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Endurance Reports Fourth Quarter 2012 Financial Results


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Copyright © Thomson Reuters 2013. All rights reserved.
2013-02-07 22:18:16 -


PEMBROKE, Bermuda - February 7, 2013 - Endurance Specialty Holdings Ltd.
(NYSE:ENH) today reported a net loss attributable to common shareholders of
$40.8 million and $0.96 per diluted common share for the fourth quarter of 2012
compared to a net loss attributable to common shareholders of $35.6 million and
$0.88 per diluted common share for the fourth quarter of 2011.

For the year ended December 31, 2012, Endurance reported net income available to
common shareholders of $129.8 million and $3.00 per diluted common share versus
a net loss attributable to common shareholders of $117.9 million and $2.95 per
diluted common share for the year ended December 31, 2011.  Book value per
diluted share was $52.88 at December 31, 2012, an increase of 4.6% from year end
2011.

Operating highlights
for the quarter ended December 31, 2012 were as follows:

* Net premiums written of $187.9 million, unchanged compared to the same
period in 2011;
* Combined ratio of 119.2%, which included 5.3 percentage points of favorable
prior year loss reserve development and 30.1 percentage points of
catastrophe losses from 2012 events;
* Net investment income of $38.6 million, a decrease of $2.0 million from the
same period in 2011;
* An operating loss, which excludes after-tax realized investment gains and
foreign exchange gains and losses, of $76.4 million and $1.80 per diluted
common share; and
* An operating loss on average common equity for the quarter of 3.3%.

Operating highlights for the year ended December 31, 2012 were as follows:

* Net premiums written of $2,029.5 million, an increase of 2.5% over the same
period in 2011;
* Combined ratio of 102.3%, which included 6.0 percentage points of favorable
prior year loss reserve development and 10.4 percentage points of current
year catastrophe losses;
* A $57.4 million net underwriting loss in our agriculture insurance line of
business;
* Net investment income of $173.3 million, an increase of $26.3 million over
the same period in 2011;
* Operating income, which excludes after-tax realized investment gains and
foreign exchange gains and losses, of $54.3 million and $1.25 per diluted
common share; and
* An operating return on average common equity of 2.4%.

David Cash, Chief Executive Officer, commented, "2012 was a productive year for
Endurance, as we were able to grow book value including dividends by 7%, while
withstanding the impact of the severe drought in the Midwestern U.S. and
Superstorm Sandy.  Strategically, I am pleased with the progress we made in
2012 as we grew many of our businesses, augmented our leadership and added
specialty trade credit, surety, engineering and weather teams to our portfolio
of specialty insurance and reinsurance businesses.  I believe the investment in
our leadership and our specialty insurance and reinsurance capabilities position
Endurance well for 2013 and the years ahead."



Insurance Segment

Operating highlights for Endurance's Insurance segment for the quarter ended
December 31, 2012 were as follows:

* Net premiums written of $106.7 million, an increase of 10.5% from the fourth
quarter of 2011;
* Combined ratio of 119.1%, an increase of 8.1 percentage points from the
fourth quarter of 2011;
* Favorable prior year loss reserve development of 3.0 percentage points
during the current period, compared to 0.2 percentage points of favorable
prior year loss reserve development in the fourth quarter of 2011;
* Net catastrophe losses from Superstorm Sandy of $35.1 million or 14.4
percentage points on the net loss ratio; and
* A net underwriting loss of $13.8 million in our agriculture business line
due to the Midwest drought.

Operating highlights for Endurance's Insurance segment for the year ended
December 31, 2012 were as follows:

* Net premiums written of $942.4 million, a decrease of 6.3% from the same
period in 2011;
* Combined ratio of 110.6%, an increase of 10.5 percentage points from the
same period in 2011;
* Favorable prior year loss reserve development of 4.8 percentage points
during the current period, compared to 7.2 percentage points of favorable
prior year loss reserve development in the same period in 2011; and
* A net underwriting loss of $57.4 million in our agriculture business line
due to the Midwest drought.

