ended December 31, 2011, 2010 and 2009 are as follows:

	Year Ended December 31, 2011
	Validus Re				Talbot				Total
	Written		Earned		Written		Earned		Elimination		Written		Earned
Direct	$	-	$	-	$	510,200	$	480,432	$	-	$	510,200	$	480,432
Assumed		1,190,220		1,158,917		503,922		507,383		(79,651)		1,614,491		1,666,300
Ceded		(150,718)		(127,026)		(218,174)		(217,563)		79,651		(289,241)		(344,589)
Total	$	1,039,502	$	1,031,891	$	795,948	$	770,252	$	-	$	1,835,450	$	1,802,143
	Year Ended December 31, 2010
	Validus Re				Talbot				Total
	Written		Earned		Written		Earned		Elimination		Written		Earned
Direct	$	-	$	-	$	460,337	$	450,348	$	-	$	460,337	$	450,348
Assumed		1,101,239		1,127,249		520,736		503,021		(91,746)		1,530,229		1,630,270
Ceded		(63,147)		(76,049)		(258,081)		(243,446)		91,746		(229,482)		(319,495)
Total	$	1,038,092	$	1,051,200	$	722,992	$	709,923	$	-	$	1,761,084	$	1,761,123
	Year Ended December 31, 2009
	Validus Re				Talbot				Total
	Written		Earned		Written		Earned		Elimination		Written		Earned
Direct	$	-	$	-	$	459,771	$	427,280	$	-	$	459,771	$	427,280
Assumed		768,084		880,434		460,135		382,535		(66,749)		1,161,470		1,262,969
Ceded		(95,446)		(84,884)		(204,186)		(155,788)		66,749		(232,883)		(240,672)
Total	$	672,638	$	795,550	$	715,720	$	654,027	$	-	$	1,388,358	$	1,449,577

(b) Credit risk

The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers. The reinsurance program is generally placed with reinsurers whose rating, at the time of placement, was A- or better rated by Standard & Poor's or the equivalent with other rating agencies. Exposure to a single reinsurer is also controlled with restrictions dependent on rating. At December 31, 2011,99.4% of reinsurance recoverables (which includes loss reserves recoverable and recoverables on paid losses) were from reinsurers rated A- or better and included $125,298of IBNR recoverable (December 31, 2010: $146,519). Reinsurance recoverables by reinsurer are as follows:

	December 31, 2011				December 31, 2010
	Reinsurance Recoverable		% of Total		Reinsurance Recoverable		% of Total
Top 10 reinsurers	$	323,315		69.8%	$	222,420		71.5%
Other reinsurers' balances > $1 million		132,417		28.6%		80,221		25.8%
Other reinsurers' balances < $1 million		7,248		1.6%		8,489		2.7%
Total	$	462,980		100.0%	$	311,130		100.0%

	December 31, 2011
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	77,419	24.0%
Allianz	AA-		59,764	18.5%
Hannover Re	AA-		39,762	12.3%
Everest Re	A+		38,618	11.9%
Transatlantic Re	A+		21,344	6.6%
Tokio Millennium Re Ltd	AA-		20,432	6.3%
Fully collateralized reinsurers	NR		18,140	5.6%
Odyssey Reinsurance Company	A-		16,737	5.2%
Platinum Underwriters	A		15,833	4.9%
Munich Re	AA-		15,266	4.7%
Total		$	323,315	100.0%

	December 31, 2010
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	60,716	27.2%
Hannover Re	AA-		32,392	14.6%
Fully collateralized reinsurers	NR		23,750	10.7%
Montpelier Re	A-		20,000	9.0%
Munich Re	AA-		17,411	7.8%
Everest Re	A+		16,611	7.5%
Allianz	AA		14,184	6.4%
Transatlantic Re	A+		13,758	6.2%
Tokio Millennium Re	AA		11,980	5.4%
Platinum Re	A		11,618	5.2%
Total		$	222,420	100.0%

At December 31, 2011 and December 31, 2010, the provision for uncollectible reinsurance relating to losses recoverable was $6,821and $5,652, respectively. To estimate the provision for uncollectible reinsurance recoverable, the reinsurance recoverable is first allocated to applicable reinsurers. This determination is based on a process rather than an estimate, although an element of judgment is applied. As part of this process, ceded IBNR is allocated by reinsurer. Of the $462,980 reinsurance recoverable at December 31, 2011, $18,140was fully collateralized (December 31, 2010: $23,750).

The Company uses a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are reinsurance recoverable balances by reinsurer and default factors used to determine the portion of a reinsurer's balance deemed to be uncollectible. Default factors require considerable judgment and are determined using the current rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions.

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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Reinsurance recoverables by reinsurer
Reinsurance recoverable	$ 462,980	$ 311,130
Percentage of total	100.00%	100.00%
Percentage of top 10 reinsurers reinsurance recoverable	100.00%	100.00%
Reinsurance (Textuals) [Abstract]
Incurred but not reported recoverable	125,298	146,519
Provision for uncollectible reinsurance relating to losses recoverable	6,821	5,652
A- or better rating [Member]
Reinsurance (Textuals) [Abstract]
Percentage of total	99.40%
Top 10 reinsurers [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	323,315	222,420
Percentage of total	69.80%	71.50%
Top 10 reinsurers [Member] | Lloyd's Syndicates [Member] | A+ [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	77,419	60,716
Percentage of top 10 reinsurers reinsurance recoverable	24.00%	27.20%
Top 10 reinsurers [Member] | Fully Collateralized Reinsurers [Member] | NR [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	18,140	23,750
Percentage of top 10 reinsurers reinsurance recoverable	5.60%	10.70%
Top 10 reinsurers [Member] | Montpelier Re [Member] | A- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		20,000
Percentage of top 10 reinsurers reinsurance recoverable		9.00%
Top 10 reinsurers [Member] | Hannover Re [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	39,762	32,392
Percentage of top 10 reinsurers reinsurance recoverable	12.30%	14.60%
Top 10 reinsurers [Member] | Munich Re [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	15,266	17,411
Percentage of top 10 reinsurers reinsurance recoverable	4.70%	7.80%
Top 10 reinsurers [Member] | Transatlantic Re [Member] | A+ [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	21,344	13,758
Percentage of top 10 reinsurers reinsurance recoverable	6.60%	6.20%
Top 10 reinsurers [Member] | Everest Re [Member] | A+ [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	38,618	16,611
Percentage of top 10 reinsurers reinsurance recoverable	11.90%	7.50%
Top 10 reinsurers [Member] | Tokio Millennium Re Ltd [Member] | AA [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		11,980
Percentage of top 10 reinsurers reinsurance recoverable		5.40%
Top 10 reinsurers [Member] | Tokio Millennium Re Ltd [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	20,432
Percentage of top 10 reinsurers reinsurance recoverable	6.30%
Top 10 reinsurers [Member] | Allianz [Member] | AA [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		14,184
Percentage of top 10 reinsurers reinsurance recoverable		6.40%
Top 10 reinsurers [Member] | Allianz [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	59,764
Percentage of top 10 reinsurers reinsurance recoverable	18.50%
Top 10 reinsurers [Member] | Platinum Re [Member] | A [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	15,833	11,618
Percentage of top 10 reinsurers reinsurance recoverable	4.90%	5.20%
Top 10 reinsurers [Member] | Odyssey Reinsurance Company [Member] | A- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	16,737
Percentage of top 10 reinsurers reinsurance recoverable	5.20%
Other reinsurers' balances > $1 million
Reinsurance recoverables by reinsurer
Reinsurance recoverable	132,417	80,221
Percentage of total	28.60%	25.80%
Other reinsurers' balances less than $1 million
Reinsurance recoverables by reinsurer
Reinsurance recoverable	$ 7,248	$ 8,489
Percentage of total	1.60%	2.70%

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Investment in AlphaCat Re 2011, Ltd.

12 Months Ended

Dec. 31, 2011

Equity method investment [Abstract]

Investment in AlphaCat Re 2011, Ltd.

8.Investment in AlphaCat Re 2011, Ltd.

On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, a special purpose “sidecar” reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance.  At the time of formation, Validus Re had an equity interest in AlphaCat Re 2011 and as Validus Re held a majority of AlphaCat Re 2011's outstanding voting rights, the financial statements of AlphaCat Re 2011 were included in the consolidated financial statements of the Company.

On December 23, 2011, the Company completed a secondary offering of common shares of AlphaCat Re 2011to third party investors, along with a partial sale of Validus Re's common shares to one of the third party investors.As a result of these transactions, Validus Re maintained an equity interest in AlphaCat Re 2011; however its share of AlphaCat Re 2011's outstanding voting rights decreased to 43.7%.  As a result of the Company's voting interest falling below 50%, the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 have been derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 is treated as an equity method investment as at December 31, 2011. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 is recorded in the Consolidated Statements of Operations and Comprehensive Income as net income attributable to noncontrolling interest.

The following table presents a reconciliation of thebeginning and ending noncontrolling interestand investment in non-consolidated affiliate balances for the year ended December 31, 2011:

		Year Ended December 31, 2011
		Noncontrolling interest		Investment in non-consolidated affiliate
As at December 31, 2010		$	-	$	-
	Initial purchase of shares		134,301		50,000
	Secondary purchase of shares		60,000		-
	Purchase (sale) of shares		11,000		(11,000)
	Gain on sale of shares		-		553
	Accretion of discount on preferred shares		233		-
	Initial transaction costs		(2,304)		-
	Net income		21,793		11,642
	Derecognition of noncontrolling interest		(225,023)		-
	Fair value adjustment		-		1,836
As at December 31, 2011		$	-	$	53,031

The following table presents the Company's equity investment in AlphaCat Re 2011 at December 31, 2011:
	Investment in non-consolidated affiliate
		Investment		Voting ownership %		Equity ownership %		Carrying value
AlphaCat Re 2011	$	41,389		43.7%		22.3%	$	53,031
The following table presents certain summarized financial information of the investee as a whole at December 31, 2011 and for the year ended:
	Combined investee summarized financial data
		Total assets		Total liabilities		Total revenue		Net income
AlphaCat Re 2011	$	293,691	$	17,973	$	50,640	$	33,435

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Business combination (Supplemental proforma information) (Details) (Ipc Holdings Ltd [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2009
Ipc Holdings Ltd [Member]
Supplemental Pro forma information
Gross premiums written	$ 2,008,578
Reinsurance premiums ceded	(239,412)
Net premiums written	1,769,166
Change in unearned premiums	(57,338)
Net premiums earned	1,711,828
Net investment income	163,944
Net realized (losses) on investments	(4,717)
Net unrealized gains on investments	189,789
Other income	4,603
Realized gain on repurchase of debentures	4,444
Foreign exchange gains	4,294
Total revenue	2,074,185
Losses and loss expenses	556,550
Policy acquisition costs	289,600
General and administrative expenses	209,510
Share compensation expenses	33,751
Finance expenses	44,513
Total expense	1,133,924
Net income before taxes	940,261
Tax benefit (expense)	3,759
Net income	$ 944,020
Basic earnings per share	$ 10.01
Diluted earnings per share	$ 9.72

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Statutory and regulatory requirements (Details) (Bermuda, USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Validus Re
Statutory And Regulatory Requirements [Line Items]
Actual statutory capital and surplus	$ 3,304,837	$ 4,035,000
Actual share capital	2,670,447	2,667,249
Actual relevant assets	4,536,108	3,869,217
IPC Re Limited
Statutory And Regulatory Requirements [Line Items]
Actual statutory capital and surplus	125,000	296,854
Actual share capital	125,000	250,000
Actual relevant assets	146,591	512,509
AlphaCat Reinsurance, Ltd.
Statutory And Regulatory Requirements [Line Items]
Actual statutory capital and surplus	133	123
Actual share capital	120	120
Actual relevant assets	124,516	94,870
Talbot Insurance (Bermuda) Ltd.
Statutory And Regulatory Requirements [Line Items]
Actual statutory capital and surplus	457,374	432,281
Actual share capital	62,731	62,731
Actual relevant assets	$ 680,814	$ 520,671

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Investments

12 Months Ended

Dec. 31, 2011

Investments [Abstract]

Investments

7. Investments

The Company's investments in fixed maturities are classified as trading and carried at fair value, with related net unrealized gains or losses included in earnings. The Company has adopted all authoritative guidance in effect as of the balance sheet date regarding certain market conditions that allow for fair value measurements that incorporate unobservable inputs where active market transaction based measurements are unavailable.

