10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 __________________________________________________

Form 10-Q

__________________________________________________

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

For the quarterly period ended June 30, 2012

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	(I.R.S. Employer
incorporation or organization)	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)

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 x  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 x  No 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 x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

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

As of July 24, 2012 there were 93,985,765 outstanding Common Shares, $0.175 par value per share, of the registrant.

INDEX

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as at June 30, 2012 (unaudited) and December 31, 2011	2
Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2012 and 2011 (unaudited)	2
Consolidated Statements of Shareholders’ Equity for the Six Months Ended June 30, 2012 and 2011 (unaudited)	2
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011 (unaudited)	2
Notes to Consolidated Financial Statements (unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	84
Item 4. Controls and Procedures	85
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	86
Item 1A. Risk Factors	86
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 3. Defaults Upon Senior Securities	87
Item 4. Mine Safety Disclosure	87
Item 5. Other Information	87
Item 6. Exhibits	87
Signatures	88

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

Validus Holdings, Ltd.

Consolidated Balance Sheets

As at June 30, 2012 (unaudited) and December 31, 2011

(Expressed in thousands of U.S. dollars, except share and per share information)

	June 30, 2012			December 31, 2011
	(unaudited)
Assets
Fixed maturities, at fair value (amortized cost: 2012 - $4,715,764; 2011 - $4,859,705)	$	4,772,899		$	4,894,145
Short-term investments, at fair value (amortized cost: 2012 - $310,715; 2011 - $280,299)	310,703			280,191
Other investments at fair value (amortized cost: 2012 - $510,900; 2011 - $15,002)	463,018			16,787
Cash and cash equivalents	903,310			832,844
Total investments and cash	6,449,930			6,023,967
Investments in affiliates	92,807			53,031
Premiums receivable	977,431			646,354
Deferred acquisition costs	176,172			121,505
Prepaid reinsurance premiums	176,387			91,381
Securities lending collateral	3,456			7,736
Loss reserves recoverable	371,484			372,485
Paid losses recoverable	32,395			90,495
Income taxes recoverable	2,651			—
Intangible assets	112,651			114,731
Goodwill	20,393			20,393
Accrued investment income	21,399			25,906
Other assets	62,412			50,487
Total assets	$	8,499,568		$	7,618,471
Liabilities
Reserve for losses and loss expenses	$	2,591,299		$	2,631,143
Unearned premiums	1,196,836			772,382
Reinsurance balances payable	185,456			119,899
Securities lending payable	4,145			8,462
Deferred income taxes	19,197			16,720
Net payable for investments purchased	6,451			1,256
Accounts payable and accrued expenses	76,774			83,402
Senior notes payable	247,036			246,982
Debentures payable	289,800			289,800
Total liabilities	$	4,616,994		$	4,170,046
Commitments and contingent liabilities
Shareholders’ equity
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2012 - 135,374,491; 2011 - 134,503,065; Outstanding: 2012 - 93,411,062; 2011 - 99,471,080)	$	23,691		$	23,538
Treasury shares (2012 - 41,963,429; 2011 - 35,031,985)	(7,343		)	(6,131		)
Additional paid-in-capital	1,684,781			1,893,890
Accumulated other comprehensive (loss)	(5,965		)	(6,601		)
Retained earnings	1,782,670			1,543,729
Total shareholders’ equity available to Validus	3,477,834			3,448,425
Noncontrolling interest	404,740			—
Total shareholders’ equity	$	3,882,574		$	3,448,425
Total liabilities and shareholders’ equity	$	8,499,568		$	7,618,471

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Validus Holdings, Ltd.

Consolidated Statements of Comprehensive Income (Loss)

For the Three and Six Months EndedJune 30, 2012 and 2011 (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information) 

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues
Gross premiums written	$	627,089		$	605,387		$	1,464,378		$	1,455,283
Reinsurance premiums ceded	(119,052		)	(132,346		)	(226,104		)	(242,166		)
Net premiums written	508,037			473,041			1,238,274			1,213,117
Change in unearned premiums	(60,410		)	(47,401		)	(339,448		)	(357,944		)
Net premiums earned	447,627			425,640			898,826			855,173
Net investment income	25,885			26,494			53,645			56,469
Net realized gains on investments	6,154			11,552			13,686			17,931
Net unrealized (losses) gains on investments	(53,574		)	18,526			(32,903		)	5,698
(Loss) from investment affiliate	(398		)	—			(398		)	—
Other income	5,994			595			14,885			2,201
Foreign exchange (losses) gains	(652		)	(1,991		)	2,514			(2,458		)
Total revenues	431,036			480,816			950,255			935,014
Expenses
Losses and loss expenses	153,692			207,307			385,681			683,505
Policy acquisition costs	76,129			78,230			154,261			155,526
General and administrative expenses	61,635			60,841			128,010			109,318
Share compensation expenses	6,800			7,628			12,238			19,677
Finance expenses	13,706			16,361			29,985			30,362
Total expenses	311,962			370,367			710,175			998,388
Net income (loss) before taxes and income from operating affiliates	119,074			110,449			240,080			(63,374		)
Tax (expense) benefit	(404		)	29			(543		)	1,488
Income from operating affiliates	3,592			—			6,959			—
Net income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Net loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Net income (loss) available (attributable) to Validus	$	167,622		$	109,884		$	291,856		$	(62,480	)
Other comprehensive (loss) income
Foreign currency translation adjustments	(757		)	(21		)	636			936
Other comprehensive (loss) income	$	(757	)	$	(21	)	$	636		$	936
Comprehensive income (loss) available (attributable) to Validus	$	166,865		$	109,863		$	292,492		$	(61,544	)
Earnings per share
Weighted average number of common shares and common share equivalents outstanding
Basic	98,254,186			98,385,924			98,839,663			98,165,132
Diluted	103,667,967			104,562,450			104,382,030			98,165,132
Basic earnings (loss) per share available (attributable) to common shareholders	$	1.69		$	1.10		$	2.92		$	(0.68	)
Diluted earnings (loss) per share available (attributable) to common shareholders	$	1.62		$	1.05		$	2.80		$	(0.68	)
Cash dividends declared per share	$	0.25		$	0.25		$	0.50		$	0.50

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Validus Holdings, Ltd.

Consolidated Statements of Shareholders’ Equity

For the Six Months EndedJune 30, 2012 and 2011 (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	June 30, 2012			June 30, 2011
	(unaudited)			(unaudited)
Common shares
Balance - Beginning of period	$	23,538		$	23,247
Common shares issued, net	153			167
Balance - End of period	$	23,691		$	23,414
Treasury shares
Balance - Beginning of period	$	(6,131	)	$	(6,096	)
Repurchase of common shares	(1,212		)	(35		)
Balance - End of period	$	(7,343	)	$	(6,131	)
Additional paid-in capital
Balance - Beginning of period	$	1,893,890		$	1,860,960
Common shares (redeemed) issued, net	(1,307		)	6,071
Repurchase of common shares	(220,040		)	(5,960		)
Share compensation expenses	12,238			19,677
Balance - End of period	$	1,684,781		$	1,880,748
Accumulated other comprehensive (loss)
Balance - Beginning of period	$	(6,601	)	$	(5,455	)
Foreign currency translation adjustments	636			936
Balance - End of period	$	(5,965	)	$	(4,519	)
Retained earnings
Balance - Beginning of period	$	1,543,729		$	1,632,175
Dividends	(52,915		)	(54,890		)
Net income (loss)	246,496			(61,886		)
Net loss (income) attributable to noncontrolling interest	45,360			(594		)
Balance - End of period	$	1,782,670		$	1,514,805
Total shareholders’ equity available to Validus	$	3,477,834		$	3,408,317
Noncontrolling interest	$	404,740		$	134,895
Total shareholders’ equity	$	3,882,574		$	3,543,212

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Validus Holdings, Ltd.

Consolidated Statements of Cash Flows

For the Six Months EndedJune 30, 2012 and 2011 (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	June 30, 2012			June 30, 2011
	(unaudited)			(unaudited)
Cash flows provided by (used in) operating activities
Net income (loss)	$	246,496		$	(61,886	)
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Share compensation expenses	12,238			19,677
Amortization of discount on senior notes	54			54
Loss from investment affiliate	398			—
Net realized (gains) on investments	(13,686		)	(17,931		)
Net unrealized losses (gains) on investments	32,903			(5,698		)
Amortization of intangible assets	2,080			2,080
Income from operating affiliates	(6,959		)	—
Foreign exchange (gains) included in net income	(5,844		)	(12,729		)
Amortization of premium on fixed maturities	12,253			16,247
Change in:
Premiums receivable	(330,214		)	(475,119		)
Deferred acquisition costs	(54,667		)	(52,827		)
Prepaid reinsurance premiums	(85,006		)	(106,312		)
Loss reserves recoverable	1,475			(155,002		)
Paid losses recoverable	58,149			(2,825		)
Income taxes recoverable	(2,720		)	(2,400		)
Accrued investment income	4,534			12,406
Other assets	(11,777		)	9,351
Reserve for losses and loss expenses	(43,198		)	575,832
Unearned premiums	424,454			464,256
Reinsurance balances payable	65,154			116,080
Deferred income taxes	2,565			(2,611		)
Accounts payable and accrued expenses	(3,518		)	(11,029		)
Net cash provided by operating activities	305,164			309,614
Cash flows provided by (used in) investing activities
Proceeds on sales of investments	1,829,294			2,654,804
Proceeds on maturities of investments	295,192			195,055
Purchases of fixed maturities	(1,975,225		)	(2,613,981		)
Purchases of short-term investments, net	(31,629		)	(451,706		)
(Purchases) sales of other investments	(500,632		)	3,809
Decrease in securities lending collateral	4,317			960
Purchase of investment in operating affiliates	(26,500		)	—
Purchase of investment in investment affiliate	(3,368		)	—
Net cash (used in) investing activities	(408,551		)	(211,059		)
Cash flows provided by (used in) financing activities
(Redemption) issuance of common shares, net	(1,154		)	6,238
Purchases of common shares under share repurchase program	(221,252		)	(5,995		)
Dividends paid	(56,260		)	(54,000		)
Decrease in securities lending payable	(4,317		)	(960		)
Third party investment in noncontrolling interest	450,100			134,301
Net cash provided by financing activities	167,117			79,584
Effect of foreign currency rate changes on cash and cash equivalents	6,736			17,042
Net increase in cash	70,466			195,181
Cash and cash equivalents - beginning of period	$	832,844		$	620,740
Cash and cash equivalents - end of period	$	903,310		$	815,921
Taxes paid (recovered) during the period	$	3,764		$	(3,373	)
Interest paid during the period	$	20,117		$	23,823

 The accompanying notes are an integral part of these consolidated financial statements (unaudited).

2

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

1. Basis of preparation and consolidation

These unaudited consolidated financial statements include Validus Holdings, Ltd. and its subsidiaries (together, the "Company") and have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 in Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In addition, the year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. This Quarterly Report should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the U.S. Securities and Exchange Commission (the "SEC").

In the opinion of management, these unaudited 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 significant 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 results of operations for any interim period are not necessarily indicative of the results for a full year. The term "ASC" used in these notes refers to Accounting Standard Codifications issued by the United States Financial Accounting Standards Board ("FASB").

On April 2, 2012, the Company joined with other investors in capitalizing PaCRe, Ltd. (“PaCRe”) a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance. Validus Reinsurance, Ltd. (“Validus Re”) has an equity interest in PaCRe and as Validus Re holds a majority of PaCRe's outstanding voting rights, the financial statements of PaCRe are included in the consolidated financial statements of the Company. The portion of PaCRe's earnings attributable to third party investors for the three and six months ended June 30, 2012 is recorded in the consolidated Statements of Comprehensive Income (loss) as net income attributable to noncontrolling interest. Refer to Note 5 "Noncontrolling interest" for further information.

On May 29, 2012, the Company joined with other investors in capitalizing AlphaCat Re 2012, Ltd. (“AlphaCat Re 2012”) a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance with a particular focus on windstorm risks for Florida domiciled insurance companies. Validus Re has an equity interest and voting interest in AlphaCat Re 2012 which is below 50%, therefore the investment in AlphaCat Re 2012 is included as an equity method investment in the consolidated financial statements of the Company. Refer to Note 4 “Investments in affiliates” for further information.

2. Recent accounting pronouncements

(a) Adoption of New Accounting Standards

Fair Value Measurement and Disclosures

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. Effective January 1, 2012, the Company prospectively adopted this amended guidance. The adoption of this guidance did not impact our results of operations, financial condition or liquidity. The adoption of this guidance did not have a significant impact on the current disclosures included in Note 3 "Investments".

Presentation of Comprehensive Income

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. Effective January 1, 2012, the Company retrospectively adopted this guidance. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

(b) Recently Issued Accounting Standards Not Yet Adopted

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. 

In July 2012, the FASB issued Accounting Standards Update No. 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" ("ASU 2012-02"). The objective of ASU 2012-02 is to simplify how entities test intangibles for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment described in ASC Topic 350 "Intangibles - Goodwill and Other - General Intangibles Other than Goodwill." The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued. The Company has evaluated the impact of this guidance and has concluded that it will not have a material impact on the Company's consolidated financial statements.

3. Investments

The Company’s investments in fixed maturities, short-term investments and other investments 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

3

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

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 four Paulson & Co. Inc. managed hedge funds and an investment in a fund of hedge funds are the only financial instruments in this category as at June 30, 2012. For each respective hedge fund investment, the Company obtains and reviews the valuation methodology used by the fund administrators and investment managers to ensure that the hedge fund investments are following fair value principles consistent with U.S. GAAP in determining the net asset value (“NAV”).

Other investments consist of an investment in four Paulson & Co. Inc. managed hedge funds (the "hedge funds"), a fund of hedge funds and a deferred compensation trust held in mutual funds. The hedge funds were valued at $450,131 at June 30, 2012. The funds' administrator provides monthly reported NAVs with a one-month delay in its valuation. As a result, the funds' administrator's May 31, 2012 NAV was used as a partial basis for fair value measurement in the Company's June 30, 2012 balance sheet. The fund manager provides an estimate of the NAV at June 30, 2012 based on estimated performance. The Company adjusts fair value to the fund manager's estimated NAV that incorporates relevant valuation sources on a timely basis. As this valuation technique incorporates both observable and significant unobservable inputs, the fund is classified as a Level 3 asset. To determine the reasonableness of the estimated NAV, the Company assesses the variance between the fund manager's estimated NAV and the fund administrator's NAV. Immaterial variances are recorded in the following reporting period. These managed hedge funds are subject to quarterly liquidity.

The fund of hedge funds is a side pocket valued at $4,662 at June 30, 2012. While a redemption request has been submitted, the timing of receipt of proceeds on the side pocket is unknown. The fund’s administrator provides a monthly reported NAV with a one-month delay in its valuation. As a result, the fund administrator’s May 31, 2012 NAV was used as a basis for fair value measurement in the Company’s June 30, 2012 balance sheet. The fund manager provides an estimate of the fund NAV at June 30, 2012 based on the estimated performance provided from the underlying third-party funds. To determine the reasonableness of the NAV, the Company compares the one-month delayed fund administrator's NAV to the fund manager’s estimated NAV that incorporates relevant valuation sources on a timely basis. Immaterial variances are recorded in the following reporting period. As this valuation technique incorporates both observable and significant unobservable inputs, the fund of hedge funds is classified as a Level 3 asset.

At June 30, 2012, the Company’s investments were allocated between Levels 1, 2 and 3 as follows:

4

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	Level 1		Level 2		Level 3			Total
U.S. Government and Government Agency	$	—	$	1,139,424	$	—		$	1,139,424
Non-U.S. Government and Government Agency	—		331,601		—			331,601
States, municipalities, political subdivision	—		42,844		—			42,844
Agency residential mortgage-backed securities	—		449,464		—			449,464
Non-Agency residential mortgage-backed securities	—		23,069		—			23,069
U.S. corporate	—		1,271,768		—			1,271,768
Non-U.S. corporate	—		559,479		—			559,479
Bank loans	—		566,017		—			566,017
Catastrophe bonds	—		36,702		—			36,702
Asset-backed securities	—		352,531		—			352,531
Commercial mortgage-backed securities	—		—		—			—
Total fixed maturities	—		4,772,899		—			4,772,899
Short-term investments	282,061		28,642		—			310,703
Fund of hedge funds	—		—		4,662			4,662
Hedge funds (a)	—		—		450,131			450,131
Mutual funds	—		8,225		—			8,225
Total	$	282,061	$	4,809,766	$	454,793		$	5,546,620
Noncontrolling interest (a)					(405,118		)	(405,118		)
Total investments excluding noncontrolling interest	$	282,061	$	4,809,766	$	49,675		$	5,141,502

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

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	—		—		5,627		5,627
Private equity investment	—		—		3,253		3,253
Mutual funds	—		7,907		—		7,907
Total	$	257,854	$	4,924,389	$	8,880	$	5,191,123

At June 30, 2012, Level 3 investments excluding the noncontrolling interest totaled $49,675, representing 1.0% of total

5

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

investments, excluding noncontrolling interest, measured at fair value on a recurring basis. At December 31, 2011, Level 3 investments totaled $8,880 representing 0.2% 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 during the three and six month periods ending June 30, 2012 and 2011:

	Three Months Ended June 30, 2012
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	8,325		$	8,325
Purchases	—		500,000			500,000
Sales	—		(277		)	(277		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		21			21
Unrealized (losses)	—		(48,494		)	(48,494		)
Amortization	—		—			—
Transfers	—		(4,782		)	(4,782		)
Level 3 investments - End of period	$	—	$	454,793		$	454,793
Noncontrolling interest (a)	—		(405,118		)	(405,118		)
Level 3 investments excluding noncontrolling interest	$	—	$	49,675		$	49,675

	Three Months Ended June 30, 2011
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	10,713		$	10,713
Purchases	—		—			—
Sales	—		(1,247		)	(1,247		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		175			175
Unrealized gains	—		135			135
Amortization	—		—			—
Transfers	—		—			—
Level 3 investments - End of period	$	—	$	9,776		$	9,776

6

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	Six Months Ended June 30, 2012
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	8,880		$	8,880
Purchases	—		500,000			500,000
Sales	—		(896		)	(896		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		48			48
Unrealized (losses)	—		(49,986		)	(49,986		)
Amortization	—		—			—
Transfers	—		(3,253		)	(3,253		)
Level 3 investments - End of period	$	—	$	454,793		$	454,793
Noncontrolling interest (a)	—		(405,118		)	(405,118		)
Level 3 investments excluding noncontrolling interest	$	—	$	49,675		$	49,675

	Six Months Ended June 30, 2011
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	12,892		$	12,892
Purchases	—		—			—
Sales	—		(3,809		)	(3,809		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		435			435
Unrealized gains	—		258			258
Amortization	—		—			—
Transfers	—		—			—
Level 3 investments - End of period	$	—	$	9,776		$	9,776

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

There have not been any transfers between Levels 1 and 2 during the three or six months ended June 30, 2012. During the three months ended June 30, 2012, there was a transfer of the private equity investment out of Level 3 “Other investments” to “Investments in affiliates.” Refer to Note 4 “Investments in affiliates.”

(b) Net investment income

Net investment income was derived from the following sources: 

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Fixed maturities and short-term investments	$	26,471		$	27,535		$	53,747		$	56,470
Cash and cash equivalents	1,449			687			3,766			3,268
Securities lending income	1			8			6			24
Total gross investment income	27,921			28,230			57,519			59,762
Investment expenses	(2,036		)	(1,736		)	(3,874		)	(3,293		)
Net investment income	$	25,885		$	26,494		$	53,645		$	56,469

7

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

(c) Fixed maturity and short-term investments

The following represents an analysis of net realized gains and the change in net unrealized (losses) gains on investments:

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains	$	9,415		$	13,032		$	19,423		$	28,797
Gross realized (losses)	(3,261		)	(1,480		)	(5,737		)	(10,866		)
Net realized gains on investments	6,154			11,552			13,686			17,931
Net unrealized gains on securities lending	—			11			37			41
Change in net unrealized (losses) gains on investments	(53,574		)	18,515			(32,940		)	5,657
Total net realized gains and change in net unrealized (losses) gains on investments	$	(47,420	)	$	30,078		$	(19,217	)	$	23,629
Noncontrolling interest (a)	44,882			—			44,882			—
Total net realized gains and change in net unrealized (losses) gains on investments excluding noncontrolling interest	$	(2,538	)	$	30,078		$	25,665		$	23,629

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at June 30, 2012 were as follows:

8

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government and Government Agency	$	1,131,386		$	8,154	$	(116	)	$	1,139,424
Non-U.S. Government and Government Agency	326,229			7,204		(1,832		)	331,601
States, municipalities, political subdivision	42,149			713		(18		)	42,844
Agency residential mortgage-backed securities	433,732			15,953		(221		)	449,464
Non-Agency residential mortgage-backed securities	26,119			250		(3,300		)	23,069
U.S. corporate	1,249,755			23,395		(1,382		)	1,271,768
Non-U.S. corporate	551,236			8,778		(535		)	559,479
Bank loans	567,779			3,346		(5,108		)	566,017
Catastrophe bonds	36,250			485		(33		)	36,702
Asset-backed securities	351,129			1,892		(490		)	352,531
Commercial mortgage-backed securities	—			—		—			—
Total fixed maturities	4,715,764			70,170		(13,035		)	4,772,899
Total short-term investments	310,715			8		(20		)	310,703
Mutual funds	6,504			1,721		—			8,225
Fund of hedge funds	4,396			266		—			4,662
Hedge funds (a)	500,000			—		(49,869		)	450,131
Total other investments	510,900			1,987		(49,869		)	463,018
Total	$	5,537,379		$	72,165	$	(62,924	)	$	5,546,620
Noncontrolling interest (a)	$	(450,000	)	$	—	$	44,882		$	(405,118	)
Total investments excluding noncontrolling interest	$	5,087,379		$	72,165	$	(18,042	)	$	5,141,502

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at December 31, 2011 were as follows:

9

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	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
Fund of hedge funds	5,244		383		—			5,627
Private equity investment	3,253		—		—			3,253
Mutual funds	6,505		1,402		—			7,907
Total other investments	15,002		1,785		—			16,787
Total	$	5,155,006	$	75,230	$	(39,113	)	$	5,191,123

The following table sets forth certain information regarding the investment ratings of the Company’s fixed maturities portfolio as at June 30, 2012 and December 31, 2011. 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.

	June 30, 2012				December 31, 2011
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
AAA	$	745,676	15.6	%	$	882,912	18.0	%
AA	2,025,848		42.5	%	2,077,981		42.5	%
A	1,019,888		21.4	%	1,078,793		22.0	%
BBB	378,502		7.9	%	345,091		7.1	%
Investment grade	4,169,914		87.4	%	4,384,777		89.6	%
BB	315,768		6.6	%	254,409		5.2	%
B	263,900		5.5	%	231,420		4.7	%
CCC	8,885		0.2	%	12,578		0.3	%
CC	3,116		0.1	%	4,605		0.1	%
D/NR	11,316		0.2	%	6,356		0.1	%
Non-Investment grade	602,985		12.6	%	509,368		10.4	%
Total Fixed Maturities	$	4,772,899	100.0	%	$	4,894,145	100.0	%

The amortized cost and estimated fair value amounts for fixed maturity securities held at June 30, 2012 and December 31,

10

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

2011 are shown below 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.

	June 30, 2012				December 31, 2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	452,460	$	455,506	$	520,631	$	523,107
Due after one year through five years	3,049,223		3,088,234		3,160,647		3,186,711
Due after five years through ten years	398,769		398,975		350,459		346,654
Due after ten years	4,332		5,120		8,184		8,211
	3,904,784		3,947,835		4,039,921		4,064,683
Asset-backed and mortgage-backed securities	810,980		825,064		819,784		829,462
Total	$	4,715,764	$	4,772,899	$	4,859,705	$	4,894,145

The Company has a four-year, $525,000 secured letter of credit facility provided by a syndicate of commercial banks (the “Four Year Facility”). At June 30, 2012, approximately $322,126 (December 31, 2011: $nil) of letters of credit were issued and outstanding under this facility for which $435,868 of investments were pledged as collateral (December 31, 2011: $nil). 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 June 30, 2012, $25,000 (December 31, 2011: $25,000) of letters of credit were issued and outstanding under the Talbot FAL Facility for which $43,835 of investments were pledged as collateral (December 31, 2011: $44,623). In addition, $2,100,431 of investments were held in trust at June 30, 2012 (December 31, 2011: $2,129,570). Of those, $1,778,366 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, 2011: $1,686,586). In 2009, the Company entered into a $500,000 secured letter of credit facility provided by Citibank Europe plc (the "Secured Bi-Lateral Letter of Credit Facility"). At June 30, 2012 approximately $80,134 (December 31, 2011: $nil) letters of credit were issued and outstanding under this facility for which $110,428 of investments were pledged as collateral (December 31, 2011: $nil).

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 June 30, 2012, the IPC Bi-Lateral Facility had $51,479 (December 31, 2011: $57,146) letters of credit issued and outstanding for which $107,984 (December 31, 2011: $105,428) 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 June 30, 2012, the Company had $4,039 (December 31, 2011: $8,286) in securities on loan. During the three months ended June 30, 2012, the Company recorded a $nil unrealized gain on this collateral on its Statements of Comprehensive Income (Loss) (June 30, 2011: unrealized gain $11). During the six months endedJune 30, 2012, the Company recorded a $37 unrealized gain on this collateral on its Statements of Comprehensive Income (Loss) (June 30, 2011: unrealized gain $41).

Securities lending collateral reinvested includes corporate floating rate securities and overnight repos with an average reset period of 2.9 days (December 31, 2011: 3.9 days). As at June 30, 2012, 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:

11

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	Level 1		Level 2		Level 3		Total
Corporate	$	—	$	148	$	—	$	148
Short-term investments	3,308		—		—		3,308
Total	$	3,308	$	148	$	—	$	3,456

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

The following table sets forth certain information regarding the investment ratings of the Company’s securities lending collateral reinvested as at June 30, 2012 and December 31, 2011. 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.

	June 30, 2012				December 31, 2011
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
NR	148		4.3	%	255		3.3	%
	148		4.3	%	255		3.3	%
NR- Short-term investments (a)	3,308		95.7	%	7,481		96.7	%
Total	$	3,456	100.0	%	$	7,736	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 June 30, 2012 and December 31, 2011 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.

	June 30, 2012				December 31, 2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,525	$	3,308	$	7,462	$	7,481
Due after one year through five years	620		148		1,000		255
Total	$	4,145	$	3,456	$	8,462	$	7,736

4. Investments in affiliates

(a) Operating affiliates

AlphaCat Re 2011, Ltd.

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

On December 23, 2011, AlphaCat Re 2011 completed a secondary offering of its common shares 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 were derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 has been treated as an equity method investment as at June 30, 2012. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 was recorded in the Consolidated Statements of Comprehensive Income (loss) as net income attributable to noncontrolling interest.

AlphaCat Re 2012, Ltd.

On May 29, 2012, the Company joined with other investors in capitalizing ACRe 2012, Ltd. ("AlphaCat Re 2012"), a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance with a particular focus on windstorm risks for Florida domiciled insurance companies. The Company holds an equity interest of 37.9% and a voting interest of 49.0% in AlphaCat Re 2012, therefore the investment has been treated as an equity method investment as at June 30, 2012.

The following table presents a reconciliation of the beginning and ending investment in operating affiliate balances for the three and six months ended June 30, 2012: 

	Three Months Ended June 30, 2012
		Investment in operating affiliate (AlphaCat Re 2011)		Investment in operating affiliate (AlphaCat Re 2012)		Total
As at March 31, 2012		$	56,398	$	—	$	56,398
Purchase of shares		—		26,500		26,500
Income from operating affiliates		2,840		752		3,592
As at June 30, 2012		$	59,238	$	27,252	$	86,490

	Six Months Ended June 30, 2012
	Investment in operating affiliate (AlphaCat Re 2011)		Investment in operating affiliate (AlphaCat Re 2012)		Total
As at December 31, 2011	$	53,031	$	—	$	53,031
Purchase of shares	—		26,500		26,500
Income from operating affiliates	6,207		752		6,959
As at June 30, 2012	$	59,238	$	27,252	$	86,490

The following table presents the Company's investments in AlphaCat Re 2011 and AlphaCat Re 2012, as at June 30, 2012:

	Investment in non-consolidated affiliate
	Investment at cost		Voting ownership %		Equity Ownership		Carrying Value
AlphaCat Re 2011	$	41,389	43.7	%	22.3	%	$	59,238
AlphaCat Re 2012	$	26,500	49.0	%	37.9	%	$	27,252

(b) Investment affiliate

Aquiline Financial Services Fund II L.P.

On December 20, 2011, Validus Re 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 private equity limited partnership provides quarterly capital account statements with a three-month delay in its valuation. As a result, the limited partnership's March 31, 2012 capital account statement was used as a basis for calculation of the Company's share of partnership income for the period.

The following table presents a reconciliation of the beginning and ending investment in the Company's investment affiliate balances for the three and six months ended June 30, 2012:

	Three Months Ended June 30, 2012
	Investment in limited partnership (Aquiline Financial Services Fund II L.P)
As at March 31, 2012	$	3,347
Capital contributions	3,368
(Loss) from investment affiliate	(398		)
As at June 30, 2012	$	6,317

	Six Months Ended June 30, 2012
	Investment in limited partnership (Aquiline Financial Services Fund II L.P) (a)
As at December 31, 2011	$	3,253
Capital contributions	4,898
Net unrealized loss on investments (a)	(1,436		)
(Loss) from investment affiliate	(398		)
As at June 30, 2012	$	6,317

(a) As at December 31, 2011 and March 31, 2012, this investment was included in "Other investments" as a level 3 investment in the fair value hierarchy, hence the change in fair value was included in net unrealized (losses) gains on investments.

The following table presents the Company's investment in Aquiline as at June 30, 2012:

	Investment in non-consolidated affiliate
	Investment at cost		Voting ownership %		Equity Ownership		Carrying Value
Aquiline Financial Services Fund II L.P	$	8,151	—	%	6.8	%	$	6,317

5. Noncontrolling interest

     On April 2, 2012, the Company joined with other investors in capitalizing PaCRe a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance. Validus Re has a majority voting equity interest in PaCRe and as a result, the financial statements of PaCRe are included in the consolidated financial statements of the Company. The portion of PaCRe's earnings attributable to third party investors for the three and six months ended June 30, 2012 is recorded in the consolidated Statements of Comprehensive Income (loss) as net income attributable to noncontrolling interest.

The following table presents a reconciliation of the beginning and ending balances of noncontrolling interest for the three months ended June 30, 2012:

	Noncontrolling
	interest
Balance - April 2, 2012	$	—
Purchase of shares by noncontrolling interest		450,100
Net Income (loss):
Net (loss) attributable to noncontrolling interest		(45,360	)
Balance - June 30, 2012	$	404,740

6. Derivative instruments used in hedging activities

The Company enters into derivative instruments for risk management purposes, specifically to hedge unmatched foreign currency exposures. As at June 30, 2012 the Company held a foreign currency forward contract to mitigate the risk of foreign currency exposure of unpaid losses denominated in Chilean Pesos (CLP) as well as foreign currency forward contracts to mitigate the risk of fluctuations in the Euro to U.S. dollar exchange rates.

The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at June 30, 2012:

			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contracts	$	45,711	Other assets	$	152	Accounts payable and accrued expenses	$	680

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 contract	$	75,323	Other assets	$	476	Accounts payable and accrued expenses	$	—

(a) Classification within the fair value hierarchy

As described in Note 3 "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.

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 three and six months ended June 30, 2012:

		Three Months Ended June 30, 2012
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 derivative		Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged			Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange gains (losses)	$	1,700	$	(1,700	)	$	—
		Three Months Ended June 30, 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 derivative		Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged			Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange gains (losses)	$	897	$	(897	)	$	—

		Six Months Ended June 30, 2012
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 derivative			Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange (losses) gains	$	(1,618	)	$	1,618	$	—
		Six Months Ended June 30, 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 derivative			Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange (losses) gains	$	(2,925	)	$	2,925	$	—

7. 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 and adjusted 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 losses and loss expenses for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Reserve for losses and loss expenses, beginning of period	$	2,649,610		$	2,534,415		$	2,631,143		$	2,035,973
Losses and loss expenses recoverable	(351,292		)	(453,701		)	(372,485		)	(283,134		)
Net reserves for losses and loss expenses, beginning of period	2,298,318			2,080,714			2,258,658			1,752,839
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year	191,252			233,012			453,665			735,726
Prior years	(37,560		)	(25,705		)	(67,984		)	(52,221		)
Total incurred losses and loss expenses	153,692			207,307			385,681			683,505
Total net paid losses	(220,529		)	(121,046		)	(424,752		)	(284,303		)
Foreign exchange	(11,666		)	13,580			228			28,514
Net reserve for losses and loss expenses, end of period	2,219,815			2,180,555			2,219,815			2,180,555
Losses and loss expenses recoverable	371,484			439,805			371,484			439,805
Reserve for losses and loss expenses, end of period	$	2,591,299		$	2,620,360		$	2,591,299		$	2,620,360

8. 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) 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 June 30, 2012, 97.3% of reinsurance recoverables (which includes loss reserves recoverable and recoverables on paid losses) were from reinsurers rated A- or better and included $156,316 of IBNR recoverable (December 31, 2011: $125,298). Reinsurance recoverables by reinsurer are as follows:

	June 30, 2012				December 31, 2011
	Reinsurance Recoverable		% of Total		Reinsurance Recoverable		% of Total
Top 10 reinsurers	$	291,970	72.3	%	$	323,315	69.8	%
Other reinsurers’ balances > $1 million	104,288		25.8	%	132,417		28.6	%
Other reinsurers’ balances < $1 million	7,621		1.9	%	7,248		1.6	%
Total	$	403,879	100.0	%	$	462,980	100.0	%

	June 30, 2012
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	75,022	25.8	%
Everest Re	A+	42,727		14.6	%
Allianz	AA-	39,336		13.5	%
Hannover Re	AA-	38,960		13.3	%
Transatlantic Re	A+	20,975		7.2	%
Lancashire Insurance Company Ltd	A	20,000		6.9	%
Swiss Re	AA-	16,200		5.5	%
Munich Re	AA-	13,722		4.7	%
Tokio Millenium Re Ltd	AA-	12,940		4.4	%
Platinum Underwriters	A-	12,088		4.1	%
Total		$	291,970	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 Millenium Re Ltd	AA-	20,432		6.3	%
Fully Collateralized	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	%

At June 30, 2012 and December 31, 2011, the provision for uncollectible reinsurance relating to losses recoverable was $6,475 and $6,821, 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 $403,879 reinsurance recoverable at June 30, 2012 (December 31, 2011: $462,980), $9,717 was fully collateralized (December 31, 2011: $18,140).

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.

9. 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 common voting shares are entitled to receive dividends and 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 June 5, 2012, the Company announced the final results of its “modified Dutch auction” tender offer. Pursuant to this tender offer the Company purchased 6,383,884 of its common shares at a price of $32.00 per common share for a total cost of 204,284, excluding fees and expenses relating to the tender offer. The Company funded the purchase of the shares in the tender offer using cash on hand.

The Company may from time to time repurchase its securities, including common shares, Junior Subordinated Deferrable Debentures and Senior Notes. The Company has repurchased approximately 41,963,429 common shares for an aggregate purchase price of $1,168,422 from the inception of its share repurchase program to June 30, 2012. The Company had $160,751 remaining under its authorized share repurchase program as of June 30, 2012.

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, 2011	134,503,065
Restricted share awards vested, net of shares withheld	687,990
Restricted share units vested, net of shares withheld	12,336
Options exercised	171,100
Warrants exercised	—
Common shares issued, June 30, 2012	135,374,491
Shares repurchased	(41,963,429	)
Common shares outstanding, June 30, 2012	93,411,062

	Common Shares
Common shares issued, December 31, 2010	132,838,111
Restricted share awards vested, net of shares withheld	458,933
Restricted share units vested, net of shares withheld	9,496
Options exercised	455,033
Warrants exercised	34,340
Common shares issued, June 30, 2011	133,795,913
Shares repurchased	(35,031,985	)
Common shares outstanding, June 30, 2011	98,763,928

(b) Warrants

During the three and six months ended June 30, 2012 no warrants were exercised. During the three and six months ended June 30, 2011, 72,598 warrants were exercised which resulted in the issuance of 34,340 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 June 30, 2012 were 4,927 (December 31, 2011: 4,850).

(d) Dividends

On February 9, 2012, the Company announced a quarterly cash dividend of $0.25 (2011: $0.25) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on March 30, 2012 to holders of record on March 15, 2012.

On May 2, 2012, the Company announced a quarterly cash dividend of $0.25 (2011: $0.25) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on June 29, 2012 to holders of record on June 15, 2012.

10. 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 3,152,947 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. Fair value of the option awards at the date of grant is determined 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 has not granted any stock options awards since September 4, 2009.

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 in respect of options of $7 were recorded for the three months ended June 30, 2012 (2011: $179). Share compensation expenses in respect of options of $142 were recorded for the six months ended June 30, 2012 (2011:$1,426). 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 six months ended June 30, 2012 was as follows:

	Options		Weighted Average Grant Date Fair Value		Weighted Average Grant Date Exercise Price
Options outstanding, December 31, 2011	2,263,012		$	6.69	$	20.12
Options granted	—		—		—
Options exercised	(171,100	)	7.52		17.99
Options forfeited	—		—		—
Options outstanding, June 30, 2012	2,091,912		$	6.63	$	20.29
Options exercisable at June 30, 2012	2,091,912		$	6.63	$	20.29

Activity with respect to options for the six months ended June 30, 2011was 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	(455,033	)	6.96		20.56
Options forfeited	(1,850	)	10.30		20.39
Options outstanding, June 30, 2011	2,266,801		$	6.70	$	20.12
Options exercisable at June 30, 2011	2,178,828		$	6.62	$	20.02

At June 30, 2012, there were $nil (December 31, 2011: $141) of total unrecognized share compensation expenses in respect of options that are expected to be recognized over a weighted-average period of 0.0 years (December 31, 2011: 0.2 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 $6,176 were recorded for the three months ended June 30, 2012 (2011: $5,792). Share compensation expenses of $12,116 were recorded for the six months ended June 30, 2012 (2011: $14,948). 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 six months ended June 30, 2012 was as follows:

	Restricted Share Awards		Weighted Average Grant Date Fair Value
Restricted share awards outstanding, December 31, 2011	3,003,547		$	25.77
Restricted share awards granted	900,725		31.38
Restricted share awards vested	(803,917	)	25.93
Restricted share awards forfeited	(30,801	)	28.10
Restricted share awards outstanding, June 30, 2012	3,069,554		$	27.35

Activity with respect to unvested restricted share awards for the six months ended June 30, 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	590,367		32.16
Restricted share awards vested	(553,615	)	25.46
Restricted share awards forfeited	(13,198	)	27.28
Restricted share awards outstanding, June 30, 2011	3,137,593		$	25.60

At June 30, 2012, there were $55,832 (December 31, 2011: $40,809) of total unrecognized share compensation expenses in respect of restricted share awards that are expected to be recognized over a weighted-average period of 2.9 years (December 31, 2011: 2.4 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 $111 were recorded for the three months ended June 30, 2012 (2011: $97). Share compensation expenses of $231 were recorded for the six months ended June 30, 2012 (2011: $211). 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 units for the six months ended June 30, 2012 was as follows:

	Restricted Share Units		Weighted Average Grant Date Fair Value
Restricted share units outstanding, December 31, 2011	53,312		$	27.60
Restricted share units granted	13,625		31.38
Restricted share units vested	(18,175	)	26.58
Restricted share units issued in lieu of cash dividends	789		28.01
Restricted share units forfeited	(1,150	)	30.07
Restricted share units outstanding, June 30, 2012	48,401		$	29.00

Activity with respect to unvested restricted share units for the six months ended June 30, 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	296		25.45
Restricted share units forfeited	—		—
Restricted share units outstanding, June 30, 2011	52,393		$	27.60

At June 30, 2012, there were $1,145 (December 31, 2011: $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 2.9 years (December 31, 2011: 2.7 years).

iv.Performance share awards

The Performance Share Awards (“PSAs”) 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 PSAs 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 reflect any adjustments in the consolidated statements of income in the period in which they are determined.

Share compensation expenses of $506 were recorded for the three months ended June 30, 2012 (2011: $528). Share compensation expenses of $(251) for the six months ended June 30, 2012 (2011: $872). 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 six months ended June 30, 2012 was as follows:

	Performance Share Awards		Weighted Average Grant Date Fair Value
Performance share awards outstanding, December 31, 2011	279,019		$	30.77
Performance share awards granted	41,128		31.38
Performance share awards vested	—		—
Performance share awards cancelled	(99,302	)	28.70
Performance share awards outstanding, June 30, 2012	220,845		$	31.81

Activity with respect to unvested performance share awards for the six months ended June 30, 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, June 30, 2011	279,019	$	30.77

At June 30, 2012, there were $4,436 (December 31, 2011: $5,677) of total unrecognized share compensation expenses in respect of PSAs that are expected to be recognized over a weighted-average period of 2.1 years (December 31, 2011: 2.1 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 the potential for forfeiture was completely extinguished.

As of July 2, 2011, the employee seller shares were fully expensed. Share compensation expenses of $1,032 and $2,220 were recorded for the three and six months ended June 30, 2011, respectively.

Total share compensation expenses

The breakdown of share compensation expenses by award type was as follows:

	Three Months Ended				Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012			June 30, 2011
Options	$	7	$	179	$	142		$	1,426
Restricted share awards	6,176		5,792		12,116			14,948
Restricted share units	111		97		231			211
Performance share awards	506		528		(251		)	872
Employee seller shares	—		1,032		—			2,220
Total	$	6,800	$	7,628	$	12,238		$	19,677

11. Debt and financing arrangements

(a) Financing structure and finance expenses

The financing structure at June 30, 2012 was:

12

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	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		247,036
$400,000 syndicated unsecured letter of credit facility	400,000		—		—
$525,000 syndicated secured letter of credit facility	525,000		322,126		—
$500,000 bi-lateral secured letter of credit facility	500,000		80,134		—
Talbot FAL Facility (b)	25,000		25,000		—
PaCRe senior secured letter of credit facility	10,000		—		—
IPC Bi-Lateral Facility	80,000		51,479		—
Total	$	2,140,000	$	1,018,539	$	536,836

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

(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 and the costs of FAL as follows:

	Three Months Ended				Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
2006 Junior Subordinated Deferrable Debentures	$	1,552	$	3,228	$	3,101	$	6,816
2007 Junior Subordinated Deferrable Debentures	2,832		3,028		5,861		6,057
2010 Senior Notes due 2040	5,598		5,597		11,195		11,194
Credit facilities	3,605		1,589		9,678		3,313
AlphaCat Re 2011 preferred dividend (a)	—		2,919		—		2,919
Talbot FAL Facility	32		—		63		63
Talbot other interest	87		—		87		—
Total	$	13,706	$	16,361	$	29,985	$	30,362

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

13

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

(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 will be structurally subordinated to all obligations of the Company’s subsidiaries.

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 was 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 are 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 was 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.

14

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

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) $400,000 syndicated unsecured letter of credit facility and $525,000 syndicated secured letter of credit facility

On March 9, 2012, the Company, Validus Re Americas, Ltd. ("Validus Re Americas"),PaCReand Validus Re entered into a $400,000 four year unsecured credit facility with Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, N.A. as administrative agent, Lloyds Securities Inc. and Suntrust Bank, as co-documentation agents and the lenders party thereto, which provides for letter of credit availability for the Company and certain designated subsidiaries of the Company and revolving credit availability for the Company (the "Four Year Unsecured Facility") (the full $400,000 of which is available for letters of credit and/or revolving loans). The Four Year Unsecured Facility was provided by a syndicate of commercial banks arranged by J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Lloyds Securities Inc. and SunTrust Robinson Humphrey, Inc. Letters of credit under the Four Year Unsecured Facility are available to support obligations in connection with the insurance business of the Company and its subsidiaries. Loans under the Four Year Unsecured Facility are available for the general corporate and working capital purposes of the Company. The Company may request that existing lenders under the Four Year Unsecured Facility or prospective additional lenders agree to make available additional commitments from time to time so long as the aggregate commitments under the Four Year Unsecured Facility do not exceed $500,000. Letter of credit fees are payable on account of each letter of credit issued under the Four Year Unsecured Facility at a rate per annum equal to an applicable rate. Borrowings under the Four Year Unsecured Facility bear interest, at the option of the Company, at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, N.A., the federal funds effective rate plus 0.5%, and the adjusted LIBOR rate plus 1.0%) or the adjusted LIBOR rate applicable to such loans, plus an applicable rate.

Also on March 9, 2012, the Company, Validus Re Americas and Validus Re entered into a $525,000 four-year secured credit facility with Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, N.A. as administrative agent, Lloyds Securities Inc. and Suntrust Bank, as co-documentation agents and the lenders party thereto, which provides for letter of credit availability for the Company and certain designated subsidiaries of the Company (the "Four Year Secured Facility" and together with the Four Year Unsecured Facility, the "Credit Facilities"). The Four Year Secured Facility was provided by a syndicate of commercial banks arranged by J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Lloyds Securities Inc. and SunTrust Robinson Humphrey, Inc. Letters of credit under the Four Year Secured Facility will be available to support obligations in connection with the insurance business of the Company and its subsidiaries. The Company may request that existing lenders under the Four Year Secured Facility or prospective additional lenders agree to make available additional commitments from time to time so long as the aggregate commitments under the Four Year Secured Facility do not exceed $700,000. The obligations of the Company and its designated subsidiaries under the Four Year Secured Facility are secured by cash and securities deposited into cash collateral accounts from time to time with The Bank of New York Mellon. Letter of credit fees are payable on account of each letter of credit issued under the Four Year Secured Facility at a rate per annum equal to an applicable rate. Borrowings under the Four Year Secured Facility bear interest at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, N.A., the federal funds effective rate plus 0.5%, and the adjusted LIBOR rate plus 1.0%).

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 $2,600,000 and, commencing with the end of the fiscal quarter ending June 30, 2012, to be increased quarterly by an amount equal to 50.0% of the Company's consolidated net income (if positive) for such quarter plus 50.0% of the aggregate increases in the consolidated shareholders' equity of the Company during such fiscal quarter by reason of the issuance and sale of common equity interests of the Company, including upon any conversion of debt securities of the Company into such equity interests, (ii) the requirement that the Company maintain at all times a consolidated total debt to consolidated total capital ratio not greater than 0.35:1.00, and (iii) the requirement that Validus Re and any other

15

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

material insurance subsidiaries maintain a financial strength rating by A.M. Best of not less than "B++" (Fair). In addition, the Credit Facilities contain customary negative covenants applicable to the Company and its subsidiaries, including limitations on the ability to pay dividends and other payments in respect of equity interests at any time that the Company is otherwise in default with respect to certain provisions under the respective Credit Facilities, limitations on the ability to incur liens, sell assets, merge or consolidate with others, enter into transactions with affiliates, and limitations on the ability of its subsidiaries to incur indebtedness. The Credit Facilities also contain customary affirmative covenants, representations and warranties and events of default for credit facilities of its type.

As of June 30, 2012, there was $322,126 in outstanding letters of credit under the Four Year Secured Facility (December 31, 2011: $nil) and $nil outstanding under the Four Year Unsecured Facility (December 31, 2011: $nil).

As of June 30, 2012, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Credit Facilities.

On March 9, 2012, upon entering into the Credit Facilities, the Company terminated its (a) three-year bi-lateral $60,000 unsecured revolving credit facility, dated March 12, 2010 with Lloyds TSB Bank plc, (b) 340,000 three-year unsecured credit facility, dated March 12, 2010 with Deutsche Bank Securities Inc., as syndication agent and JPMorgan Chase Bank, N.A. as administrative agent and (c) 500,000 five-year secured credit facility, dated March 12, 2007 with Deutsche Bank Securities Inc., as syndication agent and JPMorgan Chase Bank, N.A. as administrative agent. No early termination penalties were incurred.

(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 to extend the support to the 2012 and 2013 years of account.

As amended, the Talbot FAL Facility contains affirmative covenants that include, among other things, (i) the requirement that we 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 June 30, 2012, the Company had $25,000 (December 31, 2011: $25,000) in outstanding letters of credit under this facility.

As of June 30, 2012, 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 June 30, 2012, $51,479 of outstanding letters of credit were issued under the IPC Bi-Lateral Facility (December 31, 2011: $57,146).

16

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

As of June 30, 2012, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the IPC Bi-Lateral Facility.

(iv) $500,000 secured bi-lateral facility

On August 10, 2009, Validus Re entered into an uncommitted $500,000 secured bi-lateral letter of credit facility with Citibank Europe plc (the “Secured Bi-Lateral Letter of Credit Facility”). Letters of credit were first issued under the Secured Bi-Lateral Letter of Credit Facility during the first quarter of 2012. As of June 30, 2012, $80,134 of letters of credit were outstanding under the Secured Bi-Lateral Facility. The Secured Bi-Lateral Letter of Credit Facility has no fixed termination date and as of June 30, 2012, Validus Re is in compliance with all terms and covenants thereof.

(v) $10,000 PaCRe Senior secured letter of credit facility

On May 11, 2012, PaCRe (as Borrower) and its subsidiary, PaCRe Investments, Ltd. (as Guarantor) entered into a 364-Day secured revolving credit and letter of credit facility with JPMorgan Chase Bank, N.A. This facility provides for revolving borrowings by the Borrower and for letters of credit issued by the Borrower to be used to support its reinsurance obligations in aggregate amount of $10,000. As of June 30, 2012, no letters of credit or revolving loans were issued under this facility.

12. 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 treasury 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 June 30, 2012, 1.1% 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 0.9% of its investment portfolio, other than with respect to government and agency securities.

(b) 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 June 30, 2012 amounted to $532,500 (December 31, 2011: $473,800) of which $25,000 is provided under the Talbot FAL Facility (December 31, 2011: $25,000).

(c) 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 June 30, 2012 exchange rate of £1 equals $1.5709 and assuming the maximum 3% assessment, the Company would be assessed approximately $28,276.

17

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

(d) Aquiline Commitment

On December 20, 2011, Validus Re 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. Validus Re's remaining commitment at June 30, 2012 was $41,849.

13. Related party transactions

The transactions listed below are classified as related party transactions as each counter party has either a direct or indirect shareholding in the Company.

    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 three and six months ended June 30, 2012 of $1,118 (2011: $900) and $1,415 (2011:$1,411) of which $886 was included in premiums receivable at June 30, 2012 (December 31, 2011: $330). The Company also recognized reinsurance premiums ceded during the three and six months ended June 30, 2012 of $nil (2011: $nil) and $nil (2011:$163) of which $1 was included in reinsurance balances payable at June 30, 2012 (December 31, 2011: $21). Earned premium adjustments of $370 (2011: $344) and $732 (2011:$678) were incurred during the three and six months ended June 30, 2012.