Net premiums written in the Insurance segment increased $10.2 million and
decreased $63.1 million for the fourth quarter and year ended December
31, 2012, respectively, compared to the same periods in the prior year.  Within
the fourth quarter of 2012, net premiums written increased as higher premiums in
the agriculture and casualty and other specialty lines of business were
partially offset by declines in the professional liability and property lines of
business.  The premium growth in the agriculture line of business was
predominantly driven by a shift in policy inception dates from the third quarter
to the fourth quarter for certain agriculture insurance products.   The premium
growth in the casualty and other specialty line of business in the fourth
quarter of 2012 was due to new Bermuda excess lines and U.S. small contract
policies.  The current quarter declines in the professional liability and
property lines of business as compared to fourth quarter 2011 were predominantly
the result of exiting businesses that were not meeting profitability targets.
 For the full year 2012, net premiums written declined compared to the same
period in 2011 as agriculture premiums were impacted by lower commodity prices
and property premiums decreased due to the Company's decision to reallocate
capital to lines of business with greater profit potential.

The increase in the Insurance segment combined ratios for the quarter and full
year ended December 31, 2012 compared to the same period in 2011 was driven by
higher net loss ratios partially offset by lower general and administrative
expense ratios.  The net loss ratios for the quarter and twelve months ended
December 31, 2012 increased primarily as a result of net losses from Superstorm
Sandy in the property line and from net losses from the Midwest drought in the
agriculture line.  The general and administrative expense ratios were lower in
the current quarter and full year of 2012 compared to a year ago due to higher
ceding commissions, higher expense reimbursements in the agriculture line, and
lower general and administrative expenses.

The Insurance segment's net loss ratio in the fourth quarter of 2012 benefited
from $7.3 million, or 3.0 percentage points of favorable prior year loss reserve
development, compared to $0.6 million, or 0.2 percentage points, for the same
period a year ago. For the current quarter, the favorable development was driven
predominantly by the casualty and other specialty lines of business.  For the
year ended December 31, 2012, the net loss ratio benefited from 4.8 percentage
points of favorable prior year loss reserve development compared to 7.2
percentage points during 2011.  The reduced level of favorable prior year loss
reserve development for the full year 2012 compared to 2011 was driven
predominantly by the agriculture line of business, as the development recognized
in 2011 was impacted by the combination of a very strong 2010 crop year with a
delayed harvest that extended claims settlements into 2011, compared to the
2011 crop year, which did not experience the same level of harvest delays or
extension of claims settlements into 2012.

Reinsurance Segment

Operating highlights for Endurance's Reinsurance segment for the quarter ended
December 31, 2012 were as follows:

* Net premiums written of $81.3 million, a decrease of 11.0% from the fourth
quarter of 2011;
* Combined ratio of 119.2%, an increase of 5.2 percentage points from the
fourth quarter of 2011;
* Favorable prior year loss reserve development of 7.2 percentage points
compared to 16.6 percentage points of favorable prior year loss reserve
development in the fourth quarter of 2011; and
* Net catastrophe losses from Superstorm Sandy of $123.7 million, or 45.5
percentage points on the net loss ratio, compared to net catastrophe losses
of $109.9 million, or 44.5 percentage points in the fourth quarter of 2011.

Operating highlights for Endurance's Reinsurance segment for the year ended
December 31, 2012 were as follows:

* Net premiums written of $1,087.1 million, an increase of 11.6% from the same
period in 2011;
* Combined ratio of 94.7%, an improvement of 31.3 percentage points from the
same period in 2011;
* Favorable prior year loss reserve development of 7.0 percentage points
during the current period, compared to 11.5 percentage points of favorable
prior year loss reserve development in the same period in 2011; and
* Net catastrophe losses from 2012 events of $171.4 million or 17.3 percentage
points on the net loss ratio compared to net catastrophe losses of $457.1
million or 49.9 points in 2011.

The $10.1 million decline in net premiums written within the Reinsurance segment
during the fourth quarter of 2012 compared to the fourth quarter of 2011
resulted primarily from a decline in the casualty line of business partially
offset by increases in the catastrophe and property lines of business.  The
decline in casualty premiums resulted from the non-renewal of a large contract
in the current quarter where profitability was not meeting company targets.  The
increase in catastrophe premiums was largely due to reinstatement premiums
related to Superstorm Sandy. The growth in property premiums was predominantly
due to a large premium adjustment and new business writings.  For the full year
2012, net premiums grew across all the reinsurance lines from increases on
renewals and new business written.

