updated 2/9/2011 4:16:59 PM ET 2011-02-09T21:16:59

PEMBROKE, Bermuda, Feb. 9, 2011 (GLOBE NEWSWIRE) -- Endurance Specialty Holdings Ltd. (NYSE:ENH) today reported net income of $111.2 million and $2.09 per diluted common share for the fourth quarter of 2010 versus net income of $154.8 million and $2.56 per diluted common share for the fourth quarter of 2009.

For the year ended December 31, 2010, net income was $364.7 million and $6.38 per diluted common share versus net income of $536.1 million and $8.69 per diluted common share for the year ended December 31, 2009.

Operating highlights for the quarter ended December 31, 2010 were as follows:

  • Net premiums written of $158.1 million, an increase of 8.0% over the same period in 2009;
  • Combined ratio of 84.6%, which included 5.2 percentage points of favorable prior year loss reserve development;
  • Net investment income of $56.9 million, a decrease of $2.4 million from the same period in 2009;
  • Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, of $108.3 million and $2.04 per diluted common share;
  • Operating return on average common equity for the quarter of 3.9%, or 15.6% on an annualized basis; and
  • Book value of $52.74 per diluted common share, up 1.76% from September 30, 2010.

Operating highlights for the year ended December 31, 2010 were as follows:

  • Net premiums written of $1,763.7 million, an increase of 9.8% over 2009;
  • Combined ratio of 88.7%, which included 7.3 percentage points of favorable prior year loss reserve development;
  • Net investment income of $200.4 million compared to $284.2 million for full year 2009;
  • Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, of $345.5 million and $6.03 per diluted common share;
  • Operating return on average common equity of 12.6%; and
  • Book value of $52.74 per diluted common share, an 18.2% increase from December 31, 2009.

David Cash, Chief Executive Officer, commented, "2010 was a strong year for Endurance both financially and strategically. The Company earned a 12.6% operating return on equity despite a number of large industry catastrophe losses and historically low fixed income yields, launched several strategic initiatives that will help extend our portfolio of specialty businesses and grew book value per share significantly."

Insurance Segment

Operating highlights for Endurance's Insurance segment for the quarter ended December 31, 2010 were as follows:

  • Net premiums written of $81.6 million, a decrease of 7.7% from the fourth quarter of 2009;
  • Combined ratio of 86.7%, an improvement of 0.5 percentage points from the fourth quarter of 2009; and
  • Favorable prior year loss reserve development of 5.6 percentage points during the current period, compared to 11.2 percentage points of favorable prior year loss reserve development in the fourth quarter of 2009.

Operating highlights for Endurance's Insurance segment for the year ended December 31, 2010 were as follows:

  • Net premiums written of $829.9 million, an increase of 12.1% from the prior year;
  • Combined ratio of 90.6%, an improvement of 1.4 percentage points from 2009; and
  • Favorable prior year loss reserve development of 5.7 percentage points during the current period, compared to 11.2 percentage points of favorable prior year loss reserve development in 2009.

The decline of $6.8 million in net premiums written in the Insurance segment in the fourth quarter of 2010 compared to the fourth quarter of 2009 was predominantly due to reduced premiums in the property and professional lines of business, as pricing pressure led to the non-renewal of business that no longer met our return objectives. Partially offsetting this reduction was modest growth in the agriculture, casualty and healthcare lines of business. For the year ended December 31, 2010, net written premiums increased $89.6 million compared to a year ago as significant growth within the agriculture and property lines resulted from retaining more business on a net basis in the current year. The Company also experienced modest growth within the casualty and healthcare liability lines of business, partially offset by a decline in the professional line of business.