(a) Classification within the fair value hierarchy

     Under U.S. GAAP, a company must determine the appropriate level in the fair value hierarchy for each fair value measurement. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or liability, into three levels. It gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.       

    Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement. Level 3 inputs are unobservable inputs for the asset or liability.

     Level 1 primarily consists of financial instruments whose value is based on quoted market prices or alternative indices including overnight repos and commercial paper. Level 2 includes financial instruments that are valued through independent external sources using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. The Company performs internal procedures on the valuations received from independent external sources. Financial instruments in this category include U.S. and U.K. Treasuries, sovereign debt, corporate debt, catastrophe bonds, U.S. agency and non-agency mortgage and asset-backed securities and bank loans. Level 3 includes financial instruments that are valued using market approach and income approach valuation techniques. These models incorporate both observable and unobservable inputs. An investment in a fund of hedge funds and a private equity investment are the only financial instruments in this category as at December 31, 2011.

     The Company's management and external investment advisors had noted illiquidity and dislocation in the non-Agency RMBS market for the period September 30, 2008through to June 30, 2010. During this period, the Company identified certain non-Agency RMBS securities in its portfolio trading in inactive markets ("identified RMBS securities"). In order to gauge market activity for the identified RMBS securities, the Company, with assistance from external investment advisors, reviewed the pricing sources for each security in the portfolio. The Company utilized various pricing vendors to obtain market pricing information for investment securities.

     Consistent with U.S. GAAP, market approach fair value measurements for securities trading in inactive markets are not determinative. In weighing the fair value measurements resulting from market approach and income approach valuation techniques, the Company had previously placed less reliance on the market approach fair value measurements. The income approach valuation technique determines the fair value of each security on the basis of contractual cash flows, discounted using a risk-adjusted discount rate. As the income approach valuation technique incorporates both observable and significant unobservable inputs, the securities were included as Level 3 assets with respect to the fair value hierarchy. The foundation for the income approach was the amount and timing of future cash flows.

During the three month period ended September 30, 2010, the Company, with assistance from external investment advisors, determined that market activity had increased for the identified RMBS securities. Therefore, a market approach valuation technique was adopted for the identified RMBS securities. Because the market approach incorporated observable inputs, the identified RMBS securities are classified as Level 2 with respect to the fair value hierarchy at September 30, 2010. During the three months ended December 31, 2010, the Company liquidated substantially all of the identified RMBS securities which had previously been classified as Level 3 securities.

Other investments consist of an investment in a fund of hedge funds, a private equity investment and a deferred compensation trust held in mutual funds. The fund of hedge funds is a side pocket valued at $5,627at December 31, 2011. While a redemption request has been submitted, the timing of receipt of proceeds on the side pocket is unknown. The fund administrator provides monthly reported net asset values ("NAV") with a one-month delay in its valuation. As a result, the fund administrator'sNovember 30, 2011NAV was used as a partial basis for fair value measurement in the Company's December 31, 2011 balance sheet. The fund manager provides an estimate of the performance of the fund for the following month based on the estimated performance provided from the underlying third-party funds. The Company utilizes the fund investment manager's primary market approach estimated NAV that incorporates relevant valuation sources on a timely basis. As this valuation technique incorporates both observable and significant unobservable inputs, the fund of hedge funds is classified as a Level 3 asset. To determine the reasonableness of the estimated NAV, the Company assesses the variance between the estimated NAV and the one-month delayed fund administrator's NAV. Immaterial variances are recorded in the following reporting period.

	At December 31, 2011, the Company's investments were allocated between Levels 1, 2 and 3 as follows:
		Level 1		Level 2		Level 3		Total
U.S. Government and Government Agency		$	-	$	1,182,393	$	-	$	1,182,393
Non-U.S. Government and Government Agency			-		449,358		-		449,358
States, municipalities, political subdivision			-		26,291		-		26,291
Agency residential mortgage-backed securities			-		468,054		-		468,054
Non-Agency residential mortgage-backed securities			-		32,706		-		32,706
U.S. corporate			-		1,329,758		-		1,329,758
Non-U.S. corporate			-		579,675		-		579,675
Bank loans			-		467,256		-		467,256
Catastrophe bonds			-		29,952		-		29,952
Asset-backed securities			-		328,299		-		328,299
Commercial mortgage-backed securities			-		403		-		403
Total fixed maturities			-		4,894,145		-		4,894,145
Short-term investments			257,854		22,337		-		280,191
Fund of hedge funds / Private equity investment			-		-		8,880		8,880
Mutual funds			-		7,907		-		7,907
Total		$	257,854	$	4,924,389	$	8,880	$	5,191,123
	At December 31, 2010, the Company's investments were allocated between Levels 1, 2 and 3 as follows:
		Level 1		Level 2		Level 3		Total
U.S. Government and Government Agency		$	-	$	1,677,166	$	-	$	1,677,166
Non-U.S. Government and Government Agency			-		554,199		-		554,199
States, municipalities, political subdivision			-		26,285		-		26,285
Agency residential mortgage-backed securities			-		445,859		-		445,859
Non-Agency residential mortgage-backed securities			-		56,470		-		56,470
U.S. corporate			-		1,308,406		-		1,308,406
Non-U.S. corporate			-		502,067		-		502,067
Bank loans			-		52,566		-		52,566
Catastrophe bonds			-		58,737		-		58,737
Asset-backed securities			-		123,569		-		123,569
Commercial mortgage-backed securities			-		18,543		-		18,543
Total fixed maturities			-		4,823,867		-		4,823,867
Short-term investments			259,261		14,253		-		273,514
Fund of hedge funds			-		-		12,892		12,892
Mutual funds			-		8,586		-		8,586
Total		$	259,261	$	4,846,706	$	12,892	$	5,118,859

AtDecember 31, 2011, Level 3 investments totaled $8,880,representing 0.2%of total investments measured at fair value on a recurring basis. At December 31, 2010, Level 3 investments totaled $12,892 representing 0.3% of total investments measured at fair value on a recurring basis.

The following tables present a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs as at December 31, 2011 and 2010:

	Year Ended December 31, 2011
	Fixed maturity investments		Other investments		Total fair market value
Level 3 investments - Beginning of period	$	-	$	12,892	$	12,892
Purchases		-		3,253		3,253
Sales		-		(7,220)		(7,220)
Issuances		-		-		-
Settlements		-		-		-
Realized gains		-		697		697
Unrealized (losses)		-		(742)		(742)
Amortization		-		-		-
Transfers		-		-		-
Level 3 investments - End of period	$	-	$	8,880	$	8,880
	Year Ended December 31, 2010
	Fixed maturity investments		Other investments		Total fair market value
Level 3 investments - Beginning of period	$	85,336	$	25,670	$	111,006
Purchases		-		-		-
Sales		-		(13,850)		(13,850)
Issuances		-		-		-
Settlements		-		-		-
Realized gains		-		662		662
Unrealized (losses)		(6,307)		410		(5,897)
Amortization		(11,841)		-		(11,841)
Transfers		(67,188)		-		(67,188)
Level 3 investments - End of period	$	-	$	12,892	$	12,892

(b) Net investment income
Net investment income was derived from the following sources:
	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Fixed maturities and short-term investments	$	111,983	$	132,669	$	117,631
Cash and cash equivalents		7,285		8,180		3,374
Securities lending income		58		200		772
Total gross investment income		119,326		141,049		121,777
Investment expenses		(7,030)		(6,946)		(3,004)
Net investment income	$	112,296	$	134,103	$	118,773

(c) Fixed maturity and short-term investments
	The following represents an analysis of net realized gains (losses) and the change in net unrealized (losses) gains on
investments:
		Years Ended
		December 31,		December 31,		December 31,
		2011		2010		2009
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains		$	45,026	$	76,920	$	33,063
Gross realized (losses)			(16,494)		(44,422)		(44,606)
Net realized gains (losses) on investments			28,532		32,498		(11,543)
Net unrealized gains (losses) on securities lending			39		(1,009)		6,978
Change in net unrealized (losses) gains on investments			(20,030)		46,961		77,818
Total net realized gains (losses) and change in
net unrealized (losses) gains on investments		$	8,541	$	78,450	$	73,253

The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2011 were as follows:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Government and Government Agency	$	1,170,810	$	11,630	$	(47)	$	1,182,393
Non-U.S. Government and Government
Agency		446,258		9,173		(6,073)		449,358
States, municipalities, political subdivision		25,715		586		(10)		26,291
Agency residential mortgage-backed
securities		451,751		16,622		(319)		468,054
Non-Agency residential mortgage-backed
securities		39,134		143		(6,571)		32,706
U.S. corporate		1,314,375		24,932		(9,549)		1,329,758
Non-U.S. corporate		577,743		6,320		(4,388)		579,675
Bank loans		475,770		2,435		(10,949)		467,256
Catastrophe bonds		29,250		702		-		29,952
Asset-backed securities		328,497		900		(1,098)		328,299
Commercial mortgage-backed securities		402		1		-		403
Total fixed maturities		4,859,705		73,444		(39,004)		4,894,145
Total short-term investments		280,299		1		(109)		280,191
Total other investments		15,002		1,785		-		16,787
Total	$	5,155,006	$	75,230	$	(39,113)	$	5,191,123
The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2010 were as follows:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Government and Government Agency	$	1,665,050	$	20,134	$	(8,018)	$	1,677,166
Non-U.S. Government and Government
Agency		550,759		11,635		(8,195)		554,199
States, municipalities, political subdivision		26,365		90		(170)		26,285
Agency residential mortgage-backed
securities		430,873		15,491		(505)		445,859
Non-Agency residential mortgage-backed
securities		62,020		64		(5,614)		56,470
U.S. corporate		1,288,078		28,526		(8,198)		1,308,406
Non-U.S. corporate		497,689		7,939		(3,561)		502,067
Bank loans		52,612		58		(104)		52,566
Catastrophe bonds		56,991		2,042		(296)		58,737
Asset-backed securities		123,354		605		(390)		123,569
Commercial mortgage-backed securities		18,246		299		(2)		18,543
Total fixed maturities		4,772,037		86,883		(35,053)		4,823,867
Total short-term investments		273,444		70		-		273,514
Total other investments		18,392		3,086		-		21,478
Total	$	5,063,873	$	90,039	$	(35,053)	$	5,118,859

The following table sets forth certain information regarding the investment ratings of the Company's fixed maturities portfolio as at December 31, 2011 and 2010. Investment ratings are the lower of Moody's or Standard & Poor's rating for each investment security, presented in Standard & Poor's equivalent rating. For investments where Moody's and Standard & Poor's ratings are not available, Fitch ratings are used and presented in Standard & Poor's equivalent rating.

