Validus Holdings Ltd 8-k (events Or Changes Between Quarterly Reports) 2009-02-23
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 23, 2009 Commission file number 001-33606
VALIDUS HOLDINGS, LTD. (Exact name of registrant as specified in its charter) BERMUDA (State or other jurisdiction of incorporation or organization)
98-0501001 (I.R.S. Employer Identification No.)
19 Par-La-Ville Road, Hamilton, HM 11 Bermuda (Address of principal executive offices) Registrant’s telephone number, including area code: (441) 278-9000 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 7.01 Regulation FD Disclosure. Beginning on February 24, 2009, Validus Holdings, Ltd. will present the information attached to this report as Exhibit 99.1 to various investors. The presentation attached to this Current Report on Form 8-K as Exhibit 99.1 is incorporated herein by reference. The information in this Current Report on Form 8-K, including the information set forth in Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. The following exhibits are filed herewith: Exhibit No.
99.1
Description
Investor Presentation
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 23, 2009
By: /s/ Joseph E. (Jeff) Consolino Name: Joseph E. (Jeff) Consolino Title: Executive Vice President & Chief Financial Officer
() I nve s t or
Pr e s e n t a t i o n
Fo u r t h Q u a r t e r
2008
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() Ca u t i o n a r y
No t e
Re g a r d i n g
F o r wa r d - L o o k i n g
St a t e m e nt s
Al l f o r wa r d - l o o k i n g s t a t e m e n t s a d d r e s s m a t t e r s t h a t i n v o l v e r i s k s a n d u n c e r t a i n t i e s . Ac c o r d i n g l y , t h e r e a r e o r wi l l b e i m p o r t a n t f a c t o r s t h a t c o u l d c a u s e a c t u a l r e s u l t s t o d i f f e r m a t e r i a l l y f r o m t h o s e i n d i c a t e d i n s u c h s t a t e m e n t s a n d , t h e r e f o r e , y o u s h o u l d n o t p l a c e u n d u e r e l i a n c e o n a n y s u c h s t a t e m e n t s . T h i s p r e s e n t a t i o n m a y i n c l u d e f o r wa r d - l o o k i n g s t a t e m e n t s , b o t h wi t h r e s p e c t t o u s a n d o u r i n d u s t r y , t h a t r e f l e c t o u r c u r r e n t v i e ws wi t h r e s p e c t t o f u t u r e e v e n t s a n d f i n a n c i a l p e r f o r m a n c e . S t a t e m e n t s t h a t i n c l u d e t h e wo r d s “ e x p e c t , ” “ i n t e n d , ” “ p l a n , ” “ b e l i e v e , ” “ p r o j e c t , ” “ a n t i c i p a t e , ” “ wi l l , ” “ m a y ” a n d s i m i l a r s t a t e m e n t s o f a f u t u r e o r f o r wa r d - l o o k i n g n a t u r e i d e n t i f y f o r wa r d - l o o k i n g s t a t e m e n t s . W e b e l i e v e t h a t t h e s e f a c t o r s i n c l u d e , b u t a r e n o t l i m i t e d t o , t h e f o l l o wi n g : 1 ) u n p r e d i c t a b i l i t y a n d s e v e r i t y o f c a t a s t r o p h i c e v e n t s ; 2 ) r a t i n g a g e n c y a c t i o n s ; 3 ) a d e q u a c y o f o u r r i s k m a n a g e m e n t a n d l o s s l i m i t a t i o n m e t h o d s ; 4 ) c y c l i c a l i t y o f d e m a n d a n d p r i c i n g i n t h e i n s u r a n c e a n d r e i n s u r a n c e m a r k e t s ; 5 ) o u r l i m i t e d o p e r a t i n g h i s t o r y ; 6 ) o u r a b i l i t y t o s u c c e s s f u l l y i m p l e m e n t o u r b u s i n e s s s t r a t e g y d u r i n g “ s o f t ” a s we l l a s “ h a r d ” m a r k e t s ; 7 ) a d e q u a c y o f o u r l o s s r e s e r v e s ; 8 ) c o n t i n u e d a v a i l a b i l i t y o f c a p i t a l a n d f i n a n c i n g ; 9 ) r e t e n t i o n o f k e y p e r s o n n e l ; 1 0 ) c o m p e t i t i o n ; 1 1 ) p o t e n t i a l l o s s o f b u s i n e s s f r o m o n e o r m o r e m a j o r i n s u r a n c e o r r e i n s u r a n c e b r o k e r s ; 1 2 ) o u r a b i l i t y t o i m p l e m e n t , s u c c e s s f u l l y a n d o n a t i m e l y b a s i s , c o m p l e x i n f r a s t r u c t u r e , d i s t r i b u t i o n c a p a b i l i t i e s , s y s t e m s , p r o c e d u r e s a n d i n t e r n a l c o n t r o l s , a n d t o d e v e l o p a c c u r a t e a c t u a r i a l d a t a t o s u p p o r t t h e b u s i n e s s a n d r e g u l a t o r y a n d r e p o r t i n g r e q u i r e m e n t s ; 1 3 ) g e n e r a l e c o n o m i c a n d m a r k e t c o n d i t i o n s ( i n c l u d i n g i n f l a t i o n , v o l a t i l i t y i n t h e c r e d i t a n d c a p i t a l m a r k e t s , i n t e r e s t r a t e s a n d f o r e i g n c u r r e n c y e x c h a n g e r a t e s ) ; 1 4 ) t h e i n t e g r a t i o n o f o t h e r b u s i n e s s e s we m a y a c q u i r e o r n e w b u s i n e s s v e n t u r e s we m a y s t a r t ; 1 5 ) t h e e f f e c t o n o u r i n v e s t m e n t p o r t f o l i o o f c h a n g i n g f i n a n c i a l m a r k e t c o n d i t i o n s i n c l u d i n g i n f l a t i o n , i n t e r e s t r a t e s , l i q u i d i t y a n d o t h e r f a c t o r s ; 1 6 ) a c t s o f t e r r o r i s m o r o u t b r e a k o f wa r ; a n d 1 7 ) a v a i l a b i l i t y o f r e i n s u r a n c e a n d r e t r o c e s s i o n a l c o v e r a g e , a s we l l a s m a n a g e m e n t ’ s r e s p o n s e t o a n y o f t h e a f o r e m e n t i o n e d f a c t o r s .
