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Endurance Reports Second Quarter 2015 Financial Results

PEMBROKE, Bermuda - August 3, 2015 - Endurance Specialty Holdings Ltd. (NYSE:ENH) today reported net income available to common shareholders of $76.0 million and $1.68 per diluted common share for the second quarter of 2015 versus net income of $75.0 million and $1.68 per diluted common share for the second quarter of 2014.

For the six months ended June 30, 2015, Endurance reported net income available to common shareholders of $176.3 million and $3.91 per diluted common share versus net income of $171.3 million and $3.84 per diluted common share for the six months ended June 30, 2014.  Book value per diluted share was $63.32 at June 30, 2015, up 3.2% from December 31, 2014.

Operating highlights for the quarter ended June 30, 2015 were as follows:

  • Gross premiums written of $861.2 million, an increase of 24.9% compared to the same period in 2014;
  • Net premiums written of $559.1 million, an increase of 9.3% compared to the same period in 2014;
  • Combined ratio of 85.5%, which included 12.8 percentage points of favorable prior year loss reserve development and 2.2 percentage points of net catastrophe losses from 2015 events, 3.9 percentage points of large property and energy losses, and 0.8 percentage points of corporate expenses related to the acquisition of Montpelier Re Holdings Ltd. ("Montpelier");
  • Net investment income of $32.3 million, a decrease of $7.1 million from the same period in 2014;
  • Operating income, which excludes after-tax realized investment gains and foreign exchange losses, of $79.5 million and $1.76 per diluted common share; and
  • Operating return on average common equity for the quarter of 2.8% or 11.1% on an annualized basis.

Operating highlights for the six months ended June 30, 2015 were as follows:

  • Gross premiums written of $2,162.6 million, an increase of 17.1% over the same period in 2014;
  • Net premiums written of $1,324.0 million, an increase of 1.1% over the same period in 2014;
  • Combined ratio of 84.1%, which included 13.7 percentage points of favorable prior year loss reserve development, 2.1 percentage points of current year catastrophe losses, 2.1 percentage points of large property and energy losses, and 0.5 percentage points of corporate expenses related to the acquisition of Montpelier;
  • Net investment income of $74.1 million, a decrease of $6.2 million over the same period in 2014;
  • Operating income of $170.7 million and $3.78 per diluted common share; and
  • Operating return on average common equity for the first six months of the year of 6.1%, or 12.1% on an annualized basis.

John R. Charman, Chairman and Chief Executive Officer, commented, "During the second quarter we continued to deliver improved profitability by generating an operating ROE of 11.1% in spite of very challenging market conditions.  We were also able to meaningfully expand our global specialty book of business as evidenced by our 25% growth in gross written premiums. These strong results continue to reflect the significant strategic improvements we have implemented over the past 30 months at Endurance. Our globally recognized, market leading underwriters are now firmly established and are attracting high quality, historically profitable business.  Our underwriters' careful risk selection and underwriting discipline remain critical in this very competitive rate environment and I am confident of our ability to continue to deliver strong financial results as well as creating exceptional value for our shareholders.

Last week we announced the completion of our acquisition of Montpelier after both Endurance and Montpelier received overwhelming shareholder support for the transaction.  Having spent the last several months diligently planning, we have already begun to immediately integrate Montpelier into Endurance.  We are confident in our ability to materially exceed our original synergy estimates and to achieve our targeted strategic and financial objectives."

Insurance Segment

Operating highlights for Endurance's Insurance segment for the quarter ended June 30, 2015 were as follows:

  • Gross premiums written of $468.9 million, an increase of 45.8% from the second quarter of 2014;
  • Net premiums written of $190.3 million, an increase of 6.3% from the second quarter of 2014; and
  • Combined ratio of 95.2%, which included favorable prior year loss reserve development of 9.2 percentage points, net catastrophe losses from 2015 events of $1.2 million or 0.6 percentage points and large property and energy losses of $16.2 million or 8.8 percentage points.

Operating highlights for Endurance's Insurance segment for the six months ended June 30, 2015 were as follows:

  • Gross premiums written of $1,205.1 million, an increase of 23.8% from the same period in 2014;
  • Net premiums written of $494.3 million, a decrease of 5.3% from the same period in 2014; and
  • Combined ratio of 92.2%, which included favorable prior year loss reserve development of 11.6 percentage points, net catastrophe losses from 2015 events of $5.7 million or 1.7 percentage points and large property and energy losses of $16.2 million or 5.3 percentage points.