The combined ratio in the Reinsurance segment for the fourth quarter of 2012
increased compared to the same period in 2011, predominantly due to a higher net
loss ratio, partially offset by lower acquisition and general and administrative
expense ratios.  The Reinsurance segment's net loss ratio in the fourth quarter
increased primarily due to lower levels of favorable prior year loss reserve
development.  The current quarter's net loss ratio benefited from $20.8 million,
or 7.2 percentage points, of favorable prior year loss reserve development,
compared to $41.5 million, or 16.6 percentage points, for the same period a year
ago with the decline largely attributable to short tail lines that have been
impacted by a higher level of catastrophe activity.  The Reinsurance segment's
acquisition and general and administrative expense ratios declined in the
quarter and year ended December 31, 2012 compared to the same periods in 2011
due to higher levels of earned premiums in the catastrophe line, lower loss
sensitive adjustments and from reduced general and administrative expenses.

For the full year 2012, the Reinsurance segment reported a combined ratio of
94.7% compared to 126.0% for the full year 2011.  The improvement in the
combined ratio was largely attributable to an improvement in the net loss ratio
as a result of the lower frequency and severity of catastrophe events in 2012
and lower general and administrative expenses, partially offset by lower levels
of favorable prior year reserve development.

Investments

Endurance's net investment income for the quarter and year ended December
31, 2012 was $38.6 million and $173.3 million, a decrease of $2.0 million and an
increase of $26.3 million, respectively, compared to the same periods in 2011.
 The total return of Endurance's investment portfolio was 0.60% and 4.70% for
the quarter and year ended December 31, 2012, respectively, compared to 0.88%
and 3.50% for the quarter and year ended December 31, 2011, respectively.
 Investment income generated from Endurance's fixed maturity investments
decreased by $6.4 million and $24.7 million for the quarter and year ended
December 31, 2012, respectively, compared to the same periods in 2011 due to
lower reinvestment rates during 2012 and the short duration of Endurance's fixed
maturity portfolio.  During the quarter and year ended December 31, 2012,
Endurance's net investment income included gains of $11.0 million and $49.1
million, respectively, on its alternative investment funds and high yield loan
funds, which are included in other investments, as compared to gains of $6.9
million and losses of $0.7 million in the quarter and year ended December
31, 2011, respectively.  The ending book yield on Endurance's fixed maturity
investments at December 31, 2012 was 2.35%, down from 2.68% at December
31, 2011.

At December 31, 2012, Endurance's fixed maturity portfolio, which comprises
90.2% of Endurance's investments, had an average credit quality of AA and a
duration of 2.49 years.  Endurance's fixed maturity portfolio was in a net
unrealized gain position of $141.7 million at December 31, 2012, an improvement
of $18.9 million from December 31, 2011.  Endurance recorded net realized
investment gains, net of impairment losses recognized in earnings, of $41.8
million and $71.3 million during the quarter and year ended December 31, 2012
compared to net realized investment gains of $4.6 million and $28.2 million
during the quarter and year ended December 31, 2011.

Endurance ended the fourth quarter of 2012 with cash and invested assets of $6.6
billion, which represents a 4.1% increase from December 31, 2011.  Net operating
cash flow was $272.8 million for the year ended December 31, 2012 versus $281.3
million for the same period in 2011.

Capitalization and Shareholders' Equity

At December 31, 2012, Endurance's shareholders' equity was $2.71 billion or
$52.88 per diluted common share versus $2.61 billion or $50.56 per diluted
common share at December 31, 2011.  For the quarter and year ended December
31, 2012, Endurance declared and paid common dividends of $0.31 and $1.24 per
share, respectively.  During the fourth quarter of 2012, the company repurchased
251,309 shares at an average cost of $39.81 for a total amount of repurchases of
$10.0 million.

Earnings Call

Endurance will host a conference call on February 8, 2013 at 8:30 a.m. Eastern
time to discuss its financial results.  The conference call can be accessed via
telephone by dialing (888) 797-2982 or (913) 312-0721 (international) and
entering pass code: 6703094.  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 22, 2013 by dialing (888) 203-1112 or (719) 457-0820 (international)
and entering the pass code: 6703094.

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 2012 will
be available on Endurance's website at www.endurance.bm shortly after the
release of earnings.

Operating (loss) income, operating (loss) return on average common equity,
operating (loss) income per diluted common share, operating (loss) income
(attributable) 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 lines of insurance and catastrophe, property, casualty, 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, 2011.