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M ar ket
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() F o u r t h Qu a r t e r 2 0 0 8 — Ov e r v i e w ( $ US i n t h o u s a n d s ) Q 4 2 0 0 8 Q 4 d e c r e a s e d Di l u t e d n e t o p e r a t i n g E P S 0 . 6 5 1 . 6 8 b y $ 8 0 . 6 m m Bo o k Lo s s e s a n d l o s s e x p e n s e s 6 0 . 6 % 3 3 . 8 % P o l i c y a c q u i s i t i o n c o s t s
2 0 0 7 Gr o s s p r e m i u m s wr i t t e n $ 1 9 1 , 7 3 6 $ 1 9 0 , 9 9 6 Gr o s s p r e m i u m s wr i t t e n i n c r e a s e d Ne t p r e m i u m s wr i t t e n 1 8 9 , 0 1 4 1 8 6 , 4 3 0 b y $ 0 . 7 m m ( 0 . 4 % ) Ne t p r e m i u m s e a r n e d 3 1 6 , 0 3 1 3 1 8 , 0 3 1 Ne t u n d e r wr i t i n g i n c o m e ( l o s s ) 3 2 , 9 6 0 1 1 7 , 3 7 6 · De c r e a s e o f $ 3 . 6 m m i n Va l i d u s v a l u e p e r d i l u t e d s h a r e p l u s a c c u m u l a t e d d i v i d e n d s $ 2 4 . 5 8 $ 2 4 . 0 0 • P r i m a r i l y d u e t o n e t i m p a c t o f An n u a l i z e d o p e r a t i n g r e t u r n o n a v e r a g e e q u i t y 1 0 . 6 % 2 8 . 2 % Hu r r i c a n e I k e ( $ 7 0 . 1 m m ) F i n a n c i a l Ra t i o s 1 9 . 4 % 1 6 . 8 % G& A e x p e n s e s 9 . 5 % 1 2 . 5 % Ex p e n s e r a t i o 2 8 . 9 % 2 9 . 3 % Co m b i n e d r a t i o 8 9 . 5 % 6 3 . 1 % I m p a c t o f i d e n t i f i e d l o s s e v e n t s ( No t e 1 ) 2 4 . 4 % 3 . 1 % I m p a c t o f p r i o r p e r i o d d e v e l o p m e n t ( f a v o r a b l e ) / u n f a v o r a b l e ( 6 . 2 % ) ( 9 . 6 % ) No t e ( 1 ) : $ 7 7 . 2 mm a t t r i b u t a b l e
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() Va l i d u s Re — Qu a r t e r l y S e g m e n t Re s u l t s ( $ US i n t h o u s a n d s ) De c e m b e r 3 1 , De c e m b e r 3 1 , 2 0 0 8 2 0 0 7 Un d e r wr i t i n g r e v e n u e s Gr o s s p r e m i u m s wr i t t e n 7 , 8 5 8 S h a r e c o m p e n s a t i o n 2 , 1 9 7 1 , 1 8 9 “ Un d e r l y i n g ” l o s s r a t i o ( e x - d e v e l o p m e n t a n d T o t a l u n d e r wr i t i n g d e d u c t i o n s 1 3 3 , 4 8 1 7 9 , 3 9 8 i d e n t i f i e d l o s s i n Q4 ’ 2 0 0 7
d e c l i n e d b y $ 3 . 6 m m : Gr o s s p r e m i u m s wr i t t e n $ 4 3 , 8 7 3 e v e n t s ) o f 2 6 . 3 % i n Q4 ’ 0 8 Un d e r wr i t i n g i n c o m e ( l o s s )
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() T a l b o t — Qu a r t e r l y S e g m e n t Re s u l t s ( $ US i n t h o u s a n d s ) De c e m b e r 3 1 , De c e m b e r 3 1 , 2 0 0 8 2 0 0 7 Un d e r wr i t i n g r e v e n u e s Gr o s s p r e m i u m s wr i t t e n i n c r e a s e d $ 9 . 2 m m : Gr o s s p r e m i u m s wr i t t e n $ 1 5 2 , 6 6 2 $ 1 4 3 , 4 9 7 Re i n s u r a n c e p r e m i u m s c e d e d ( 5 , 8 2 5 ) ( 7 5 3 ) y At c o n s t a n t e x c h a n g e r a t e s , g r o wt h h e r e wo u l d h a v e b e e n o f Hu r r i c a n e I k e Ge n e r a l a n d a d m i n i s t r a t i v e e x p e n s e s 1 2 , 8 8 2 2 3 , 6 2 8 S h a r e c o m p e n s a t i o n 1 , 4 3 6 9 7 8 y Re s e r v e r e l e a s e s o f $ 1 3 . 6 m m v s . T o t a l u n d e r wr i t i n g d e d u c t i o n s 1 4 3 , 4 8 2 1 1 5 , 0 9 9 $ 2 9 . 7 m m i n p r i o r y e a r ’ s q u a r t e r Un d e r wr i t i n g i n c o m e ( l o s s ) $ 8 , 1 8 1 $ 4 0 , 4 1 8 y “ Un d e r l y i n g ” l o s s r a t i o ( e x - d e v e l o p m e n t a n d b e f o r e i n t e r s e g me n t e l i mi n a t i o n s I m p a c t o f p r i o r p e r i o d d e v e l o p m e n t No t e ( 1 ) : $ 1 8 . 3 mm a t t r i b u t a b l e t o Hu r r i c a n e I k e i n Q4 ’ 2 0 0 8 ( f a v o r a b l e ) / u n f a v o r a b l e ( 8 . 9 % ) ( 1 9 . 1 % )
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() I n v e s t m e n t P o r t f o l i o a t De c e m b e r 3 1 , 2 0 0 8 · Co n s e r v a t i v e Co r p o r a t e s 3 . 8 % · I n v e s t m e n t y i e l d : 3 . 7 5 % ( 1 ) No t e ( 1 ) :
