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

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

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

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

•	Completing an initial public offering (“IPO”) on July 30, 2007;

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

•	Raising $450.0 million of third party capital for PaCRe, Ltd. ("PaCRe") a Class 4 Bermuda reinsurer formed for the purpose of writing high excess property catastrophe reinsurance, on April 2, 2012 and a further $58.5 million on May 1, 2013;

•	Acquiring all of the outstanding shares of Flagstone Reinsurance Holdings, S.A. ("Flagstone") on November 30, 2012;

•	Acquiring all of the outstanding shares of Western World Insurance Group, Inc. ("Western World") on October 2, 2014;

•	Successfully launching a series of sidecars beginning on May 25, 2011 and most recently, raising $127.0 million of third party capital for AlphaCat 2015, Ltd. ("AlphaCat 2015") on December 29, 2014; of which, $117.4 was funded as at December 31, 2014. The remaining commitment of $9.6 million will be called and deployed throughout 2015;

•	Managing third party capital of $785.9 million for the AlphaCat Insurance Linked Securities ("ILS") funds as at December 31, 2014;

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•	Delivering a 12.4% compounded annual growth in book value per diluted common share plus accumulated dividends from formation to December 31, 2014;

•	Declaring a $2.00 special dividend per common share and per common share equivalent on February 6, 2013 and, on that same date, increasing the annual dividend by 20% from $1.00 to $1.20 per common share and per common share equivalent;

•	Further increasing the annual dividend by an additional 6.7% from $1.20 to $1.28 per common share and per common share equivalent on February 3, 2015; and

•	Repurchasing approximately 71.4 million common shares for an aggregate purchase price of approximately $2,284.8 million and paying an aggregate amount of $947.0 million in dividends from formation to February 20, 2015.

(a)	AlphaCat 2014 and AlphaCat 2015 are non-consolidated operating affiliates that are owned 19.6% and 20.0%, respectively, by the Company.

(b)	One of the funds is consolidated and the remaining funds are owned 7.9%, 39.7% and 9.1% by the Company.

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

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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•	Establish the principles by which the Company can evaluate the risk/reward trade-offs associated with key strategic and tactical decisions.

•	Establish a risk governance structure that, in respect of all activities related to ERM, operates with clearly defines roles and responsibilities.

•	Establish minimum requirements that must be met by each of the Company’s segments.

•	Identify and assess all risks and causes of risks arising out of the Company’s strategic initiatives, internal processes, and external environment.

•	Establish a set of responses to manage the Company’s risks within its stated risk appetite and risk tolerances.

•	Establish procedures through which near-miss and actual incidents, that either have the potential to impact or have impacted the Company, are reported and reviewed in order to inform the risk identification and assessment process.

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•	Absolute maximum limits - these are defined based on the underlying peril or coverage and include measures such as zonal aggregates, which convey the maximum contractual loss exposure.

•	Probable maximum loss - these are defined where probabilistic event sets exist for underlying perils and are established for most natural catastrophe, aviation and offshore energy coverage, and conveys an extreme but likely loss exposure.

•	Realistic disaster scenarios ("RDSs") - these are either prescribed by third parties or developed internally and convey a more intuitive view of potential loss outcome.

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

•	exposure limits by line of business;

•	contractual exposures and limits requiring mandatory referrals; and

•	levels of analysis to be performed by lines of business.

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

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

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

•	employ our well-founded and carefully maintained market contacts within the Company to enhance our robust distribution capabilities.

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•

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

•	Performing independent checks on the accuracy of reported building characteristics through third-party tools;

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

•	To properly quantify risk, we frequently adjust vendor models in advance of their updates based on the latest scientific studies and claims data.

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

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

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(a)	Represents risks in two or more geographic zones.

(b)	Represents risk in one geographic zone.

(c)	The other locations non-specific category refers to business for which an analysis of exposure by geographic zone is not applicable, such as marine and aerospace risks, since these exposures can span multiple geographic areas and, in some instances, are not fixed locations.

(d)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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•	budgeted underwriting for the coming year;

•	loss experience from prior years;

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

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

•	scenario planning;

•	changes to capital requirements; and

•	RDSs prescribed by Lloyd’s.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	The reserves for losses and loss expenses of Western World are consolidated from the October 2, 2014 date of acquisition.

(a)	The reserves for losses and loss expenses of Western World are consolidated from the October 2, 2014 date of acquisition.

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(a)	See Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion.

(b)	The reserves for losses and loss expenses of Flagstone are consolidated from the November 30, 2012 date of acquisition.

(c)	The impact of foreign currency exchange rate movements is excluded from the re-estimated liability and from paid losses.

(d)	The reserves for losses and loss expenses of Western World are consolidated from the October 2, 2014 date of acquisition.

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(a)	See Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion.

(b)	The reserves for losses and loss expenses of Flagstone are consolidated from the November 30, 2012 date of acquisition.

(c)	The impact of foreign currency exchange rate movements is excluded from the re-estimated liability and from paid losses.

(d)	The reserves for losses and loss expenses of Western World are consolidated from the October 2, 2014 date of acquisition.

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(a)	The reserves for losses and loss expenses of Western World are consolidated from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition of Western World, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,607 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

(c)	The reserves for losses and loss expenses of Flagstone are consolidated from the November 30, 2012 date of acquisition.

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•	Alleghany Corporation, Allied World Assurance Company Holdings, Limited., Arch Capital Group, Limited., Argo Group International Holdings, Ltd., Aspen Insurance Holdings Limited, AXIS Capital Holdings Limited, Endurance Specialty Holdings Ltd., Everest Re Group Limited, Montpelier Re Holdings Ltd., PartnerRe Ltd., Platinum Underwriters Holdings Ltd., and RenaissanceRe Holdings Ltd.;

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

•	Asset managers and reinsurers who provide collateralized reinsurance and retrocessional coverage;

•	Treaty and direct insurers, in not only the London but also the global market, that compete with Lloyd’s on a worldwide basis;

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

•	Government-sponsored insurers and reinsurers.