	December 31, 2011				December 31, 2010
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
AAA	$	882,912		18.0%	$	2,946,514		61.2%
AA		2,077,981		42.5%		428,972		8.9%
A		1,078,793		22.0%		1,077,389		22.3%
BBB		345,091		7.1%		219,523		4.6%
Investment grade		4,384,777		89.6%		4,672,398		97.0%
BB		254,409		5.2%		74,475		1.5%
B		231,420		4.7%		45,660		0.9%
CCC		12,578		0.3%		29,219		0.6%
CC		4,605		0.1%		-		0.0%
D/NR		6,356		0.1%		2,115		0.0%
Non-Investment grade		509,368		10.4%		151,469		3.0%
Total Fixed Maturities	$	4,894,145		100.0%	$	4,823,867		100.0%

The amortized cost and estimated fair value amounts for fixed maturity securities held at December 31, 2011 and 2010 are shown by contractual maturity. Actual maturity may differ from contractual maturity because certain borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

	December 31, 2011				December 31, 2010
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	520,631	$	523,107	$	424,327	$	426,167
Due after one year through five years		3,160,647		3,186,711		3,498,334		3,540,408
Due after five years through ten years		350,459		346,654		207,918		206,317
Due after ten years		8,184		8,211		6,965		6,534
		4,039,921		4,064,683		4,137,544		4,179,426
Asset-backed and mortgage-backed
securities		819,784		829,462		634,493		644,441
Total	$	4,859,705	$	4,894,145	$	4,772,037	$	4,823,867

The Company has a five year, $500,000 secured letter of credit facility provided by a syndicate of commercial banks (the “Five Year Facility”). At December 31, 2011, approximately $333,179 (December 31, 2010: $268,944) of letters of credit were issued and outstanding under this facility for which$392,822 of investments were pledged as collateral (December 31, 2010: $325,532). In 2007, the Company entered into a $100,000 standby letter of credit facility which provides Funds at Lloyd's (the “Talbot FAL Facility”).  On November 19, 2009, the Company entered into a Second Amendment to the Talbot FAL Facility to reduce the commitment from $100,000 to $25,000. At December 31, 2011,$25,000 (December 31, 2010:$25,000) of letters of credit were issued and outstanding under the Talbot FAL Facility for which $44,623 of investments were pledged as collateral (December 31, 2010:$45,504). In addition, $2,129,570 of investments were held in trust at December 31, 2011 (December 31, 2010:$1,729,631). Of those, $1,686,586 were held in trust for the benefit of Talbot's cedants and policyholders, and to facilitate the accreditation of Talbot as an alien insurer/reinsurer by certain regulators (December 31, 2010:$1,489,243).

The Company assumed two letters of credit facilities as part of the acquisition of IPC Holdings, Ltd. (the “IPC Acquisition”): a Credit Facility between IPC, IPCRe Limited, the Lenders party thereto and Wachovia Bank, National Association (the “IPC Syndicated Facility”) and a Letters of Credit Master Agreement between Citibank N.A. and IPCRe Limited (the “IPC Bi-Lateral Facility”). At March 31, 2010,the IPC Syndicated Facilitywas closed. At December 31, 2011, the IPC Bi-Lateral Facility had $57,146(December 31, 2010: $68,063) letters of credit issued and outstanding for which $105,428(December 31, 2010: $105,310) of investments were held in an associated collateral account.

• Securities lending

The Company participates in a securities lending program whereby certain securities from its portfolio are loaned to third parties for short periods of time through a lending agent. The Company retains all economic interest in the securities it lends and receives a fee from the borrower for the temporary use of the securities. Collateral in the form of cash, government securities and letters of credit is required at a rate of 102% of the market value of the loaned securities and is held by a third party. As at December 31, 2011, the Company had $8,286(December 31, 2010: $22,566) in securities on loan. During the year endedDecember 31, 2011, the Company recorded a$39unrealized gain on this collateral in its Statements of Operations (December 31, 2010: unrealized loss($1,009)).

Securities lending collateral reinvested includes corporate floating rate securities and overnight repos with an average reset period of 3.9days(December 31, 2010:17.6 days). As at December 31, 2011, the securities lending collateral reinvested by the Company in connection with its securities lending program was allocated between Levels 1, 2 and 3 as follows:

		Level 1		Level 2		Level 3		Total
Corporate		$	-	$	255	$	-	$	255
Cash and cash equivalents			7,481		-		-		7,481
Total		$	7,481	$	255	$	-	$	7,736
	As at December 31, 2010, the securities lending collateral reinvested by the Company in connection with its
securities lending program was allocated between Levels 1, 2 and 3 as follows:
		Level 1		Level 2		Level 3		Total
Corporate		$	-	$	229	$	-	$	229
Asset-backed securities			-		5,005		-		5,005
Short-term investments			2,644		14,450		-		17,094
Total		$	2,644	$	19,684	$	-	$	22,328

The following table sets forth certain information regarding the investment ratings of the Company's securities lending collateral reinvested as at December 31, 2011 and 2010. Investment ratings are the lower of Moody's or Standard & Poor's rating for each investment security, presented in Standard & Poor's equivalent rating. For investments where Moody's and Standard & Poor's ratings are not available, Fitch ratings are used and presented in Standard & Poor's equivalent rating.

	December 31, 2011				December 31, 2010
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
AAA	$	-		0.0%	$	5,454		24.4%
AA+		-		0.0%		11,003		49.3%
AA		-		0.0%		-		0.0%
AA-		-		0.0%		2,998		13.5%
A+		-		0.0%		-		0.0%
A		-		0.0%		-		0.0%
NR		255		3.3%		229		1.0%
		255		3.3%		19,684		88.2%
NR- Short-term investments (a)		7,481		96.7%		2,644		11.8%
Total	$	7,736		100.0%	$	22,328		100.0%
(a) This amount relates to certain short-term investments with short original maturities which are generally not rated.

The amortized cost and estimated fair value amounts for securities lending collateral reinvested by the Company at December 31, 2011 and 2010 are shown by contractual maturity below. Actual maturity may differ from contractual maturity because certain borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

	December 31, 2011				December 31, 2010
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	7,462	$	7,481	$	17,093	$	17,094
Due after one year through five years		1,000		255		6,000		5,234
Total	$	8,462	$	7,736	$	23,093	$	22,328

XML

Derivative instruments used in hedging activities

12 Months Ended

Dec. 31, 2011

Derivative instruments used in hedging activities [Abstract]

Derivative instruments used in hedging activities

9. Derivative Instruments Used in Hedging Activities

The Company enters into derivative instruments for risk management purposes, specifically to hedge unmatched foreign currency exposures. During the three months ended June 30, 2011, the Company entered into a foreign currency forward exchange contract to mitigate the risk of foreign currency exposure of unpaid losses denominated in Japanese Yen.  The Yen foreign currency forward contract was renewed during the three months ended December 31, 2011. During the three months ended March 31, 2011, the Company entered into three foreign currency forward exchange contracts to mitigate the risk of fluctuations in the Euro and Australian dollar to U.S. dollar rates.  Two of the contracts were renewed during the three months ended December 31, 2011. During the three months ended December 31, 2011, the Company entered into an additional foreign currency forward contract to mitigate the risk of fluctuations in the Euro to U.S. dollar rates.  During the year ended December 31, 2010, the Company entered into a foreign currency forward contract to mitigate the risk of foreign currency exposure of unpaid losses denominated in Chilean Pesos (CLP). The CLP foreign currency forward contract was renewed during the three months ended December 31, 2011.  The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at December 31, 2011:

			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contracts	$	75,323	Other assets	$	476	Accounts payable and accrued expenses	$	-
The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at December 31, 2010:
			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contract	$	75,000	Other assets	$	2,905	Accounts payable and accrued expenses	$	-

(a) Classification within the fair value hierarchy

As described in Note 7 “Investments”, under U.S. GAAP, a company must determine the appropriate level in the fair value hierarchy for each fair value measurement. The assumptions used within the valuation are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Accordingly, these derivatives were classified within Level 2 of the fair value hierarchy.

(b) Derivative instruments designated as a fair value hedge

The Company designates its derivative instruments as fair value hedges and formally and contemporaneously documents all relationships between the hedging instruments and hedged items and links the hedging derivatives to specific assets and liabilities.  The Company assesses the effectiveness of the hedges, both at inception and on an on-going basis and determines whether the hedgesare highly effective in offsetting changes in fair value of the linked hedged items.

The following table provides the total impact on earnings relating to the derivative instruments formally designated as fair value hedges along with the impact of the related hedged items for the years endedDecember 31, 2011 and 2010:

		Year ended December 31, 2011
Derivatives designated as fair value hedges and related hedged item:	Location of gain (loss) recognized in income	Amount of gain (loss) recognized in income on derivatives		Amount of gain (loss) recognized on hedged items recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivatives (ineffective portion)
Foreign exchange	Foreign exchange gain (loss)	$	(3,994)	$	3,994	$	-
		Year ended December 31, 2010
Derivatives designated as fair value hedges and related hedged item:	Location of gain (loss) recognized in income	Amount of gain (loss) recognized in income on derivatives		Amount of gain (loss) recognized on hedged items recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivatives (ineffective portion)
Foreign exchange	Foreign exchange gain (loss)	$	2,905	$	(2,905)	$	-

XML

Premiums receivable

12 Months Ended

Dec. 31, 2011

Premiums Receivable Disclosure [Abstract]

Premiums receivable

10. Premiums receivable

Premiums receivable are composed of premiums in the course of collection, net of commissions and brokerage, and premiums accrued but unbilled, net of commissions and brokerage. The following is a breakdown of the components of receivables at December 31, 2011 and 2010:

	Premiums		Premiums
	in course		accrued
	of collection		but unbilled		Total
Balance as at December 31, 2010	$	118,342	$	450,419	$	568,761
Change during 2011		56,769		20,824		77,593
Balance as at December 31, 2011	$	175,111	$	471,243	$	646,354
Balance as at December 31, 2009	$	243,930	$	307,686	$	551,616
Change during 2010		(125,588)		142,733		17,145
Balance as at December 31, 2010	$	118,342	$	450,419	$	568,761

