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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 $135.0 million of third party initial capital for AlphaCat Re 2011, Ltd. (“AlphaCat Re 2011”) on May 25, 2011 and a further $60.0 million of additional third party capital on December 23, 2011;

•	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;

•	Raising $43.5 million of third party capital for AlphaCat Re 2012, Ltd. (“AlphaCat Re 2012”) on May 29, 2012;

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

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•	Raising $185.0 million of third party capital for AlphaCat 2013, Ltd. ("AlphaCat 2013") on December 17, 2012;

•	Raising $292.2 million of third party subscriptions for AlphaCat Insurance Linked Securities ("ILS") funds;

•	Raising $138.0 million of third party capital for AlphaCat 2014, Ltd. ("AlphaCat 2014") on December 20, 2013;

•	Delivering a 12.7% compounded annual growth in book value per diluted common share plus accumulated dividends from formation to December 31, 2013;

•	Increasing the annual dividend by 20% from $1.00 to $1.20 per common share and per common share equivalent and declaring a $2.00 special dividend per common share and per common share equivalent on February 6, 2013; and

•	Repurchasing approximately 59.6 million common shares for an aggregate purchase price of $1,821.1 million and paying an aggregate amount of $830.3 million in dividends from formation to February 14, 2014.

(a)	AlphaCat Re 2011, AlphaCat Re 2012, AlphaCat 2013 and AlphaCat 2014 are non-consolidated operating affiliates that are owned 22.3%, 37.9% , 19.7% and 19.6%, respectively by the Company.

(b)	Two of the funds are consolidated and the third is owned 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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•	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, 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 group 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;

•	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 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.

(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.

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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.

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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.

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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.

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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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•	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;

•	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;

•	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 14, 2014 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 2013 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 IPC on September 4, 2009 and is net of transaction related expenses.

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

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

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

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

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

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

(i)	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.

(j)

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, 2013 were $237.3 million compared to $311.8 million for the three months ended December 31, 2012, a decrease of $74.6 million, or 23.9%.

•	Net premiums earned for the three months ended December 31, 2013 were $492.2 million compared to $499.3 million for the three months ended December 31, 2012, a decrease of $7.0 million, or 1.4%.

•	Underwriting income for the three months ended December 31, 2013 was $110.4 million compared to an underwriting loss of ($113.1) million for the three months ended December 31, 2012, an increase of $223.4 million, or 197.6%.

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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 compared to a combined ratio for the three months ended December 31, 2012 of 122.7% which included $57.2 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 11.5 percentage points.

•	Loss ratio for the three months ended December 31, 2013 was 41.9% compared to 91.8% for the three months ended December 31, 2012.

•	Loss ratios by line of business are as follows:

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

•	Net investment income for the three months ended December 31, 2013 was $24.2 million compared to $28.8 million for the three months ended December 31, 2012, a decrease of $4.6 million, or 16.0%.

•	Net operating income available to Validus for the three months ended December 31, 2013 was $96.4 million compared to net operating loss attributable to Validus of ($100.8) million for the three months ended December 31, 2012, an increase of $197.2 million, or 195.6%.

•	Net income available to Validus for the three months ended December 31, 2013 was $95.3 million, or $0.93 per diluted common share compared to a loss of ($90.7) million or ($0.94) per diluted common share for the three months ended December 31, 2012.

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•	Losses and loss expenses from notable loss events for the three months ended December 31, 2013 was $nil compared to $361.0 million for the three months ended December 31, 2012, a decrease of $361.0 million.

•	Investment yield for the three months ended December 31, 2013 was 1.31% compared to 1.53% for the three months ended December 31, 2012.

•	Annualized return on average equity and annualized net operating return on average equity for the three months ended December 31, 2013 were 10.2% and 10.3%, respectively, compared to (9.5)% and (10.5)% for the three months ended December 31, 2012.

(a)

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

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

(c)	Net of reinsurance but not of reinstatement premiums. Total reinstatement premiums were $0.0 million and $30.8 million for the three months ended December 31, 2013 and December 31, 2012, respectively.

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(d)	The AlphaCat segment's non-consolidated affiliates incurred loss and loss expenses of $8.4 million related to Hurricane Sandy for the three months ended December 31, 2012. These losses are not included in the table above as the entities are accounted for as investments in operating affiliates.