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 for the three and six months ended June 30, 2012 of $2,070 (2011: $628) and $2,360 (2011:$1,081) of which $2,124 was included in accounts payable and accrued expenses at June 30, 2012 (December 31, 2011: $86).

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, one of the Company's directors, serves as a director of a subsidiary company of Conning Holdings Corp. Investment management fees incurred under this agreement for the three and six months ended June 30, 2012 were $205 (2011: $234) and $404 (2011:$380) of which $202 was included in accounts payable and accrued expenses at June 30, 2012 (December 31, 2011: $203).

On December 20, 2011, Validus Re 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"). Messrs. Greenberg and Watson, directors of the Company, serve as managing principal and senior principal, respectively, of Aquiline Capital Partners LLC. For the three and six months ended June 30, 2012, the Company incurred $450 (2011: $nil) and $1,886 (2011:$nil) in partnership fees and made $3,368 (2011: nil) and $4,898 (2011: $nil) of capital contributions, of which $nil was included in accounts payable and accrued expenses at June 30, 2012 (December 31, 2011: $nil).

Certain shareholders of the Company and their affiliates, as well as the employers of or entities otherwise associated with certain directors and officers or their affiliates, have purchased insurance and/or reinsurance from the Company in the ordinary course of business on terms the Company believes were no more favorable to these (re)insureds than those made available to other customers.

18

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

14. Earnings per share

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2012 and 2011: 

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Basic earnings per share
Income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Income (loss) available (attributable) to Validus	167,622			109,884			291,856			(62,480		)
less: Dividends and distributions declared on outstanding warrants	(1,729		)	(1,966		)	(3,458		)	(3,950		)
Income (loss) available (attributable) to common shareholders	$	165,893		$	107,918		$	288,398		$	(66,430	)
Weighted average number of common shares outstanding	98,254,186			98,385,924			98,839,663			98,165,132
Basic earnings (loss) per share available (attributable) to common shareholders	$	1.69		$	1.10		$	2.92		$	(0.68	)
Diluted earnings per share
Income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Income (loss) available (attributable) to Validus	167,622			109,884			291,856			(62,480		)
less: Dividends and distributions declared on outstanding warrants	—			—			—			(3,950		)
Income (loss) available (attributable) to common shareholders	$	167,622		$	109,884		$	291,856		$	(66,430	)
Weighted average number of common shares outstanding	98,254,186			98,385,924			98,839,663			98,165,132
Share equivalents:
Warrants	3,077,136			3,561,096			3,050,054			—
Stock options	801,180			908,590			807,522			—
Unvested restricted shares	1,535,465			1,706,840			1,684,791			—
Weighted average number of diluted common shares outstanding	103,667,967			104,562,450			104,382,030			98,165,132
Diluted earnings (loss) per share available (attributable) to common shareholders	$	1.62		$	1.05		$	2.80		$	(0.68	)

Share equivalents that would result in the issuance of common shares of 675,478 (2011: 479,104) and 346,070 (2011: 247,550) were outstanding for the three and six months ended June 30, 2012, but were not included in the computation of diluted earnings per share because the effect would be antidilutive.

15.Subsequent events

Quarterly Dividend

On July 25, 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 September 28, 2012 to holders of record

19

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

on September 14, 2012.

16.  Segment information

The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. and Talbot Holdings Ltd. from which three operating segments have been determined under U.S. GAAP segment reporting. During the first quarter of 2012, to better align the Company's operating and reporting structure with its current strategy, there was a change in the segment structure. This change included the AlphaCat group of companies as a separate operating segment. "AlphaCat segment" was included as an additional segment and includes the Company's investments in AlphaCat Re 2011, AlphaCat Re 2012 and PaCRe. Prior period comparatives have been restated to reflect the change in segmentation. 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 Segment

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, contingency and motor.

AlphaCat Segment

The AlphaCat segment manages strategic relationships that leverage the Company's underwriting and investment expertise and earns management, performance and underwriting fees primarily from the Company's operating affiliates, AlphaCat Re 2011 and AlphaCat Re 2012, as well as an investment in PaCRe.

Validus Re Consolidated

The Validus Re consolidated group of companies represents the Validus Reinsurance, Ltd. consolidated U.S. GAAP results.

Talbot Segment

The Talbot segment focuses on a wide range of marine and energy, war, political violence, commercial property, financial institutions, contingency, bloodstock, 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.

The following tables summarize the results of our operating segments and "corporate":

20

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

Three Months Ended June 30, 2012	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	340,850		$	15,155		$	—		$	356,005		$	283,528		$	(12,444	)	$	627,089
Reinsurance premiums ceded	(97,077		)	—			—			(97,077		)	(34,419		)	12,444			(119,052		)
Net premiums written	243,773			15,155			—			258,928			249,109			—			508,037
Change in unearned premiums	(1,087		)	(11,568		)	—			(12,655		)	(47,755		)	—			(60,410		)
Net premiums earned	242,686			3,587			—			246,273			201,354			—			447,627
Underwriting deductions
Losses and loss expenses	53,190			—			—			53,190			100,502			—			153,692
Policy acquisition costs	37,084			382			(25		)	37,441			41,803			(3,115		)	76,129
General and administrative expenses	14,142			2,402			1,866			18,410			30,957			12,268			61,635
Share compensation expenses	1,966			59			159			2,184			1,799			2,817			6,800
Total underwriting deductions	106,382			2,843			2,000			111,225			175,061			11,970			298,256
Underwriting income (loss)	$	136,304		$	744		$	(2,000	)	$	135,048		$	26,293		$	(11,970	)	$	149,371
Net investment income	21,694			820			—			22,514			5,425			(2,054		)	25,885
Other income	467			6,589			2,018			9,074			327			(3,407		)	5,994
Finance expenses	(2,145		)	(437		)	—			(2,582		)	(120		)	(11,004		)	(13,706		)
Operating income (loss) before taxes and income from operating affiliates	156,320			7,716			18			164,054			31,925			(28,435		)	167,544
Tax (expense) benefit	(2		)	—			—			(2		)	(419		)	17			(404		)
Income from operating affiliates	—			3,592			—			3,592			—			—			3,592
Net operating income (loss)	$	156,318		$	11,308		$	18		$	167,644		$	31,506		$	(28,418	)	$	170,732
Net realized gains (losses) on investments	4,823			(84		)	—			4,739			1,415			—			6,154
Net unrealized (losses) on investments	(3,697		)	(49,519		)	—			(53,216		)	(358		)	—			(53,574		)
(Loss) from investment affiliate	(398		)	—			—			(398		)	—			—			(398		)
Foreign exchange gains (losses)	2,715			26			—			2,741			(3,435		)	42			(652		)
Net income (loss)	$	159,761		$	(38,269	)	$	18		$	121,510		$	29,128		$	(28,376	)	$	122,262
Net loss attributable to noncontrolling interest	—			45,360			—			45,360			—			—			45,360
Net income (loss) available (attributable) to Validus	$	159,761		$	7,091		$	18		$	166,870		$	29,128		$	(28,376	)	$	167,622
Selected ratios:
Net premiums written / Gross premiums written	71.5		%	100.0		%							87.9		%				81.0		%
Losses and loss expenses	21.9		%	0.0		%							49.9		%				34.3		%
Policy acquisition costs	15.3		%	10.6		%							20.8		%				17.0		%
General and administrative expenses (a)	6.6		%	68.6		%							16.3		%				15.3		%
Expense ratio	21.9		%	79.2		%							37.1		%				32.3		%
Combined ratio	43.8		%	79.2		%							87.0		%				66.6		%
Total assets	$	4,846,607		$	696,236								$	2,931,430		$	25,295		$	8,499,568

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

21

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

The following tables summarize the results of our operating segments and corporate segment:

Three Months Ended June 30, 2011	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	290,691		$	50,960		$	—		$	341,651		$	276,886		$	(13,150	)	$	605,387
Reinsurance premiums ceded	(98,218		)	—			—			(98,218		)	(47,278		)	13,150			(132,346		)
Net premiums written	192,473			50,960			—			243,433			229,608			—			473,041
Change in unearned premiums	31,814			(42,569		)	—			(10,755		)	(36,646		)	—			(47,401		)
Net premiums earned	224,287			8,391			—			232,678			192,962			—			425,640
Underwriting deductions
Losses and loss expenses	94,035			—			—			94,035			113,272			—			207,307
Policy acquisition costs	35,013			973			(217		)	35,769			42,307			154			78,230
General and administrative expenses	15,059			1,061			1,813			17,933			33,345			9,563			60,841
Share compensation expenses	1,823			21			174			2,018			2,026			3,584			7,628
Total underwriting deductions	145,930			2,055			1,770			149,755			190,950			13,301			354,006
Underwriting income (loss)	$	78,357		$	6,336		$	(1,770	)	$	82,923		$	2,012		$	(13,301	)	$	71,634
Net investment income	21,662			727			—			22,389			6,372			(2,267		)	26,494
Other income	745			2,532			(308		)	2,969			594			(2,968		)	595
Finance expenses	(1,579		)	(2,923		)	—			(4,502		)	—			(11,859		)	(16,361		)
Operating income (loss) before taxes	99,185			6,672			(2,078		)	103,779			8,978			(30,395		)	82,362
Tax (expense) benefit	(4		)	—			—			(4		)	(208		)	241			29
Net operating income (loss)	$	99,181		$	6,672		$	(2,078	)	$	103,775		$	8,770		$	(30,154	)	$	82,391
Net realized gains on investments	9,014			538			—			9,552			2,000			—			11,552
Net unrealized gains (losses) on investments	15,377			(820		)	—			14,557			3,969			—			18,526
Foreign exchange (losses) gains	(5,266		)	(71		)	—			(5,337		)	3,410			(64		)	(1,991		)
Net income (loss)	$	118,306		$	6,319		$	(2,078	)	$	122,547		$	18,149		$	(30,218	)	$	110,478
Net (income) attributable to noncontrolling interest	—			(594		)	—			(594		)	—			—			(594		)
Net income (loss) available (attributable) to Validus	$	118,306		$	5,725		$	(2,078	)	$	121,953		$	18,149		$	(30,218	)	$	109,884
Selected ratios:
Net premiums written / Gross premiums written	66.2		%	100.0		%							82.9		%				78.1		%
Losses and loss expenses	41.9		%	0.0		%							58.7		%				48.7		%
Policy acquisition costs	15.6		%	11.6		%							21.9		%				18.4		%
General and administrative expenses (a)	7.5		%	12.9		%							18.3		%				16.1		%
Expense ratio	23.1		%	24.5		%							40.2		%				34.5		%
Combined ratio	65.0		%	24.5		%							98.9		%				83.2		%
Total assets	$	5,003,271		$	408,809								$	2,759,850		$	87,858		$	8,259,788

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

22

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

Six Months Ended June 30, 2012	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	907,716		$	18,673		$	—		$	926,389		$	576,781		$	(38,792	)	$	1,464,378
Reinsurance premiums ceded	(127,078		)	—			—			(127,078		)	(137,818		)	38,792			(226,104		)
Net premiums written	780,638			18,673			—			799,311			438,963			—			1,238,274
Change in unearned premiums	(284,943		)	(12,423		)	—			(297,366		)	(42,082		)	—			(339,448		)
Net premiums earned	495,695			6,250			—			501,945			396,881			—			898,826
Underwriting deductions
Losses and loss expenses	177,396			—			—			177,396			208,285			—			385,681
Policy acquisition costs	75,874			638			(25		)	76,487			80,541			(2,767		)	154,261
General and administrative expenses	31,394			3,434			2,315			37,143			64,305			26,562			128,010
Share compensation expenses	3,838			111			311			4,260			3,147			4,831			12,238
Total underwriting deductions	288,502			4,183			2,601			295,286			356,278			28,626			680,190
Underwriting income (loss)	$	207,193		$	2,067		$	(2,601	)	$	206,659		$	40,603		$	(28,626	)	$	218,636
Net investment income	45,271			1,479			—			46,750			11,215			(4,320		)	53,645
Other income	2,686			14,563			2,908			20,157			1,353			(6,625		)	14,885
Finance expenses	(5,839		)	(439		)	—			(6,278		)	(151		)	(23,556		)	(29,985		)
Operating income (loss) before taxes and income from operating affiliates	249,311			17,670			307			267,288			53,020			(63,127		)	257,181
Tax (expense) benefit	(9		)	—			—			(9		)	(551		)	17			(543		)
Income from operating affiliates	—			6,959			—			6,959			—			—			6,959
Net operating income (loss)	$	249,302		$	24,629		$	307		$	274,238		$	52,469		$	(63,110	)	$	263,597
Net realized gains (losses) on investments	11,065			(84		)	—			10,981			2,705			—			13,686
Net unrealized gains (losses) on investments	16,168			(50,116		)	—			(33,948		)	1,045			—			(32,903		)
(Loss) from investment affiliate	(398		)	—			—			(398		)	—			—			(398		)
Foreign exchange gains (losses)	2,453			17			—			2,470			188			(144		)	2,514
Net income (loss)	$	278,590		$	(25,554	)	$	307		$	253,343		$	56,407		$	(63,254	)	$	246,496
Net loss attributable to noncontrolling interest	—			45,360			—			45,360			—			—			45,360
Net income (loss) available (attributable) to Validus	$	278,590		$	19,806		$	307		$	298,703		$	56,407		$	(63,254	)	$	291,856
Selected ratios:
Net premiums written / Gross premiums written	86.0		%	100.0		%							76.1		%				84.6		%
Losses and loss expenses	35.8		%	0.0		%							52.5		%				42.9		%
Policy acquisition costs	15.3		%	10.2		%							20.3		%				17.2		%
General and administrative expenses (a)	7.1		%	56.7		%							17.0		%				15.6		%
Expense ratio	22.4		%	66.9		%							37.3		%				32.8		%
Combined ratio	58.2		%	66.9		%							89.8		%				75.7		%
Total assets	$	4,846,607		$	696,236								$	2,931,430		$	25,295		$	8,499,568

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

23

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

Six Months Ended June 30, 2011	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	894,779		$	58,110		$	—		$	952,889		$	539,943		$	(37,549	)	$	1,455,283
Reinsurance premiums ceded	(145,023		)	—			—			(145,023		)	(134,692		)	37,549			(242,166		)
Net premiums written	749,756			58,110			—			807,866			405,251			—			1,213,117
Change in unearned premiums	(276,526		)	(46,353		)	—			(322,879		)	(35,065		)	—			(357,944		)
Net premiums earned	473,230			11,757			—			484,987			370,186			—			855,173
Underwriting deductions
Losses and loss expenses	404,579			—			—			404,579			278,926			—			683,505
Policy acquisition costs	74,763			1,289			(217		)	75,835			79,523			168			155,526
General and administrative expenses	25,589			1,955			3,160			30,704			60,651			17,963			109,318
Share compensation expenses	4,928			48			502			5,478			4,745			9,454			19,677
Total underwriting deductions	509,859			3,292			3,445			516,596			423,845			27,585			968,026
Underwriting (loss) income	$	(36,629	)	$	8,465		$	(3,445	)	$	(31,609	)	$	(53,659	)	$	(27,585	)	$	(112,853	)
Net investment income	46,094			1,946			—			48,040			12,962			(4,533		)	56,469
Other income	2,036			3,173			(78		)	5,131			2,195			(5,125		)	2,201
Finance expenses	(3,292		)	(2,923		)	—			(6,215		)	(63		)	(24,084		)	(30,362		)
Operating income (loss) before taxes	8,209			10,661			(3,523		)	15,347			(38,565		)	(61,327		)	(84,545		)
Tax (expense) benefit	(6		)	—			—			(6		)	1,585			(91		)	1,488
Net operating income (loss)	$	8,203		$	10,661		$	(3,523	)	$	15,341		$	(36,980	)	$	(61,418	)	$	(83,057	)
Net realized gains on investments	12,915			556			—			13,471			4,460			—			17,931
Net unrealized gains (losses) on investments	7,701			(1,659		)	—			6,042			(344		)	—			5,698
Foreign exchange (losses) gains	(9,536		)	(161		)	—			(9,697		)	7,311			(72		)	(2,458		)
Net income (loss)	$	19,283		$	9,397		$	(3,523	)	$	25,157		$	(25,553	)	$	(61,490	)	$	(61,886	)
Net (income) attributable to noncontrolling interest	—			(594		)	—			(594		)	—			—			(594		)
Net income (loss) available (attributable) to Validus	$	19,283		$	8,803		$	(3,523	)	$	24,563		$	(25,553	)	$	(61,490	)	$	(62,480	)
Selected ratios:
Net premiums written / Gross premiums written	83.8		%	100.0		%							75.1		%				83.4		%
Losses and loss expenses	85.5		%	0.0		%							75.3		%				79.9		%
Policy acquisition costs	15.8		%	11.0		%							21.5		%				18.2		%
General and administrative expenses (a)	6.4		%	17.0		%							17.7		%				15.1		%
Expense ratio	22.2		%	28.0		%							39.2		%				33.3		%
Combined ratio	107.7		%	28.0		%							114.5		%				113.2		%
Total assets	$	5,003,271		$	408,809								$	2,759,850		$	87,858		$	8,259,788

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

24

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

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:

	Three Months Ended June 30, 2012
	Gross Premiums Written
	Validus Re		AlphaCat			Talbot		Eliminations			Total		%
United States	$	213,473	$	14,166		$	32,941	$	(1,933	)	$	258,647	41.3	%
Worldwide excluding United States (a)	4,650		—			61,334		(2,628		)	63,356		10.1	%
Europe	14,427		(11		)	14,198		(598		)	28,016		4.5	%
Latin America and Caribbean	5,626		—			24,427		(1,075		)	28,978		4.6	%
Japan	31,112		—			3,427		(119		)	34,420		5.5	%
Canada	116		—			2,148		(120		)	2,144		0.3	%
Rest of the world (b)	10,067		—			—		—			10,067		1.6	%
Sub-total, non United States	65,998		(11		)	105,534		(4,540		)	166,981		26.6	%
Worldwide including United States (a)	20,734		1,000			18,369		(716		)	39,387		6.3	%
Marine and Aerospace (c)	40,645		—			126,684		(5,255		)	162,074		25.8	%
Total	$	340,850	$	15,155		$	283,528	$	(12,444	)	$	627,089	100.0	%

	Three Months Ended June 30, 2011
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	211,323	$	50,041	$	34,181	$	(2,307	)	$	293,238	48.5	%
Worldwide excluding United States (a)	2,580		—		57,204		(257		)	59,527		9.8	%
Europe	10,710		19		18,935		(59		)	29,605		4.9	%
Latin America and Caribbean	11,432		—		22,265		(8,942		)	24,755		4.1	%
Japan	23,871		—		2,216		—			26,087		4.3	%
Canada	10		—		2,443		(10		)	2,443		0.4	%
Rest of the world (b)	8,939		—		—		—			8,939		1.5	%
Sub-total, non United States	57,542		19		103,063		(9,268		)	151,356		25.0	%
Worldwide including United States (a)	11,684		900		15,506		(40		)	28,050		4.6	%
Marine and Aerospace (c)	10,142		—		124,136		(1,535		)	132,743		21.9	%
Total	$	290,691	$	50,960	$	276,886	$	(13,150	)	$	605,387	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.

25

Validus Holdings, Ltd.

Notes to Consolidated Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share information)

	Six Months Ended June 30, 2012
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	367,903	$	16,574	$	61,696	$	(4,235	)	$	441,938	30.2	%
Worldwide excluding United States (a)	26,845		—		137,594		(9,306		)	155,133		10.6	%
Europe	72,218		820		29,445		(1,764		)	100,719		6.8	%
Latin America and Caribbean	26,213		—		53,741		(3,370		)	76,584		5.2	%
Japan	30,977		—		4,087		(237		)	34,827		2.4	%
Canada	324		—		5,670		(327		)	5,667		0.4	%
Rest of the world (b)	52,008		279				—			52,287		3.6	%
Sub-total, non United States	208,585		1,099		230,537		(15,004		)	425,217		29.0	%
Worldwide including United States (a)	78,753		1,000		33,166		(1,802		)	111,117		7.6	%
Marine and Aerospace (c)	252,475		—		251,382		(17,751		)	486,106		33.2	%
Total	$	907,716	$	18,673	$	576,781	$	(38,792	)	$	1,464,378	100.0	%

	Six Months Ended June 30, 2011
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	401,481	$	52,248	$	62,012	$	(4,204	)	$	511,537	35.2	%
Worldwide excluding United States (a)	29,558		—		125,171		(2,969		)	151,760		10.4	%
Europe	68,466		1,229		34,944		(561		)	104,078		7.2	%
Latin America and Caribbean	35,918		633		40,533		(22,571		)	54,513		3.7	%
Japan	34,069		—		2,756		(100		)	36,725		2.5	%
Canada	110		—		6,251		(110		)	6,251		0.4	%
Rest of the world (b)	44,996		—		—		—			44,996		3.1	%
Sub-total, non United States	213,117		1,862		209,655		(26,311		)	398,323		27.3	%
Worldwide including United States (a)	76,780		4,000		26,036		(542		)	106,274		7.3	%
Marine and Aerospace (c)	203,401		—		242,240		(6,492		)	439,149		30.2	%
Total	$	894,779	$	58,110	$	539,943	$	(37,549	)	$	1,455,283	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.

26

ITEM 2.  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 and six months ended June 30, 2012 and 2011 and the Company's consolidated financial condition, liquidity and capital resources at June 30, 2012 and December 31, 2011. This discussion and analysis should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended December 31, 2011, the discussions of critical accounting policies and the qualitative and quantitative disclosure about market risk contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

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 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 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.

Executive Overview

The Company underwrites from three distinct global operating segments, Validus Re, Talbot and AlphaCat. Validus Re, the Company’s principal reinsurance operating segment, operates as a Bermuda-based provider of short-tail reinsurance products on a global basis. Talbot, the Company’s principal insurance operating segment manages Syndicate 1183 at Lloyd’s of London (“Lloyd’s”) and which writes short-tail insurance products on a worldwide basis. The AlphaCat segment manages strategic relationships that leverage the Company's underwriting and investment expertise and earns management, performance and underwriting fees primarily from our equity interests in AlphaCat Re 2011 and AlphaCat Re 2012, as well as our investment in PaCRe.

The Company’s strategy has been to concentrate primarily on short-tail risks, which has been 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 April 2, 2012, the Company capitalized PaCRe, a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance.  PaCRe was funded with $500.0 million of contributed capital. Validus invested $50.0 million in PaCRe's common equity. The Company will underwrite business for PaCRe, for which it will be paid a profit commission based on the company's underwriting results. As Validus Re holds a majority of PaCRe's outstanding voting rights, the financial statements of PaCRe are included in the consolidated financial statements for the Company. The portion of PaCRe's earnings attributable to third party investors for three and six months ended June 30, 2012 is recorded in the consolidated Statements of Comprehensive Income (Loss) as "net loss (income) attributable to noncontrolling interest."

On May 29, 2012, the Company announced that it has joined with other investors in capitalizing AlphaCat Re 2012. AlphaCat Re 2012 is a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance with a particular focus on windstorm risks for Florida domiciled insurance companies. AlphaCat Re 2012 was funded with $70.0 million of equity capital. The Company will underwrite business for AlphaCat Re 2012, for which it will be paid a commission for originating the business and a profit commission based on underwriting results. Validus Re has an equity interest and voting rights in AlphaCat Re 2012 which is below 50%, therefore the investment in AlphaCat Re 2012 is included as an equity method investment in the consolidated financial statements of the Company.

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

27

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 worldwide (re)insurance industry and no major hurricanes making landfall in the United States. In 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. In 2011, the Company continued to see increased catastrophe activity, principally the Tohuku and Christchurch earthquakes. During 2011, while the Company continued to see strong competition for business there were also positive rate movements, particularly on loss affected lines.

 During the January 2012 renewal season, the Validus Re segment showed rate improvement relative to 2011. This improvement was largely due to the large catastrophe loss activity during 2011. During the first quarter of 2012, Talbot experienced rate increases in loss affected lines without seeing a systemic rise in rates across all lines.

During the July 2012 renewal period, the Validus Re segment experienced rate improvements in the U.S. and International property lines, specifically in the Florida and Japanese wind and earthquake markets. In addition, the marine liability and hull rates increased. The Talbot segment experienced a rate increase of 3.7% across the portfolio, with some lines performing in line with expectations and other lines either de-risking or reassessing the portfolio.

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 available to Validus for the period by the average shareholders’ equity available to Validus during the period. Average shareholders’ equity available to Validus is the average of the beginning, ending and intervening quarter end shareholders’ equity available to Validus balances. Percentages for the quarter and interim periods are annualized. The Company’s objective is to generate superior returns on capital that appropriately reward shareholders for the risks assumed and to grow premiums written only when returns meet or exceed internal requirements. Details of annualized return on average equity are provided below.

	Three Months Ended June 30,				Year Ended December 31,
	2012		2011		2011
Annualized return on average equity	19.1	%	13.1	%	0.6	%

The increase in annualized return on average equity for the three months ended June 30, 2012 was driven primarily by an increase in net income. Net income available to Validus for the three months ended June 30, 2012 increased by $57.7 million, or 52.5% compared to the three months ended June 30, 2011. The increase in net income was primarily due to an increase in underwriting income for the three months ended June 30, 2012 of $77.7 million. This increase is primarily due to a decrease in underwriting deductions of $55.8 million which includes the effect of a $90.3 milliondecrease in notable loss events and an

28

increase in net premiums written of $35.0 million.

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 increased by $2.15, or 6.7%, from $32.28 at December 31, 2011 to $34.43 at June 30, 2012. The increase was due to the income generated in the six months ended June 30, 2012. 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 “Other Non-GAAP Financial Measures.”

Cash dividends per common shareare an integral part of the value created for shareholders. On July 25, 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 September 28, 2012 to holders of record on September 14, 2012.

Underwriting income (loss) 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, income (loss) from investment and operating affiliates and foreign exchange gains (losses). 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. The most comparable U.S. GAAP financial measure is net income. Underwriting income for the three months ended June 30, 2012 and 2011 was $149.4 million and $71.6 million, respectively. Underwriting income (loss) is a non-GAAP financial measure as described in detail and reconciled in the section below entitled “Underwriting Income.”

Managed gross premiums written represents gross premiums written by the Company and its operating affiliates.  Managed gross premiums written differs from total gross premiums written, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of premiums written on behalf of the Company's operating affiliates, AlphaCat Re 2011, Ltd. and AlphaCat Re 2012, Ltd., which are accounted for under the equity method of accounting. A reconciliation of managed gross premiums written to gross premiums written, the most comparable U.S. GAAP financial measure, is presented in below in the section entitled "Other Non-GAAP Financial Measures."

Critical Accounting Policies and Estimates

There are certain accounting policies that the Company considers to be critical due to the judgment and uncertainty inherent in the application of those policies. In calculating financial statement estimates, the use of different assumptions could produce materially different estimates. The Company believes the following critical accounting policies affect significant estimates used in the preparation of our consolidated financial statements:

• Premiums;

• Reinsurance premiums ceded and reinsurance recoverable;

• Investment valuation; and

• Reserve for losses and loss expenses.

Critical accounting policies and estimates are discussed further in Item 7, Management's Discussion and Analysis of Results of Operations and Financial Condition in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

Segment Reporting

Management has determined that the Company operates in three operating segments. The three significant operating segments are Validus Re, AlphaCat and Talbot.

Results of Operations

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 Validus Re commenced operations on December 16, 2005. The Company’s fiscal year ends on December 31. Financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information.

The following table presents results of operations for the three and six months endedJune 30, 2012 and 2011: 

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2012			2011			2012			2011
Underwriting income
Gross premiums written	$	627,089		$	605,387		$	1,464,378		$	1,455,283
Reinsurance premiums ceded	(119,052		)	(132,346		)	(226,104		)	(242,166		)
Net premiums written	508,037			473,041			1,238,274			1,213,117
Change in unearned premiums	(60,410		)	(47,401		)	(339,448		)	(357,944		)
Net premiums earned	447,627			425,640			898,826			855,173
Underwriting deductions
Losses and loss expenses	153,692			207,307			385,681			683,505
Policy acquisition costs	76,129			78,230			154,261			155,526
General and administrative expenses	61,635			60,841			128,010			109,318
Share compensation expenses	6,800			7,628			12,238			19,677
Total underwriting deductions	298,256			354,006			680,190			968,026
Underwriting income (loss) (a)	149,371			71,634			218,636			(112,853		)
Net investment income	25,885			26,494			53,645			56,469
Other income	5,994			595			14,885			2,201
Finance expenses	(13,706		)	(16,361		)	(29,985		)	(30,362		)
Operating income (loss) before taxes and income from operating affiliates	167,544			82,362			257,181			(84,545		)
Tax (expense) benefit	(404		)	29			(543		)	1,488
Income from operating affiliates	3,592			—			6,959			—
Net operating income (loss) (a)	170,732			82,391			263,597			(83,057		)
Net realized gains on investments	6,154			11,552			13,686			17,931
Net unrealized (losses) gains on investments	(53,574		)	18,526			(32,903		)	5,698
(Loss) from investment affiliate	(398		)	—			(398		)	—
Foreign exchange (losses) gains	(652		)	(1,991		)	2,514			(2,458		)
Net income (loss)	122,262			110,478			246,496			(61,886		)
Net loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Net income (loss) available (attributable) to Validus	$	167,622		$	109,884		$	291,856		$	(62,480	)
Selected ratios:
Net premiums written / Gross premiums written	81.0		%	78.1		%	84.6		%	83.4		%
Losses and loss expenses	34.3		%	48.7		%	42.9		%	79.9		%
Policy acquisition costs	17.0		%	18.4		%	17.2		%	18.2		%
General and administrative expenses (b)	15.3		%	16.1		%	15.6		%	15.1		%
Expense ratio	32.3		%	34.5		%	32.8		%	33.3		%
Combined ratio	66.6		%	83.2		%	75.7		%	113.2		%

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

 b)   The general and administrative expense ratio includes share compensation expenses.

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	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Validus Re
Gross premiums written	$	340,850		$	290,691		$	907,716		$	894,779
Reinsurance premiums ceded	(97,077		)	(98,218		)	(127,078		)	(145,023		)
Net premiums written	243,773			192,473			780,638			749,756
Change in unearned premiums	(1,087		)	31,814			(284,943		)	(276,526		)
Net premiums earned	242,686			224,287			495,695			473,230
Losses and loss expenses	53,190			94,035			177,396			404,579
Policy acquisition costs	37,084			35,013			75,874			74,763
General and administrative expenses	14,142			15,059			31,394			25,589
Share compensation expenses	1,966			1,823			3,838			4,928
Total underwriting deductions	106,382			145,930			288,502			509,859
Underwriting income (loss) (a)	136,304			78,357			207,193			(36,629		)
AlphaCat
Gross premiums written	$	15,155		$	50,960		$	18,673		$	58,110
Reinsurance premiums ceded	—			—			—			—
Net premiums written	15,155			50,960			18,673			58,110
Change in unearned premiums	(11,568		)	(42,569		)	(12,423		)	(46,353		)
Net premiums earned	3,587			8,391			6,250			11,757
Policy acquisition costs	382			973			638			1,289
General and administrative expenses	2,402			1,061			3,434			1,955
Share compensation expenses	59			21			111			48
Total underwriting deductions	2,843			2,055			4,183			3,292
Underwriting income (a)	744			6,336			2,067			8,465
Legal Entity adjustments
Policy acquisition costs	(25		)	(217		)	(25		)	(217		)
General and administrative expenses	1,866			1,813			2,315			3,160
Share compensation expenses	159			174			311			502
Total underwriting deductions	2,000			1,770			2,601			3,445
Underwriting (loss) (a)	(2,000		)	(1,770		)	(2,601		)	(3,445		)
Talbot
Gross premiums written	$	283,528		$	276,886		$	576,781		$	539,943
Reinsurance premiums ceded	(34,419		)	(47,278		)	(137,818		)	(134,692		)
Net premiums written	249,109			229,608			438,963			405,251
Change in unearned premiums	(47,755		)	(36,646		)	(42,082		)	(35,065		)
Net premiums earned	201,354			192,962			396,881			370,186
Losses and loss expenses	100,502			113,272			208,285			278,926
Policy acquisition costs	41,803			42,307			80,541			79,523
General and administrative expenses	30,957			33,345			64,305			60,651
Share compensation expenses	1,799			2,026			3,147			4,745
Total underwriting deductions	175,061			190,950			356,278			423,845
Underwriting income (loss) (a)	26,293			2,012			40,603			(53,659		)
Corporate & Eliminations
Gross premiums written	$	(12,444	)	$	(13,150	)	$	(38,792	)	$	(37,549	)
Reinsurance premiums ceded	12,444			13,150			38,792			37,549
Net premiums written	—			—			—			—
Policy acquisition costs	(3,115		)	154			(2,767		)	168
General and administrative expenses	12,268			9,563			26,562			17,963
Share compensation expenses	2,817			3,584			4,831			9,454
Total underwriting deductions	11,970			13,301			28,626			27,585
Underwriting (loss) (a)	(11,970		)	(13,301		)	(28,626		)	(27,585		)
Total underwriting income (loss) (a)	$	149,371		$	71,634		$	218,636		$	(112,853	)

a)      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."

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Three Months Ended June 30, 2012 compared to Three Months Ended June 30, 2011

Net income available to Validus for the three months ended June 30, 2012 was $167.6 million compared to $109.9 million for the three months ended June 30, 2011, an increase of $57.7 million or 52.5%. The primary factors driving the increase in net income were:

• Increase in underwriting income of $77.7 million primarily due to:

•   A decrease in underwriting deductions of $55.8 million which includes the effect of a $90.3 milliondecrease in notable loss events; and 

•   An increase in net premiums written of $35.0 million due to an increase in gross premiums written and a decrease in reinsurance premiums ceded.

The above items were partially offset by the following factor:

• An unfavorable movement of $72.1 million in net unrealized (losses) gains on investments, of which $44.9 million is attributable to noncontrolling interest.

 The change in net income available to Validus for the three months ended June 30, 2012 of $57.7 million as compared to the three months ended June 30, 2011 is described in the following table:

	Three Months Ended June 30, 2012
	Increase (Decrease) Over the Three Months Ended June 30, 2011
(Dollars in thousands)	Validus Re			AlphaCat			Talbot			Corporate and Eliminations (a)			Total
Notable losses - decrease in net loss and loss expenses (b)	$	62,423		$	—		$	27,872		—			$	90,295
Less: Notable losses - decrease in net reinstatement premiums (b)	(6,269		)	—			(667		)	—			(6,936		)
Other underwriting income (loss)	1,793			(5,592		)	(2,924		)	1,101			(5,622		)
Underwriting income (loss) (c)	57,947			(5,592		)	24,281			1,101			77,737
Net investment income	32			93			(947		)	213			(609		)
Other income	(278		)	4,057			(267		)	1,887			5,399
Finance expenses	(566		)	2,486			(120		)	855			2,655
Net income before taxes and income from operating affiliates	57,135			1,044			22,947			4,056			85,182
Tax benefit (expense)	2			—			(211		)	(224		)	(433		)
Income from operating affiliates	—			3,592			—			—			3,592
Net operating income	57,137			4,636			22,736			3,832			88,341
Net realized (losses) on investments	(4,191		)	(622		)	(585		)	—			(5,398		)
Net unrealized (losses) on investments	(19,074		)	(48,699		)	(4,327		)	—			(72,100		)
(Loss) from investment affilate	(398		)	—			—			—			(398		)
Foreign exchange gains (losses)	7,981			97			(6,845		)	106			1,339
Net income (loss)	41,455			(44,588		)	10,979			3,938			11,784
Net loss attributable to noncontrolling interest	—			45,954			—			—			45,954
Net income available to Validus	$	41,455		$	1,366		$	10,979		$	3,938		$	57,738

(a) The Corporate and Eliminations column includes legal entity adjustments.

(b) There were no notable losses for the three months ended June 30, 2012. Notable losses for the three months ended June 30, 2011 included: Tohoku earthquake, Gryphon Alpha, Christchurch earthquake, Brisbane floods and CNRL Horizon. Excludes the reserve for potential development on 2011 notable loss events.

(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."

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Gross Premiums Written

Gross premiums written for the three months ended June 30, 2012 were $627.1 million compared to $605.4 million for the three months ended June 30, 2011, an increase of $21.7 million or 3.6%. Details of gross premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)		Gross Premiums Written		Gross Premiums Written (%)		% Change
Property	$	392,218	62.5	%	$	408,785	67.5	%	(4.1	)%
Marine	128,269		20.5	%	97,243		16.1	%	31.9	%
Specialty	106,602		17.0	%	99,359		16.4	%	7.3	%
Total	$	627,089	100.0	%	$	605,387	100.0	%	3.6	%

Validus Re. Validus Re gross premiums written for the three months ended June 30, 2012 were $340.9 million compared to $290.7 million for the three months ended June 30, 2011, an increase of $50.2 million or 17.3%. Details of Validus Re gross premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premium Written (%)		Gross Premiums Written		Gross Premiums Written (%)		% Change
Property	$	292,264	85.8	%	$	272,148	93.6	%	7.4	%
Marine	24,898		7.3	%	4,846		1.7	%	413.8	%
Specialty	23,688		6.9	%	13,697		4.7	%	72.9	%
Total	$	340,850	100.0	%	$	290,691	100.0	%	17.3	%

The increase in gross premiums written in the property lines of $20.1 million was due primarily to an increase in catastrophe excess of loss treaties of $23.2 million partially offset by decreases in per risk excess of loss and proportional treaties. The increase in gross premiums written of $20.1 million in the marine lines was due primarily to a $10.1 million increase in per risk excess of loss treaties and proportional treaties. In addition, reinstatement premiums and premium adjustments relating to prior periods contributed $10.0 million to the marine lines increase. The increase in gross premiums written in the specialty lines of $10.0 million was due primarily to a $5.9 million increase in proportional premiums written and $3.5 million in premium adjustments relating to prior periods.

Gross premiums written under the quota share, surplus treaty and excess of loss contracts with Talbot for the three months ended June 30, 2012 decreased by $1.2 million as compared to the three months ended June 30, 2011. These reinsurance agreements with Talbot are eliminated upon consolidation.

AlphaCat. AlphaCat gross premiums written for the three months ended June 30, 2012 were $15.2 million compared to $51.0 million for the three months ended June 30, 2011, a decrease of $35.8 million or 70.3%. Details of AlphaCat gross premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)		Gross Premiums Written		Gross Premiums Written (%)		% Change
Property	$	15,155	100.0	%	$	50,960	100.0	%	(70.3	)%
Total	$	15,155	100.0	%	$	50,960	100.0	%	(70.3	)%

The decrease in gross premiums written in the property lines of $35.8 million was due primarily to the change in accounting treatment for AlphaCat Re 2011 which occurred as at December 31, 2011, when the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 were derecognized from the consolidated Balance Sheet of the Company. AlphaCat Re 2011 was consolidated in 2011 whereas in 2012, AlphaCat Re 2011 is accounted for as an equity method operating affiliate. Therefore the comparative renewals are not reflected in gross premiums written in 2012 but are included in gross managed premiums, a comparable measure.

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Managed gross premiums written from our non-consolidated affiliates, AlphaCat Re 2011 and AlphaCat Re 2012, for the three months ended June 30, 2012 were $43.4 million compared to $42.6 million for the three months ended June 30, 2011, an increase of $0.8 million or 2.0%. Gross premiums written from our consolidated entities for the three months ended June 30, 2012 were $15.2 million compared to $8.4 million for the three months ended June 30, 2011, an increase of $6.8 million or 80.3% .

Gross premiums written with Talbot for the three months ended June 30, 2012 increased by $0.5 million as compared to the three months ended June 30, 2011. These reinsurance agreements with Talbot are eliminated upon consolidation.

Talbot. Talbot gross premiums written for the three months ended June 30, 2012 were $283.5 million compared to $276.9 million for the three months ended June 30, 2011, an increase of $6.6 million or 2.4%. The $283.5 million of gross premiums written translated at 2011 rates of exchange would have been $284.6 million during the three months ended June 30, 2012, giving an effective increase of $7.7 million or 2.8%. Details of Talbot gross premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)		Gross Premiums Written		Gross Premiums Written (%)		% Change
Property	$	96,797	34.1	%	$	97,732	35.3	%	(1.0	)%
Marine	103,822		36.7	%	93,492		33.8	%	11.0	%
Specialty	82,909		29.2	%	85,662		30.9	%	(3.2	)%
Total	$	283,528	100.0	%	$	276,886	100.0	%	2.4	%

The increase in gross premiums written in the marine lines of $10.3 million was due primarily to a $9.4 million increase in premiums written on the energy and cargo lines. The decrease in gross premiums written in the specialty lines of $2.8 million was due primarily to a $5.1 million decrease in premiums written in the war and financial institutions lines, partially offset by a $4.2 million increase in premiums written in the political risk and political violence lines.

Reinsurance Premiums Ceded

Reinsurance premiums ceded for the three months ended June 30, 2012 were $119.1 million compared to $132.3 million for the three months ended June 30, 2011, a decrease of $13.3 million or 10.0%. Details of reinsurance premiums ceded by line of business are provided below.

	Three Months Ended June 30, 2012					Three Months Ended June 30, 2011
(Dollars in thousands)	Reinsurance Premiums Ceded			Reinsurance Premiums Ceded (%)		Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		% Change
Property	$	105,750		88.8	%	$	112,299	84.9	%	(5.8	)%
Marine	13,752			11.6	%	16,034		12.1	%	(14.2	)%
Specialty	(450		)	(0.4	)%	4,013		3.0	%	(111.2	)%
Total	$	119,052		100.0	%	$	132,346	100.0	%	(10.0	)%

Validus Re. Validus Re reinsurance premiums ceded for the three months ended June 30, 2012 were $97.1 million compared to $98.2 million for the three months ended June 30, 2011, a decrease of $1.1 million or 1.2%. Details of Validus Re reinsurance premiums ceded by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		% Change
Property	$	83,746	86.3	%	$	85,389	86.9	%	(1.9	)%
Marine	13,294		13.7	%	12,829		13.1	%	3.6	%
Specialty	37		—	%	—		—	%	NM
Total	$	97,077	100.0	%	$	98,218	100.0	%	(1.2	)%

 NM: Not meaningful

34

Reinsurance premiums ceded in the property lines decreased by $1.6 million, due primarily to a decrease in ceded reinstatement premiums.

AlphaCat.AlphaCat did not cede reinsurance premiums for the three months ended June 30, 2012 and 2011.

Talbot. Talbot reinsurance premiums ceded for the three months ended June 30, 2012 were $34.4 million compared to $47.3 million for the three months ended June 30, 2011, a decrease of $12.9 million or (27.2)%. Details of Talbot reinsurance premiums ceded by line of business are provided below.

	Three Months Ended June 30, 2012					Three Months Ended June 30, 2011
(Dollars in thousands)	Reinsurance Premiums Ceded			Reinsurance Premiums Ceded (%)		Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		% Change
Property	$	34,002		98.8	%	$	38,965	82.4	%	(12.7	)%
Marine	909			2.6	%	4,300		9.1	%	(78.9	)%
Specialty	(492		)	(1.4	)%	4,013		8.5	%	(112.3	)%
Total	$	34,419		100.0	%	$	47,278	100.0	%	(27.2	)%

The decrease in reinsurance premiums ceded in the property lines of $5.0 million was due primarily to a $3.3 million decrease in premiums ceded in the property treaty lines. The decrease in reinsurance premiums ceded in the marine lines of $3.4 million was due primarily to a $2.3 million decrease in premiums ceded in the marine energy and cargo lines of which $1.0 million relates to reinstatement premiums. The decrease in reinsurance premiums ceded in the specialty lines of $4.5 million was due primarily to a $4.5 million decrease in premiums ceded in the the aviation, war, political risk and political violence lines.

Reinsurance premiums ceded under the quota share, surplus treaty and excess of loss contracts with Validus Re and AlphaCat for the three months ended June 30, 2012 were $12.4 million compared to $13.2 million for the three months ended June 30, 2011, a decrease of $0.7 million. These reinsurance agreements with Validus Re and AlphaCat are eliminated upon consolidation.

Net Premiums Written

Net premiums written for the three months ended June 30, 2012 were $508.0 million compared to $473.0 million for the three months ended June 30, 2011, an increase of $35.0 million or 7.4%. The ratios of net premiums written to gross premiums written for the three months ended June 30, 2012 and 2011 were 81.0% and 78.1%, respectively. Details of net premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written		Net Premiums Written (%)		% Change
Property	$	286,468	56.4	%	$	296,486	62.7	%	(3.4	)%
Marine	114,517		22.5	%	81,209		17.2	%	41.0	%
Specialty	107,052		21.1	%	95,346		20.1	%	12.3	%
Total	$	508,037	100.0	%	$	473,041	100.0	%	7.4	%

Validus Re.Validus Re net premiums writtenfor the three months ended June 30, 2012 were $243.8 million compared to $192.5 million for the three months ended June 30, 2011, an increase of $51.3 million or 26.7%.  Details of Validus Re net premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written			Net Premiums Written (%)		% Change
Property	$	208,518	85.5	%	$	186,759		97.0	%	11.7	%
Marine	11,604		4.8	%	(7,983		)	(4.1	)%	245.4	%
Specialty	23,651		9.7	%	13,697			7.1	%	72.7	%
Total	$	243,773	100.0	%	$	192,473		100.0	%	26.7	%

35

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 gross premiums written were 71.5% and 66.2% for the three months ended June 30, 2012 and 2011, respectively.

AlphaCat.AlphaCat net premiums writtenfor the three months ended June 30, 2012 were $15.2 million compared to $51.0 million for the three months ended June 30, 2011, a decrease of $35.8 million or 70.3%. Details of AlphaCat net premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written		Net Premiums Written (%)		% Change
Property	$	15,155	100.0	%	$	50,960	100.0	%	(70.3	)%
Total	$	15,155	100.0	%	$	50,960	100.0	%	(70.3	)%

The decrease in AlphaCat net premiums written was driven by the factors highlighted above in respect of gross premiums written. The ratios of net premiums written to gross premiums written were 100.0% for the three months ended June 30, 2012 and 2011.

Talbot. Talbot net premiums written for the three months ended June 30, 2012 were $249.1 million compared to $229.6 million for the three months ended June 30, 2011, an increase of $19.5 million or 8.5%. Details of Talbot net premiums written by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written		Net Premiums Written (%)		% Change
Property	$	62,795	25.2	%	$	58,767	25.6	%	6.9	%
Marine	102,913		41.3	%	89,192		38.8	%	15.4	%
Specialty	83,401		33.5	%	81,649		35.6	%	2.1	%
Total	$	249,109	100.0	%	$	229,608	100.0	%	8.5	%

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 June 30, 2012 and 2011 were 87.9% and 82.9%, respectively.

Net Change in Unearned Premiums

Net change in unearned premiums for the three months ended June 30, 2012 was ($60.4) million compared to ($47.4) million for the three months ended June 30, 2011, a decrease of ($13.0) million or 27.4%.

	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(111,390	)	$	(109,608	)	(1.6	)%
Change in prepaid reinsurance premiums	50,980			62,207			(18.0	)%
Net change in unearned premiums	$	(60,410	)	$	(47,401	)	(27.4	)%

Validus Re. Validus Re net change in unearned premiums for the three months ended June 30, 2012 was ($1.1) million compared to $31.8 million for the three months ended June 30, 2011, a decrease of ($32.9) million or 103.4%.

36

	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(70,676	)	$	(40,510	)	(74.5	)%
Change in prepaid reinsurance premiums	69,589			72,324			(3.8	)%
Net change in unearned premiums	$	(1,087	)	$	31,814		(103.4	)%

Validus Re net change in unearned premiums has decreased for the three months ended June 30, 2012 due primarily to the impact of the increase in gross premiums written for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011.

AlphaCat. AlphaCat net change in unearned premiums for the three months ended June 30, 2012 was ($11.6) million compared to ($42.6) million for the three months ended June 30, 2011, an increase of $31.0 million or 72.8%.

	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(11,568	)	$	(42,569	)	72.8	%
Net change in unearned premiums	$	(11,568	)	$	(42,569	)	72.8	%

AlphaCat net change in unearned premiums has increased for the three months ended June 30, 2012 due primarily to the impact the factors highlighted above in respect of gross premiums written during the three months ended June 30, 2012 as compared to three months ended June 30, 2011.

Talbot.Talbot net change in unearned premiums for the three months ended June 30, 2012 was ($47.8) million compared to ($36.6) million for the three months ended June 30, 2011, a decrease of ($11.1) million or 30.3%.

	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(29,146	)	$	(26,529	)	(9.9	)%
Change in prepaid reinsurance premiums	(18,609		)	(10,117		)	(83.9	)%
Net change in unearned premiums	$	(47,755	)	$	(36,646	)	(30.3	)%

Talbot net change in unearned premium has decreased for the three months ended June 30, 2012 compared to the three months ended June 30, 2011 due to the earnings pattern of gross premiums written and reinsurance premiums ceded during three months ended June 30, 2012 as compared to the three months ended June 30, 2011.

Net Premiums Earned

Net premiums earned for the three months ended June 30, 2012 were $447.6 million compared to $425.6 million for the three months ended June 30, 2011, an increase of $22.0 million or 5.2%. Details of net premiums earned by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)		Net Premiums Earned		Net Premiums Earned (%)		% Change
Property	$	202,692	45.3	%	$	204,624	48.1	%	(0.9	)%
Marine	146,682		32.8	%	125,496		29.5	%	16.9	%
Specialty	98,253		21.9	%	95,520		22.4	%	2.9	%
Total	$	447,627	100.0	%	$	425,640	100.0	%	5.2	%

Validus Re. Validus Re net premiums earned for three months ended June 30, 2012 were $242.7 million compared to

37

$224.3 million for the three months ended June 30, 2011, an increase of $18.4 million or 8.2%. Details of Validus Re net premiums earned by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)		Net Premiums Earned		Net Premiums Earned (%)		% Change
Property	$	158,360	65.3	%	$	158,388	70.6	%	—	%
Marine	61,185		25.2	%	46,549		20.8	%	31.4	%
Specialty	23,141		9.5	%	19,350		8.6	%	19.6	%
Total	$	242,686	100.0	%	$	224,287	100.0	%	8.2	%

The increase in net premiums earned is consistent with the relevant pattern of net premiums written influencing the earned premiums for the three months ended June 30, 2012 compared to the three months ended June 30, 2011.