•	Premiums charged and other terms and conditions offered;

•	Services provided;

•	Financial ratings assigned by independent rating agencies;

•	Speed of claims payment;

•	Reputation;

•	Perceived financial strength; and

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

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•	Proportionality Principle;

•	Corporate Governance;

•	Risk Management;

•	Governance Mechanism;

•	Outsourcing; and

•	Market Discipline and Disclosure.

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•	underwriting, which encompasses the risk of adverse loss developments and inadequate pricing;

•	declines in asset values arising from credit risk; and

•	declines in asset values arising from investment risks.

•	insurer is required to submit a plan for corrective action;

•	insurer is subject to examination, analysis and specific corrective action;

•	regulators may place insurer under regulatory control; and

•	regulators are required to place insurer under regulatory control.

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•	integrating financial and operational reporting systems;

•	integration into new geographical regions;

•	establishing satisfactory budgetary and other financial controls;

•	funding increased capital needs and overhead expenses;

•	retaining management personnel required for existing operations;

•	obtaining management personnel required for expanded operations;

•	obtaining necessary regulatory permissions;

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

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

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

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

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(a)	Share transactions are on a trade date basis through February 20, 2015 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 from 2009 at the inception of the share repurchase program through to 2014 was lower than the book value per common share, the repurchase of shares increased the ending book value per share.

(c)

The estimated impact on earnings per diluted 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 earnings per diluted share.

(d)	The maximum number of shares that may yet be purchased under the program is calculated using the month end closing price.

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(a)	The gain on bargain purchase, net of expenses, arose from the acquisitions of Flagstone on November 30, 2012 and is net of transaction related expenses.

(b)	The transaction expenses related to costs incurred in connection with the Company’s proposed acquisition of Transatlantic Holdings, Inc. during 2011. Transaction expenses incurred during 2014 relate to the acquisition of Western World. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

(c)	The losses and loss expenses ratio is calculated by dividing losses and loss expenses by net premiums earned.

(d)	The policy acquisition costs ratio is calculated by dividing policy acquisition costs by net premiums earned.

(e)	The general and administrative expenses ratio is calculated by dividing the sum of general and administrative expenses and share compensation expenses by net premiums earned.

(f)	The expense ratio is calculated by combining the policy acquisition costs ratio and the general and administrative expenses ratio.

(g)	The combined ratio is calculated by combining the losses and loss expenses ratio, the policy acquisition costs ratio and the general and administrative expenses ratio.

(h)	Return on average equity is calculated by dividing the net income available to Validus for the period by the average of the beginning, ending and intervening quarter end shareholders’ equity available to Validus balances.

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(a)	Investments at fair value as at December 31, 2013, 2012 and 2011 includes revisions of $121,706, $131,127 and $101,321, respectively, from cash and cash equivalents to conform to current period presentation.

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

(c)

Book value per diluted common share is calculated based on total shareholders’ equity available to Validus 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). Book value per diluted common share is a non-GAAP financial measure, as described in more detail in the section entitled “Non-GAAP Financial Measures.”

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•	Gross premiums written for the three months ended December 31, 2014 were $336.6 million compared to $237.3 million for the three months ended December 31, 2013, an increase of $99.4 million, or 41.9%.

•	Net premiums earned for the three months ended December 31, 2014 were $558.7 million compared to $492.2 million for the three months ended December 31, 2013, an increase of $66.5 million, or 13.5%.

•	Underwriting income for the three months ended December 31, 2014 was $135.7 million compared to underwriting income of $110.4 million for the three months ended December 31, 2013, an increase of $25.3 million, or 22.9%.

•

Combined ratio for the three months ended December 31, 2014 was 75.7% which included $84.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 15.1 percentage points compared to a combined ratio for the three months ended December 31, 2013 of 77.6% which included $33.6 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 6.8 percentage points.

•	Loss ratio for the three months ended December 31, 2014 was 40.5% compared to 41.9% for the three months ended December 31, 2013.

•	Loss ratios by line of business are as follows:

(a)	The results of operations for Western World are consolidated from the October 2, 2014 date of acquisition.

•	Losses and loss expenses from notable loss events for the three months ended December 31, 2014 was $6.8 million compared to ($1.9) million for the three months ended December 31, 2013, an increase of $8.7 million.

•	Net investment income for the three months ended December 31, 2014 was $30.2 million compared to $24.2 million for the three months ended December 31, 2013, an increase of $6.0 million, or 24.6%.

•	Investment yield for the three months ended December 31, 2014 was 1.84% compared to 1.44% for the three months ended December 31, 2013.

•	Net operating income available to Validus for the three months ended December 31, 2014 was $129.0 million compared to $100.1 million for the three months ended December 31, 2013, an increase of $29.0 million, or 29.0%.

•	Net income available to Validus for the three months ended December 31, 2014 was $125.9 million, or $1.38 per diluted common share compared to $95.3 million or $0.93 per diluted common share for the three months ended December 31, 2013.

•	Annualized return on average equity and annualized net operating return on average equity for the three months ended December 31, 2014 were 13.8% and 14.2%, respectively, compared to 10.2% and 10.7% for the three months ended December 31, 2013.

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•	Gross premiums written for the year ended December 31, 2014 were $2.363 billion compared to $2.401 billion for the year ended December 31, 2013, a decrease of $37.8 million, or 1.6%.

•	Net premiums earned for the year ended December 31, 2014 were $2.002 billion compared to $2.102 billion for the year ended December 31, 2013, a decrease of $99.6 million, or 4.7%.

•	Underwriting income for the year ended December 31, 2014 was $526.9 million compared to $604.9 million for the year ended December 31, 2013, a decrease of $78.0 million, or 12.9%.

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Combined ratio for the year ended December 31, 2014 was 73.7%, which included $252.2 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 12.6 percentage points, compared to 71.2%, which included $205.4 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.8 percentage points, for the year ended December 31, 2013.

•	Loss ratio for the year ended December 31, 2014 was 38.6% compared to 37.8% for the year ended December 31, 2013.

•	Loss ratios by line of business are as follows:

(a)	The results of operations for Western World are consolidated from the October 2, 2014 date of acquisition.

•	Losses and loss expenses from notable loss events for the year ended December 31, 2014 was $34.9 million compared to $60.8 million for the year ended December 31, 2013, a decrease of $25.9 million.