XML

Investments (Fair value hierarchy) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Allocation of investments
Total fixed maturities	$ 4,894,145	$ 4,823,867
Short-term investments	280,191	273,514
Other investments	16,787	21,478
Recurring [Member]
Allocation of investments
Total fixed maturities	4,894,145	4,823,867
Short-term investments	280,191	273,514
Total	5,191,123	5,118,859
Recurring [Member] | U.S. Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	1,182,393	1,677,166
Recurring [Member] | Non-US Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	449,358	554,199
Recurring [Member] | States, municipalities, political subdivision [Member]
Allocation of investments
Total fixed maturities	26,291	26,285
Recurring [Member] | Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	468,054	445,859
Recurring [Member] | Non-Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	32,706	56,470
Recurring [Member] | U.S. corporate [Member]
Allocation of investments
Total fixed maturities	1,329,758	1,308,406
Recurring [Member] | Non-U.S. corporate [Member]
Allocation of investments
Total fixed maturities	579,675	502,067
Recurring [Member] | Bank loans [Member]
Allocation of investments
Total fixed maturities	467,256	52,566
Recurring [Member] | Catastrophe bonds [Member]
Allocation of investments
Total fixed maturities	29,952	58,737
Recurring [Member] | Asset-backed securities [Member]
Allocation of investments
Total fixed maturities	328,299	123,569
Recurring [Member] | Commercial mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	403	18,543
Recurring [Member] | Fund of hedge funds / Private equity [Member]
Allocation of investments
Other investments	8,880
Recurring [Member] | Fund of hedge funds [Member]
Allocation of investments
Other investments		12,892
Recurring [Member] | Mutual funds [Member]
Allocation of investments
Other investments	7,907	8,586
Recurring [Member] | Level 1 [Member]
Allocation of investments
Total fixed maturities	0	0
Short-term investments	257,854	259,261
Total	257,854	259,261
Recurring [Member] | Level 1 [Member] | U.S. Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Non-US Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | States, municipalities, political subdivision [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Non-Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | U.S. corporate [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Non-U.S. corporate [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Bank loans [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Catastrophe bonds [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Asset-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Commercial mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 1 [Member] | Fund of hedge funds / Private equity [Member]
Allocation of investments
Other investments	0
Recurring [Member] | Level 1 [Member] | Fund of hedge funds [Member]
Allocation of investments
Other investments		0
Recurring [Member] | Level 1 [Member] | Mutual funds [Member]
Allocation of investments
Other investments	0	0
Recurring [Member] | Level 2 [Member]
Allocation of investments
Total fixed maturities	4,894,145	4,823,867
Short-term investments	22,337	14,253
Total	4,924,389	4,846,706
Recurring [Member] | Level 2 [Member] | U.S. Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	1,182,393	1,677,166
Recurring [Member] | Level 2 [Member] | Non-US Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	449,358	554,199
Recurring [Member] | Level 2 [Member] | States, municipalities, political subdivision [Member]
Allocation of investments
Total fixed maturities	26,291	26,285
Recurring [Member] | Level 2 [Member] | Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	468,054	445,859
Recurring [Member] | Level 2 [Member] | Non-Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	32,706	56,470
Recurring [Member] | Level 2 [Member] | U.S. corporate [Member]
Allocation of investments
Total fixed maturities	1,329,758	1,308,406
Recurring [Member] | Level 2 [Member] | Non-U.S. corporate [Member]
Allocation of investments
Total fixed maturities	579,675	502,067
Recurring [Member] | Level 2 [Member] | Bank loans [Member]
Allocation of investments
Total fixed maturities	467,256	52,566
Recurring [Member] | Level 2 [Member] | Catastrophe bonds [Member]
Allocation of investments
Total fixed maturities	29,952	58,737
Recurring [Member] | Level 2 [Member] | Asset-backed securities [Member]
Allocation of investments
Total fixed maturities	328,299	123,569
Recurring [Member] | Level 2 [Member] | Commercial mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	403	18,543
Recurring [Member] | Level 2 [Member] | Fund of hedge funds / Private equity [Member]
Allocation of investments
Other investments	0
Recurring [Member] | Level 2 [Member] | Fund of hedge funds [Member]
Allocation of investments
Other investments		0
Recurring [Member] | Level 2 [Member] | Mutual funds [Member]
Allocation of investments
Other investments	7,907	8,586
Recurring [Member] | Level 3 [Member]
Allocation of investments
Total fixed maturities	0	0
Short-term investments	0	0
Total	8,880	12,892
Other Details
Percentage of total investments measured at fair value on recurring basis	0.20%	0.30%
Recurring [Member] | Level 3 [Member] | U.S. Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Non-US Government and Government Agency [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | States, municipalities, political subdivision [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Non-Agency residential mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | U.S. corporate [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Non-U.S. corporate [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Bank loans [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Catastrophe bonds [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Asset-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Commercial mortgage-backed securities [Member]
Allocation of investments
Total fixed maturities	0	0
Recurring [Member] | Level 3 [Member] | Fund of hedge funds / Private equity [Member]
Allocation of investments
Other investments	8,880
Recurring [Member] | Level 3 [Member] | Fund of hedge funds [Member]
Allocation of investments
Other investments		12,892
Recurring [Member] | Level 3 [Member] | Mutual funds [Member]
Allocation of investments
Other investments	$ 0	$ 0

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Reinsurance (Effects on premiums written and earned) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Written:
Direct premiums written													$ 510,200	$ 460,337	$ 459,771
Assumed premiums written													1,614,491	1,530,229	1,161,470
Reinsurance premiums ceded	(16,489)	(30,586)	(132,346)	(109,820)	(35,376)	(35,641)	(67,726)	(90,739)	(30,393)	(67,687)	(62,291)	(72,512)	(289,241)	(229,482)	(232,883)
Net premiums written	261,790	360,543	473,041	740,076	223,355	308,399	449,135	780,195	224,896	263,341	362,741	537,380	1,835,450	1,761,084	1,388,358
Earned:
Direct premiums earned													480,432	450,348	427,280
Assumed premiums earned													1,666,300	1,630,270	1,262,969
Ceded premiums earned													(344,589)	(319,495)	(240,672)
Net premiums earned	488,346	458,624	425,640	429,533	432,811	432,674	437,944	457,694	427,901	374,717	328,200	318,759	1,802,143	1,761,123	1,449,577
Validus Re [Member]
Written:
Direct premiums written													0	0	0
Assumed premiums written													1,190,220	1,101,239	768,084
Reinsurance premiums ceded													(150,718)	(63,147)	(95,446)	[1]
Net premiums written													1,039,502	1,038,092	672,638	[1]
Earned:
Direct premiums earned													0	0	0
Assumed premiums earned													1,158,917	1,127,249	880,434
Ceded premiums earned													(127,026)	(76,049)	(84,884)
Net premiums earned													1,031,891	1,051,200	795,550	[1]
Talbot [Member]
Written:
Direct premiums written													510,200	460,337	459,771
Assumed premiums written													503,922	520,736	460,135
Reinsurance premiums ceded													(218,174)	(258,081)	(204,186)
Net premiums written													795,948	722,992	715,720
Earned:
Direct premiums earned													480,432	450,348	427,280
Assumed premiums earned													507,383	503,021	382,535
Ceded premiums earned													(217,563)	(243,446)	(155,788)
Net premiums earned													770,252	709,923	654,027
Elimination
Written:
Direct premiums written													0	0	0
Assumed premiums written													(79,651)	(91,746)	(66,749)
Reinsurance premiums ceded													$ 79,651	$ 91,746	$ 66,749

[1] Operating results of IPC have been included from the September 2009 date of acquisition.

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Investments (Components of net investment income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Net investment income
Total gross investment income													$ 119,326	$ 141,049	$ 121,777
Investment expenses													(7,030)	(6,946)	(3,004)
Net investment income	28,080	27,747	26,494	29,975	30,962	34,033	34,809	34,299	35,506	29,532	26,963	26,772	112,296	134,103	118,773
Fixed maturities and short term investments [Member]
Net investment income
Total gross investment income													111,983	132,669	117,631
Cash and cash equivalents [Member]
Net investment income
Total gross investment income													7,285	8,180	3,374
Securities lending income [Member]
Net investment income
Total gross investment income													$ 58	$ 200	$ 772

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Commitments and contingencies (Investment porfolio and Lloyd's syndicate) (Details) In Thousands, unless otherwise specified	12 Months Ended		12 Months Ended
	Dec. 31, 2011	Dec. 31, 2011 Investment portfolio excluding government and agency securities [Member] Concentrations of credit risk [Member]	Dec. 31, 2011 Investment portfolio excluding bank loans [Member] Concentrations of credit risk [Member]	Dec. 31, 2011 Lloyd's Syndicate 1183 [Member] USD ($)	Dec. 31, 2011 Lloyd's Syndicate 1183 [Member] GBP (£)	Dec. 31, 2011 Talbot FAL Facility [Member] USD ($)	Dec. 31, 2010 Talbot FAL Facility [Member] USD ($)	Dec. 31, 2011 Talbot FAL Facility [Member] Lloyd's Syndicate 1183 [Member] USD ($)	Dec. 31, 2010 Talbot FAL Facility [Member] Lloyd's Syndicate 1183 [Member] USD ($)	Dec. 31, 2011 Talbot FAL Facility [Member] Lloyd's Syndicate 1183 [Member] 2012 USD ($)	Dec. 31, 2011 Talbot FAL Facility [Member] Lloyd's Syndicate 1183 [Member] 2011 USD ($)	Dec. 31, 2011 Talbot FAL Facility [Member] Lloyd's Syndicate 1183 [Member] 2010 USD ($)
Funds at Lloyd's and Lloyd's Central Fund
Maximum premium levies assessable, percent				3.00%	3.00%
Maximum premium levies assessable, amount				$ 27,941
Estimated underwriting capacity					600,000
Exchange rate				£1 equals 1.5523	£1 equals 1.5523
FAL are provided for as follows for each year of account:
Credit facility, commitment						25,000	25,000	25,000	25,000	25,000	25,000	25,000
Group funds										448,800	416,000	427,000
Total								$ 473,800	$ 441,000	$ 473,800	$ 441,000	$ 452,000
Concentrations of credit risk
Aggregate exposure to single issuer, actual		1.00%
Maximum aggregate exposure to single issuer, allowed	3.00%
Minimum credit rating of any security purchased			Baa3/BBB-
Percent of investment portfolio with a credit rating below the minimum required credit rating of Baa3/BBB-			1.20%
Holding in aggregate market value permitted with written pre-authorization			10.00%
Allowable percentage holding in downgraded investments			2.00%

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Goodwill and intangible assets (Other details) (Details) (USD $) In Thousands, unless otherwise specified		12 Months Ended
	Dec. 31, 2009 Ipc Holdings Ltd [Member]	Dec. 31, 2011 Talbot [Member] year
Business Acquisition [Line Items]
Intangible asset - customer relationships	$ 21,671
Syndicate capacity owned by acquiree		100.00%
Trademark and distribution network, useful life		10

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Stock plans (Components of share compensation expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Total share compensation expenses
Share compensation expenses	$ 7,237	$ 7,382	$ 7,628	$ 12,049	$ 7,871	$ 7,618	$ 6,846	$ 6,576	$ 8,189	$ 5,862	$ 5,632	$ 7,354	$ 34,296	$ 28,911	$ 27,037
Ipc Holdings Ltd [Member]
Total share compensation expenses
Share compensation expenses															5,431
Options [Member]
Total share compensation expenses
Share compensation expenses													1,770	3,845	4,158
Restricted share awards [Member]
Total share compensation expenses
Share compensation expenses													27,428	20,038	16,775
Restricted share units [Member]
Total share compensation expenses
Share compensation expenses													456	393	5,513
Performance share awards [Member]
Total share compensation expenses
Share compensation expenses													2,349	232	0
Employee seller shares [Member]
Total share compensation expenses
Share compensation expenses													2,293	4,403	6,022
Share compensation expenses including termination costs relating to the acquisition of IPC
Total share compensation expenses
Share compensation expenses															$ 32,468

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Schedule III - Supplementary insurance information

12 Months Ended

Dec. 31, 2011

Supplementary Insurance Information [Abstract]

Supplementary Insurance Information, for Insurance Companies Disclosure [Text Block]

SCHEDULE III

VALIDUS HOLDINGS, LTD.