AlphaCat. AlphaCat net premiums earned for the three months ended June 30, 2012 were $3.6 million compared to $8.4 million for the three months ended June 30, 2011, a decrease of $4.8 million or 57.3%. Details of AlphaCat net premiums earned by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)		Net Premiums Earned		Net Premiums Earned (%)		% Change
Property	$	3,587	100.0	%	$	8,391	100.0	%	(57.3	)%
Total	$	3,587	100.0	%	$	8,391	100.0	%	(57.3	)%

The decrease in net premiums earned is consistent with the relevant pattern of net premiums written influencing the earned premiums for the three months ended June 30, 2012 compared to the three months ended June 30, 2011.

Talbot. Talbot net premiums earned for the three months ended June 30, 2012 were $201.4 million compared to $193.0 million for the three months ended June 30, 2011, an increase of $8.4 million or 4.3%. Details of Talbot net premiums earned by line of business are provided below.

	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)		Net Premiums Earned		Net Premiums Earned (%)		% Change
Property	$	40,745	20.2	%	$	37,845	19.6	%	7.7	%
Marine	85,497		42.5	%	78,947		40.9	%	8.3	%
Specialty	75,112		37.3	%	76,170		39.5	%	(1.4	)%
Total	$	201,354	100.0	%	$	192,962	100.0	%	4.3	%

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 June 30, 2012, as compared to the three months ended June 30, 2011.

Losses and Loss Expenses

Losses and loss expenses for the three months ended June 30, 2012 were $153.7 million compared to $207.3 million for the three months ended June 30, 2011, a decrease of $53.6 million or 25.9%. The loss ratios, defined as losses and loss expenses divided by net premiums earned, for the three months ended June 30, 2012 and 2011 were 34.3% and 48.7%, respectively. Details of loss ratios by line of business are provided below.

	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Percentage Point Change
Property	37.1	%	52.8	%	(15.7	)
Marine	30.6	%	59.5	%	(28.9	)
Specialty	34.3	%	25.8	%	8.5
All lines	34.3	%	48.7	%	(14.4	)

38

For the three months ended June 30, 2012, there were no notable loss events. For the three months ended June 30, 2011, the Company incurred $90.3 million of losses from notable loss events, which represented 21.2 percentage points of the loss ratio, excluding the reserve for potential development on notable loss events. Net of $6.9 million of reinstatement premiums, the effect of these events on net income was a decrease of $83.4 million. The Company's loss ratio, excluding notable loss events, reserve for potential development on notable loss events and prior year loss reserve development for the three months ended June 30, 2012 and 2011 was 42.7% and 33.5%, respectively.

Three Months Ended June 30, 2012

(Dollars in thousands)

Second Quarter 2012 Notable Loss Events

Validus Re

Talbot

Total

Description

Net Losses and Loss Expenses

% of NPE

Net Losses and Loss Expenses

% of NPE

Net Losses and Loss Expenses

% of NPE

None

$

—

—

%

$

—

—

%

—

$

—

—

%

Total

$

—

—

%

$

—

—

%

$

—

—

%

		Three Months Ended June 30, 2011
		(Dollars in thousands)
Second Quarter 2011 Notable Loss Events (a)		Validus Re				Talbot				Total
Description		Net Losses and Loss Expenses (b)		% of NPE (c)		Net Losses and Loss Expenses (b)		% of NPE		Net Losses and Loss Expenses (b)		% of NPE
Cat 46	Tornado	$	36,584	16.3	%	$	7,222	3.7	%	$	43,806	10.3	%
Cat 48	Tornado	20,869		9.3	%	10,612		5.5	%	31,481		7.4	%
Jupiter 1	Platform failure	4,970		2.2	%	10,038		5.2	%	15,008		3.5	%
Total		$	62,423	27.8	%	$	27,872	14.4	%	$	90,295	21.2	%

(a)  These notable loss event amounts exclude the reserve for potential development on 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 of these events, and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events and the Company's actual ultimate net losses from these events may vary materially from these estimates.

(b) Net of reinsurance but not net of reinstatement premiums. Total reinstatement premiums were $6.9 million million for the three months ended June 30, 2011.

(c) The 2011 loss ratios for the Validus Re segment have been represented to exclude the impact of the AlphaCat segment.

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

39

	Three Months Ended June 30,
	2012		2011		Percentage Point Change
Property - current period - excluding items below	35.5	%	21.9	%	13.6
Property - current period - notable losses	0.0	%	33.7	%	(33.7	)
Property - change in prior accident years	1.6	%	(2.8	)%	4.4
Property - loss ratio	37.1	%	52.8	%	(15.7	)
Marine - current period - excluding items below	50.5	%	50.9	%	(0.4	)
Marine - current period - notable losses	0.0	%	16.5	%	(16.5	)
Marine - change in prior accident years	(19.9	)%	(7.9	)%	(12.0	)
Marine - loss ratio	30.6	%	59.5	%	(28.9	)
Specialty - current period - excluding items below	46.1	%	35.8	%	10.3
Specialty - current period - notable losses	0.0	%	0.6	%	(0.6	)
Specialty - change in prior accident years	(11.8	)%	(10.6	)%	(1.2	)
Specialty – loss ratio	34.3	%	25.8	%	8.5
All lines - current period - excluding items below	42.7	%	33.5	%	9.2
All lines - current period - notable losses	0.0	%	21.2	%	(21.2	)
All lines - change in prior accident years	(8.4	)%	(6.0	)%	(2.4	)
All lines - loss ratio	34.3	%	48.7	%	(14.4	)

Validus Re.Validus Re losses and loss expenses for the three months ended June 30, 2012 were $53.2 million compared to $94.0 million for the three months ended June 30, 2011, a decrease of $40.8 million or 43.4%. The loss ratio, defined as losses and loss expenses divided by net premiums earned, was 21.9% and 41.9% for the three months ended June 30, 2012 and 2011, respectively. For the three months ended June 30, 2012, Validus Re incurred losses of $63.9 million related to current year losses and $10.7 million of favorable loss reserve development relating to prior accident years. For three months ended June 30, 2012, favorable loss reserve development on prior accident years benefited the Validus Re loss ratio by 4.4 percentage points. For the three months ended June 30, 2011, Validus Re incurred losses of $106.3 million related to current year losses and $12.3 million of favorable loss reserve development relating to prior accident years. For the three months ended June 30, 2011, favorable loss reserve development on prior years benefited the Validus Re loss ratio by 5.5 percentage points.

For the three months ended June 30, 2012, Validus Re did not incur any notable losses. For the three months ended June 30, 2011, Validus Re incurred $62.4 million of losses from notable loss events, which represented 27.8 percentage points of the loss ratio, excluding the reserve for potential development on notable loss events. Net of reinstatement premiums of $6.3 million, the effect of these events on Validus Re segment income was a decrease of $56.2 million. Validus Re segment loss ratios excluding notable loss events, reserve for potential development on notable loss events and prior year loss reserve development for the three months ended June 30, 2012 and 2011 were 26.3% and 19.6%, respectively. Details of Validus Re loss ratios by line of business and period of occurrence are provided below.

40

	Three Months Ended June 30,
	2012		2011		Percentage Point Change
Property - current period excluding items below	26.9	%	14.1	%	12.8
Property - current period - notable losses	0.0	%	36.3	%	(36.3	)
Property - change in prior accident years	6.1	%	(4.1	)%	10.2
Property - loss ratio	33.0	%	46.3	%	(13.3	)
Marine - current period excluding items below	28.5	%	41.7	%	(13.2	)
Marine - current period - notable losses	0.0	%	10.7	%	(10.7	)
Marine - change in prior accident years	(25.5	)%	(9.7	)%	(15.8	)
Marine - loss ratio	3.0	%	42.7	%	(39.7	)
Specialty - current period excluding items below	16.5	%	11.3	%	5.2
Specialty - current period - notable losses	0.0	%	0.0	%	—
Specialty - change in prior accident years	(20.6	)%	(6.6	)%	(14.0	)
Specialty – loss ratio	(4.1	)%	4.7	%	(8.8	)
All lines - current period excluding items below	26.3	%	19.6	%	6.7
All lines - current period - notable losses	0.0	%	27.8	%	(27.8	)
All lines - change in prior accident years	(4.4	)%	(5.5	)%	1.1
All lines - loss ratio	21.9	%	41.9	%	(20.0	)

For the three months ended June 30, 2012, Validus Re property lines losses and loss expenses included $42.6 million related to current year losses and $9.7 million of adverse loss reserve development relating to prior accident years. The adverse loss reserve development was due to an increase in loss estimates on prior year notable loss events, which led to a movement in the reserve for potential development on notable loss events during the three months ended June 30, 2012. This movement was partially offset by a reduction in loss estimates on attritional losses. For the three months ended June 30, 2011, Validus Re property lines losses and loss expenses included $79.8 million related to current year losses and $6.5 million of favorable loss reserve development relating to prior accident years. The favorable loss reserve development was attributable to lower than expected claims development.

For the three months ended June 30, 2012, Validus Re property lines did not incur any notable losses. For the three months ended June 30, 2011, Validus Re property lines incurred $57.5 million of losses from notable loss events, which represented 36.3 percentage points of the property lines loss ratio, excluding reserve for potential development on notable loss events. Validus Re property lines loss ratios, excluding notable loss events, reserve for potential development on notable loss events and prior year loss reserve development, for the three months ended June 30, 2012 and 2011 were 26.9% and 14.1%, respectively.

For the three months ended June 30, 2012, Validus Re marine lines losses and loss expenses included $17.5 million related to current year losses and $15.6 million of favorable loss reserve development relating to prior accident years. The favorable loss reserve development was due primarily to a reduction in loss estimates on attritional losses. For the three months ended June 30, 2011, Validus Re marine lines losses and loss expenses included $24.4 million related to current year losses and $4.5 million of favorable loss reserve development relating to prior accident years.

For the three months ended June 30, 2012, Validus Re marine lines did not incur any notable losses. For the three months ended June 30, 2011, Validus Re marine lines incurred $5.0 million of losses from notable loss events, which represented 10.7 percentage points of the marine lines loss ratio, excluding reserve for potential development on notable loss events. Validus Re marine lines loss ratios, excluding notable loss events, reserve for potential development on notable loss events and prior year loss reserve development, for the three months ended June 30, 2012 and 2011 were 28.5% and 41.7%, respectively.

For the three months ended June 30, 2012, Validus Re specialty lines losses and loss expenses included $3.8 million related to current year losses and $4.8 million of favorable loss reserve development relating to prior accident years. The favorable loss reserve development was due primarily to a reduction in loss estimates on attritional losses. For the three months ended June 30, 2011, Validus Re specialty lines losses and loss expenses included $2.2 million related to current year losses and $1.3 million of favorable loss reserve development relating to prior accident years.

41

For the three months ended June 30, 2012 and 2011 Validus Re specialty lines did not incur any notable losses. Validus Re specialty lines loss ratios, excluding prior year loss reserve development, for the three months ended June 30, 2012 and 2011 were 16.5% and 11.3%, respectively.

AlphaCat.The AlphaCat segment did not incur any losses and loss expenses for the three months ended June 30, 2012 and 2011.

Talbot.Talbot losses and loss expenses for the three months ended June 30, 2012 were $100.5 million compared to $113.3 million for the three months ended June 30, 2011, a decrease of $12.8 million or 11.3%. The loss ratio defined as losses and loss expenses divided by net premiums earned, was 49.9% and 58.7% for the three months ended June 30, 2012 and 2011, respectively.  For the three months ended June 30, 2012, Talbot incurred losses of $127.4 million related to current year losses and $26.9 million of favorable loss reserve development relating to prior accident years. For the three months ended June 30, 2012, favorable loss reserve development on prior accident years benefited the Talbot loss ratio by 13.4 percentage points. For the three months ended June 30, 2011, Talbot incurred losses of $126.7 million related to current year losses and $13.4 million in favorable loss reserve development relating to prior accident years. For the three months ended June 30, 2011, favorable loss reserve development on prior accident years benefited the Talbot loss ratio by 6.9 percentage points.

For the three months ended June 30, 2012, Talbot did not incur any notable losses. For the three months ended June 30, 2011, Talbot incurred $27.9 million of losses from notable loss events, which represented 14.4 percentage points of the Talbot loss ratio. Talbot loss ratios, excluding notable loss events and prior year loss reserve development, for the three months ended June 30, 2012 and 2011 were 63.3% and 51.2%, respectively. Details of Talbot loss ratios by line of business and period of occurrence are provided below.

	Three Months Ended June 30,
	2012		2011		Percentage Point Change
Property - current period excluding items below	72.0	%	58.9	%	13.1
Property - current period - notable losses	0.0	%	30.5	%	(30.5	)
Property - change in prior accident years	(15.9	)%	2.3	%	(18.2	)
Property - loss ratio	56.1	%	91.7	%	(35.6	)
Marine - current period excluding items below	66.1	%	56.3	%	9.8
Marine - current period - notable losses	0.0	%	20.0	%	(20.0	)
Marine - change in prior accident years	(15.8	)%	(6.8	)%	(9.0	)
Marine - loss ratio	50.3	%	69.5	%	(19.2	)
Specialty - current period excluding items below	55.3	%	42.0	%	13.3
Specialty - current period - notable losses	0.0	%	0.7	%	(0.7	)
Specialty - change in prior accident years	(9.2	)%	(11.6	)%	2.4
Specialty – loss ratio	46.1	%	31.1	%	15.0
All lines - current period excluding items below	63.3	%	51.2	%	12.1
All lines - current period - notable losses	0.0	%	14.4	%	(14.4	)
All lines - change in prior accident years	(13.4	)%	(6.9	)%	(6.5	)
All lines - loss ratio	49.9	%	58.7	%	(8.8	)

For the three months ended June 30, 2012, Talbot property lines losses and loss expenses included $29.3 million related to current year losses and $6.5 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was due to lower than expected claims development on attritional losses. For the three months ended June 30, 2011, Talbot property lines losses and loss expenses included $33.8 million related to current year losses and $0.9 million of adverse loss reserve development relating to prior accident years. The prior year adverse loss reserve development was attributable to higher than expected claims development on the onshore energy lines.

For the three months ended June 30, 2012, Talbot property lines did not incur any notable losses. For the three months ended June 30, 2011, Talbot's property lines incurred $11.5 million of losses from notable loss events, which represented 30.5 percentage points of the property lines loss ratio. Talbot property line loss ratio, excluding notable loss events and prior year loss reserve development for the three months ended June 30, 2012 and 2011 were 72.0% and 58.9%, respectively.

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For the three months ended June 30, 2012, Talbot marine lines losses and loss expenses included $56.5 million related to current year losses and $13.5 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was due primarily to lower than expected claims development on attritional and large losses. For the three months ended June 30, 2011, Talbot marine lines losses and loss expenses included $60.3 million related to current year losses and $5.4 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was primarily due to lower than expected loss development across most lines of business, partially offset by adverse claims development on the offshore energy lines.

For the three months ended June 30, 2012, Talbot marine lines did not incur any notable losses. For the three months ended June 30, 2011, Talbot's marine lines incurred $15.8 million of losses from notable loss events, which represented 20.0 percentage points of the marine lines loss ratio. Talbot marine lines loss ratios, excluding notable loss events and prior year loss reserve development for the three months ended June 30, 2012 and 2011 were 66.1% and 56.3%, respectively.

For the three months ended June 30, 2012, Talbot specialty lines losses and loss expenses included $41.5 million relating to current year losses and $6.9 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was attributable to lower than expected claims development on attritional losses. For the three months ended June 30, 2011, Talbot specialty lines losses and loss expenses included $32.6 million relating to current year losses and $8.9 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was primarily due to lower than expected loss development across most specialty lines, partially offset by adverse claims development in the financial institutions lines.

For the three months ended June 30, 2012, Talbot specialty lines did not incur any notable losses. For the three months ended June 30, 2011, Talbot's specialty lines incurred $0.6 million of losses from notable loss events, which represented 0.7 percentage points of the specialty lines loss ratio. Talbot specialty lines loss ratios, excluding notable loss events and prior year loss reserve development for the three months ended June 30, 2012 and 2011 were 55.3% and 42.0%, respectively.

Reserves for Losses and Loss expenses

At June 30, 2012, 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 in the Company's Annual Report on Form 10-K for the year ended December 31, 2011. The Company did not make any significant changes in the assumptions or methodology used in its reserving process for the three and six months ended June 30, 2012.

	As at June 30, 2012
(Dollars in thousands)	Gross Case Reserves		Gross IBNR		Total Gross Reserve for Losses and Loss Expenses
Property	$	733,568	$	433,651	$	1,167,219
Marine	474,142		389,612		863,754
Specialty	250,583		309,743		560,326
Total	$	1,458,293	$	1,133,006	$	2,591,299

	As at June 30, 2012
(Dollars in thousands)	Net Case Reserves		Net IBNR		Total Net Reserve for Losses and Loss Expenses
Property	$	625,551	$	395,150	$	1,020,701
Marine	419,038		321,106		740,144
Specialty	198,536		260,434		458,970
Total	$	1,243,125	$	976,690	$	2,219,815

The following table sets forth a reconciliation of gross and net reserves for losses and loss expenses by segment for the three months ended June 30, 2012:

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	Three Months Ended June 30, 2012
(Dollars in thousands)	Validus Re Segment			AlphaCat Segment		Talbot Segment			Eliminations			Total
Gross reserves at period beginning	$	1,327,941		$	10,000	$	1,415,739		$	(104,070	)	$	2,649,610
Losses recoverable	(68,069		)	—		(387,293		)	104,070			(351,292		)
Net reserves at period beginning	1,259,872			10,000		1,028,446			—			2,298,318
Incurred losses - current year	63,859			—		127,393			—			191,252
Change in prior accident years	(10,669		)	—		(26,891		)	—			(37,560		)
Incurred losses	53,190			—		100,502			—			153,692
Foreign exchange	(6,506		)	—		(5,160		)	—			(11,666		)
Paid losses	(139,048		)	—		(81,481		)	—			(220,529		)
Net reserves at period end	1,167,508			10,000		1,042,307			—			2,219,815
Losses recoverable	79,964			—		392,483			(100,963		)	371,484
Gross reserves at period end	$	1,247,472		$	10,000	$	1,434,790		$	(100,963	)	$	2,591,299

The amount of recorded reserves represents management's best estimate of expected losses and loss expenses on premiums earned. For the three months ended June 30, 2012, favorable loss reserve development on prior accident years was $37.6 million of which, $10.7 million of the favorable loss reserve development related to the Validus Re segment and $26.9 million related to the Talbot segment. Favorable loss reserve development benefited the Company's loss ratio by 8.4 percentage points for the three months ended June 30, 2012. For the three months ended June 30, 2011, favorable loss reserve development on prior accident years was $25.7 million, of which, $12.3 million related to the Validus Re segment and $13.4 million related to the Talbot segment. Favorable loss reserve development benefited the Company's loss ratio by 6.0 percentage points for the three months ended June 30, 2011.

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 March 31, 2012, the reserve for potential development on 2010 and 2011 notable loss events was $18.6 million and $65.0 million, respectively. During the three months ended June 30, 2012, the Company increased certain loss estimates and allocated $46.5 million of the 2010 and 2011 reserve to the Deepwater Horizon, Danish flood, Thailand floods, Tohoku earthquake, Christchurch earthquake and other events. The Company also increased the reserve for potential development on 2011 notable loss events by $27.9 million. As at June 30, 2012, the reserve for potential development on 2010 and 2011 notable loss events was $11.1 million and $53.9 million respectively, for a total of $65.0 million.

Policy Acquisition Costs

Policy acquisition costs for the three months ended June 30, 2012 were $76.1 million compared to $78.2 million for the three months ended June 30, 2011, a decrease of $2.1 million or 2.7%. Policy acquisition costs as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 17.0% and 18.4%, respectively. The changes in policy acquisition costs are due to the factors provided below.

	Three Months Ended June 30, 2012						Three Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	$	22,330	29.3	%	11.0	%	$	30,032	38.4	%	14.7	%	(25.6	)%
Marine	31,482		41.4	%	21.5	%	26,977		34.5	%	21.5	%	16.7	%
Specialty	22,292		29.3	%	22.7	%	21,221		27.1	%	22.2	%	5.0	%
Total	$	76,129	100.0	%	17.0	%	$	78,230	100.0	%	18.4	%	(2.7	)%

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Validus Re.Validus Re policy acquisition costs for the three months ended June 30, 2012 were $37.1 million compared to $35.0 million for the three months ended June 30, 2011, an increase of $2.1 million or 5.9%.

	Three Months Ended June 30, 2012						Three Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	$	21,389	57.7	%	13.5	%	$	21,790	62.2	%	13.8	%	(1.8	)%
Marine	11,783		31.8	%	19.3	%	10,147		29.0	%	21.8	%	16.1	%
Specialty	3,912		10.5	%	16.9	%	3,076		8.8	%	15.9	%	27.2	%
Total	$	37,084	100.0	%	15.3	%	$	35,013	100.0	%	15.6	%	5.9	%

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 the policy acquisition ratio. Validus Re policy acquisition costs as a percent of net premiums earned (the policy acquisition cost ratio) for the three months ended June 30, 2012 and 2011 were 15.3% and 15.6%, respectively. The policy acquisition cost ratio on the marine line has decreased by 2.5 percentage points due to an increase in reinstatement premiums that attract little or no policy acquisition costs.

AlphaCat.AlphaCat policy acquisition costs for the three months ended June 30, 2012 were $0.4 million compared to $1.0 million for the three months ended June 30, 2011, a decrease of $0.6 million or 60.7%.

	Three Months Ended June 30, 2012						Three Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	$	382	100.0	%	10.6	%	$	973	100.0	%	11.6	%	(60.7	)%
Total	$	382	100.0	%	10.6	%	$	973	100.0	%	11.6	%	(60.7	)%

Policy acquisition costs as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 10.6% and 11.6%, respectively.

Talbot.Talbot policy acquisition costs for the three months ended June 30, 2012 were $41.8 million compared to $42.3 million for the three months ended June 30, 2011, a decrease of $0.5 million or 1.2%.

	Three Months Ended June 30, 2012						Three Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	$	3,718	8.9	%	9.1	%	$	7,217	17.0	%	19.1	%	(48.5	)%
Marine	19,646		47.0	%	23.0	%	16,834		39.8	%	21.3	%	16.7	%
Specialty	18,439		44.1	%	24.5	%	18,256		43.2	%	24.0	%	1.0	%
Total	$	41,803	100.0	%	20.8	%	$	42,307	100.0	%	21.9	%	(1.2	)%

Policy acquisition costs as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 20.8% and 21.9%, respectively. The policy acquisition ratio on the property line decreased 10.0 percentage points primarily due to an acquisition cost rate decrease on the onshore energy lines.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2012 were $61.6 million compared to $60.8 million for the three months ended June 30, 2011, an increase of $0.8 million or 1.3%.

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	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	General and Administrative Expenses		General and Administrative Expenses (%)		General and Administrative Expenses		General and Administrative Expenses (%)		% Change
Validus Re	$	14,142	23.0	%	$	15,059	24.8	%	(6.1	)%
AlphaCat	2,402		3.9	%	1,061		1.7	%	126.4	%
Talbot	30,957		50.2	%	33,345		54.8	%	(7.2	)%
Corporate & Eliminations (a)	14,134		22.9	%	11,376		18.7	%	24.2	%
Total	$	61,635	100.0	%	$	60,841	100.0	%	1.3	%

(a) Corporate and Eliminations includes legal entity adjustments.

General and administrative expenses of $61.6 million in the three months ended June 30, 2012 represents 13.8 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 June 30, 2012 were $14.1 million compared to $15.1 million for the three months ended June 30, 2011, a decrease of $0.9 million or 6.1%. General and administrative expenses have decreased due primarily to a $2.6 million decrease in professional fees. This decrease was partially offset by an increase in rent and office expenses due to the Bermuda office refurbishment. 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 June 30, 2012 and 2011 were 5.8% and 6.7%, respectively.

AlphaCat. AlphaCat general and administrative expenses for the three months ended June 30, 2012 were $2.4 million as compared to $1.1 million for the three months ended June 30, 2011, an increase of $1.3 million or 126.4%. General and administrative expenses have increased primarily due to an increase in salaries and benefits and professional fees. AlphaCat's general and administrative expenses as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 67.0% and 12.6%, respectively. The AlphaCat segment's general and administrative ratio has been impacted by the reduction in net premiums earned as a greater proportion of the segment's revenues are generated in equity earnings from operating affiliates which is not included in the ratio calculation.

Talbot. Talbot general and administrative expenses for the three months ended June 30, 2012 were $31.0 million compared to $33.3 million for the three months ended June 30, 2011, a decrease of $2.4 million or 7.2%. General and administrative expenses have decreased primarily due to a $1.2 million decrease in Lloyd's syndicate costs. Talbot's general and administrative expenses as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 15.4% and 17.3%, respectively.

Corporate & Eliminations. Corporate general and administrative expenses for the three months ended June 30, 2012 were $14.1 million compared to $11.4 million for the three months ended June 30, 2011, an increase of $2.8 million or 24.2%. General and administrative expenses have increased primarily due to a $1.0 million increase in professional fees and a $1.3 million increase in modeling software license fees and IT expenses. 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 three months ended June 30, 2012 were $6.8 million compared to $7.6 million for the three months ended June 30, 2011, a decrease of $0.8 million or 10.9%. 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.

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	Three Months Ended June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Share Compensation Expenses		Share Compensation Expenses (%)		Share Compensation Expenses		Share Compensation Expenses (%)		% Change
Validus Re	$	1,966	28.8	%	$	1,823	23.9	%	7.8	%
AlphaCat	59		0.9	%	21		0.3	%	181.0	%
Talbot	1,799		26.5	%	2,026		26.6	%	(11.2	)%
Corporate & Eliminations (a)	2,976		43.8	%	3,758		49.2	%	(20.8	)%
Total	$	6,800	100.0	%	$	7,628	100.0	%	(10.9	)%

(a) Corporate and Eliminations includes legal entity adjustments.

Share compensation expenses of $6.8 million in the three months ended June 30, 2012 represents 1.5 percentage points of the general and administrative expense ratio. The decrease in share compensation expenses of $0.8 million is due to reduced expense on the non-qualified options which fully vested in May 2012. In addition, the share compensation expenses of $7.6 million for the three months ended June 30, 2011 included $1.0 million of expenses relating to the employee seller shares which fully vested on July 2, 2011.

Validus Re.Validus Re share compensation expenses for the three months ended June 30, 2012 were $2.0 million compared to $1.8 million for the three months ended June 30, 2011, an increase of $0.1 million or 7.8%. Share compensation expense as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 0.8% and 0.8%, respectively.

AlphaCat. AlphaCat share compensation expense as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 1.6% and 0.3%, respectively.

Talbot. Talbot share compensation expenses for the three months ended June 30, 2012 was $1.8 million compared to $2.0 million for the three months ended June 30, 2011, a decrease of $0.2 million or 11.2%. Share compensation expense as a percent of net premiums earned for the three months ended June 30, 2012 and 2011 were 0.9% and 1.0%, respectively.

Corporate & Eliminations.Corporate share compensation expenses for the three months ended June 30, 2012 were $3.0 million compared to $3.8 million for the three months ended June 30, 2011, a decrease of $0.8 million or 20.8%.

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 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 policy 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 administrative expense ratio, expense ratio and combined ratio for the three months ended June 30, 2012 and 2011.

Consolidated	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Percentage Point Change
Losses and loss expense ratio	34.3	%	48.7	%	(14.4	)
Policy acquisition cost ratio	17.0	%	18.4	%	(1.4	)
General and administrative expense ratio (a)	15.3	%	16.1	%	(0.8	)
Expense ratio	32.3	%	34.5	%	(2.2	)
Combined ratio	66.6	%	83.2	%	(16.6	)

Validus Re	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Percentage Point Change
Losses and loss expense ratio	21.9	%	41.9	%	(20.0	)
Policy acquisition cost ratio	15.3	%	15.6	%	(0.3	)
General and administrative expense ratio (a)	6.6	%	7.5	%	(0.9	)
Expense ratio	21.9	%	23.1	%	(1.2	)
Combined ratio	43.8	%	65.0	%	(21.2	)

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AlphaCat	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Percentage Point Change
Losses and loss expense ratio	0.0	%	0.0	%	—
Policy acquisition cost ratio	10.6	%	11.6	%	(1.0	)
General and administrative expense ratio (a)	68.6	%	12.9	%	55.7
Expense ratio	79.2	%	24.5	%	54.7
Combined ratio	79.2	%	24.5	%	54.7

Talbot	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Percentage Point Change
Losses and loss expense ratio	49.9	%	58.7	%	(8.8	)
Policy acquisition cost ratio	20.8	%	21.9	%	(1.1	)
General and administrative expense ratio (a)	16.3	%	18.3	%	(2.0	)
Expense ratio	37.1	%	40.2	%	(3.1	)
Combined ratio	87.0	%	98.9	%	(11.9	)

a) Includes general and administrative expenses and share compensation expenses.

General and administrative expense ratios for the three months ended June 30, 2012 and 2011 were 15.3% and 16.1%, 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 June 30, 2012				Three Months Ended June 30, 2011
(Dollars in thousands)	Expenses		Expenses as % of Net Earned Premiums		Expenses		Expenses as % of Net Earned Premiums
General and administrative expenses	$	61,635	13.8	%	$	60,841	14.3	%
Share compensation expenses	6,800		1.5	%	7,628		1.8	%
Total	$	68,435	15.3	%	$	68,469	16.1	%

Underwriting Income

Underwriting income for the three months ended June 30, 2012 was $149.4 million compared to $71.6 million for the three months ended June 30, 2011, an increase of $77.7 million, or 108.5%.

(Dollars in thousands)	Three Months Ended June 30, 2012			% of sub-total		Three Months Ended June 30, 2011			% of sub-total		% Change
Validus Re	$	136,304		83.4	%	$	78,357		90.4	%	74.0	%
AlphaCat	744			0.5	%	6,336			7.3	%	(88.3	)%
Talbot	26,293			16.1	%	2,012			2.3	%	1,206.8	%
Sub-total	163,341			100.0	%	86,705			100.0	%	88.4	%
Corporate & Eliminations (a)	(13,970		)			(15,071		)			7.3	%
Total	$	149,371				$	71,634				108.5	%

(a)    Corporate and Eliminations include legal entity adjustments.

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 Comprehensive Income (Loss) line items, as illustrated below.

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(Dollars in thousands)	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
Underwriting income	$	149,371		$	71,634
Net investment income	25,885			26,494
Other income	5,994			595
Finance expenses	(13,706		)	(16,361		)
Net realized gains on investments	6,154			11,552
Net unrealized (losses) gains on investments	(53,574		)	18,526
(Loss) from investment affiliate	(398		)	—
Foreign exchange (losses)	(652		)	(1,991		)
Tax (expense) benefit	(404		)	29
Income from operating affiliates	3,592			—
Net income	$	122,262		$	110,478

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 income statement line items noted above, from its calculation of underwriting income. Net realized and unrealized gains (losses) on investments are excluded 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 the other line items excluded 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 bonus component of 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 June 30, 2012 was $25.9 million compared to $26.5 million for the three months ended June 30, 2011, a decrease of $0.6 million or 2.3%. Net investment income decreased due to falling yields on fixed maturity investments. Net investment is comprised of 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 June 30, 2012 and 2011 are as provided below.

49

(Dollars in thousands)	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011			% Change
Fixed maturities and short-term investments	$	26,471		$	27,535		(3.9	)%
Cash and cash equivalents	1,449			687			110.9	%
Securities lending income	1			8			(87.5	)%
Total gross investment income	27,921			28,230			(1.1	)%
Investment expenses	(2,036		)	(1,736		)	(17.3	)%
Net investment income	$	25,885		$	26,494		(2.3	)%

Annualized effective investment yield is calculated by dividing net investment income by the average balance of the assets managed by our portfolio managers (excluding other investments). Average assets is the average of the beginning, ending and intervening quarter end asset balances. The Company's annualized effective investment yield was 1.69% and 1.76% for the three months ended June 30, 2012 and 2011 respectively, and the average duration of the portfolio at June 30, 2012 was 1.65 years (December 31, 2011- 1.63 years).

Other Income

Other income for the three months ended June 30, 2012 was $6.0 million compared to $0.6 million for the three months ended June 30, 2011, an increase of $5.4 million or 907.4%. The primary component of other income for the three months ended June 30, 2012 is $5.9 million in underwriting and performance fees the AlphaCat segment earned from business written by AlphaCat Re 2011 and AlphaCat Re 2012. AlphaCat Re 2011 was a consolidated subsidiary during the three months ended June 30, September 30 and December 31, 2011. The balance sheet of AlphaCat Re 2011 was deconsolidated as at December 31, 2011.

Finance Expenses

Finance expenses for the three months ended June 30, 2012 were $13.7 million compared to $16.4 million for the three months ended June 30, 2011, a decrease of $2.7 million or 16.2%. Finance expenses also include the amortization of debt offering costs and discounts, and fees related to our credit facilities.

	Three Months Ended June 30,
(Dollars in thousands)	2012		2011		% Change
2006 Junior Subordinated Deferrable Debentures	$	1,552	$	3,228	(51.9	)%
2007 Junior Subordinated Deferrable Debentures	2,832		3,028		(6.5	)%
2010 Senior Notes due 2040	5,598		5,597		0.0	%
Credit facilities	3,605		1,589		126.9	%
AlphaCat Re 2011 preferred dividend (a)	—		2,919		(100.0	)%
Talbot FAL Facility	32		—		NM
Talbot other interest	87		—		NM
Finance expenses	$	13,706	$	16,361	(16.2	)%

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

NM: Not Meaningful

The decrease in finance expenses of $2.7 million for the three months ended June 30, 2012 was due primarily to a $2.9 million decrease in the preferred share dividend and finance expenses attributable to AlphaCat Re 2011. In addition, there was a $1.7 million decrease in interest paid on the 2006 Junior Subordinated Deferrable Debentures due 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 which was partially offset by a $2.0 million increase in credit facility fees.

Tax (Expense) Benefit

Tax expense for the three months ended June 30, 2012 was ($0.4) million compared to a benefit of $0.0 million for the three months ended June 30, 2011, an increase in expense of $0.4 million.

50

Income From Operating Affiliates

Income from operating affiliates for the three months ended June 30, 2012 was $3.6 million, compared to $nil for the three months ended June 30, 2011, an increase of $3.6 million or 100%. For the three months ended June 30, 2012, income from operating affiliates includes $2.8 million in equity earnings relating to AlphaCat Re 2011 and $0.8 million in equity earnings relating to AlphaCat Re 2012.

In the second quarter of 2011, AlphaCat Re 2011 was included in the consolidated results of the Company, therefore there was no comparative information for the three months ended June 30, 2011. As at June 30, 2012, the Company owned 22.3% of AlphaCat Re 2011, therefore income from operating affiliates reflects the Company's share of AlphaCat Re 2011's net income for the three months ended June 30, 2012.

AlphaCat Re 2012 was formed on May 29, 2012 therefore there was no comparative information for the three months ended June 30, 2011. As at June 30, 2012, the Company owned 37.9% of AlphaCat Re 2012, therefore income from operating affiliates reflects the Company's share of AlphaCat Re 2012's net income for the three months ended June 30, 2012.

Net Realized Gains on Investments

Net realized gains on investments for the three months ended June 30, 2012 were $6.2 million compared to $11.6 million for the three months ended June 30, 2011, a decrease of $5.4 million or 46.7%.

Net Unrealized (Losses) Gains on Investments

Net unrealized losses on fixed maturities and short term investments for the three months ended June 30, 2012 were ($4.8) million compared to gains of $18.5 million for the three months ended June 30, 2011, a decrease of $23.3 million or 125.9%.

Net unrealized losses on other investments for the three months ended June 30, 2012 were ($48.7) million compared to $nil for the three months ended June 30, 2011. Net unrealized losses for the three months ended June 30, 2012 were driven primarily by the ($49.9) million unrealized loss relating to the hedge fund investments. The amount of net unrealized losses attributable to noncontrolling interest was ($44.9) million for the three months ended June 30, 2012, leaving a net impact to the Company of ($5.0) million.

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.

Loss From Investment Affiliate

The loss from investment affiliate for the three months ended June 30, 2012 was ($0.4) million compared to $nil for the three months ended June 30, 2011, a decrease of $0.4 million or 100%. The loss from investment affiliate relates to the loss incurred in the Company's investment in the Aquiline Financial Services Fund II L.P. for the three months ended June 30, 2012. The Company did not hold this investment as of June 30, 2011.

Foreign Exchange Gains (Losses)

Foreign exchange losses for the three months ended June 30, 2012 were ($0.7) million compared to ($2.0) million for the three months ended June 30, 2011, a favorable movement of $1.3 million or 67.3%. For the three months ended June 30, 2012, Validus Re recognized foreign exchange gains of $2.7 million and Talbot recognized foreign exchange losses of ($3.4) million.

For the three months ended June 30, 2012, Validus Re segment foreign exchange gains were $2.7 million compared to foreign exchange losses of ($5.3) million for the three months ended June 30, 2011, a favorable movement of $8.0 million or 151.6%. Validus Re currently hedges foreign currency exposure by balancing assets (primarily cash and premium receivables) with liabilities (primarily case reserves and event IBNR) for certain major non-USD currencies. Consequently, Validus Re aims to have a limited exposure to foreign exchange fluctuations. The favorable movement in Validus Re foreign exchange in the current period was due primarily to the British pound sterling and Japanese Yen strengthening during the quarter. The prior year loss of $5.3 million occurred primarily as a result of the Company being in a net short position on New Zealand dollar and Japanese Yen for April and May 2011. During these months, these two currencies strengthened significantly.

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For the three months ended June 30, 2012, Talbot segment foreign exchange losses were ($3.4) million compared to gains of $3.4 million for the three months ended June 30, 2011, an unfavorable movement of ($6.8) million or 200.7%. The unfavorable movement in Talbot foreign exchange was due primarily to the movement in Swiss franc to British pound sterling as a number of deposits are held in Swiss francs. During the three months ended June 30, 2012, the Swiss franc to British pound sterling weakened by 3.1% as compared to a strengthening of the Swiss franc to British pound sterling of 10.5% for the three months ended June 30, 2011.

As at June 30, 2012, Talbot's balance sheet includes net unearned premiums and deferred acquisition costs denominated in foreign currencies of approximately $107.2 million and $22.3 million, respectively. These balances consisted of British pound sterling and Canadian dollars of $75.3 million and $9.6 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. Additional foreign exchange gains (losses) 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 Loss (Income) Attributable to Noncontrolling Interest

On April 2, 2012, the Company capitalized PaCRe, a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance. PaCRe was funded with $500.0 million of contributed capital. Validus invested $50.0 million in PaCRe's common equity and therefore effectively owns 10.0% of PaCRe. The net loss attributable to noncontrolling interest of $45.4 million for the three months ended June 30, 2012 is effectively 90.0% of the net loss in PaCRe for the quarter.

On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. Validus Re has an equity interest in AlphaCat Re 2011 and Validus Re held a majority of AlphaCat Re 2011’s outstanding voting rights up to December 23, 2011 when AlphaCat Re 2011 completed a secondary offering of its common shares to third party investors, along with a partial sale of Validus Re common shares to one of the third party investors. As a result of these transactions, the Company'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 were 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 June 30, 2012. For the three months ended June 30, 2011, the Company recorded ($0.6) million in net income attributable to noncontrolling interest relating to AlphaCat Re 2011.

52

The following table presents results of operations for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2012			2011			2012			2011
Underwriting income
Gross premiums written	$	627,089		$	605,387		$	1,464,378		$	1,455,283
Reinsurance premiums ceded	(119,052		)	(132,346		)	(226,104		)	(242,166		)
Net premiums written	508,037			473,041			1,238,274			1,213,117
Change in unearned premiums	(60,410		)	(47,401		)	(339,448		)	(357,944		)
Net premiums earned	447,627			425,640			898,826			855,173
Underwriting deductions
Losses and loss expenses	153,692			207,307			385,681			683,505
Policy acquisition costs	76,129			78,230			154,261			155,526
General and administrative expenses	61,635			60,841			128,010			109,318
Share compensation expenses	6,800			7,628			12,238			19,677
Total underwriting deductions	298,256			354,006			680,190			968,026
Underwriting income (loss) (a)	149,371			71,634			218,636			(112,853		)
Net investment income	25,885			26,494			53,645			56,469
Other income	5,994			595			14,885			2,201
Finance expenses	(13,706		)	(16,361		)	(29,985		)	(30,362		)
Operating income (loss) before taxes and income from operating affiliates	167,544			82,362			257,181			(84,545		)
Tax (expense) benefit	(404		)	29			(543		)	1,488
Income from operating affiliates	3,592			—			6,959			—
Net operating income (loss) (a)	170,732			82,391			263,597			(83,057		)
Net realized gains on investments	6,154			11,552			13,686			17,931
Net unrealized (losses) gains on investments	(53,574		)	18,526			(32,903		)	5,698
(Loss) from investment affiliate	(398		)	—			(398		)	—
Foreign exchange (losses) gains	(652		)	(1,991		)	2,514			(2,458		)
Net income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Net loss (income) attributable to noncontrolling interest	$	45,360		$	(594	)	$	45,360		$	(594	)
Net income (loss) available (attributable) to Validus	$	167,622		$	109,884		$	291,856		$	(62,480	)
Selected ratios:
Net premiums written / Gross premiums written	81.0		%	78.1		%	84.6		%	83.4		%
Losses and loss expenses	34.3		%	48.7		%	42.9		%	79.9		%
Policy acquisition costs	17.0		%	18.4		%	17.2		%	18.2		%
General and administrative expenses (b)	15.3		%	16.1		%	15.6		%	15.1		%
Expense ratio	32.3		%	34.5		%	32.8		%	33.3		%
Combined ratio	66.6		%	83.2		%	75.7		%	113.2		%

(a) Non-GAAP Financial Measures: In presenting the Company’s results, management has included and discussed underwriting income and net 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. A reconciliation of underwriting income to net income, the most comparable U.S. GAAP financial measure, is presented in the section below entitled “Underwriting Income (Loss).”

(b) The general and administrative expense ratio includes share compensation expenses.

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	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Validus Re
Gross premiums written	$	340,850		$	290,691		$	907,716		$	894,779
Reinsurance premiums ceded	(97,077		)	(98,218		)	(127,078		)	(145,023		)
Net premiums written	243,773			192,473			780,638			749,756
Change in unearned premiums	(1,087		)	31,814			(284,943		)	(276,526		)
Net premiums earned	242,686			224,287			495,695			473,230
Losses and loss expenses	53,190			94,035			177,396			404,579
Policy acquisition costs	37,084			35,013			75,874			74,763
General and administrative expenses	14,142			15,059			31,394			25,589
Share compensation expenses	1,966			1,823			3,838			4,928
Total underwriting deductions	106,382			145,930			288,502			509,859
Underwriting income (loss) (a)	$	136,304		$	78,357		$	207,193		$	(36,629	)
AlphaCat
Gross premiums written	15,155			50,960			18,673			58,110
Reinsurance premiums ceded	—			—			—			—
Net premiums written	15,155			50,960			18,673			58,110
Change in unearned premiums	(11,568		)	(42,569		)	(12,423		)	(46,353		)
Net premiums earned	3,587			8,391			6,250			11,757
Policy acquisition costs	382			973			638			1,289
General and administrative expenses	2,402			1,061			3,434			1,955
Share compensation expenses	59			21			111			48
Total underwriting deductions	2,843			2,055			4,183			3,292
Underwriting income (a)	$	744		$	6,336		$	2,067		$	8,465
Legal Entity adjustments
Policy acquisition costs	(25		)	(217		)	(25		)	(217		)
General and administrative expenses	1,866			1,813			2,315			3,160
Share compensation expenses	159			174			311			502
Total underwriting deductions	2,000			1,770			2,601			3,445
Underwriting (loss) (a)	$	(2,000	)	$	(1,770	)	$	(2,601	)	$	(3,445	)
Talbot
Gross premiums written	$	283,528		$	276,886		$	576,781		$	539,943
Reinsurance premiums ceded	(34,419		)	(47,278		)	(137,818		)	(134,692		)
Net premiums written	249,109			229,608			438,963			405,251
Change in unearned premiums	(47,755		)	(36,646		)	(42,082		)	(35,065		)
Net premiums earned	201,354			192,962			396,881			370,186
Losses and loss expenses	100,502			113,272			208,285			278,926
Policy acquisition costs	41,803			42,307			80,541			79,523
General and administrative expenses	30,957			33,345			64,305			60,651
Share compensation expenses	1,799			2,026			3,147			4,745
Total underwriting deductions	175,061			190,950			356,278			423,845
Underwriting income (loss) (a)	$	26,293		$	2,012		$	40,603		$	(53,659	)
Corporate & Eliminations
Gross premiums written	$	(12,444	)	$	(13,150	)	$	(38,792	)	$	(37,549	)
Reinsurance premiums ceded	12,444			13,150			38,792			37,549
Net premiums written	—			—			—			—
Policy acquisition costs	(3,115		)	154			(2,767		)	168
General and administrative expenses	12,268			9,563			26,562			17,963
Share compensation expenses	2,817			3,584			4,831			9,454
Total underwriting deductions	$	11,970		$	13,301		$	28,626		$	27,585
Underwriting (loss) (a)	(11,970		)	(13,301		)	(28,626		)	(27,585		)
Total underwriting income (loss) (a)	$	149,371		$	71,634		$	218,636		$	(112,853	)

(a) 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 (Loss).”

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Six Months Ended June 30, 2012 compared to Six Months Ended June 30, 2011

Net income available to Validus for the six months endedJune 30, 2012 was $291.9 million compared to a net loss attributable to Validus of $(62.5) million for the six months endedJune 30, 2011, an increase of $354.3 million . The primary factors driving the increase in net income were:

• Increase in underwriting income of $331.5 million primarily due to:

• A decrease in underwriting deductions of $287.8 million which includes the effect of a $323.6 million decrease in notable loss events; and

• An increase in net premiums written of $25.2 million due to an increase in gross premiums written and a decrease in reinsurance premiums ceded.

The above items were partially offset by the following factor:

• An unfavorable movement of $38.6 million in net unrealized (losses) gains on investments, of which $44.9 million is attributable to noncontrolling interest.

The change in net income available to Validus for the six months endedJune 30, 2012 of $354.3 million compared to the six months endedJune 30, 2011 is described in the following table:

	Six Months Ended June 30, 2012
	Increase (Decrease) Over the Six Months Ended June 30, 2011
(Dollars in thousands)	Validus Re			AlphaCat			Talbot			Corporate and Eliminations (a)			Total
Notable losses — decrease in net loss and loss expenses (b)	$	231,506		$	—		$	92,139		$	—		$	323,645
Less: Notable losses - (decrease) increase in net reinstatement premiums (b)	(15,427		)	—			2,199			—			(13,228		)
Other underwriting income (loss)	27,743			(6,398		)	(76		)	(197		)	21,072
Underwriting income (loss) (c)	243,822			(6,398		)	94,262			(197		)	331,489
Net investment income	(823		)	(467		)	(1,747		)	213			(2,824		)
Other income	650			11,390			(842		)	1,486			12,684
Finance expenses	(2,547		)	2,484			(88		)	528			377
Operating income before taxes and income from operating affiliates	241,102			7,009			91,585			2,030			341,726
Tax (expense) benefit	(3		)	—			(2,136		)	108			(2,031		)
Income from operating affiliates	—			6,959			—			—			6,959
Net operating income	241,099			13,968			89,449			2,138			346,654
Net realized (losses) on investments	(1,850		)	(640		)	(1,755		)	—			(4,245		)
Net unrealized gains (losses) on investments	8,467			(48,457		)	1,389			—			(38,601		)
(Loss) from investment affiliate	(398		)	—			—			—			(398		)
Foreign exchange gains (losses)	11,989			178			(7,123		)	(72		)	4,972
Net income (loss)	259,307			(34,951		)	81,960			2,066			308,382
Net loss attributable to noncontrolling interest	—			45,954			—			—			45,954
Net income available to Validus	259,307			11,003			81,960			2,066			354,336

(a) The Corporate and Eliminations column includes legal entity adjustments.

(b) Notable losses for the six months endedJune 30, 2012 included: Costa Concordia and Cat 67. Notable losses for the six months endedJune 30, 2011 included: Tohoku earthquake, Gryphon Alpha, Christchurch earthquake, Brisbane floods, CNRL Horizon, Cat 46, Cat 48 and Jupiter 1. Excludes the reserve for potential development on 2011 notable loss events.

55

(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 (Loss)."

Gross Premiums Written

Gross premiums written for the six months ended June 30, 2012 were $1,464.4 million compared to $1,455.3 million for the six months ended June 30, 2011, an increase of $9.1 million or 0.6%. Details of gross premiums written by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)		Gross Premiums Written		Gross Premiums Written (%)		% Change
Property	$	773,599	52.8	%	$	827,908	56.8	%	(6.6	)%
Marine	434,504		29.7	%	384,991		26.5	%	12.9	%
Specialty	256,275		17.5	%	242,384		16.7	%	5.7	%
Total	$	1,464,378	100.0	%	$	1,455,283	100.0	%	0.6	%

Validus Re. Validus Re gross premiums written for the six months ended June 30, 2012 were $907.7 million compared to $894.8 million for the six months ended June 30, 2011, an increase of $12.9 million or 1.4%. Details of Validus Re gross premiums written by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)		Gross Premiums Written		Gross Premiums Written (%)		% Change
Property	$	610,749	67.3	%	$	630,266	70.5	%	(3.1	)%
Marine	223,325		24.6	%	189,879		21.2	%	17.6	%
Specialty	73,642		8.1	%	74,634		8.3	%	(1.3	)%
Total	$	907,716	100.0	%	$	894,779	100.0	%	1.4	%

The decrease in gross premiums written in the property lines of $19.5 million was due primarily to a $23.4 million decrease in reinstatement premiums which were due to the high level of notable losses in the first quarter of 2011. In addition, there was a $13.6 million reduction in proportional premiums written primarily due to contracts not meeting the Company’s underwriting requirements. This was partially offset by a $9.8 million increase in new business written in the Singapore branch. The increase in gross premiums written of $33.4 million in the marine lines was due to a $16.1 million increase in reinstatement premiums primarily relating to the Costa Concordia event and $13.2 million of new business incepting during the period.

Gross premiums written under the quota share, surplus treaty and excess of loss contracts between Validus Re and Talbot for the six months ended June 30, 2012 increased by $0.7 million as compared to the six months ended June 30, 2011. These reinsurance agreements with Talbot are eliminated upon consolidation.

AlphaCat. AlphaCat gross premiums written for the six months ended June 30, 2012 were $18.7 million compared to $58.1 million for the six months ended June 30, 2011, a decrease of $39.4 million or 67.9%. Details of AlphaCat gross premiums written by line of business are provided below.