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,     December 31,

        2012      2011
---------------- --------------------------------
Assets

Cash and cash equivalents $  1,124,019    $  890,914

Fixed maturity investments,
available for sale, at fair
value    4,868,150       4,831,966

Short-term investments,
available for sale, at fair
value    42,230       67,802

Equity securities, available
for sale, at fair value    86,997       59,767

Other investments    517,546       432,658

Premiums receivable, net    601,952       544,017

Insurance and reinsurance  105,663   92,710
balances receivable

Deferred acquisition costs    168,252       166,049

Prepaid reinsurance premiums    166,702       149,670

Losses recoverable    774,942       666,928

Accrued investment income    27,166       29,708

Goodwill and intangible assets    172,000       181,828

Deferred tax asset    43,501       33,355

Net receivable on sales of  9,144   77,821
investments

Other assets    86,708       67,422
---------------- --------------------------------
Total Assets $  8,794,972    $  8,292,615
---------------- --------------------------------


Liabilities

Reserve for losses and loss  4,240,876   3,824,224
expenses $   $

Reserve for unearned premiums    965,244       932,108

Deposit liabilities    22,220       26,887

Reinsurance balances payable    110,843       189,488

Debt    527,339       528,118

Net payable on purchases of  81,469   55,243
investments

Other liabilities    136,384       125,382
---------------- --------------------------------
Total Liabilities    6,084,375       5,681,450
---------------- --------------------------------


Shareholders' Equity

Preferred shares

Series A, non-cumulative -
8,000,000 issued and
outstanding (2011 -
  8,000,000)    8,000       8,000

Series B, non-cumulative -
9,200,000 issued and
outstanding (2011 -
  9,200,000)    9,200       9,200

Common shares

43,116,394 issued and
outstanding (2011 -
  43,086,834)    43,116       43,087

Additional paid-in capital    527,915       526,910

Accumulated other comprehensive
income    152,463       130,392

Retained earnings    1,969,903       1,893,576
---------------- --------------------------------
Total Shareholders' Equity    2,710,597       2,611,165
---------------- --------------------------------


Total Liabilities and
Shareholders' Equity $  8,794,972    $  8,292,615
---------------- --------------------------------


Book Value per Common Share

Dilutive common shares
outstanding    43,130,075       43,142,277

Diluted book value per common
share [a] $  52.88    $  50.56
---------------- --------------------------------


Note: All financial information contained herein is unaudited, except the
balance sheet data for the year ended December 31, 2011, which was derived
    from Endurance's audited financial statements.



[a] Excludes the $430 million liquidation value of the preferred shares
    (2011 - $430 million).


ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(In thousands of United States dollars, except share and per share amounts)



      Quarter Ended   For the Year Ended
--------------------------- --------------- --------------
      December   December   December 31,   December 31,
31, 31,

      2012      2011    2012    2011
------------- ------------- --------------- --------------
Revenues

Gross premiums written $  262,046    $  262,966    $  2,549,026    $  2,467,114
------------- ------------- --------------- --------------


Net premiums written $  187,946    $  187,864    $  2,029,495    $  1,979,821

Change in unearned    343,107       312,625       (15,595)      (48,428)
premiums
------------- ------------- --------------- --------------


Net premiums earned    531,053       500,489       2,013,900       1,931,393

Other underwriting
loss    (520)      (1,425)    (2,183)    (3,547)

Net investment income    38,603       40,594       173,326       147,037

Net realized and    41,881       5,331       72,139       31,671
unrealized gains



Total other-than-    (90)      (751)      (364)      (2,659)
temporary impairment
  losses

Portion of loss    -       50       (483)      (861)
recognized in other
comprehensive (loss)
  income
------------- ------------- --------------- --------------
Net impairment losses    (90)      (701)      (847)      (3,520)
recognized in (losses)
earnings
------------- ------------- --------------- --------------


Total revenues    610,927       544,288       2,256,335       2,103,034
------------- ------------- --------------- --------------


Expenses

Net losses and loss
expenses    504,808       412,152     1,520,995     1,632,666

Acquisition expenses    73,780       77,157       303,179       282,911

General and
administrative
expenses    54,324       73,731     235,689     264,152