•	Net investment income for the year ended December 31, 2014 was $100.1 million compared to $96.1 million for the year ended December 31, 2013, an increase of $4.0 million, or 4.2%.

•	Investment yield for the year ended December 31, 2014 was 1.53% compared to 1.38% for the year ended December 31, 2013.

•	Net operating income available to Validus for the year ended December 31, 2014 was $486.5 million, or $5.14 per diluted common share compared to $589.4 million or $5.48 per diluted common share for the year ended December 31, 2013.

•	Net income available to Validus for the year ended December 31, 2014 was $481.3 million, or $5.08 per diluted common share compared to $532.7 million or $4.94 per diluted common share for the year ended December 31, 2013.

•	Return on average equity and net operating return on average equity for the year ended December 31, 2014 were 13.1% and 13.2%, respectively compared to 14.0% and 15.5% for the year ended December 31, 2013.

•	Total cash and cash equivalents, restricted cash and investments less assets held in trust on behalf of operating affiliates, catastrophe bonds and non-controlling interest as at December 31, 2014 was $7.1 billion compared to $7.1 billion as at December 31, 2013.

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(a)	The results of operations for Western World are consolidated from the October 2, 2014 date of acquisition.

(b)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(c)	The notable loss event for the year ended December 31, 2014 was Tripoli Airport. The notable loss event for the year ended December 31, 2013 was the European Floods. Notable loss events for the year ended December 31, 2012 were Costa Concordia, Cat 67, U.S. drought, Hurricane Isaac and Hurricane Sandy.

(d)	Other underwriting deductions consist of policy acquisition costs, general & administration expenses and share compensation expenses.

(e)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating 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. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”

(f)	Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses, taxes and income (loss) from operating affiliates.

•	A decrease in net premiums earned of $99.6 million, primarily within the Validus Re segment, due to a reduction in gross premiums written, the timing of the purchase of retrocessional coverage and the effect of the Flagstone run-off business; and,

•	An increase in income attributable to operating affiliate investors of $40.6 million; offset by,

•	A decrease in losses and loss expenses of $21.9 million primarily due to an increase in favorable prior period development of $46.8 million; offset by an increase in current year losses and loss expenses of $24.9 million.

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•	An increase in net premiums earned of $228.8 million, primarily due to new agriculture business written by Validus Re and business written in consolidated AlphaCat subsidiaries; and

•	A decrease in losses and loss expenses of $205.5 million, driven by a significantly lower level of notable loss events, offset by losses on the new agricultural business written by Validus Re; offset by,

•	An increase in general and administrative expenses of $51.6 million, due primarily to costs associated with the run-off of the former Flagstone business and an increase in average headcount;

•	An increase in policy acquisition costs of $25.6 million, reflecting the higher level of net premiums earned; and

•	An increase in income attributable to operating affiliate investors of $68.8 million.

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Gross premiums written for the three months ended December 31, 2014 were $32.7 million compared to $10.3 million for the three months ended December 31, 2013, an increase of $22.5 million, or 219.4%. Gross premiums written for the three months ended December 31, 2014 included $14.0 million of property premiums, $15.3 million of marine premiums and $3.5 million of specialty premiums; compared to $17.2 million of property premiums and $nil of marine premiums, offset by ($6.9) million of specialty premiums for the three months ended December 31, 2013.

•	Net premiums earned for the three months ended December 31, 2014 were $230.5 million compared to $250.3 million for the three months ended December 31, 2013, a decrease of $19.8 million, or 7.9%.

•	Underwriting income for the three months ended December 31, 2014 was $112.3 million compared to income of $77.1 million for the three months ended December 31, 2013, an increase of $35.2 million, or 45.7%.

•	Combined ratio for the three months ended December 31, 2014 was 51.3% compared to 69.1% for the three months ended December 31, 2013.

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The loss ratio for the three months ended December 31, 2014 was 25.8% compared to 44.2% for the three months ended December 31, 2013, a decrease of 18.4 percentage points. The loss ratio for the three months ended December 31, 2014 included favorable loss reserve development on prior accident years of $30.8 million, decreasing the loss ratio by 13.3 percentage points. The loss ratio for the three months ended December 31, 2013 included unfavorable loss reserve development on prior accident years of $3.4 million, increasing the loss ratio by 1.3 percentage points.

•	Losses and loss expenses from a notable loss event for the three months ended December 31, 2014 was $6.8 million compared to $nil for the three months ended December 31, 2013.

•	Net investment income for the three months ended December 31, 2014 was $18.3 million compared to $19.6 million for the three months ended December 31, 2013, a decrease of $1.3 million, or 6.4%.

•	Other insurance related income for the three months ended December 31, 2014 was $0.8 million compared to $0.9 million for the three months ended December 31, 2013, a decrease of $0.1 million.

•	Net operating income for the three months ended December 31, 2014 of $132.1 million compared to income of $92.1 million for the three months ended December 31, 2013, an increase of $40.0 million.

•	General and administrative expenses for the three months ended December 31, 2014 were $21.0 million compared to $21.6 million for the three months ended December 31, 2013, a decrease of $0.6 million, or 2.9%.

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(b)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”

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

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(b)	The notable loss event for the year ended December 31, 2014 was Tripoli Airport. The notable loss event for the year ended December 31, 2013 was the European Floods. Notable loss events for the year ended December 31, 2012 were Costa Concordia, Cat 67, U.S. drought, Hurricane Isaac and Hurricane Sandy.

(c)	Other underwriting deductions consist of policy acquisition costs, general & administration expenses and share compensation expenses.

(d)	Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses and taxes.

(e)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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

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(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

(a)	The results of operations from Flagstone are consolidated from the November 30, 2012 date of acquisition.

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•	Gross premiums written from our consolidated entities, including PaCRe, for the three months ended December 31, 2014 were $0.1 million compared to $0.3 million for the three months ended December 31, 2013, a decrease of $0.1 million.

•	Net premiums earned for the three months ended December 31, 2014 were $34.1 million compared to $37.6 million for the three months ended December 31, 2013, a decrease of $3.6 million.