Gross premiums written in the Insurance segment increased $147.3 million and $231.3 million for the quarter and six months ended June 30, 2015 compared to the same periods in 2014 as we achieved growth across all lines of business.  The underwriting investments we have made over the last 30 months within the professional lines, casualty and other specialty and property, marine and energy lines of business continue to attract new business to Endurance. Non-agriculture net premiums written increased $34.4 million and $74.6 million for the quarter and six months ended June 30, 2015, compared to the same periods in 2014.  Net premiums written were impacted by greater levels of reinsurance, including additional quota share protection for individual lines of business as well as across the entire portfolio.  Within agriculture insurance, greater cessions to the federal government and increased purchases of third party reinsurance led to a decline in net premiums written of $23.1 million and $102.3 million for the quarter and six months ended June 30, 2015 compared to the same periods in 2014.

The 3.4 percentage point increase in the Insurance segment combined ratio for the quarter ended June 30, 2015 compared to the same period in 2014 was driven by higher net loss and acquisition expense ratios partially offset by a lower general and administrative expense ratio.  The increase in the net loss ratio reflects lower levels of favorable loss reserve development which improved the current quarter's net loss ratio by 9.2 percentage points compared to 10.1 percentage points in 2014.  The accident year net loss ratio increased modestly in the current quarter as two large energy losses totaling $16.2 million, or 8.8 percentage points, were partially offset by improved profitability within our expanding professional lines business.  The current quarter's decline in the general and administrative expense ratio reflects higher ceding commissions received as a result of increased quota share reinsurance purchases.  The acquisition expense ratio increased in the current quarter as specialty lines with higher related acquisition costs accounted for a greater percentage of earned premiums than a year ago.  For the six months ended June 30, 2015 compared to the same period in 2014, the combined ratio improved as lower net loss and general and administrative expense ratios were partially offset by a higher acquisition expense ratio.

Reinsurance Segment

Operating highlights for Endurance's Reinsurance segment for the quarter ended June 30, 2015 were as follows:

  • Gross premiums written of $392.3 million, an increase of 6.6% from the second quarter of 2014;
  • Net premiums written of $368.8 million, an increase of 10.9% from the second quarter of 2014; and
  • Combined ratio of 73.0%, which included favorable prior year loss reserve development of 15.7 percentage points and net catastrophe losses from 2015 events of $8.6 million or 3.5 percentage points.

Operating highlights for Endurance's Reinsurance segment for the six months ended June 30, 2015 were as follows:

  • Gross premiums written of $957.5 million, an increase of 9.7% from the same period in 2014;
  • Net premiums written of $829.7 million, an increase of 5.3% from the same period in 2014; and
  • Combined ratio of 73.8%, which included favorable prior year loss reserve development of 15.0 percentage points, and net catastrophe losses from 2015 events of $11.3 million or 2.3 percentage points.

Gross premiums written in the Reinsurance segment increased $24.4 million and $84.4 million for the quarter and six months ended June 30, 2015 compared to the same periods in 2014.  For the second quarter of 2015, the increase was driven by the professional lines and casualty lines of business, partially offset by declines within the property, catastrophe and specialty lines of business.  Growth in professional lines and casualty predominantly resulted from expansion of existing contracts at renewal, some renewal date changes, as well as the entry into new quota share agreements.  Declines in the property and catastrophe lines of business were driven by the non-renewal of numerous contracts that no longer met our profitability targets, while the decline in the specialty line of business resulted primarily from reduced premium estimates on some existing treaties.  For the quarter and six months ended June 30, 2015, net premiums written increased $36.4 million and $41.6 million from a year ago as the growth in gross premiums written was largely offset by the purchase of greater levels of proportional and aggregate excess of loss retrocessional coverage for the Company's catastrophe portfolio and the initiation of a new whole account quota share retrocession for the majority of the specialty line of business.

The combined ratio in the Reinsurance segment for the second quarter of 2015 improved by 1.3 percentage points compared to the same period in 2014, due to a lower net loss ratio that was partially offset by higher acquisition and general and administrative expense ratios.  The net loss ratio improved by 5.2 percentage points in the current quarter compared to a year ago predominantly due to higher levels of favorable reserve development and a lower level of catastrophe losses.  The 2.1 percentage point increase in the current quarter's acquisition expense ratio was attributed to an increase in gross premiums written in the specialty lines of business, which has higher acquisition expenses.  The general and administrative expense ratio increased 1.8 percentage points in the second quarter of 2015 primarily from higher personnel expenses related to strategic investments made within our global specialty reinsurance operations.