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written	Gross Premiums Written (%)		Gross Premiums Written	Gross Premiums Written (%)		% Change
Property	18,673	100.0	%	58,110	100.0	%	(67.9	)%
Total	18,673	100.0	%	58,110	100.0	%	(67.9	)%

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The decrease in gross premiums written in the property lines of $39.4 million was due primarily to the change in accounting treatment for AlphaCat Re 2011 which occurred as at December 31, 2011, when when the individual assets and liabilities and corresponding noncontrolling interest of AlphaCat Re 2011 were derecognized from the consolidated Balance Sheet of the Company. AlphaCat Re 2011 was consolidated in 2011 whereas in 2012, AlphaCat Re 2011 is accounted for as an equity method operating affiliate. Therefore the comparative renewals are not reflected in gross premiums written in 2012, but are included in gross managed premiums, a comparable measure.

Managed gross premiums written from our non-consolidated affiliates, AlphaCat Re 2011and AlphaCat Re 2012, for the six months ended June 30, 2012 were $117.3 million compared to $42.6 million for the six months ended June 30, 2011, an increase of $74.7 million or 175.6%. Gross premiums written from our consolidated entities for the six months ended June 30, 2012 were $18.7 million compared to $15.6 million for the six months ended June 30, 2011, an increase of $3.1 million or 20.0%.

Gross premiums written with Talbot for the six months ended June 30, 2012 increased by $0.5 million as compared to the six months ended June 30, 2011. These reinsurance agreements with Talbot are eliminated upon consolidation.

Talbot. Talbot gross premiums written for the six months ended June 30, 2012 were $576.8 million compared to $539.9 million for the six months ended June 30, 2011, an increase of $36.8 million or 6.8%. The $576.8 million of gross premiums written translated at 2011 rates of exchange would have been $579.9 million for the six months ended June 30, 2012, giving an effective increase of $40.0 million or 7.4%. Details of Talbot gross premiums written by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Gross Premiums Written		Gross Premiums Written (%)		Gross Premiums Written		Gross Premiums Written (%)		% Change
Property	$	178,331	30.9	%	$	168,461	31.2	%	5.9	%
Marine	213,820		37.1	%	198,427		36.7	%	7.8	%
Specialty	184,630		32.0	%	173,055		32.1	%	6.7	%
Total	$	576,781	100.0	%	$	539,943	100.0	%	6.8	%

The increase in gross premiums written in the property lines of $9.9 million was due primarily to an increase in premium adjustments in the property treaty lines. The increase in gross premiums written in the marine lines of $15.4 million was due primarily to a $7.1 million increase in premiums written in the offshore energy lines and a $7.4 million increase in premium adjustments in the cargo line. The increase in gross premiums written in the specialty lines of $11.6 million was due primarily to a $10.6 million increase in premiums written in the political risk lines.

Reinsurance Premiums Ceded

Reinsurance premiums ceded for the six months ended June 30, 2012 were $226.1 million compared to $242.2 million for the six months ended June 30, 2011, a decrease of $16.1 million, or 6.6%.  Details of reinsurance premiums ceded by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		% Change
Property	$	162,355	71.8	%	$	180,467	74.6	%	(10.0	)%
Marine	33,861		15.0	%	31,600		13.0	%	7.2	%
Specialty	29,888		13.2	%	30,099		12.4	%	(0.7	)%
Total	$	226,104	100.0	%	$	242,166	100.0	%	(6.6	)%

Validus Re. Validus Re reinsurance premiums ceded for the six months ended June 30, 2012 were $127.1 million compared to $145.0 million for the six months ended June 30, 2011, a decrease of $17.9 million, or 12.4%. Details of Validus Re reinsurance premiums ceded by line of business are provided below.

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	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		% Change
Property	$	113,090	89.0	%	$	132,069	91.1	%	(14.4	)%
Marine	13,419		10.6	%	12,453		8.6	%	7.8	%
Specialty	569		0.4	%	501		0.3	%	13.6	%
Total	$	127,078	100.0	%	$	145,023	100.0	%	(12.4	)%

Reinsurance premiums ceded in the property lines decreased by $19.0 million, due primarily to a $12.5 million decrease in non-proportional retrocessional coverage, a $3.8 million decrease in adjustments from prior periods and a $1.9 million decrease in proportional retrocessional coverage. The reduction in both non-proportional and proportional retrocessional coverage is a result of comparatively higher purchases of this coverage in the three months ended March 31, 2011 prior to, and following, the notable loss events of that quarter.

AlphaCat.AlphaCat did not cede reinsurance premiums for the six months ended June 30, 2012 and 2011.

Talbot. Talbot reinsurance premiums ceded for the six months ended June 30, 2012 were $137.8 million compared to $134.7 million for the six months ended June 30, 2011, an increase of $3.1 million or 2.3%. Details of Talbot reinsurance premiums ceded by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		Reinsurance Premiums Ceded		Reinsurance Premiums Ceded (%)		% Change
Property	$	83,419	60.5	%	$	77,327	57.4	%	7.9	%
Marine	23,083		16.8	%	22,462		16.7	%	2.8	%
Specialty	31,316		22.7	%	34,903		25.9	%	(10.3	)%
Total	$	137,818	100.0	%	$	134,692	100.0	%	2.3	%

The increase in reinsurance premiums ceded in the property lines of $6.1 million was due primarily to an $11.2 million increase in premium ceded in the property treaty and direct property lines partially offset by a $4.7 million decrease in the onshore energy lines. The decrease in reinsurance premiums ceded in the specialty lines of $3.6 million was due to a $3.6 million decrease in excess of loss coverage for the political risk, political violence and trade credit lines.

Reinsurance premiums ceded under the quota share, surplus treaty and excess of loss contracts with Validus Re and AlphaCat for the six months ended June 30, 2012 were $38.8 million compared to $37.5 million for the six months ended June 30, 2011, an increase of $1.2 million. These reinsurance agreements with Validus Re and AlphaCat are eliminated upon consolidation.

Net Premiums Written

Net premiums written for the six months ended June 30, 2012 were $1,238.3 million compared to $1,213.1 million for the six months ended June 30, 2011, an increase of $25.2 million, or 2.1%. The ratios of net premiums written to gross premiums written for the six months ended June 30, 2012 and 2011 were 84.6% and 83.4%, respectively. Details of net premiums written by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written		Net PremiumsWritten (%)		% Change
Property	$	611,244	49.4	%	$	647,441	53.4	%	(5.6	)%
Marine	400,643		32.3	%	353,391		29.1	%	13.4	%
Specialty	226,387		18.3	%	212,285		17.5	%	6.6	%
Total	$	1,238,274	100.0	%	$	1,213,117	100.0	%	2.1	%

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Validus Re. Validus Re net premiums written for the six months ended June 30, 2012 were $780.6 million compared to $749.8 million for the six months ended June 30, 2011, an increase of $30.9 million or 4.1%.  Details of Validus Re net premiums written by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written		NetPremiums Written (%)		% Change
Property	$	497,659	63.7	%	$	498,197	66.4	%	(0.1	)%
Marine	209,906		26.9	%	177,426		23.7	%	18.3	%
Specialty	73,073		9.4	%	74,133		9.9	%	(1.4	)%
Total	$	780,638	100.0	%	$	749,756	100.0	%	4.1	%

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 86.0% and 83.8% for the six months ended June 30, 2012 and 2011, respectively.

AlphaCat.AlphaCat net premiums writtenfor the six months ended June 30, 2012 were $18.7 million compared to $58.1 million for the six months ended June 30, 2011, a decrease of $39.4 million or 67.9%. Details of AlphaCat net premiums written by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written		Net Premiums Written (%)		% Change
Property	$	18,673	100.0	%	$	58,110	100.0	%	(67.9	)%
Total	$	18,673	100.0	%	$	58,110	100.0	%	(67.9	)%

The decrease in AlphaCat net premiums written was driven by the factors highlighted above in respect of gross premiums written. The ratios of net premiums written to gross premiums written were 100.0% for the six months ended June 30, 2012 and 2011.

Talbot. Talbot net premiums written for the six months ended June 30, 2012 were $439.0 million compared to $405.3 million for the six months ended June 30, 2011, an increase of $33.7 million or 8.3%. Details of Talbot net premiums written by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Written		Net Premiums Written (%)		Net Premiums Written		Net Premiums Written (%)		% Change
Property	$	94,912	21.6	%	$	91,134	22.5	%	4.1	%
Marine	190,737		43.5	%	175,965		43.4	%	8.4	%
Specialty	153,314		34.9	%	138,152		34.1	%	11.0	%
Total	$	438,963	100.0	%	$	405,251	100.0	%	8.3	%

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 six months ended June 30, 2012 and 2011 were 76.1% and 75.1%, respectively.

Net Change in Unearned Premiums

Net change in unearned premiums for the six months ended June 30, 2012 was $(339.4) million compared to $(357.9) million for the six months ended June 30, 2011, an increase of $18.5 million or 5.2%.

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	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(424,454	)	$	(464,256	)	8.6	%
Change in prepaid reinsurance premiums	85,006			106,312			(20.0	)%
Net change in unearned premiums	$	(339,448	)	$	(357,944	)	5.2	%

Validus Re. Validus Re net change in unearned premiums for the six months ended June 30, 2012 was $(284.9) million compared to $(276.5) million for the six months ended June 30, 2011, a decrease of $(8.4) million, or 3.0%.

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(350,258	)	$	(356,902	)	1.9	%
Change in prepaid reinsurance premiums	65,315			80,376			(18.7	)%
Net change in unearned premiums	$	(284,943	)	$	(276,526	)	(3.0	)%

Validus Re net change in unearned premiums has decreased for thesix months ended June 30, 2012 due primarily to the impact of the increase in gross premiums written for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011.

AlphaCat. AlphaCat net change in unearned premiums for the six months ended June 30, 2012 was $(12.4) million compared to $(46.4) million for the six months ended June 30, 2011, an increase of $33.9 million or 73.2%.

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
(Dollars in thousands)	Net Change in Unearned Premiums			Net Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(12,423	)	$	(46,353	)	73.2	%
Net change in unearned premiums	$	(12,423	)	$	(46,353	)	73.2	%

AlphaCat net change in unearned premiums has increased for thesix months ended June 30, 2012 due primarily to the decrease in gross premiums written during the six months ended June 30, 2012 as compared to six months ended June 30, 2011.

Talbot. Talbot net change in unearned premiums for the six months ended June 30, 2012 was $(42.1) million compared to $(35.1) million for the six months ended June 30, 2011, a decrease of $(7.0) million or 20.0%.

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
(Dollars in thousands)	Change in Unearned Premiums			Change in Unearned Premiums			% Change
Change in gross unearned premiums	$	(61,773	)	$	(61,001	)	(1.3	)%
Change in prepaid reinsurance premiums	19,691			25,936			(24.1	)%
Net change in unearned premiums	$	(42,082	)	$	(35,065	)	(20.0	)%

Talbot net change in unearned premiums has decreased for the six months ended June 30, 2012 due to the earnings pattern of gross premiums written and reinsurance premiums ceded during the six months ended June 30, 2012 as compared to the six months ended June 30, 2011.

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Net Premiums Earned

Net premiums earned for the six months ended June 30, 2012 were $898.8 million compared to $855.2 million for the six months ended June 30, 2011, an increase of $43.7 million or 5.1%. Details of net premiums earned by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)		Net Premiums Earned		Net Premiums Earned (%)		% Change
Property	$	410,025	45.7	%	$	420,337	49.2	%	(2.5	)%
Marine	292,423		32.5	%	243,793		28.5	%	19.9	%
Specialty	196,378		21.8	%	191,043		22.3	%	2.8	%
Total	$	898,826	100.0	%	$	855,173	100.0	%	5.1	%

Validus Re. Validus Re net premiums earned for the six months ended June 30, 2012 were $495.7 million compared to $473.2 million for the six months ended June 30, 2011, an increase of $22.5 million or 4.7%. Details of Validus Re net premiums earned by line of business are provided below.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)		Net Premiums Earned		Net Premiums Earned (%)		% Change
Property	$	318,408	64.3	%	$	331,792	70.1	%	(4.0	)%
Marine	133,062		26.8	%	100,407		21.2	%	32.5	%
Specialty	44,225		8.9	%	41,031		8.7	%	7.8	%
Total	$	495,695	100.0	%	$	473,230	100.0	%	4.7	%

The increase in net premiums earned is consistent with the relevant pattern of net premiums written influencing the earned premiums for the six months ended June 30, 2012 compared to the six months ended June 30, 2011.

AlphaCat. AlphaCat net premiums earned for the six months ended June 30, 2012 were $6.3 million compared to $11.8 million for the six months ended June 30, 2011, a decrease of $5.5 million or 46.8%. Details of AlphaCat net premiums earned by line of business are provided below.

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned	Net Premiums Earned (%)		Net Premiums Earned	Net Premiums Earned (%)		% Change
Property	6,250	100.0	%	11,757	100.0	%	(46.8	)%
Total	6,250	100.0	%	11,757	100.0	%	(46.8	)%

The decrease in net premiums earned is consistent with the relevant pattern of net premiums written influencing the earned premiums for the six months ended June 30, 2012 compared to the six months ended June 30, 2011.

Talbot. Talbot net premiums earned for the six months ended June 30, 2012 were $396.9 million compared to $370.2 million for the six months ended June 30, 2011, an increase of $26.7 million or 7.2%. Details of Talbot net premiums earned by line of business are provided below.

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	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Net Premiums Earned		Net Premiums Earned (%)		Net Premiums Earned		Net Premiums Earned (%)		% Change
Property	$	85,367	21.5	%	$	76,788	20.8	%	11.2	%
Marine	159,361		40.2	%	143,386		38.7	%	11.1	%
Specialty	152,153		38.3	%	150,012		40.5	%	1.4	%
Total	$	396,881	100.0	%	$	370,186	100.0	%	7.2	%

The increase in net premiums earned is consistent with the relevant patterns of net premiums written influencing the earned premiums for the six months ended June 30, 2012, as compared to the six months ended June 30, 2011.

Losses and Loss Expenses

Losses and loss expenses for the six months ended June 30, 2012 were $385.7 million compared to $683.5 million for the six months ended June 30, 2011, a decrease of $297.8 million or 43.6%. The loss ratios, defined as losses and loss expenses divided by net premiums earned, for the six months ended June 30, 2012 and 2011 were 42.9% and 79.9%, respectively. Details of loss ratios by line of business are provided below.

	Six Months Ended June 30, 2012		Six Months Ended June 30, 2011		Percentage Point Change
Property	32.2	%	95.5	%	(63.3	)%
Marine	59.7	%	86.2	%	(26.5	)%
Specialty	40.2	%	37.7	%	2.5	%
All lines	42.9	%	79.9	%	(37.0	)%

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

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	Six Months Ended June 30,
	2012		2011		Percentage Point Change
Property - current period - excluding items below	27.0	%	23.2	%	3.8
Property - current period - notable losses	6.9	%	74.1	%	(67.2	)
Property - change in prior accident years	(1.7	)%	(4.1	)%	2.4
Property - current period - reserve for potential development on notable loss events	0.0	%	2.3	%	(2.3	)
Property - loss ratio	32.2	%	95.5	%	(63.3	)
Marine - current period - excluding notable losses	48.6	%	49.7	%	(1.1	)
Marine - current period - notable losses	24.8	%	42.6	%	(17.8	)
Marine - change in prior accident years	(13.7	)%	(6.1	)%	(7.6	)
Marine - current period - reserve for potential development on notable loss events	0.0	%	0.0	%	—
Marine - loss ratio	59.7	%	86.2	%	(26.5	)
Specialty - current period - excluding notable losses	50.9	%	43.5	%	7.4
Specialty - current period - notable losses	0.0	%	4.7	%	(4.7	)
Specialty - change in prior accident years	(10.7	)%	(10.5	)%	(0.2	)
Specialty - current period - reserve for potential development on notable loss events	0.0	%	0.0	%	—
Specialty — loss ratio	40.2	%	37.7	%	2.5
All lines - current period - excluding notable losses	39.3	%	35.3	%	4.0
All lines - current period - notable losses	11.2	%	49.6	%	(38.4	)
All lines - change in prior accident years	(7.6	)%	(6.1	)%	(1.5	)
All lines - current period - reserve for potential development on notable loss events	0.0	%	1.1	%	(1.1	)
All lines - loss ratio	42.9	%	79.9	%	(37.0	)

Validus Re.Validus Re losses and loss expenses for the six months ended June 30, 2012 were $177.4 million compared to $404.6 million for the six months ended June 30, 2011, a decrease of $227.2 million or 56.2%. The loss ratio, defined as losses and loss expenses divided by net premiums earned, was 35.8% and 85.5% for the six months ended June 30, 2012 and 2011, respectively. For the six months ended June 30, 2012, Validus Re incurred losses of $206.4 million related to current year losses and $29.0 million of favorable loss reserve development relating to prior accident years. For the six months ended June 30, 2012, favorable loss reserve development on prior accident years benefited the Validus Re loss ratio by 5.9 percentage points. For the six months ended June 30, 2011, Validus Re incurred losses of $428.2 million related to current year losses and $23.6 million of favorable loss reserve development relating to prior accident years. For the six months ended June 30, 2011, favorable loss reserve development on prior years benefited the Validus Re loss ratio by 5.0 percentage points.

For the six months ended June 30, 2012, Validus Re incurred $84.7 million of losses from notable loss events, which represented 17.1 percentage points of the loss ratio. Net of reinstatement premiums of $22.8 million, the effect of these events on Validus Re segment income was a decrease of $61.9 million. For the six months ended June 30, 2011, Validus Re incurred $316.2 million of losses from notable loss events, which represented 66.8 percentage points of the loss ratio, excluding the reserve for potential development on notable loss events. Net of reinstatement premiums of $38.2 million, the effect of these events on Validus Re segment income was a decrease of $278.0 million. Validus Re segment loss ratios excluding, notable loss events, reserve for potential development on notable loss events and prior year loss reserve development for the six months ended June 30, 2012 and 2011 were 24.6% and 21.7%, respectively. Details of Validus Re loss ratios by line of business and period of occurrence are provided below.

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	Six Months Ended June 30,
	2012		2011		Percentage Point Change
Property - current period excluding notable losses	18.2	%	15.8	%	2.4
Property - current period - notable losses	8.7	%	73.5	%	(64.8	)
Property - change in prior accident years	(0.5	)%	(3.8	)%	3.3
Property - current period - reserve for potential development on notable loss events	0.0	%	2.9	%	(2.9	)
Property - loss ratio	26.4	%	88.4	%	(62.0	)
Marine - current period excluding notable losses	38.8	%	40.9	%	(2.1	)
Marine - current period - notable losses	42.9	%	67.6	%	(24.7	)
Marine - change in prior accident years	(15.8	)%	(4.4	)%	(11.4	)
Marine - loss ratio	65.9	%	104.1	%	(38.2	)
Specialty - current period excluding notable losses	26.6	%	21.6	%	5.0
Specialty - current period - notable losses	0.0	%	11.0	%	(11.0	)
Specialty - change in prior accident years	(14.0	)%	(16.3	)%	2.3
Specialty — loss ratio	12.6	%	16.3	%	(3.7	)
All lines - current period excluding notable losses	24.6	%	21.7	%	2.9
All lines - current period - notable losses	17.1	%	66.8	%	(49.7	)
All lines - change in prior accident years	(5.9	)%	(5.0	)%	(0.9	)
All lines - current period - reserve for potential development on notable loss events	0.0	%	2.0	%	(2.0	)
All lines - loss ratio	35.8	%	85.5	%	(49.7	)

For the six months ended June 30, 2012, Validus Re property lines losses and loss expenses included $85.8 million related to current year losses and $1.7 million of favorable loss reserve development relating to prior accident years. The favorable loss reserve development was due primarily to a reduction in loss estimates on attritional losses. This movement was mostly offset by an increase in loss estimates on prior year notable loss events, which led to a movement in the reserve for potential development on notable loss events during the six months ended June 30, 2012. For the six months ended June 30, 2011, Validus Re property lines losses and loss expenses included $305.9 million related to current year losses and $12.5 million of favorable loss reserve development relating to prior accident years. The favorable loss reserve development was attributable to lower than expected claims development.

For the six months ended June 30, 2012, Validus Re property lines incurred $27.7 million of losses from notable loss events, which represented 8.7 percentage points of the property lines loss ratio. For the six months ended June 30, 2011, Validus Re property lines incurred $243.8 million of losses from notable loss events, which represented 73.5 percentage points of the property lines loss ratio, excluding reserve for potential development on notable loss events. Validus Re property lines loss ratios, excluding notable loss events, reserve for potential development on notable loss events and prior year loss reserve development, for the six months ended June 30, 2012 and 2011 were 18.2% and 15.8%, respectively.

For the six months ended June 30, 2012, Validus Re marine lines losses and loss expenses included $108.8 million related to current year losses and $21.1 million of favorable loss reserve development relating to prior accident years. The favorable loss reserve development is due primarily to a reduction in loss estimates on attritional losses. For the six months ended June 30, 2011, Validus Re marine lines losses and loss expenses included $108.9 million related to current year losses and $4.4 million of favorable loss reserve development relating to prior accident years.

For the six months ended June 30, 2012, Validus Re marine lines incurred $57.1 million of losses from notable loss events, which represented 42.9 percentage points on the marine lines loss ratio. For the six months ended June 30, 2011, Validus Re marine lines incurred $67.9 million of losses from notable loss events, which represented 67.6 percentage points of the marine

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lines loss ratio, excluding reserve for potential development on notable loss events. Validus Re marine lines loss ratios, excluding notable loss events, reserve for potential development on notable loss events and prior year loss reserve development, for the six months ended June 30, 2012 and 2011 were 38.8% and 40.9%, respectively.

For the six months ended June 30, 2012, Validus Re specialty lines losses and loss expenses included $11.8 million related to current year losses and $6.2 million of favorable loss reserve development relating to prior accident years. The favorable loss reserve development was due primarily to a reduction in loss estimates on attritional losses. For the six months ended June 30, 2011, Validus Re specialty lines losses and loss expenses included $13.4 million related to current year losses and $6.7 million of favorable loss reserve development relating to prior accident years.

For the six months ended June 30, 2012, Validus Re specialty lines did not incur any notable losses. For the six months ended June 30, 2011, Validus Re specialty lines incurred $4.5 million of losses from notable loss events, which represented 11.0 percentage points of the specialty lines loss ratio, excluding reserve for potential development on notable loss events. Validus Re specialty lines loss ratios, excluding notable loss events, reserve for potential development on notable loss events and  prior year loss reserve development, for the six months ended June 30, 2012 and 2011 were 26.6% and 21.6%, respectively.

AlphaCat. The AlphaCat segment did not incur any losses and loss expenses for the six months ended June 30, 2012 and 2011.

    Talbot.Talbot losses and loss expenses for the six months ended June 30, 2012 were $208.3 million compared to $278.9 million for the six months ended June 30, 2011, a decrease of $70.6 million or 25.3%. The loss ratio defined as losses and loss expenses divided by net premiums earned, was 52.5% and 75.3% for the six months ended June 30, 2012 and 2011, respectively.  For the six months ended June 30, 2012, Talbot incurred losses of $247.3 million related to current year losses and $39.0 million of favorable loss reserve development relating to prior accident years. For the six months ended June 30, 2012, favorable loss reserve development on prior accident years benefited the Talbot loss ratio by 9.8 percentage points. For the six months ended June 30, 2011, Talbot incurred losses of $307.6 million related to current year losses and $28.6 million in favorable loss reserve development relating to prior accident years. For the six months ended June 30, 2011, favorable loss reserve development on prior accident years benefited the Talbot loss ratio by 7.7 percentage points.

For the six months ended June 30, 2012, Talbot incurred $16.0 million of losses from notable loss events, which represented 4.0 percentage points of the loss ratio. Including the impact of reinstatement premiums of ($4.3) million, the effect of these events on Talbot segment income was a decrease of $20.3 million. For the six months ended June 30, 2011, Talbot incurred $108.1 million of losses from notable loss events, which represented 29.2 percentage points of the Talbot loss ratio. Talbot loss ratios, excluding notable loss events and prior year loss reserve development, for the six months ended June 30, 2012 and 2011 were 58.3% and 53.8%, respectively. Details of Talbot loss ratios by line of business and period of occurrence are provided below.

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	Six Months Ended June 30,
	2012		2011		Percentage Point Change
Property - current period excluding items below	62.0	%	58.4	%	3.6
Property - current period - notable losses	0.6	%	88.3	%	(87.7	)
Property - change in prior accident years	(6.2	)%	(6.2	)%	—
Property - loss ratio	56.4	%	140.5	%	(84.1	)
Marine - current period excluding items below	56.7	%	55.9	%	0.8
Marine - current period - notable losses	9.7	%	25.1	%	(15.4	)
Marine - change in prior accident years	(11.9	)%	(7.3	)%	(4.6	)
Marine - loss ratio	54.5	%	73.7	%	(19.2	)
Specialty - current period excluding items below	57.9	%	49.6	%	8.3
Specialty - current period - notable losses	0.0	%	2.9	%	(2.9	)
Specialty - change in prior accident years	(9.7	)%	(8.9	)%	(0.8	)
Specialty — loss ratio	48.2	%	43.6	%	4.6
All lines - current period excluding items below	58.3	%	53.8	%	4.5
All lines - current period - notable losses	4.0	%	29.2	%	(25.2	)
All lines - change in prior accident years	(9.8	)%	(7.7	)%	(2.1	)
All lines - loss ratio	52.5	%	75.3	%	(22.8	)

For the six months ended June 30, 2012, Talbot property lines losses and loss expenses include $53.4 million related to current year losses and $5.3 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was due to favorable experience on attritional losses offset in part by adverse experience on large losses. For the six months ended June 30, 2011, Talbot property lines losses and loss expenses included $112.6 million related to current year losses and $4.7 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was attributable to lower than expected claims development.

For the six months ended June 30, 2012, Talbot property lines incurred $0.5 million of losses from notable loss events, which represented 0.6 percentage points of the property lines loss ratio. For the six months ended June 30, 2011, Talbot's property lines incurred $67.8 million of losses from notable loss events, which represented 88.3 percentage points of the property lines loss ratio. Talbot property lines loss ratio, excluding notable loss events and prior year loss reserve development for the six months ended June 30, 2012 and 2011 were 62.0% and 58.4%, respectively.

For the six months ended June 30, 2012, Talbot marine lines losses and loss expenses included $105.7 million related to current year losses and $19.0 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was due primarily to favorable development on attritional losses. For the six months ended June 30, 2011, Talbot marine lines losses and loss expenses included $116.1 million related to current year losses and $10.5 million of favorable loss reserve development relating to prior accident years. The prior year favorable loss reserve development was attributable to lower than expected claims development.

For the six months ended June 30, 2012, Talbot marine lines incurred $15.5 million of losses from notable loss events, which represented 9.7 percentage points of the marine lines loss ratio. For the six months ended June 30, 2011, Talbot's marine lines incurred $36.0 million of losses from notable loss events, which represented 25.1 percentage points of the marine lines loss ratio. Talbot marine lines loss ratios, excluding notable loss events and prior year loss reserve development, for the six months ended June 30, 2012 and 2011 were 56.7% and 55.9%, respectively.

For the six months ended June 30, 2012, Talbot specialty lines losses and loss expenses included $88.1 million relating to current year losses and $14.7 million of favorable loss reserve development relating to prior accident years. The prior year favorable reserve development was due primarily to favorable development on attritional losses. For the six months ended June 30, 2011, Talbot specialty lines losses and loss expenses included $78.8 million relating to current year losses and $13.4 million

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of favorable loss reserve development relating to prior accident years. The prior year favorable reserve development was primarily due to lower than expected claims development.

For the six months ended June 30, 2012, Talbot specialty lines did not incur losses from notable loss events. For the six months ended June 30, 2011, Talbot's specialty lines incurred $4.4 million of losses from notable loss events, which represented 2.9 percentage points of the specialty lines loss ratio. Talbot specialty lines loss ratios, excluding notable loss events and prior year loss reserve development for the six months ended June 30, 2012 and 2011 were 57.9% and 49.6%, respectively.

Reserves for Losses and Loss expenses

At June 30, 2012, 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 in the Company's Annual Report on Form 10-K for the year ended December 31, 2011. The Company did not make any significant changes in the assumptions or methodology used in its reserving process for the six months ended June 30, 2012.

	As at June 30, 2012
(Dollars in thousands)	Gross Case Reserves		Gross IBNR		Total Gross Reserve for Losses and Loss Expenses
Property	$	733,568	$	433,651	$	1,167,219
Marine	474,142		389,612		863,754
Specialty	250,583		309,743		560,326
Total	$	1,458,293	$	1,133,006	$	2,591,299

	As at June 30, 2012
(Dollars in thousands)	Net Case Reserves		Net IBNR		Total Net Reserve for Losses and Loss Expenses
Property	$	625,551	$	395,150	$	1,020,701
Marine	419,038		321,106		740,144
Specialty	198,536		260,434		458,970
Total	$	1,243,125	$	976,690	$	2,219,815

The following table sets forth a reconciliation of gross and net reserves for losses and loss expenses by segment for the six months ended June 30, 2012.

	Six Months Ended June 30, 2012
(Dollars in thousands)	Validus Re Segment			AlphaCat Segment		Talbot Segment			Eliminations			Total
Gross reserves at period beginning	$	1,350,849		$	10,000	$	1,377,561		$	(107,267	)	$	2,631,143
Losses recoverable	(95,509		)	—		(384,243		)	107,267			(372,485		)
Net reserves at period beginning	1,255,340			10,000		993,318			—			2,258,658
Incurred losses- current year	206,403					247,262			—			453,665
Change in prior accident years	(29,007		)			(38,977		)	—			(67,984		)
Incurred losses	177,396			—		208,285			—			385,681
Foreign exchange	(1,508		)			1,736			—			228
Paid losses	(263,720		)			(161,032		)	—			(424,752		)
Net reserves at period end	1,167,508			10,000		1,042,307			—			2,219,815
Losses recoverable	79,964			—		392,483			(100,963		)	371,484
Gross reserves at period end	$	1,247,472		$	10,000	$	1,434,790		$	(100,963	)	$	2,591,299

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The amount of recorded reserves represents management's best estimate of expected losses and loss expenses on premiums earned. For the six months ended June 30, 2012, favorable loss reserve development on prior accident years was $68.0 million of which, $29.0 million related to the Validus Re segment and $39.0 million related to the Talbot segment. Favorable loss reserve development benefited the Company's loss ratio by 7.6 percentage points for the six months ended June 30, 2012. For the six months ended June 30, 2011, favorable loss reserve development on prior accident years was $52.2 million, of which, $23.6 million related to the Validus Re segment and $28.6 million related to the Talbot segment. Favorable loss reserve development benefited the Company's loss ratio by 6.1 percentage points for the six months ended June 30, 2011.

For the six months ended June 30, 2012, the Company incurred $100.7 million of losses from notable loss events, which represented 11.2 percentage points of the loss ratio. Net of $18.4 million of reinstatement premiums, the effect of these events on net income was a decrease of $82.3 million. For the six months ended June 30, 2011, the Company incurred $424.4 million of losses from notable loss events, which represented 49.6 percentage points of the loss ratio, excluding the reserve for potential development on notable loss events. Net of $31.7 million of reinstatement premiums, the effect of these events on net income was a decrease of $392.7 million. The Company's loss ratio, excluding notable loss events, reserve for potential development on notable loss events and prior year loss reserve development for the six months ended June 30, 2012 and 2011 was 39.3% and 35.3%, respectively.

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 of December 31, 2011 the reserve for potential development on 2010 and 2011 notable loss events was $18.6 million and $78.0 million, respectively. During the six months ended June 30, 2012, the Company increased certain loss estimates and allocated $59.5 million of the 2010 and 2011 reserve to the Deepwater Horizon, Danish flood, Thailand floods, Tohoku earthquake, Christchurch earthquake and other events. The Company also increased the reserve for potential development on 2011 notable loss events by $27.9 million. As at June 30, 2012, the reserve for potential development on 2010 and 2011 notable loss events was $11.1 million and $53.9 million for a total of $65.0 million.

Policy Acquisition Costs

Policy acquisition costs for the six months ended June 30, 2012 were $154.3 million compared to $155.5 million for the six months ended June 30, 2011, a decrease of $1.3 million or 0.8%. Policy acquisition costs as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 17.2% and 18.2%, respectively. The changes in policy acquisition costs are due to the factors provided below.

	Six Months Ended June 30, 2012						Six Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	$	50,227	32.6	%	12.2	%	$	59,216	38.0	%	14.1	%	(15.2	)%
Marine	61,271		39.7	%	21.0	%	54,060		34.8	%	22.2	%	13.3	%
Specialty	42,738		27.7	%	21.8	%	42,250		27.2	%	22.1	%	1.2	%
Total	$	154,261	100.0	%	17.2	%	$	155,526	100.0	%	18.2	%	(0.8	)%

Validus Re. Validus Re policy acquisition costs for the six months ended June 30, 2012 were $75.9 million compared to $74.8 million for the six months ended June 30, 2011, an increase of $1.1 million or 1.5%. Details of Validus Re policy acquisition costs by line of business are provided below.

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	Six Months Ended June 30, 2012						Six Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	$	45,303	59.7	%	14.2	%	$	47,349	63.4	%	14.3	%	(4.3	)%
Marine	23,304		30.7	%	17.5	%	20,657		27.6	%	20.6	%	12.8	%
Specialty	7,267		9.6	%	16.4	%	6,757		9.0	%	16.5	%	7.5	%
Total	$	75,874	100.0	%	15.3	%	$	74,763	100.0	%	15.8	%	1.5	%

Policy acquisition costs include brokerage, commission and excise tax, are generally driven by contract terms and 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 the policy acquisition ratio. Validus Re policy acquisition costs as a percent of net premiums earned (the policy acquisition cost ratio) for the six months ended June 30, 2012 and 2011 were 15.3% and 15.8%, respectively. The policy acquisition cost ratio on the marine line has decreased by 3.1 percentage points due to an increase in reinstatement premiums that attract little or no policy acquisition costs.

AlphaCat.AlphaCat policy acquisition costs for the six months ended June 30, 2012 were $0.6 million compared to $1.3 million for the six months ended June 30, 2011, a decrease of $0.7 million or 50.5%.

	Six Months Ended June 30, 2012					Six Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs	Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs	Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	638	100.0	%	10.2	%	1,289	100.0	%	11.0	%	(50.5	)%
Total	638	100.0	%	10.2	%	1,289	100.0	%	11.0	%	(50.5	)%

 Policy acquisition costs as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 10.2% and 11.0%, respectively.

Talbot. Talbot policy acquisition costs for the six months ended June 30, 2012 were $80.5 million compared to $79.5 million for the six months ended June 30, 2011, an increase of $1.0 million or 1.3%. Details of Talbot policy acquisition costs by line of business are provided below.

	Six Months Ended June 30, 2012						Six Months Ended June 30, 2011
(Dollars in thousands)	Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		Policy Acquisition Costs		Policy Acquisition Costs (%)		Acquisition Cost Ratio		% Change
Property	$	7,090	8.8	%	8.3	%	$	10,583	13.3	%	13.8	%	(33.0	)%
Marine	37,931		47.1	%	23.8	%	33,427		42.0	%	23.3	%	13.5	%
Specialty	35,520		44.1	%	23.3	%	35,513		44.7	%	23.7	%	—	%
Total	$	80,541	100.0	%	20.3	%	$	79,523	100.0	%	21.5	%	1.3	%

Policy acquisition costs as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 20.3% and 21.5%, respectively. The policy acquisition cost ratio on the Talbot property lines decreased by 33.0 percentage points, primarily due to an acquisition cost rate decrease on the onshore energy lines.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2012 were $128.0 million compared to $109.3 million for the six months ended June 30, 2011, an increase of $18.7 million or 17.1%.

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	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	General and Administrative Expenses		General and Administrative Expenses (%)		General and Administrative Expenses		General and Administrative Expenses (%)		% Change
Validus Re	$	31,394	24.5	%	$	25,589	23.4	%	22.7	%
AlphaCat	3,434		2.7	%	1,955		1.8	%	75.7	%
Talbot	64,305		50.2	%	60,651		55.5	%	6.0	%
Corporate & Eliminations (a)	28,877		22.6	%	21,123		19.3	%	36.7	%
Total	$	128,010	100.0	%	$	109,318	100.0	%	17.1	%

(a)  Corporate and Eliminations includes legal entity adjustments.

General and administrative expenses of $128.0 million in the six months ended June 30, 2012 represents 14.2 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 six months ended June 30, 2012 were $31.4 million compared to $25.6 million for the six months ended June 30, 2011, an increase of $5.8 million or 22.7%. General and administrative expenses have increased primarily due to an increase in the performance bonus for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. Other contributing factors to the increase in general and administrative expense include an increase in rent and office expenses due to the Bermuda office refurbishment. 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 six months ended June 30, 2012 and 2011 were 6.3% and 5.4%, respectively.

AlphaCat. AlphaCat general and administrative expenses for the six months ended June 30, 2012 were $3.4 million compared to $2.0 million for the six months ended June 30, 2011, an increase of $1.5 million or 75.7%. General and administrative expenses include salaries and benefits and professional fees. General and administrative expenses have increased primarily due to an increase in salaries and benefits and professional fees. AlphaCat's general and administrative expenses as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 54.9% and 16.6%, respectively. The AlphaCat segment general and administrative ratio has been impacted by the reduction in net premiums earned as a greater proportion of the segment's revenues are generated in equity earnings from operating affiliates which is not included in the ratio calculation.

Talbot. Talbot general and administrative expenses for the six months ended June 30, 2012 were $64.3 million compared to $60.7 million for the six months ended June 30, 2011, an increase of $3.7 million or 6.0%. General and administrative expenses have increased primarily due to an increase in the performance bonus accrual for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011.  This increase was partially offset by a decrease in Lloyd's syndicate costs. Talbot's general and administrative expenses as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 16.2% and 16.4%, respectively.

Corporate & Eliminations. Corporate general and administrative expenses for the six months ended June 30, 2012 were $28.9 million compared to $21.1 million for the six months ended June 30, 2011, an increase of $7.8 million or 36.7%. General and administrative expenses have increased primarily due to an increase in professional fees related to Solvency II.  Other contributing factors to the increase in general and administrative expenses include a $2.1 million increase in modeling software license fees and IT expenses for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. 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 six months ended June 30, 2012 were $12.2 million compared to $19.7 million for the six months ended June 30, 2011, a decrease of $7.4 million or 37.8%. 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.

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	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Share Compensation Expenses		Share Compensation Expenses (%)		Share Compensation Expenses		Share Compensation Expenses (%)		% Change
Validus Re	$	3,838	31.4	%	$	4,928	25.1	%	(22.1	)%
AlphaCat	111		0.9	%	48		0.2	%	131.3	%
Talbot	3,147		25.7	%	4,745		24.1	%	(33.7	)%
Corporate & Eliminations (a)	5,142		42.0	%	9,956		50.6	%	(48.4	)%
Total	$	12,238	100.0	%	$	19,677	100.0	%	(37.8	)%

a) Corporate and Eliminations includes legal entity adjustments.

Share compensation expenses of $12.2 million in the six months ended June 30, 2012 represent 1.4 percentage points of the general and administrative expense ratio. The decrease in share compensation expenses of $7.4 million is due to a reversal of $1.4 million of expenses related to performance shares based on a review of current and projected performance criteria and a reduced expense of $1.3 million on the non-qualified options which fully vested in May 2012. In addition, the share compensation expenses of $19.7 million for the six months ended June 30, 2011 included $2.2 million of expenses on the employee seller shares and $1.1 million of Talbot restricted share awards which fully vested on July 2, 2011.

Validus Re.Validus Re share compensation expenses for the six months ended June 30, 2012 were $3.8 million compared to $4.9 million for the six months ended June 30, 2011, a decrease of $1.1 million or 22.1%. Share compensation expense as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 0.8% and 1.0%, respectively.

AlphaCat. AlphaCat share compensation expense as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 1.8% and 0.4%, respectively.

Talbot. Talbot share compensation expenses for the six months ended June 30, 2012 was $3.1 million compared to $4.7 million for the six months ended June 30, 2011, a decrease of $1.6 million or 33.7%. Share compensation expense as a percent of net premiums earned for the six months ended June 30, 2012 and 2011 were 0.8% and 1.3%, respectively.

Corporate & Eliminations. Corporate share compensation expenses for the six months ended June 30, 2012 were $5.1 million compared to $10.0 million for the six months ended June 30, 2011, a decrease of $4.8 million or 48.4%.

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 policy 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 administrative expense ratio, expense ratio and combined ratio for the six months ended June 30, 2012 and 2011.

Consolidated	Six Months Ended June 30, 2012		Six Months Ended June 30, 2011		Percentage point change
Losses and loss expenses ratio	42.9	%	79.9	%	(37.0	)
Policy acquisition costs ratio	17.2	%	18.2	%	(1.0	)
General and administrative expenses ratio (a)	15.6	%	15.1	%	0.5
Expense ratio	32.8	%	33.3	%	(0.5	)
Combined ratio	75.7	%	113.2	%	(37.5	)

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Validus Re	Six Months Ended June 30, 2012		Six Months Ended June 30, 2011		Percentage point change
Losses and loss expenses ratio	35.8	%	85.5	%	(49.7	)
Policy acquisition costs ratio	15.3	%	15.8	%	(0.5	)
General and administrative expenses ratio (a)	7.1	%	6.4	%	0.7
Expense ratio	22.4	%	22.2	%	0.2
Combined ratio	58.2	%	107.7	%	(49.5	)

AlphaCat	Six Months Ended June 30, 2012		Six Months Ended June 30, 2011		Percentage point change
Losses and loss expenses ratio	0.0	%	0.0	%	—
Policy acquisition costs ratio	10.2	%	11.0	%	(0.8	)
General and administrative expenses ratio (a)	56.7	%	17.0	%	39.7
Expense ratio	66.9	%	28.0	%	38.9
Combined ratio	66.9	%	28.0	%	38.9

Talbot	Six Months Ended June 30, 2012		Six Months Ended June 30, 2011		Percentage point change
Losses and loss expenses ratio	52.5	%	75.3	%	(22.8	)
Policy acquisition costs ratio	20.3	%	21.5	%	(1.2	)
General and administrative expenses ratio (a)	17.0	%	17.7	%	(0.7	)
Expense ratio	37.3	%	39.2	%	(1.9	)
Combined ratio	89.8	%	114.5	%	(24.7	)

(a) Includes general and administrative expenses and share compensation expenses.

General and administrative expense ratios for the six months ended June 30, 2012 and 2011 were 15.6% and 15.1%, respectively. General and administrative expense ratio is the sum of general and administrative expenses and share compensation expense divided by net premiums earned.

	Six Months Ended June 30, 2012				Six Months Ended June 30, 2011
(Dollars in thousands)	Expenses		Expenses as % of Net Earned Premiums		Expenses		Expenses as % of Net Earned Premiums
General and administrative expenses	$	128,010	14.2	%	$	109,318	12.8	%
Share compensation expenses	12,238		1.4	%	19,677		2.3	%
Total	$	140,248	15.6	%	$	128,995	15.1	%

Underwriting Income (Loss)

Underwriting income for the six months ended June 30, 2012 was $218.6 million compared to an underwriting (loss) of $(112.9) million for the six months ended June 30, 2011, an increase of $331.5 million or 293.7%.

(Dollars in thousands)	Six Months Ended June 30, 2012			% of Sub-total		Six Months Ended June 30, 2011			% of Sub-total		% Change
Validus Re	$	207,193		82.9	%	$	(36,629	)	44.7	%	665.7	%
AlphaCat	2,067			0.8	%	8,465			(10.3	)%	(75.6	)%
Talbot	40,603			16.3	%	(53,659		)	65.6	%	175.7	%
Sub total	249,863			100.0	%	(81,823		)	100.0	%	(405.4	)%
Corporate & Eliminations (a)	(31,227		)			(31,030		)			(0.6	)%
Total	$	218,636				$	(112,853	)			293.7	%

(a) Corporate and Eliminations includes legal entity adjustments.

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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 Comprehensive Income (Loss) line items, as illustrated below.

(Dollars in thousands)	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
Underwriting income (loss)	$	218,636		$	(112,853	)
Net investment income	53,645			56,469
Other income	14,885			2,201
Finance expenses	(29,985		)	(30,362		)
Net realized gains on investments	13,686			17,931
Net unrealized (losses) gains on investments	(32,903		)	5,698
(Loss) from investment affiliate	(398		)	—
Foreign exchange gains (losses)	2,514			(2,458		)
Tax (expense) benefit	(543		)	1,488
Income from operating affiliates	6,959			—
Net income (loss)	$	246,496		$	(61,886	)

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 income statement line items noted above, from its calculation of underwriting income. Net realized and unrealized gains (losses) on investments are excluded 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 the other line items excluded 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 bonus component of 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 six months ended June 30, 2012 was $53.6 million compared to $56.5 million for the six

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months ended June 30, 2011, a decrease of $2.8 million or 5.0%. Net investment income decreased due to falling yields on fixed maturity investments. Net investment income is comprised of 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 six months ended June 30, 2012 and 2011 are as provided below.

(Dollars in thousands)	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011			% Change
Fixed maturities and short-term investments	$	53,747		$	56,470		(4.8	)%
Cash and cash equivalents	3,766			3,268			15.2	%
Securities lending income	6			24			(75.0	)%
Total investment income	57,519			59,762			(3.8	)%
Investment expenses	(3,874		)	(3,293		)	(17.6	)%
Net investment income	$	53,645		$	56,469		(5.0	)%

Annualized effective investment yield is calculated by dividing net investment income by the average balance of the assets managed by our portfolio managers (excluding other investments). Average assets is the average of the beginning, ending and intervening quarter end asset balances. The Company's annualized effective investment yield was 1.77% and 1.90% for the six months ended June 30, 2012 and 2011, respectively, and the average duration of the portfolio at June 30, 2012 was 1.65 years (December 31, 2011 - 1.63 years).

Other Income

Other income for the six months ended June 30, 2012 was $14.9 million compared to $2.2 million for the six months ended June 30, 2011, an increase of $12.7 million or 576.3%. The primary component of other income for the six months ended June 30, 2012 is $14.6 million in underwriting and performance fees the AlphaCat segment earned from business written by AlphaCat Re 2011 and AlphaCat Re 2012. AlphaCat Re 2011 was a consolidated subsidiary during the three months ended June 30, September 30 and December 31, 2011. The balance sheet of AlphaCat Re 2011 was deconsolidated as at December 31, 2011.

Finance Expenses

Finance expenses for the six months ended June 30, 2012 were $30.0 million compared to $30.4 million for the six months ended June 30, 2011, a decrease of $0.4 million or 1.2%. Finance expenses include interest, the amortization of debt offering costs and discounts, and fees related to our credit facilities.

	Six Months Ended June 30,
(Dollars in thousands)	2012		2011		% Change
2006 Junior Subordinated Deferrable Debentures	$	3,101	$	6,816	(54.5	)%
2007 Junior Subordinated Deferrable Debentures	5,861		6,057		(3.2	)%
2010 Senior Notes due 2040	11,195		11,194		0.0	%
Credit facilities	9,678		3,313		192.1	%
AlphaCat Re 2011 preferred dividend (a)	—		2,919		(100.0	)%
Talbot FAL Facility	63		63		0.0	%
Talbot other interest	87		—		NM
Finance expenses	$	29,985	$	30,362	(1.2	)%

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

NM: Not Meaningful

The decrease in finance expenses of $0.4 million for the six months ended June 30, 2012 was due primarily to a $3.7 million decrease in interest paid on the 2006 Junior Subordinated Deferrable Debentures due 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 and a $2.9 million decrease in the preferred dividends and finance expenses attributable to AlphaCat Re 2011. These decreases were partially offset by a $6.4 million increase in credit facility fees due to closing fees on the renewal of the credit facilities

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and the acceleration of fees expensed on the credit facilities that expired during the year. 

Tax (Expense) Benefit

Tax expense for the six months ended June 30, 2012 was $(0.5) million compared to a benefit of $1.5 million for the six months ended June 30, 2011, an increase in expense of $2.0 million or 136.5%. The increase is primarily due to higher taxable income in the Talbot segment for the six months ended June 30, 2012 compared to the six months ended June 30, 2011.

Income From Operating Affiliates

Income from operating affiliates for the six months ended June 30, 2012, was $7.0 million compared to $nil for the six months ended June 30, 2011, an increase of $7.0 million or 100%. For the six months ended June 30, 2012 income from operating affiliates includes $6.2 million in equity earnings relating to AlphaCat Re 2011 and $0.8 million in equity earnings relating to AlphaCat Re 2012.

In the second quarter of 2011, AlphaCat Re 2011 was included in the consolidated results of the Company, therefore there was no comparative information for the six months ended June 30, 2011. As at June 30, 2012, the Company owned 22.3% of AlphaCat Re 2011, therefore income from operating affiliates reflects the Company's share of AlphaCat Re 2011's net income for the six months ended June 30, 2012.

AlphaCat Re 2012 was formed on May 29, 2012 therefore there was no comparative information for the six months ended June 30, 2011. As at June 30, 2012, the Company owned 37.9% of AlphaCat Re 2012, therefore income from operating affiliates reflects the Company's share of AlphaCat Re 2012's net income for the six months ended June 30, 2012.

Net Realized Gains on Investments

Net realized gains on investments for the six months ended June 30, 2012 were $13.7 million compared to $17.9 million for the six months ended June 30, 2011, a decrease of $4.2 million or 23.7%.

Net Unrealized Gains (Losses) on Investments

Net unrealized gains on fixed maturity and short term investments for the six months ended June 30, 2012 were $16.8 million compared to $5.1 million for the six months ended June 30, 2011, an increase of $11.7 million or 229.4% . The net unrealized gains for the six months ended June 30, 2012 were a result of increased market appetite for corporate credit.

Net unrealized losses on other investments for the six months ended June 30, 2012 were ($49.7) million compared to gains of $0.6 million for the six months ended June 30, 2011, a decrease of $50.3 million. The net unrealized losses for the six months ended June 30, 2012 were driven primarily by the ($49.9) million unrealized loss relating to the hedge fund investments. The amount of net unrealized losses attributable to noncontrolling interest was ($44.9 million) for the six months ended June 30, 2012, leaving a net impact to the Company of ($5.0) million.

Net unrealized gains (losses) 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.

Loss From Investment Affiliate

The Loss from investment affiliate for the six months ended June 30, 2012 was ($0.4) million as compared to $nil for the six months ended June 30, 2011, a decrease of $0.4 million or 100%. The loss from investment affiliate relates to the loss incurred in the Company's investment in the Aquiline Financial Services Fund II L.P. for the six months ended June 30, 2012 . The Company did not hold this investment as of June 30, 2011.

Foreign Exchange Gains (Losses)

Foreign exchange gains for the six months ended June 30, 2012 were $2.5 million compared to losses of ($2.5) million for the six months ended June 30, 2011, a favorable movement of $5.0 million or 202.3%. For the six months ended June 30, 2012, Validus Re recognized foreign exchange losses of $2.5 million and Talbot recognized foreign exchange gains of $0.2 million.