•	Underwriting income for the three months ended December 31, 2014 was $29.2 million compared to $28.0 million for the three months ended December 31, 2013, an increase of $1.2 million.

•	Other insurance related income for the three months ended December 31, 2014 was $5.6 million compared to $9.0 million for the three months ended December 31, 2013, a decrease of $3.3 million.

•	Income from operating affiliates for the three months ended December 31, 2014 was $4.1 million compared to income from operating affiliates of $5.5 million for the three months ended December 31, 2013, a decrease of $1.4 million.

•	Income attributable to operating affiliate investors for the three months ended December 31, 2014 and 2013 was $26.6 million.

•	The combined ratio for the three months ended December 31, 2014 was 14.3% compared to 25.6% for the three months ended December 31, 2013, a decrease of 11.3 percentage points.

•	The loss ratio for the three months ended December 31, 2014 was (7.4)% compared to 1.7% for the three months ended December 31, 2013, a decrease of 9.1 percentage points.

•	Net investment income for the three months ended December 31, 2014 was $1.7 million compared to $1.0 million for the three months ended December 31, 2013, an increase of $0.7 million.

•	Net operating income available to AlphaCat for the three months ended December 31, 2014 was $8.9 million compared to $11.8 million for the three months ended December 31, 2013, a decrease of $2.9 million.

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(a)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”

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

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(a)	The notable loss event for the year ended December 31, 2013 was the European Floods.

(b)	Other underwriting deductions consist of policy acquisition costs, general & administration expenses and share compensation expenses.

(c)	Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses, taxes and income (loss) from operating affiliates.

(d)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Further discussion of these measures is presented in the section entitled “Non-GAAP Financial Measures.”

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

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•

Gross premiums written for the three months ended December 31, 2014 were $247.4 million compared to $236.4 million for the three months ended December 31, 2013, an increase of $11.1 million, or 4.7%. Gross premiums written for the three months ended December 31, 2014 included $76.1 million of property premiums, $72.9 million of marine premiums and $98.4 million of specialty premiums compared to $60.9 million of property premiums, $75.1 million of marine premiums and $100.4 million of specialty premiums for the three months ended December 31, 2013.

•	Net premiums earned for the three months ended December 31, 2014 were $221.2 million compared to $204.3 million for the three months ended December 31, 2013, an increase of $16.9 million, or 8.3%.

•	Underwriting income for the three months ended December 31, 2014 was $7.2 million compared to $27.1 million for the three months ended December 31, 2013, a decrease of $19.9 million.

•	Combined ratio for the three months ended December 31, 2014 was 96.8% compared to 86.8% for the three months ended December 31, 2013.

•

The loss ratio for the three months ended December 31, 2014 was 53.6% compared to 46.4% for the three months ended December 31, 2013, an increase of 7.2 percentage points. The loss ratio for the three months ended December 31, 2014 included favorable loss reserve development on prior accident years of $42.0 million, benefiting the loss ratio by 19.0 percentage points. The loss ratio for the three months ended December 31, 2013 included favorable loss reserve development on prior accident years of $37.0 million, benefiting the loss ratio by 18.1 percentage points.

•	Losses and loss expenses from notable loss events for the three months ended December 31, 2014 was $nil compared to ($1.7) million for the three months ended December 31, 2013, an increase of $1.7 million.

•	Net investment income for the three months ended December 31, 2014 was $6.3 million compared to $4.6 million for the three months ended December 31, 2013, an increase of $1.7 million, or 37.0%.

•	Net operating income for the three months ended December 31, 2014 was $11.3 million compared to $33.4 million for the three months ended December 31, 2013, a decrease of $22.1 million.

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(a)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Reconciliations of these measures to the most comparable U.S. GAAP financial measure, are presented in the section below entitled “Non-Operating Income and Expenses.”

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

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(a)	The notable loss event for the year ended December 31, 2014 was Tripoli Airport. The notable loss event for the year ended December 31, 2013 was the European Floods. Notable loss events for the year ended December 31, 2012 were Costa Concordia, Cat 67, Hurricane Isaac and Hurricane Sandy.

(b)	Other underwriting deductions consist of policy acquisition costs, general & administration expenses and share compensation expenses.

(c)	Other operating income and expenses, net, consists of net investment income, other insurance related income, finance expenses and taxes.

(d)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating 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. Further discussion of the measures is presented in the section entitled “Non-GAAP Financial Measures.”

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

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(a)

Non-GAAP Financial Measures. In presenting the Company’s results, management has included and discussed underwriting income and operating income that are not calculated under standards or rules that comprise U.S. GAAP. Such measures are referred to as non-GAAP. Non-GAAP measures may be defined or calculated differently by other companies. These measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Reconciliations of these measures to the most comparable U.S. GAAP financial measure, are presented in the section below entitled “Non-Operating Income and Expenses.”

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

(c)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,607 during the year ended December 31, 2014, benefiting the loss ratio by 6.3% points. The remaining fair value adjustment will be amortized in 2015.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,607 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $409 was made to decrease net reserves to reflect fair value. This adjustment was amortized to income through an increase in losses and loss expenses of $121 during the year ended December 31, 2014, increasing the loss ratio by 1.1% points. The remaining fair value adjustment will be amortized in 2015.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $409 was made to decrease net reserves to reflect fair value. This adjustment was amortized to income through an increase in losses and loss expenses of $121 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $15,995 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,728 during the year ended December 31, 2014, benefiting the loss ratio by 7.7% points. The remaining fair value adjustment will be amortized in 2015.

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $15,995 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,728 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $34,736 was made to reduce deferred acquisition costs to reflect fair value. These deferred acquisition costs would otherwise have been expensed in the amounts of $12,914 during the year ended December 31, 2014 and $21,822 million in 2015.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $34,736 was made to reduce deferred acquisition costs to reflect fair value. These deferred acquisition costs would otherwise have been expensed in the amount of $12,914 during the year ended December 31, 2014, benefiting the policy acquisition cost ratio by 17.6% points. The remaining adjustment of $21,822 would have been expensed in 2015.

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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

(b)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	The results of operations for Western World are consolidated from the October 2, 2014 date of acquisition.