Investments

Endurance's net investment income for the quarter and six months ended June 30, 2015 was $32.3 million and $74.1 million, a decrease of $7.1 million and $6.2 million, respectively, compared to the same periods in 2014.  The total return of Endurance's investment portfolio was (0.07)% and 0.81% for the quarter and six months ended June 30, 2015, compared to 1.52% and 2.78% for the quarter and six months ended June 30, 2014.  Investment income generated from Endurance's available for sale investments increased by $0.1 million and $2.0 million for the three and six months ended June 30, 2015, compared to the same periods in 2014 as assets and returns have remained relatively flat.  During the quarter and six months ended June 30, 2015, Endurance's net investment income on its alternative investment funds and high yield loan funds, which are included in other investments, included gains of $3.6 million and $16.0 million, as compared to $10.8 million and $24.3 million in the second quarter and the first six months of 2014.  The ending book yield on Endurance's fixed maturity investments at June 30, 2015 was 2.27%, up from 2.15% at June 30, 2014.

At June 30, 2015, Endurance's fixed maturity portfolio, which comprises 82.6% of Endurance's investments, had an average credit quality of AA- and a duration of 3.08 years.  Endurance's fixed maturity portfolio was in a net unrealized gain position of $43.6 million at June 30, 2015, a decrease of $42.5 million from December 31, 2014.  Endurance recorded net realized investment gains, net of impairments, of $9.3 million and $26.8 million during the second quarter and first six months of 2015, compared to $3.2 million and $8.0 million during the second quarter and first six months of 2014. 

Endurance ended the second quarter of 2015 with cash and invested assets of $6.6 billion, which represents a 0.8% decrease from December 31, 2014.  Net operating cash inflow was $23.5 million for the six months ended June 30, 2015 versus $19.7 million for the same period in 2014.

Capitalization and Shareholders' Equity

At June 30, 2015, Endurance's shareholders' equity was $3.30 billion or $63.32 per diluted common share versus $3.19 billion or $61.33 per diluted common share at December 31, 2014.  For the quarter and six months ended June 30, 2015, Endurance declared and paid common dividends of $0.35 and $0.70 per share, respectively. 

Earnings Call

Endurance will host a conference call on August 4, 2015 at 9:00 a.m. Eastern time to discuss its financial results.  The conference call can be accessed via telephone by dialing (888) 240-9314 or (913) 312-1477 (international) and entering pass code: 1577277.  Those who intend to participate in the conference call should register at least ten minutes in advance to ensure access to the call.  A telephone replay of the conference call will be available through August 18, 2015 by dialing (888) 203-1112 or (719) 457-0820 (international) and entering the pass code: 1577277.

The public may access a live broadcast of the conference call at the "Investors" section of Endurance's website, www.endurance.bm.  Following the live broadcast, an archived version will continue to be available on Endurance's website.

A copy of Endurance's financial supplement for the second quarter of 2015 will be available on Endurance's website at www.endurance.bm shortly after the release of earnings.

Operating income, operating return on average common equity, operating income per diluted common share, operating income allocated to common shareholders and the combined ratio excluding prior year net loss reserve development are non-GAAP measures.  Reconciliations of these measures to the appropriate GAAP measures are included in the attached tables.

About Endurance Specialty Holdings

Endurance Specialty Holdings Ltd. is a global specialty provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance writes agriculture, casualty and other specialty, professional lines and property, marine and energy lines of insurance and catastrophe, property, casualty, professional lines and specialty lines of reinsurance. We maintain excellent financial strength as evidenced by the ratings of A (Excellent) from A.M. Best (XV size category) and A (Strong) from Standard and Poor's on our principal operating subsidiaries.  Endurance's headquarters are located at Waterloo House, 100 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda.  For more information about Endurance, please visit www.endurance.bm.

Safe Harbor for Forward-Looking Statements

Some of the statements in this press release may include, and Endurance may make related oral forward-looking statements which reflect our current views with respect to future events and financial performance. Such statements may include forward-looking statements both with respect to us in general and the insurance and reinsurance sectors specifically, both as to underwriting and investment matters. Statements which include the words "should," "would," "expect," "intend," "plan," "believe," "project," "target," "anticipate," "seek," "will," "deliver," and similar statements of a future or forward-looking nature identify forward-looking statements in this press release for purposes of the U.S. federal securities laws or otherwise.  We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the Private Securities Litigation Reform Act of 1995.