Amortization of
intangibles    2,359       2,413     10,347     11,213

Net foreign exchange
(gains) losses    (1,212)      233     (15,911)    (7,422)

Interest expense    9,042       9,088       36,174       36,254
------------- ------------- --------------- --------------
Total expenses    643,101       574,774       2,090,473       2,219,774
------------- ------------- --------------- --------------


(Loss) income before
income taxes    (32,174)      (30,486)    165,862     (116,740)

Income tax (expense)
benefit    (453)      3,110       (3,346)      23,006
------------- ------------- --------------- --------------
Net (loss) income    (32,627)      (27,376)      162,516       (93,734)



Preferred dividends    (8,186)      (8,187)      (32,750)      (24,125)
------------- ------------- --------------- --------------


Net (loss) income
(attributable)
available to common
and participating
common shareholders $  (40,813)   $  (35,563)   $  129,766    $  (117,859)
------------- ------------- --------------- --------------


Per share data

Basic (losses)
earnings per common
share $  (0.96) $  (0.88) $  3.00  $  (2.95)
------------- ------------- --------------- --------------
Diluted (losses)
earnings per common
share $  (0.96) $  (0.88)   $  3.00  $  (2.95)
------------- ------------- --------------- --------------

    ENDURANCE SPECIALTY HOLDINGS LTD.

    RESULTS BY SEGMENT

    (in thousands of United States dollars, except ratios)



          For the quarter ended December 31, 2012
-----------------------------------------
    Reported
      Insurance   Reinsurance   Totals
------------- ------------- -------------


    Revenues

    Gross premiums written   $  177,116    $  84,930    $  262,046

    Ceded premiums written      (70,464)      (3,636)      (74,100)
------------- ------------- -------------
    Net premiums written      106,652       81,294       187,946
------------- ------------- -------------
    Net premiums earned      244,101       286,952       531,053

    Other underwriting loss      -       (520)      (520)
------------- ------------- -------------
    Total underwriting revenues      244,101       286,432       530,533
------------- ------------- -------------


    Expenses

    Net losses and loss expenses      244,985       259,823       504,808

    Acquisition expenses      17,332       56,448       73,780

General and administrative
    expenses  28,445     25,879     54,324
------------- ------------- -------------
             290,762       342,150     
 632,912
------------- ------------- -------------
    Underwriting loss   $  (46,661)   $  (55,718)   $  (102,379)
------------- ------------- -------------


    Net loss ratio     100.3  %     90.5  %     95.1  %

    Acquisition expense ratio     7.1  %     19.7  %     13.9  %

General and administrative
    expense ratio 11.7  %   9.0  %   10.2  %
------------- ------------- -------------
    Combined ratio     119.1  %     119.2  %     119.2  %
------------- ------------- -------------

    ENDURANCE SPECIALTY HOLDINGS LTD.

    RESULTS BY SEGMENT

    (in thousands of United States dollars, except ratios)



          For the quarter ended December 31, 2011
----------------------------------------
    Reported
      Insurance   Reinsurance   Totals
------------- ------------- ------------


    Revenues

    Gross premiums written   $  167,766    $  95,200    $  262,966

    Ceded premiums written      (71,288)      (3,814)      (75,102)
------------- ------------- ------------
    Net premiums written      96,478       91,386       187,864
------------- ------------- ------------
    Net premiums earned      251,101       249,388       500,489

    Other underwriting loss      (493)      (932)      (1,425)
------------- ------------- ------------
    Total underwriting revenues      250,608       248,456       499,064
------------- ------------- ------------


    Expenses

    Net losses and loss expenses      214,681       197,471       412,152

    Acquisition expenses      20,388       56,769       77,157

General and administrative
    expenses  43,754     29,977     73,731
------------- ------------- ------------
             278,823       284,217     
 563,040
------------- ------------- ------------
    Underwriting loss   $  (28,215)   $  (35,761)   $  (63,976)
------------- ------------- ------------


    Net loss ratio     85.5  %     79.2  %     82.4  %

    Acquisition expense ratio     8.1  %     22.8  %     15.4  %

General and administrative expense
    ratio 17.4  %   12.0  %   14.7  %
------------- ------------- ------------
    Combined ratio     111.0  %     114.0  %     112.5  %
------------- ------------- ------------

    ENDURANCE SPECIALTY HOLDINGS LTD.