(e)	The Company increased the threshold for disclosure of notable losses effective January 1, 2013 from $15.0 million to $30.0 million.

•	Gross premiums written for the year ended December 31, 2013 were $2.4 billion compared to $2.2 billion for the year ended December 31, 2012, an increase of $234.7 million, or 10.8%.

•	Net premiums earned for the year ended December 31, 2013 were $2.1 billion compared to $1.9 billion for the year ended December 31, 2012, an increase of $228.8 million, or 12.2%.

•	Underwriting income for the year ended December 31, 2013 was $604.9 million compared to $248.7 million for the year ended December 31, 2012, an increase of $356.2 million, or 143.2%.

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Combined ratio for the year ended December 31, 2013 was 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, compared to 86.8%, which included $175.0 million of favorable loss reserve development on prior accident years, benefiting the loss ratio by 9.3 percentage points, for the year ended December 31, 2012.

•	Loss ratio for the year ended December 31, 2013 was 37.8% compared to 53.4% for the year ended December 31, 2012.

•	Loss ratios by line of business are as follows:

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

•	Net investment income for the year ended December 31, 2013 was $96.1 million compared to $107.9 million for the year ended December 31, 2012, a decrease of $11.9 million, or 11.0%.

•	Net income available to Validus for the year ended December 31, 2013 was $532.7 million, or $4.94 per diluted common share compared to $408.4 million or $3.99 per diluted common share for the year ended December 31, 2012.

•	Net operating income available to Validus for the year ended December 31, 2013 was $578.7 million, or $5.38 per diluted common share compared to $333.8 million or $3.26 per diluted common share for the year ended December 31, 2012.

•	Losses and loss expenses from notable loss events for the year ended December 31, 2013 was $60.8 million compared to $500.6 million for the year ended December 31, 2012, a decrease of $439.7 million.

•	Investment yield for the year ended December 31, 2013 was 1.30% compared to 1.65% for the year ended December 31, 2012.

•	Return on average equity and net operating return on average equity for the year ended December 31, 2013 were 14.0% and 15.2%, respectively compared to 11.3% and 9.2% for the year ended December 31, 2012.

•	Total cash and investments as at December 31, 2013 was $8.0 billion compared to $8.0 billion as at December 31, 2012.

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

(b)

Notable loss for the year ended December 31, 2013 was the European Floods. Notable losses for the year ended December 31, 2012 were Costa Concordia, Cat 67, U.S. drought, Hurricane Isaac and Hurricane Sandy. Notable losses for the year ended December 31, 2011 were Tohoku Earthquake, Gryphon Alpha, Christchurch Earthquake, Brisbane Floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish Floods, Hurricane Irene and the Thailand Floods.

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

(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 these measures is presented in the section entitled “Non-GAAP Financial Measures.”

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

•	An increase in underwriting income of $356.2 million due primarily to:

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

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

•	Offset by the following factors:

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

◦	A $25.6 million increase in policy acquisition costs, reflecting the higher level of net premiums earned.

•	Offsetting the increase in underwriting income were:

•	Increases in income attributable to operating affiliate investors and net operating income attributable to noncontrolling interest of $68.8 million and $10.2 million, respectively; and

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•	Increase in underwriting income of $236.9 million due primarily to:

•	A $245.0 million decrease in losses and loss expenses, driven by a lower level of notable losses; and

•	A $71.1 million increase in net premiums earned, primarily due to expansion of the marine book at both Validus Re and Talbot;

•	Offset by the following factors:

◦	A $66.2 million increase in general and administrative expenses, due primarily to an increase in headcount and a higher level of performance bonus, partially offset by $7.6 million decrease in share compensation expenses; and

◦	A $20.5 million increase in policy acquisition costs, reflecting the higher level of net premiums earned.

•	In addition to the increase in underwriting income, there were:

•	A $20.4 million decrease in net operating income attributable to noncontrolling interest; and

•	Increases in other income of $16.7 million and income from operating affiliates of $12.6 million.