All forward-looking statements address matters that involve risks and uncertainties.  Accordingly, there are or may be important factors that could cause actual results to differ materially from those indicated in the forward-looking statements.  These factors include, but are not limited to, the effects of competitors' pricing policies, greater frequency or severity of claims and loss activity, changes in market conditions in the agriculture insurance industry, termination of or changes in the terms of the U.S. multiple peril crop insurance program, a decreased demand for property and casualty insurance or reinsurance, changes in the availability, cost or quality of reinsurance or retrocessional coverage, our inability to renew business previously underwritten or acquired, our inability to maintain our applicable financial strength ratings, our inability to effectively integrate acquired operations, uncertainties in our reserving process, changes to our tax status, changes in insurance regulations, reduced acceptance of our existing or new products and services, a loss of business from and credit risk related to our broker counterparties, assessments for high risk or otherwise uninsured individuals, possible terrorism or the outbreak of war, a loss of key personnel, political conditions, changes in insurance regulation, changes in accounting policies, our investment performance, the valuation of our invested assets, a breach of our investment guidelines, the unavailability of capital in the future, developments in the world's financial and capital markets and our access to such markets, government intervention in the insurance and reinsurance industry, illiquidity in the credit markets, changes in general economic conditions and other factors described in our Annual Report on Form 10-K for the year ended December 31, 2014.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors included in Endurance's most recent report on Form 10-K and other documents of Endurance on file with the Securities and Exchange Commission.  Any forward-looking statements made in this material are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Endurance will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Endurance or its business or operations. Except as required by law, Endurance undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

The contents of any website referenced in this press release are not incorporated by reference herein.



ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands of United States dollars, except share and per share amounts)

      June 30,   December 31,
      2015   2014
Assets      
Cash and cash equivalents $ 622,642     $ 745,472  
Fixed maturity investments, available for sale, at fair value 4,933,776     5,092,581  
Short-term investments, available for sale, at fair value 16,366     9,014  
Equity securities, available for sale, at fair value 420,411     331,368  
Other investments 623,868     541,454  
Premiums receivable, net 1,665,990     883,450  
Insurance and reinsurance balances receivable 108,162     122,214  
Deferred acquisition costs 296,568     207,368  
Prepaid reinsurance premiums 668,964     354,940  
Reinsurance recoverable on unpaid losses 785,472     670,795  
Reinsurance recoverable on paid losses 157,287     218,291  
Accrued investment income 25,118     27,183  
Goodwill and intangible assets 150,296     153,405  
Deferred tax asset 46,779     48,995  
Net receivable on sales of investments 21,420     38,877  
Other assets 172,162     199,375  
Total Assets $ 10,715,281     $ 9,644,782  
           
Liabilities      
Reserve for losses and loss expenses $ 3,833,525     $ 3,846,859  
Reserve for unearned premiums 2,046,933     1,254,519  
Deposit liabilities 13,376     15,136  
Reinsurance balances payable 632,457     375,711  
Debt 528,123     527,715  
Net payable on purchases of investments 82,375     151,682  
Other liabilities 275,586     287,978  
Total Liabilities 7,412,375   6,459,600
           
Shareholders' Equity      
Preferred shares      
  Series A, non-cumulative - 8,000,000 issued and outstanding (2014 - 8,000,000) 8,000     8,000  
  Series B, non-cumulative - 9,200,000 issued and outstanding (2014 - 9,200,000) 9,200     9,200  
Common shares      
  45,156,845 issued and outstanding (2014 - 44,765,153) 45,157     44,765  
Additional paid-in capital 610,585     598,226  
Accumulated other comprehensive income 36,965     76,706  
Retained earnings 2,592,999     2,448,285  
Total Shareholders' Equity 3,302,906   3,185,182
           
Total Liabilities and Shareholders' Equity $ 10,715,281     $ 9,644,782  
           
Book Value per Common Share      
Dilutive common shares outstanding 45,367,976     44,920,768  
Diluted book value per common share [a] $ 63.32     $ 61.33  

Note: All financial information contained herein is unaudited, except the balance sheet data for the year ended December 31, 2014, which was derived from Endurance's audited financial statements.
[a] Excludes the $430 million liquidation value of the preferred shares.
ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of United States dollars, except share and per share amounts)

    Three Months Ended   Six Months Ended
    June 30,   June 30,   June 30,   June 30,
    2015   2014   2015   2014
Revenues              
Gross premiums written $ 861,184     $ 689,425     $ 2,162,616     $ 1,846,940  
                 
Net premiums written $ 559,083     $ 511,427     $ 1,324,037     $ 1,310,132  
Change in unearned premiums (100,948 )   (29,889 )   (476,043 )   (432,328 )
                 
Net premiums earned 458,135     481,538   847,994     877,804  
Other underwriting income (loss) 1,389     (4,824 )   3,795     (6,062 )
Net investment income 32,252     39,302     74,113     80,292  
Net realized and unrealized gains 9,680     3,411     27,869     8,283  
                 
  Total other-than-temporary impairment losses (424 )   (198 )   (1,073 )   (309 )
  Portion of loss recognized in other comprehensive (loss) income -     -     -     -  
Net impairment losses recognized in earnings (424 )   (198 )   (1,073 )   (309 )
                 