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() T r a n s p a r e n t Ri s k Di s c l o s u r e — J a n u a r y 1 , 2 0 0 9 P o r t f o l i o 1 : 1 0 0 y e a r P M L e q u a l t o 2 2 . 1 % o f De c e m b e r 3 1 , 2 0 0 8 c a p i t a l , 2 5 . 5 % o f s h a r e h o l d e r s ’ e q u i t y Ne t l o s s e s t i m a t e s a r e b e f o r e i n c o m e t a x , n e t o f r e i n s t a t e m e n t p r e m i u m s , a n d n e t o f r e i n s u r a n c e a n d r e t r o c e s s i o n a l r e c o v e r i e s . T h e e s t i m a t e s s e t f o r t h a b o v e a r e b a s e d o n a s s u m p t i o n s t h a t a r e i n h e r e n t l y s u b j e c t t o s i g n i f i c a n t u n c e r t a i n t i e s a n d c o n t i n g e n c i e s . T h e s e u n c e r t a i n t i e s a n d c o n t i n g e n c i e s c a n a f f e c t a c t u a l l o s s e s a n d c o u l d c a u s e a c t u a l l o s s e s t o d i f f e r m a t e r i a l l y f r o m t h o s e e x p r e s s e d a b o v e . I n p a r t i c u l a r , m o d e l e d l o s s e s t i m a t e s d o n o t n e c e s s a r i l y a c c u r a t e l y p r e d i c t a c t u a l l o s s e s , a n d m a y s i g n i f i c a n t l y m i s - e s t i m a t e a c t u a l l o s s e s . S u c h e s t i m a t e s , t h e r e f o r e , s h o u l d n o t b e c o n s i d e r e d a s a r e p r e s e n t a t i o n o f a c t u a l l o s s e s . Th e Co m p a n y h a s d e v e l o p e d t h e e s t i m a t e s o f l o s s e s e x p e c t e d f r o m c e r t a i n c a t a s t r o p h e s f o r i t s p o r t f o l i o o f p r o p e r t y , m a r i n e , wo r k e r s ’ c o m p e n s a t i o n , a n d p e r s o n a l a c c i d e n t c o n t r a c t s u s i n g c o m m e r c i a l l y a v a i l a b l e c a t a s t r o p h e m o d e l s s u c h a s RM S , AI R a n d E QE CAT , wh i c h a r e a p p l i e d a n d a d j u s t e d b y t h e Co m p a n y . T h e s e e s t i m a t e s i n c l u d e a s s u m p t i o n s r e g a r d i n g t h e l o c a t i o n , s i z e a n d m a g n i t u d e o f a n e v e n t , t h e f r e q u e n c y o f e v e n t s , t h e c o n s t r u c t i o n t y p e a n d d a m a g e a b i l i t y o f p r o p e r t y i n a z o n e , p o l i c y t e r m s a n d c o n d i t i o n s a n d t h e c o s t o f r e b u i l d i n g p r o p e r t y i n a z o n e , a m o n g o t h e r a s s u m p t i o n s . T h e s e a s s u m p t i o n s wi l l e v o l v e f o l l o wi n g a n y a c t u a l e v e n t . Ac c o r d i n g l y , i f t h e e s t i m a t e s a n d a s s u m p t i o n s t h a t a r e e n t e r e d i n t o t h e r i s k m o d e l a r e i n c o r r e c t , o r i f t h e r i s k m o d e l p r o v e s t o b e a n i n a c c u r a t e f o r e c a s t i n g t o o l , t h e l o s s e s t h e Co m p a n y m i g h t i n c u r f r o m a n a c t u a l c a t a s t r o p h e c o u l d b e m a t e r i a l l y h i g h e r t h a n i t s e x p e c t a t i o n o f l o s s e s g e n e r a t e d f r o m m o d e l e d c a t a s t r o p h e s c e n a r i o s . I n a d d i t i o n , m a n y r i s k s s u c h a s s e c o n d - e v e n t c o v e r s , a g g r e g a t e e x c e s s o f l o s s , o r a t t r i t i o n a l l o s s c o m p o n e n t s c a n n o t b e f u l l y e v a l u a t e d u s i n g t h e v e n d o r m o d e l s . F u r t h e r , t h e Co m p a n y c a n n o t a s s u r e t h a t s u c h t h i r d p a r t y m o d e l s a r e f r e e o f d e f e c t s i n t h e m o d e l i n g l o g i c o r i n t h e s o f t wa r e c o d e . I n v e s t o r s s h o u l d n o t r e l y o n t h e i n f o r m a t i o n s e t f o r t h i n t h i s p r e s e n t a t i o n wh e n c o n s i d e r i n g i n v e s t m e n t i n t h e Co m p a n y . T h e i n f o r m a t i o n c o n t a i n e d i n t h i s p r e s e n t a t i o n h a s n o t b e e n a u d i t e d n o r h a s i t b e e n s u b j e c t t o i n d e p e n d e n t v e r i f i c a t i o n . T h e e s t i m a t e s s e t f o r t h a b o v e s p e a k o n l y a s o f t h e d a t e o f t h i s p r e s e n t a t i o n a n d t h e Co m p a n y u n d e r t a k e s n o o b l i g a t i o n t o u p d a t e o r r e v i s e s u c h i n f o r m a t i o n t o r e f l e c t t h e o c c u r r e n c e o f f u t u r e e v e n t s , i n c l u d i n g , b u t n o t l i m i t e d t o , t h e c o m p o s i t i o n o f t h e Co m p a n y ’ s b u s i n e s s . T h e e v e n t s p r e s e n t e d r e f l e c t a s p e c i f i c s e t o f p r o s c r i b e d c a l c u l a t i o n s a n d d o n o t n e c e s s a r i l y r e f l e c t a l l e v e n t s t h a t m a y i m p a c t t h e Co m p a n y .