(b)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)

Included in the short-term investments balance are assets held in trust to support AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by one AlphaCat ILS fund which is consolidated by the Company but in which the Company has an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.

(b)	Included in the other investments balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.

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(a)	Issuers exclude government-backed government-sponsored enterprises and cash and cash equivalents.

(b)	Credit exposures represent only direct exposure to fixed maturities and short-term investments of the parent issuer and its major subsidiaries. These exposures exclude asset and mortgage backed securities that were issued, sponsored or serviced by the parent.

(c)	Investment ratings are the median of Moody's, Standard & Poor's and Fitch, presented in Standard & Poor's equivalent rating. For investments where three ratings are unavailable, the lower of the ratings shall apply, presented in Standard & Poor's equivalent rating.

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(a)	Equity ownership in the three funds were 7.9%, 39.7% and 9.1% as at December 31, 2014.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(b)	Upon closing the acquisition, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,607 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

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(a)	Includes paid losses, case reserves and IBNR reserves.

(b)	Development other than allocation of RDE.

(c)	Excludes impact of movements in foreign exchange rates.

(d)	Closing Reserve for the period equals Closing Estimate for the period less cumulative Paid Losses (Recovery).

(e)	As at September 30, 2014, the initial estimate for Tripoli Airport was below the $30.0 notable loss event threshold; however, during the fourth quarter of 2014 adverse development caused this event to exceed the notable loss event threshold.

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(a)

During the year ended December 31, 2012, $18.6 million was allocated to Deepwater Horizon from the 2010 reserve for development on notable loss events. During the same period, $16.3 million was allocated to the Tohoku earthquake, $20.1 million was allocated to the New Zealand earthquake, $7.7 million was allocated to the Danish flood and $14.3 million was allocated to the Thailand floods and $5.4 million was allocated to the Gryphon Alpha mooring failure from the 2011 reserve for development on notable loss events.

(b)	Notable loss events for the year ended December 31, 2012 were Costa Concordia, Cat 67, U.S. drought, Hurricane Isaac and Hurricane Sandy.

(c)

During the year ended December 31, 2012, several of the 2011 notable loss events, principally the Tohoku earthquake and the New Zealand earthquake, continued to experience adverse development. Therefore, rather than deteriorate the 2011 RDE proportionately, an additional allocation of $27.9 million was made to the 2011 RDE based on the potential for further adverse development on the 2011 notable loss events.

(d)	RDE is included as part of the Company's overall reserve requirement as defined and disclosed in the Critical Accounting Policies and Estimates section.

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(a)	The results of operations for Western World are consolidated from the October 2, 2014 date of acquisition.

(b)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)

On January 21, 2010, the Company offered and sold $250.0 million 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 net proceeds of $244.0 million 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 our outstanding capital stock and dividends to our shareholders.

(b)

$150.0 million of Junior Subordinated Deferrable Debentures (the "2006 Junior Subordinated Deferrable Debentures") were issued on June 15, 2006, mature on June 15, 2036 and have been redeemable at the Company's option at par since June 15, 2011. $200.0 million of Junior Subordinated Deferrable Debentures ("2007 Junior Subordinated Deferrable Debentures") were issued on June 21, 2007, mature on June 15, 2037 and have been redeemable at the Company's option at par since June 15, 2012. During 2008 and 2009, the Company repurchased $60.2 million principal amount of its 2007 Junior Subordinated Deferrable Debentures due 2037 from an unaffiliated financial institution.

(c)

As part of the acquisition of Flagstone Reinsurance Holdings, S.A., the Company assumed $137.2 million of junior subordinated deferrable interest debentures due 2036 (the “Flagstone 2006 Junior Subordinated Deferrable Debentures”). The Flagstone 2006 Junior Subordinated Deferrable Debentures mature on September 15, 2036 and have been redeemable at the Company's option at par since September 15, 2011. In addition, the Company assumed $113.7 million of junior subordinated deferrable interest debentures due 2037 (the “Flagstone 2007 Junior Subordinated Deferrable Debentures”). $88.8 million of the Flagstone 2007 Junior Subordinated Deferrable Debentures mature on July 30, 2037 and have been redeemable at the Company's option at par since July 30, 2012. $25.0 million of the Flagstone 2007 Junior Subordinated Deferrable Debentures mature on September 15, 2037 and have been redeemable at the Company's option at par since September 15, 2012.

(d)	Total capitalization equals total shareholders' equity plus redeemable noncontrolling interest, Senior Notes and Junior Subordinated Deferrable Debentures.

(e)	Total capitalization available to Validus equals total shareholder's equity less noncontrolling interest plus Senior Notes and Junior Subordinated Deferrable Debentures.

(f)	The Company does not include notes payable to operating affiliate investors within total capitalization, since these are issued to some of the Company's operating affiliates specifically for the purpose of purchasing capital market products and writing collateralized reinsurance.

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(a)	The arrangement is indicated as evergreen if, unless written notice to the contrary is given, it automatically renews on a regular basis.

(b)	Indicates utilization of commitment amount, not necessarily drawn borrowings.

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(a)

The reserve for losses and loss expenses represents an estimate, including actuarial and statistical projections at a given point in time of an insurer’s or reinsurer’s expectations of the ultimate settlement and administration costs of claims incurred. As a result, it is likely that the ultimate liability will differ from such estimates, perhaps significantly. Such estimates are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends in loss severity and frequency and other variable factors such as inflation, litigation and tort reform. Moreover, in certain circumstances, the Company has necessitated the use of industry loss emergence patterns in deriving IBNR. Further, expected losses and loss ratios are typically developed using vendor and proprietary computer models and these expected loss ratios are a material component in the calculation deriving IBNR. Actual loss ratios will deviate from expected loss ratios and ultimate loss ratios will be greater or less than expected loss ratios. During the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, ultimate liability will exceed or be less than the revised estimates. The actual payment of the reserve for losses and loss expenses will differ from estimated payouts.

(b)

The 2010 Senior Notes mature on January 26, 2040, and are redeemable at the Company’s option in whole or any time or in part from time to time at a make-whole redemption price. The Company may redeem the notes in whole, but not in part, at any time upon the occurrence of certain tax events as described in the notes prospectus supplement. The 2010 Senior Notes bear interest at the rate of 8.875% per annum from January 26, 2010 to maturity or early redemption.