Total revenues 501,032   519,229   952,698     960,008  
                 
Expenses              
Net losses and loss expenses 239,122     259,196     411,058     436,092  
Acquisition expenses 84,971     78,601     167,064     150,758  
General and administrative expenses 54,965     58,312     109,855     117,813  
Corporate expenses [a] 12,634     28,143     24,902     41,848  
Amortization of intangibles 1,579     1,623     3,178     3,240  
Net foreign exchange losses 12,981     319     20,533     3,283  
Interest expense 9,062     9,732     18,121     18,783  
Total expenses 415,314   435,926   754,711     771,817  
                 
Income before income taxes 85,718   83,303   197,987     188,191  
Income tax expense (1,512 )   (140 )   (5,302 )   (548 )
Net income 84,206   83,163   192,685     187,643  
                 
Preferred dividends (8,188 )   (8,188 )   (16,376 )   (16,376 )
                 
Net income available to common and participating common shareholders $ 76,018     $ 74,975     $ 176,309     $ 171,267  
               
Per share data              
Basic earnings per common share $ 1.69     $ 1.68     $ 3.92     $ 3.84  
Diluted earnings per common share $ 1.68     $ 1.68     $ 3.91     $ 3.84  

[a] The Company incurred $3.5 million and $4.5 million of corporate expenses in relation to the Company's acquisition of Montpelier for the quarter and six months ended June 30, 2015.  For the quarter and six months ended June 30, 2014, the Company incurred $12.1 million and $13.0 million of corporate expenses in relation to the Company's proposed acquisition of Aspen Insurance Holdings Limited.



ENDURANCE SPECIALTY HOLDINGS LTD.
RESULTS BY SEGMENT
(in thousands of United States dollars, except ratios)

      Three Months Ended June 30, 2015  
      Insurance   Reinsurance   Reported Totals  
                 
  Revenues              
  Gross premiums written   $ 468,866     $ 392,318     $ 861,184    
  Ceded premiums written   (278,567 )   (23,534 )   (302,101 )  
  Net premiums written   190,299     368,784     559,083    
  Net premiums earned   201,460     256,675     458,135    
  Other underwriting income   -     1,389     1,389    
  Total underwriting revenues   201,460     258,064     459,524    
                 
  Expenses              
  Net losses and loss expenses   145,483     93,639     239,122    
  Acquisition expenses   17,702     67,269     84,971    
  General and administrative expenses   28,567     26,398     54,965    
      191,752     187,306     379,058    
  Underwriting income   $ 9,708     $ 70,758     80,466    
                 
  Net investment income           32,252    
  Corporate expenses           (12,634 )  
  Interest expense           (9,062 )  
  Amortization of intangibles           (1,579 )  
  Net foreign exchange losses           (12,981 )  
  Net realized and unrealized gains           9,680    
  Net impairment losses recognized in earnings           (424 )  
  Income before income taxes           $ 85,718    
                 
  Net loss ratio   72.2 %   36.5 %   52.2 %  
  Acquisition expense ratio   8.8 %   26.2 %   18.5 %  
  General and administrative expense ratio   14.2 %   10.3 %   14.8 % [a]
  Combined ratio   95.2 %   73.0 %   85.5 %  

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.

ENDURANCE SPECIALTY HOLDINGS LTD.
RESULTS BY SEGMENT
(in thousands of United States dollars, except ratios)

      Three Months Ended June 30, 2014  
      Insurance   Reinsurance   Reported Totals  
                 
  Revenues              
  Gross premiums written   $ 321,526     $ 367,899     $ 689,425    
  Ceded premiums written   (142,488 )   (35,510 )   (177,998 )  
  Net premiums written   179,038     332,389     511,427    
  Net premiums earned   218,563     262,975     481,538    
  Other underwriting loss   -     (4,824 )   (4,824 )  
  Total underwriting revenues   218,563     258,151     476,714    
                 
  Expenses              
  Net losses and loss expenses   149,567     109,629     259,196    
  Acquisition expenses   15,128     63,473     78,601    
  General and administrative expenses   35,969     22,343     58,312    
      200,664     195,445     396,109    
  Underwriting income   $ 17,899     $ 62,706     80,605    
                 
  Net investment income           39,302    
  Corporate expenses           (28,143 )  
  Interest expense           (9,732 )  
  Amortization of intangibles           (1,623 )  
  Net foreign exchange losses           (319 )  
  Net realized and unrealized gains           3,411    
  Net impairment losses recognized in earnings           (198 )  
  Income before income taxes           $ 83,303    
                 
  Net loss ratio   68.5 %   41.7 %   53.8 %  
  Acquisition expense ratio   6.9 %   24.1 %   16.3 %  
  General and administrative expense ratio   16.4 %   8.5 %   18.0 % [a]
  Combined ratio   91.8 %   74.3 %   88.1 %  

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.