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() Re a l i s t i c Di s a s t e r S c e n a r i o s — J a n u a r y 1 , 2 0 0 9 P o r t f o l i o Th e Co m p a n y h a s p r e s e n t e d t h e Co m p a n y Re a l i s t i c Di s a s t e r S c e n a r i o s f o r n o n - n a t u r a l c a t a s t r o p h e e v e n t s . Twi c e y e a r l y , Ll o y d ’ s s y n d i c a t e s ’ i n c l u d i n g t h e Co m p a n y ‘ s Ta l b o t S y n d i c a t e 1 1 8 3 a r e r e q u i r e d t o p r o v i d e d e t a i l s o f t h e i r p o t e n t i a l e x p o s u r e s t o s p e c i f i c d i s a s t e r s c e n a r i o s . L l o y d ’ s m a k e s i t s u p d a t e d Re a l i s t i c Di s a s t e r S c e n a r i o s ( RDS ) g u i d a n c e a v a i l a b l e t o t h e m a r k e t a n n u a l l y . T h e RDS s c e n a r i o s p e c i f i c a t i o n d o c u m e n t f o r 2 0 0 9 c a n b e a c c e s s e d a t t h e RDS p a r t o f t h e L l o y d ’ s p u b l i c we b s i t e ( h t t p : / / www. l l o y d s . c o m / L l o y d s _ M a r k e t / T o o l s _ a n d _ r e f e r e n c e / E x p o s u r e _ M a n a g e m e n t / Re a l i s t i c _ Di s a s t e r _ S c e n a r i o s / ) . M o d e l i n g c a t a s t r o p h e t h r e a t s c e n a r i o s i s a c o m p l e x e x e r c i s e i n v o l v i n g n u m e r o u s v a r i a b l e s a n d i s i n h e r e n t l y s u b j e c t t o s i g n i f i c a n t u n c e r t a i n t i e s a n d c o n t i n g e n c i e s . T h e s e u n c e r t a i n t i e s a n d c o n t i n g e n c i e s c a n a f f e c t a c t u a l l o s s e s a n d c o u l d c a u s e a c t u a l l o s s e s i n c u r r e d b y t h e Co m p a n y t o d i f f e r m a t e r i a l l y f r o m t h o s e e x p r e s s e d a b o v e . S h o u l d a n e v e n t o c c u r , t h e m o d e l e d o u t c o m e s m a y p r o v e i n a d e q u a t e , p o s s i b l y m a t e r i a l l y s o . Th i s m a y o c c u r f o r a n u m b e r o f r e a s o n s i n c l u d i n g , l e g a l r e q u i r e m e n t s , m o d e l d e f i c i e n c y , n o n - m o d e l e d r i s k s o r d a t a i n a c c u r a c i e s . A m o d e l e d o u t c o m e o f n e t l o s s f r o m a s i n g l e e v e n t a l s o r e l i e s i n s i g n i f i c a n t p a r t o n t h e r e i n s u r a n c e a n d r e t r o c e s s i o n a r r a n g e m e n t s i n p l a c e , o r e x p e c t e d t o b e i n p l a c e a t t h e t i m e o f t h e a n a l y s i s , a n d m a y c h a n g e d u r i n g t h e y e a r . M o d e l e d o u t c o m e s a s s u m e t h a t t h e r e i n s u r a n c e a n d r e t r o c e s s i o n i n p l a c e r e s p o n d s a s e x p e c t e d wi t h m i n i m a l r e i n s u r a n c e f a i l u r e o r d i s p u t e . Re i n s u r a n c e i s p u r c h a s e d t o m a t c h t h e o r i g i n a l e x p o s u r e a s f a r a s p o s s i b l e , b u t i t i s p o s s i b l e f o r t h e r e t o b e a m i s m a t c h o r g a p i n c o v e r wh i c h c o u l d r e s u l t i n h i g h e r t h a n m o d e l e d l o s s e s t o t h e Co m p a n y . I n a d d i t i o n , m a n y p a r t s o f t h e r e i n s u r a n c e p r o g r a m a r e p u r c h a s e d wi t h l i m i t e d r e i n s t a t e m e n t s a n d , t h e r e f o r e , t h e n u m b e r o f c l a i m s o r e v e n t s wh i c h m a y b e r e c o v e r e d f r o m s e c o n d o r s u b s e q u e n t e v e n t s i s l i m i t e d . I t s h o u l d a l s o b e n o t e d t h a t r e n e wa l d a t e s o f t h e r e i n s u r a n c e p r o g r a m d o n o t n e c e s s a r i l y c o i n c i d e wi t h t h o s e o f t h e i n wa r d s b u s i n e s s wr i t t e n . W h e r e o r i g i n a l b u s i n e s s i s n o t p r o t e c t e d b y r i s k s a t t a c h i n g r e i n s u r a n c e o r r e t r o c e s s i o n p r o g r a m s , t h e p r o g r a m s c o u l d e x p i r e r e s u l t i n g i n a n i n c r e a s e i n t h e p o s s i b l e n e t l o s s r e t a i n e d b y t h e Co m p a n y . I n v e s t o r s s h o u l d n o t r e l y o n t h e i n f o r m a t i o n s e t f o r t h i n t h i s p r e s e n t a t i o n wh e n c o n s i d e r i n g i n v e s t m e n t i n t h e Co m p a n y . T h e i n f o r m a t i o n c o n t a i n e d i n t h i s p r e s e n t a t i o n h a s n o t b e e n a u d i t e d n o r h a s i t b e e n s u b j e c t t o i n d e p e n d e n t v e r i f i c a t i o n . T h e e s t i m a t e s s e t f o r t h a b o v e s p e a k o n l y a s o f t h e d a t e o f t h i s p r e s e n t a t i o n a n d t h e Co m p a n y u n d e r t a k e s n o o b l i g a t i o n t o u p d a t e o r r e v i s e s u c h i n f o r m a t i o n t o r e f l e c t t h e o c c u r r e n c e o f f u t u r e e v e n t s . T h e e v e n t s p r e s e n t e d r e f l e c t a s p e c i f i c s e t o f p r o s c r i b e d c a l c u l a t i o n s a n d d o n o t n e c e s s a r i l y r e f l e c t a l l e v e n t s t h a t m a y i m p a c t t h e Co m p a n y .
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 23, 2009 Commission file number 001-33606
VALIDUS HOLDINGS, LTD. (Exact name of registrant as specified in its charter) BERMUDA (State or other jurisdiction of incorporation or organization)
98-0501001 (I.R.S. Employer Identification No.)
19 Par-La-Ville Road, Hamilton, HM 11 Bermuda (Address of principal executive offices) Registrant’s telephone number, including area code: (441) 278-9000 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 7.01 Regulation FD Disclosure. Beginning on February 24, 2009, Validus Holdings, Ltd. will present the information attached to this report as Exhibit 99.1 to various investors. The presentation attached to this Current Report on Form 8-K as Exhibit 99.1 is incorporated herein by reference. The information in this Current Report on Form 8-K, including the information set forth in Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. The following exhibits are filed herewith: Exhibit No.