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Gross premiums written for the three months ended December 31, 2013 were $10.3 million compared to $79.2 million for the three months ended December 31, 2012, a decrease of $69.0 million, or 87.1%. Gross premiums written for the three months ended December 31, 2013 included $17.2 million of property premiums and $nil of marine premiums, offset by ($6.9) million of specialty premiums, compared to $54.9 million of property premiums, $8.6 million of marine premiums and $15.7 million of specialty premiums for the three months ended December 31, 2012.

•	Net premiums earned for the three months ended December 31, 2013 were $250.3 million compared to $285.3 million for the three months ended December 31, 2012, a decrease of $35.0 million, or 12.3%.

•	Underwriting income for the three months ended December 31, 2013 was $77.1 million compared to a loss of ($103.1) million for the three months ended December 31, 2012, an increase of $180.2 million, or 174.7%.

•	Combined ratio for the three months ended December 31, 2013 was 69.1% compared to 136.2% for the three months ended December 31, 2012.

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The loss ratio for the three months ended December 31, 2013 was 44.2% compared to 116.1% for the three months ended December 31, 2012, a decrease of 71.9 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. The loss ratio for the three months ended December 31, 2012 included favorable loss reserve development on prior accident years of $19.8 million, benefiting the loss ratio by 6.9 percentage points.

•	Net investment income for the three months ended December 31, 2013 was $19.6 million compared to $23.8 million for the three months ended December 31, 2012, a decrease of $4.2 million, or 17.8%.

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•	Net operating income for the three months ended December 31, 2013 of $88.4 million compared to a loss of ($80.9) million for the three months ended December 31, 2012, an increase of $169.4 million.

•	General and administrative expenses for the three months ended December 31, 2013 were $21.6 million compared to $14.7 million for the three months ended December 31, 2012, an increase of $6.9 million, or 46.9%. General and administrative expenses associated with the run-off from the Flagstone acquisition were $3.7 million for the three months ended December 31, 2013.

•	Losses from notable loss events for the three months ended December 31, 2013 was $nil compared to $282.6 million for the three months ended December 31, 2012.

(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 expense 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)

Notable loss for the year ended December 31, 2013 was the European Floods. Notable losses for the year ended December 31, 2012 were Costa Concordia, Cat 67, U.S. drought, Hurricane Isaac and Hurricane Sandy. Notable losses for the year ended December 31, 2011 were Tohoku Earthquake, Gryphon Alpha, Christchurch Earthquake, Brisbane Floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish Floods, Hurricane Irene and the Thailand Floods.

(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 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.

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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.

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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.

(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.

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•	Gross premiums written from our consolidated entities, including PaCRe for the three months ended December 31, 2013 were $0.3 million compared to $nil for the three months ended December 31, 2012, an increase of $0.3 million.

•	Managed gross premiums written, including our non-consolidated affiliates, for the three months ended December 31, 2013 were ($1.0) million compared to $nil for the three months ended December 31, 2012, a decrease of $1.0 million.

•	Net premiums earned for the three months ended December 31, 2013 were $37.6 million compared to $5.9 million for the three months ended December 31, 2012, an increase of $31.8 million.

•	Underwriting income for the three months ended December 31, 2013 was $28.0 million compared to $3.2 million for the three months ended December 31, 2012, an increase of $24.8 million.

•	Income from operating affiliates for the three months ended December 31, 2013 was $5.5 million compared to a loss from operating affiliates of ($0.6) million for the three months ended December 31, 2012, an increase of $6.1 million.

•	Income attributable to operating affiliate investors for the three months ended December 31, 2013 was $26.6 million compared to $nil for the three months ended December 31, 2012, an increase of $26.6 million.

•	The combined ratio for the three months ended December 31, 2013 was 25.6% compared to 45.6% for the three months ended December 31, 2012, a decrease of 20.0 percentage points.

•	The loss ratio for the three months ended December 31, 2013 was 1.7% compared to 0.0% for the three months ended December 31, 2012, an increase of 1.7 percentage points.

•	Net investment income for the three months ended December 31, 2013 was $1.0 million compared to $1.1 million for the three months ended December 31, 2012.

•	Net operating income available to AlphaCat for the three months ended December 31, 2013 was $11.8 million compared to $1.1 million for the three months ended December 31, 2012, an increase of $10.7 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 expense ratio includes share compensation expenses.