The improvement in the Insurance segment combined ratio in the current year and quarter ended December 31, 2010 compared to the same periods in 2009 was driven by lower acquisition expense ratios, partially offset by higher net loss and general and administrative expense ratios. The current periods' acquisition expense ratios improved over the prior periods largely due to agriculture net premiums written, which maintain lower acquisition expenses, constituting a greater proportion of net premiums written. The modest increases in the net loss ratios were driven by lower levels of favorable prior year loss reserve development in the current periods compared to a year ago, which was predominantly offset by improved loss experience in the current periods' agriculture and property lines of business. The current periods' general and administrative expense ratios increased compared to the same periods a year ago as less ceding commission was received as the Company utilized less reinsurance in the agriculture and property lines of business.

Reinsurance Segment

Operating highlights for Endurance's Reinsurance segment for the quarter ended December 31, 2010 were as follows:

  • Net premiums written of $76.5 million, an increase of 31.8% from the fourth quarter of 2009;
  • Combined ratio of 82.8%, an increase of 19.7 percentage points from the fourth quarter of 2009; and
  • Favorable prior year loss reserve development of 4.9 percentage points during the current period, compared to 9.7 percentage points of favorable prior year loss reserve development in the fourth quarter of 2009.

Operating highlights for Endurance's Reinsurance segment for the year ended December 31, 2010 were as follows:

  • Net premiums written of $933.9 million, an increase of 7.9% from 2009;
  • Combined ratio of 86.9%, an increase of 11.0 percentage points from the prior year; and
  • Favorable prior year loss reserve development of 8.7 percentage points during the current period, compared to 7.3 percentage points of favorable prior year loss reserve development in 2009.

The $18.5 million increase in net premiums written in the Reinsurance segment during the fourth quarter of 2010 over the fourth quarter of 2009 resulted primarily from growth in the casualty, catastrophe, and aerospace and marine lines of business. Partially offsetting this growth were modest declines in net premiums written within the property line of business. The largest change in the quarter was experienced in the casualty line of business from a higher level of favorable premium adjustments than a year ago and from one new non-standard auto reinsurance treaty with an existing client that incepted in the fourth quarter. For full year 2010, net premiums written increased $68.1 million compared to full year 2009 driven by growth across all lines of business. While the catastrophe, property, and aerospace and marine lines of business recorded modest growth, the casualty and surety lines of business posted more robust growth due to writing a few select new contracts during the year paired with higher favorable premium adjustments.

The combined ratios in the Reinsurance segment for the current periods increased compared to the same periods in 2009 due to higher net loss ratios, as the industry experienced a greater frequency of large loss events during 2010, including the earthquake in Chile and European Windstorm Xynthia in the first quarter and the earthquake in New Zealand in the third quarter. Partially offsetting the increase in the net loss ratio in the current year was the recognition of greater favorable prior year loss reserve development within the short and long tail lines of business compared to the same period in 2009.

The Company's acquisition expense ratios declined in the current periods compared to the same periods in 2009 due to reduced profit and loss sensitive commissions. The general and administrative expense ratios declined in the current periods due to a higher earned premium base and lower variable incentive compensation compared to prior year periods. Lower variable compensation was driven by lower corporate profitability in the current year, which was caused by higher catastrophe losses and reduced investment yields compared to a year ago.

Investments

Endurance's net investment income decreased 4.0% or $2.4 million for the quarter ended December 31, 2010 and 29.5% or $83.8 million for the year ended December 31, 2010 compared to the same periods in 2009. During the fourth quarter and year ended December 31, 2010, Endurance's net investment income included gains of $16.4 million and $40.3 million on its alternative investment funds and high yield loan funds which are included in other investments, as compared to gains of $16.8 million and $98.1 million in the fourth quarter and year ended December 31, 2009. Investment income generated from Endurance's fixed maturity investments declined by $1.4 million and $20.8 million for the three months and year ended December 31, 2010 compared to the same periods in 2009. This decrease resulted from lower reinvestment rates during 2010, driven by lower market yields, partially offset by higher average investment portfolio balances. For the same reasons, the ending book yield on Endurance's fixed maturity investments at December 31, 2010 was 3.13%, down from 3.29% at December 31, 2009.