(c)

The 2006 Junior Subordinated Deferrable Debentures (the "2006 JSDs") mature on June 15, 2036, are redeemable at the Company’s option at par beginning June 15, 2011, and require quarterly interest payments by the Company to the holders of the 2006 Junior Subordinated Deferrable Debentures. Interest is payable at a floating rate of three-month LIBOR plus 355 basis points, reset quarterly. The Company has entered into an interest rate swap which fixed the rate of interest on the 2006 JSDs at 5.83125%. The term of the swap is matched to the maturity date of the 2006 JSDs. The interest payments in the table above reflect the Company's contractual obligations with respect to the swap.

(d)

The 2007 Junior Subordinated Deferrable Debentures (the "2007 JSDs") 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 is payable at a floating rate of three-month LIBOR plus 295 basis points, reset quarterly. The Company has entered into an interest rate swap which fixed the rate of interest on the 2007 JSDs at 5.18%. The term of the swap is matched to the maturity date of the 2007 JSDs. The interest payments in the table above reflect the Company's contractual obligations with respect to the swap.

(e)

The Flagstone 2006 Junior Subordinated Deferrable Debentures mature on September 15, 2036, are redeemable at the Company's option at par beginning September 15, 2011, and require quarterly interest payments by the Company to the holders of the Flagstone 2006 Junior Subordinated Deferrable Debentures. Interest is payable at a floating rate of three-month LIBOR plus 354 basis points, reset quarterly. The Company has entered into a $120,000 interest rate

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(f)

$88,750 of the Flagstone 2007 Junior Subordinated Deferrable Debentures mature on July 30, 2037, are redeemable at the Company's option at par beginning July 30, 2012, and require quarterly interest payments by the Company to the holders of the Flagstone 2007 Junior Subordinated Deferrable Debentures. Interest is payable at a floating rate of three-month LIBOR plus 300 basis points, reset quarterly. $25,000 of the Flagstone 2007 Junior Subordinated Deferrable Debentures mature on September 15, 2037, are redeemable at the Company's option at par beginning September 15, 2012, and require quarterly interest payments by the Company to the holders of the Flagstone 2007 Junior Subordinated Deferrable Debentures. Interest is payable at a floating rate of three-month LIBOR plus 310 basis points, reset quarterly. The Company has entered into a $100,000 interest rate swap which fixed the rate of interest at 5.9%, and also entered into a $25,000 interest rate swap which fixed the interest rate at 5.9825%. The interest payments in the table above reflect the Company's contractual obligations with respect to the swaps.

(g)

Contractual obligations related to the notes payable to operating affiliates, including the timing of any payment, are dependent upon the settlement of the relevant underlying transactions. The notes typically have at least a twelve month duration and do not have any principal amount, since the final amount payable is dependent on the income or loss generated by the transactions. They also do not have any stated maturity date, since full repayment is dependent on the complexity involved in the settlement of the underlying transactions. Please refer to Note 9 to the Consolidated Financial Statements in Part II, Item 8 for further details describing the notes payable.

(h)	Please refer to Note 22 (f) to the Consolidated Financial Statements in Part II, Item 8 for further details describing the Aquiline commitments. There is no defined contractual commitment date, therefore it is included in the less than one year category.

(i)	Please refer to Note 22 (f) to the Consolidated Financial Statements in Part II, Item 8 for further details describing the AlphaCat 2015 commitment. The remaining commitment will be called and deployed throughout 2015, therefore it is included in the less than one year category.

(j)	Please refer to Note 22 (f) to the Consolidated Financial Statements in Part II, Item 8 for further details describing the AlphaCat ILS fund commitment. The remaining commitment will be called and deployed throughout 2015, therefore it is included in the less than one year category.

(k)	Please refer to Note 22 (g) to the Consolidated Financial Statements in Part II, Item 8 for further details describing the fixed maturity commitment. There is no defined contractual commitment date, therefore it is included in the less than one year category.

(l)	Please refer to Note 22 (h) to the Consolidated Financial Statements in Part II, Item 8 for further details describing the other investment commitments. There is no defined contractual commitment date, therefore it is included in the less than one year category.

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(a)

The A.M. Best ratings were most recently affirmed on February 25, 2014 for Validus Holdings, Ltd, Validus Reinsurance, Ltd and Validus Reinsurance (Switzerland) Ltd. The A.M. Best rating for Lloyd's was most recently affirmed on July 24, 2014. The A.M. Best rating for Talbot Syndicate 1183 was assigned on June 18, 2014. The A.M. Best rating for Western World Insurance Company was downgraded from A+ to A on November 6, 2014.

(b)	The S&P ratings were most recently affirmed on August 23, 2012 for Validus Holdings, Ltd and Validus Reinsurance, Ltd. The S&P rating for Validus Reinsurance (Switzerland) Ltd was issued on December 11, 2013. On October 13, 2014, the S&P rating for Lloyd's was affirmed and the outlook was revised from positive to stable.

(c)	The Moody’s ratings were most recently affirmed on June 25, 2014 for Validus Holdings, Ltd and Validus Reinsurance, Ltd.

(d)	The Fitch ratings were most recently affirmed on August 19, 2014 for Validus Holdings, Ltd. and Validus Reinsurance, Ltd. The Fitch rating for Lloyd's was most recently affirmed on October 14, 2014.

(e)	A.M. Best placed the A- rating of PaCRe, Ltd. “under review with negative implications” on January 20, 2015.

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	The results of operations for Western World are consolidated from the October 2, 2014 date of acquisition.