SUPPLEMENTARY INSURANCE INFORMATION

As at and for the years endedDecember 31, 2011, 2010 and 2009

(Expressed in thousands of U.S. dollars)

		As at and for the year ended December 31, 2011
			Reserve										Amortization
	Deferred		for Losses				Net		Net		Losses		of Deferred		Other		Net
	Acquisition		and Loss		Unearned		Premiums		Investment		and Loss		Acquisition		Operating		Premiums
	Costs		Expenses		Premiums		Earned		Income		Expenses		Costs		Expenses		Written
Validus Re	$	57,807	$	1,360,849	$	321,147	$	1,031,891	$	96,492	$	759,305	$	160,134	$	55,662	$	1,039,502
Talbot		74,345		1,377,561		481,261		770,252		25,380		485,096		157,334		126,064		795,948
Corporate &
Eliminations		(10,647)		(107,267)		(30,026)		-		(9,576)		-		(3,284)		50,067		-
Total	$	121,505	$	2,631,143	$	772,382	$	1,802,143	$	112,296	$	1,244,401	$	314,184	$	231,793	$	1,835,450
		As at and for the year ended December 31, 2010
			Reserve										Amortization
	Deferred		for Losses				Net		Net		Losses		of Deferred		Other		Net
	Acquisition		and Loss		Unearned		Premiums		Investment		and Loss		Acquisition		Operating		Premiums
	Costs		Expenses		Premiums		Earned		Income		Expenses		Costs		Expenses		Written
Validus Re	$	57,982	$	998,165	$	299,250	$	1,051,200	$	113,968	$	601,610	$	160,599	$	52,798	$	1,038,092
Talbot		74,846		1,191,548		454,927		709,923		29,287		385,976		143,769		120,966		722,992
Corporate &
Eliminations		(8,931)		(153,740)		(25,661)		-		(9,152)		-		(11,469)		64,437		-
Total	$	123,897	$	2,035,973	$	728,516	$	1,761,123	$	134,103	$	987,586	$	292,899	$	238,201	$	1,761,084
		As at and for the year ended December 31, 2009
			Reserve										Amortization
	Deferred		for Losses				Net		Net		Losses		of Deferred		Other		Net
	Acquisition		and Loss		Unearned		Premiums		Investment		and Loss		Acquisition		Operating		Premiums
	Costs		Expenses		Premiums		Earned		Income		Expenses		Costs		Expenses		Written
Validus Re	$	54,325	$	742,510	$	325,260	$	795,550	$	94,973	$	186,704	$	127,433	$	73,286	$	672,638
Talbot		68,341		903,986		427,284		654,027		30,114		337,053		139,932		103,523		715,720
Corporate &
Eliminations		(10,337)		(24,362)		(28,440)		-		(6,314)		-		(4,399)		35,796		-
Total	$	112,329	$	1,622,134	$	724,104	$	1,449,577	$	118,773	$	523,757	$	262,966	$	212,605	$	1,388,358

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Commitments and contingencies (Tables)

12 Months Ended

Dec. 31, 2011

Commitments and contingencies [Abstract]

Percentage of gross premiums written by broker

	Years Ended
	December 31,	December 31,	December 31,
	2011	2010	2009
Marsh & McLennan	25.9%	25.5%	23.3%
Willis Group Holdings Ltd.	17.0%	17.1%	14.0%
Aon Benfield Group Ltd.	23.8%	22.6%	25.7%

Future minimum lease commitments

Future minimum lease commitments are as follows:

2012	$	4,874
2013		7,231
2014		6,907
2015		6,719
2016 and thereafter		43,238
	$	68,969

Components of FAL

	2012		2011		2010
	Underwriting		Underwriting		Underwriting
	Year		Year		Year
Talbot FAL facility	$	25,000	$	25,000	$	25,000
Group funds		448,800		416,000		427,000
Total	$	473,800	$	441,000	$	452,000

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Retirement plans

12 Months Ended

Dec. 31, 2011

Retirement Plans [Abstract]

Retirement plans

15. Retirement plans

The Company provides pension benefits to eligible employees through various plans which are managed externally and sponsored by the Company. All pension plans are structured as defined contribution retirement plans. The Company's contributions are expensed as incurred. The Company's expenses for its defined contribution retirement plans for the years ended December 31, 2011, 2010 and 2009were $7,591,$7,564 and $5,606, respectively.

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Schedule II - Condensed financial information (Income Statement) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Revenues [Abstract]
Net investment income	$ 28,080	$ 27,747	$ 26,494	$ 29,975	$ 30,962	$ 34,033	$ 34,809	$ 34,299	$ 35,506	$ 29,532	$ 26,963	$ 26,772	$ 112,296	$ 134,103	$ 118,773
Other income	3,517	0	595	1,606	552	1,082	2,697	888	1,759	1,101	1,017	757	5,718	5,219	4,634
Foreign exchange (losses)	266	(19,932)	(1,991)	(467)	3,424	10,790	(4,099)	(8,764)	338	(5,244)	8,432	(4,200)	(22,124)	1,351	(674)
Total revenues													1,906,574	1,980,246	1,937,106
Expenses [Abstract]
General and administrative expenses	52,253	35,926	60,841	48,477	54,511	48,831	52,379	53,569	60,253	46,036	41,200	38,079	197,497	209,290	185,568
Share compensation expenses	7,237	7,382	7,628	12,049	7,871	7,618	6,846	6,576	8,189	5,862	5,632	7,354	34,296	28,911	27,037
Finance expenses	13,520	10,935	16,361	14,001	13,786	13,715	13,218	15,151	14,398	11,257	10,752	7,723	54,817	55,870	44,130
Transaction expenses	3,850	13,583	0	0									17,433	0	0
Net income	35,007	70,001	110,478	(172,364)	102,687	238,473	179,782	(118,378)	165,759	499,178	137,563	94,907	43,122	402,564	897,407
Parent Company [Member]
Revenues [Abstract]
Net investment income													6	2	14
Other income													5,321	0	0
Foreign exchange (losses)													158	154	56
Total revenues													5,485	156	70
Expenses [Abstract]
General and administrative expenses													44,276	37,601	25,404
Share compensation expenses													11,598	8,899	0
Finance expenses													49,530	52,485	31,716
Transaction expenses													16,285	0	0
Total expenses													121,689	98,985	57,120
(Loss) before equity in net earnings of subsidiaries													(116,204)	(98,829)	(57,050)
Equity in net earnings of subsidiaries													137,533	501,393	954,457
Net income													$ 21,329	$ 402,564	$ 897,407

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Related party transactions

12 Months Ended

Dec. 31, 2011

Related Party Transactions [Abstract]

Related party transactions

20. Related party transactions

The transactions listed below are classified as related party transactions as each counterparty has either a direct or indirect shareholding in the Company.

a)       On December 8, 2005, the Company entered into agreements with Goldman Sachs Asset Management and its affiliates ("GSAM") under which GSAM provides investment management services for a portion of the Company's investment portfolio. For the years ended December 31, 2010 and 2009, GSAM was deemed to be a related party due to a combination of GSAM being a shareholder in the Company and having an employee on the Company's Board of Directors during this period. For the year ended December 31, 2011, GSAM was no longer a related party due to the resignation of Sumit Rajpal from the Board of Directors effective February 7, 2011. Investment management fees earned by GSAM for the years ended December 31, 2010 and 2009 were $1,728 and $1,280, respectively. Management believes that the fees charged were consistent with those that would have been charged in arm's-length transactions with unrelated third parties.

b)       Aquiline Capital Partners, LLC and its related companies (“Aquiline”), which own 6,255,943 shares in the Company, hold warrants to purchase 2,756,088 shares, and have two employees on the Company's Board of Directors who do not receive compensation from the Company, are shareholders of Group Ark Insurance Holdings Ltd. (“Group Ark”). Christopher E. Watson, a director of the Company, also serves as a director of Group Ark. Pursuant to reinsurance agreements with a subsidiary of Group Ark, the Company recognized gross premiums written during the year ended December 31, 2011 of $1,464 (2010: $2,239; 2009: $nil) of which $330 was included in premiums receivable at December 31, 2011(December 31, 2010: $378). The Company also recognized reinsurance premiums ceded during the year ended December 31, 2011 of $163(2010: $738; 2009: $953), of which $21 were included in reinsurance balances payable at December 31, 2011(December 31, 2010: $132). Earned premium adjustments of $1,524 were incurred during the year ended December 31, 2011(2010: $1,024;2009: $nil).

Aquiline is also a shareholder of Tiger Risk Partners LLC (“Tiger Risk”). Christopher E. Watson, a director of the Company serves as a director of Tiger Risk. Pursuant to certain reinsurance contracts, the Company recognized brokerage expenses paid to Tiger Risk during the year ended December 31, 2011 of $1,142(2010: $1,461; 2009: $1,231), of which $86 were included in accounts payable and accrued expenses at December 31, 2011(December 31, 2010: $792).

On November 24, 2009, the Company entered into an Investment Management Agreement with Conning, Inc. (“Conning”) to manage a portion of the Company's investment portfolio. Aquiline acquired Conning on June 16, 2009. John J. Hendrickson and Jeffrey W. Greenberg, directors of the Company, each serve as a director of Conning Holdings Corp., the parent company of Conning, and Michael Carpenter, the Chairman of Talbot Holdings Ltd. and a director of the Company, serves as a director of a subsidiary company of Conning Holdings Corp. Investment management fees earned by Conning for the year ended December 31, 2011 were $783(2010: $379;2009: $13), of which $203 were included in accounts payable and accrued expenses at December 31, 2011 (December 31, 2010: $97).

On December 20, 2011, Validus Re, a wholly owned subsidiary of the Company, entered into an Assignment and Assumption Agreement (the "Agreement") with Aquiline Capital Partners LLC, a Delaware limited liability company (the "Assignor") and Aquiline Capital Partners II GP (Offshore) Ltd., a Cayman Islands company limited by shares (the "General Partner") pursuant to which Validus Re has assumed 100% of the Assignor's interest in Aquiline Financial Services Fund II L.P. (the "Partnership") representing a total capital commitment of $50,000 (the "Commitment"), as a limited partner in the Partnership (the "Transferred Interest").  Pursuant to the Agreement, Validus Re paid $3,253 in paid and outstanding capital contributions, net of interest received, to the Partnership and in consideration, the Assignor assigned to Validus Re all of its rights and interests as a limited partner in the Partnership with respect to the Transferred Interest, including all amounts due and to become due to the Assignor with respect thereto. Messrs. Greenberg and Watson, directors of the Company, serve as managing principal and senior principal, respectively, of Aquiline Capital Partners LLC.

c)       On December 8, 2005, the Company entered into agreements with BlackRock Financial Management, Inc. ("BlackRock") under which BlackRock provided investment management services for part of the Company's investment portfolio. For the year ended December 31, 2009, BlackRock was deemed to be a related party due to a combination of Merrill Lynch (a shareholder of BlackRock) being a shareholder in the Company and having an employee on the Company's Board of Directors during this period. For the years ended December 31, 2011 and 2010, BlackRock was no longer a related party. Investment management fees earned by BlackRock for the year ended December 31, 2009 were $2,036. Management believes that the fees charged were consistent with those that would have been charged in arm's-length transactions with unrelated third parties.

d)       Vestar Capital entities have an employee on the Company's Board of Directors who does not receive compensation from the Company. Sander M. Levy, a director of the Company, serves as Managing Director of Vestar Capital Partners. During 2009, Vestar Capital entities were shareholders of PARIS RE Holdings, Limited (“Paris Re”). On July 4, 2009, PartnerRe Ltd. (“PartnerRe”) acquired the outstanding shares of Paris Re and as a result Paris Re was not a related party of the Company during the years ended December 31, 2011 and 2010. However, for the year ended December 31, 2009, pursuant to reinsurance agreements with Paris Re, the Company recognized gross premiums written of $5,176 and earned premium adjustments of $5,918.