At December 31, 2010, Endurance's fixed maturity portfolio, which comprises 93.2% of Endurance's investments, had an average credit quality of AA and a duration of 2.39 years. Endurance's fixed maturity portfolio was in an unrealized gain position of $129.8 million at December 31, 2010, an improvement of $91.6 million from December 31, 2009. Endurance recorded net realized gains on investment sales, including impairment losses recognized in earnings, of $6.6 million and $18.5 million during the fourth quarter and full year of 2010 compared to net realized investment gains of $2.2 million and losses of $13.9 million during the same periods in 2009. 

Endurance ended the fourth quarter of 2010 with cash and invested assets of $6.2 billion, which represents a 3.6% increase from December 31, 2009. Net operating cash flow was $407.2 million for the year ended December 31, 2010 versus $471.9 million for the year ended December 31, 2009. 

Capitalization and Shareholders' Equity

At December 31, 2010, Endurance's shareholders' equity was $2.85 billion or $52.74 per diluted common share versus $2.79 billion or $44.61 per diluted common share at December 31, 2009. During the three months ended December 31, 2010, Endurance repurchased 2.5 million of its common shares and share equivalents for an aggregate repurchase price of $107.5 million. For the full year of 2010, Endurance repurchased 8.7 million common shares and share equivalents for an aggregate repurchase price of $338.1 million and an average price of $38.96.

Subsequent Event

On January 24, 2011, Endurance announced that it had entered into an agreement to repurchase the ordinary shares and options held by two affiliated funds of Perry Corp., which was a founding shareholder of Endurance, for $44.99 per ordinary share. Endurance repurchased 7,143,056 ordinary shares and options to purchase an additional 10,000 ordinary shares which represented approximately 15% of the Company's ordinary shares outstanding as of December 31, 2010. The aggregate repurchase price for the shares and the options was $321.5 million and the transaction was completed on January 28, 2011.

Earnings Call

Endurance will host a conference call on February 10, 2011 at 8:30 a.m. Eastern time to discuss its financial results. The conference call can be accessed via telephone by dialing (877) 440-5788 or (719) 325-4937 (international) and entering pass code: 4905037. 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 February 24, 2011 by dialing (888) 203-1112 or (719) 457-0820 (international) and entering the pass code: 4905037.

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 fourth quarter of 2010 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 property, casualty, healthcare liability, agriculture, workers' compensation, professional lines of insurance and property, catastrophe, casualty, agriculture, marine, aerospace, and surety and other 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 Wellesley House, 90 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 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," "expect," "intend," "plan," "believe," "project," "anticipate," "seek," "will," 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 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, 2009.

Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation publicly to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

ENDURANCE SPECIALTY HOLDINGS LTD. 
CONSOLIDATED BALANCE SHEETS
 (in thousands of United States dollars, except share and per share amounts)
 
  December 31,

2010
December 31,

2009
Assets    
Cash and cash equivalents $609,852 $528,944
Fixed maturity investments, available for sale, at fair value  5,116,702 4,548,618
Short term investments, available for sale, at fair value 70,444 534,678
Preferred equity securities, available for sale, at fair value 13,565 11,023
Other investments 376,652 351,352
Premiums receivable, net 827,609 565,348
Deferred acquisition costs 154,484 146,979
Securities lending collateral 59,886 66,913
Prepaid reinsurance premiums 107,977 120,941
Losses recoverable 319,349 467,664
Accrued investment income 32,934 30,367
Goodwill and intangible assets 181,954 191,450
Deferred tax assets 33,684 17,252
Receivable on pending investment sales 602 632
Other assets 73,711 84,533
Total Assets $7,979,405 $7,666,694
     