(b)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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•	unpredictability and severity of catastrophic events;

•	our ability to obtain and maintain ratings, which may affect by our ability to raise additional equity or debt financings, as well as other factors described herein;

•	adequacy of the Company’s risk management and loss limitation methods;

•	cyclicality of demand and pricing in the insurance and reinsurance markets;

•	the Company’s ability to implement its business strategy during “soft” as well as “hard” markets;

•	adequacy of the Company’s loss reserves;

•	continued availability of capital and financing;

•	the Company’s ability to identify, hire and retain, on a timely and unimpeded basis and on anticipated economic and other terms, experienced and capable senior management, as well as underwriters, claims professionals and support staff;

•	acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and (re)insureds;

•	competition, including increased competition, on the basis of pricing, capacity, coverage terms or other factors;

•	potential loss of business from one or more major insurance or reinsurance brokers;

•	the Company’s ability to implement, successfully and on a timely basis, complex infrastructure, distribution capabilities, systems, procedures and internal controls, and to develop accurate actuarial data to support the business and regulatory and reporting requirements;

•	general economic and market conditions (including inflation, volatility in the credit and capital markets, interest rates and foreign currency exchange rates) and conditions specific to the insurance and reinsurance markets in which we operate;

•	the integration of businesses we may acquire or new business ventures, including overseas offices, we may start and the risk associated with implementing our business strategies and initiatives with respect to the new business ventures;

•

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 other factors;

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•	acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events;

•	availability and cost of reinsurance and retrocession coverage;

•	the failure of reinsurers, retrocessionaires, producers or others to meet their obligations to us;

•	the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us;

•	changes in domestic or foreign laws or regulations, or their interpretations;

•	changes in accounting principles or the application of such principles by regulators;

•	statutory or regulatory or rating agency developments, including as to tax policy and reinsurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers; and

•

the other factors set forth herein under Part I Item 1A “Risk Factors” and under Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the other sections of this Annual Report on Form 10-K for the year ended December 31, 2014, 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.

•	interest rate risk;

•	foreign currency risk;

•	credit risk;

•	liquidity risk; and

•	inflation risk.

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(a)	Financial Statements and Financial Statement Schedules are included as pages F-1 to F-88.

(b)	The exhibits numbers followed by an asterisk (*) indicate exhibits physically filed with this Annual Report on Form 10-K. All other exhibit numbers indicate exhibits filed by incorporation by reference.

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(a)	Premiums

(b)	Policy acquisition costs

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(c)	Reserve for losses and loss expenses

(d)	Reinsurance

(e)	Investments

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(f)	Fair value of financial instruments

(g)	Derivative instruments

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(h)	Cash and cash equivalents

(i)	Foreign exchange

(j)	Stock plans

(k)	Warrants

(l)	Earnings per share

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(m)	Income taxes and uncertain tax provisions

(n)	Goodwill and other intangible assets

(o)	Investments in affiliates

(p)	Variable interest entities

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(q)	Noncontrolling interests

(a)	Adoption of New Accounting Standards

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(b)	Recently Issued Accounting Standards Not Yet Adopted

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(a)	Western World Insurance Group, Inc. acquisition

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(b)	Flagstone Reinsurance Holdings S.A. acquisition

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(a)	Premiums receivable of $171,620 were net of an allowance for doubtful accounts of $2,216.

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(a)	Fixed maturity, short-term and other investments

(a)

Included in the short-term investments balance are assets held in trust to support AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by one AlphaCat ILS fund which is consolidated by the Company but in which the Company has an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.

(b)	Included in the hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.

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(a)

Included in the short-term investments balance are assets held in trust to support AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by two AlphaCat ILS funds which are consolidated by the Company but in which the Company has an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.

(b)	Included in the hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.

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(b)	Net investment income

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(c)	Net realized gains (losses) and change in net unrealized (losses) gains on investments

(a)	Includes change in net unrealized gains (losses) and realized gains on investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors and is included in the Consolidated Statements of Comprehensive Income as net loss (income) attributable to noncontrolling interest.

(d)	Pledged investments

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(e)	Securities lending

(a)	Classification within the fair value hierarchy

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(a)

Included in the short-term investments balance are assets held in trust to support AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by one AlphaCat ILS fund which is consolidated by the Company but in which the Company has an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.

(b)	Included in the hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.

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(a)

Included in the short-term investments balance are assets held in trust to support AlphaCat's fully collateralized reinsurance transactions. Also, included in the short-term investments balance are investments held by two AlphaCat ILS funds which are consolidated by the Company but in which the Company has an equity interest of less than 100%. The remaining interests are held by third party investors and included in the Consolidated Balance Sheets as redeemable noncontrolling interest.

(b)	Included in the Hedge funds balance are investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.

(b)	Level 1 assets measured at fair value

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(c)	Level 2 assets measured at fair value

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(d)	Level 3 assets measured at fair value

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(a)	Includes Level 3 investments held by PaCRe in which the Company has an equity interest of 10%. The remaining 90% interest is held by third party investors and included in the Consolidated Balance Sheets as noncontrolling interest.

(e)	Financial Instruments Not Carried at Fair Value

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(a)	Investment affiliate

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(b)	Operating affiliates

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(a)	Equity ownership in the funds was 7.9%, 39.7% and 9.1%, respectively as at December 31, 2014.

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(a)	AlphaCat ILS funds information includes all funds, including those where the Company is not the primary beneficiary.

(c)	Notes payable and (income) attributable to operating affiliates

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(a)

Asset and liability derivatives are classified within other assets and accounts payable and accrued expenses respectively on the Consolidated Balance Sheets. The total impact on earnings during the year ended December 31, 2014, recognized in income within other insurance related income and other income, relating to the foreign currency forward contract that was not designated as a hedging instrument was $1,685.

(a)	Asset and liability derivatives are classified within other assets and accounts payable and accrued expenses respectively on the Consolidated Balance Sheets.

(a)	Classification within the fair value hierarchy

(b)	Derivative instruments designated as a fair value hedge

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(c)	Derivative instruments designated as a cash flow hedge

(d)	Balance sheet offsetting

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(a)	Upon closing the acquisition of Western World, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,607 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

(a)	Upon closing the acquisition of Western World, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,607 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

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(a)	Upon closing the acquisition, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $4,607 during the year ended December 31, 2014. The remaining fair value adjustment will be amortized in 2015.

(a)	AlphaCat has not had any development on prior accident years.

(a)	AlphaCat has not had any development on prior accident years.