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Debt and financing arrangements (Components of finance expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Components of financial expenses
Finance expenses	$ 13,520	$ 10,935	$ 16,361	$ 14,001	$ 13,786	$ 13,715	$ 13,218	$ 15,151	$ 14,398	$ 11,257	$ 10,752	$ 7,723	$ 54,817		$ 55,870		$ 44,130
Credit Facilities [Member]
Components of financial expenses
Finance expenses													6,710		5,492		2,319
AlphaCat Re 2011 [Member]
Components of financial expenses
Finance expenses													3,609	[1]	0	[1]	0	[1]
Talbot FAL Facility [Member]
Components of financial expenses
Finance expenses													227		333		542
Talbot third party FAL facility [Member]
Components of financial expenses
Finance expenses													0		2,807		14,183
2006 Junior Subordinated Deferrable Debentures [Member]
Components of financial expenses
Finance expenses													9,768		14,354		14,354
2007 Junior Subordinated Deferrable Debentures [Member]
Components of financial expenses
Finance expenses													12,115		12,114		12,732
2010 Senior Notes due 2040 [Member]
Components of financial expenses
Finance expenses													$ 22,388		$ 20,770		$ 0

[1] Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.

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Debt and financing arrangements (Tables)

12 Months Ended

Dec. 31, 2011

Debt and financing arrangements [Abstract]

Schedule of financing structure

a) Financing structure and finance expenses
	The financing structure at December 31, 2011 was:
		Commitment		Outstanding (a)		Drawn
2006 Junior Subordinated Deferrable Debentures		$	150,000	$	150,000	$	150,000
2007 Junior Subordinated Deferrable Debentures			200,000		139,800		139,800
2010 Senior Notes due 2040			250,000		250,000		246,982
$340,000 syndicated unsecured letter of credit facility			340,000		-		-
$60,000 bilateral unsecured letter of credit facility			60,000		-		-
$500,000 secured letter of credit facility			500,000		333,179		-
Talbot FAL Facility (b)			25,000		25,000		-
IPC Bi-Lateral Facility			80,000		57,146		-
Total		$	1,605,000	$	955,125	$	536,782
	The financing structure at December 31, 2010 was:
		Commitment		Outstanding (a)		Drawn
2006 Junior Subordinated Deferrable Debentures		$	150,000	$	150,000	$	150,000
2007 Junior Subordinated Deferrable Debentures			200,000		139,800		139,800
2010 Senior Notes due 2040			250,000		250,000		246,874
$340,000 syndicated unsecured letter of credit facility			340,000		-		-
$60,000 bilateral unsecured letter of credit facility			60,000		-		-
$500,000 secured letter of credit facility			500,000		268,944		-
Talbot FAL Facility (b)			25,000		25,000		-
IPC Bi-Lateral Facility			80,000		68,063		-
Total		$	1,605,000	$	901,807	$	536,674

Components of finance expenses

			Years Ended
			December 31,		December 31,	December 31,
		2011		2010		2009
2006 Junior Subordinated Deferrable Debentures		$	9,768	$	14,354	$	14,354
2007 Junior Subordinated Deferrable Debentures			12,115		12,114		12,732
2010 Senior Notes due 2040			22,388		20,770		-
Credit facilities			6,710		5,492		2,319
AlphaCat Re 2011 preferred dividend (a)			3,609		-		-
Talbot FAL Facility			227		333		542
Talbot third party FAL facility			-		2,807		14,183
Total		$	54,817	$	55,870	$	44,130
	(a) Includes preferred share dividends and finance expenses attributable to AlphaCat Re 2011.

Future expected payments of principal

Future expected payments of principal on the 2010Senior Notes are as follows:

2012	$	-
2013		-
2014		-
2015		-
2016 and thereafter		250,000
Total minimum future payments	$	250,000

Future expected payments of principal on the2006 and 2007Junior Subordinated Deferrable Debentures are as follows:

2012	$	-
2013		-
2014		-
2015		-
2016 and thereafter		289,800
Total minimum future payments	$	289,800

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Commitments and continencies (Aquiline commitment) (Details) (Aquiline Capital Partners II GP Offshore Ltd [Member], USD $)	12 Months Ended
	Dec. 31, 2011
Aquiline Capital Partners II GP Offshore Ltd [Member]
Related Party Transaction [Line Items]
Percentage of interest assumed	100.00%
Related Party Transaction Capital Commitment	$ 50,000,000

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Investment in AlphaCat Re 2011, Ltd. (Tables)

12 Months Ended

Dec. 31, 2011

Equity method investment [Abstract]

Activity in noncontrolling interest

		Year Ended December 31, 2011
		Noncontrolling interest		Investment in non-consolidated affiliate
As at December 31, 2010		$	-	$	-
	Initial purchase of shares		134,301		50,000
	Secondary purchase of shares		60,000		-
	Purchase (sale) of shares		11,000		(11,000)
	Gain on sale of shares		-		553
	Accretion of discount on preferred shares		233		-
	Initial transaction costs		(2,304)		-
	Net income		21,793		11,642
	Derecognition of noncontrolling interest		(225,023)		-
	Fair value adjustment		-		1,836
As at December 31, 2011		$	-	$	53,031

Summarized financial information of non-consolidated affiliate

The following table presents the Company's equity investment in AlphaCat Re 2011 at December 31, 2011:
	Investment in non-consolidated affiliate
		Investment		Voting ownership %		Equity ownership %		Carrying value
AlphaCat Re 2011	$	41,389		43.7%		22.3%	$	53,031
The following table presents certain summarized financial information of the investee as a whole at December 31, 2011 and for the year ended:
	Combined investee summarized financial data
		Total assets		Total liabilities		Total revenue		Net income
AlphaCat Re 2011	$	293,691	$	17,973	$	50,640	$	33,435

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Earnings per share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Basic earnings per share
Income	$ 35,007	$ 70,001	$ 110,478	$ (172,364)	$ 102,687	$ 238,473	$ 179,782	$ (118,378)	$ 165,759	$ 499,178	$ 137,563	$ 94,907	$ 43,122	$ 402,564	$ 897,407
Income attributable to noncontrolling interest	(7,683)	(13,516)	(594)	0	0	0	0	0	0	0	0	0	(21,793)	0	0
Income available to Validus	27,324	56,485	109,884	(172,364)	102,687	238,473	179,782	(118,378)	165,759	499,178	137,563	94,907	21,329	402,564	897,407
less: Dividends and distributions declared on outstanding warrants													(7,644)	(6,991)	(6,507)
Income available to common shareholders													13,685	395,573	890,900
Weighted average number of common shares outstanding	99,137,696	98,961,795	98,385,924	97,944,340	105,828,739	110,601,888	121,009,553	126,633,277	130,413,790	92,492,373	76,138,038	75,744,577	98,607,439	116,018,364	93,697,194
Basic earnings (loss) per share available (attributable) to common shareholders	$ 0.26	$ 0.55	$ 1.10	$ (1.78)	$ 0.95	$ 2.14	$ 1.47	$ (0.95)	$ 1.26	$ 5.38	$ 1.79	$ 1.23	$ 0.14	$ 3.41	$ 9.51
Diluted earnings per share
Income	35,007	70,001	110,478	(172,364)	102,687	238,473	179,782	(118,378)	165,759	499,178	137,563	94,907	43,122	402,564	897,407
Income attributable to noncontrolling interest	(7,683)	(13,516)	(594)	0	0	0	0	0	0	0	0	0	(21,793)	0	0
Income available to Validus	27,324	56,485	109,884	(172,364)	102,687	238,473	179,782	(118,378)	165,759	499,178	137,563	94,907	21,329	402,564	897,407
less: Dividends and distributions declared on outstanding warrants													(7,644)	0	0
Income available to common shareholders													$ 13,685	$ 402,564	$ 897,407
Weighted average number of common shares outstanding, diluted	101,324,291	100,823,335	104,562,450	97,944,340	111,316,736	114,842,742	125,152,300	126,633,277	134,794,120	95,834,809	78,942,065	79,102,643	100,928,284	120,630,945	97,168,409
Diluted earnings (loss) per share available (attributable) to common shareholders	$ 0.25	$ 0.54	$ 1.05	$ (1.78)	$ 0.92	$ 2.08	$ 1.44	$ (0.95)	$ 1.23	$ 5.21	$ 1.74	$ 1.20	$ 0.14	$ 3.34	$ 9.24
Earnings per share (Textuals) [Abstract]
Anti-dilutive securities excluded from the calculation of diluted earnings per share													181,105	136,881	172,425
Options [Member]
Weighted Average Number Diluted Shares Outstanding Adjustment [Abstract] [Line Items]
Weighted average number diluted shares outstanding adjustment													776,204	888,281	478,472
Warrants [Member]
Weighted Average Number Diluted Shares Outstanding Adjustment [Abstract] [Line Items]
Weighted average number diluted shares outstanding adjustment													0	2,657,258	2,220,096
Unvested restricted shares [Member]
Weighted Average Number Diluted Shares Outstanding Adjustment [Abstract] [Line Items]
Weighted average number diluted shares outstanding adjustment													1,544,641	1,067,042	772,647

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Consolidated Statements of Shareholders' Equity (USD $) In Thousands	Total	Common shares	Treasury shares	Additional paid-in capital	Accumulated other comprehensive (loss)	Retained earnings
Beginning balance at Dec. 31, 2008		$ 13,235	$ 0	$ 1,412,635	$ (7,858)	$ 520,722
Common shares issued, net		9,798		1,314,188
Repurchase of common shares			(553)	(83,611)
Share compensation expenses				32,468
Foreign currency translation adjustments	3,007				3,007
Dividends						(80,318)
Net income	897,407					897,407
Net income attributable to noncontrolling interest	0					0
Ending balance at Dec. 31, 2009	4,031,120	23,033	(553)	2,675,680	(4,851)	1,337,811
Common shares issued, net		214		7,752
Repurchase of common shares			(5,543)	(851,383)
Share compensation expenses				28,911
Foreign currency translation adjustments	(604)				(604)
Dividends						(108,200)
Net income	402,564					402,564
Net income attributable to noncontrolling interest	0					0
Ending balance at Dec. 31, 2010	3,504,831	23,247	(6,096)	1,860,960	(5,455)	1,632,175
Common shares issued, net		291		4,594
Repurchase of common shares			(35)	(5,960)
Share compensation expenses				34,296
Foreign currency translation adjustments	(1,146)				(1,146)
Dividends						(109,775)
Net income	43,122					43,122
Net income attributable to noncontrolling interest	(21,793)					(21,793)
Ending balance at Dec. 31, 2011	$ 3,448,425	$ 23,538	$ (6,131)	$ 1,893,890	$ (6,601)	$ 1,543,729

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Retirement plans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract]
Defined contribution retirement plan expense	$ 7,591	$ 7,564	$ 5,606

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Recent accounting pronouncements

12 Months Ended

Dec. 31, 2011

Recent accounting pronouncements [Abstract]

Recent accounting pronouncements

4. Recent accounting pronouncements

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). The objective of ASU 2011-04 is to provide common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the amendments do not result in a change in the application of the requirements in ASC Topic 820 “Fair Value Measurements”. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact of this guidance, however it is not expected to have a material impact on the Company's consolidated financial statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). The objective of ASU 2011-05 is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011. In December 2011, the FASB issued Accounting Standards Update No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05".ASU 2011-12 indefinitely defers certain reclassification adjustment provisions of ASU 2011-05. ASU 2011-12 is also effective for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact of the guidance; however, since these updates affect disclosures only, they are not expected to have a material impact on the Company's consolidated financial statements.