    RESULTS BY SEGMENT

    (in thousands of United States dollars, except ratios)



          For the year ended December 31, 2012
----------------------------------------------
    Reported
      Insurance   Reinsurance   Totals
--------------- --------------- --------------


    Revenues

    Gross premiums written   $  1,429,930    $  1,119,096    $  2,549,026

    Ceded premiums written      (487,573)      (31,958)      (519,531)
--------------- --------------- --------------
    Net premiums written      942,357       1,087,138       2,029,495
--------------- --------------- --------------
    Net premiums earned      955,089       1,058,811       2,013,900

Other underwriting (loss)
    income  (2,684)    501     (2,183)
--------------- --------------- --------------
    Total underwriting revenues      952,405       1,059,312       2,011,717
--------------- --------------- --------------


    Expenses

    Net losses and loss expenses      855,941       665,054       1,520,995

    Acquisition expenses      75,597       227,582       303,179

General and administrative
    expenses  125,108     110,581     235,689
--------------- --------------- --------------
             1,056,646       1,003,217     
 2,059,863
--------------- --------------- --------------
    Underwriting (loss) income   $  (104,241)   $  56,095    $  (48,146)
--------------- --------------- --------------


    Net loss ratio     89.6  %     62.8  %     75.5  %

    Acquisition expense ratio     7.9  %     21.5  %     15.1  %

General and administrative
    expense ratio 13.1  %   10.4  %   11.7  %
--------------- --------------- --------------
    Combined ratio     110.6  %     94.7  %     102.3  %
--------------- --------------- --------------

    ENDURANCE SPECIALTY HOLDINGS LTD.

    RESULTS BY SEGMENT

    (in thousands of United States dollars, except ratios)



          For the year ended December 31, 2011
----------------------------------------------
    Reported
      Insurance   Reinsurance   Totals
--------------- --------------- --------------


    Revenues

    Gross premiums written   $  1,469,798    $  997,316    $  2,467,114

    Ceded premiums written      (464,308)      (22,985)      (487,293)
--------------- --------------- --------------
    Net premiums written      1,005,490       974,331       1,979,821
--------------- --------------- --------------
    Net premiums earned      981,592       949,801       1,931,393

    Other underwriting loss      (3,368)      (179)      (3,547)
--------------- --------------- --------------
    Total underwriting revenues      978,224       949,622       1,927,846
--------------- --------------- --------------


    Expenses

    Net losses and loss expenses      765,119       867,547       1,632,666

    Acquisition expenses      71,295       211,616       282,911

General and administrative
    expenses  146,115     118,037     264,152
--------------- --------------- --------------
             982,529       1,197,200     
 2,179,729
--------------- --------------- --------------
    Underwriting loss   $  (4,305)   $  (247,578)   $  (251,883)
--------------- --------------- --------------


    Net loss ratio     77.9  %     91.3  %     84.6  %

    Acquisition expense ratio     7.3  %     22.3  %     14.6  %

General and administrative
    expense ratio 14.9  %   12.4  %   13.7  %
--------------- --------------- --------------
    Combined ratio     100.1  %     126.0  %     112.9  %
--------------- --------------- --------------

    ENDURANCE SPECIALTY HOLDINGS LTD.

    CONSOLIDATED FINANCIAL RATIOS





  As Reported


----------------------------------------------------------------
          For the quarter ended December 31,
----------------------------------------------------------------
          Insurance   Reinsurance   Total
--------------------- --------------------- --------------------
          2012    2011    2012    2011    2012   
2011



    Net loss ratio   100.3  %   85.5  %   90.5  %   79.2  %   95.1  %  
82.4  %

Acquisition
    expense ratio 7.1  %   8.1  %   19.7  %   22.8  %   13.9  %  
15.4  %

General and
administrative
    expense ratio 11.7  %   17.4  %   9.0  %   12.0  %   10.2  %  
14.7  %
---------- ---------- ---------- ---------- ---------- ---------
    Combined ratio   119.1  %   111.0  %   119.2  %   114.0  %   119.2  %  
112.5  %
---------- ---------- ---------- ---------- ---------- ---------




Effect of Prior Year Net
  Loss Reserve Development



Favorable /
  (Unfavorable)


----------------------------------------------------------------
          For the quarter ended December 31,
----------------------------------------------------------------
          Insurance   Reinsurance   Total
--------------------- --------------------- --------------------
          2012    2011    2012    2011    2012   
2011