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(a)	Effects of reinsurance on premiums written and earned

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(b)	Credit risk

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(a)	Authorized and issued

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(b)	Warrants

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(c)	Deferred share units

(d)	Dividends

(a)	Defined benefit plans

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(b)	Other pension plans

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(a)	Long Term Incentive Plan and Short Term Incentive Plan

i.	Options

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(a)	The total intrinsic value in the tables above represent the amount by which the market price of the Company's common stock is greater than the option strike price multiplied by the number of options exercised during the year.

ii.	Restricted share awards

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iii.	Restricted share units

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iv.	Performance share awards

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(b)	Total share compensation expenses

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(a)	Financing structure

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(a)	Indicates utilization of commitment amount, not necessarily drawn borrowings.

(b)	Senior notes and junior subordinated deferrable debentures

(a)	Fixed interest rate.

(b)	Variable interest rate is the three-month LIBOR, reset quarterly, plus spread as noted in the table.

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(a)	Fixed interest rate.

(b)	Interest rate has been fixed as a result of interest rate swap contracts entered into by the Company.

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(c)	Credit facilities

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

ii.	$25,000 Talbot FAL facility

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iii.	$40,000 IPC bi-lateral facility

iv.	$200,000 secured bi-lateral letter of credit facility

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v.	$10,000 PaCRe senior secured letter of credit facility

vi.	$30,000 AlphaCat Re secured letter of credit facility

vii.	$375,000 Flagstone bi-lateral facility

(d)	Finance expenses

(a)	Includes finance expenses incurred by AlphaCat Managers, Ltd. in relation to fund raising for the AlphaCat ILS funds, AlphaCat 2015, AlphaCat 2014 and AlphaCat 2013.

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(a)	Concentrations of credit risk

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(b)	Employment agreements

(c)	Operating leases

(d)	Funds at Lloyd’s

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(e)	Lloyd’s Central Fund

(f)	Investment in affiliate commitments

(g)	Fixed maturity commitment

(h)	Other investment commitments

(i)	Multi-Beneficiary Reinsurance Trusts

(j)	Structured settlements

(k)	Income tax examinations

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(a)	The transaction expenses relate to costs incurred in connection with the acquisition of Western World, which was completed on October 2, 2014. Transaction expenses are primarily comprised of legal, financial advisory and audit related services.

(b)	Ratios are based on net premiums earned.

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

(d)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	Ratios are based on net premiums earned.

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

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(a)	The gain on bargain purchase, net of expenses, arose from the acquisition of Flagstone Reinsurance Holdings S.A. on November 30, 2012 and is net of transaction related expenses which included legal, financial advisory, audit related services and termination expenses.

(b)	Ratios are based on net premiums earned.

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

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(a)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)	Represents risks in two or more geographic zones.

(b)	Represents risks in one geographic zone.

(c)	The Other locations non-specific category refers to business for which an analysis of exposure by geographic zone is not applicable, such as marine and aerospace risks, since these exposures can span multiple geographic areas and, in some instances, are not fixed locations.

(d)	The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

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(a)

The Company's Bermuda based insurance subsidiaries are required to maintain minimum statutory capital and surplus equal to the greater of a minimum solvency margin ("MSM") and the Enhanced Capital Requirement ("ECR") where applicable. The ECR is equal to the higher of each insurer's MSM or the Bermuda Solvency Capital Requirement ("BSCR") model or approved internal capital model. The BSCR for the relevant insurers for the year ended December 31, 2014 will not be filed with the BMA until April 2015. As a result, the required statutory capital and surplus as at December 31, 2014 is based on the MSM of all relevant insurers, whereas the required statutory capital and surplus as at December 31, 2013 is based on the MSM and ECR where applicable for all relevant insurers. Required statutory capital and surplus includes Validus Reinsurance, Ltd., Validus Reinsurance (Switzerland) Ltd (Bermuda Branch), PaCRe, Ltd., IPCRe Limited, Validus Re Americas, Ltd., Talbot Insurance (Bermuda), Ltd., AlphaCat Reinsurance, Ltd. and Mont Fort Re Ltd. Actual statutory capital and surplus includes Validus Reinsurance, Ltd., AlphaCat Reinsurance, Ltd. and Talbot Insurance (Bermuda), Ltd. Validus Reinsurance, Ltd. is the parent company of the other five Bermuda based insurance subsidiaries.

(b)

Required statutory capital and surplus is based on the Risk-Based Capital ("RBC") requirements and includes Western World Insurance Company, Tudor Insurance Company and Stratford Insurance Company. Actual statutory capital and surplus includes Western World Insurance Company. Western World Insurance Company is the parent Company of the other two U.S. based insurance subsidiaries. The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(c)	Required statutory capital and surplus is based on the Target Capital ("TC") requirements calculated under the Swiss Solvency Test ("SST"). Required and actual statutory capital and surplus includes Validus Reinsurance (Switzerland) Ltd (formerly Flagstone Réassurance Suisse SA).

(a)	Statutory net income includes Validus Reinsurance, Ltd., PaCRe, Ltd. (at the Company's effective 10% equity interest), IPCRe Limited, Validus Re Americas, Ltd., Talbot Insurance (Bermuda), Ltd., AlphaCat Reinsurance, Ltd. and Mont Fort Re Ltd.

(b)	Statutory net income includes Western World Insurance Company, Tudor Insurance Company and Stratford Insurance Company. The results of Western World have been included in the Company's consolidated results from the October 2, 2014 date of acquisition.

(c)	Statutory net income (loss) includes Validus Reinsurance (Switzerland) Ltd (formerly Flagstone Réassurance Suisse SA). The results of Validus Reinsurance (Switzerland) Ltd, a former Flagstone subsidiary, have been included in the Company's consolidated results from the November 30, 2012 date of acquisition.

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(a)	Bermuda

(b)	United Kingdom

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(c)	United States

(d)	Switzerland

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(a)	Quarterly dividend

(b)	Share repurchase authorization

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(a)	This amount had been shown within finance expenses for each of the three months ended March 31, June 30 and September 30, 2013.

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(a)	The gain on bargain purchase, net of expenses, arose from the acquisition of Flagstone Reinsurance Holdings S.A. on November 30, 2012 and is net of transaction related expenses which included legal, financial advisory, audit related services and termination expenses.

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