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For the six months ended June 30, 2012, Validus Re segment foreign exchange gains were $2.5 million compared to a foreign exchange loss of ($9.5) million for the six months ended June 30, 2011, a favorable movement of $12.0 million or 125.7%. Validus Re currently hedges foreign currency exposure by balancing assets (primarily cash and premium receivables) with liabilities (primarily case reserves and event IBNR) for certain major non-USD currencies. Consequently, Validus Re aims to have a limited exposure to foreign exchange fluctuations. The $2.5 million gain for the six months ended June 30, 2012 primarily occurred as a result of the British pound sterling and Japanese Yen strengthening during the period. In the six months ended June 30, 2011 a foreign exchange loss occurred 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.

For the six months ended June 30, 2012, Talbot segment foreign exchange gains were $0.2 million compared to gains of $7.3 million for the six months ended June 30, 2011, an unfavorable movement of $7.1 million or 97.4%. The unfavorable movement in Talbot foreign exchange was due primarily to the revaluation of Swiss franc, Euro and Australian dollar deposits.

At June 30, 2012, Talbot's balance sheet includes net unearned premiums and deferred acquisition costs denominated in foreign currencies of approximately $107.2 million and $22.3 million, respectively. These balances consisted of British pound sterling and Canadian dollars of $75.3 million and $9.6 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. Additional foreign exchange gains (losses) 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 Loss (Income) Attributable to Noncontrolling Interest

On April 2, 2012, the Company capitalized PaCRe, a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance. PaCRe was funded with $500.0 million of contributed capital. Validus invested $50.0 million in PaCRe's common equity and therefore owns 10.0% of PaCRe. The net loss attributable to noncontrolling interest of $45.4 million for the six months ended June 30, 2012 was calculated as 90.0% of the net loss in PaCRe for the quarter.

On May 25, 2011, the Company joined with other investors in capitalizing AlphaCat Re 2011, a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance and retrocessional reinsurance. Validus Re has an equity interest in AlphaCat Re 2011 and Validus Re held a majority of AlphaCat Re 2011’s outstanding voting rights up to December 23, 2011 when AlphaCat Re 2011 completed a secondary offering of its common shares to third party investors, along with a partial sale of Validus Re common shares to one of the third party investors. As a result of these transactions, the Company'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 were 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 June 30, 2012. For the six months ended June 30, 2011, the Company recorded ($0.6) million in net income attributable to noncontrolling interest relating to AlphaCat Re 2011.

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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), managed gross premiums written, 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 (Loss)." 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, income (loss) from investment affiliates, 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 six months ended June 30, 2012 and 2011 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-U.S. dollar denominated balances are unrelated to our underlying business.

Managed gross premiums written represents gross premiums written by the Company and its operating affiliates.  Managed gross premiums written differs from total gross premiums written, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of premiums written on behalf of the Company's operating affiliates, AlphaCat Re 2011, Ltd. and AlphaCat Re 2012, Ltd., which are accounted for under the equity method of accounting. A reconciliation of managed gross premiums written to gross premiums written, the most comparable U.S. GAAP financial measure, is presented in the section below.

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 June 30, 2012 and December 31, 2011.

	As at June 30, 2012
	(unaudited)
	Equity Amount		Shares	Exercise Price		Book Value Per Share
Book value per common share
Total shareholders' equity available to Validus	$	3,477,834	93,411,062			$	37.23
Diluted book value per common share
Total shareholders' equity available to Validus		3,477,834	93,411,062
Assumed exercise of outstanding warrants		121,445	6,916,677	$	17.56
Assumed exercise of outstanding stock options		42,451	2,091,912	$	20.29
Unvested restricted shares		—	3,343,727
Diluted book value per common share	$	3,641,730	105,763,378			$	34.43

	As at December 31, 2011
	Equity Amount		Shares	Exercise Price		Book Value Per Share
Book value per common share
Total shareholders' equity available to Validus	$	3,448,425	99,471,080			$	34.67
Diluted book value per common share
Total shareholders' equity available to Validus		3,448,425	99,471,080
Assumed exercise of outstanding warrants		121,445	6,916,677	$	17.56
Assumed exercise of outstanding stock options		45,530	2,263,012	$	20.12
Unvested restricted shares		—	3,340,729
Diluted book value per common share	$	3,615,400	111,991,498			$	32.28

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The following tables present reconciliations of total gross premiums written to total managed gross premiums written, the most comparable U.S. GAAP financial measure, at June 30, 2012 and June 30, 2011.

		Three Months Ended			Six Months Ended
		(unaudited)			(unaudited)
		June 30,		June 30,		June 30,		June 30,
		2012		2011(a)		2012		2011(a)
Total gross premiums written	$	627,089	$	605,387	$	1,464,378	$	1,455,283
Adjustments for:
Gross premiums written on behalf of AlphaCat Re 2011		12,830		—		86,705		—
Gross premiums written on behalf of AlphaCat Re 2012		30,558		—		30,558		—
Total managed gross premiums written	$	670,477	$	605,387	$	1,581,641	$	1,455,283

(a) Total gross premiums written for the three and six months ended June 30, 2011 included $42.6 million of gross premiums written from AlphaCat Re 2011, which was a consolidated subsidiary during the three months ended June 30, September 30 and December 31, 2011. The balance sheet of AlphaCat Re 2011 was deconsolidated as at December 31, 2011.

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" in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for further discussion of the Company's dividend policy.

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 total 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 (used in) investing activities, net cash provided by financing activities and the effect of foreign currency rate changes on cash and cash equivalents for the six months ended June 30, 2012 and 2011 is provided in the following table.

	Six Months Ended June 30,
(Dollars in thousands)	2012			2011			% Change
Net cash provided by operating activities	$	305,164		$	309,614		(1.4	)%
Net cash (used in) investing activities	(408,551		)	(211,059		)	(93.6	)%
Net cash provided by financing activities	167,117			79,584			110.0	%
Effect of foreign currency rate changes on cash and cash equivalents	6,736			17,042			(60.5	)%
Net increase in cash	$	70,466		$	195,181		(63.9	)%

During the six months ended June 30, 2012, net cash provided by operating activities of $305.2 million was driven primarily by net income of $246.5 million, a $424.5 million increase in unearned premiums, partially offset by a $330.2 million increase in premiums receivable. Net cash used in investing activities of $408.6 million was driven primarily by a net purchase of investments of $383.0 million. Net cash provided by financing activities of $167.1 million was driven primarily by the third party investment in noncontrolling interest of $450.1 million, partially offset by share repurchases of $221.3 million and a payment of $56.3 million in quarterly dividends.

During the six months ended June 30, 2011, net cash provided by operating activities of $309.6 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 $211.1 million was driven primarily by a net purchase of investments of $212.0 million. Net cash provided by financing activities of $79.6 million was driven primarily by $134.3 million of third party investment in AlphaCat Re 2011, partially offset by the payment of $54.0 million of quarterly dividends.

As at June 30, 2012, the Company's portfolio was composed of fixed income investments including short-term investments, agency securities and sovereign securities amounting to $5,546.6 million or 86.0% of total cash and investments. Details of the

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Company's debt and financing arrangements at June 30, 2012 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
$400,000 syndicated unsecured letter of credit facility	March 9, 2016	—
$525,000 syndicated secured letter of credit facility	March 9, 2016	322,126
$500,000 bi-lateral secured letter of credit facility	March 12, 2012	80,134
Talbot FAL Facility	December 31, 2015	25,000
PaCRe senior secured letter of credit facility	May 10, 2013	—
IPC Bi-Lateral Facility	December 31, 2012	51,479
Total		$	1,018,539

Capital Resources

Shareholders' equity at June 30, 2012 was $3,882.6 million.

On May 2, 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, which was paid on June 29, 2012 to holders of record on June 15, 2012.

On July 25, 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 September 28, 2012 to holders of record on September 14, 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.

 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.

On April 2, 2012, the Company capitalized PaCRe, a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance.  PaCRe was funded with $500.0 million of contributed capital. Validus invested $50.0 million in PaCRe's common equity. The Company will underwrite business for PaCRe, for which it will be paid a profit commission based on the company's underwriting results.

On May 29, 2012, the Company announced that it has joined with other investors in capitalizing AlphaCat Re 2012. AlphaCat Re 2012 is a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance with a particular focus on windstorm risks for Florida domiciled insurance companies. AlphaCat Re 2012 was funded with $70.0 million of equity capital. The Company will underwrite business for AlphaCat Re 2012, for which it will be paid a commission for originating the business and a profit commission based on underwriting results.

On June 5, 2012, the Company announced the final results of its “modified Dutch auction” tender offer. Pursuant to this tender offer, the Company purchased 6,383,884 of its common shares at a price of $32.00 per common share for a total cost of $204.3 million, excluding fees and expenses relating to the tender offer. The Company funded the purchase of the shares in the tender offer using cash on hand.

The Company may from time to time repurchase its securities, including common shares, Junior Subordinated Deferrable Debentures and Senior Notes. The Company repurchased $42.5 million shares at a cost of $1,185.5 million under the share repurchase programs for the period November 4, 2009 through July 24, 2012. The Company has $160.8 million remaining under its authorized share repurchase program at July 24, 2012.

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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 following table details the capital resources of the Company's more significant subsidiaries on an unconsolidated basis.

	Capital at
(Dollars in thousands)	June 30, 2012
Validus Reinsurance, Ltd. (consolidated), excluding Validus Re Americas, Ltd.	$	3,238,834
Validus Re Americas, Ltd. (formerly IPCRe, Ltd.)	131,441
AlphaCat Reinsurance, Ltd.	1,084
Total Validus Reinsurance, Ltd. (consolidated)	3,371,359
Noncontrolling interest in PacRe, Ltd.	404,740
Talbot Holdings, Ltd.	708,765
Other subsidiaries	5,771
Other, net	(71,225		)
Total consolidated capitalization	4,419,410
Senior notes payable	(247,036		)
Debentures payable	(289,800		)
Total shareholders' equity	$	3,882,574

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 July 31, 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
Talbot
Financial strength rating applicable to all Lloyds 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 2 to the Consolidated Financial Statements (Part I, Item I) 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 June 30, 2012.

(Dollars in thousands)	Commitments		Outstanding (a)
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
$400,000 syndicated unsecured letter of credit facility	400,000		—
$525,000 syndicated secured letter of credit facility	525,000		322,126
$500,000 bi-lateral secured letter of credit facility	500,000		80,134
Talbot FAL Facility (b)	25,000		25,000
PaCRe senior secured letter of credit facility	10,000		—
IPC Bi-Lateral Facility	80,000		51,479
Total	$	2,140,000	$	1,018,539

(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 11 to the Consolidated Financial Statements (Part I, Item I) for further discussion of the Company’s debt and financing arrangements.

Investments

A significant portion of contracts written 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 June 30, 2012 were publicly traded. At June 30, 2012 the average duration of the Company's fixed maturity portfolio was 1.65 years (December 31, 2011: 1.63 years) and the average rating of the portfolio was A+ (December 31, 2011: AA-). At June 30, 2012, the total fixed maturity portfolio was $4,772.9 million (December 31, 2011: $4,894.1 million), of which $745.7 million (December 31, 2011: $882.9 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 June 30, 2012, the Company held a fund of hedge fund side pocket of $4.7 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. The Company's investment portfolio as at June 30, 2012, has $18.7 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 June 30, 2012 were $0.9 million of Non-U.S. Government and Government agency bonds, $36.7 million of catastrophe bonds, $544.5 million of bank loans and $2.0 million of corporate bonds.

Cash and cash equivalents and investments in Talbot of $1,778.4 million at June 30, 2012 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, 2011:

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$1,686.6 million). Total cash and cash equivalents and investments in Talbot were $1,826.8 million at June 30, 2012 (December 31, 2011: $1,743.0 million).

As of June 30, 2012, the Company had approximately $3.8 million of Alt-A RMBS (December 31, 2011: $4.4 million).

Cash Flows

During the six months ended June 30, 2012 and 2011, the Company generated net cash from operating activities of $305.2 million and $309.6 million, respectively. Cash flows from operations generally represent premiums collected, less losses and loss expenses paid and underwriting and other expenses paid. Cash flows from operations may differ substantially from net income.

As of June 30, 2012 and December 31, 2011, the Company had cash and cash equivalents of $903.3 million and $832.8 million, respectively.

The Company has written certain 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 June 30, 2012, 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.

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 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

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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 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 the possible downgrade of U.S. securities by credit rating agencies and the resulting effect on the value of securities in the Company’s investment portfolio, as well as 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 the Company's 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

83

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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We believe we are principally exposed to five types of market risk:

• interest rate risk;

• foreign currency risk;

• credit risk;

• liquidity risk; and

• effects of inflation.

Interest Rate Risk:The Company's primary market risk exposure is to changes in interest rates. 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 atJune 30, 2012, 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 $84.9 million. As at June 30, 2012, 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 1.3% or approximately $69.3 million.

As atJune 30, 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 $82.2 million. As at June 30, 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 1.1% or approximately $57.2 million.

As at June 30, 2012, the Company held $825.1 million (December 31, 2011: $829.5 million), or 17.3% (December 31, 2011: 16.9%), 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 attempt to 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 June 30, 2012, $816.2 million, or 9.6% of our total assets and $832.3 million, or 18.0% of our total liabilities were held in foreign currencies. As of June 30, 2012, $147.4 million, or 3.2% of our total liabilities held in foreign currencies was non-monetary items which do not require revaluation at each reporting date. As of June 30, 2011, $727.1 million, or 8.8% of our total assets and $910.1 million, or 19.3% of our total liabilities were held in foreign currencies. As of June 30, 2011, $108.2 million, or 2.3% of our total liabilities held in foreign currencies was non-monetary items which do not require revaluation at each reporting date.

Credit Risk:We are exposed to credit risk primarily from the possibility that counterparties may default on their obligations to us. We attempt to limit our credit exposure by purchasing high quality fixed income investments to maintain an average portfolio

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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 minimum credit rating of any security purchased is BBB-/Baa3 and 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 June 30, 2012, 1.1% 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 0.9% of total investments, other than with respect to government and agency 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 June 30, 2012, 97.3% of reinsurance recoverables (which includes loss reserves recoverable and recoverables on paid losses) were from reinsurers rated A- or above, or from reinsurers posting full collateral (December 31, 2011: 99.4%, rated A-).

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 9.1% (December 31, 2011: 8.3%) 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 June 30, 2012, the Company had $1,268.1 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 June 30, 2012 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
$400,000 syndicated unsecured letter of credit facility	March 9, 2016	—
$525,000 syndicated secured letter of credit facility	March 9, 2016	322,126
$500,000 bi-lateral secured letter of credit facility	March 12, 2012	80,134
Talbot FAL Facility	December 31, 2015	25,000
PaCRe senior secured letter of credit facility	May 10, 2013	—
IPC Bi-Lateral Facility	December 31, 2012	51,479
Total		$	1,018,539

Effects of Inflation: 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.

ITEM 4. 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 recorded, processed, summarized and reported when required and the information is accumulated and communicated, as appropriate, to allow timely decisions regarding required disclosures.

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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.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company anticipates that, similar to the rest of the insurance and reinsurance industry, it will be subject to litigation and arbitration in the ordinary course of business.

ITEM 1A.RISK FACTORS

Please refer to the discussion of Risk Factors in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 5, 2012, the Company announced the final results of its “modified Dutch auction” tender offer. Pursuant to this tender offer, the Company purchased 6,383,884 of its common shares at a price of $32.00 per common share for a total cost of $204.3 million, excluding fees and expenses relating to the tender offer. The Company funded the purchase of the shares in the tender offer using cash on hand.

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 $42.5 million common shares for an aggregate purchase price of $1,185.5 million from the inception of the share repurchase program to July 24, 2012. The Company has $143.7 million remaining under its authorized share repurchase program as of July 24, 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 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 (Expressed in thousands of U.S. dollars except for share and per share information)
	As at March 31, 2012								Quarter ended
Effect of share repurchases:	(cumulative)		April		May		June		June 30, 2012
Aggregate purchase price (a)	$	958,478	$	—	$	—	$	209,944	$	209,944
Shares repurchased	35,404,545		$	—	$	—	$	6,558,884	$	6,558,884
Average price (a)	$	27.07	$	—	$	—	$	32.01	$	32.01
Estimated net accretive (dilutive) impact on:
Diluted BV per common share (b)									1.87
Diluted EPS - Quarter (c)									0.42

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	Share Repurchase Activity (Expressed in thousands of U.S. dollars except for share and per share information)
	As at June 30, 2012		As at
Effect of share repurchases:	(cumulative)		July 24, 2012		Cumulative to Date Effect
Aggregate purchase price (a)	$	1,168,422	$	17,068	$	1,185,490
Shares repurchased	41,963,429		521,347		42,484,776
Average price (a)	$	27.84	$	32.74	$	27.90

(a) Share transactions are on a trade date basis through July 24, 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, 2011 and 2012 was lower than the book value per common share, the repurchase of shares increased the Company's period 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 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURE

The Company is in the insurance and reinsurance business and as such, mine safety disclosures do not apply.

ITEM 5.OTHER INFORMATION

None.

ITEM 6.  EXHIBITS

Exhibit	Description
Exhibit 10.1	Amended and Restated Employment Agreement dated as of May 7, 2012 between Validus Holdings, Ltd. and Jeffrey D. Sangster (Incorporated by reference from the Company's Current Report on Form 8-K filed on May 10, 2012)
Exhibit 10.2	Third Amended and Restated Employment Agreement, dated as of May 21, 2012, by and between Validus Holdings, Ltd. and Conan M. Ward (Incorporated by reference from the Company's Current Report on Form 8-K filed on May 21, 2012)
Exhibit 31.1*	Certification of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
Exhibit 31.2*	Certification of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
Exhibit 32*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
Exhibit 101.1 INS*	XBRL Instance Document
Exhibit 101.SCH*	XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

*Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		VALIDUS HOLDINGS, LTD.
		(Registrant)
Date:	July 31, 2012	/s/ Edward J. Noonan
		Edward J. Noonan
		Chief Executive Officer
Date:	July 31, 2012	/s/ Joseph E. (Jeff) Consolino
		Joseph E. (Jeff) Consolino
		President and Chief Financial Officer

88

EX-31.1

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 Quarterly Report on Form 10-Q 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:	July 31, 2012
		/s/ Edward J. Noonan
		Edward J. Noonan
		Chief Executive Officer

EX-31.2

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)

1. I, JosephE. (Jeff) Consolino, certify that:

2. I have reviewed this Quarterly Report on Form 10-Q of Validus Holdings, Ltd.;

3. 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;

4. 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;

5. 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

6. 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:	July 31, 2012
		/s/ Joseph E. (Jeff) Consolino
		Joseph E. (Jeff) Consolino
		President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION ACCOMPANYING FORM 10-Q 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 Quarterly Report on Form 10-Q for the period ended June 30, 2012 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:	July 31, 2012
		/s/ Edward J. Noonan
		Edward J. Noonan
		Chief Executive Officer
		Validus Holdings, Ltd.

Dated:	July 31, 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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Investments (Realized and unrealized gains) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains	$ 9,415		$ 13,032		$ 19,423		$ 28,797
Gross realized (losses)	(3,261)		(1,480)		(5,737)		(10,866)
Net realized gains on investments	6,154		11,552		13,686		17,931
Net unrealized gains on securities lending	0		11		37		41
Net unrealized (losses) gains on investments	(53,574)		18,526		(32,903)		5,698
Total net realized gains and change in net unrealized (losses) gains on investments	(47,420)		30,078		(19,217)		23,629
Noncontrolling interest	44,882	[1]	0	[1]	44,882	[1]	0	[1]
Total net realized gains and change in net unrealized (losses) gains on investments excluding non-controlling interest	(2,538)		30,078		25,665		23,629
Investments excluding securities lending [Member]
Fixed maturities, short-term and other investments and cash equivalents
Net unrealized (losses) gains on investments	$ (53,574)		$ 18,515		$ (32,940)		$ 5,657

[1] The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

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Reserve for losses and loss expenses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reserve for paid losses and unpaid loss expenses
Reserve for losses and loss expenses, beginning of period	$ 2,649,610	$ 2,534,415	$ 2,631,143	$ 2,035,973
Losses and loss expenses recoverable	(351,292)	(453,701)	(372,485)	(283,134)
Net reserves for losses and loss expenses, beginning of period	2,298,318	2,080,714	2,258,658	1,752,839
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year	191,252	233,012	453,665	735,726
Prior years	(37,560)	(25,705)	(67,984)	(52,221)
Total incurred losses and loss expenses	153,692	207,307	385,681	683,505
Total net paid losses	(220,529)	(121,046)	(424,752)	(284,303)
Foreign exchange	(11,666)	13,580	228	28,514
Net reserve for losses and loss expenses, end of period	2,219,815	2,180,555	2,219,815	2,180,555
Losses and loss expenses recoverable, end of period	371,484	439,805	371,484	439,805
Reserve for losses and loss expenses, end of period	$ 2,591,299	$ 2,620,360	$ 2,591,299	$ 2,620,360

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Investments in non-consolidated affiliates (Operating affiliates - other details) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Investment:
Carrying value	$ 86,490	$ 56,398	$ 53,031
Aquiline Financial Services Fund LP [Member]
Investment:
Voting ownership %	0.00%
Equity ownership %	6.80%
Alphacat Re 2011 Ltd [Member]
Investment:
Investment	41,389
Voting ownership %	43.70%
Equity ownership %	22.30%
Carrying value	59,238	56,398	53,031
AlphaCat Re 2012 Ltd [Member]
Investment:
Investment	26,500
Voting ownership %	49.00%
Equity ownership %	37.90%
Carrying value	$ 27,252	$ 0	$ 0

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Earnings per share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Basic earnings per share
Net income (loss)	$ 122,262	$ 110,478	$ 246,496	$ (61,886)
Net loss (income) attributable to noncontrolling interest	45,360	(594)	45,360	(594)
Net income (loss) available (attributable) to Validus	167,622	109,884	291,856	(62,480)
less: Dividends and distributions declared on outstanding warrants	(1,729)	(1,966)	(3,458)	(3,950)
Income (loss) available (attributable) to common shareholders	165,893	107,918	288,398	(66,430)
Weighted average number of common shares outstanding	98,254,186	98,385,924	98,839,663	98,165,132
Basic earnings (loss) per share	$ 1.69	$ 1.10	$ 2.92	$ (0.68)
Diluted earnings per share
Net income (loss) available (attributable) to Validus	167,622	109,884	291,856	(62,480)
Net loss (income) attributable to noncontrolling interest	45,360	(594)	45,360	(594)
Net income (loss)	122,262	110,478	246,496	(61,886)
less: Dividends and distributions declared on outstanding warrants	0	0	0	(3,950)
Income (loss) available (attributable) to common shareholders	$ 167,622	$ 109,884	$ 291,856	$ (66,430)
Weighted average number of common shares outstanding	98,254,186	98,385,924	98,839,663	98,165,132
Weighted average number of common shares outstanding, diluted	103,667,967	104,562,450	104,382,030	98,165,132
Diluted earnings (loss) per share	$ 1.62	$ 1.05	$ 2.80	$ (0.68)
Earnings per share (Textuals) [Abstract]
Anti-dilutive securities excluded from the calculation of diluted earnings per share	675,478	479,104	346,070	247,550
Options [Member]
Diluted earnings per share
Weighted average number diluted shares outstanding adjustment	801,180	908,590	807,522	0
Warrants [Member]
Diluted earnings per share
Weighted average number diluted shares outstanding adjustment	3,077,136	3,561,096	3,050,054	0
Unvested restricted shares [Member]
Diluted earnings per share
Weighted average number diluted shares outstanding adjustment	1,535,465	1,706,840	1,684,791	0

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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Reinsurance recoverables by reinsurer
Reinsurance recoverable	$ 403,879		$ 462,980
Percentage of total		100.00%	100.00%
Reinsurance (Textuals) [Abstract]
Incurred but not reported recoverable	156,316	156,316	125,298
Provision for uncollectible reinsurance relating to losses recoverable	6,475		6,821
A- or better rating [Member]
Reinsurance (Textuals) [Abstract]
Percentage of total		97.30%
Fully Collateralized Reinsurers [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable	9,717		18,140
Top 10 reinsurers [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		291,970	323,315
Percentage of total		72.30%	69.80%
Percentage of top 10 reinsurers reinsurance recoverable		100.00%	100.00%
Top 10 reinsurers [Member] | Lloyd's Syndicates [Member] | A+ [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		75,022	77,419
Percentage of total		25.80%	24.00%
Top 10 reinsurers [Member] | Allianz [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		39,336	59,764
Percentage of total		13.50%	18.50%
Top 10 reinsurers [Member] | Everest Re [Member] | A+ [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		42,727	38,618
Percentage of total		14.60%	11.90%
Top 10 reinsurers [Member] | Hannover Re [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		38,960	39,762
Percentage of total		13.30%	12.30%
Top 10 reinsurers [Member] | Transatlantic Re [Member] | A+ [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		20,975	21,344
Percentage of total		7.20%	6.60%
Top 10 reinsurers [Member] | Lancashire Insurance Company Ltd [Member] | A [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		20,000
Percentage of total		6.90%
Top 10 reinsurers [Member] | Odyssey Reinsurance Company [Member] | A- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable			16,737
Percentage of total			5.20%
Top 10 reinsurers [Member] | Swiss Re [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		16,200
Percentage of total		5.50%
Top 10 reinsurers [Member] | Tokio Millennium Re Ltd [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		12,940	20,432
Percentage of total		4.40%	6.30%
Top 10 reinsurers [Member] | Platinum Underwriters [Member] | A [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable			15,833
Percentage of total			4.90%
Top 10 reinsurers [Member] | Platinum Underwriters [Member] | A- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		12,088
Percentage of total		4.10%
Top 10 reinsurers [Member] | Munich Re [Member] | AA- [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable		13,722	15,266
Percentage of total		4.70%	4.70%
Top 10 reinsurers [Member] | Fully Collateralized Reinsurers [Member] | NR [Member]
Reinsurance recoverables by reinsurer
Reinsurance recoverable			18,140
Percentage of total			5.60%
Other reinsurers' balances > $1 million
Reinsurance recoverables by reinsurer
Reinsurance recoverable		104,288	132,417
Percentage of total		25.80%	28.60%
Other reinsurers' balances less than $1 million
Reinsurance recoverables by reinsurer
Reinsurance recoverable		$ 7,621	$ 7,248
Percentage of total		1.90%	1.60%

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Investments (Text) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended			12 Months Ended
	Jun. 30, 2012		Jun. 30, 2011	Jun. 30, 2012		Jun. 30, 2011	Dec. 31, 2011
Securities lending [Abstract]
Securities lending - Percent of market value required in collateral	102.00%
Securities on loan	$ 4,039			$ 4,039			$ 8,286
Securities lending - average reset period on collateral reinvested	2.9						3.9
Securities lending - unrealized gain (loss) on collateral securities	0		11	37		41
Talbot Fal Facility [Member]
Line of Credit Facility [Line Items]
Letter of credit facility, original commitment amount	100,000			100,000
Secured letter of credit facility, value	25,000	[1]		25,000	[1]		25,000	[1]
Investments held in trust for the benefit of Talbot FAL Facility	1,778,366			1,778,366			1,686,586
Investments held in trust	2,100,431			2,100,431			2,129,570
Investments pledged as collateral	43,835			43,835			44,623
Credit facility, outstanding	25,000	[1],[2]		25,000	[1],[2]		25,000	[1],[2]
IPC Bi Lateral Facility [Member]
Line of Credit Facility [Line Items]
Secured letter of credit facility, value	80,000			80,000			80,000
Investments pledged as collateral	107,984			107,984			105,428
Credit facility, outstanding	51,479	[2]		51,479	[2]		57,146	[2]
Secured letter of credit facility [Member]
Line of Credit Facility [Line Items]
Secured letter of credit facility, value							500,000
Credit facility, outstanding							333,179	[2]
Four-year unsecured credit facility [Member]
Line of Credit Facility [Line Items]
Secured letter of credit facility, term				4 years
Credit facility, outstanding	0	[2]		0	[2]		0	[2]
Four-year syndicated secured credit facility [Member]
Line of Credit Facility [Line Items]
Secured letter of credit facility, term				4 years
Secured letter of credit facility, value	525,000			525,000
Investments pledged as collateral	435,868			435,868			0
Credit facility, outstanding	322,126	[2]		322,126	[2]		0	[2]
Bi-lateral secured facility [Member]
Line of Credit Facility [Line Items]
Secured letter of credit facility, value	500,000			500,000
Investments pledged as collateral	110,428			110,428			0
Credit facility, outstanding	$ 80,134	[2]		$ 80,134	[2]		$ 0

[1] 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.

[2] Indicates utilization of commitment amount, not drawn borrowings.

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Earnings per share (Tables)

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2012 and 2011: 

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Basic earnings per share
Income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Income (loss) available (attributable) to Validus	167,622			109,884			291,856			(62,480		)
less: Dividends and distributions declared on outstanding warrants	(1,729		)	(1,966		)	(3,458		)	(3,950		)
Income (loss) available (attributable) to common shareholders	$	165,893		$	107,918		$	288,398		$	(66,430	)
Weighted average number of common shares outstanding	98,254,186			98,385,924			98,839,663			98,165,132
Basic earnings (loss) per share available (attributable) to common shareholders	$	1.69		$	1.10		$	2.92		$	(0.68	)
Diluted earnings per share
Income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Income (loss) available (attributable) to Validus	167,622			109,884			291,856			(62,480		)
less: Dividends and distributions declared on outstanding warrants	—			—			—			(3,950		)
Income (loss) available (attributable) to common shareholders	$	167,622		$	109,884		$	291,856		$	(66,430	)
Weighted average number of common shares outstanding	98,254,186			98,385,924			98,839,663			98,165,132
Share equivalents:
Warrants	3,077,136			3,561,096			3,050,054			—
Stock options	801,180			908,590			807,522			—
Unvested restricted shares	1,535,465			1,706,840			1,684,791			—
Weighted average number of diluted common shares outstanding	103,667,967			104,562,450			104,382,030			98,165,132
Diluted earnings (loss) per share available (attributable) to common shareholders	$	1.62		$	1.05		$	2.80		$	(0.68	)

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Segment information (Segment geographic) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	$ 627,089		$ 605,387		$ 1,464,378		$ 1,455,283
Percent of gross premiums written	100.00%		100.00%		100.00%		100.00%
United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	258,647		293,238		441,938		511,537
Percent of gross premiums written	41.30%		48.50%		30.20%		35.20%
Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	63,356	[1]	59,527	[1]	155,133	[1]	151,760	[1]
Percent of gross premiums written	10.10%	[1]	9.80%	[1]	10.60%	[1]	10.40%	[1]
Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	28,016		29,605		100,719		104,078
Percent of gross premiums written	4.50%		4.90%		6.80%		7.20%
Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	28,978		24,755		76,584		54,513
Percent of gross premiums written	4.60%		4.10%		5.20%		3.70%
Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	34,420		26,087		34,827		36,725
Percent of gross premiums written	5.50%		4.30%		2.40%		2.50%
Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	2,144		2,443		5,667		6,251
Percent of gross premiums written	0.30%		0.40%		0.40%		0.40%
Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	10,067	[2]	8,939	[2]	52,287	[2]	44,996	[2]
Percent of gross premiums written	1.60%	[2]	1.50%	[2]	3.60%	[2]	3.10%	[2]
Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	166,981		151,356		425,217		398,323
Percent of gross premiums written	26.60%		25.00%		29.00%		27.30%
Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	39,387	[1]	28,050	[1]	111,117	[1]	106,274	[1]
Percent of gross premiums written	6.30%	[1]	4.60%	[1]	7.60%	[1]	7.30%	[1]
Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	162,074	[3]	132,743	[3]	486,106	[3]	439,149	[3]
Percent of gross premiums written	25.80%	[3]	21.90%	[3]	33.20%	[3]	30.20%	[3]
Validus Re Legal Entity [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	356,005		341,651		926,389		952,889
Validus Re Segment [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	340,850		290,691		907,716		894,779
Validus Re Segment [Member] | United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	213,473		211,323		367,903		401,481
Validus Re Segment [Member] | Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	4,650		2,580		26,845		29,558
Validus Re Segment [Member] | Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	14,427		10,710		72,218		68,466
Validus Re Segment [Member] | Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	5,626		11,432		26,213		35,918
Validus Re Segment [Member] | Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	31,112		23,871		30,977		34,069
Validus Re Segment [Member] | Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	116		10		324		110
Validus Re Segment [Member] | Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	10,067		8,939		52,008		44,996
Validus Re Segment [Member] | Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	65,998		57,542		208,585		213,117
Validus Re Segment [Member] | Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	20,734		11,684		78,753		76,780
Validus Re Segment [Member] | Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	40,645		10,142		252,475		203,401
AlphaCat Segment [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	15,155		50,960		18,673		58,110
AlphaCat Segment [Member] | United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	14,166		50,041		16,574		52,248
AlphaCat Segment [Member] | Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0	[1]	0	[1]	0	[1]	0	[1]
AlphaCat Segment [Member] | Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(11)		19		820		1,229
AlphaCat Segment [Member] | Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0		0		0		633
AlphaCat Segment [Member] | Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0		0		0		0
AlphaCat Segment [Member] | Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0		0		0		0
AlphaCat Segment [Member] | Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0	[2]	0	[2]	279	[2]	0	[2]
AlphaCat Segment [Member] | Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(11)		19		1,099		1,862
AlphaCat Segment [Member] | Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	1,000	[1]	900	[1]	1,000	[1]	4,000	[1]
AlphaCat Segment [Member] | Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0	[3]	0	[3]	0	[3]	0	[3]
Talbot [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	283,528		276,886		576,781		539,943
Talbot [Member] | United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	32,941		34,181		61,696		62,012
Talbot [Member] | Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	61,334	[1]	57,204	[1]	137,594	[1]	125,171	[1]
Talbot [Member] | Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	14,198		18,935		29,445		34,944
Talbot [Member] | Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	24,427		22,265		53,741		40,533
Talbot [Member] | Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	3,427		2,216		4,087		2,756
Talbot [Member] | Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	2,148		2,443		5,670		6,251
Talbot [Member] | Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0	[2]	0	[2]		[2]	0	[2]
Talbot [Member] | Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	105,534		103,063		230,537		209,655
Talbot [Member] | Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	18,369	[1]	15,506	[1]	33,166	[1]	26,036	[1]
Talbot [Member] | Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	126,684	[3]	124,136	[3]	251,382	[3]	242,240	[3]
Eliminations [Member] | United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(1,933)		(2,307)		(4,235)		(4,204)
Eliminations [Member] | Worldwide excluding United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(2,628)	[1]	(257)	[1]	(9,306)	[1]	(2,969)	[1]
Eliminations [Member] | Europe [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(598)		(59)		(1,764)		(561)
Eliminations [Member] | Latin America and Caribbean [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(1,075)		(8,942)		(3,370)		(22,571)
Eliminations [Member] | Japan [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(119)		0		(237)		(100)
Eliminations [Member] | Canada [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(120)		(10)		(327)		(110)
Eliminations [Member] | Rest of world [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	0	[2]	0	[2]	0	[2]	0	[2]
Eliminations [Member] | Subtotal Non United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(4,540)		(9,268)		(15,004)		(26,311)
Eliminations [Member] | Worldwide including United States [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(716)	[1]	(40)	[1]	(1,802)	[1]	(542)	[1]
Eliminations [Member] | Marine and Aerospace [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	(5,255)	[3]	(1,535)	[3]	(17,751)	[3]	(6,492)	[3]
Corporate And Eliminations [Member]
Gross premiums written allocated to the territory of coverage exposure
Gross premiums written	$ (12,444)		$ (13,150)		$ (38,792)		$ (37,549)

[1] Represents risks in two or more geographic zones.

[2] Represents risks in one geographic zone.

[3] 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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Stock plans (Options valuation assumptions) (Details)	12 Months Ended
	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
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)					2 years
Expected volatility	0.00%	[1]	0.00%	[1]	34.60%

[1] The Company has not granted any stock options awards since September 4, 2009.

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Subsequent events (Details) (Dividend declared [Member], USD $)	0 Months Ended
	Jul. 30, 2012
Common Stock [Member]
Subsequent events (Textuals) [Abstract]
Subsequent event date	Jul. 25, 2012
Subsequent event, dividends declared	$ 0.25
Common Share Equivalents [Member]
Subsequent events (Textuals) [Abstract]
Subsequent event, dividends declared	$ 0.25

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Investments in affiliates (Tables)

6 Months Ended

Jun. 30, 2012

Equity Method Investments and Joint Ventures [Abstract]

Reconciliation of the beginning and ending non-consolidated affiliate balance

The following table presents a reconciliation of the beginning and ending investment in operating affiliate balances for the three and six months ended June 30, 2012: 

	Three Months Ended June 30, 2012
		Investment in operating affiliate (AlphaCat Re 2011)		Investment in operating affiliate (AlphaCat Re 2012)		Total
As at March 31, 2012		$	56,398	$	—	$	56,398
Purchase of shares		—		26,500		26,500
Income from operating affiliates		2,840		752		3,592
As at June 30, 2012		$	59,238	$	27,252	$	86,490

	Six Months Ended June 30, 2012
	Investment in operating affiliate (AlphaCat Re 2011)		Investment in operating affiliate (AlphaCat Re 2012)		Total
As at December 31, 2011	$	53,031	$	—	$	53,031
Purchase of shares	—		26,500		26,500
Income from operating affiliates	6,207		752		6,959
As at June 30, 2012	$	59,238	$	27,252	$	86,490

Summarized financial information of non-consolidated affiliate

The following table presents the Company's investments in AlphaCat Re 2011 and AlphaCat Re 2012, as at June 30, 2012:

	Investment in non-consolidated affiliate
	Investment at cost		Voting ownership %		Equity Ownership		Carrying Value
AlphaCat Re 2011	$	41,389	43.7	%	22.3	%	$	59,238
AlphaCat Re 2012	$	26,500	49.0	%	37.9	%	$	27,252

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Investments in affiliates (Text) (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Alphacat Re 2011 Ltd [Member]
Schedule of Equity Method Investments [Line Items]
Equity ownership %	22.30%
Ownership percentage required for consolidation	50.00%
Aquiline Financial Services Fund LP [Member]
Schedule of Equity Method Investments [Line Items]
Equity ownership %	6.80%
Investment Time Lag Reporting	3 months
Related Party Transaction Assumption Of Interest Percentage	100.00%
Related Party Transaction Capital Commitment	50,000

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Investments (Maturity profile of fixed maturity investments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Maturity profile
Amortized cost	$ 4,715,764	$ 4,859,705
Estimated fair value	4,772,899	4,894,145
Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	3,904,784	4,039,921
Estimated fair value	3,947,835	4,064,683
Due in one year or less [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	452,460	520,631
Estimated fair value	455,506	523,107
Due after one year through five years [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	3,049,223	3,160,647
Estimated fair value	3,088,234	3,186,711
Due after five years through ten years [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	398,769	350,459
Estimated fair value	398,975	346,654
Due after ten years [Member] | Fixed maturities trading securities allocated to contractual maturity [Member]
Maturity profile
Amortized cost	4,332	8,184
Estimated fair value	5,120	8,211
Asset backed and mortgaged backed securities [Member] | No single maturity date [Member]
Maturity profile
Amortized cost	810,980	819,784
Estimated fair value	$ 825,064	$ 829,462

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Investments (Level 3 rollforward) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011	Jun. 30, 2012		Jun. 30, 2011
Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis
Level 3 investments-Beginning of period	$ 8,325		$ 10,713	$ 8,880		$ 12,892
Purchases	500,000		0	500,000		0
Sales	(277)		(1,247)	(896)		(3,809)
Issuances	0		0	0		0
Settlements	0		0	0		0
Realized gains	21		175	48		435
Unrealized (losses)	(48,494)		135	(49,986)		258
Amortization	0		0	0		0
Transfers	(4,782)		0	(3,253)		0
Level 3 investments-End of period	454,793		9,776	454,793		9,776
Noncontrolling interest	(405,118)	[1]		(405,118)	[1]
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		0	0		0
Purchases	0		0	0		0
Sales	0		0	0		0
Issuances	0		0	0		0
Settlements	0		0	0		0
Realized gains	0		0	0		0
Unrealized (losses)	0		0	0		0
Amortization	0		0	0		0
Transfers	0		0	0		0
Level 3 investments-End of period	0		0	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	8,325		10,713	8,880		12,892
Purchases	500,000		0	500,000		0
Sales	(277)		(1,247)	(896)		(3,809)
Issuances	0		0	0		0
Settlements	0		0	0		0
Realized gains	21		175	48		435
Unrealized (losses)	(48,494)		135	(49,986)		258
Amortization	0		0	0		0
Transfers	(4,782)		0	(3,253)		0
Level 3 investments-End of period	454,793		9,776	454,793		9,776
Fair Value, Measurements, Recurring [Member]
Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis
Noncontrolling interest	(405,118)	[1]		(405,118)	[1]
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis
Noncontrolling interest	(405,118)	[1]		(405,118)	[1]
Level 3 investments excluding noncontrolling interest	49,675			49,675
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Other investments level three [Member]
Reconciliation of beginning and ending balances for all investments measured at fair value on recurring basis
Level 3 investments excluding noncontrolling interest	$ 49,675			$ 49,675

[1] The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

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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	Jun. 30, 2012	Dec. 31, 2011
Summary of amount of derivatives designated as hedging instruments
Notional amount	$ 45,711	$ 75,323
Other assets [Member]
Summary of amount of derivatives designated as hedging instruments
Fair value, derivative assets	152	476
Other liabilities [Member]
Summary of amount of derivatives designated as hedging instruments
Fair value, derivative liabilities	$ 680	$ 0

XML

Commitments and contingencies Commitments and contingencies (Investment portfolio) (Details) (Concentrations of credit risk [Member])	6 Months Ended
	Jun. 30, 2012
Investment portfolio excluding government and agency securities [Member]
Concentrations Of Credit Risk [Abstract]
Maximum aggregate exposure to single issuer, allowed	3.00%
Aggregate exposure to single issuer, actual	0.90%
Investment portfolio excluding bank loans [Member]
Concentrations Of Credit Risk [Abstract]
Minimum credit rating of any security purchased	Baa3/BBB-
Allowable percentage holding in downgraded investments	2.00%
Holding in aggregate market value permitted with written pre-authorization	10.00%
Percent of investment portfolio with a credit rating below the minimum required credit rating of Baa3/BBB-	1.10%

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Stock plans (Text) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Stock plans (other details)
Number of shares reserved for issuance under the LTIP and STIP	13,126,896		13,126,896
Remaining number of shares reserved for issuance	3,152,947		3,152,947
Share compensation expenses	$ 6,800	$ 7,628	$ 12,238	$ 19,677
Options [Member]
Stock plans (other details)
Share compensation expenses	7	179	142	1,426
Unrecognized share compensation expenses	0		0		141
Weighted average period of recognizing share based compensation expenses					2 months 12 days
Maturity period of options			10 years
Restricted share awards [Member]
Stock plans (other details)
Share compensation expenses	6,176	5,792	12,116	14,948
Unrecognized share compensation expenses	55,832		55,832		40,809
Weighted average period of recognizing share based compensation expenses			2 years 10 months 24 days		2 years 4 months 24 days
Restricted share units [Member]
Stock plans (other details)
Share compensation expenses	111	97	231	211
Unrecognized share compensation expenses	1,145		1,145		985
Weighted average period of recognizing share based compensation expenses			2 years 10 months 24 days		2 years 8 months 12 days
Performance share awards [Member]
Stock plans (other details)
Share compensation expenses	506	528	(251)	872
Unrecognized share compensation expenses	4,436		4,436		5,677
Weighted average period of recognizing share based compensation expenses			2 years 1 month 6 days		2 years 1 month 6 days
Employee seller shares [Member]
Stock plans (other details)
Share compensation expenses	$ 0	$ 1,032	$ 0	$ 2,220
Restricted stock issued under Share Sale Agreement			1,209,741
Percentage of employee seller shares vesting annually			25.00%

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Investments in affiliates (Operating affiliates rollforward) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Activity in non-consolidated affiliate balances for the period:
Balance, beginning of period	$ 56,398	$ 53,031
Initial purchase of shares	26,500	26,500
Equity in earnings in non-consolidated affiliate	3,592	6,959
Balance, end of period	86,490	86,490
Aquiline Financial Services Fund LP [Member]
Activity in non-consolidated affiliate balances for the period:
Equity Method Investment Voting Percentage	0.00%	0.00%
AlphaCat Re 2011 Ltd [Member]
Activity in non-consolidated affiliate balances for the period:
Equity Method Investment Voting Percentage	43.70%	43.70%
Balance, beginning of period	56,398	53,031
Initial purchase of shares	0	0
Equity in earnings in non-consolidated affiliate	2,840	6,207
Balance, end of period	59,238	59,238
AlphaCat Re 2012 Ltd [Member]
Activity in non-consolidated affiliate balances for the period:
Equity Method Investment Voting Percentage	49.00%	49.00%
Balance, beginning of period	0	0
Initial purchase of shares	26,500	26,500
Equity in earnings in non-consolidated affiliate	752	752
Balance, end of period	$ 27,252	$ 27,252

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Investments

6 Months Ended

Jun. 30, 2012

Investments [Abstract]

Investments

Investments

The Company’s investments in fixed maturities, short-term investments and other investments 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 four Paulson & Co. Inc. managed hedge funds and an investment in a fund of hedge funds are the only financial instruments in this category as at June 30, 2012. For each respective hedge fund investment, the Company obtains and reviews the valuation methodology used by the fund administrators and investment managers to ensure that the hedge fund investments are following fair value principles consistent with U.S. GAAP in determining the net asset value (“NAV”).

Other investments consist of an investment in four Paulson & Co. Inc. managed hedge funds (the "hedge funds"), a fund of hedge funds and a deferred compensation trust held in mutual funds. The hedge funds were valued at $450,131 at June 30, 2012. The funds' administrator provides monthly reported NAVs with a one-month delay in its valuation. As a result, the funds' administrator's May 31, 2012 NAV was used as a partial basis for fair value measurement in the Company's June 30, 2012 balance sheet. The fund manager provides an estimate of the NAV at June 30, 2012 based on estimated performance. The Company adjusts fair value to the fund manager's estimated NAV that incorporates relevant valuation sources on a timely basis. As this valuation technique incorporates both observable and significant unobservable inputs, the fund is classified as a Level 3 asset. To determine the reasonableness of the estimated NAV, the Company assesses the variance between the fund manager's estimated NAV and the fund administrator's NAV. Immaterial variances are recorded in the following reporting period. These managed hedge funds are subject to quarterly liquidity.

The fund of hedge funds is a side pocket valued at $4,662 at June 30, 2012. While a redemption request has been submitted, the timing of receipt of proceeds on the side pocket is unknown. The fund’s administrator provides a monthly reported NAV with a one-month delay in its valuation. As a result, the fund administrator’s May 31, 2012 NAV was used as a basis for fair value measurement in the Company’s June 30, 2012 balance sheet. The fund manager provides an estimate of the fund NAV at June 30, 2012 based on the estimated performance provided from the underlying third-party funds. To determine the reasonableness of the NAV, the Company compares the one-month delayed fund administrator's NAV to the fund manager’s estimated NAV that incorporates relevant valuation sources on a timely basis. Immaterial variances are recorded in the following reporting period. As this valuation technique incorporates both observable and significant unobservable inputs, the fund of hedge funds is classified as a Level 3 asset.

At June 30, 2012, 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	$	—	$	1,139,424	$	—		$	1,139,424
Non-U.S. Government and Government Agency	—		331,601		—			331,601
States, municipalities, political subdivision	—		42,844		—			42,844
Agency residential mortgage-backed securities	—		449,464		—			449,464
Non-Agency residential mortgage-backed securities	—		23,069		—			23,069
U.S. corporate	—		1,271,768		—			1,271,768
Non-U.S. corporate	—		559,479		—			559,479
Bank loans	—		566,017		—			566,017
Catastrophe bonds	—		36,702		—			36,702
Asset-backed securities	—		352,531		—			352,531
Commercial mortgage-backed securities	—		—		—			—
Total fixed maturities	—		4,772,899		—			4,772,899
Short-term investments	282,061		28,642		—			310,703
Fund of hedge funds	—		—		4,662			4,662
Hedge funds (a)	—		—		450,131			450,131
Mutual funds	—		8,225		—			8,225
Total	$	282,061	$	4,809,766	$	454,793		$	5,546,620
Noncontrolling interest (a)					(405,118		)	(405,118		)
Total investments excluding noncontrolling interest	$	282,061	$	4,809,766	$	49,675		$	5,141,502

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

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	—		—		5,627		5,627
Private equity investment	—		—		3,253		3,253
Mutual funds	—		7,907		—		7,907
Total	$	257,854	$	4,924,389	$	8,880	$	5,191,123

At June 30, 2012, Level 3 investments excluding the noncontrolling interest totaled $49,675, representing 1.0% of total investments, excluding noncontrolling interest, measured at fair value on a recurring basis. At December 31, 2011, Level 3 investments totaled $8,880 representing 0.2% 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 during the three and six month periods ending June 30, 2012 and 2011:

	Three Months Ended June 30, 2012
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	8,325		$	8,325
Purchases	—		500,000			500,000
Sales	—		(277		)	(277		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		21			21
Unrealized (losses)	—		(48,494		)	(48,494		)
Amortization	—		—			—
Transfers	—		(4,782		)	(4,782		)
Level 3 investments - End of period	$	—	$	454,793		$	454,793
Noncontrolling interest (a)	—		(405,118		)	(405,118		)
Level 3 investments excluding noncontrolling interest	$	—	$	49,675		$	49,675

	Three Months Ended June 30, 2011
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	10,713		$	10,713
Purchases	—		—			—
Sales	—		(1,247		)	(1,247		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		175			175
Unrealized gains	—		135			135
Amortization	—		—			—
Transfers	—		—			—
Level 3 investments - End of period	$	—	$	9,776		$	9,776

	Six Months Ended June 30, 2012
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	8,880		$	8,880
Purchases	—		500,000			500,000
Sales	—		(896		)	(896		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		48			48
Unrealized (losses)	—		(49,986		)	(49,986		)
Amortization	—		—			—
Transfers	—		(3,253		)	(3,253		)
Level 3 investments - End of period	$	—	$	454,793		$	454,793
Noncontrolling interest (a)	—		(405,118		)	(405,118		)
Level 3 investments excluding noncontrolling interest	$	—	$	49,675		$	49,675

	Six Months Ended June 30, 2011
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	12,892		$	12,892
Purchases	—		—			—
Sales	—		(3,809		)	(3,809		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		435			435
Unrealized gains	—		258			258
Amortization	—		—			—
Transfers	—		—			—
Level 3 investments - End of period	$	—	$	9,776		$	9,776

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

There have not been any transfers between Levels 1 and 2 during the three or six months ended June 30, 2012. During the three months ended June 30, 2012, there was a transfer of the private equity investment out of Level 3 “Other investments” to “Investments in affiliates.” Refer to Note 4 “Investments in affiliates.”