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(a)	Notable loss 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 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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(b)	Includes general and administrative expenses and share compensation expenses.

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Gross premiums written for the three months ended December 31, 2013 were $236.4 million compared to $241.1 million for the three months ended December 31, 2012, a decrease of $4.7 million, or 2.0%. Gross premiums written for the three months ended December 31, 2013 included $60.9 million of property premiums, $75.1 million of marine premiums and $100.4 million of specialty premiums compared to $62.3 million of property premiums, $81.5 million of marine premiums and $97.3 million of specialty premiums for the three months ended December 31, 2012.

•	Net premiums earned for the three months ended December 31, 2013 were $204.3 million compared to $208.1 million for the three months ended December 31, 2012, a decrease of $3.8 million, or 1.8%.

•	Underwriting income for the three months ended December 31, 2013 was $27.1 million compared to $4.4 million for the three months ended December 31, 2012, an increase of $22.7 million.

•	Combined ratio for the three months ended December 31, 2013 was 86.8% compared to 97.9% for the three months ended December 31, 2012.

•

The loss ratio for the three months ended December 31, 2013 was 46.4% compared to 61.1% for the three months ended December 31, 2012, a decrease of 14.7 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. The loss ratio for the three months ended December 31, 2012 included favorable loss reserve development on prior accident years of $37.4 million, benefiting the loss ratio by 18.0 percentage points.

•	Net investment income for the three months ended December 31, 2013 was $4.6 million compared to $4.8 million for the three months ended December 31, 2012, a decrease of $0.3 million, or 5.6%.

•	Net operating income available to Talbot for the three months ended December 31, 2013 was $33.4 million compared to $7.6 million for the three months ended December 31, 2012, an increase of $25.8 million.

•	Losses and loss expenses from notable loss events for the three months ended December 31, 2013 was $nil compared to $78.4 million for the three months ended December 31, 2012, a decrease of $78.4 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 expense ratio includes share compensation expenses.

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(a)

Notable loss for the year ended December 31, 2013 was the European Floods. Notable losses for the year ended December 31, 2012 were Costa Concordia, Cat 67, Hurricane Isaac and Hurricane Sandy. Notable losses for the year ended December 31, 2011 were Tohoku Earthquake, Gryphon Alpha, Christchurch Earthquake, Brisbane Floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish Floods, Hurricane Irene and the Thailand 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 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)	The results of operations for Flagstone are consolidated from the November 30, 2012 date of acquisition.

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(a)	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.

(b)	Included in the short-term investments balance are investments held by consolidated AlphaCat ILS funds, where the Company has an equity interest of less than 100% and the remaining is held by third party investors.

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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)	Ratings used are the lower of Standard & Poor's (S&P) and Moody's. When Moody's ratings are used, they are presented in S&P's equivalent rating.

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(a)	During the year ended December 31, 2011, $14.8 million was allocated to Deepwater Horizon from the 2010 reserve for development on notable loss events. During the same period, $29.8 million was allocated to the Tohoku earthquake and $20.2 million was allocated to the Christchurch earthquake from the 2011 reserve for development on notable loss events.

(b)	Notable losses for the year ended December 31, 2011 were Tohoku earthquake, Gryphon Alpha mooring failure, Christchurch earthquake, Brisbane floods, CNRL Horizon, Cat 46, Cat 48, Jupiter 1, Danish floods, Hurricane Irene and Thailand floods.

(c)

The 2011 notable loss events, principally the Tohoku earthquake, the Christchurch earthquake and the Thailand floods continued to experience adverse development as shown in the notable loss roll forward table. During the year ended December 31, 2012, based on the potential that one or some of the 2011 notable loss events eligible for potential allocation from the 2011 RDE may experience adverse development, rather than all deteriorating proportionately, an addition to the 2011 RDE of $27.9 million was made.

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

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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. This uncertainty is heightened by the short time in which the Company has operated, thereby providing limited claims loss emergence patterns specifically for the Company. The lack of historical information for the Company has necessitated the use of industry loss emergence patterns in deriving IBNR. Further, expected losses and loss ratios are typically developed using vendor and proprietary computer models and these expected loss ratios are a material component in the calculation deriving IBNR. Actual loss ratios will deviate from expected loss ratios and ultimate loss ratios will be greater or less than expected loss ratios. During the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, ultimate liability will exceed or be less than the revised estimates. The actual payment of the reserve for losses and loss expenses will differ from estimated payouts.