    Net loss ratio   3.0  %   0.2  %   7.2  %   16.6  %   5.3  %  
8.4  %
---------- ---------- ---------- ---------- ---------- ---------




Net of Prior Year Net Loss
  Reserve Development



          For the quarter ended December 31,
----------------------------------------------------------------
          Insurance   Reinsurance   Total
--------------------- --------------------- --------------------
          2012    2011    2012    2011    2012   
2011



    Net loss ratio   103.3  %   85.7  %   97.7  %   95.8  %   100.4  %  
90.8  %

Acquisition
    expense ratio 7.1  %   8.1  %   19.7  %   22.8  %   13.9  %  
15.4  %

General and
administrative
    expense ratio 11.7  %   17.4  %   9.0  %   12.0  %   10.2  %  
14.7  %
---------- ---------- ---------- ---------- ---------- ---------
    Combined ratio   122.1  %   111.2  %   126.4  %   130.6  %   124.5  %  
120.9  %
---------- ---------- ---------- ---------- ---------- ---------


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.

    CONSOLIDATED FINANCIAL RATIOS





  As Reported


----------------------------------------------------------------
          For the year ended December 31,
----------------------------------------------------------------
          Insurance   Reinsurance   Total
--------------------- --------------------- --------------------
          2012    2011    2012    2011    2012   
2011



    Net loss ratio   89.6  %   77.9  %   62.8  %   91.3  %   75.5  %  
84.6  %

Acquisition
    expense ratio 7.9  %   7.3  %   21.5  %   22.3  %   15.1  %  
14.6  %

General and
administrative
    expense ratio 13.1  %   14.9  %   10.4  %   12.4  %   11.7  %  
13.7  %
---------- ---------- ---------- ---------- ---------- ---------
    Combined ratio   110.6  %   100.1  %   94.7  %   126.0  %   102.3  %  
112.9  %
---------- ---------- ---------- ---------- ---------- ---------




Effect of Prior Year Net
  Loss Reserve Development



Favorable /
  (Unfavorable)


----------------------------------------------------------------
          For the year ended December 31,
----------------------------------------------------------------
          Insurance   Reinsurance   Total
--------------------- --------------------- --------------------
          2012    2011    2012    2011    2012   
2011



    Net loss ratio   4.8  %   7.2  %   7.0  %   11.5  %   6.0  %  
9.3  %
---------- ---------- ---------- ---------- ---------- ---------




Net of Prior Year Net Loss
  Reserve Development



          For the year ended December 31,
----------------------------------------------------------------
          Insurance   Reinsurance   Total
--------------------- --------------------- --------------------
          2012    2011    2012    2011    2012   
2011



    Net loss ratio   94.4  %   85.1  %   69.8  %   102.8  %   81.5  %  
93.9  %

Acquisition
    expense ratio 7.9  %   7.3  %   21.5  %   22.3  %   15.1  %  
14.6  %

General and
administrative
    expense ratio 13.1  %   14.9  %   10.4  %   12.4  %   11.7  %  
13.7  %
---------- ---------- ---------- ---------- ---------- ---------
    Combined ratio   115.4  %   107.3  %   101.7  %   137.5  %   108.3  %  
122.2  %
---------- ---------- ---------- ---------- ---------- ---------


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, 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
  quarters ended December 31, 2012 and 2011:





Quarter Ended December Quarter Ended December
      31, 2012   31, 2011
------------------------------- -----------------------------
Gross Net Premiums Gross Net Premiums
Premiums   Written   Premiums   Written
      Written Written
------------------------------- -----------------------------
  Insurance

    Agriculture $  64,798    $  25,413    $  46,260    $  9,121

Casualty and    59,942       43,683       57,727       40,287
other
    specialty

Professional    39,242       30,044       45,110       38,402
    lines

    Property    13,134       7,512       18,669       8,668
--------------- --------------- -------------- --------------
Subtotal $  177,116    $  106,652    $  167,766    $  96,478
    Insurance
--------------- --------------- -------------- --------------