Liabilities    
Reserve for losses and loss expenses $3,319,927 $3,157,026
Reserve for unearned premiums 842,154 832,561
Net deposit liabilities 32,505 42,638
Securities lending payable 59,886 66,968
Reinsurance balances payable 228,860 220,435
Debt 528,411 447,664
Payable on pending investment purchases -- 25
Other liabilities 119,509 112,094
Total Liabilities 5,131,252 4,879,411
     
Shareholders' Equity    
Preferred shares    
Series A, non-cumulative – 8,000,000 issued and outstanding (2009 – 8,000,000)  8,000 8,000
Common shares    
47,218,468 issued and outstanding (2009 – 55,115,702)  47,218 55,116
Additional paid-in capital 613,915 929,577
Accumulated other comprehensive income  138,571 52,148
Retained earnings 2,040,449 1,742,442
Total Shareholders' Equity 2,848,153 2,787,283
     
Total Liabilities and Shareholders' Equity $7,979,405 $7,666,694
     
Book Value per Common Share    
Dilutive common shares outstanding 50,210,614 57,996,331
Diluted book value per common share[a] $52.74 $44.61
     
Note: All financial information contained herein is unaudited, except the balance sheet data for the year ended December 31, 2009, which was derived from Endurance's audited financial statements.
     
[a] Excludes the $200 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)
         
  Quarter Ended For the Year Ended
  December 31, 2010  December 31, 2009 December 31, 2010 December 31, 2009
Revenues        
Gross premiums written $189,225 $209,367 $2,053,236 $2,021,450
         
Net premiums written $158,115 $146,442 $1,763,744 $1,606,050
Change in unearned premiums 291,621 247,501 (22,631) 27,142
         
Net premiums earned 449,736 393,943 1,741,113 1,633,192
Other underwriting income (loss)  410 (284) (1,636) 3,914
Net investment income  56,874 59,257 200,358 284,200
Net realized gains on investment sales 7,314 3,166 22,488 6,303
         
Total other-than-temporary impairment losses (48) (561) (2,695) (50,993)
Portion of loss recognized in accumulated other comprehensive income  (663) (423) (1,249) 30,742
Net impairment losses recognized in earnings (711) (984) (3,944) (20,251)
         
Total revenues 513,623 455,098 1,958,379 1,907,358
         
Expenses        
Losses and loss expenses  246,424 164,005 1,038,100 866,640
Acquisition expenses 66,133 72,821 264,228 267,971
General and administrative expenses 67,756 57,932 241,920 237,154
Amortization of intangibles 2,696 2,699 10,460 10,463
Net foreign exchange losses (gains) 3,476 1,008 (2,989) (29,740)
Interest expense 9,053 7,541 34,762 30,174
Total expenses 395,538 306,006 1,586,481 1,382,662
         
Income before income taxes 118,085 149,092 371,898 524,696
Income tax (expense) benefit  (6,857) 5,733 (7,160) 11,408
Net income 111,228 154,825 364,738 536,104
Preferred dividends (3,875) (3,875) (15,500) (15,500)
Net income available to common and participating common shareholders $107,353 $150,950 $349,238 $520,604
         
Per share data        
Basic earnings per common share $2.22 $2.69 $6.73 $9.14
Diluted earnings per common share $2.09 $2.56 $6.38 $8.69
 
ENDURANCE SPECIALTY HOLDINGS LTD.
       
RESULTS BY SEGMENT
       
(in thousands of United States dollars)
       
  For the quarter ended December 31, 2010
       
  Insurance Reinsurance Reported Totals
       
Revenues      
Gross premiums written $112,664 $76,561 $189,225
Ceded premiums written (31,021) (89) (31,110)
Net premiums written 81,643 76,472 158,115
Net premiums earned 205,528 244,208 449,736
Other underwriting income 4 406 410
Total underwriting revenues 205,532 244,614 450,146
       
Expenses      
Net losses and loss expenses 129,168 117,256 246,424
Acquisition expenses 12,220 53,913 66,133
General and administrative expenses 36,812 30,944 67,756
  178,200 202,113 380,313
Underwriting income $27,332 $42,501 $69,833
       
Net loss ratio 62.9% 48.0% 54.8%
Acquisition expense ratio 5.9% 22.1% 14.7%
General and administrative expense ratio 17.9% 12.7% 15.1%
Combined ratio 86.7% 82.8% 84.6%
 
ENDURANCE SPECIALTY HOLDINGS LTD.
       