(b) Net investment income

Net investment income was derived from the following sources: 

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Fixed maturities and short-term investments	$	26,471		$	27,535		$	53,747		$	56,470
Cash and cash equivalents	1,449			687			3,766			3,268
Securities lending income	1			8			6			24
Total gross investment income	27,921			28,230			57,519			59,762
Investment expenses	(2,036		)	(1,736		)	(3,874		)	(3,293		)
Net investment income	$	25,885		$	26,494		$	53,645		$	56,469

(c) Fixed maturity and short-term investments

The following represents an analysis of net realized gains and the change in net unrealized (losses) gains on investments:

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains	$	9,415		$	13,032		$	19,423		$	28,797
Gross realized (losses)	(3,261		)	(1,480		)	(5,737		)	(10,866		)
Net realized gains on investments	6,154			11,552			13,686			17,931
Net unrealized gains on securities lending	—			11			37			41
Change in net unrealized (losses) gains on investments	(53,574		)	18,515			(32,940		)	5,657
Total net realized gains and change in net unrealized (losses) gains on investments	$	(47,420	)	$	30,078		$	(19,217	)	$	23,629
Noncontrolling interest (a)	44,882			—			44,882			—
Total net realized gains and change in net unrealized (losses) gains on investments excluding noncontrolling interest	$	(2,538	)	$	30,078		$	25,665		$	23,629

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

The amortized cost, gross unrealized gains and (losses) and estimated fair value of investments at June 30, 2012 were as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government and Government Agency	$	1,131,386		$	8,154	$	(116	)	$	1,139,424
Non-U.S. Government and Government Agency	326,229			7,204		(1,832		)	331,601
States, municipalities, political subdivision	42,149			713		(18		)	42,844
Agency residential mortgage-backed securities	433,732			15,953		(221		)	449,464
Non-Agency residential mortgage-backed securities	26,119			250		(3,300		)	23,069
U.S. corporate	1,249,755			23,395		(1,382		)	1,271,768
Non-U.S. corporate	551,236			8,778		(535		)	559,479
Bank loans	567,779			3,346		(5,108		)	566,017
Catastrophe bonds	36,250			485		(33		)	36,702
Asset-backed securities	351,129			1,892		(490		)	352,531
Commercial mortgage-backed securities	—			—		—			—
Total fixed maturities	4,715,764			70,170		(13,035		)	4,772,899
Total short-term investments	310,715			8		(20		)	310,703
Mutual funds	6,504			1,721		—			8,225
Fund of hedge funds	4,396			266		—			4,662
Hedge funds (a)	500,000			—		(49,869		)	450,131
Total other investments	510,900			1,987		(49,869		)	463,018
Total	$	5,537,379		$	72,165	$	(62,924	)	$	5,546,620
Noncontrolling interest (a)	$	(450,000	)	$	—	$	44,882		$	(405,118	)
Total investments excluding noncontrolling interest	$	5,087,379		$	72,165	$	(18,042	)	$	5,141,502

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

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
Fund of hedge funds	5,244		383		—			5,627
Private equity investment	3,253		—		—			3,253
Mutual funds	6,505		1,402		—			7,907
Total other investments	15,002		1,785		—			16,787
Total	$	5,155,006	$	75,230	$	(39,113	)	$	5,191,123

The following table sets forth certain information regarding the investment ratings of the Company’s fixed maturities portfolio as at June 30, 2012 and December 31, 2011. 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.

	June 30, 2012				December 31, 2011
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
AAA	$	745,676	15.6	%	$	882,912	18.0	%
AA	2,025,848		42.5	%	2,077,981		42.5	%
A	1,019,888		21.4	%	1,078,793		22.0	%
BBB	378,502		7.9	%	345,091		7.1	%
Investment grade	4,169,914		87.4	%	4,384,777		89.6	%
BB	315,768		6.6	%	254,409		5.2	%
B	263,900		5.5	%	231,420		4.7	%
CCC	8,885		0.2	%	12,578		0.3	%
CC	3,116		0.1	%	4,605		0.1	%
D/NR	11,316		0.2	%	6,356		0.1	%
Non-Investment grade	602,985		12.6	%	509,368		10.4	%
Total Fixed Maturities	$	4,772,899	100.0	%	$	4,894,145	100.0	%

The amortized cost and estimated fair value amounts for fixed maturity securities held at June 30, 2012 and December 31, 2011 are shown below 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.

	June 30, 2012				December 31, 2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	452,460	$	455,506	$	520,631	$	523,107
Due after one year through five years	3,049,223		3,088,234		3,160,647		3,186,711
Due after five years through ten years	398,769		398,975		350,459		346,654
Due after ten years	4,332		5,120		8,184		8,211
	3,904,784		3,947,835		4,039,921		4,064,683
Asset-backed and mortgage-backed securities	810,980		825,064		819,784		829,462
Total	$	4,715,764	$	4,772,899	$	4,859,705	$	4,894,145

The Company has a four-year, $525,000 secured letter of credit facility provided by a syndicate of commercial banks (the “Four Year Facility”). At June 30, 2012, approximately $322,126 (December 31, 2011: $nil) of letters of credit were issued and outstanding under this facility for which $435,868 of investments were pledged as collateral (December 31, 2011: $nil). 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 June 30, 2012, $25,000 (December 31, 2011: $25,000) of letters of credit were issued and outstanding under the Talbot FAL Facility for which $43,835 of investments were pledged as collateral (December 31, 2011: $44,623). In addition, $2,100,431 of investments were held in trust at June 30, 2012 (December 31, 2011: $2,129,570). Of those, $1,778,366 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, 2011: $1,686,586). In 2009, the Company entered into a $500,000 secured letter of credit facility provided by Citibank Europe plc (the "Secured Bi-Lateral Letter of Credit Facility"). At June 30, 2012 approximately $80,134 (December 31, 2011: $nil) letters of credit were issued and outstanding under this facility for which $110,428 of investments were pledged as collateral (December 31, 2011: $nil).

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 June 30, 2012, the IPC Bi-Lateral Facility had $51,479 (December 31, 2011: $57,146) letters of credit issued and outstanding for which $107,984 (December 31, 2011: $105,428) 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 June 30, 2012, the Company had $4,039 (December 31, 2011: $8,286) in securities on loan. During the three months ended June 30, 2012, the Company recorded a $nil unrealized gain on this collateral on its Statements of Comprehensive Income (Loss) (June 30, 2011: unrealized gain $11). During the six months endedJune 30, 2012, the Company recorded a $37 unrealized gain on this collateral on its Statements of Comprehensive Income (Loss) (June 30, 2011: unrealized gain $41).

Securities lending collateral reinvested includes corporate floating rate securities and overnight repos with an average reset period of 2.9 days (December 31, 2011: 3.9 days). As at June 30, 2012, 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	$	—	$	148	$	—	$	148
Short-term investments	3,308		—		—		3,308
Total	$	3,308	$	148	$	—	$	3,456

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

The following table sets forth certain information regarding the investment ratings of the Company’s securities lending collateral reinvested as at June 30, 2012 and December 31, 2011. 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.

	June 30, 2012				December 31, 2011
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
NR	148		4.3	%	255		3.3	%
	148		4.3	%	255		3.3	%
NR- Short-term investments (a)	3,308		95.7	%	7,481		96.7	%
Total	$	3,456	100.0	%	$	7,736	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 June 30, 2012 and December 31, 2011 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.

	June 30, 2012				December 31, 2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,525	$	3,308	$	7,462	$	7,481
Due after one year through five years	620		148		1,000		255
Total	$	4,145	$	3,456	$	8,462	$	7,736

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Debt and financing arrangements (Schedule of finance structure) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Schedule of financing structure and finance expenses
Debt instrument and line of credit facility amount committed, total	$ 2,140,000		$ 1,605,000
Debt instrument and line of credit facility outstanding, total	1,018,539		955,125
Long-term Debt, Gross	536,836		536,782
Syndicated unsecured letter of credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	400,000		340,000
Credit facility, outstanding	0	[1]	0	[1]
Four-year unsecured credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, outstanding	0	[1]	0	[1]
Four-year syndicated secured credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	525,000
Credit facility, outstanding	322,126	[1]	0	[1]
Bi-lateral secured facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	500,000
Credit facility, outstanding	80,134	[1]	0
Talbot Fal Facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	25,000	[2]	25,000	[2]
Credit facility, outstanding	25,000	[1],[2]	25,000	[1],[2]
PaCRe Senior secured letter of credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	10,000
Credit facility, outstanding	0	[1]
Bilateral unsecured letter of credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment			60,000
Credit facility, outstanding			0	[1]
Secured letter of credit facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment			500,000
Credit facility, outstanding			333,179	[1]
IPC Bi Lateral Facility [Member]
Schedule of financing structure and finance expenses
Credit facility, commitment	80,000		80,000
Credit facility, outstanding	51,479	[1]	57,146	[1]
2006 Junior Subordinated Deferrable Debentures [Member]
Schedule of financing structure and finance expenses
Debt instrument, commitment	150,000		150,000
Debt Instrument Utilization Of Commitment	150,000	[1]	150,000	[1]
Long-term Debt, Gross	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 Utilization Of Commitment	139,800	[1]	139,800	[1]
Long-term Debt, Gross	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 Utilization Of Commitment	250,000	[1]	250,000	[1]
Long-term Debt, Gross	$ 247,036		$ 246,982

[1] Indicates utilization of commitment amount, not drawn borrowings.

[2] 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.

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Investments (Fair value hierarchy of securities lending) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	$ 3,456	$ 7,736
Level 1 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	3,308	7,481
Level 2 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	148	255
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	148	255
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	148	255
Corporate [Member] | Level 3 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	0	0
Short-term investments [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	3,308
Short-term investments [Member] | Level 1 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	3,308
Short-term investments [Member] | Level 2 [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral reinvested, estimated fair value	0
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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Reinsurance (Tables)

6 Months Ended

Jun. 30, 2012

Reinsurance Disclosures [Abstract]

Reinsurance recoverables by reinsurer

Reinsurance recoverables by reinsurer are as follows:

	June 30, 2012				December 31, 2011
	Reinsurance Recoverable		% of Total		Reinsurance Recoverable		% of Total
Top 10 reinsurers	$	291,970	72.3	%	$	323,315	69.8	%
Other reinsurers’ balances > $1 million	104,288		25.8	%	132,417		28.6	%
Other reinsurers’ balances < $1 million	7,621		1.9	%	7,248		1.6	%
Total	$	403,879	100.0	%	$	462,980	100.0	%

	June 30, 2012
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	75,022	25.8	%
Everest Re	A+	42,727		14.6	%
Allianz	AA-	39,336		13.5	%
Hannover Re	AA-	38,960		13.3	%
Transatlantic Re	A+	20,975		7.2	%
Lancashire Insurance Company Ltd	A	20,000		6.9	%
Swiss Re	AA-	16,200		5.5	%
Munich Re	AA-	13,722		4.7	%
Tokio Millenium Re Ltd	AA-	12,940		4.4	%
Platinum Underwriters	A-	12,088		4.1	%
Total		$	291,970	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 Millenium Re Ltd	AA-	20,432		6.3	%
Fully Collateralized	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	%

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Reserve for losses and loss expenses (Tables)

6 Months Ended

Jun. 30, 2012

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Reserve for losses and loss expenses

The following table represents an analysis of paid and unpaid losses and loss expenses incurred and a reconciliation of the beginning and ending unpaid losses and loss expenses for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Reserve for losses and loss expenses, beginning of period	$	2,649,610		$	2,534,415		$	2,631,143		$	2,035,973
Losses and loss expenses recoverable	(351,292		)	(453,701		)	(372,485		)	(283,134		)
Net reserves for losses and loss expenses, beginning of period	2,298,318			2,080,714			2,258,658			1,752,839
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year	191,252			233,012			453,665			735,726
Prior years	(37,560		)	(25,705		)	(67,984		)	(52,221		)
Total incurred losses and loss expenses	153,692			207,307			385,681			683,505
Total net paid losses	(220,529		)	(121,046		)	(424,752		)	(284,303		)
Foreign exchange	(11,666		)	13,580			228			28,514
Net reserve for losses and loss expenses, end of period	2,219,815			2,180,555			2,219,815			2,180,555
Losses and loss expenses recoverable	371,484			439,805			371,484			439,805
Reserve for losses and loss expenses, end of period	$	2,591,299		$	2,620,360		$	2,591,299		$	2,620,360

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Share capital (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended		3 Months Ended		6 Months Ended
	Jun. 05, 2012	Feb. 09, 2012	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Summary of common shares issued and outstanding
Common shares issued, beginning balance					134,503,065	132,838,111
Options exercised					171,100	455,033
Warrants exercised				34,340	0	34,340
Common shares issued, ending balance			135,374,491	133,795,913	135,374,491	133,795,913
Shares repurchased, ending balance			(41,963,429)	(35,031,985)	(41,963,429)	(35,031,985)
Common shares outstanding, ending balance			93,411,062	98,763,928	93,411,062	98,763,928	99,471,080
Share repurchases
Remaining share repurchase authorization amount					$ 160,751
Share Repurchase Authorization Price Per Share	$ 32.00
Treasury Stock, Value, Acquired, Cost Method	204,284
Treasury Stock, Shares, Acquired	6,383,884
Share Capital (Textuals) [Abstract]
Common shares, shares authorized			571,428,571		571,428,571		571,428,571
Common shares, par value			$ 0.175		$ 0.175		$ 0.175
Restriction on percentage of voting power					9.09%
Number of warrants exercised during period				72,598		72,598
Deferred share units, adjustment factor					100.00%
Total outstanding deferred share units			4,927		4,927		4,850
Date of dividend declaration		Feb. 09, 2012			May 02, 2012
Cash dividends declared per share			$ 0.25	$ 0.25	$ 0.50	$ 0.50
Common Share Equivalents [Member]
Share Capital (Textuals) [Abstract]
Cash dividends declared per share		0.25			$ 0.25
Common Stock [Member]
Share repurchases
Share repurchase program, cumulative shares repurchased					41,963,429
Shares repurchased, cumulative					$ 1,168,422
Share Capital (Textuals) [Abstract]
Cash dividends declared per share		0.25	$ 0.25	$ 0.25
Restricted share awards [Member]
Summary of common shares issued and outstanding
Vested, net of shares withheld					687,990	458,933
Restricted share units [Member]
Summary of common shares issued and outstanding
Vested, net of shares withheld					12,336	9,496

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Investments (Securities lending collateral by investment rating) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Securities Financing Transaction [Line Items]
Securities lending collateral	$ 3,456		$ 7,736
Percentage of total	100.00%		100.00%
Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	148		255
Percentage of total	4.30%		3.30%
Short-term investments [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	3,308
NR [Member] | Rated Securities [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	148		255
Percentage of total	4.30%		3.30%
NR [Member] | Short-term investments [Member]
Securities Financing Transaction [Line Items]
Securities lending collateral	$ 3,308	[1]	$ 7,481	[1]
Percentage of total	95.70%	[1]	96.70%	[1]

[1] This amount relates to certain short-term investments with short original maturities which are generally not rated.

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Share capital (Tables)

6 Months Ended

Jun. 30, 2012

Stockholders' Equity Note [Abstract]

Summary of common shares issued and outstanding

The following table is a summary of the common shares issued and outstanding:

	Common Shares
Common shares issued, December 31, 2011	134,503,065
Restricted share awards vested, net of shares withheld	687,990
Restricted share units vested, net of shares withheld	12,336
Options exercised	171,100
Warrants exercised	—
Common shares issued, June 30, 2012	135,374,491
Shares repurchased	(41,963,429	)
Common shares outstanding, June 30, 2012	93,411,062

	Common Shares
Common shares issued, December 31, 2010	132,838,111
Restricted share awards vested, net of shares withheld	458,933
Restricted share units vested, net of shares withheld	9,496
Options exercised	455,033
Warrants exercised	34,340
Common shares issued, June 30, 2011	133,795,913
Shares repurchased	(35,031,985	)
Common shares outstanding, June 30, 2011	98,763,928

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Stock plans (Tables)

6 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Options, weighted average assumptions

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 has not granted any stock options awards since September 4, 2009.

Options, activity during the period

Activity with respect to options for the six months ended June 30, 2012 was as follows:

	Options		Weighted Average Grant Date Fair Value		Weighted Average Grant Date Exercise Price
Options outstanding, December 31, 2011	2,263,012		$	6.69	$	20.12
Options granted	—		—		—
Options exercised	(171,100	)	7.52		17.99
Options forfeited	—		—		—
Options outstanding, June 30, 2012	2,091,912		$	6.63	$	20.29
Options exercisable at June 30, 2012	2,091,912		$	6.63	$	20.29

Activity with respect to options for the six months ended June 30, 2011was 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	(455,033	)	6.96		20.56
Options forfeited	(1,850	)	10.30		20.39
Options outstanding, June 30, 2011	2,266,801		$	6.70	$	20.12
Options exercisable at June 30, 2011	2,178,828		$	6.62	$	20.02

Other awards, activity during the period

Activity with respect to unvested performance share awards for the six months ended June 30, 2012 was as follows:

	Performance Share Awards		Weighted Average Grant Date Fair Value
Performance share awards outstanding, December 31, 2011	279,019		$	30.77
Performance share awards granted	41,128		31.38
Performance share awards vested	—		—
Performance share awards cancelled	(99,302	)	28.70
Performance share awards outstanding, June 30, 2012	220,845		$	31.81

Activity with respect to unvested performance share awards for the six months ended June 30, 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, June 30, 2011	279,019	$	30.77

Activity with respect to unvested restricted share awards for the six months ended June 30, 2012 was as follows:

	Restricted Share Awards		Weighted Average Grant Date Fair Value
Restricted share awards outstanding, December 31, 2011	3,003,547		$	25.77
Restricted share awards granted	900,725		31.38
Restricted share awards vested	(803,917	)	25.93
Restricted share awards forfeited	(30,801	)	28.10
Restricted share awards outstanding, June 30, 2012	3,069,554		$	27.35

Activity with respect to unvested restricted share awards for the six months ended June 30, 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	590,367		32.16
Restricted share awards vested	(553,615	)	25.46
Restricted share awards forfeited	(13,198	)	27.28
Restricted share awards outstanding, June 30, 2011	3,137,593		$	25.60

Activity with respect to unvested restricted share units for the six months ended June 30, 2012 was as follows:

	Restricted Share Units		Weighted Average Grant Date Fair Value
Restricted share units outstanding, December 31, 2011	53,312		$	27.60
Restricted share units granted	13,625		31.38
Restricted share units vested	(18,175	)	26.58
Restricted share units issued in lieu of cash dividends	789		28.01
Restricted share units forfeited	(1,150	)	30.07
Restricted share units outstanding, June 30, 2012	48,401		$	29.00

Activity with respect to unvested restricted share units for the six months ended June 30, 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	296		25.45
Restricted share units forfeited	—		—
Restricted share units outstanding, June 30, 2011	52,393		$	27.60

Total share compensation expenses

The breakdown of share compensation expenses by award type was as follows:

	Three Months Ended				Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012			June 30, 2011
Options	$	7	$	179	$	142		$	1,426
Restricted share awards	6,176		5,792		12,116			14,948
Restricted share units	111		97		231			211
Performance share awards	506		528		(251		)	872
Employee seller shares	—		1,032		—			2,220
Total	$	6,800	$	7,628	$	12,238		$	19,677

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Recent accounting pronouncements

6 Months Ended

Jun. 30, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent accounting pronouncements

Recent accounting pronouncements

(a) Adoption of New Accounting Standards

Fair Value Measurement and Disclosures

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. Effective January 1, 2012, the Company prospectively adopted this amended guidance. The adoption of this guidance did not impact our results of operations, financial condition or liquidity. The adoption of this guidance did not have a significant impact on the current disclosures included in Note 3 "Investments".

Presentation of Comprehensive Income

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. Effective January 1, 2012, the Company retrospectively adopted this guidance. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

(b) Recently Issued Accounting Standards Not Yet Adopted

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. 

In July 2012, the FASB issued Accounting Standards Update No. 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" ("ASU 2012-02"). The objective of ASU 2012-02 is to simplify how entities test intangibles for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment described in ASC Topic 350 "Intangibles - Goodwill and Other - General Intangibles Other than Goodwill." The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued. The Company has evaluated the impact of this guidance and has concluded that it will not have a material impact on the Company's consolidated financial statements.

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Debt and financing arrangements (Tables)

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Schedule of financing structure

The financing structure at June 30, 2012 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		247,036
$400,000 syndicated unsecured letter of credit facility	400,000		—		—
$525,000 syndicated secured letter of credit facility	525,000		322,126		—
$500,000 bi-lateral secured letter of credit facility	500,000		80,134		—
Talbot FAL Facility (b)	25,000		25,000		—
PaCRe senior secured letter of credit facility	10,000		—		—
IPC Bi-Lateral Facility	80,000		51,479		—
Total	$	2,140,000	$	1,018,539	$	536,836

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

Components of finance expenses

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 and the costs of FAL as follows:

	Three Months Ended				Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
2006 Junior Subordinated Deferrable Debentures	$	1,552	$	3,228	$	3,101	$	6,816
2007 Junior Subordinated Deferrable Debentures	2,832		3,028		5,861		6,057
2010 Senior Notes due 2040	5,598		5,597		11,195		11,194
Credit facilities	3,605		1,589		9,678		3,313
AlphaCat Re 2011 preferred dividend (a)	—		2,919		—		2,919
Talbot FAL Facility	32		—		63		63
Talbot other interest	87		—		87		—
Total	$	13,706	$	16,361	$	29,985	$	30,362

Future expected payments of principal

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

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

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Investments (Gross unrealized gains and losses on fixed maturities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	$ 4,715,764		$ 4,859,705
Short-term investments, at amortized cost	310,715		280,299
Other investments, at amortized cost	510,900		15,002
Amortized cost	5,537,379		5,155,006
Fixed maturities, gross unrealized gains	70,170		73,444
Short term investments, gross unrealized gains	8		1
Other investments, gross unrealized gains	1,987		1,785
Gross unrealized gains	72,165		75,230
Fixed maturities, gross unrealized losses	(13,035)		(39,004)
Short term investments, gross unrealized losses	(20)		(109)
Other investments, gross unrealized losses	(49,869)
Gross unrealized losses	(62,924)		(39,113)
Total fixed maturities	4,772,899		4,894,145
Short-term investments	310,703		280,191
Other investments	463,018		16,787
Estimated fair value	5,546,620		5,191,123
Noncontrolling interest, cost or amortized cost	(450,000)	[1]
Noncontrolling interest share of unrealized losses	44,882	[1]
Noncontrolling interest	(405,118)	[1]
Total investments excluding non-controlling interest, cost or amortized cost	5,087,379
Total investments excluding non-controlling interest, unrealized gains	72,165
Total investments excluding non-controlling interest, unrealized losses	18,042
Total investments excluding noncontrolling interest	5,141,502
U.S. Government and Government Agency [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	1,131,386		1,170,810
Fixed maturities, gross unrealized gains	8,154		11,630
Fixed maturities, gross unrealized losses	(116)		(47)
Non-US Government and Government Agency [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	326,229		446,258
Fixed maturities, gross unrealized gains	7,204		9,173
Fixed maturities, gross unrealized losses	(1,832)		(6,073)
States, municipalities, political subdivision [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	42,149		25,715
Fixed maturities, gross unrealized gains	713		586
Fixed maturities, gross unrealized losses	(18)		(10)
Agency residential mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	433,732		451,751
Fixed maturities, gross unrealized gains	15,953		16,622
Fixed maturities, gross unrealized losses	(221)		(319)
Non-Agency residential mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	26,119		39,134
Fixed maturities, gross unrealized gains	250		143
Fixed maturities, gross unrealized losses	(3,300)		(6,571)
U.S. corporate [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	1,249,755		1,314,375
Fixed maturities, gross unrealized gains	23,395		24,932
Fixed maturities, gross unrealized losses	(1,382)		(9,549)
Non-U.S. corporate [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	551,236		577,743
Fixed maturities, gross unrealized gains	8,778		6,320
Fixed maturities, gross unrealized losses	(535)		(4,388)
Bank loans [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	567,779		475,770
Fixed maturities, gross unrealized gains	3,346		2,435
Fixed maturities, gross unrealized losses	(5,108)		(10,949)
Catastrophe bonds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	36,250		29,250
Fixed maturities, gross unrealized gains	485		702
Fixed maturities, gross unrealized losses	(33)		0
Asset-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	351,129		328,497
Fixed maturities, gross unrealized gains	1,892		900
Fixed maturities, gross unrealized losses	(490)		(1,098)
Commercial mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Fixed maturities, at amortized cost	0		402
Fixed maturities, gross unrealized gains	0		1
Fixed maturities, gross unrealized losses	0		0
Mutual Funds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments, at amortized cost	6,504		6,505
Other investments, gross unrealized gains	1,721		1,402
Other investments, gross unrealized losses	0		0
Other investments	8,225		7,907
Fund of hedge funds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments, at amortized cost	4,396		5,244
Other investments, gross unrealized gains	266		383
Other investments, gross unrealized losses	0		0
Other investments	4,662		5,627
Hedge Funds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments, at amortized cost	500,000	[1]
Other investments, gross unrealized gains	0	[1]
Other investments, gross unrealized losses	(49,869)	[1]
Other investments	450,131	[1]
Private Equity Funds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments, at amortized cost			3,253
Other investments, gross unrealized gains			0
Other investments, gross unrealized losses			0
Other investments			3,253	[2]
Other Investments Disclosure [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments, gross unrealized losses			0
Recurring [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Short-term investments			280,191
Noncontrolling interest	(405,118)	[1]
Total investments excluding noncontrolling interest	5,141,502
Recurring [Member] | U.S. Government and Government Agency [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	1,139,424		1,182,393
Recurring [Member] | Non-US Government and Government Agency [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	331,601		449,358
Recurring [Member] | States, municipalities, political subdivision [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	42,844		26,291
Recurring [Member] | Agency residential mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	449,464		468,054
Recurring [Member] | Non-Agency residential mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	23,069		32,706
Recurring [Member] | U.S. corporate [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	1,271,768		1,329,758
Recurring [Member] | Non-U.S. corporate [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	559,479		579,675
Recurring [Member] | Bank loans [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	566,017		467,256
Recurring [Member] | Catastrophe bonds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	36,702		29,952
Recurring [Member] | Asset-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	352,531		328,299
Recurring [Member] | Commercial mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Total fixed maturities	0		403
Recurring [Member] | Mutual Funds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments	8,225		7,907
Recurring [Member] | Fund of hedge funds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments	4,662		5,627
Recurring [Member] | Hedge Funds [Member]
Amortized cost, gross unrealized gains and (losses) and estimated fair value of investments
Other investments	$ 450,131	[1]

[1] The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

[2] As at December 31, 2011 and March 31, 2012, this investment was included in "Other investments" as a level 3 investment in the fair value hierarchy, hence the change in fair value was included in net unrealized (losses) gains on investments.

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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	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
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 derivative	$ 1,700	$ 897	$ (1,618)	$ (2,925)
Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged	(1,700)	(897)	1,618	2,925
Amount of gain (loss) recognized in income on derivative (ineffective portion)	$ 0	$ 0	$ 0	$ 0

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Segment information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012 subsidiaries segments		Jun. 30, 2011		Dec. 31, 2011
Segment Reporting Information [Line Items]
Number Of Wholly Owned Subsidiaries					2
Number Of Operating Segments					3
Underwriting income
Gross premiums written	$ 627,089		$ 605,387		$ 1,464,378		$ 1,455,283
Reinsurance premiums ceded	(119,052)		(132,346)		(226,104)		(242,166)
Net premiums written	508,037		473,041		1,238,274		1,213,117
Change in unearned premiums	(60,410)		(47,401)		(339,448)		(357,944)
Net premiums earned	447,627		425,640		898,826		855,173
Underwriting deductions
Losses and loss expenses	153,692		207,307		385,681		683,505
Policy acquisition costs	76,129		78,230		154,261		155,526
General and administrative expenses	61,635		60,841		128,010		109,318
Share compensation expenses	6,800		7,628		12,238		19,677
Total underwriting deductions	298,256		354,006		680,190		968,026
Underwriting income (loss)	149,371		71,634		218,636		(112,853)
Net investment income	25,885		26,494		53,645		56,469
Other income	5,994		595		14,885		2,201
Finance expenses	(13,706)		(16,361)		(29,985)		(30,362)
Operating income (loss) before taxes	167,544		82,362		257,181		(84,545)
Tax (expense) benefit	(404)		29		(543)		1,488
Equity earnings in non-consolidated affiliate	3,592		0		6,959		0
Net operating income (loss)	170,732		82,391		263,597		(83,057)
Net realized gains on investments	6,154		11,552		13,686		17,931
Net unrealized (losses) gains on investments	(53,574)		18,526		(32,903)		5,698
(Loss) from investment affiliate	(398)		0		(398)		0
Foreign exchange (losses) gains	(652)		(1,991)		2,514		(2,458)
Net income (loss)	122,262		110,478		246,496		(61,886)
Net loss (income) attributable to noncontrolling interest	45,360		(594)		45,360		(594)
Net income (loss) available (attributable) to Validus	167,622		109,884		291,856		(62,480)
Selected ratios:
Net premiums written / Gross premiums written	81.00%		78.10%		84.60%		83.40%
Losses and loss expenses	34.30%		48.70%		42.90%		79.90%
Policy acquisition costs	17.00%		18.40%		17.20%		18.20%
General and administrative expenses	15.30%	[1]	16.10%	[1]	15.60%	[1]	15.10%	[1]
Expense ratio	32.30%		34.50%		32.80%		33.30%
Combined ratio	66.60%		83.20%		75.70%		113.20%
Total assets	8,499,568		8,259,788		8,499,568		8,259,788		7,618,471
Validus Re Segment [Member]
Underwriting income
Gross premiums written	340,850		290,691		907,716		894,779
Reinsurance premiums ceded	(97,077)		(98,218)		(127,078)		(145,023)
Net premiums written	243,773		192,473		780,638		749,756
Change in unearned premiums	(1,087)		31,814		(284,943)		(276,526)
Net premiums earned	242,686		224,287		495,695		473,230
Underwriting deductions
Losses and loss expenses	53,190		94,035		177,396		404,579
Policy acquisition costs	37,084		35,013		75,874		74,763
General and administrative expenses	14,142		15,059		31,394		25,589
Share compensation expenses	1,966		1,823		3,838		4,928
Total underwriting deductions	106,382		145,930		288,502		509,859
Underwriting income (loss)	136,304		78,357		207,193		(36,629)
Net investment income	21,694		21,662		45,271		46,094
Other income	467		745		2,686		2,036
Finance expenses	(2,145)		(1,579)		(5,839)		(3,292)
Operating income (loss) before taxes	156,320		99,185		249,311		8,209
Tax (expense) benefit	(2)		(4)		(9)		(6)
Equity earnings in non-consolidated affiliate	0				0
Net operating income (loss)	156,318		99,181		249,302		8,203
Net realized gains on investments	4,823		9,014		11,065		12,915
Net unrealized (losses) gains on investments	(3,697)		15,377		16,168		7,701
(Loss) from investment affiliate	(398)				(398)
Foreign exchange (losses) gains	2,715		(5,266)		2,453		(9,536)
Net income (loss)	159,761		118,306		278,590		19,283
Net loss (income) attributable to noncontrolling interest	0		0		0		0
Net income (loss) available (attributable) to Validus	159,761		118,306		278,590		19,283
Selected ratios:
Net premiums written / Gross premiums written	71.50%		66.20%		86.00%		83.80%
Losses and loss expenses	21.90%		41.90%		35.80%		85.50%
Policy acquisition costs	15.30%		15.60%		15.30%		15.80%
General and administrative expenses	6.60%	[1]	7.50%	[1]	7.10%	[1]	6.40%	[1]
Expense ratio	21.90%		23.10%		22.40%		22.20%
Combined ratio	43.80%		65.00%		58.20%		107.70%
Total assets	4,846,607		5,003,271		4,846,607		5,003,271
AlphaCat Segment [Member]
Underwriting income
Gross premiums written	15,155		50,960		18,673		58,110
Reinsurance premiums ceded	0		0		0		0
Net premiums written	15,155		50,960		18,673		58,110
Change in unearned premiums	(11,568)		(42,569)		(12,423)		(46,353)
Net premiums earned	3,587		8,391		6,250		11,757
Underwriting deductions
Losses and loss expenses	0		0		0		0
Policy acquisition costs	382		973		638		1,289
General and administrative expenses	2,402		1,061		3,434		1,955
Share compensation expenses	59		21		111		48
Total underwriting deductions	2,843		2,055		4,183		3,292
Underwriting income (loss)	744		6,336		2,067		8,465
Net investment income	820		727		1,479		1,946
Other income	6,589		2,532		14,563		3,173
Finance expenses	(437)		(2,923)		(439)		(2,923)
Operating income (loss) before taxes	7,716		6,672		17,670		10,661
Tax (expense) benefit	0		0		0		0
Equity earnings in non-consolidated affiliate	3,592				6,959
Net operating income (loss)	11,308		6,672		24,629		10,661
Net realized gains on investments	(84)		538		(84)		556
Net unrealized (losses) gains on investments	(49,519)		(820)		(50,116)		(1,659)
(Loss) from investment affiliate	0				0
Foreign exchange (losses) gains	26		(71)		17		(161)
Net income (loss)	(38,269)		6,319		(25,554)		9,397
Net loss (income) attributable to noncontrolling interest	45,360		(594)		45,360		(594)
Net income (loss) available (attributable) to Validus	7,091		5,725		19,806		8,803
Selected ratios:
Net premiums written / Gross premiums written	100.00%		100.00%		100.00%		100.00%
Losses and loss expenses	0.00%		0.00%		0.00%		0.00%
Policy acquisition costs	10.60%		11.60%		10.20%		11.00%
General and administrative expenses	68.60%	[1]	12.90%	[1]	56.70%	[1]	17.00%	[1]
Expense ratio	79.20%		24.50%		66.90%		28.00%
Combined ratio	79.20%		24.50%		66.90%		28.00%
Total assets	696,236		408,809		696,236		408,809
Legal Entity Adjustments
Underwriting income
Gross premiums written	0		0		0		0
Reinsurance premiums ceded	0		0		0		0
Net premiums written	0		0		0		0
Change in unearned premiums	0		0		0		0
Net premiums earned	0				0		0
Underwriting deductions
Losses and loss expenses	0		0		0		0
Policy acquisition costs	(25)		(217)		(25)		(217)
General and administrative expenses	1,866		1,813		2,315		3,160
Share compensation expenses	159		174		311		502
Total underwriting deductions	2,000		1,770		2,601		3,445
Underwriting income (loss)	(2,000)		(1,770)		(2,601)		(3,445)
Net investment income	0		0		0		0
Other income	2,018		(308)		2,908		(78)
Finance expenses	0		0		0		0
Operating income (loss) before taxes	18		(2,078)		307		(3,523)
Tax (expense) benefit	0		0		0		0
Equity earnings in non-consolidated affiliate	0				0
Net operating income (loss)	18		(2,078)		307		(3,523)
Net realized gains on investments	0		0		0		0
Net unrealized (losses) gains on investments	0		0		0		0
(Loss) from investment affiliate	0				0
Foreign exchange (losses) gains	0		0		0		0
Net income (loss)	18		(2,078)		307		(3,523)
Net loss (income) attributable to noncontrolling interest	0		0		0		0
Net income (loss) available (attributable) to Validus	18		(2,078)		307		(3,523)
Validus Re Legal Entity [Member]
Underwriting income
Gross premiums written	356,005		341,651		926,389		952,889
Reinsurance premiums ceded	(97,077)		(98,218)		(127,078)		(145,023)
Net premiums written	258,928		243,433		799,311		807,866
Change in unearned premiums	(12,655)		(10,755)		(297,366)		(322,879)
Net premiums earned	246,273		232,678		501,945		484,987
Underwriting deductions
Losses and loss expenses	53,190		94,035		177,396		404,579
Policy acquisition costs	37,441		35,769		76,487		75,835
General and administrative expenses	18,410		17,933		37,143		30,704
Share compensation expenses	2,184		2,018		4,260		5,478
Total underwriting deductions	111,225		149,755		295,286		516,596
Underwriting income (loss)	135,048		82,923		206,659		(31,609)
Net investment income	22,514		22,389		46,750		48,040
Other income	9,074		2,969		20,157		5,131
Finance expenses	(2,582)		(4,502)		(6,278)		(6,215)
Operating income (loss) before taxes	164,054		103,779		267,288		15,347
Tax (expense) benefit	(2)		(4)		(9)		(6)
Equity earnings in non-consolidated affiliate	3,592				6,959
Net operating income (loss)	167,644		103,775		274,238		15,341
Net realized gains on investments	4,739		9,552		10,981		13,471
Net unrealized (losses) gains on investments	(53,216)		14,557		(33,948)		6,042
(Loss) from investment affiliate	(398)				(398)
Foreign exchange (losses) gains	2,741		(5,337)		2,470		(9,697)
Net income (loss)	121,510		122,547		253,343		25,157
Net loss (income) attributable to noncontrolling interest	45,360		(594)		45,360		(594)
Net income (loss) available (attributable) to Validus	166,870		121,953		298,703		24,563
Talbot [Member]
Underwriting income
Gross premiums written	283,528		276,886		576,781		539,943
Reinsurance premiums ceded	(34,419)		(47,278)		(137,818)		(134,692)
Net premiums written	249,109		229,608		438,963		405,251
Change in unearned premiums	(47,755)		(36,646)		(42,082)		(35,065)
Net premiums earned	201,354		192,962		396,881		370,186
Underwriting deductions
Losses and loss expenses	100,502		113,272		208,285		278,926
Policy acquisition costs	41,803		42,307		80,541		79,523
General and administrative expenses	30,957		33,345		64,305		60,651
Share compensation expenses	1,799		2,026		3,147		4,745
Total underwriting deductions	175,061		190,950		356,278		423,845
Underwriting income (loss)	26,293		2,012		40,603		(53,659)
Net investment income	5,425		6,372		11,215		12,962
Other income	327		594		1,353		2,195
Finance expenses	(120)		0		(151)		(63)
Operating income (loss) before taxes	31,925		8,978		53,020		(38,565)
Tax (expense) benefit	(419)		(208)		(551)		1,585
Equity earnings in non-consolidated affiliate	0				0
Net operating income (loss)	31,506		8,770		52,469		(36,980)
Net realized gains on investments	1,415		2,000		2,705		4,460
Net unrealized (losses) gains on investments	(358)		3,969		1,045		(344)
(Loss) from investment affiliate	0				0
Foreign exchange (losses) gains	(3,435)		3,410		188		7,311
Net income (loss)	29,128		18,149		56,407		(25,553)
Net loss (income) attributable to noncontrolling interest	0		0		0		0
Net income (loss) available (attributable) to Validus	29,128		18,149		56,407		(25,553)
Selected ratios:
Net premiums written / Gross premiums written	87.90%		82.90%		76.10%		75.10%
Losses and loss expenses	49.90%		58.70%		52.50%		75.30%
Policy acquisition costs	20.80%		21.90%		20.30%		21.50%
General and administrative expenses	16.30%	[1]	18.30%	[1]	17.00%	[1]	17.70%	[1]
Expense ratio	37.10%		40.20%		37.30%		39.20%
Combined ratio	87.00%		98.90%		89.80%		114.50%
Total assets	2,931,430		2,759,850		2,931,430		2,759,850
Corporate & Eliminations [Member]
Underwriting income
Gross premiums written	(12,444)		(13,150)		(38,792)		(37,549)
Reinsurance premiums ceded	12,444		13,150		38,792		37,549
Net premiums written	0		0		0		0
Change in unearned premiums	0		0		0		0
Net premiums earned	0				0		0
Underwriting deductions
Losses and loss expenses	0		0		0		0
Policy acquisition costs	(3,115)		154		(2,767)		168
General and administrative expenses	12,268		9,563		26,562		17,963
Share compensation expenses	2,817		3,584		4,831		9,454
Total underwriting deductions	11,970		13,301		28,626		27,585
Underwriting income (loss)	(11,970)		(13,301)		(28,626)		(27,585)
Net investment income	(2,054)		(2,267)		(4,320)		(4,533)
Other income	(3,407)		(2,968)		(6,625)		(5,125)
Finance expenses	(11,004)		(11,859)		(23,556)		(24,084)
Operating income (loss) before taxes	(28,435)		(30,395)		(63,127)		(61,327)
Tax (expense) benefit	17		241		17		(91)
Equity earnings in non-consolidated affiliate	0				0
Net operating income (loss)	(28,418)		(30,154)		(63,110)		(61,418)
Net realized gains on investments	0		0		0		0
Net unrealized (losses) gains on investments	0		0		0		0
(Loss) from investment affiliate	0				0
Foreign exchange (losses) gains	42		(64)		(144)		(72)
Net income (loss)	(28,376)		(30,218)		(63,254)		(61,490)
Net loss (income) attributable to noncontrolling interest	0		0		0		0
Net income (loss) available (attributable) to Validus	(28,376)		(30,218)		(63,254)		(61,490)
Selected ratios:
Total assets	$ 25,295		$ 87,858		$ 25,295		$ 87,858

[1] Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Assets
Fixed maturities, at fair value (amortized cost: 2012 - $4,951,881; 2011 - $4,859,705)	$ 4,772,899	$ 4,894,145
Short-term investments, at fair value (amortized cost: 2012 - $304,150; 2011 - $280,299)	310,703	280,191
Other investments, at fair value (amortized cost: 2012 - $15,938; 2011 - $15,002)	463,018	16,787
Cash and cash equivalents	903,310	832,844
Total investments and cash	6,449,930	6,023,967
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	92,807	53,031
Premiums receivable	977,431	646,354
Deferred acquisition costs	176,172	121,505
Prepaid reinsurance premiums	176,387	91,381
Securities lending collateral	3,456	7,736
Loss reserves recoverable	371,484	372,485
Paid losses recoverable	32,395	90,495
Income taxes recoverable	2,651	0
Intangible assets	112,651	114,731
Goodwill	20,393	20,393
Accrued investment income	21,399	25,906
Other assets	62,412	50,487
Total assets	8,499,568	7,618,471
Liabilities
Reserve for losses and loss expenses	2,591,299	2,631,143
Unearned premiums	1,196,836	772,382
Reinsurance balances payable	185,456	119,899
Securities lending payable	4,145	8,462
Deferred income taxes	19,197	16,720
Net payable for investments purchased	6,451	1,256
Accounts payable and accrued expenses	76,774	83,402
Senior notes payable	247,036	246,982
Debentures payable	289,800	289,800
Total liabilities	4,616,994	4,170,046
Commitments and contingent liabilities
Shareholders' equity
Common shares, 571,428,571 authorized, par value $0.175 (Issued: 2012 - 134,745,003; 2011 - 134,503,065; Outstanding: 2012 - 99,340,458; 2011 - 99,471,080)	23,691	23,538
Treasury shares (2012 - 35,404,545; 2011 - 35,031,985)	(7,343)	(6,131)
Additional paid-in-capital	1,684,781	1,893,890
Accumulated other comprehensive (loss)	(5,965)	(6,601)
Retained earnings	1,782,670	1,543,729
Total shareholders' equity attributable to Validus	3,477,834	3,448,425
Noncontrolling interest	404,740	0
Total shareholders' equity	3,882,574	3,448,425
Total liabilities and shareholders' equity	$ 8,499,568	$ 7,618,471

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Investments (Maturity profile of securities lending collateral) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Securities Financing Transaction [Line Items]
Amortized cost	$ 4,145	$ 8,462
Securities lending collateral reinvested, estimated fair value	3,456	7,736
Due in one year or less [Member]
Securities Financing Transaction [Line Items]
Amortized cost	3,525	7,462
Securities lending collateral reinvested, estimated fair value	3,308	7,481
Due after one year through five years [Member]
Securities Financing Transaction [Line Items]
Amortized cost	620	1,000
Securities lending collateral reinvested, estimated fair value	$ 148	$ 255

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows provided by (used in) operating activities
Net income (loss)	$ 246,496	$ (61,886)
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Share compensation expenses	12,238	19,677
Amortization of discount on senior notes	54	54
(Loss) from investment affiliate	398	0
Net realized (gains) on investments	(13,686)	(17,931)
Net unrealized gains (losses) on investments	32,903	(5,698)
Amortization of intangible assets	2,080	2,080
Equity earnings in investment in non-consolidated affiliate	(6,959)	0
Foreign exchange (gains) included in net income	(5,844)	(12,729)
Amortization of premium on fixed maturities	12,253	16,247
Change in:
Premiums receivable	(330,214)	(475,119)
Deferred acquisition costs	(54,667)	(52,827)
Prepaid reinsurance premiums	(85,006)	(106,312)
Loss reserves recoverable	1,475	(155,002)
Paid losses recoverable	58,149	(2,825)
Income taxes recoverable	(2,720)	(2,400)
Accrued investment income	4,534	12,406
Other assets	(11,777)	9,351
Reserve for losses and loss expenses	(43,198)	575,832
Unearned premiums	424,454	464,256
Reinsurance balances payable	65,154	116,080
Deferred income taxes	2,565	(2,611)
Accounts payable and accrued expenses	(3,518)	(11,029)
Net cash provided by operating activities	305,164	309,614
Cash flows provided by (used in) investing activities
Proceeds on sales of investments	1,829,294	2,654,804
Proceeds on maturities of investments	295,192	195,055
Purchases of fixed maturities	(1,975,225)	(2,613,981)
Purchases of short-term investments, net	(31,629)	(451,706)
Purchases of other investments	(500,632)	3,809
Decrease in securities lending collateral	4,317	960
Purchase of investment in operating affiliates	(26,500)	0
Purchase of investment in investment affiliate	(3,368)	0
Net cash (used in) provided by investing activities	(408,551)	(211,059)
Cash flows provided by (used in) financing activities
Issuance (redemption) of common shares, net	(1,154)	6,238
Purchases of common shares under share repurchase program	(221,252)	(5,995)
Dividends paid	(56,260)	(54,000)
Decrease in securities lending payable	(4,317)	(960)
Third party investment in noncontrolling interest	450,100	134,301
Net cash (used in) financing activities	167,117	79,584
Effect of foreign currency rate changes on cash and cash equivalents	6,736	17,042
Net increase in cash	70,466	195,181
Cash and cash equivalents - beginning of period	832,844	620,740
Cash and cash equivalents - end of period	903,310	815,921
Taxes paid during the period	3,764	(3,373)
Interest paid during the period	$ 20,117	$ 23,823

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Stock plans (Other awards activity) (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Restricted share awards [Member]
Activities
Beginning balance	3,003,547	3,114,039
Granted	900,725	590,367
Vested	(803,917)	(553,615)
Forfeited	(30,801)	(13,198)
Ending balance	3,069,554	3,137,593
Share Based Payment Award Other Than Options Nonvested Weighted Average Grant Date Fair Value [Abstract]
Weighted average grant date fair value, beginning balance	$ 25.77	$ 24.33
Weighted average grant date fair value, granted	$ 31.38	$ 32.16
Weighted average grant date fair value, vested	$ 25.93	$ 25.46
Weighted average grant date fair value, forfeited	$ 28.10	$ 27.28
Weighted average grant date fair value, ending balance	$ 27.35	$ 25.60
Restricted share units [Member]
Activities
Beginning balance	53,312	47,049
Granted	13,625	18,388
Vested	(18,175)	(13,340)
Issued in lieu of cash dividends	789	296
Forfeited	(1,150)	0
Ending balance	48,401	52,393
Share Based Payment Award Other Than Options Nonvested Weighted Average Grant Date Fair Value [Abstract]
Weighted average grant date fair value, beginning balance	$ 27.60	$ 25.04
Weighted average grant date fair value, granted	$ 31.38	$ 32.10
Weighted average grant date fair value, vested	$ 26.58	$ 24.72
Weighted average grant date fair value, issued in lieu of cash dividends	$ 28.01	$ 25.45
Weighted average grant date fair value, forfeited	$ 30.07	$ 0.00
Weighted average grant date fair value, ending balance	$ 29.00	$ 27.60
Performance share awards [Member]
Activities
Beginning balance	279,019	132,401
Granted	41,128	146,618
Vested	0	0
Forfeited		0
Cancelled	(99,302)
Ending balance	220,845	279,019
Share Based Payment Award Other Than Options Nonvested Weighted Average Grant Date Fair Value [Abstract]
Weighted average grant date fair value, beginning balance	$ 30.77	$ 28.70
Weighted average grant date fair value, granted	$ 31.38	$ 32.64
Weighted average grant date fair value, vested	$ 0.00	$ 0.00
Weighted average grant date fair value, forfeited	$ 0.00
Weighted average grant date fair value, cancelled	$ 28.70
Weighted average grant date fair value, ending balance	$ 31.81	$ 30.77

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Basis of preparation and consolidation Basis of preparation and consolidation (Details) (AlphaCat Re 2012 Ltd [Member])	6 Months Ended
	Jun. 30, 2012
AlphaCat Re 2012 Ltd [Member]
Schedule of Equity Method Investments [Line Items]
Threshold Minimum Consolidation Requirement Percentage	50.00%

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Debt and financing Arrangements (Text) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012		Dec. 31, 2011
Bilateral unsecured letter of credit facility [Member]
Credit Facilities
Letter of credit facility amount issued and outstanding			$ 0	[1]
Credit facility, commitment			60,000
Bilateral unsecured letter of credit facility [Member] | Terminated Credit Facilities [Member]
Credit Facilities
Letter of credit facility period	3 years
Credit facility, commitment	60,000
IPC Bi Lateral Facility [Member]
Credit Facilities
Letter of credit facility amount issued and outstanding	51,479	[1]	57,146	[1]
Credit facility, commitment	80,000		80,000
Talbot Fal Facility [Member]
Credit Facilities
Letter of credit facility amount issued and outstanding	25,000	[1],[2]	25,000	[1],[2]
Letter of credit facility, original commitment amount	100,000
Line of credit facility initiation date	Nov. 28, 2007
Credit facility, commitment	25,000	[2]	25,000	[2]
Percent of consolidated net income quarterly increase under covenant	50.00%
Percent of any net proceeds from issuance of common shares	50.00%
Ratio consolidated total debt to net worth under covenant	0.35:1.00
Minimum level of consolidated net worth	2,589,615
Syndicated unsecured letter of credit facility [Member]
Credit Facilities
Letter of credit facility amount issued and outstanding	0	[1]	0	[1]
Credit facility, commitment	400,000		340,000
Unsecured letter of credit facility [Member] | Terminated Credit Facilities [Member]
Credit Facilities
Letter of credit facility period	3 years
Credit facility, commitment	340,000
Secured letter of credit facility [Member]
Credit Facilities
Letter of credit facility amount issued and outstanding			333,179	[1]
Credit facility, commitment			500,000
Secured letter of credit facility [Member] | Terminated Credit Facilities [Member]
Credit Facilities
Letter of credit facility period	5 years
Credit facility, commitment	500,000
Credit Facilities
Credit Facilities
Percent of consolidated net income quarterly increase under covenant	50.00%
Percent of any net proceeds from issuance of common shares	50.00%
Ratio consolidated total debt to net worth under covenant	0.35:1.00
Minimum level of consolidated net worth	2,600,000
Four-year unsecured credit facility [Member]
Credit Facilities
Letter of credit facility period	4 years
Letter of credit facility amount issued and outstanding	0	[1]	0	[1]
Line of credit facility initiation date	Mar. 09, 2012
Aggregate commitments, maximum	500,000
Description of interest rate basis	The borrowings bear interest, at the option of the Company, at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, the federal funds effective rate plus 0.50%, and the adjusted LIBOR rate plus 1.0%) or the adjusted LIBOR rate applicable to such loans, plus an applicable rate.
Four-year unsecured credit facility [Member] | Maximum [Member]
Credit Facilities
Basis spread on variable rate	0.010
Four-year unsecured credit facility [Member] | Minimum [Member]
Credit Facilities
Basis spread on variable rate	0.005
Four-year syndicated secured credit facility [Member]
Credit Facilities
Letter of credit facility period	4 years
Letter of credit facility amount issued and outstanding	322,126	[1]	0	[1]
Line of credit facility initiation date	Mar. 09, 2012
Credit facility, commitment	525,000
Aggregate commitments, maximum	700,000
Description of interest rate basis	The borrowings bear interest at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, NA, the federal funds effective rate plus 0,50%, and the adjusted LIBOR rate plus 1.0%).
Four-year syndicated secured credit facility [Member] | Maximum [Member]
Credit Facilities
Basis spread on variable rate	0.010
Four-year syndicated secured credit facility [Member] | Minimum [Member]
Credit Facilities
Basis spread on variable rate	0.005
Bi-lateral secured facility [Member]
Credit Facilities
Letter of credit facility amount issued and outstanding	80,134	[1]	0
Line of credit facility initiation date	Aug. 10, 2009
Credit facility, commitment	500,000
PaCRe Senior secured letter of credit facility [Member]
Credit Facilities
Letter of credit facility period	364 days
Letter of credit facility amount issued and outstanding	0	[1]
Credit facility, commitment	10,000
2006 Junior Subordinated Deferrable Debentures [Member]
Senior Notes and Junior Debentures
Length of optional redemption period	5 years
Debt issuance cost	3,750
Debt instrument issuance date	Jun. 15, 2006
Debt instrument maturity date	Jun. 15, 2036
Debt instrument, commitment	150,000		150,000
Frequency of required payments	quarterly
Start of optional redemption period	Jun. 15, 2011
Gross proceeds on issuance of junior subordinated deferrable debentures	150,000
2007 Junior Subordinated Deferrable Debentures [Member]
Senior Notes and Junior Debentures
Length of optional redemption period	5 years
Debt issuance cost	2,000
Debt instrument issuance date	Jun. 21, 2007
Debt instrument maturity date	Jun. 15, 2037
Debt instrument, commitment	200,000		200,000
Frequency of required payments	quarterly
Start of optional redemption period	Jun. 15, 2012
Gross proceeds on issuance of junior subordinated deferrable debentures	200,000
2010 Senior Notes Due 2040 [Member]
Senior Notes and Junior Debentures
Net proceeds on issuance of senior notes	243,967
Interest rate	8.875%
Debt issuance cost	2,808
Debt instrument issuance date	Jan. 21, 2010
Debt instrument maturity date	Jan. 26, 2040
Date of first required payment	Jul. 26, 2010
Debt instrument, commitment	$ 250,000		$ 250,000
Frequency of required payments	semi-annually
Jun 15 2006 - Jun 15 2011 [Member] | 2006 Junior Subordinated Deferrable Debentures [Member]
Senior Notes and Junior Debentures
Interest rate	9.069%
Jun 21 2007 - Jun 15 2012 [Member] | 2007 Junior Subordinated Deferrable Debentures [Member]
Senior Notes and Junior Debentures
Interest rate	8.48%
Jun 15 2011 - Jun 15 2036 [Member] | 2006 Junior Subordinated Deferrable Debentures [Member]
Senior Notes and Junior Debentures
Description of variable rate basis	three-month LIBOR
Basis spread on variable rate	3.55%
Jun 15 2012 - Jun 15 2037 [Member] | 2007 Junior Subordinated Deferrable Debentures [Member]
Senior Notes and Junior Debentures
Description of variable rate basis	three-month LIBOR
Basis spread on variable rate	2.95%

[1] Indicates utilization of commitment amount, not drawn borrowings.