99.1
Description
Investor Presentation
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 23, 2009
By: /s/ Joseph E. (Jeff) Consolino Name: Joseph E. (Jeff) Consolino Title: Executive Vice President & Chief Financial Officer
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Al l f o r wa r d - l o o k i n g s t a t e m e n t s a d d r e s s m a t t e r s t h a t i n v o l v e r i s k s a n d u n c e r t a i n t i e s . Ac c o r d i n g l y , t h e r e a r e o r wi l l b e i m p o r t a n t f a c t o r s t h a t c o u l d c a u s e a c t u a l r e s u l t s t o d i f f e r m a t e r i a l l y f r o m t h o s e i n d i c a t e d i n s u c h s t a t e m e n t s a n d , t h e r e f o r e , y o u s h o u l d n o t p l a c e u n d u e r e l i a n c e o n a n y s u c h s t a t e m e n t s . T h i s p r e s e n t a t i o n m a y i n c l u d e f o r wa r d - l o o k i n g s t a t e m e n t s , b o t h wi t h r e s p e c t t o u s a n d o u r i n d u s t r y , t h a t r e f l e c t o u r c u r r e n t v i e ws wi t h r e s p e c t t o f u t u r e e v e n t s a n d f i n a n c i a l p e r f o r m a n c e . S t a t e m e n t s t h a t i n c l u d e t h e wo r d s “ e x p e c t , ” “ i n t e n d , ” “ p l a n , ” “ b e l i e v e , ” “ p r o j e c t , ” “ a n t i c i p a t e , ” “ wi l l , ” “ m a y ” a n d s i m i l a r s t a t e m e n t s o f a f u t u r e o r f o r wa r d - l o o k i n g n a t u r e i d e n t i f y f o r wa r d - l o o k i n g s t a t e m e n t s . W e b e l i e v e t h a t t h e s e f a c t o r s i n c l u d e , b u t a r e n o t l i m i t e d t o , t h e f o l l o wi n g : 1 ) u n p r e d i c t a b i l i t y a n d s e v e r i t y o f c a t a s t r o p h i c e v e n t s ; 2 ) r a t i n g a g e n c y a c t i o n s ; 3 ) a d e q u a c y o f o u r r i s k m a n a g e m e n t a n d l o s s l i m i t a t i o n m e t h o d s ; 4 ) c y c l i c a l i t y o f d e m a n d a n d p r i c i n g i n t h e i n s u r a n c e a n d r e i n s u r a n c e m a r k e t s ; 5 ) o u r l i m i t e d o p e r a t i n g h i s t o r y ; 6 ) o u r a b i l i t y t o s u c c e s s f u l l y i m p l e m e n t o u r b u s i n e s s s t r a t e g y d u r i n g “ s o f t ” a s we l l a s “ h a r d ” m a r k e t s ; 7 ) a d e q u a c y o f o u r l o s s r e s e r v e s ; 8 ) c o n t i n u e d a v a i l a b i l i t y o f c a p i t a l a n d f i n a n c i n g ; 9 ) r e t e n t i o n o f k e y p e r s o n n e l ; 1 0 ) c o m p e t i t i o n ; 1 1 ) p o t e n t i a l l o s s o f b u s i n e s s f r o m o n e o r m o r e m a j o r i n s u r a n c e o r r e i n s u r a n c e b r o k e r s ; 1 2 ) o u r a b i l i t y t o i m p l e m e n t , s u c c e s s f u l l y a n d o n a t i m e l y b a s i s , c o m p l e x i n f r a s t r u c t u r e , d i s t r i b u t i o n c a p a b i l i t i e s , s y s t e m s , p r o c e d u r e s a n d i n t e r n a l c o n t r o l s , a n d t o d e v e l o p a c c u r a t e a c t u a r i a l d a t a t o s u p p o r t t h e b u s i n e s s a n d r e g u l a t o r y a n d r e p o r t i n g r e q u i r e m e n t s ; 1 3 ) g e n e r a l e c o n o m i c a n d m a r k e t c o n d i t i o n s ( i n c l u d i n g i n f l a t i o n , v o l a t i l i t y i n t h e c r e d i t a n d c a p i t a l m a r k e t s , i n t e r e s t r a t e s a n d f o r e i g n c u r r e n c y e x c h a n g e r a t e s ) ; 1 4 ) t h e i n t e g r a t i o n o f o t h e r b u s i n e s s e s we m a y a c q u i r e o r n e w b u s i n e s s v e n t u r e s we m a y s t a r t ; 1 5 ) t h e e f f e c t o n o u r i n v e s t m e n t p o r t f o l i o o f c h a n g i n g f i n a n c i a l m a r k e t c o n d i t i o n s i n c l u d i n g i n f l a t i o n , i n t e r e s t r a t e s , l i q u i d i t y a n d o t h e r f a c t o r s ; 1 6 ) a c t s o f t e r r o r i s m o r o u t b r e a k o f wa r ; a n d 1 7 ) a v a i l a b i l i t y o f r e i n s u r a n c e a n d r e t r o c e s s i o n a l c o v e r a g e , a s we l l a s m a n a g e m e n t ’ s r e s p o n s e t o a n y o f t h e a f o r e m e n t i o n e d f a c t o r s .
Th e our
Th i s
f or e goi ng r e vi e w of i m por t ant f ac t or s s houl d not be c ons t r ue d as b u s i n e s s o r o p e r a t i o n s . Al l f o r wa r d - l o o k i n g s t a t e m e n t s c o n t a i n e d
pr es ent at i on
al so
cont ai ns
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pr of or m a
cons ol i dat ed
e x h a u s t i v e a n d s h o u l d b e r e a d i n c o n j u n c t i o n wi t h t h e o t h e r c a u t i o n a r y h e r e i n s p e a k o n l y a s o f t h e d a t e o f t h i s p r e s e n t a t i o n a n d we u n d e r t a k e
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about
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Ta l b o t
m i ght
a r e i n c l u d e d h e r e i n o r e l s e wh e r e , i n c l u d i n g t h e Ri s k F a c t o r s i n c l u d e d i n o u r m o s t r e c e n t r e p o r t s o n F o r m 1 0 - K a n d F o r m 1 0 - Q a n d o t h e r u p d a t e p u b l i c l y o r r e v i s e a n y f o r wa r d - l o o k i n g s t a t e m e n t , wh e t h e r a s a r e s u l t o f n e w i n f o r m a t i o n , f u t u r e d e v e l o p m e n t s o r o t h e r wi s e .
have
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t he
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s t at em ent s
of
t he
Co m p a n y
i f
i t
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on
f i nanci al
f i l e
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wi t h
does
t he
not
Se c ur i t i e s
and
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r ef l ect
t he
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f i nanci al
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f o r wa r d - l o o k i n g
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or
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oper at i ons
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as
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even
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r es ul t s
of
oper at i ons
t he
of
t hat
Co m p a n y .
t hey
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have
t he
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us
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u n d e r wr i t i n g
opt i ons ,
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m eas ur es
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wa r r a n t s
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ar e
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n o n - GAAP .