RESULTS BY SEGMENT
       
(in thousands of United States dollars)
       
  For the quarter ended December 31, 2009
       
  Insurance Reinsurance Reported Totals
       
Revenues      
Gross premiums written $150,471 $58,896 $209,367
Ceded premiums written (62,039) (886) (62,925)
Net premiums written 88,432 58,010 146,442
Net premiums earned 191,151 202,792 393,943
Other underwriting income (loss) 89 (373) (284)
Total underwriting revenues 191,240 202,419 393,659
       
Expenses      
Net losses and loss expenses 119,297 44,708 164,005
Acquisition expenses 18,619 54,202 72,821
General and administrative expenses 28,813 29,119 57,932
  166,729 128,029 294,758
Underwriting income $24,511 $74,390 $98,901
       
Net loss ratio 62.4% 22.0% 41.6%
Acquisition expense ratio 9.7% 26.7% 18.5%
General and administrative expense ratio 15.1% 14.4% 14.7%
Combined ratio 87.2% 63.1% 74.8%
 
ENDURANCE SPECIALTY HOLDINGS LTD.
       
RESULTS BY SEGMENT
       
(in thousands of United States dollars)
       
  For the year ended December 31, 2010
       
  Insurance Reinsurance Reported Totals
       
Revenues      
Gross premiums written $1,112,192 $941,044 $2,053,236
Ceded premiums written (282,328) (7,164) (289,492)
Net premiums written 829,864 933,880 1,763,744
Net premiums earned 821,828 919,285 1,741,113
Other underwriting income (loss) 475 (2,111) (1,636)
Total underwriting revenues 822,303 917,174 1,739,477
       
Expenses      
Net losses and loss expenses 558,040 480,060 1,038,100
Acquisition expenses 63,556 200,672 264,228
General and administrative expenses 123,335 118,585 241,920
  744,931 799,317 1,544,248
Underwriting income $77,372 $117,857 $195,229
       
Net loss ratio 67.9% 52.2% 59.6%
Acquisition expense ratio 7.7% 21.8% 15.2%
General and administrative expense ratio 15.0% 12.9% 13.9%
Combined ratio 90.6% 86.9% 88.7%
 
ENDURANCE SPECIALTY HOLDINGS LTD.
       
RESULTS BY SEGMENT
       
(in thousands of United States dollars)
       
  For the year ended December 31, 2009
       
  Insurance Reinsurance Reported Totals
       
Revenues      
Gross premiums written $1,152,150 $869,300 $2,021,450
Ceded premiums written (411,840) (3,560) (415,400)
Net premiums written 740,310 865,740 1,606,050
Net premiums earned 823,703 809,489 1,633,192
Other underwriting income 3,533 381 3,914
Total underwriting revenues 827,236 809,870 1,637,106
       
Expenses      
Net losses and loss expenses 553,008 313,632 866,640
Acquisition expenses 84,724 183,247 267,971
General and administrative expenses 119,766 117,388 237,154
  757,498 614,267 1,371,765
Underwriting income $69,738 $195,603 $265,341
       
Net loss ratio 67.1% 38.8% 53.1%
Acquisition expense ratio 10.3% 22.6% 16.4%
General and administrative expense ratio 14.6% 14.5% 14.5%
Combined ratio 92.0% 75.9% 84.0%
 
ENDURANCE SPECIALTY HOLDINGS LTD. 
             