[2] 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.

XML

Segment information

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment information

Segment information

The Company conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. and Talbot Holdings Ltd. from which three operating segments have been determined under U.S. GAAP segment reporting. During the first quarter of 2012, to better align the Company's operating and reporting structure with its current strategy, there was a change in the segment structure. This change included the AlphaCat group of companies as a separate operating segment. "AlphaCat segment" was included as an additional segment and includes the Company's investments in AlphaCat Re 2011, AlphaCat Re 2012 and PaCRe. Prior period comparatives have been restated to reflect the change in segmentation. 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 Segment

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, contingency and motor.

AlphaCat Segment

The AlphaCat segment manages strategic relationships that leverage the Company's underwriting and investment expertise and earns management, performance and underwriting fees primarily from the Company's operating affiliates, AlphaCat Re 2011 and AlphaCat Re 2012, as well as an investment in PaCRe.

Validus Re Consolidated

The Validus Re consolidated group of companies represents the Validus Reinsurance, Ltd. consolidated U.S. GAAP results.

Talbot Segment

The Talbot segment focuses on a wide range of marine and energy, war, political violence, commercial property, financial institutions, contingency, bloodstock, 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.

The following tables summarize the results of our operating segments and "corporate":

Three Months Ended June 30, 2012	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	340,850		$	15,155		$	—		$	356,005		$	283,528		$	(12,444	)	$	627,089
Reinsurance premiums ceded	(97,077		)	—			—			(97,077		)	(34,419		)	12,444			(119,052		)
Net premiums written	243,773			15,155			—			258,928			249,109			—			508,037
Change in unearned premiums	(1,087		)	(11,568		)	—			(12,655		)	(47,755		)	—			(60,410		)
Net premiums earned	242,686			3,587			—			246,273			201,354			—			447,627
Underwriting deductions
Losses and loss expenses	53,190			—			—			53,190			100,502			—			153,692
Policy acquisition costs	37,084			382			(25		)	37,441			41,803			(3,115		)	76,129
General and administrative expenses	14,142			2,402			1,866			18,410			30,957			12,268			61,635
Share compensation expenses	1,966			59			159			2,184			1,799			2,817			6,800
Total underwriting deductions	106,382			2,843			2,000			111,225			175,061			11,970			298,256
Underwriting income (loss)	$	136,304		$	744		$	(2,000	)	$	135,048		$	26,293		$	(11,970	)	$	149,371
Net investment income	21,694			820			—			22,514			5,425			(2,054		)	25,885
Other income	467			6,589			2,018			9,074			327			(3,407		)	5,994
Finance expenses	(2,145		)	(437		)	—			(2,582		)	(120		)	(11,004		)	(13,706		)
Operating income (loss) before taxes and income from operating affiliates	156,320			7,716			18			164,054			31,925			(28,435		)	167,544
Tax (expense) benefit	(2		)	—			—			(2		)	(419		)	17			(404		)
Income from operating affiliates	—			3,592			—			3,592			—			—			3,592
Net operating income (loss)	$	156,318		$	11,308		$	18		$	167,644		$	31,506		$	(28,418	)	$	170,732
Net realized gains (losses) on investments	4,823			(84		)	—			4,739			1,415			—			6,154
Net unrealized (losses) on investments	(3,697		)	(49,519		)	—			(53,216		)	(358		)	—			(53,574		)
(Loss) from investment affiliate	(398		)	—			—			(398		)	—			—			(398		)
Foreign exchange gains (losses)	2,715			26			—			2,741			(3,435		)	42			(652		)
Net income (loss)	$	159,761		$	(38,269	)	$	18		$	121,510		$	29,128		$	(28,376	)	$	122,262
Net loss attributable to noncontrolling interest	—			45,360			—			45,360			—			—			45,360
Net income (loss) available (attributable) to Validus	$	159,761		$	7,091		$	18		$	166,870		$	29,128		$	(28,376	)	$	167,622
Selected ratios:
Net premiums written / Gross premiums written	71.5		%	100.0		%							87.9		%				81.0		%
Losses and loss expenses	21.9		%	0.0		%							49.9		%				34.3		%
Policy acquisition costs	15.3		%	10.6		%							20.8		%				17.0		%
General and administrative expenses (a)	6.6		%	68.6		%							16.3		%				15.3		%
Expense ratio	21.9		%	79.2		%							37.1		%				32.3		%
Combined ratio	43.8		%	79.2		%							87.0		%				66.6		%
Total assets	$	4,846,607		$	696,236								$	2,931,430		$	25,295		$	8,499,568

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

The following tables summarize the results of our operating segments and corporate segment:

Three Months Ended June 30, 2011	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	290,691		$	50,960		$	—		$	341,651		$	276,886		$	(13,150	)	$	605,387
Reinsurance premiums ceded	(98,218		)	—			—			(98,218		)	(47,278		)	13,150			(132,346		)
Net premiums written	192,473			50,960			—			243,433			229,608			—			473,041
Change in unearned premiums	31,814			(42,569		)	—			(10,755		)	(36,646		)	—			(47,401		)
Net premiums earned	224,287			8,391			—			232,678			192,962			—			425,640
Underwriting deductions
Losses and loss expenses	94,035			—			—			94,035			113,272			—			207,307
Policy acquisition costs	35,013			973			(217		)	35,769			42,307			154			78,230
General and administrative expenses	15,059			1,061			1,813			17,933			33,345			9,563			60,841
Share compensation expenses	1,823			21			174			2,018			2,026			3,584			7,628
Total underwriting deductions	145,930			2,055			1,770			149,755			190,950			13,301			354,006
Underwriting income (loss)	$	78,357		$	6,336		$	(1,770	)	$	82,923		$	2,012		$	(13,301	)	$	71,634
Net investment income	21,662			727			—			22,389			6,372			(2,267		)	26,494
Other income	745			2,532			(308		)	2,969			594			(2,968		)	595
Finance expenses	(1,579		)	(2,923		)	—			(4,502		)	—			(11,859		)	(16,361		)
Operating income (loss) before taxes	99,185			6,672			(2,078		)	103,779			8,978			(30,395		)	82,362
Tax (expense) benefit	(4		)	—			—			(4		)	(208		)	241			29
Net operating income (loss)	$	99,181		$	6,672		$	(2,078	)	$	103,775		$	8,770		$	(30,154	)	$	82,391
Net realized gains on investments	9,014			538			—			9,552			2,000			—			11,552
Net unrealized gains (losses) on investments	15,377			(820		)	—			14,557			3,969			—			18,526
Foreign exchange (losses) gains	(5,266		)	(71		)	—			(5,337		)	3,410			(64		)	(1,991		)
Net income (loss)	$	118,306		$	6,319		$	(2,078	)	$	122,547		$	18,149		$	(30,218	)	$	110,478
Net (income) attributable to noncontrolling interest	—			(594		)	—			(594		)	—			—			(594		)
Net income (loss) available (attributable) to Validus	$	118,306		$	5,725		$	(2,078	)	$	121,953		$	18,149		$	(30,218	)	$	109,884
Selected ratios:
Net premiums written / Gross premiums written	66.2		%	100.0		%							82.9		%				78.1		%
Losses and loss expenses	41.9		%	0.0		%							58.7		%				48.7		%
Policy acquisition costs	15.6		%	11.6		%							21.9		%				18.4		%
General and administrative expenses (a)	7.5		%	12.9		%							18.3		%				16.1		%
Expense ratio	23.1		%	24.5		%							40.2		%				34.5		%
Combined ratio	65.0		%	24.5		%							98.9		%				83.2		%
Total assets	$	5,003,271		$	408,809								$	2,759,850		$	87,858		$	8,259,788

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

Six Months Ended June 30, 2012	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	907,716		$	18,673		$	—		$	926,389		$	576,781		$	(38,792	)	$	1,464,378
Reinsurance premiums ceded	(127,078		)	—			—			(127,078		)	(137,818		)	38,792			(226,104		)
Net premiums written	780,638			18,673			—			799,311			438,963			—			1,238,274
Change in unearned premiums	(284,943		)	(12,423		)	—			(297,366		)	(42,082		)	—			(339,448		)
Net premiums earned	495,695			6,250			—			501,945			396,881			—			898,826
Underwriting deductions
Losses and loss expenses	177,396			—			—			177,396			208,285			—			385,681
Policy acquisition costs	75,874			638			(25		)	76,487			80,541			(2,767		)	154,261
General and administrative expenses	31,394			3,434			2,315			37,143			64,305			26,562			128,010
Share compensation expenses	3,838			111			311			4,260			3,147			4,831			12,238
Total underwriting deductions	288,502			4,183			2,601			295,286			356,278			28,626			680,190
Underwriting income (loss)	$	207,193		$	2,067		$	(2,601	)	$	206,659		$	40,603		$	(28,626	)	$	218,636
Net investment income	45,271			1,479			—			46,750			11,215			(4,320		)	53,645
Other income	2,686			14,563			2,908			20,157			1,353			(6,625		)	14,885
Finance expenses	(5,839		)	(439		)	—			(6,278		)	(151		)	(23,556		)	(29,985		)
Operating income (loss) before taxes and income from operating affiliates	249,311			17,670			307			267,288			53,020			(63,127		)	257,181
Tax (expense) benefit	(9		)	—			—			(9		)	(551		)	17			(543		)
Income from operating affiliates	—			6,959			—			6,959			—			—			6,959
Net operating income (loss)	$	249,302		$	24,629		$	307		$	274,238		$	52,469		$	(63,110	)	$	263,597
Net realized gains (losses) on investments	11,065			(84		)	—			10,981			2,705			—			13,686
Net unrealized gains (losses) on investments	16,168			(50,116		)	—			(33,948		)	1,045			—			(32,903		)
(Loss) from investment affiliate	(398		)	—			—			(398		)	—			—			(398		)
Foreign exchange gains (losses)	2,453			17			—			2,470			188			(144		)	2,514
Net income (loss)	$	278,590		$	(25,554	)	$	307		$	253,343		$	56,407		$	(63,254	)	$	246,496
Net loss attributable to noncontrolling interest	—			45,360			—			45,360			—			—			45,360
Net income (loss) available (attributable) to Validus	$	278,590		$	19,806		$	307		$	298,703		$	56,407		$	(63,254	)	$	291,856
Selected ratios:
Net premiums written / Gross premiums written	86.0		%	100.0		%							76.1		%				84.6		%
Losses and loss expenses	35.8		%	0.0		%							52.5		%				42.9		%
Policy acquisition costs	15.3		%	10.2		%							20.3		%				17.2		%
General and administrative expenses (a)	7.1		%	56.7		%							17.0		%				15.6		%
Expense ratio	22.4		%	66.9		%							37.3		%				32.8		%
Combined ratio	58.2		%	66.9		%							89.8		%				75.7		%
Total assets	$	4,846,607		$	696,236								$	2,931,430		$	25,295		$	8,499,568

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

Six Months Ended June 30, 2011	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	894,779		$	58,110		$	—		$	952,889		$	539,943		$	(37,549	)	$	1,455,283
Reinsurance premiums ceded	(145,023		)	—			—			(145,023		)	(134,692		)	37,549			(242,166		)
Net premiums written	749,756			58,110			—			807,866			405,251			—			1,213,117
Change in unearned premiums	(276,526		)	(46,353		)	—			(322,879		)	(35,065		)	—			(357,944		)
Net premiums earned	473,230			11,757			—			484,987			370,186			—			855,173
Underwriting deductions
Losses and loss expenses	404,579			—			—			404,579			278,926			—			683,505
Policy acquisition costs	74,763			1,289			(217		)	75,835			79,523			168			155,526
General and administrative expenses	25,589			1,955			3,160			30,704			60,651			17,963			109,318
Share compensation expenses	4,928			48			502			5,478			4,745			9,454			19,677
Total underwriting deductions	509,859			3,292			3,445			516,596			423,845			27,585			968,026
Underwriting (loss) income	$	(36,629	)	$	8,465		$	(3,445	)	$	(31,609	)	$	(53,659	)	$	(27,585	)	$	(112,853	)
Net investment income	46,094			1,946			—			48,040			12,962			(4,533		)	56,469
Other income	2,036			3,173			(78		)	5,131			2,195			(5,125		)	2,201
Finance expenses	(3,292		)	(2,923		)	—			(6,215		)	(63		)	(24,084		)	(30,362		)
Operating income (loss) before taxes	8,209			10,661			(3,523		)	15,347			(38,565		)	(61,327		)	(84,545		)
Tax (expense) benefit	(6		)	—			—			(6		)	1,585			(91		)	1,488
Net operating income (loss)	$	8,203		$	10,661		$	(3,523	)	$	15,341		$	(36,980	)	$	(61,418	)	$	(83,057	)
Net realized gains on investments	12,915			556			—			13,471			4,460			—			17,931
Net unrealized gains (losses) on investments	7,701			(1,659		)	—			6,042			(344		)	—			5,698
Foreign exchange (losses) gains	(9,536		)	(161		)	—			(9,697		)	7,311			(72		)	(2,458		)
Net income (loss)	$	19,283		$	9,397		$	(3,523	)	$	25,157		$	(25,553	)	$	(61,490	)	$	(61,886	)
Net (income) attributable to noncontrolling interest	—			(594		)	—			(594		)	—			—			(594		)
Net income (loss) available (attributable) to Validus	$	19,283		$	8,803		$	(3,523	)	$	24,563		$	(25,553	)	$	(61,490	)	$	(62,480	)
Selected ratios:
Net premiums written / Gross premiums written	83.8		%	100.0		%							75.1		%				83.4		%
Losses and loss expenses	85.5		%	0.0		%							75.3		%				79.9		%
Policy acquisition costs	15.8		%	11.0		%							21.5		%				18.2		%
General and administrative expenses (a)	6.4		%	17.0		%							17.7		%				15.1		%
Expense ratio	22.2		%	28.0		%							39.2		%				33.3		%
Combined ratio	107.7		%	28.0		%							114.5		%				113.2		%
Total assets	$	5,003,271		$	408,809								$	2,759,850		$	87,858		$	8,259,788

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

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:

	Three Months Ended June 30, 2012
	Gross Premiums Written
	Validus Re		AlphaCat			Talbot		Eliminations			Total		%
United States	$	213,473	$	14,166		$	32,941	$	(1,933	)	$	258,647	41.3	%
Worldwide excluding United States (a)	4,650		—			61,334		(2,628		)	63,356		10.1	%
Europe	14,427		(11		)	14,198		(598		)	28,016		4.5	%
Latin America and Caribbean	5,626		—			24,427		(1,075		)	28,978		4.6	%
Japan	31,112		—			3,427		(119		)	34,420		5.5	%
Canada	116		—			2,148		(120		)	2,144		0.3	%
Rest of the world (b)	10,067		—			—		—			10,067		1.6	%
Sub-total, non United States	65,998		(11		)	105,534		(4,540		)	166,981		26.6	%
Worldwide including United States (a)	20,734		1,000			18,369		(716		)	39,387		6.3	%
Marine and Aerospace (c)	40,645		—			126,684		(5,255		)	162,074		25.8	%
Total	$	340,850	$	15,155		$	283,528	$	(12,444	)	$	627,089	100.0	%

	Three Months Ended June 30, 2011
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	211,323	$	50,041	$	34,181	$	(2,307	)	$	293,238	48.5	%
Worldwide excluding United States (a)	2,580		—		57,204		(257		)	59,527		9.8	%
Europe	10,710		19		18,935		(59		)	29,605		4.9	%
Latin America and Caribbean	11,432		—		22,265		(8,942		)	24,755		4.1	%
Japan	23,871		—		2,216		—			26,087		4.3	%
Canada	10		—		2,443		(10		)	2,443		0.4	%
Rest of the world (b)	8,939		—		—		—			8,939		1.5	%
Sub-total, non United States	57,542		19		103,063		(9,268		)	151,356		25.0	%
Worldwide including United States (a)	11,684		900		15,506		(40		)	28,050		4.6	%
Marine and Aerospace (c)	10,142		—		124,136		(1,535		)	132,743		21.9	%
Total	$	290,691	$	50,960	$	276,886	$	(13,150	)	$	605,387	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.

	Six Months Ended June 30, 2012
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	367,903	$	16,574	$	61,696	$	(4,235	)	$	441,938	30.2	%
Worldwide excluding United States (a)	26,845		—		137,594		(9,306		)	155,133		10.6	%
Europe	72,218		820		29,445		(1,764		)	100,719		6.8	%
Latin America and Caribbean	26,213		—		53,741		(3,370		)	76,584		5.2	%
Japan	30,977		—		4,087		(237		)	34,827		2.4	%
Canada	324		—		5,670		(327		)	5,667		0.4	%
Rest of the world (b)	52,008		279				—			52,287		3.6	%
Sub-total, non United States	208,585		1,099		230,537		(15,004		)	425,217		29.0	%
Worldwide including United States (a)	78,753		1,000		33,166		(1,802		)	111,117		7.6	%
Marine and Aerospace (c)	252,475		—		251,382		(17,751		)	486,106		33.2	%
Total	$	907,716	$	18,673	$	576,781	$	(38,792	)	$	1,464,378	100.0	%

	Six Months Ended June 30, 2011
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	401,481	$	52,248	$	62,012	$	(4,204	)	$	511,537	35.2	%
Worldwide excluding United States (a)	29,558		—		125,171		(2,969		)	151,760		10.4	%
Europe	68,466		1,229		34,944		(561		)	104,078		7.2	%
Latin America and Caribbean	35,918		633		40,533		(22,571		)	54,513		3.7	%
Japan	34,069		—		2,756		(100		)	36,725		2.5	%
Canada	110		—		6,251		(110		)	6,251		0.4	%
Rest of the world (b)	44,996		—		—		—			44,996		3.1	%
Sub-total, non United States	213,117		1,862		209,655		(26,311		)	398,323		27.3	%
Worldwide including United States (a)	76,780		4,000		26,036		(542		)	106,274		7.3	%
Marine and Aerospace (c)	203,401		—		242,240		(6,492		)	439,149		30.2	%
Total	$	894,779	$	58,110	$	539,943	$	(37,549	)	$	1,455,283	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 (Fair value hierarchy) (Details) (USD $) In Thousands, unless otherwise specified							6 Months Ended
	Jun. 30, 2012		Dec. 31, 2011	Jun. 30, 2012 PacRe Funds [Member] funds	Jun. 30, 2012 Fund of hedge funds [Member]	Dec. 31, 2011 Fund of hedge funds [Member]	Jun. 30, 2012 Hedge fund side pocket [Member]	Jun. 30, 2012 Hedge Funds [Member]		Dec. 31, 2011 Private Equity Funds [Member]		Jun. 30, 2012 Mutual funds [Member]	Dec. 31, 2011 Mutual funds [Member]	Jun. 30, 2012 Recurring [Member]		Dec. 31, 2011 Recurring [Member]	Jun. 30, 2012 Recurring [Member] PacRe Funds [Member]	Jun. 30, 2012 Recurring [Member] U.S. Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] U.S. Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] Non-US Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] Non-US Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] States, municipalities, political subdivision [Member]	Dec. 31, 2011 Recurring [Member] States, municipalities, political subdivision [Member]	Jun. 30, 2012 Recurring [Member] Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Non-Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Non-Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Non-U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] Non-U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Bank loans [Member]	Dec. 31, 2011 Recurring [Member] Bank loans [Member]	Jun. 30, 2012 Recurring [Member] Catastrophe bonds [Member]	Dec. 31, 2011 Recurring [Member] Catastrophe bonds [Member]	Jun. 30, 2012 Recurring [Member] Asset-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Asset-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Commercial mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Commercial mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Fund of hedge funds [Member]	Dec. 31, 2011 Recurring [Member] Fund of hedge funds [Member]	Jun. 30, 2012 Recurring [Member] Hedge fund side pocket [Member]	Jun. 30, 2012 Recurring [Member] Hedge Funds [Member]		Jun. 30, 2012 Recurring [Member] Mutual funds [Member]	Dec. 31, 2011 Recurring [Member] Mutual funds [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] U.S. Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] U.S. Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Non-US Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Non-US Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] States, municipalities, political subdivision [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] States, municipalities, political subdivision [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Non-Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Non-Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Non-U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Non-U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Bank loans [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Bank loans [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Catastrophe bonds [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Catastrophe bonds [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Asset-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Asset-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Commercial mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Commercial mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Fund of hedge funds [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Fund of hedge funds [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Hedge Funds [Member]		Dec. 31, 2011 Recurring [Member] Level 1 [Member] Private Equity Funds [Member]	Jun. 30, 2012 Recurring [Member] Level 1 [Member] Mutual funds [Member]	Dec. 31, 2011 Recurring [Member] Level 1 [Member] Mutual funds [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] U.S. Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] U.S. Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Non-US Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Non-US Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] States, municipalities, political subdivision [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] States, municipalities, political subdivision [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Non-Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Non-Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Non-U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Non-U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Bank loans [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Bank loans [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Catastrophe bonds [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Catastrophe bonds [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Asset-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Asset-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Commercial mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Commercial mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Fund of hedge funds [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Fund of hedge funds [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Hedge Funds [Member]		Dec. 31, 2011 Recurring [Member] Level 2 [Member] Private Equity Funds [Member]	Jun. 30, 2012 Recurring [Member] Level 2 [Member] Mutual funds [Member]	Dec. 31, 2011 Recurring [Member] Level 2 [Member] Mutual funds [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member]		Dec. 31, 2011 Recurring [Member] Level 3 [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] U.S. Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] U.S. Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Non-US Government and Government Agency [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Non-US Government and Government Agency [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] States, municipalities, political subdivision [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] States, municipalities, political subdivision [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Non-Agency residential mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Non-Agency residential mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Non-U.S. corporate [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Non-U.S. corporate [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Bank loans [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Bank loans [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Catastrophe bonds [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Catastrophe bonds [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Asset-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Asset-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Commercial mortgage-backed securities [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Commercial mortgage-backed securities [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Fund of hedge funds [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Fund of hedge funds [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Hedge Funds [Member]		Dec. 31, 2011 Recurring [Member] Level 3 [Member] Private Equity Funds [Member]	Jun. 30, 2012 Recurring [Member] Level 3 [Member] Mutual funds [Member]	Dec. 31, 2011 Recurring [Member] Level 3 [Member] Mutual funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment Time Lag Reporting							1 month
Allocation of investments
Total fixed maturities	$ 4,772,899		$ 4,894,145															$ 1,139,424	$ 1,182,393	$ 331,601	$ 449,358	$ 42,844	$ 26,291	$ 449,464	$ 468,054	$ 23,069	$ 32,706	$ 1,271,768	$ 1,329,758	$ 559,479	$ 579,675	$ 566,017	$ 467,256	$ 36,702	$ 29,952	$ 352,531	$ 328,299	$ 0	$ 403								$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0								$ 4,772,899	$ 4,894,145	$ 1,139,424	$ 1,182,393	$ 331,601	$ 449,358	$ 42,844	$ 26,291	$ 449,464	$ 468,054	$ 23,069	$ 32,706	$ 1,271,768	$ 1,329,758	$ 559,479	$ 579,675	$ 566,017	$ 467,256	$ 36,702	$ 29,952	$ 352,531	$ 328,299	$ 0	$ 403								$ 0		$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Short-term investments	310,703		280,191													280,191																															282,061	257,854																														28,642	22,337																														0		0
Other investments	463,018		16,787		4,662	5,627		450,131	[1]	3,253	[2]	8,225	7,907				450,131																							4,662	5,627	4,662	450,131	[1]	8,225	7,907																									0	0	0	[1]	0	0	0																									0	0	0	[1]	0	8,225	7,907																										4,662	5,627	450,131	[1]	3,253	0	0
Total	5,546,620		5,191,123																																													257,854																															4,924,389																														454,793		8,880
Noncontrolling interest	(405,118)	[1]												(405,118)	[1]																																																																																														(405,118)	[1]
Total investments excluding noncontrolling interest	$ 5,141,502													$ 5,141,502																																	$ 282,061																															$ 4,809,766																															$ 49,675
Other Details
Other Investments Number Of Hedge Funds				4
Noncontrolling Interest, Ownership Percentage by Parent				10.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				90.00%
Percentage of total investments measured at fair value on recurring basis																																																																																																													1.00%		0.20%

[1] The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

[2] As at December 31, 2011 and March 31, 2012, this investment was included in "Other investments" as a level 3 investment in the fair value hierarchy, hence the change in fair value was included in net unrealized (losses) gains on investments.

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Investments (Tables)

6 Months Ended

Jun. 30, 2012

Investments [Abstract]

Fair value hierarchy - allocation of investments

At June 30, 2012, 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	$	—	$	1,139,424	$	—		$	1,139,424
Non-U.S. Government and Government Agency	—		331,601		—			331,601
States, municipalities, political subdivision	—		42,844		—			42,844
Agency residential mortgage-backed securities	—		449,464		—			449,464
Non-Agency residential mortgage-backed securities	—		23,069		—			23,069
U.S. corporate	—		1,271,768		—			1,271,768
Non-U.S. corporate	—		559,479		—			559,479
Bank loans	—		566,017		—			566,017
Catastrophe bonds	—		36,702		—			36,702
Asset-backed securities	—		352,531		—			352,531
Commercial mortgage-backed securities	—		—		—			—
Total fixed maturities	—		4,772,899		—			4,772,899
Short-term investments	282,061		28,642		—			310,703
Fund of hedge funds	—		—		4,662			4,662
Hedge funds (a)	—		—		450,131			450,131
Mutual funds	—		8,225		—			8,225
Total	$	282,061	$	4,809,766	$	454,793		$	5,546,620
Noncontrolling interest (a)					(405,118		)	(405,118		)
Total investments excluding noncontrolling interest	$	282,061	$	4,809,766	$	49,675		$	5,141,502

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

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	—		—		5,627		5,627
Private equity investment	—		—		3,253		3,253
Mutual funds	—		7,907		—		7,907
Total	$	257,854	$	4,924,389	$	8,880	$	5,191,123

Reconciliation of beginning and ending balances for all Level 3 investments measured at fair value on 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 during the three and six month periods ending June 30, 2012 and 2011:

	Three Months Ended June 30, 2012
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	8,325		$	8,325
Purchases	—		500,000			500,000
Sales	—		(277		)	(277		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		21			21
Unrealized (losses)	—		(48,494		)	(48,494		)
Amortization	—		—			—
Transfers	—		(4,782		)	(4,782		)
Level 3 investments - End of period	$	—	$	454,793		$	454,793
Noncontrolling interest (a)	—		(405,118		)	(405,118		)
Level 3 investments excluding noncontrolling interest	$	—	$	49,675		$	49,675

	Three Months Ended June 30, 2011
	Fixed Maturity Investments		Other Investments			Total Fair Market Value
Level 3 investments - Beginning of period	$	—	$	10,713		$	10,713
Purchases	—		—			—
Sales	—		(1,247		)	(1,247		)
Issuances	—		—			—
Settlements	—		—			—
Realized gains	—		175			175
Unrealized gains	—		135			135
Amortization	—		—			—
Transfers	—		—			—
Level 3 investments - End of period	$	—	$	9,776		$	9,776

Net investment income

Net investment income was derived from the following sources: 

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Fixed maturities and short-term investments	$	26,471		$	27,535		$	53,747		$	56,470
Cash and cash equivalents	1,449			687			3,766			3,268
Securities lending income	1			8			6			24
Total gross investment income	27,921			28,230			57,519			59,762
Investment expenses	(2,036		)	(1,736		)	(3,874		)	(3,293		)
Net investment income	$	25,885		$	26,494		$	53,645		$	56,469

Analysis of net realized gains and change in unrealized (losses) gains on investments

The following represents an analysis of net realized gains and the change in net unrealized (losses) gains on investments:

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Fixed maturities, short-term and other investments and cash equivalents
Gross realized gains	$	9,415		$	13,032		$	19,423		$	28,797
Gross realized (losses)	(3,261		)	(1,480		)	(5,737		)	(10,866		)
Net realized gains on investments	6,154			11,552			13,686			17,931
Net unrealized gains on securities lending	—			11			37			41
Change in net unrealized (losses) gains on investments	(53,574		)	18,515			(32,940		)	5,657
Total net realized gains and change in net unrealized (losses) gains on investments	$	(47,420	)	$	30,078		$	(19,217	)	$	23,629
Noncontrolling interest (a)	44,882			—			44,882			—
Total net realized gains and change in net unrealized (losses) gains on investments excluding noncontrolling interest	$	(2,538	)	$	30,078		$	25,665		$	23,629

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 June 30, 2012 were as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government and Government Agency	$	1,131,386		$	8,154	$	(116	)	$	1,139,424
Non-U.S. Government and Government Agency	326,229			7,204		(1,832		)	331,601
States, municipalities, political subdivision	42,149			713		(18		)	42,844
Agency residential mortgage-backed securities	433,732			15,953		(221		)	449,464
Non-Agency residential mortgage-backed securities	26,119			250		(3,300		)	23,069
U.S. corporate	1,249,755			23,395		(1,382		)	1,271,768
Non-U.S. corporate	551,236			8,778		(535		)	559,479
Bank loans	567,779			3,346		(5,108		)	566,017
Catastrophe bonds	36,250			485		(33		)	36,702
Asset-backed securities	351,129			1,892		(490		)	352,531
Commercial mortgage-backed securities	—			—		—			—
Total fixed maturities	4,715,764			70,170		(13,035		)	4,772,899
Total short-term investments	310,715			8		(20		)	310,703
Mutual funds	6,504			1,721		—			8,225
Fund of hedge funds	4,396			266		—			4,662
Hedge funds (a)	500,000			—		(49,869		)	450,131
Total other investments	510,900			1,987		(49,869		)	463,018
Total	$	5,537,379		$	72,165	$	(62,924	)	$	5,546,620
Noncontrolling interest (a)	$	(450,000	)	$	—	$	44,882		$	(405,118	)
Total investments excluding noncontrolling interest	$	5,087,379		$	72,165	$	(18,042	)	$	5,141,502

(a) The Company has an equity interest of 10% in PaCRe, the remaining 90% interest is held by third party investors.

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
Fund of hedge funds	5,244		383		—			5,627
Private equity investment	3,253		—		—			3,253
Mutual funds	6,505		1,402		—			7,907
Total other investments	15,002		1,785		—			16,787
Total	$	5,155,006	$	75,230	$	(39,113	)	$	5,191,123

Investment ratings on fixed maturities

	June 30, 2012				December 31, 2011
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
AAA	$	745,676	15.6	%	$	882,912	18.0	%
AA	2,025,848		42.5	%	2,077,981		42.5	%
A	1,019,888		21.4	%	1,078,793		22.0	%
BBB	378,502		7.9	%	345,091		7.1	%
Investment grade	4,169,914		87.4	%	4,384,777		89.6	%
BB	315,768		6.6	%	254,409		5.2	%
B	263,900		5.5	%	231,420		4.7	%
CCC	8,885		0.2	%	12,578		0.3	%
CC	3,116		0.1	%	4,605		0.1	%
D/NR	11,316		0.2	%	6,356		0.1	%
Non-Investment grade	602,985		12.6	%	509,368		10.4	%
Total Fixed Maturities	$	4,772,899	100.0	%	$	4,894,145	100.0	%

Fixed maturities investments by contractual maturity

	June 30, 2012				December 31, 2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	452,460	$	455,506	$	520,631	$	523,107
Due after one year through five years	3,049,223		3,088,234		3,160,647		3,186,711
Due after five years through ten years	398,769		398,975		350,459		346,654
Due after ten years	4,332		5,120		8,184		8,211
	3,904,784		3,947,835		4,039,921		4,064,683
Asset-backed and mortgage-backed securities	810,980		825,064		819,784		829,462
Total	$	4,715,764	$	4,772,899	$	4,859,705	$	4,894,145

Fair value hierarchy - allocation of securities lending collateral reinvested

As at June 30, 2012, 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	$	—	$	148	$	—	$	148
Short-term investments	3,308		—		—		3,308
Total	$	3,308	$	148	$	—	$	3,456

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

Investment ratings on securities lending collateral reinvested

	June 30, 2012				December 31, 2011
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
NR	148		4.3	%	255		3.3	%
	148		4.3	%	255		3.3	%
NR- Short-term investments (a)	3,308		95.7	%	7,481		96.7	%
Total	$	3,456	100.0	%	$	7,736	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

	June 30, 2012				December 31, 2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,525	$	3,308	$	7,462	$	7,481
Due after one year through five years	620		148		1,000		255
Total	$	4,145	$	3,456	$	8,462	$	7,736

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Commitments and contingencies (Aquiline commitment) (Details) (Aquiline Capital Partners II GP Offshore Ltd [Member], USD $)	6 Months Ended
	Jun. 30, 2012
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
Related Party Transaction Remaining Commitment	$ 41,849,000

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Basis of preparation and consolidation

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Basis of preparation and consolidation

These unaudited consolidated financial statements include Validus Holdings, Ltd. and its subsidiaries (together, the "Company") and have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 in Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In addition, the year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. This Quarterly Report should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the U.S. Securities and Exchange Commission (the "SEC").

In the opinion of management, these unaudited 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 significant 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 results of operations for any interim period are not necessarily indicative of the results for a full year. The term "ASC" used in these notes refers to Accounting Standard Codifications issued by the United States Financial Accounting Standards Board ("FASB").

On April 2, 2012, the Company joined with other investors in capitalizing PaCRe, Ltd. (“PaCRe”) a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance. Validus Reinsurance, Ltd. (“Validus Re”) has an equity interest in PaCRe and as Validus Re holds a majority of PaCRe's outstanding voting rights, the financial statements of PaCRe are included in the consolidated financial statements of the Company. The portion of PaCRe's earnings attributable to third party investors for the three and six months ended June 30, 2012 is recorded in the consolidated Statements of Comprehensive Income (loss) as net income attributable to noncontrolling interest. Refer to Note 5 "Noncontrolling interest" for further information.

On May 29, 2012, the Company joined with other investors in capitalizing AlphaCat Re 2012, Ltd. (“AlphaCat Re 2012”) a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance with a particular focus on windstorm risks for Florida domiciled insurance companies. Validus Re has an equity interest and voting interest in AlphaCat Re 2012 which is below 50%, therefore the investment in AlphaCat Re 2012 is included as an equity method investment in the consolidated financial statements of the Company. Refer to Note 4 “Investments in affiliates” for further information.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Assets
Fixed maturities, at amortized cost	$ 4,715,764	$ 4,859,705
Short-term investments, at amortized cost	310,715	280,299
Other investments, at amortized cost	$ 510,900	$ 15,002
Shareholders' equity
Common shares, par value	$ 0.175	$ 0.175
Common shares, shares authorized	571,428,571	571,428,571
Common shares, shares issued	135,374,491	134,503,065
Common shares, shares outstanding	93,411,062	99,471,080
Treasury stock, common shares	41,963,429	35,031,985

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Debt and financing arrangements

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Debt and financing arrangements

Debt and financing arrangements

(a) Financing structure and finance expenses

The financing structure at June 30, 2012 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		247,036
$400,000 syndicated unsecured letter of credit facility	400,000		—		—
$525,000 syndicated secured letter of credit facility	525,000		322,126		—
$500,000 bi-lateral secured letter of credit facility	500,000		80,134		—
Talbot FAL Facility (b)	25,000		25,000		—
PaCRe senior secured letter of credit facility	10,000		—		—
IPC Bi-Lateral Facility	80,000		51,479		—
Total	$	2,140,000	$	1,018,539	$	536,836

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

(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 and the costs of FAL as follows:

	Three Months Ended				Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
2006 Junior Subordinated Deferrable Debentures	$	1,552	$	3,228	$	3,101	$	6,816
2007 Junior Subordinated Deferrable Debentures	2,832		3,028		5,861		6,057
2010 Senior Notes due 2040	5,598		5,597		11,195		11,194
Credit facilities	3,605		1,589		9,678		3,313
AlphaCat Re 2011 preferred dividend (a)	—		2,919		—		2,919
Talbot FAL Facility	32		—		63		63
Talbot other interest	87		—		87		—
Total	$	13,706	$	16,361	$	29,985	$	30,362

(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 will be structurally subordinated to all obligations of the Company’s subsidiaries.

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 was 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 are 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 was 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.

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) $400,000 syndicated unsecured letter of credit facility and $525,000 syndicated secured letter of credit facility

On March 9, 2012, the Company, Validus Re Americas, Ltd. ("Validus Re Americas"),PaCReand Validus Re entered into a $400,000 four year unsecured credit facility with Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, N.A. as administrative agent, Lloyds Securities Inc. and Suntrust Bank, as co-documentation agents and the lenders party thereto, which provides for letter of credit availability for the Company and certain designated subsidiaries of the Company and revolving credit availability for the Company (the "Four Year Unsecured Facility") (the full $400,000 of which is available for letters of credit and/or revolving loans). The Four Year Unsecured Facility was provided by a syndicate of commercial banks arranged by J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Lloyds Securities Inc. and SunTrust Robinson Humphrey, Inc. Letters of credit under the Four Year Unsecured Facility are available to support obligations in connection with the insurance business of the Company and its subsidiaries. Loans under the Four Year Unsecured Facility are available for the general corporate and working capital purposes of the Company. The Company may request that existing lenders under the Four Year Unsecured Facility or prospective additional lenders agree to make available additional commitments from time to time so long as the aggregate commitments under the Four Year Unsecured Facility do not exceed $500,000. Letter of credit fees are payable on account of each letter of credit issued under the Four Year Unsecured Facility at a rate per annum equal to an applicable rate. Borrowings under the Four Year Unsecured Facility bear interest, at the option of the Company, at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, N.A., the federal funds effective rate plus 0.5%, and the adjusted LIBOR rate plus 1.0%) or the adjusted LIBOR rate applicable to such loans, plus an applicable rate.

Also on March 9, 2012, the Company, Validus Re Americas and Validus Re entered into a $525,000 four-year secured credit facility with Deutsche Bank Securities Inc., as syndication agent, JPMorgan Chase Bank, N.A. as administrative agent, Lloyds Securities Inc. and Suntrust Bank, as co-documentation agents and the lenders party thereto, which provides for letter of credit availability for the Company and certain designated subsidiaries of the Company (the "Four Year Secured Facility" and together with the Four Year Unsecured Facility, the "Credit Facilities"). The Four Year Secured Facility was provided by a syndicate of commercial banks arranged by J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Lloyds Securities Inc. and SunTrust Robinson Humphrey, Inc. Letters of credit under the Four Year Secured Facility will be available to support obligations in connection with the insurance business of the Company and its subsidiaries. The Company may request that existing lenders under the Four Year Secured Facility or prospective additional lenders agree to make available additional commitments from time to time so long as the aggregate commitments under the Four Year Secured Facility do not exceed $700,000. The obligations of the Company and its designated subsidiaries under the Four Year Secured Facility are secured by cash and securities deposited into cash collateral accounts from time to time with The Bank of New York Mellon. Letter of credit fees are payable on account of each letter of credit issued under the Four Year Secured Facility at a rate per annum equal to an applicable rate. Borrowings under the Four Year Secured Facility bear interest at the base rate (the higher of the prime rate announced by JPMorgan Chase Bank, N.A., the federal funds effective rate plus 0.5%, and the adjusted LIBOR rate plus 1.0%).

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 $2,600,000 and, commencing with the end of the fiscal quarter ending June 30, 2012, to be increased quarterly by an amount equal to 50.0% of the Company's consolidated net income (if positive) for such quarter plus 50.0% of the aggregate increases in the consolidated shareholders' equity of the Company during such fiscal quarter by reason of the issuance and sale of common equity interests of the Company, including upon any conversion of debt securities of the Company into such equity interests, (ii) the requirement that the Company maintain at all times a consolidated total debt to consolidated total capital 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). In addition, the Credit Facilities contain customary negative covenants applicable to the Company and its subsidiaries, including limitations on the ability to pay dividends and other payments in respect of equity interests at any time that the Company is otherwise in default with respect to certain provisions under the respective Credit Facilities, limitations on the ability to incur liens, sell assets, merge or consolidate with others, enter into transactions with affiliates, and limitations on the ability of its subsidiaries to incur indebtedness. The Credit Facilities also contain customary affirmative covenants, representations and warranties and events of default for credit facilities of its type.

As of June 30, 2012, there was $322,126 in outstanding letters of credit under the Four Year Secured Facility (December 31, 2011: $nil) and $nil outstanding under the Four Year Unsecured Facility (December 31, 2011: $nil).

As of June 30, 2012, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the Credit Facilities.

On March 9, 2012, upon entering into the Credit Facilities, the Company terminated its (a) three-year bi-lateral $60,000 unsecured revolving credit facility, dated March 12, 2010 with Lloyds TSB Bank plc, (b) 340,000 three-year unsecured credit facility, dated March 12, 2010 with Deutsche Bank Securities Inc., as syndication agent and JPMorgan Chase Bank, N.A. as administrative agent and (c) 500,000 five-year secured credit facility, dated March 12, 2007 with Deutsche Bank Securities Inc., as syndication agent and JPMorgan Chase Bank, N.A. as administrative agent. No early termination penalties were incurred.

(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 to extend the support to the 2012 and 2013 years of account.

As amended, the Talbot FAL Facility contains affirmative covenants that include, among other things, (i) the requirement that we 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 June 30, 2012, the Company had $25,000 (December 31, 2011: $25,000) in outstanding letters of credit under this facility.

As of June 30, 2012, 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 June 30, 2012, $51,479 of outstanding letters of credit were issued under the IPC Bi-Lateral Facility (December 31, 2011: $57,146).

As of June 30, 2012, and throughout the reporting periods presented, the Company was in compliance with all covenants and restrictions under the IPC Bi-Lateral Facility.

(iv) $500,000 secured bi-lateral facility

On August 10, 2009, Validus Re entered into an uncommitted $500,000 secured bi-lateral letter of credit facility with Citibank Europe plc (the “Secured Bi-Lateral Letter of Credit Facility”). Letters of credit were first issued under the Secured Bi-Lateral Letter of Credit Facility during the first quarter of 2012. As of June 30, 2012, $80,134 of letters of credit were outstanding under the Secured Bi-Lateral Facility. The Secured Bi-Lateral Letter of Credit Facility has no fixed termination date and as of June 30, 2012, Validus Re is in compliance with all terms and covenants thereof.

(v) $10,000 PaCRe Senior secured letter of credit facility

On May 11, 2012, PaCRe (as Borrower) and its subsidiary, PaCRe Investments, Ltd. (as Guarantor) entered into a 364-Day secured revolving credit and letter of credit facility with JPMorgan Chase Bank, N.A. This facility provides for revolving borrowings by the Borrower and for letters of credit issued by the Borrower to be used to support its reinsurance obligations in aggregate amount of $10,000. As of June 30, 2012, no letters of credit or revolving loans were issued under this facility.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 24, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	VALIDUS HOLDINGS LTD
Entity Central Index Key	0001348259
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Year Focus	Q2
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		93,985,765

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Commitments and contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

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 treasury 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 June 30, 2012, 1.1% 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 0.9% of its investment portfolio, other than with respect to government and agency securities.

(b) 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 June 30, 2012 amounted to $532,500 (December 31, 2011: $473,800) of which $25,000 is provided under the Talbot FAL Facility (December 31, 2011: $25,000).

(c) 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 June 30, 2012 exchange rate of £1 equals $1.5709 and assuming the maximum 3% assessment, the Company would be assessed approximately $28,276.

(d) Aquiline Commitment

On December 20, 2011, Validus Re 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. Validus Re's remaining commitment at June 30, 2012 was $41,849.

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Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues
Gross premiums written	$ 627,089	$ 605,387	$ 1,464,378	$ 1,455,283
Reinsurance premiums ceded	(119,052)	(132,346)	(226,104)	(242,166)
Net premiums written	508,037	473,041	1,238,274	1,213,117
Change in unearned premiums	(60,410)	(47,401)	(339,448)	(357,944)
Net premiums earned	447,627	425,640	898,826	855,173
Net investment income	25,885	26,494	53,645	56,469
Net realized gains on investments	6,154	11,552	13,686	17,931
Net unrealized gains (losses) on investments	(53,574)	18,526	(32,903)	5,698
(Loss) from investment affiliate	(398)	0	(398)	0
Other income	5,994	595	14,885	2,201
Foreign exchange gains (losses)	(652)	(1,991)	2,514	(2,458)
Total revenues	431,036	480,816	950,255	935,014
Expenses
Losses and loss expenses	153,692	207,307	385,681	683,505
Policy acquisition costs	76,129	78,230	154,261	155,526
General and administrative expenses	61,635	60,841	128,010	109,318
Share compensation expenses	6,800	7,628	12,238	19,677
Finance expenses	13,706	16,361	29,985	30,362
Total expenses	311,962	370,367	710,175	998,388
Net income (loss) before taxes	119,074	110,449	240,080	(63,374)
Tax (expense) benefit	(404)	29	(543)	1,488
Equity earnings in non-consolidated affiliate	3,592	0	6,959	0
Net income (loss)	122,262	110,478	246,496	(61,886)
Net loss (income) attributable to noncontrolling interest	45,360	(594)	45,360	(594)
Net income (loss) available (attributable) to Validus	167,622	109,884	291,856	(62,480)
Comprehensive income
Foreign currency translation adjustments	(757)	(21)	636	936
Other comprehensive income	(757)	(21)	636	936
Comprehensive income (loss)	$ 166,865	$ 109,863	$ 292,492	$ (61,544)
Weighted average number of common shares and common share equivalents outstanding
Basic	98,254,186	98,385,924	98,839,663	98,165,132
Diluted	103,667,967	104,562,450	104,382,030	98,165,132
Basic earnings (loss) per share	$ 1.69	$ 1.10	$ 2.92	$ (0.68)
Diluted earnings (loss) per share	$ 1.62	$ 1.05	$ 2.80	$ (0.68)
Cash dividends declared per share	$ 0.25	$ 0.25	$ 0.50	$ 0.50

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Derivative instruments used in hedging activities

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative instruments used in hedging activities

Derivative instruments used in hedging activities

The Company enters into derivative instruments for risk management purposes, specifically to hedge unmatched foreign currency exposures. As at June 30, 2012 the Company held a foreign currency forward contract to mitigate the risk of foreign currency exposure of unpaid losses denominated in Chilean Pesos (CLP) as well as foreign currency forward contracts to mitigate the risk of fluctuations in the Euro to U.S. dollar exchange rates.