In December 2011, the FASB issued Accounting Standards Update No. 2011-11, “Disclosures about Offsetting Assets and Liabilities”(“ASU 2011-11”). The objective of ASU 2011-11 is to enhance disclosures by requiring improved information about financial instruments and derivative instruments in relation to netting arrangements. ASU 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. The Company is currently evaluating the impact of this guidance; however, since this update affects disclosures only, it is not expected to have a material impact on the Company's consolidated financial statements.

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Business combination (Purchase price allocation) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				12 Months Ended
	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2009	Mar. 31, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Total allocable purchase price
Validus common shares issued							54,578,268
Liabilities Acquired
Bargain purchase gain on acquisition of IPC					$ 0	$ 0	$ 352,349
Gain on bargain purchase, net of expenses
Amortization of intangible asset - customer relationships					(4,162)	(4,162)	(25,833)
Gain on bargain purchase, net of expenses	0	302,950	(15,851)	0			287,099
Ipc Holdings Ltd [Member]
Total allocable purchase price
Acquisition date							2009-09-04
IPC shares outstanding at September 4, 2009							56,110,096
In kind share payment, per share							0.9727
Per share price paid by Company to acquire IPC common shares							$ 7.50
Validus closing share price on September 4,2009							$ 24.10
Total value of Validus shares to be issued	1,315,337						1,315,337
Total cash consideration paid at $7.50 per IPC share	420,826						420,826
Share compensation awards issued to IPC employees on Amalgamation	10,061						10,061
Total allocable purchase price	1,746,224						1,746,224
Tangible assets acquired
Cash and investments	2,463,374						2,463,374
Receivables	202,278						202,278
Tangible Assets Acquired	2,665,652						2,665,652
Liabilities Acquired
Net loss reserves and paid losses recoverable	304,957						304,957
Unearned premiums, net of expenses	180,370						180,370
Other liabilities	53,423						53,423
Liabilities acquired	538,750						538,750
Net tangible assets acquired, at fair value	2,126,902						2,126,902
Max Termination Fee	(50,000)						(50,000)
Net tangible assets acquired, at fair value, adjusted	2,076,902						2,076,902
Bargain purchase gain before establishment of intangible assets							330,678
Intangible asset - customer relationships	21,671						21,671
Bargain purchase gain on acquisition of IPC							352,349
Gain on bargain purchase, net of expenses
Transaction expenses							(29,448)
Termination expenses							(14,131)
Amortization of intangible asset - customer relationships							(21,671)
Gain on bargain purchase, net of expenses							$ 287,099

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Reserve for losses and loss expenses (Prior year development) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Net favorable development on prior years by segment and line of business:
Net favorable development	$ (156,119)	$ (156,610)	$ (102,053)
Property [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(71,189)	(72,281)	(92,739)
Marine [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(41,616)	(70,031)	4,322
Specialty [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(43,314)	(14,298)	(13,636)
Validus Re [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(68,610)	(70,617)	(52,972)
Validus Re [Member] | Property [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(49,020)	(49,831)	(65,109)
Validus Re [Member] | Marine [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(10,234)	(17,616)	19,628
Validus Re [Member] | Specialty [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(9,356)	(3,170)	(7,491)
Talbot [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(87,509)	(85,993)	(49,081)
Talbot [Member] | Property [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(22,169)	(22,450)	(27,630)
Talbot [Member] | Marine [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	(31,382)	(52,415)	(15,306)
Talbot [Member] | Specialty [Member]
Net favorable development on prior years by segment and line of business:
Net favorable development	$ (33,958)	$ (11,128)	$ (6,145)

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Related party transactions (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Related Party Transaction [Line Items]
Earned premium adjustments	$ 1,524,000	$ 1,024,000	$ 0
Goldman Sachs Asset Management [Member]
Related Party Transaction [Line Items]
Investment management fees	0	1,728,000	1,280,000
Aquiline Capital Partners LLC [Member]
Related Party Transaction [Line Items]
Shares owned by related party	6,255,943
Warrants to purchase shares	2,756,088
Tiger Risk Partners LLC [Member]
Related Party Transaction [Line Items]
Accounts payable and accrued expenses	86,000	792,000
Brokerage expenses	1,142,000	1,461,000	1,231,000
Group Ark Insurance Holdings Ltd [Member]
Related Party Transaction [Line Items]
Gross premiums written	1,464,000	2,239,000	0
Reinsurance premiums ceded	163,000	738,000	953,000
Premiums receivable	330,000	378,000
Reinsurance balances payable	21,000	132,000
Conning Inc [Member]
Related Party Transaction [Line Items]
Investment management fees	783,000	379,000	13,000
Accounts payable and accrued expenses	203,000	97,000
Aquiline Capital Partners II GP (Offshore) Ltd [Member]
Related Party Transaction [Line Items]
Total capital commitment	50,000,000
Percentage of interest assumed	100.00%
Paid and outstanding capital commitments paid	3,253,000
BlackRock Financial Management, Inc.
Related Party Transaction [Line Items]
Investment management fees			2,036,000
Vestar Capital Partners [Member]
Related Party Transaction [Line Items]
Gross premiums written			5,176,000
Earned premium adjustments			$ 5,918,000

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Investments (Fixed maturities by investment rating) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Fixed Maturities
Total fixed maturities	$ 4,894,145	$ 4,823,867
Percentage of total	100.00%	100.00%
AAA [Member]
Fixed Maturities
Total fixed maturities	882,912	2,946,514
Percentage of total	18.00%	61.20%
AA [Member]
Fixed Maturities
Total fixed maturities	2,077,981	428,972
Percentage of total	42.50%	8.90%
A [Member]
Fixed Maturities
Total fixed maturities	1,078,793	1,077,389
Percentage of total	22.00%	22.30%
BBB [Member]
Fixed Maturities
Total fixed maturities	345,091	219,523
Percentage of total	7.10%	4.60%
Investment Grade [Member]
Fixed Maturities
Total fixed maturities	4,384,777	4,672,398
Percentage of total	89.60%	97.00%
BB [Member]
Fixed Maturities
Total fixed maturities	254,409	74,475
Percentage of total	5.20%	1.50%
B [Member]
Fixed Maturities
Total fixed maturities	231,420	45,660
Percentage of total	4.70%	0.90%
CCC [Member]
Fixed Maturities
Total fixed maturities	12,578	29,219
Percentage of total	0.30%	0.60%
CC [Member]
Fixed Maturities
Total fixed maturities	4,605	0
Percentage of total	0.10%	0.00%
D/NR [Member]
Fixed Maturities
Total fixed maturities	6,356	2,115
Percentage of total	0.10%	0.00%
Non Investment Grade [Member]
Fixed Maturities
Total fixed maturities	$ 509,368	$ 151,469
Percentage of total	10.40%	3.00%

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Earnings per share

12 Months Ended

Dec. 31, 2011

Earnings per share [Abstract]

Earnings per share

21.Earnings per share

The following table sets forth the computation of basic and diluted earnings per share available to common shareholders for the years ended December 31, 2011, 2010 and 2009:

	Years Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
Basic earnings per share
Income	$	43,122	$	402,564	$	897,407
Income attributable to noncontrolling interest		(21,793)		-		-
Income available to Validus	$	21,329	$	402,564	$	897,407
less: Dividends and distributions declared on outstanding warrants		(7,644)		(6,991)		(6,507)
Income available to common shareholders	$	13,685	$	395,573	$	890,900
Weighted average number of common shares outstanding		98,607,439		116,018,364		93,697,194
Basic earnings per share available to common shareholders	$	0.14	$	3.41	$	9.51
Diluted earnings per share
Income	$	43,122	$	402,564	$	897,407
Income attributable to noncontrolling interest		(21,793)		-		-
Income available to Validus	$	21,329	$	402,564	$	897,407
less: Dividends and distributions declared on outstanding warrants		(7,644)		-		-
Income available to common shareholders	$	13,685	$	402,564	$	897,407
Weighted average number of common shares outstanding		98,607,439		116,018,364		93,697,194
Share equivalents:
Warrants		-		2,657,258		2,220,096
Stock options		776,204		888,281		478,472
Unvested restricted shares		1,544,641		1,067,042		772,647
Weighted average number of diluted common shares outstanding		100,928,284		120,630,945		97,168,409
Diluted earnings per share available to common shareholders	$	0.14	$	3.34	$	9.24

Share equivalents that would result in the issuance of common shares of 181,105, 136,881 and 172,425were outstanding for the years ended December 31, 2011, 2010 and 2009 respectively, but were not included in the computation of diluted earnings per share because the effect would be antidilutive.

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Schedule III - Supplementary insurance information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Supplementary Insurance Information, by Segment [Line Items]
Deferred acquisition costs	$ 121,505	$ 123,897	$ 112,329
Reserve for losses and loss expenses	2,631,143	2,035,973	1,622,134
Unearned premiums	772,382	728,516	724,104
Net premiums earned	1,802,143	1,761,123	1,449,577
Net investment income	112,296	134,103	118,773
Losses and loss expenses	1,244,401	987,586	523,757
Amortization of deferred acquisition costs	314,184	292,899	262,966
Other operating expenses	231,793	238,201	212,605
Net premiums written	1,835,450	1,761,084	1,388,358
Validus Re [Member]
Supplementary Insurance Information, by Segment [Line Items]
Deferred acquisition costs	57,807	57,982	54,325
Reserve for losses and loss expenses	1,360,849	998,165	742,510
Unearned premiums	321,147	299,250	325,260
Net premiums earned	1,031,891	1,051,200	795,550
Net investment income	96,492	113,968	94,973
Losses and loss expenses	759,305	601,610	186,704
Amortization of deferred acquisition costs	160,134	160,599	127,433
Other operating expenses	55,662	52,798	73,286
Net premiums written	1,039,502	1,038,092	672,638
Talbot [Member]
Supplementary Insurance Information, by Segment [Line Items]
Deferred acquisition costs	74,345	74,846	68,341
Reserve for losses and loss expenses	1,377,561	1,191,548	903,986
Unearned premiums	481,261	454,927	427,284
Net premiums earned	770,252	709,923	654,027
Net investment income	25,380	29,287	30,114
Losses and loss expenses	485,096	385,976	337,053
Amortization of deferred acquisition costs	157,334	143,769	139,932
Other operating expenses	126,064	120,966	103,523
Net premiums written	795,948	722,992	715,720
Corporate & Eliminations [Member]
Supplementary Insurance Information, by Segment [Line Items]
Deferred acquisition costs	(10,647)	(8,931)	(10,337)
Reserve for losses and loss expenses	(107,267)	(153,740)	(24,362)
Unearned premiums	(30,026)	(25,661)	(28,440)
Net premiums earned	0	0	0
Net investment income	(9,576)	(9,152)	(6,314)
Losses and loss expenses	0	0	0
Amortization of deferred acquisition costs	(3,284)	(11,469)	(4,399)
Other operating expenses	50,067	64,437	35,796
Net premiums written	$ 0	$ 0	$ 0