CONSOLIDATED FINANCIAL RATIOS
             
As Reported            
             
  For the quarter ended December 31
  Insurance Reinsurance Total
  2010 2009 2010 2009 2010 2009
             
Net loss ratio 62.9% 62.4% 48.0% 22.0% 54.8% 41.6%
Acquisition expense ratio 5.9% 9.7% 22.1% 26.7% 14.7% 18.5%
General and administrative expense ratio 17.9% 15.1% 12.7% 14.4% 15.1% 14.7%
Combined ratio 86.7% 87.2% 82.8% 63.1% 84.6% 74.8%
             
Effect of Prior Year Net Loss Reserve Development      
             
Favorable / (Unfavorable)          
             
  For the quarter ended December 31
  Insurance Reinsurance Total
  2010 2009 2010 2009 2010 2009
             
Net loss ratio 5.6% 11.2% 4.9% 9.7% 5.2% 10.5%
             
Net of Prior Year Net Loss Reserve Development      
             
  For the quarter ended December 31
  Insurance Reinsurance Total
  2010 2009 2010 2009 2010 2009
             
Net loss ratio 68.5% 73.6% 52.9% 31.7% 60.0% 52.1%
Acquisition expense ratio 5.9% 9.7% 22.1% 26.7% 14.7% 18.5%
General and administrative expense ratio 17.9% 15.1% 12.7% 14.4% 15.1% 14.7%
Combined ratio 92.3% 98.4% 87.7% 72.8% 89.8% 85.3%
             
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            
             
  For the year ended December 31
  Insurance Reinsurance Total
  2010 2009 2010 2009 2010 2009
             
Net loss ratio 67.9% 67.1% 52.2% 38.8% 59.6% 53.1%
Acquisition expense ratio 7.7% 10.3% 21.8% 22.6% 15.2% 16.4%
General and administrative expense ratio 15.0% 14.6% 12.9% 14.5% 13.9% 14.5%
Combined ratio 90.6% 92.0% 86.9% 75.9% 88.7% 84.0%
             
Effect of Prior Year Net Loss Reserve Development      
             
Favorable / (Unfavorable)            
             
  For the year ended December 31
  Insurance Reinsurance Total
  2010 2009 2010 2009 2010 2009
             
Net loss ratio 5.7% 11.2% 8.7% 7.3% 7.3% 9.2%
             
Net of Prior Year Net Loss Reserve Development        
             
  For the year ended December 31
  Insurance Reinsurance Total
  2010 2009 2010 2009 2010 2009
             
Net loss ratio 73.6% 78.3% 60.9% 46.1% 66.9% 62.3%
Acquisition expense ratio 7.7% 10.3% 21.8% 22.6% 15.2% 16.4%
General and administrative expense ratio 15.0% 14.6% 12.9% 14.5% 13.9% 14.5%
Combined ratio 96.3% 103.2% 95.6% 83.2% 96.0% 93.2%
             
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, excluding 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 quarters and years ended December 31, 2010 and 2009: 
         
  Quarter Ended  Quarter Ended 
  December 31, 2010 December 31, 2009
  Gross Premiums Written Net Premiums Written  Gross Premiums Written Net Premiums Written 
         
Insurance        
 Agriculture $6,930 $2,372 $33,430 $697
 Professional lines 36,690 33,171 49,915 44,456
 Casualty 37,377 25,536 31,680 19,875
 Property 22,134 11,895 26,479 14,932
 Healthcare liability 10,811 9,946 9,650 9,129
 Workers' compensation (1,278) (1,277) (683) (657)
 Subtotal Insurance $112,664 $81,643 $150,471 $88,432
         
Reinsurance        
 Catastrophe $17,896 $17,896 $13,939 $12,753
 Casualty 47,970 47,965 34,543 34,537
 Property 8,628 8,628 9,710 9,710
 Aerospace and Marine 2,380 2,380 1,716 1,721
 Surety and other specialty (313) (397) (1,012) (711)
 Subtotal Reinsurance $76,561 $76,472 $58,896 $58,010
         
Total $189,225 $158,115 $209,367 $146,442
 
ENDURANCE SPECIALTY HOLDINGS LTD.
         