The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at June 30, 2012:

			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contracts	$	45,711	Other assets	$	152	Accounts payable and accrued expenses	$	680

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 contract	$	75,323	Other assets	$	476	Accounts payable and accrued expenses	$	—

(a) Classification within the fair value hierarchy

As described in Note 3 "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.

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 three and six months ended June 30, 2012:

		Three Months Ended June 30, 2012
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 derivative		Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged			Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange gains (losses)	$	1,700	$	(1,700	)	$	—
		Three Months Ended June 30, 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 derivative		Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged			Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange gains (losses)	$	897	$	(897	)	$	—

		Six Months Ended June 30, 2012
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 derivative			Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange (losses) gains	$	(1,618	)	$	1,618	$	—
		Six Months Ended June 30, 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 derivative			Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange (losses) gains	$	(2,925	)	$	2,925	$	—

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Noncontrolling interest

6 Months Ended

Jun. 30, 2012

Noncontrolling Interest [Abstract]

Noncontrolling Interest Disclosure [Text Block]

Noncontrolling interest

     On April 2, 2012, the Company joined with other investors in capitalizing PaCRe a new Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance. Validus Re has a majority voting equity interest in PaCRe and as a result, the financial statements of PaCRe are included in the consolidated financial statements of the Company. The portion of PaCRe's earnings attributable to third party investors for the three and six months ended June 30, 2012 is recorded in the consolidated Statements of Comprehensive Income (loss) as net income attributable to noncontrolling interest.

The following table presents a reconciliation of the beginning and ending balances of noncontrolling interest for the three months ended June 30, 2012:

	Noncontrolling
	interest
Balance - April 2, 2012	$	—
Purchase of shares by noncontrolling interest		450,100
Net Income (loss):
Net (loss) attributable to noncontrolling interest		(45,360	)
Balance - June 30, 2012	$	404,740

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Significant accounting policies (Policies)

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Basis of preparation

These unaudited consolidated financial statements include Validus Holdings, Ltd. and its subsidiaries (together, the "Company") and have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 in Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In addition, the year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. This Quarterly Report should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the U.S. Securities and Exchange Commission (the "SEC").

In the opinion of management, these unaudited 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.

Use of estimates

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 significant 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 results of operations for any interim period are not necessarily indicative of the results for a full year.

Investments

The Company’s investments in fixed maturities, short-term investments and other investments 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.

Reserves 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 and adjusted 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.

Reinsurance Accounting Policy [Policy Text Block]

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.

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.

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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Related party transactions

6 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Related party transactions

Related party transactions

The transactions listed below are classified as related party transactions as each counter party has either a direct or indirect shareholding in the Company.

    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 three and six months ended June 30, 2012 of $1,118 (2011: $900) and $1,415 (2011:$1,411) of which $886 was included in premiums receivable at June 30, 2012 (December 31, 2011: $330). The Company also recognized reinsurance premiums ceded during the three and six months ended June 30, 2012 of $nil (2011: $nil) and $nil (2011:$163) of which $1 was included in reinsurance balances payable at June 30, 2012 (December 31, 2011: $21). Earned premium adjustments of $370 (2011: $344) and $732 (2011:$678) were incurred during the three and six months ended June 30, 2012.

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 for the three and six months ended June 30, 2012 of $2,070 (2011: $628) and $2,360 (2011:$1,081) of which $2,124 was included in accounts payable and accrued expenses at June 30, 2012 (December 31, 2011: $86).

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, one of the Company's directors, serves as a director of a subsidiary company of Conning Holdings Corp. Investment management fees incurred under this agreement for the three and six months ended June 30, 2012 were $205 (2011: $234) and $404 (2011:$380) of which $202 was included in accounts payable and accrued expenses at June 30, 2012 (December 31, 2011: $203).

On December 20, 2011, Validus Re 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"). Messrs. Greenberg and Watson, directors of the Company, serve as managing principal and senior principal, respectively, of Aquiline Capital Partners LLC. For the three and six months ended June 30, 2012, the Company incurred $450 (2011: $nil) and $1,886 (2011:$nil) in partnership fees and made $3,368 (2011: nil) and $4,898 (2011: $nil) of capital contributions, of which $nil was included in accounts payable and accrued expenses at June 30, 2012 (December 31, 2011: $nil).

Certain shareholders of the Company and their affiliates, as well as the employers of or entities otherwise associated with certain directors and officers or their affiliates, have purchased insurance and/or reinsurance from the Company in the ordinary course of business on terms the Company believes were no more favorable to these (re)insureds than those made available to other customers.

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Share capital

6 Months Ended

Jun. 30, 2012

Stockholders' Equity Note [Abstract]

Share capital

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 common voting shares are entitled to receive dividends and 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 June 5, 2012, the Company announced the final results of its “modified Dutch auction” tender offer. Pursuant to this tender offer the Company purchased 6,383,884 of its common shares at a price of $32.00 per common share for a total cost of 204,284, excluding fees and expenses relating to the tender offer. The Company funded the purchase of the shares in the tender offer using cash on hand.

The Company may from time to time repurchase its securities, including common shares, Junior Subordinated Deferrable Debentures and Senior Notes. The Company has repurchased approximately 41,963,429 common shares for an aggregate purchase price of $1,168,422 from the inception of its share repurchase program to June 30, 2012. The Company had $160,751 remaining under its authorized share repurchase program as of June 30, 2012.

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, 2011	134,503,065
Restricted share awards vested, net of shares withheld	687,990
Restricted share units vested, net of shares withheld	12,336
Options exercised	171,100
Warrants exercised	—
Common shares issued, June 30, 2012	135,374,491
Shares repurchased	(41,963,429	)
Common shares outstanding, June 30, 2012	93,411,062

	Common Shares
Common shares issued, December 31, 2010	132,838,111
Restricted share awards vested, net of shares withheld	458,933
Restricted share units vested, net of shares withheld	9,496
Options exercised	455,033
Warrants exercised	34,340
Common shares issued, June 30, 2011	133,795,913
Shares repurchased	(35,031,985	)
Common shares outstanding, June 30, 2011	98,763,928

(b) Warrants

During the three and six months ended June 30, 2012 no warrants were exercised. During the three and six months ended June 30, 2011, 72,598 warrants were exercised which resulted in the issuance of 34,340 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 June 30, 2012 were 4,927 (December 31, 2011: 4,850).

(d) Dividends

On February 9, 2012, the Company announced a quarterly cash dividend of $0.25 (2011: $0.25) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on March 30, 2012 to holders of record on March 15, 2012.

On May 2, 2012, the Company announced a quarterly cash dividend of $0.25 (2011: $0.25) per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable. This dividend was paid on June 29, 2012 to holders of record on June 15, 2012.

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Stock plans (Components of share compensation expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Total share compensation expenses
Share compensation expenses	$ 6,800	$ 7,628	$ 12,238	$ 19,677
Options [Member]
Total share compensation expenses
Share compensation expenses	7	179	142	1,426
Restricted share awards [Member]
Total share compensation expenses
Share compensation expenses	6,176	5,792	12,116	14,948
Restricted share units [Member]
Total share compensation expenses
Share compensation expenses	111	97	231	211
Performance share awards [Member]
Total share compensation expenses
Share compensation expenses	506	528	(251)	872
Employee seller shares [Member]
Total share compensation expenses
Share compensation expenses	$ 0	$ 1,032	$ 0	$ 2,220

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Reserve for losses and loss expenses

6 Months Ended

Jun. 30, 2012

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Reserve for losses and loss expenses

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 and adjusted 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 losses and loss expenses for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Reserve for losses and loss expenses, beginning of period	$	2,649,610		$	2,534,415		$	2,631,143		$	2,035,973
Losses and loss expenses recoverable	(351,292		)	(453,701		)	(372,485		)	(283,134		)
Net reserves for losses and loss expenses, beginning of period	2,298,318			2,080,714			2,258,658			1,752,839
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year	191,252			233,012			453,665			735,726
Prior years	(37,560		)	(25,705		)	(67,984		)	(52,221		)
Total incurred losses and loss expenses	153,692			207,307			385,681			683,505
Total net paid losses	(220,529		)	(121,046		)	(424,752		)	(284,303		)
Foreign exchange	(11,666		)	13,580			228			28,514
Net reserve for losses and loss expenses, end of period	2,219,815			2,180,555			2,219,815			2,180,555
Losses and loss expenses recoverable	371,484			439,805			371,484			439,805
Reserve for losses and loss expenses, end of period	$	2,591,299		$	2,620,360		$	2,591,299		$	2,620,360

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Reinsurance

6 Months Ended

Jun. 30, 2012

Reinsurance Disclosures [Abstract]

Reinsurance

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) 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 June 30, 2012, 97.3% of reinsurance recoverables (which includes loss reserves recoverable and recoverables on paid losses) were from reinsurers rated A- or better and included $156,316 of IBNR recoverable (December 31, 2011: $125,298). Reinsurance recoverables by reinsurer are as follows:

	June 30, 2012				December 31, 2011
	Reinsurance Recoverable		% of Total		Reinsurance Recoverable		% of Total
Top 10 reinsurers	$	291,970	72.3	%	$	323,315	69.8	%
Other reinsurers’ balances > $1 million	104,288		25.8	%	132,417		28.6	%
Other reinsurers’ balances < $1 million	7,621		1.9	%	7,248		1.6	%
Total	$	403,879	100.0	%	$	462,980	100.0	%

	June 30, 2012
Top 10 Reinsurers	Rating	Reinsurance Recoverable		% of Total
Lloyd's Syndicates	A+	$	75,022	25.8	%
Everest Re	A+	42,727		14.6	%
Allianz	AA-	39,336		13.5	%
Hannover Re	AA-	38,960		13.3	%
Transatlantic Re	A+	20,975		7.2	%
Lancashire Insurance Company Ltd	A	20,000		6.9	%
Swiss Re	AA-	16,200		5.5	%
Munich Re	AA-	13,722		4.7	%
Tokio Millenium Re Ltd	AA-	12,940		4.4	%
Platinum Underwriters	A-	12,088		4.1	%
Total		$	291,970	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 Millenium Re Ltd	AA-	20,432		6.3	%
Fully Collateralized	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	%

At June 30, 2012 and December 31, 2011, the provision for uncollectible reinsurance relating to losses recoverable was $6,475 and $6,821, 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 $403,879 reinsurance recoverable at June 30, 2012 (December 31, 2011: $462,980), $9,717 was fully collateralized (December 31, 2011: $18,140).

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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Stock plans

6 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock plans

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 3,152,947 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. Fair value of the option awards at the date of grant is determined 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 has not granted any stock options awards since September 4, 2009.

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 in respect of options of $7 were recorded for the three months ended June 30, 2012 (2011: $179). Share compensation expenses in respect of options of $142 were recorded for the six months ended June 30, 2012 (2011:$1,426). 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 six months ended June 30, 2012 was as follows:

	Options		Weighted Average Grant Date Fair Value		Weighted Average Grant Date Exercise Price
Options outstanding, December 31, 2011	2,263,012		$	6.69	$	20.12
Options granted	—		—		—
Options exercised	(171,100	)	7.52		17.99
Options forfeited	—		—		—
Options outstanding, June 30, 2012	2,091,912		$	6.63	$	20.29
Options exercisable at June 30, 2012	2,091,912		$	6.63	$	20.29

Activity with respect to options for the six months ended June 30, 2011was 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	(455,033	)	6.96		20.56
Options forfeited	(1,850	)	10.30		20.39
Options outstanding, June 30, 2011	2,266,801		$	6.70	$	20.12
Options exercisable at June 30, 2011	2,178,828		$	6.62	$	20.02

At June 30, 2012, there were $nil (December 31, 2011: $141) of total unrecognized share compensation expenses in respect of options that are expected to be recognized over a weighted-average period of 0.0 years (December 31, 2011: 0.2 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 $6,176 were recorded for the three months ended June 30, 2012 (2011: $5,792). Share compensation expenses of $12,116 were recorded for the six months ended June 30, 2012 (2011: $14,948). 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 six months ended June 30, 2012 was as follows:

	Restricted Share Awards		Weighted Average Grant Date Fair Value
Restricted share awards outstanding, December 31, 2011	3,003,547		$	25.77
Restricted share awards granted	900,725		31.38
Restricted share awards vested	(803,917	)	25.93
Restricted share awards forfeited	(30,801	)	28.10
Restricted share awards outstanding, June 30, 2012	3,069,554		$	27.35

Activity with respect to unvested restricted share awards for the six months ended June 30, 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	590,367		32.16
Restricted share awards vested	(553,615	)	25.46
Restricted share awards forfeited	(13,198	)	27.28
Restricted share awards outstanding, June 30, 2011	3,137,593		$	25.60

At June 30, 2012, there were $55,832 (December 31, 2011: $40,809) of total unrecognized share compensation expenses in respect of restricted share awards that are expected to be recognized over a weighted-average period of 2.9 years (December 31, 2011: 2.4 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 $111 were recorded for the three months ended June 30, 2012 (2011: $97). Share compensation expenses of $231 were recorded for the six months ended June 30, 2012 (2011: $211). 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 units for the six months ended June 30, 2012 was as follows:

	Restricted Share Units		Weighted Average Grant Date Fair Value
Restricted share units outstanding, December 31, 2011	53,312		$	27.60
Restricted share units granted	13,625		31.38
Restricted share units vested	(18,175	)	26.58
Restricted share units issued in lieu of cash dividends	789		28.01
Restricted share units forfeited	(1,150	)	30.07
Restricted share units outstanding, June 30, 2012	48,401		$	29.00

Activity with respect to unvested restricted share units for the six months ended June 30, 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	296		25.45
Restricted share units forfeited	—		—
Restricted share units outstanding, June 30, 2011	52,393		$	27.60

At June 30, 2012, there were $1,145 (December 31, 2011: $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 2.9 years (December 31, 2011: 2.7 years).

iv.Performance share awards

The Performance Share Awards (“PSAs”) 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 PSAs 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 reflect any adjustments in the consolidated statements of income in the period in which they are determined.

Share compensation expenses of $506 were recorded for the three months ended June 30, 2012 (2011: $528). Share compensation expenses of $(251) for the six months ended June 30, 2012 (2011: $872). 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 six months ended June 30, 2012 was as follows:

	Performance Share Awards		Weighted Average Grant Date Fair Value
Performance share awards outstanding, December 31, 2011	279,019		$	30.77
Performance share awards granted	41,128		31.38
Performance share awards vested	—		—
Performance share awards cancelled	(99,302	)	28.70
Performance share awards outstanding, June 30, 2012	220,845		$	31.81

Activity with respect to unvested performance share awards for the six months ended June 30, 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, June 30, 2011	279,019	$	30.77

At June 30, 2012, there were $4,436 (December 31, 2011: $5,677) of total unrecognized share compensation expenses in respect of PSAs that are expected to be recognized over a weighted-average period of 2.1 years (December 31, 2011: 2.1 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 the potential for forfeiture was completely extinguished.

As of July 2, 2011, the employee seller shares were fully expensed. Share compensation expenses of $1,032 and $2,220 were recorded for the three and six months ended June 30, 2011, respectively.

Total share compensation expenses

The breakdown of share compensation expenses by award type was as follows:

	Three Months Ended				Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012			June 30, 2011
Options	$	7	$	179	$	142		$	1,426
Restricted share awards	6,176		5,792		12,116			14,948
Restricted share units	111		97		231			211
Performance share awards	506		528		(251		)	872
Employee seller shares	—		1,032		—			2,220
Total	$	6,800	$	7,628	$	12,238		$	19,677

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Debt and financing Arrangements (Future payments of principal) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
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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Commitments and contingencies (Lloyd's syndicate) (Details) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012 Lloyd's Syndicate 1183 [Member] USD ($)	Jun. 30, 2012 Lloyd's Syndicate 1183 [Member] GBP (£)	Dec. 31, 2011 Lloyd's Syndicate 1183 [Member] USD ($)	Jun. 30, 2012 Talbot Fal Facility [Member] USD ($)		Dec. 31, 2011 Talbot Fal Facility [Member] USD ($)
Funds at Lloyd's and Lloyd's Central Fund
Maximum premium levies assessable, percent	3.00%	3.00%
Estimated underwriting capacity		£ 600,000
Exchange rate	£1 equals $1.5709	£1 equals $1.5709
Maximum premium levies assessable, amount	28,276
Components Of Required Capital [Abstract]
Cash, investments and letters of credit amount	532,500		473,800
Credit facility, commitment				$ 25,000	[1]	$ 25,000	[1]

[1] 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.

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Debt and financing Arrangements (Components of finance expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Components of financial expenses
Finance expenses	$ 13,706		$ 16,361		$ 29,985		$ 30,362
Credit Facilities [Member]
Components of financial expenses
Finance expenses	3,605		1,589		9,678		3,313
AlphaCat Re 2011 fees [Member]
Components of financial expenses
Finance expenses	0	[1]	2,919	[1]	0	[1]	2,919	[1]
Talbot Fal Facility [Member]
Components of financial expenses
Finance expenses	32		0		63		63
Talbot other interest [Member]
Components of financial expenses
Finance expenses	87		0		87		0
2006 Junior Subordinated Deferrable Debentures [Member]
Components of financial expenses
Finance expenses	1,552		3,228		3,101		6,816
2007 Junior Subordinated Deferrable Debentures [Member]
Components of financial expenses
Finance expenses	2,832		3,028		5,861		6,057
2010 Senior Notes Due 2040 [Member]
Components of financial expenses
Finance expenses	$ 5,598		$ 5,597		$ 11,195		$ 11,194

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

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Segment information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Results of operating segments and corporate segment

Six Months Ended June 30, 2011	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	894,779		$	58,110		$	—		$	952,889		$	539,943		$	(37,549	)	$	1,455,283
Reinsurance premiums ceded	(145,023		)	—			—			(145,023		)	(134,692		)	37,549			(242,166		)
Net premiums written	749,756			58,110			—			807,866			405,251			—			1,213,117
Change in unearned premiums	(276,526		)	(46,353		)	—			(322,879		)	(35,065		)	—			(357,944		)
Net premiums earned	473,230			11,757			—			484,987			370,186			—			855,173
Underwriting deductions
Losses and loss expenses	404,579			—			—			404,579			278,926			—			683,505
Policy acquisition costs	74,763			1,289			(217		)	75,835			79,523			168			155,526
General and administrative expenses	25,589			1,955			3,160			30,704			60,651			17,963			109,318
Share compensation expenses	4,928			48			502			5,478			4,745			9,454			19,677
Total underwriting deductions	509,859			3,292			3,445			516,596			423,845			27,585			968,026
Underwriting (loss) income	$	(36,629	)	$	8,465		$	(3,445	)	$	(31,609	)	$	(53,659	)	$	(27,585	)	$	(112,853	)
Net investment income	46,094			1,946			—			48,040			12,962			(4,533		)	56,469
Other income	2,036			3,173			(78		)	5,131			2,195			(5,125		)	2,201
Finance expenses	(3,292		)	(2,923		)	—			(6,215		)	(63		)	(24,084		)	(30,362		)
Operating income (loss) before taxes	8,209			10,661			(3,523		)	15,347			(38,565		)	(61,327		)	(84,545		)
Tax (expense) benefit	(6		)	—			—			(6		)	1,585			(91		)	1,488
Net operating income (loss)	$	8,203		$	10,661		$	(3,523	)	$	15,341		$	(36,980	)	$	(61,418	)	$	(83,057	)
Net realized gains on investments	12,915			556			—			13,471			4,460			—			17,931
Net unrealized gains (losses) on investments	7,701			(1,659		)	—			6,042			(344		)	—			5,698
Foreign exchange (losses) gains	(9,536		)	(161		)	—			(9,697		)	7,311			(72		)	(2,458		)
Net income (loss)	$	19,283		$	9,397		$	(3,523	)	$	25,157		$	(25,553	)	$	(61,490	)	$	(61,886	)
Net (income) attributable to noncontrolling interest	—			(594		)	—			(594		)	—			—			(594		)
Net income (loss) available (attributable) to Validus	$	19,283		$	8,803		$	(3,523	)	$	24,563		$	(25,553	)	$	(61,490	)	$	(62,480	)
Selected ratios:
Net premiums written / Gross premiums written	83.8		%	100.0		%							75.1		%				83.4		%
Losses and loss expenses	85.5		%	0.0		%							75.3		%				79.9		%
Policy acquisition costs	15.8		%	11.0		%							21.5		%				18.2		%
General and administrative expenses (a)	6.4		%	17.0		%							17.7		%				15.1		%
Expense ratio	22.2		%	28.0		%							39.2		%				33.3		%
Combined ratio	107.7		%	28.0		%							114.5		%				113.2		%
Total assets	$	5,003,271		$	408,809								$	2,759,850		$	87,858		$	8,259,788

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

Six Months Ended June 30, 2012	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	907,716		$	18,673		$	—		$	926,389		$	576,781		$	(38,792	)	$	1,464,378
Reinsurance premiums ceded	(127,078		)	—			—			(127,078		)	(137,818		)	38,792			(226,104		)
Net premiums written	780,638			18,673			—			799,311			438,963			—			1,238,274
Change in unearned premiums	(284,943		)	(12,423		)	—			(297,366		)	(42,082		)	—			(339,448		)
Net premiums earned	495,695			6,250			—			501,945			396,881			—			898,826
Underwriting deductions
Losses and loss expenses	177,396			—			—			177,396			208,285			—			385,681
Policy acquisition costs	75,874			638			(25		)	76,487			80,541			(2,767		)	154,261
General and administrative expenses	31,394			3,434			2,315			37,143			64,305			26,562			128,010
Share compensation expenses	3,838			111			311			4,260			3,147			4,831			12,238
Total underwriting deductions	288,502			4,183			2,601			295,286			356,278			28,626			680,190
Underwriting income (loss)	$	207,193		$	2,067		$	(2,601	)	$	206,659		$	40,603		$	(28,626	)	$	218,636
Net investment income	45,271			1,479			—			46,750			11,215			(4,320		)	53,645
Other income	2,686			14,563			2,908			20,157			1,353			(6,625		)	14,885
Finance expenses	(5,839		)	(439		)	—			(6,278		)	(151		)	(23,556		)	(29,985		)
Operating income (loss) before taxes and income from operating affiliates	249,311			17,670			307			267,288			53,020			(63,127		)	257,181
Tax (expense) benefit	(9		)	—			—			(9		)	(551		)	17			(543		)
Income from operating affiliates	—			6,959			—			6,959			—			—			6,959
Net operating income (loss)	$	249,302		$	24,629		$	307		$	274,238		$	52,469		$	(63,110	)	$	263,597
Net realized gains (losses) on investments	11,065			(84		)	—			10,981			2,705			—			13,686
Net unrealized gains (losses) on investments	16,168			(50,116		)	—			(33,948		)	1,045			—			(32,903		)
(Loss) from investment affiliate	(398		)	—			—			(398		)	—			—			(398		)
Foreign exchange gains (losses)	2,453			17			—			2,470			188			(144		)	2,514
Net income (loss)	$	278,590		$	(25,554	)	$	307		$	253,343		$	56,407		$	(63,254	)	$	246,496
Net loss attributable to noncontrolling interest	—			45,360			—			45,360			—			—			45,360
Net income (loss) available (attributable) to Validus	$	278,590		$	19,806		$	307		$	298,703		$	56,407		$	(63,254	)	$	291,856
Selected ratios:
Net premiums written / Gross premiums written	86.0		%	100.0		%							76.1		%				84.6		%
Losses and loss expenses	35.8		%	0.0		%							52.5		%				42.9		%
Policy acquisition costs	15.3		%	10.2		%							20.3		%				17.2		%
General and administrative expenses (a)	7.1		%	56.7		%							17.0		%				15.6		%
Expense ratio	22.4		%	66.9		%							37.3		%				32.8		%
Combined ratio	58.2		%	66.9		%							89.8		%				75.7		%
Total assets	$	4,846,607		$	696,236								$	2,931,430		$	25,295		$	8,499,568

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

The following tables summarize the results of our operating segments and "corporate":

Three Months Ended June 30, 2012	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	340,850		$	15,155		$	—		$	356,005		$	283,528		$	(12,444	)	$	627,089
Reinsurance premiums ceded	(97,077		)	—			—			(97,077		)	(34,419		)	12,444			(119,052		)
Net premiums written	243,773			15,155			—			258,928			249,109			—			508,037
Change in unearned premiums	(1,087		)	(11,568		)	—			(12,655		)	(47,755		)	—			(60,410		)
Net premiums earned	242,686			3,587			—			246,273			201,354			—			447,627
Underwriting deductions
Losses and loss expenses	53,190			—			—			53,190			100,502			—			153,692
Policy acquisition costs	37,084			382			(25		)	37,441			41,803			(3,115		)	76,129
General and administrative expenses	14,142			2,402			1,866			18,410			30,957			12,268			61,635
Share compensation expenses	1,966			59			159			2,184			1,799			2,817			6,800
Total underwriting deductions	106,382			2,843			2,000			111,225			175,061			11,970			298,256
Underwriting income (loss)	$	136,304		$	744		$	(2,000	)	$	135,048		$	26,293		$	(11,970	)	$	149,371
Net investment income	21,694			820			—			22,514			5,425			(2,054		)	25,885
Other income	467			6,589			2,018			9,074			327			(3,407		)	5,994
Finance expenses	(2,145		)	(437		)	—			(2,582		)	(120		)	(11,004		)	(13,706		)
Operating income (loss) before taxes and income from operating affiliates	156,320			7,716			18			164,054			31,925			(28,435		)	167,544
Tax (expense) benefit	(2		)	—			—			(2		)	(419		)	17			(404		)
Income from operating affiliates	—			3,592			—			3,592			—			—			3,592
Net operating income (loss)	$	156,318		$	11,308		$	18		$	167,644		$	31,506		$	(28,418	)	$	170,732
Net realized gains (losses) on investments	4,823			(84		)	—			4,739			1,415			—			6,154
Net unrealized (losses) on investments	(3,697		)	(49,519		)	—			(53,216		)	(358		)	—			(53,574		)
(Loss) from investment affiliate	(398		)	—			—			(398		)	—			—			(398		)
Foreign exchange gains (losses)	2,715			26			—			2,741			(3,435		)	42			(652		)
Net income (loss)	$	159,761		$	(38,269	)	$	18		$	121,510		$	29,128		$	(28,376	)	$	122,262
Net loss attributable to noncontrolling interest	—			45,360			—			45,360			—			—			45,360
Net income (loss) available (attributable) to Validus	$	159,761		$	7,091		$	18		$	166,870		$	29,128		$	(28,376	)	$	167,622
Selected ratios:
Net premiums written / Gross premiums written	71.5		%	100.0		%							87.9		%				81.0		%
Losses and loss expenses	21.9		%	0.0		%							49.9		%				34.3		%
Policy acquisition costs	15.3		%	10.6		%							20.8		%				17.0		%
General and administrative expenses (a)	6.6		%	68.6		%							16.3		%				15.3		%
Expense ratio	21.9		%	79.2		%							37.1		%				32.3		%
Combined ratio	43.8		%	79.2		%							87.0		%				66.6		%
Total assets	$	4,846,607		$	696,236								$	2,931,430		$	25,295		$	8,499,568

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

The following tables summarize the results of our operating segments and corporate segment:

Three Months Ended June 30, 2011	Validus Re Segment			AlphaCat Segment			Legal Entity Adjustments			Validus Re Consolidated			Talbot Segment			Corporate & Eliminations			Total
Underwriting income
Gross premiums written	$	290,691		$	50,960		$	—		$	341,651		$	276,886		$	(13,150	)	$	605,387
Reinsurance premiums ceded	(98,218		)	—			—			(98,218		)	(47,278		)	13,150			(132,346		)
Net premiums written	192,473			50,960			—			243,433			229,608			—			473,041
Change in unearned premiums	31,814			(42,569		)	—			(10,755		)	(36,646		)	—			(47,401		)
Net premiums earned	224,287			8,391			—			232,678			192,962			—			425,640
Underwriting deductions
Losses and loss expenses	94,035			—			—			94,035			113,272			—			207,307
Policy acquisition costs	35,013			973			(217		)	35,769			42,307			154			78,230
General and administrative expenses	15,059			1,061			1,813			17,933			33,345			9,563			60,841
Share compensation expenses	1,823			21			174			2,018			2,026			3,584			7,628
Total underwriting deductions	145,930			2,055			1,770			149,755			190,950			13,301			354,006
Underwriting income (loss)	$	78,357		$	6,336		$	(1,770	)	$	82,923		$	2,012		$	(13,301	)	$	71,634
Net investment income	21,662			727			—			22,389			6,372			(2,267		)	26,494
Other income	745			2,532			(308		)	2,969			594			(2,968		)	595
Finance expenses	(1,579		)	(2,923		)	—			(4,502		)	—			(11,859		)	(16,361		)
Operating income (loss) before taxes	99,185			6,672			(2,078		)	103,779			8,978			(30,395		)	82,362
Tax (expense) benefit	(4		)	—			—			(4		)	(208		)	241			29
Net operating income (loss)	$	99,181		$	6,672		$	(2,078	)	$	103,775		$	8,770		$	(30,154	)	$	82,391
Net realized gains on investments	9,014			538			—			9,552			2,000			—			11,552
Net unrealized gains (losses) on investments	15,377			(820		)	—			14,557			3,969			—			18,526
Foreign exchange (losses) gains	(5,266		)	(71		)	—			(5,337		)	3,410			(64		)	(1,991		)
Net income (loss)	$	118,306		$	6,319		$	(2,078	)	$	122,547		$	18,149		$	(30,218	)	$	110,478
Net (income) attributable to noncontrolling interest	—			(594		)	—			(594		)	—			—			(594		)
Net income (loss) available (attributable) to Validus	$	118,306		$	5,725		$	(2,078	)	$	121,953		$	18,149		$	(30,218	)	$	109,884
Selected ratios:
Net premiums written / Gross premiums written	66.2		%	100.0		%							82.9		%				78.1		%
Losses and loss expenses	41.9		%	0.0		%							58.7		%				48.7		%
Policy acquisition costs	15.6		%	11.6		%							21.9		%				18.4		%
General and administrative expenses (a)	7.5		%	12.9		%							18.3		%				16.1		%
Expense ratio	23.1		%	24.5		%							40.2		%				34.5		%
Combined ratio	65.0		%	24.5		%							98.9		%				83.2		%
Total assets	$	5,003,271		$	408,809								$	2,759,850		$	87,858		$	8,259,788

(a) Ratios are based on net premiums earned. The general and administrative expense ratio includes share compensation expenses.

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:

	Three Months Ended June 30, 2012
	Gross Premiums Written
	Validus Re		AlphaCat			Talbot		Eliminations			Total		%
United States	$	213,473	$	14,166		$	32,941	$	(1,933	)	$	258,647	41.3	%
Worldwide excluding United States (a)	4,650		—			61,334		(2,628		)	63,356		10.1	%
Europe	14,427		(11		)	14,198		(598		)	28,016		4.5	%
Latin America and Caribbean	5,626		—			24,427		(1,075		)	28,978		4.6	%
Japan	31,112		—			3,427		(119		)	34,420		5.5	%
Canada	116		—			2,148		(120		)	2,144		0.3	%
Rest of the world (b)	10,067		—			—		—			10,067		1.6	%
Sub-total, non United States	65,998		(11		)	105,534		(4,540		)	166,981		26.6	%
Worldwide including United States (a)	20,734		1,000			18,369		(716		)	39,387		6.3	%
Marine and Aerospace (c)	40,645		—			126,684		(5,255		)	162,074		25.8	%
Total	$	340,850	$	15,155		$	283,528	$	(12,444	)	$	627,089	100.0	%

	Three Months Ended June 30, 2011
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	211,323	$	50,041	$	34,181	$	(2,307	)	$	293,238	48.5	%
Worldwide excluding United States (a)	2,580		—		57,204		(257		)	59,527		9.8	%
Europe	10,710		19		18,935		(59		)	29,605		4.9	%
Latin America and Caribbean	11,432		—		22,265		(8,942		)	24,755		4.1	%
Japan	23,871		—		2,216		—			26,087		4.3	%
Canada	10		—		2,443		(10		)	2,443		0.4	%
Rest of the world (b)	8,939		—		—		—			8,939		1.5	%
Sub-total, non United States	57,542		19		103,063		(9,268		)	151,356		25.0	%
Worldwide including United States (a)	11,684		900		15,506		(40		)	28,050		4.6	%
Marine and Aerospace (c)	10,142		—		124,136		(1,535		)	132,743		21.9	%
Total	$	290,691	$	50,960	$	276,886	$	(13,150	)	$	605,387	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.

	Six Months Ended June 30, 2012
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	367,903	$	16,574	$	61,696	$	(4,235	)	$	441,938	30.2	%
Worldwide excluding United States (a)	26,845		—		137,594		(9,306		)	155,133		10.6	%
Europe	72,218		820		29,445		(1,764		)	100,719		6.8	%
Latin America and Caribbean	26,213		—		53,741		(3,370		)	76,584		5.2	%
Japan	30,977		—		4,087		(237		)	34,827		2.4	%
Canada	324		—		5,670		(327		)	5,667		0.4	%
Rest of the world (b)	52,008		279				—			52,287		3.6	%
Sub-total, non United States	208,585		1,099		230,537		(15,004		)	425,217		29.0	%
Worldwide including United States (a)	78,753		1,000		33,166		(1,802		)	111,117		7.6	%
Marine and Aerospace (c)	252,475		—		251,382		(17,751		)	486,106		33.2	%
Total	$	907,716	$	18,673	$	576,781	$	(38,792	)	$	1,464,378	100.0	%

	Six Months Ended June 30, 2011
	Gross Premiums Written
	Validus Re		AlphaCat		Talbot		Eliminations			Total		%
United States	$	401,481	$	52,248	$	62,012	$	(4,204	)	$	511,537	35.2	%
Worldwide excluding United States (a)	29,558		—		125,171		(2,969		)	151,760		10.4	%
Europe	68,466		1,229		34,944		(561		)	104,078		7.2	%
Latin America and Caribbean	35,918		633		40,533		(22,571		)	54,513		3.7	%
Japan	34,069		—		2,756		(100		)	36,725		2.5	%
Canada	110		—		6,251		(110		)	6,251		0.4	%
Rest of the world (b)	44,996		—		—		—			44,996		3.1	%
Sub-total, non United States	213,117		1,862		209,655		(26,311		)	398,323		27.3	%
Worldwide including United States (a)	76,780		4,000		26,036		(542		)	106,274		7.3	%
Marine and Aerospace (c)	203,401		—		242,240		(6,492		)	439,149		30.2	%
Total	$	894,779	$	58,110	$	539,943	$	(37,549	)	$	1,455,283	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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Noncontrolling interest (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 PaCRe, Ltd [Member]	Apr. 04, 2012 PaCRe, Ltd [Member]
Activity in net income attributable to noncontrolling interest
Balance - Beginning of Period			$ 0			$ 0
Purchase of shares by noncontrolling interest					450,100
Net loss (income) attributable to noncontrolling interest	45,360	(594)	45,360	(594)	45,360
Balance - End of Period	$ 404,740	$ 134,895	$ 404,740	$ 134,895	$ 404,740	$ 0

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Subsequent events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent events

Subsequent events

Quarterly Dividend

On July 25, 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 September 28, 2012 to holders of record on September 14, 2012.

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Noncontrolling interest (Tables)

6 Months Ended

Jun. 30, 2012

Noncontrolling Interest [Abstract]

Minority Interest Rollforward Activity [Table Text Block]

The portion of PaCRe's earnings attributable to third party investors for the three and six months ended June 30, 2012 is recorded in the consolidated Statements of Comprehensive Income (loss) as net income attributable to noncontrolling interest.

The following table presents a reconciliation of the beginning and ending balances of noncontrolling interest for the three months ended June 30, 2012:

	Noncontrolling
	interest
Balance - April 2, 2012	$	—
Purchase of shares by noncontrolling interest		450,100
Net Income (loss):
Net (loss) attributable to noncontrolling interest		(45,360	)
Balance - June 30, 2012	$	404,740

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Investments in affiliates (Investment affiliate) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2012 Aquiline Financial Services Fund LP [Member]		Jun. 30, 2012 Aquiline Financial Services Fund LP [Member]		Dec. 31, 2011 Private Equity Funds [Member]
Schedule of Equity Method Investments [Line Items]
Investment in limited partnership (Aquiline Financial Services Fund II L.P.), beginning of period						$ 3,347
Investment in Aquiline prior to reclassification			16,787		463,018					3,253	[1]
Capital contributions						3,368		4,898	[1]
Net unrealized loss on investments								(1,436)	[1]
(Loss) from investment affiliate	(398)	0	(398)	0		(398)		(398)	[1]
Investment in limited partnership (Aquiline Financial Services Fund II L.P.), end of period						6,317	[1]	6,317	[1]
Investment in Aquiline - other details
Voting ownership %						0.00%		0.00%
Equity ownership %						6.80%		6.80%
Carrying value						$ 6,317	[1]	$ 6,317	[1]

[1] As at December 31, 2011 and March 31, 2012, this investment was included in "Other investments" as a level 3 investment in the fair value hierarchy, hence the change in fair value was included in net unrealized (losses) gains on investments.

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Investments (Fixed maturities by investment rating) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fixed Maturities
Estimated fair value	$ 4,772,899	$ 4,894,145
Percentage of total	100.00%	100.00%
AAA [Member]
Fixed Maturities
Estimated fair value	745,676	882,912
Percentage of total	15.60%	18.00%
AA [Member]
Fixed Maturities
Estimated fair value	2,025,848	2,077,981
Percentage of total	42.50%	42.50%
A [Member]
Fixed Maturities
Estimated fair value	1,019,888	1,078,793
Percentage of total	21.40%	22.00%
BBB [Member]
Fixed Maturities
Estimated fair value	378,502	345,091
Percentage of total	7.90%	7.10%
Investment Grade [Member]
Fixed Maturities
Estimated fair value	4,169,914	4,384,777
Percentage of total	87.40%	89.60%
BB [Member]
Fixed Maturities
Estimated fair value	315,768	254,409
Percentage of total	6.60%	5.20%
B [Member]
Fixed Maturities
Estimated fair value	263,900	231,420
Percentage of total	5.50%	4.70%
CCC [Member]
Fixed Maturities
Estimated fair value	8,885	12,578
Percentage of total	0.20%	0.30%
CC [Member]
Fixed Maturities
Estimated fair value	3,116	4,605
Percentage of total	0.10%	0.10%
D/NR [Member]
Fixed Maturities
Estimated fair value	11,316	6,356
Percentage of total	0.20%	0.10%
Non Investment Grade [Member]
Fixed Maturities
Estimated fair value	$ 602,985	$ 509,368
Percentage of total	12.60%	10.40%

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Consolidated Statements of Shareholders' Equity (Unaudited) (USD $) In Thousands	Total	Common shares	Treasury shares	Additional paid-in capital	Accumulated other comprehensive (loss)	Retained earnings
Beginning balance at Dec. 31, 2010		$ 23,247	$ (6,096)	$ 1,860,960	$ (5,455)	$ 1,632,175
Common shares issued, net		167		6,071
Repurchase of common shares			(35)	(5,960)
Share compensation expenses				19,677
Foreign currency translation adjustments	936				936
Dividends						(54,890)
Net income (loss)	(61,886)					(61,886)
Net loss (income) attributable to noncontrolling interest	(594)
Noncontrolling interest	134,895
Total shareholders' equity	3,543,212
Ending balance at Jun. 30, 2011	3,408,317	23,414	(6,131)	1,880,748	(4,519)	1,514,805
Beginning balance at Dec. 31, 2011	3,448,425	23,538	(6,131)	1,893,890	(6,601)	1,543,729
Common shares issued, net		153		(1,307)
Repurchase of common shares			(1,212)	(220,040)
Share compensation expenses				12,238
Foreign currency translation adjustments	636				636
Dividends						(52,915)
Net income (loss)	246,496					246,496
Net loss (income) attributable to noncontrolling interest	45,360
Noncontrolling interest	404,740
Total shareholders' equity	3,882,574
Ending balance at Jun. 30, 2012	$ 3,477,834	$ 23,691	$ (7,343)	$ 1,684,781	$ (5,965)	$ 1,782,670

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Investments in affilates

6 Months Ended

Jun. 30, 2012

Equity Method Investments and Joint Ventures [Abstract]

Investment in AlphaCat Re 2011, Ltd.

Investments in affiliates

(a) Operating affiliates

AlphaCat Re 2011, Ltd.

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

On December 23, 2011, AlphaCat Re 2011 completed a secondary offering of its common shares 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 were derecognized from the consolidated balance sheet of the Company as at December 31, 2011 and the remaining investment in AlphaCat Re 2011 has been treated as an equity method investment as at June 30, 2012. The portion of AlphaCat Re 2011's earnings attributable to third party investors for the year ended December 31, 2011 was recorded in the Consolidated Statements of Comprehensive Income (loss) as net income attributable to noncontrolling interest.

AlphaCat Re 2012, Ltd.

On May 29, 2012, the Company joined with other investors in capitalizing ACRe 2012, Ltd. ("AlphaCat Re 2012"), a new special purpose reinsurer formed for the purpose of writing collateralized reinsurance with a particular focus on windstorm risks for Florida domiciled insurance companies. The Company holds an equity interest of 37.9% and a voting interest of 49.0% in AlphaCat Re 2012, therefore the investment has been treated as an equity method investment as at June 30, 2012.

The following table presents a reconciliation of the beginning and ending investment in operating affiliate balances for the three and six months ended June 30, 2012: 

	Three Months Ended June 30, 2012
		Investment in operating affiliate (AlphaCat Re 2011)		Investment in operating affiliate (AlphaCat Re 2012)		Total
As at March 31, 2012		$	56,398	$	—	$	56,398
Purchase of shares		—		26,500		26,500
Income from operating affiliates		2,840		752		3,592
As at June 30, 2012		$	59,238	$	27,252	$	86,490

	Six Months Ended June 30, 2012
	Investment in operating affiliate (AlphaCat Re 2011)		Investment in operating affiliate (AlphaCat Re 2012)		Total
As at December 31, 2011	$	53,031	$	—	$	53,031
Purchase of shares	—		26,500		26,500
Income from operating affiliates	6,207		752		6,959
As at June 30, 2012	$	59,238	$	27,252	$	86,490

The following table presents the Company's investments in AlphaCat Re 2011 and AlphaCat Re 2012, as at June 30, 2012:

	Investment in non-consolidated affiliate
	Investment at cost		Voting ownership %		Equity Ownership		Carrying Value
AlphaCat Re 2011	$	41,389	43.7	%	22.3	%	$	59,238
AlphaCat Re 2012	$	26,500	49.0	%	37.9	%	$	27,252

(b) Investment affiliate

Aquiline Financial Services Fund II L.P.

On December 20, 2011, Validus Re 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 private equity limited partnership provides quarterly capital account statements with a three-month delay in its valuation. As a result, the limited partnership's March 31, 2012 capital account statement was used as a basis for calculation of the Company's share of partnership income for the period.

The following table presents a reconciliation of the beginning and ending investment in the Company's investment affiliate balances for the three and six months ended June 30, 2012:

	Three Months Ended June 30, 2012
	Investment in limited partnership (Aquiline Financial Services Fund II L.P)
As at March 31, 2012	$	3,347
Capital contributions	3,368
(Loss) from investment affiliate	(398		)
As at June 30, 2012	$	6,317

	Six Months Ended June 30, 2012
	Investment in limited partnership (Aquiline Financial Services Fund II L.P) (a)
As at December 31, 2011	$	3,253
Capital contributions	4,898
Net unrealized loss on investments (a)	(1,436		)
(Loss) from investment affiliate	(398		)
As at June 30, 2012	$	6,317

(a) As at December 31, 2011 and March 31, 2012, this investment was included in "Other investments" as a level 3 investment in the fair value hierarchy, hence the change in fair value was included in net unrealized (losses) gains on investments.

The following table presents the Company's investment in Aquiline as at June 30, 2012:

	Investment in non-consolidated affiliate
	Investment at cost		Voting ownership %		Equity Ownership		Carrying Value
Aquiline Financial Services Fund II L.P	$	8,151	—	%	6.8	%	$	6,317

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Stock plans (Options activity) (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Options Activities
Options outstanding, beginning balance	2,263,012	2,723,684
Options granted	0	0
Options exercised	(171,100)	(455,033)
Options forfeited	0	(1,850)
Options outstanding, ending balance	2,091,912	2,266,801
Options exercisable	2,091,912	2,178,828
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, beginning balance	$ 6.69	$ 6.74
Weighted average grant date fair value, options granted	$ 0.00	$ 0.00
Weighted average grant date fair value, options exercised	$ 7.52	$ 6.96
Weighted average grant date fair value, options forfeited	$ 0.00	$ 10.30
Weighted average grant date fair value, ending balance	$ 6.63	$ 6.70
Weighted average grant date fair value, options exercisable	$ 6.63	$ 6.62
Weighted Average Grant Date Exercise Price
Weighted average grant date exercise price, beginning balance	$ 20.12	$ 20.19
Weighted average grant date exercise price, options granted	$ 0.00	$ 0.00
Weighted average grant date exercise price, options exercised	$ 17.99	$ 20.56
Weighted average grant date exercise price, options forfeited	$ 0.00	$ 20.39
Weighted average grant date exercise price, ending balance	$ 20.29	$ 20.12
Weighted average grant date exercise price, options exercisable	$ 20.29	$ 20.02

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Related party transactions (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Aquiline Capital Partners LLC [Member]
Related Party Transaction [Line Items]
Shares owned by related party	6,255,943		6,255,943
Warrants to purchase shares	2,756,088		2,756,088
Tiger Risk Partners LLC [Member]
Related Party Transaction [Line Items]
Accounts payable and accrued expenses	$ 2,124,000		$ 2,124,000		$ 86,000
Brokerage expenses	2,070,000	628,000	2,360,000	1,081,000
Group Ark Insurance Holdings Ltd [Member]
Related Party Transaction [Line Items]
Gross premiums written	1,118,000	900,000	1,415,000	1,411,000
Earned premium adjustments	370,000	344,000	732,000	678,000
Reinsurance premiums ceded	0	0	0	163,000
Premiums receivable	886,000		886,000		330,000
Reinsurance balances payable	1,000		1,000		21,000
Conning Inc [Member]
Related Party Transaction [Line Items]
Investment management fees	205,000	234,000	404,000	380,000
Accounts payable and accrued expenses	202,000		202,000		203,000
Aquiline Capital Partners Ii Gp Offshore Ltd [Member]
Related Party Transaction [Line Items]
Related Party Transaction Assumption Of Interest Percentage			100.00%
Related Party Transaction Capital Commitment			50,000,000
Accounts payable and accrued expenses	0		0		0
Partnership fees incurred	450,000	0	1,886,000	0
Capital contributions	$ 3,368,000	$ 0	$ 4,898,000	$ 0

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Derivative instruments used in hedging activities (Tables)

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Location and fair value amount of derivative instruments reported on the balance sheet

The following table summarizes information on the location and amount of the derivative fair value on the consolidated balance sheet at June 30, 2012:

			Asset derivatives			Liability derivatives
Derivatives designated as hedging instruments:	Notional amount		Balance Sheet location	Fair value		Balance Sheet location	Fair value
Foreign exchange contracts	$	45,711	Other assets	$	152	Accounts payable and accrued expenses	$	680

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 contract	$	75,323	Other assets	$	476	Accounts payable and accrued expenses	$	—

Location and amount of gains and losses related to derivative instruments reported on in the income statement

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 three and six months ended June 30, 2012:

		Three Months Ended June 30, 2012
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 derivative		Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged			Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange gains (losses)	$	1,700	$	(1,700	)	$	—
		Three Months Ended June 30, 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 derivative		Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged			Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange gains (losses)	$	897	$	(897	)	$	—

		Six Months Ended June 30, 2012
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 derivative			Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange (losses) gains	$	(1,618	)	$	1,618	$	—
		Six Months Ended June 30, 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 derivative			Amount of gain (loss) on hedged item recognized in income attributable to risk being hedged		Amount of gain (loss) recognized in income on derivative (ineffective portion)
Foreign exchange	Foreign exchange (losses) gains	$	(2,925	)	$	2,925	$	—

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Investments (Components of net investment income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Net investment income
Total gross investment income	$ 27,921	$ 28,230	$ 57,519	$ 59,762
Investment expenses	(2,036)	(1,736)	(3,874)	(3,293)
Net investment income	25,885	26,494	53,645	56,469
Fixed Maturities And Short Term Investments [Member]
Net investment income
Total gross investment income	26,471	27,535	53,747	56,470
Cash and cash equivalents [Member]
Net investment income
Total gross investment income	1,449	687	3,766	3,268
Securities lending income [Member]
Net investment income
Total gross investment income	$ 1	$ 8	$ 6	$ 24

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Earnings per share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Earnings per share

Earnings per share

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2012 and 2011: 

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Basic earnings per share
Income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Income (loss) available (attributable) to Validus	167,622			109,884			291,856			(62,480		)
less: Dividends and distributions declared on outstanding warrants	(1,729		)	(1,966		)	(3,458		)	(3,950		)
Income (loss) available (attributable) to common shareholders	$	165,893		$	107,918		$	288,398		$	(66,430	)
Weighted average number of common shares outstanding	98,254,186			98,385,924			98,839,663			98,165,132
Basic earnings (loss) per share available (attributable) to common shareholders	$	1.69		$	1.10		$	2.92		$	(0.68	)
Diluted earnings per share
Income (loss)	$	122,262		$	110,478		$	246,496		$	(61,886	)
Loss (income) attributable to noncontrolling interest	45,360			(594		)	45,360			(594		)
Income (loss) available (attributable) to Validus	167,622			109,884			291,856			(62,480		)
less: Dividends and distributions declared on outstanding warrants	—			—			—			(3,950		)
Income (loss) available (attributable) to common shareholders	$	167,622		$	109,884		$	291,856		$	(66,430	)
Weighted average number of common shares outstanding	98,254,186			98,385,924			98,839,663			98,165,132
Share equivalents:
Warrants	3,077,136			3,561,096			3,050,054			—
Stock options	801,180			908,590			807,522			—
Unvested restricted shares	1,535,465			1,706,840			1,684,791			—
Weighted average number of diluted common shares outstanding	103,667,967			104,562,450			104,382,030			98,165,132
Diluted earnings (loss) per share available (attributable) to common shareholders	$	1.62		$	1.05		$	2.80		$	(0.68	)

Share equivalents that would result in the issuance of common shares of 675,478 (2011: 479,104) and 346,070 (2011: 247,550) were outstanding for the three and six months ended June 30, 2012, but were not included in the computation of diluted earnings per share because the effect would be antidilutive.