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Investments (Text) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 day	Dec. 31, 2010 day	Dec. 31, 2009
Securities lending [Abstract]
Securities lending - Percent of market value required in collateral	102.00%
Securities loaned	$ 8,286	$ 22,566
Securities lending - average reset period on collateral reinvested	3.9	17.6
Securities lending - unrealized gain (loss) on collateral securities	39	(1,009)	6,978
Talbot FAL Facility [Member]
Line of Credit Facility [Line Items]
Letter of credit facility, original commitment amount	100,000
Secured letter of credit facility, value	25,000	25,000
Investments held in trust for the benefit of Talbot FAL Facility	1,686,586	1,489,243
Investments held in trust	2,129,570	1,729,631
Investments pledged as collateral	44,623	45,504
Letter of credit facility amount issued and outstanding	25,000	25,000
IPC Bi-Lateral Facility [Member]
Line of Credit Facility [Line Items]
Secured letter of credit facility, value	80,000	80,000
Investments pledged as collateral	105,428	105,310
Letter of credit facility amount issued and outstanding	57,146	68,063
Secured letter of credit facility [Member]
Line of Credit Facility [Line Items]
Secured letter of credit facility, term	5 years
Secured letter of credit facility, value	500,000	500,000
Investments pledged as collateral	392,822	325,532
Letter of credit facility amount issued and outstanding	$ 333,179	$ 268,944

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Business combination (Tables)

12 Months Ended

Dec. 31, 2011

Business Combinations [Abstract]

Purchase price allocation

Total allocable purchase price
	IPC shares outstanding at September 4, 2009		56,110,096
	Exchange ratio		0.9727
	Validus common shares issued		54,578,268
	Validus closing share price on September 4, 2009	$	24.10
	Total value of Validus shares to be issued			$	1,315,337
	Total cash consideration paid at $7.50 per IPC share				420,826
	Share compensation awards issued to IPC employees pursuant
	to the Amalgamation Agreement and earned prior to the
	Amalgamation				10,061
	Total allocable purchase price				1,746,224
Tangible Assets Acquired
	Cash and investments	$	2,463,374
	Receivables (a)		202,278
	Tangible Assets Acquired				2,665,652
Liabilities Acquired
	Net loss reserves and paid losses recoverable	$	304,957
	Unearned premiums, net of expenses		180,370
	Other liabilities		53,423
Liabilities acquired					538,750
Net tangible assets acquired, at fair value					2,126,902
	Max Termination Fee				(50,000)
	Net tangible assets acquired, at fair value, adjusted				2,076,902
Bargain purchase gain before establishment of intangible assets					330,678
	Intangible asset - customer relationships				21,671
Bargain purchase gain on acquisition of IPC				$	352,349

Gain on bargain purchase net of expenses

	Year ended
	December 31, 2009
Bargain purchase gain on acquisition of IPC	$	352,349
Transaction expenses		(29,448)
Termination expenses		(14,131)
Amortization of intangible asset – customer relationships		(21,671)
Gain on bargain purchase, net of expenses	$	287,099

Results since acquisition

	From Acquisition Date to
	December 31, 2009
Net premiums written	$	(4,974)
Total revenue		161,188
Total expenses		33,370
Net income	$	127,818

Pro forma information

	Year ended
	December 31, 2009
Revenues	(unaudited)
Gross premiums written	$	2,008,578
Reinsurance premiums ceded		(239,412)
Net premiums written		1,769,166
Change in unearned premiums		(57,338)
Net premiums earned		1,711,828
Net investment income		163,944
Net realized (losses) on investments		(4,717)
Net unrealized gains on investments		189,789
Other income		4,603
Realized gain on repurchase of debentures		4,444
Foreign exchange gains		4,294
Total revenues		2,074,185
Expenses
Losses and loss expenses		556,550
Policy acquisition costs		289,600
General and administrative expenses		209,510
Share compensation expenses		33,751
Finance expenses		44,513
Total expenses		1,133,924
Net income before taxes		940,261
Tax benefit		3,759
Net income		944,020
Basic earnings per share	$	10.01
Diluted earnings per share	$	9.72

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Share capital

12 Months Ended

Dec. 31, 2011

Share capital [Abstract]

Share capital

14. Share capital

(a) Authorized and issued

The Company's authorized share capital is 571,428,571 voting and non-voting shares with a par value of $0.175 per share. The holders of voting and non-voting common shares are entitled to receive dividends. Holders of voting common shares are allocated one vote per share, provided that, if the controlled shares of any shareholder or group of related shareholders constitute more than 9.09 percent of the outstanding common shares of the Company, their voting power will be reduced to 9.09 percent.

On September 4, 2009, the Company acquired all of the outstanding shares of IPC from a group of institutional and other investors. Pursuant to the Amalgamation Agreement, the Company acquired all of IPC's outstanding common shares in exchange for the Company's common shares and cash. The Company issued 54,556,762 common shares (and 21,506 restricted share awards) valued at $24.10 per share as partial consideration for the acquisition.

The Company may from time to time repurchase its securities, including common shares, Junior Subordinated Deferrable Debentures and Senior Notes. In November 2009, the Board of Directors of the Company authorized an initial $400,000 share repurchase program. On February 17, 2010, the Board of Directors of the Company authorized the Company to return up to $750,000 to shareholders. This amount was in addition to, and in excess of, the $135,494 of common shares purchased by the Company through February 17, 2010 under its previously authorized $400,000 share repurchase program. On May 6, 2010, the Board of Directors authorized a self tender offer pursuant to which the Companyrepurchased $300,000 in common shares. On November 4, 2010, the Board of Directors authorized a self tender offer pursuant to which the Company repurchased$238,362 in common shares. In addition, the Board of Directors authorized separate repurchase agreements with funds affiliated with or managed by each of Aquiline Capital Partners LLC, New Mountain Capital LLC, and Vestar Capital Partners pursuant to which the Company repurchased $61,638 in common shares. On December 20, 2010, the Board of Directors authorized the Company to return up to an additional $400,000 to shareholders. This amount is in addition to the $929,173 of common shares purchased by the Company through December 23, 2010 under its previously authorized share repurchase program.

The Company expects the purchases under its share repurchase program 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 of Directors at any time.

The following table is a summary of the common shares issued and outstanding:

	Common Shares
Common shares issued, December 31, 2010		132,838,111
Restricted share awards vested, net of shares withheld		569,104
Restricted share units vested, net of shares withheld		9,497
Employee seller shares vested		197,174
Options exercised		459,932
Warrants exercised		428,884
Direct issuance of common stock		363
Common shares issued, December 31, 2011		134,503,065
Shares repurchased, December 31, 2011		(35,031,985)
Common shares outstanding, December 31, 2011		99,471,080
	Common Shares
Common shares issued, December 31, 2009		131,616,349
Restricted share awards vested, net of shares withheld		405,055
Restricted share units vested, net of shares withheld		57,192
Employee seller shares vested		203,544
Options exercised		550,014
Warrants exercised		5,957
Common shares issued, December 31, 2010		132,838,111
Shares repurchased, December 31, 2010		(34,836,885)
Common shares outstanding, December 31, 2010		98,001,226
	Common Shares
Common shares issued, December 31, 2008		75,624,697
Restricted share awards vested, net of shares withheld		423,746
Restricted share units vested, net of shares withheld		360,383
Employee seller shares vested		248,085
Options exercised		164,834
Warrants exercised		237,842
Direct issuance of common stock		54,556,762
Common shares issued, December 31, 2009		131,616,349
Shares repurchased, December 31, 2009		(3,156,871)
Common shares outstanding, December 31, 2009		128,459,478

(b) Warrants

In consideration for the founder's and sponsoring investors' commitments, the Company had outstanding as at December 31, 2011 warrants to the founding shareholder and sponsoring investors to purchase, in the aggregate, up to 6,916,678 (December 31, 2010: 7,934,860) common shares. Of those outstanding, 1,726,011 (December 31, 2010: 2,090,815) of the warrants are to purchase non-voting common shares.

The warrants may be settled using either the physical settlement or net-share settlement methods. The warrants have been classified as equity instruments, in accordance with U.S. GAAP guidance for “Derivatives and Hedging, Contracts inEntity's own Equity.” The warrants were measured at fair value and recorded in additional paid-in capital.

The fair value of each warrant issued was estimated on the date of grant using the Black-Scholes option-pricing model.The volatility assumption used, of approximately 30.0%, was derived from the historical volatility of the share price of a range of publicly-traded Bermuda reinsurance companies of a similar business nature to the Company. No allowance was made for any potential illiquidity associated with the private trading of the Company's shares. The other assumptions in the warrant-pricing model were as follows:

	July 24,		February 3,		December 15,
	2007		2006		2005
	Issuance		Issuance		Issuance
Warrants issued		256,409		8,593		8,446,727
Average strike price	$	20.00	$	17.50	$	17.50
Volatility		30.0%		30.0%		30.0%
Risk-free rate		4.5%		4.5%		4.5%
Expected dividend yield		0.0%		0.0%		0.0%
Expected term (years)		8		10		10
Calculated fair value per warrant	$	11.28	$	8.89	$	8.89

No further warrants are anticipated to be issued.The holder of the warrant is entitled to exercise the warrant in whole or in part at any time until the expiration date.

During the year ended December 31, 2011, 1,018,184 (2010: 17,278) warrants were exercised which resulted in the net share issuance of 428,884 (2010: 5,957) common shares.

(c) Deferred share units

Under the terms of the Company's Director Stock Compensation Plan, non-management directors may elect to receive their director fees in deferred share units rather than cash.  The number of share units distributed in case of election under the plan is equal to the amount of the annual retainer fee otherwise payable to the director on such payment date divided by 100% of the fair market value of a share on such payment date. Additional deferred share units are issued in lieu of dividends that accrue on these deferred share units.  The total outstanding deferred share units at December 31, 2011was4,850 (December 31, 2010:4,727).

(d) Dividends

On February 9, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on March 31, 2011 to holders of record on March 15, 2011.

On May 4, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on June 30, 2011 to holders of record on June 15, 2011.

On August 3, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on September 30, 2011 to holders of record on September 15, 2011.

On November 2, 2011, the Company announced a quarterly cash dividend of $0.25 (2010: $0.22; 2009: $0.20) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on December 30, 2011 to holders of record on December 15, 2011.

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Income taxes (Text) (Details) (United Kingdom Tax Jurisdiction [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011
Operating Loss Carryforwards [Line Items]
Net operating loss carryforward	43,100
2010
Operating Loss Carryforwards [Line Items]
Corporate tax rate	27.00%
2011
Operating Loss Carryforwards [Line Items]
Corporate tax rate	26.00%
2012
Operating Loss Carryforwards [Line Items]
Corporate tax rate	25.00%