(b)

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

(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.

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(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. During 2013, the Company entered into a $120,000 interest rate swap which fixed the rate of interest on the Flagstone 2006 Junior Subordinated Deferrable Debentures at 6.405%. Also in 2013, the Company entered into a cross currency interest rate swap which fixed the rate of interest at 6.8625% and the notional at $17,463. The interest payments in the table above reflect the Company's contractual obligations with respect to the swaps.

(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. During 2013, the Company 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 (Part II, Item 8) for further details describing the notes payable.

(h)	Please refer to Note 20 (f) to the Consolidated Financial Statements (Part II, Item 8) for further details describing the Aquiline commitment. While the commitment expires on July 2, 2015, it does not have a defined contractual commitment date and therefore it is included in the less than one year category.

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(a)	The A.M. Best ratings were most recently affirmed on February 7, 2013.

(b)	The S&P ratings were most recently affirmed on August 30, 2012. The S&P rating for Validus Reinsurance (Switzerland), Ltd. was issued on December 11, 2013.

(c)	All Moody’s ratings were most recently affirmed on September 16, 2013.

(d)	The Fitch ratings were most recently affirmed on February 5, 2014 for Validus Holdings, Ltd. and Validus Reinsurance, Ltd. The Fitch ratings for Validus Reinsurance (Switzerland), Ltd. and Talbot were affirmed on October 18, 2013.

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(a)	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;

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

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•	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, 2013, 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-76.

(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

(c)	Reserve for losses and loss expenses

(d)	Reinsurance

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(e)	Investments

(f)	Fair value of financial instruments

(g)	Derivative instruments

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(h)	Cash and cash equivalents

(i)	Foreign exchange

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(j)	Stock plans

(k)	Warrants

(l)	Earnings per share

(m)	Income taxes and uncertain tax provisions

(n)	Goodwill and other intangible assets

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(o)	Investments in affiliates

(p)	Variable interest entities

(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)	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 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)	Included in the Total 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.

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(a)	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 and net unrealized (losses) gains on investments

(a)	Includes realized (gains) and net unrealized losses 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.

(d)	Pledged investments

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(a)	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)	Included in the Total 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.

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(a)	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)	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.

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(a)	Investment affiliate

(a)	Until 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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(b)	Operating affiliates

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(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 on the Consolidated Balance Sheets.

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

(a)	Derivative instruments designated as a fair value hedge

(b)	Derivative instruments designated as a cash flow hedge

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(c)	Balance sheet offsetting

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

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(a)	Effects of reinsurance on premiums written and earned

(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)	Long Term Incentive Plan and Short Term Incentive Plan

i.	Options

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ii.	Restricted share awards

iii.	Restricted share units

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iv.	Performance share awards

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(b)	Employee seller shares

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(c)	Total share compensation expenses

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(a)	Financing structure and finance expenses

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

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(b)	Senior notes and junior subordinated deferrable debentures

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

(b)	Fixed interest rate.

(c)	For the Flagstone 2006 and 2007 Junior Subordinated Deferrable Debentures, the table summarizes the Company's participation as at the date of the Flagstone Acquisition, November 30, 2012.

(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

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(ii)	$25,000 Talbot FAL facility

(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)	$24,800 AlphaCat reinsurance secured letter of credit facility

(vii)	$375,000 Flagstone bi-lateral facility

(d)	Finance expenses

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

(b)	Includes finance expenses incurred during the years ended December 31, 2013, and 2012 by AlphaCat Managers, Ltd. in relation to the AlphaCat ILS funds and fund-raising for AlphaCat 2014 and AlphaCat 2013 respectively.

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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)	Aquiline Commitment

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

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

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

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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.

(a)	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. Required statutory capital and surplus also includes $440,163 of Funds at Lloyd’s as at December, 31, 2013 (2012: $556,239).

(b)	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.

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(a)	Bermuda

(b)	United Kingdom

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(c)	Switzerland

(a)	Quarterly Dividend

(b)	Share Repurchase Authorization

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

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