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net
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as
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i n
accor dance
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() F o u r t h Qu a r t e r 2 0 0 8 — Ov e r v i e w ( $ US i n t h o u s a n d s ) Q 4 2 0 0 8 Q 4 d e c r e a s e d Di l u t e d n e t o p e r a t i n g E P S 0 . 6 5 1 . 6 8 b y $ 8 0 . 6 m m Bo o k Lo s s e s a n d l o s s e x p e n s e s 6 0 . 6 % 3 3 . 8 % P o l i c y a c q u i s i t i o n c o s t s
2 0 0 7 Gr o s s p r e m i u m s wr i t t e n $ 1 9 1 , 7 3 6 $ 1 9 0 , 9 9 6 Gr o s s p r e m i u m s wr i t t e n i n c r e a s e d Ne t p r e m i u m s wr i t t e n 1 8 9 , 0 1 4 1 8 6 , 4 3 0 b y $ 0 . 7 m m ( 0 . 4 % ) Ne t p r e m i u m s e a r n e d 3 1 6 , 0 3 1 3 1 8 , 0 3 1 Ne t u n d e r wr i t i n g i n c o m e ( l o s s ) 3 2 , 9 6 0 1 1 7 , 3 7 6 · De c r e a s e o f $ 3 . 6 m m i n Va l i d u s v a l u e p e r d i l u t e d s h a r e p l u s a c c u m u l a t e d d i v i d e n d s $ 2 4 . 5 8 $ 2 4 . 0 0 • P r i m a r i l y d u e t o n e t i m p a c t o f An n u a l i z e d o p e r a t i n g r e t u r n o n a v e r a g e e q u i t y 1 0 . 6 % 2 8 . 2 % Hu r r i c a n e I k e ( $ 7 0 . 1 m m ) F i n a n c i a l Ra t i o s 1 9 . 4 % 1 6 . 8 % G& A e x p e n s e s 9 . 5 % 1 2 . 5 % Ex p e n s e r a t i o 2 8 . 9 % 2 9 . 3 % Co m b i n e d r a t i o 8 9 . 5 % 6 3 . 1 % I m p a c t o f i d e n t i f i e d l o s s e v e n t s ( No t e 1 ) 2 4 . 4 % 3 . 1 % I m p a c t o f p r i o r p e r i o d d e v e l o p m e n t ( f a v o r a b l e ) / u n f a v o r a b l e ( 6 . 2 % ) ( 9 . 6 % ) No t e ( 1 ) : $ 7 7 . 2 mm a t t r i b u t a b l e
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() Va l i d u s Re — Qu a r t e r l y S e g m e n t Re s u l t s ( $ US i n t h o u s a n d s ) De c e m b e r 3 1 , De c e m b e r 3 1 , 2 0 0 8 2 0 0 7 Un d e r wr i t i n g r e v e n u e s Gr o s s p r e m i u m s wr i t t e n 7 , 8 5 8 S h a r e c o m p e n s a t i o n 2 , 1 9 7 1 , 1 8 9 “ Un d e r l y i n g ” l o s s r a t i o ( e x - d e v e l o p m e n t a n d T o t a l u n d e r wr i t i n g d e d u c t i o n s 1 3 3 , 4 8 1 7 9 , 3 9 8 i d e n t i f i e d l o s s i n Q4 ’ 2 0 0 7
d e c l i n e d b y $ 3 . 6 m m : Gr o s s p r e m i u m s wr i t t e n $ 4 3 , 8 7 3 e v e n t s ) o f 2 6 . 3 % i n Q4 ’ 0 8 Un d e r wr i t i n g i n c o m e ( l o s s )
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o f r e i n s t a t e m e n t p r e m i u m s i n Q4 ’ 0 8 Ne t p r e m i u m s wr i t t e n 4 2 , 1 7 7 4 3 , 6 8 6 Ch a n g e i n u n e a r n e d p r e m i u m s 1 2 2 , 1 9 1 1 1 8 , 8 2 8 Ne t p r e m i u m s e a r n e d 1 6 4 , 3 6 8 1 6 2 , 5 1 4 y No n - r e n e wa l 2 9 . 7 % P o l i c y a c q u i s i t i o n c o s t s 1 7 . 0 % 1 3 . 6 % G& A e x p e n s e s 5 . 8 % 5 . 6 % E x p e n s e r a t i o 2 2 . 8 % 1 9 . 2 % Co m b i n e d r a t i o 8 1 . 2 % 4 8 . 9 % I m p a c t o f i d e n t i f i e d l o s s e v e n t s ( No t e 1 )
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() T a l b o t — Qu a r t e r l y S e g m e n t Re s u l t s ( $ US i n t h o u s a n d s ) De c e m b e r 3 1 , De c e m b e r 3 1 , 2 0 0 8 2 0 0 7 Un d e r wr i t i n g r e v e n u e s Gr o s s p r e m i u m s wr i t t e n i n c r e a s e d $ 9 . 2 m m : Gr o s s p r e m i u m s wr i t t e n $ 1 5 2 , 6 6 2 $ 1 4 3 , 4 9 7 Re i n s u r a n c e p r e m i u m s c e d e d ( 5 , 8 2 5 ) ( 7 5 3 ) y At c o n s t a n t e x c h a n g e r a t e s , g r o wt h h e r e wo u l d h a v e b e e n o f Hu r r i c a n e I k e Ge n e r a l a n d a d m i n i s t r a t i v e e x p e n s e s 1 2 , 8 8 2 2 3 , 6 2 8 S h a r e c o m p e n s a t i o n 1 , 4 3 6 9 7 8 y Re s e r v e r e l e a s e s o f $ 1 3 . 6 m m v s . T o t a l u n d e r wr i t i n g d e d u c t i o n s 1 4 3 , 4 8 2 1 1 5 , 0 9 9 $ 2 9 . 7 m m i n p r i o r y e a r ’ s q u a r t e r Un d e r wr i t i n g i n c o m e ( l o s s ) $ 8 , 1 8 1 $ 4 0 , 4 1 8 y “ Un d e r l y i n g ” l o s s r a t i o ( e x - d e v e l o p m e n t a n d b e f o r e i n t e r s e g me n t e l i mi n a t i o n s I m p a c t o f p r i o r p e r i o d d e v e l o p m e n t No t e ( 1 ) : $ 1 8 . 3 mm a t t r i b u t a b l e t o Hu r r i c a n e I k e i n Q4 ’ 2 0 0 8 ( f a v o r a b l e ) / u n f a v o r a b l e ( 8 . 9 % ) ( 1 9 . 1 % )
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() I n v e s t m e n t P o r t f o l i o a t De c e m b e r 3 1 , 2 0 0 8 · Co n s e r v a t i v e Co r p o r a t e s 3 . 8 % · I n v e s t m e n t y i e l d : 3 . 7 5 % ( 1 ) No t e ( 1 ) :