ENDURANCE SPECIALTY HOLDINGS LTD.
RESULTS BY SEGMENT
(in thousands of United States dollars, except ratios)

      Six Months Ended June 30, 2015  
      Insurance   Reinsurance   Reported Totals  
                 
  Revenues              
  Gross premiums written   $ 1,205,084     $ 957,532     $ 2,162,616    
  Ceded premiums written   (710,746 )   (127,833 )   (838,579 )  
  Net premiums written   494,338     829,699     1,324,037    
  Net premiums earned   337,324     510,670     847,994    
  Other underwriting income   -     3,795     3,795    
  Total underwriting revenues   337,324     514,465     851,789    
                 
  Expenses              
  Net losses and loss expenses   219,995     191,063     411,058    
  Acquisition expenses   33,585     133,479     167,064    
  General and administrative expenses   57,409     52,446     109,855    
      310,989     376,988     687,977    
  Underwriting income   $ 26,335     $ 137,477     163,812    
                 
  Net investment income           74,113    
  Corporate expenses           (24,902 )  
  Interest expense           (18,121 )  
  Amortization of intangibles           (3,178 )  
  Net foreign exchange losses           (20,533 )  
  Net realized and unrealized gains           27,869    
  Net impairment losses recognized in earnings           (1,073 )  
  Income before income taxes           $ 197,987    
                 
  Net loss ratio   65.2 %   37.4 %   48.5 %  
  Acquisition expense ratio   10.0 %   26.1 %   19.7 %  
  General and administrative expense ratio   17.0 %   10.3 %   15.9 % [a]
  Combined ratio   92.2 %   73.8 %   84.1 %  

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.

ENDURANCE SPECIALTY HOLDINGS LTD.
RESULTS BY SEGMENT
(in thousands of United States dollars, except ratios)

      Six Months Ended June 30, 2014  
      Insurance   Reinsurance   Reported Totals  
                 
  Revenues              
  Gross premiums written   $ 973,802     $ 873,138     $ 1,846,940    
  Ceded premiums written   (451,737 )   (85,071 )   (536,808 )  
  Net premiums written   522,065     788,067     1,310,132    
  Net premiums earned   362,584     515,220     877,804    
  Other underwriting loss   -     (6,062 )   (6,062 )  
  Total underwriting revenues   362,584     509,158     871,742    
                 
  Expenses              
  Net losses and loss expenses   238,100     197,992     436,092    
  Acquisition expenses   27,389     123,369     150,758    
  General and administrative expenses   72,668     45,145     117,813    
      338,157     366,506     704,663    
  Underwriting income   $ 24,427     $ 142,652     167,079    
                 
  Net investment income           80,292    
  Corporate expenses           (41,848 )  
  Interest expense           (18,783 )  
  Amortization of intangibles           (3,240 )  
  Net foreign exchange losses           (3,283 )  
  Net realized and unrealized gains           8,283    
  Net impairment losses recognized in earnings           (309 )  
  Income before income taxes           $ 188,191    
                 
  Net loss ratio   65.7 %   38.5 %   49.6 %  
  Acquisition expense ratio   7.6 %   23.9 %   17.2 %  
  General and administrative expense ratio   20.0 %   8.7 %   18.2 % [a]
  Combined ratio   93.3 %   71.1 %   85.0 %  

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.



ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED FINANCIAL RATIOS

As Reported                        
                             
        Three Months Ended June 30,
        Insurance   Reinsurance   Total
        2015   2014   2015   2014   2015   2014
                             
  Net loss ratio   72.2 %   68.5 %   36.5 %   41.7 %   52.2 %   53.8 %
  Acquisition expense ratio   8.8 %   6.9 %   26.2 %   24.1 %   18.5 %   16.3 %
  General and administrative expense ratio   14.2 %   16.4 %   10.3 %   8.5 %   14.8 %   18.0 %
  Combined ratio   95.2 %   91.8 %   73.0 %   74.3 %   85.5 %   88.1 %
                             
Effect of Prior Year Net Loss Reserve Development                    
                             
Favorable / (Unfavorable)                        
                             
        Three Months Ended June 30,
        Insurance   Reinsurance   Total
        2015   2014   2015   2014   2015   2014
                             
  Net loss ratio   9.2 %   10.1 %   15.7 %   12.2 %   12.8 %   11.3 %
                             
Net of Prior Year Net Loss Reserve Development                    
                             
        Three Months Ended June 30,
        Insurance   Reinsurance   Total
        2015   2014   2015   2014   2015   2014
                             
  Net loss ratio   81.4 %   78.6 %   52.2 %   53.9 %   65.0 %   65.1 %
  Acquisition expense ratio   8.8 %   6.9 %   26.2 %   24.1 %   18.5 %   16.3 %
  General and administrative expense ratio   14.2 %   16.4 %   10.3 %   8.5 %   14.8 %   18.0 %
  Combined ratio   104.4 %   101.9 %   88.7 %   86.5 %   98.3 %   99.4 %
                             
  The combined ratio is the sum of the loss, acquisition expense and general and administrative expense ratios.  Endurance presents the combined ratio as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.  The combined ratio, excluding prior year net loss reserve development, enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance's results of underwriting activities in a manner similar to how management analyzes Endurance's underlying business performance.  The combined ratio, net of prior year net loss reserve development, should not be viewed as a substitute for the combined ratio.




ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED FINANCIAL RATIOS

As Reported                        
                             
        Six Months Ended June 30,
        Insurance   Reinsurance   Total
        2015   2014   2015   2014   2015   2014
                             
  Net loss ratio   65.2 %   65.7 %   37.4 %   38.5 %   48.5 %   49.6 %
  Acquisition expense ratio   10.0 %   7.6 %   26.1 %   23.9 %   19.7 %   17.2 %
  General and administrative expense ratio   17.0 %   20.0 %   10.3 %   8.7 %   15.9 %   18.2 %
  Combined ratio   92.2 %   93.3 %   73.8 %   71.1 %   84.1 %   85.0 %
                             
Effect of Prior Year Net Loss Reserve Development                    
                             
Favorable / (Unfavorable)                        
                             
        Six Months Ended June 30,
        Insurance   Reinsurance   Total
        2015   2014   2015   2014   2015   2014
                             
  Net loss ratio   11.6 %   9.3 %   15.0 %   13.7 %   13.7 %   11.9 %
                             
Net of Prior Year Net Loss Reserve Development                    
                             
        Six Months Ended June 30,
        Insurance   Reinsurance   Total
        2015   2014   2015   2014   2015   2014
                             
  Net loss ratio   76.8 %   75.0 %   52.4 %   52.2 %   62.2 %   61.5 %
  Acquisition expense ratio   10.0 %   7.6 %   26.1 %   23.9 %   19.7 %   17.2 %
  General and administrative expense ratio   17.0 %   20.0 %   10.3 %   8.7 %   15.9 %   18.2 %
  Combined ratio   103.8 %   102.6 %   88.8 %   84.8 %   97.8 %   96.9 %
                             
  The combined ratio is the sum of the loss, acquisition expense and general and administrative expense ratios.  Endurance presents the combined ratio as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.  The combined ratio, excluding prior year net loss reserve development, enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance's results of underwriting activities in a manner similar to how management analyzes Endurance's underlying business performance.  The combined ratio, net of prior year net loss reserve development, should not be viewed as a substitute for the combined ratio.




ENDURANCE SPECIALTY HOLDINGS LTD.
GROSS AND NET PREMIUMS WRITTEN BY SEGMENT
(in thousands of United States dollars)

The following tables show Endurance's gross and net premiums written for the three months ended June 30, 2015 and 2014:

    Three Months Ended   Three Months Ended
    June 30, 2015   June 30, 2014
    Gross Premiums Written   Net Premiums Written   Gross Premiums Written   Net Premiums Written
Insurance              
  Agriculture $ 112,012     $ 22,677     $ 80,540     $ 45,826  
  Casualty and other specialty 146,056     65,302     108,030     56,475  
  Professional lines 96,736     43,443     74,650     29,846  
  Property, marine and energy 114,062     58,877     58,306     46,891  
  Subtotal Insurance 468,866     190,299     321,526     179,038  
                 
Reinsurance              
  Catastrophe 139,833     122,305     158,372     123,411  
  Property 30,560     30,118     42,887     42,886  
  Casualty 48,132     48,132     30,875     30,868  
  Professional lines 134,241     134,241     84,117     84,117  
  Specialty 39,552     33,988     51,648     51,107  
  Subtotal Reinsurance 392,318     368,784     367,899     332,389  
                 
Total $ 861,184     $ 559,083     $ 689,425     $ 511,427  




ENDURANCE SPECIALTY HOLDINGS LTD.
GROSS AND NET PREMIUMS WRITTEN BY SEGMENT
(in thousands of United States dollars)

The following tables show Endurance's gross and net premiums written for the six months ended June 30, 2015 and 2014:

    Six Months Ended   Six Months Ended
    June 30, 2015   June 30, 2014
    Gross Premiums Written   Net Premiums Written   Gross Premiums Written   Net Premiums Written
Insurance              
  Agriculture $ 628,928     $ 225,137     $ 608,434     $ 327,471  
  Casualty and other specialty 246,738     110,360     175,683     93,288  
  Professional lines 151,496     67,674     113,430     44,416  
  Property, marine and energy 177,922     91,167     76,255     56,890  
  Subtotal Insurance $ 1,205,084     $ 494,338     $ 973,802     $ 522,065  
                 
