2. Overview
Risk Factors
What we liked
Trends
Ratios
Decision

3. Incorporated on October 19, 2005 traded on the NYSE
Bermuda-based company
provides reinsurance, insurance, and insurance linked securities fund management services in the property, marine, and specialty lines markets worldwide.
Focus on underwriting profits
Primarily use short‐tail lines  which   have  been  and  remain  the  best-­‐priced  classes  of  risk
Short duration, highly liquid, conservative balance sheet
Insurance for insurance, insure a portion of another insurers policy in exchange for a premium.

4. Source: Validus Group Investor Relations Release for Q2 2013
..Reinsurers and..
Talbot is a specialty insurance group

5. “Credit quality has improved alongside delinquency rates”
“Major banks have been keeping interest rates low”
- S&P Net Advantage Financials: Diversified Outlook
Industry belh:PPP
“Our general strategy is to manage interest rate risk while minimizing exposure to credit risk”
- Hatteras Financial Investor Relations Release

6. Macroeconomic Risk Factors
Competition (must stay technologically innovative)
Interest Rates
Recession Risk (debt ceiling looming)

7. Source: Validus Group Investor Relations Release for Q2 2013
“The Company actively manages its aggregate exposures by geographic or risk zone (“zones”) to maintain a balanced and diverse portfolio of underlying risks.” - Validus Group 10-K

8. Source: Validus Group Investor Relations Release for Q2 2013
ROL: A percentage derived by dividing reinsurance premium by reinsurance limit; the inverse is known as the payback or amortization period. For example, a $10 million catastrophe cover with a premium of $2 million would have an ROL of 20 percent and a payback period of 5 years. - See more at:

9. Source: Validus Group Investor Relations Release for Q2 2013

10. Source: Validus Group Investor Relations Release for Q2 2013

11. Source: Validus Group Investor Relations Release for Q2 2013
“A foundation for future growth as crop insurance is a global class of business” Validus Group Investor Relations Release Q2 2013

12. Source: Validus Group Investor Relations Release for Q2 2013

13. Source: Yahoo Finance technical charts – company VR

14. Source: Yahoo Finance technical charts – company VR

15. Source: StockCharts.com Technical Charts – company VR

16. Indicators VR RNR INDUSTRY
EPS(1)
3.41
9.35 -
P/B Ratio
1.06
1.29
1.8
P/S Ratio
1.84
3.08
P/E Ratio (2)
7.22
8.66
16.15
Rev. Growth (3)
2.4%
-99.80%
Op. Margin
20.34%
53.92%
Dividend % (4) 3%
1.2%
1.77%
ROA
4.63%
7.67%
ROE
10.76%
18.09%
8.2%
PEG
0.45
1.33
1.37
Numbers obtained from the Bloomberg Terminal and Yahoo Finance on 10/15/13 – Capital IQ
TTM
Forward projection
Quarterly revenue growth
five year average dividend yield

17. Valuation Method
Findings
Free CF
N/A
Discounted CF
$44.00
TTM P/E Multiple
$57.87
CAPM
$39.79
Current
$38.28

18. Data source: NASDAQ financial

19. Overview
Risk Factors
What we liked
Trends
Ratios
Decision

20. We want to buy it !

21. Why should we buy? Respectable Dividend Rate Fundamentally sound
Will continue to grow
Buy it at a bargain
With the sale of Tower Group

22. Sources S&P Net Advantage Outlook on Financials: Diversified
Nasdaq Financial Data