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() T r a n s p a r e n t Ri s k Di s c l o s u r e — J a n u a r y 1 , 2 0 0 9 P o r t f o l i o 1 : 1 0 0 y e a r P M L e q u a l t o 2 2 . 1 % o f De c e m b e r 3 1 , 2 0 0 8 c a p i t a l , 2 5 . 5 % o f s h a r e h o l d e r s ’ e q u i t y Ne t l o s s e s t i m a t e s a r e b e f o r e i n c o m e t a x , n e t o f r e i n s t a t e m e n t p r e m i u m s , a n d n e t o f r e i n s u r a n c e a n d r e t r o c e s s i o n a l r e c o v e r i e s . T h e e s t i m a t e s s e t f o r t h a b o v e a r e b a s e d o n a s s u m p t i o n s t h a t a r e i n h e r e n t l y s u b j e c t t o s i g n i f i c a n t u n c e r t a i n t i e s a n d c o n t i n g e n c i e s . T h e s e u n c e r t a i n t i e s a n d c o n t i n g e n c i e s c a n a f f e c t a c t u a l l o s s e s a n d c o u l d c a u s e a c t u a l l o s s e s t o d i f f e r m a t e r i a l l y f r o m t h o s e e x p r e s s e d a b o v e . I n p a r t i c u l a r , m o d e l e d l o s s e s t i m a t e s d o n o t n e c e s s a r i l y a c c u r a t e l y p r e d i c t a c t u a l l o s s e s , a n d m a y s i g n i f i c a n t l y m i s - e s t i m a t e a c t u a l l o s s e s . S u c h e s t i m a t e s , t h e r e f o r e , s h o u l d n o t b e c o n s i d e r e d a s a r e p r e s e n t a t i o n o f a c t u a l l o s s e s . Th e Co m p a n y h a s d e v e l o p e d t h e e s t i m a t e s o f l o s s e s e x p e c t e d f r o m c e r t a i n c a t a s t r o p h e s f o r i t s p o r t f o l i o o f p r o p e r t y , m a r i n e , wo r k e r s ’ c o m p e n s a t i o n , a n d p e r s o n a l a c c i d e n t c o n t r a c t s u s i n g c o m m e r c i a l l y a v a i l a b l e c a t a s t r o p h e m o d e l s s u c h a s RM S , AI R a n d E QE CAT , wh i c h a r e a p p l i e d a n d a d j u s t e d b y t h e Co m p a n y . T h e s e e s t i m a t e s i n c l u d e a s s u m p t i o n s r e g a r d i n g t h e l o c a t i o n , s i z e a n d m a g n i t u d e o f a n e v e n t , t h e f r e q u e n c y o f e v e n t s , t h e c o n s t r u c t i o n t y p e a n d d a m a g e a b i l i t y o f p r o p e r t y i n a z o n e , p o l i c y t e r m s a n d c o n d i t i o n s a n d t h e c o s t o f r e b u i l d i n g p r o p e r t y i n a z o n e , a m o n g o t h e r a s s u m p t i o n s . T h e s e a s s u m p t i o n s wi l l e v o l v e f o l l o wi n g a n y a c t u a l e v e n t . Ac c o r d i n g l y , i f t h e e s t i m a t e s a n d a s s u m p t i o n s t h a t a r e e n t e r e d i n t o t h e r i s k m o d e l a r e i n c o r r e c t , o r i f t h e r i s k m o d e l p r o v e s t o b e a n i n a c c u r a t e f o r e c a s t i n g t o o l , t h e l o s s e s t h e Co m p a n y m i g h t i n c u r f r o m a n a c t u a l c a t a s t r o p h e c o u l d b e m a t e r i a l l y h i g h e r t h a n i t s e x p e c t a t i o n o f l o s s e s g e n e r a t e d f r o m m o d e l e d c a t a s t r o p h e s c e n a r i o s . I n a d d i t i o n , m a n y r i s k s s u c h a s s e c o n d - e v e n t c o v e r s , a g g r e g a t e e x c e s s o f l o s s , o r a t t r i t i o n a l l o s s c o m p o n e n t s c a n n o t b e f u l l y e v a l u a t e d u s i n g t h e v e n d o r m o d e l s . F u r t h e r , t h e Co m p a n y c a n n o t a s s u r e t h a t s u c h t h i r d p a r t y m o d e l s a r e f r e e o f d e f e c t s i n t h e m o d e l i n g l o g i c o r i n t h e s o f t wa r e c o d e . I n v e s t o r s s h o u l d n o t r e l y o n t h e i n f o r m a t i o n s e t f o r t h i n t h i s p r e s e n t a t i o n wh e n c o n s i d e r i n g i n v e s t m e n t i n t h e Co m p a n y . T h e i n f o r m a t i o n c o n t a i n e d i n t h i s p r e s e n t a t i o n h a s n o t b e e n a u d i t e d n o r h a s i t b e e n s u b j e c t t o i n d e p e n d e n t v e r i f i c a t i o n . T h e e s t i m a t e s s e t f o r t h a b o v e s p e a k o n l y a s o f t h e d a t e o f t h i s p r e s e n t a t i o n a n d t h e Co m p a n y u n d e r t a k e s n o o b l i g a t i o n t o u p d a t e o r r e v i s e s u c h i n f o r m a t i o n t o r e f l e c t t h e o c c u r r e n c e o f f u t u r e e v e n t s , i n c l u d i n g , b u t n o t l i m i t e d t o , t h e c o m p o s i t i o n o f t h e Co m p a n y ’ s b u s i n e s s . T h e e v e n t s p r e s e n t e d r e f l e c t a s p e c i f i c s e t o f p r o s c r i b e d c a l c u l a t i o n s a n d d o n o t n e c e s s a r i l y r e f l e c t a l l e v e n t s t h a t m a y i m p a c t t h e Co m p a n y .