Reinsurance              
  Catastrophe $ 264,240     $ 175,765     $ 285,020     $ 202,374  
  Property 156,260     153,567     209,300     209,208  
  Casualty 106,230     106,230     115,857     114,260  
  Professional lines 178,098     178,098     109,736     109,736  
  Specialty 252,704     216,039     153,225     152,489  
  Subtotal Reinsurance $ 957,532     $ 829,699     $ 873,138     $ 788,067  
                 
Total $ 2,162,616     $ 1,324,037     $ 1,846,940     $ 1,310,132  




ENDURANCE SPECIALTY HOLDINGS LTD.
RECONCILIATIONS
(in thousands of United States dollars, except share, per share amounts and ratios)

The following is a reconciliation of Endurance's net income, net income per basic or diluted common share, net income allocated to common shareholders under the two-class method and annualized return on average common equity to operating income, operating income per basic or diluted common share, operating income allocated to common shareholders under the two-class method and annualized operating return on average common equity (all non-GAAP measures) for the three and six months ended June 30, 2015 and 2014:

    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2015   2014   2015   2014
Net income $ 84,206     $ 83,163     $ 192,685     $ 187,643  
Add (less) after-tax items:              
  Net foreign exchange losses 12,910     305     20,484     3,277  
  Net realized and unrealized gains (9,707 )   (3,559 )   (27,021 )   (8,563 )
  Net impairment losses recognized in earnings 309     198     957     309  
Operating income before preferred dividends 87,718     80,107     $ 187,105     $ 182,666  
  Preferred dividends (8,188 )   (8,188 )   (16,376 )   (16,376 )
Operating income allocated to common and              
  participating common shareholders $ 79,530     $ 71,919     $ 170,729     $ 166,290  
                 
Operating income allocated to common              
  shareholders under the two-class method $ 77,152     $ 69,797     $ 165,657     $ 161,447  
                 
Weighted average diluted common shares 43,896,721     43,350,911     43,792,626     43,265,626  
                 
Operating income per diluted common share [b] $ 1.76     $ 1.61     $ 3.78     $ 3.73  
                 
Average common equity [a] $ 2,858,876     $ 2,628,392     $ 2,814,044     $ 2,571,112  
                 
Operating return on average common equity 2.8 %   2.7 %   6.1 %   6.5 %
                 
Annualized operating return on average common equity 11.1 %   10.9 %   12.1 %   12.9 %
                 
Net income $ 84,206     $ 83,163     $ 192,685     $ 187,643  
  Preferred dividends (8,188 )   (8,188 )   (16,376 )   (16,376 )
Net income available to common and              
  participating common shareholders $ 76,018     $ 74,975     $ 176,309     $ 171,267  
                 
Net income allocated to common shareholders              
  under the two-class method $ 73,745     $ 72,763     $ 171,072     $ 166,279  
                 
Net income per diluted common share [b] $ 1.68     $ 1.68     $ 3.91     $ 3.84  
                 
Return on average common equity, Net income 2.7 %   2.9 %   6.3 %   6.7 %
               
Annualized return on average common equity, Net income 10.6 %   11.4 %   12.5 %   13.3 %

[a] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated period, which excludes the $430 million liquidation value of the preferred shares.
[b] Represents diluted income per share calculated under the two-class method which was the lower of the treasury stock method and the two-class method.



Operating income and operating income per basic or diluted common share are internal performance measures used by Endurance in the management of its operations.  Operating income allocated to common shareholders (excludes unvested restricted shares outstanding which are considered participating) per diluted common share represents operating income divided by weighted average dilutive common shares, which has been calculated in accordance with the two-class method under U.S. GAAP.  Operating income represents after-tax operational results excluding, as applicable, after-tax net realized capital gains or losses and after-tax net foreign exchange gains or losses because the amount of these gains or losses is heavily influenced by, and fluctuates in part, according to the availability of market opportunities.  Endurance believes these amounts are largely independent of its business and underwriting process and including them distorts the analysis of trends in its operations.  In addition to presenting net income and net income per dilutive common share determined in accordance with the two-class method under GAAP, Endurance believes that showing operating income and operating income per dilutive common share enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance's results of operations in a manner similar to that used by management to analyze the Company's underlying business performance.  Operating income and operating income per dilutive common share should not be viewed as substitutes for GAAP net income and net income per dilutive common share, respectively.

Endurance presents return on equity as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

Contact:
Investor Relations
Phone: +1 441 278 0988
Email: investorrelations@endurance.bm

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HUG#1943359