GROSS AND NET PREMIUMS WRITTEN BY SEGMENT
         
(in thousands of United States dollars)
         
  Year Ended  Year Ended 
  December 31, 2010 December 31, 2009
  Gross Premiums Written Net Premiums Written  Gross Premiums Written Net Premiums Written 
         
Insurance        
 Agriculture $567,461 $404,767 $572,096 $324,480
 Professional lines 170,146 148,717 193,799 167,091
 Casualty 167,549 107,801 152,580 91,071
 Property 122,110 88,299 124,621 68,011
 Healthcare liability 87,593 82,893 82,955 78,284
 Workers' compensation (2,667) (2,613) 26,099 11,373
 Subtotal Insurance $1,112,192 $829,864 $1,152,150 $740,310
         
Reinsurance        
 Catastrophe $309,886 $305,617 $303,404 $302,218
 Casualty 294,030 293,222 255,142 254,897
 Property 224,544 224,544 215,085 215,085
 Aerospace and Marine 48,761 46,696 44,696 42,563
 Surety and other specialty 63,823 63,801 50,973 50,977
 Subtotal Reinsurance $941,044 $933,880 $869,300 $865,740
         
Total $2,053,236 $1,763,744 $2,021,450 $1,606,050
 
ENDURANCE SPECIALTY HOLDINGS LTD.
         
RECONCILIATIONS 
         
(in thousands of United States dollars, except share and per share amounts)
         
The following is a reconciliation of Endurance's net income, net income per 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 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 quarters and years ended December 31, 2010 and 2009: 
         
  Quarter Ended Year Ended
  December 31, December 31,
  2010 2009 2010 2009
Net income $ 111, 228 $154,825 $364,738 $536,104
 (Less) Add after-tax items:        
Net foreign exchange losses (gains) 3,496 1,116 (2,967) (29,372)
Net realized gains on investment sales  (7,176) (3,262) (20,180) (6,281)
Net impairment losses recognized in earnings 712 984 3,944 20,251
Operating income before preferred dividends $108,260 $153,663 $345,535 $520,702
Preferred dividends (3,875) (3,875) (15,500) (15,500)
Operating income available to common and participating common shareholders $104,385 $149,788 $330,035 $505,202
         
Operating income allocated to common shareholders under the two-class method $102,405 $147,397 $323,800 $496,366
         
Weighted average dilutive common shares 50,302,939 58,052,021 53,728,459 58,874,114
         
Operating income per diluted common share $2.04 $2.54 $6.03 $8.43
         
Average common equity [a] $2,683,919 $2,547,817 $2,617,718 $2,297,283
         
Operating return on average common equity 3.9% 5.9% 12.6% 22.0%
Annualized operating return on average common equity 15.6% 23.5% 12.6% 22.0%
         
Net income $111,228 $154,825 $364,738 $536,104
Preferred dividends (3,875) (3,875) (15,500) (15,500)
Net income available to common and participating common shareholders $107,353 $150,950 $349,238 $520,604
         
Net income allocated to common shareholders under the two-class method $105,317 $148,541 $342,643 $511,500
         
Net income per diluted common share $2.09 $2.56 $6.38 $8.69
         
Return on average common equity, Net income 4.0% 5.9% 13.3% 22.7%
Annualized return on average common equity, Net income  16.0% 23.7% 13.3% 22.7%
 
[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 $200 million liquidation value of the preferred shares.
 
Operating income and operating income per 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 how management analyzes Endurance'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: (441) 278-0988
         Email: investorrelations@endurance.bm

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 5.03%
$30K home equity loan FICO 5.68%
$75K home equity loan FICO 4.87%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com