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() Re a l i s t i c Di s a s t e r S c e n a r i o s — J a n u a r y 1 , 2 0 0 9 P o r t f o l i o Th e Co m p a n y h a s p r e s e n t e d t h e Co m p a n y Re a l i s t i c Di s a s t e r S c e n a r i o s f o r n o n - n a t u r a l c a t a s t r o p h e e v e n t s . Twi c e y e a r l y , Ll o y d ’ s s y n d i c a t e s ’ i n c l u d i n g t h e Co m p a n y ‘ s Ta l b o t S y n d i c a t e 1 1 8 3 a r e r e q u i r e d t o p r o v i d e d e t a i l s o f t h e i r p o t e n t i a l e x p o s u r e s t o s p e c i f i c d i s a s t e r s c e n a r i o s . L l o y d ’ s m a k e s i t s u p d a t e d Re a l i s t i c Di s a s t e r S c e n a r i o s ( RDS ) g u i d a n c e a v a i l a b l e t o t h e m a r k e t a n n u a l l y . T h e RDS s c e n a r i o s p e c i f i c a t i o n d o c u m e n t f o r 2 0 0 9 c a n b e a c c e s s e d a t t h e RDS p a r t o f t h e L l o y d ’ s p u b l i c we b s i t e ( h t t p : / / www. l l o y d s . c o m / L l o y d s _ M a r k e t / T o o l s _ a n d _ r e f e r e n c e / E x p o s u r e _ M a n a g e m e n t / Re a l i s t i c _ Di s a s t e r _ S c e n a r i o s / ) . M o d e l i n g c a t a s t r o p h e t h r e a t s c e n a r i o s i s a c o m p l e x e x e r c i s e i n v o l v i n g n u m e r o u s v a r i a b l e s a n d i s i n h e r e n t l y s u b j e c t t o s i g n i f i c a n t u n c e r t a i n t i e s a n d c o n t i n g e n c i e s . T h e s e u n c e r t a i n t i e s a n d c o n t i n g e n c i e s c a n a f f e c t a c t u a l l o s s e s a n d c o u l d c a u s e a c t u a l l o s s e s i n c u r r e d b y t h e Co m p a n y t o d i f f e r m a t e r i a l l y f r o m t h o s e e x p r e s s e d a b o v e . S h o u l d a n e v e n t o c c u r , t h e m o d e l e d o u t c o m e s m a y p r o v e i n a d e q u a t e , p o s s i b l y m a t e r i a l l y s o . Th i s m a y o c c u r f o r a n u m b e r o f r e a s o n s i n c l u d i n g , l e g a l r e q u i r e m e n t s , m o d e l d e f i c i e n c y , n o n - m o d e l e d r i s k s o r d a t a i n a c c u r a c i e s . A m o d e l e d o u t c o m e o f n e t l o s s f r o m a s i n g l e e v e n t a l s o r e l i e s i n s i g n i f i c a n t p a r t o n t h e r e i n s u r a n c e a n d r e t r o c e s s i o n a r r a n g e m e n t s i n p l a c e , o r e x p e c t e d t o b e i n p l a c e a t t h e t i m e o f t h e a n a l y s i s , a n d m a y c h a n g e d u r i n g t h e y e a r . M o d e l e d o u t c o m e s a s s u m e t h a t t h e r e i n s u r a n c e a n d r e t r o c e s s i o n i n p l a c e r e s p o n d s a s e x p e c t e d wi t h m i n i m a l r e i n s u r a n c e f a i l u r e o r d i s p u t e . Re i n s u r a n c e i s p u r c h a s e d t o m a t c h t h e o r i g i n a l e x p o s u r e a s f a r a s p o s s i b l e , b u t i t i s p o s s i b l e f o r t h e r e t o b e a m i s m a t c h o r g a p i n c o v e r wh i c h c o u l d r e s u l t i n h i g h e r t h a n m o d e l e d l o s s e s t o t h e Co m p a n y . I n a d d i t i o n , m a n y p a r t s o f t h e r e i n s u r a n c e p r o g r a m a r e p u r c h a s e d wi t h l i m i t e d r e i n s t a t e m e n t s a n d , t h e r e f o r e , t h e n u m b e r o f c l a i m s o r e v e n t s wh i c h m a y b e r e c o v e r e d f r o m s e c o n d o r s u b s e q u e n t e v e n t s i s l i m i t e d . I t s h o u l d a l s o b e n o t e d t h a t r e n e wa l d a t e s o f t h e r e i n s u r a n c e p r o g r a m d o n o t n e c e s s a r i l y c o i n c i d e wi t h t h o s e o f t h e i n wa r d s b u s i n e s s wr i t t e n . W h e r e o r i g i n a l b u s i n e s s i s n o t p r o t e c t e d b y r i s k s a t t a c h i n g r e i n s u r a n c e o r r e t r o c e s s i o n p r o g r a m s , t h e p r o g r a m s c o u l d e x p i r e r e s u l t i n g i n a n i n c r e a s e i n t h e p o s s i b l e n e t l o s s r e t a i n e d b y t h e Co m p a n y . I n v e s t o r s s h o u l d n o t r e l y o n t h e i n f o r m a t i o n s e t f o r t h i n t h i s p r e s e n t a t i o n wh e n c o n s i d e r i n g i n v e s t m e n t i n t h e Co m p a n y . T h e i n f o r m a t i o n c o n t a i n e d i n t h i s p r e s e n t a t i o n h a s n o t b e e n a u d i t e d n o r h a s i t b e e n s u b j e c t t o i n d e p e n d e n t v e r i f i c a t i o n . T h e e s t i m a t e s s e t f o r t h a b o v e s p e a k o n l y a s o f t h e d a t e o f t h i s p r e s e n t a t i o n a n d t h e Co m p a n y u n d e r t a k e s n o o b l i g a t i o n t o u p d a t e o r r e v i s e s u c h i n f o r m a t i o n t o r e f l e c t t h e o c c u r r e n c e o f f u t u r e e v e n t s . T h e e v e n t s p r e s e n t e d r e f l e c t a s p e c i f i c s e t o f p r o s c r i b e d c a l c u l a t i o n s a n d d o n o t n e c e s s a r i l y r e f l e c t a l l e v e n t s t h a t m a y i m p a c t t h e Co m p a n y .
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