  Reinsurance

    Catastrophe $  24,112    $  22,073    $  15,250    $  14,753

    Property    31,065       31,065       15,087       15,087

    Casualty    24,961       24,960       59,231       59,234

Other    4,792       3,196       5,632       2,312
    specialty
--------------- --------------- -------------- --------------
Subtotal $  84,930    $  81,294    $  95,200    $  91,386
    Reinsurance
--------------- --------------- -------------- --------------


  Total $  262,046    $  187,946    $  262,966    $  187,864
--------------- --------------- -------------- --------------

  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
  years ended December 31, 2012 and 2011:





      Year Ended December 31, 2012   Year Ended December 31, 2011
------------------------------- -------------------------------
Gross Net Premiums Gross Net Premiums
Premiums   Written   Premiums   Written
      Written Written
------------------------------- -------------------------------
  Insurance

    Agriculture $  903,730    $  553,762    $  901,746    $  586,659

Casualty and    296,325       216,780       289,421       215,939
other
    specialty

Professional    169,815       137,885       169,319       137,962
    lines

    Property    60,060       33,930       109,312       64,930
--------------- --------------- --------------- ---------------
Subtotal $  1,429,930    $  942,357    $  1,469,798    $  1,005,490
    Insurance
--------------- --------------- --------------- ---------------


  Reinsurance

    Catastrophe $  378,387    $  351,140    $  346,023    $  329,081

    Property    349,579       349,586       266,562       266,562

    Casualty    283,313       282,073       277,495       276,697

Other    107,817       104,339       107,236       101,991
    specialty
--------------- --------------- --------------- ---------------
Subtotal $  1,119,096    $  1,087,138    $  997,316    $  974,331
    Reinsurance
--------------- --------------- --------------- ---------------


  Total $  2,549,026    $  2,029,495    $  2,467,114    $  1,979,821
--------------- --------------- --------------- ---------------

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 (loss) income, net (loss)
income per diluted common share, net (loss) income allocated to common
shareholders under the two-class method and annualized return on average common
equity to operating (loss) income, operating (loss) income per diluted common
  share, operating (loss) 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, 2012 and 2011:



      Quarter Ended   Year Ended

      December 31,   December 31,
--------------------------------- ---------------------------------
      2012      2011    2012    2011
---------------- ---------------- ---------------- ----------------
Net (loss)
  income $  (32,627)   $  (27,376)   $  162,516    $  (93,734)

(Less) add
after-tax
  items:

Net foreign
exchange
(gains)
    losses    (1,220)      208       (14,077)    
 (7,614)

Net realized
and
unrealized
    gains    (34,500)      (4,836)      (62,208)    
 (30,350)

Net
impairment
losses
recognized in
(losses)
    earnings    89       701       814     
 3,520
---------------- ---------------- ---------------- ----------------
Operating
(loss) income
before
preferred
  dividends $  (68,258)   $  (31,303)   $  87,045    $  (128,178)

Preferred
    dividends    (8,186)      (8,187)      (32,750)    
 (24,125)
---------------- ---------------- ---------------- ----------------
Operating
(loss) income
(attributable)
  allocated to

common and
participating
common
    shareholders $  (76,444)   $  (39,490)   $  54,295    $  (152,303)
---------------- ---------------- ---------------- ----------------


Operating
(loss) income
(attributable)
  allocated to

common
shareholders
under the
two-class
    method $  (76,650)   $  (39,711)   $  53,411    $  (153,264)
---------------- ---------------- ---------------- ----------------


Weighted
average diluted
  common    42,603,831       40,641,211       42,601,835     
 40,214,979
---------------- ---------------- ---------------- ----------------


Operating
(loss) income
per diluted
common share
  [b] $  (1.80)   $  (0.98)   $  1.25    $  (3.81)
---------------- ---------------- ---------------- ----------------


Average common
  equity [a] $  2,330,736    $  2,193,558    $  2,230,881    $  2,414,659



Operating
return on
average common
  equity   (3.3) %     (1.8) %     2.4  %     (6.3) %
---------------- ---------------- ---------------- ----------------
Annualized
operating
return on
average common
  equity   (13.1) %     (7.2) %     2.4  %     (6.3) %
---------------- ---------------- ---------------- ----------------


Net (loss)
  income $  (32,627)   $  (27,376)   $  162,516    $  (93,734)

Preferred
    dividends    (8,186)      (8,187)      (32,750)    
 (24,125)
---------------- ---------------- ---------------- ----------------
Net (loss)
income
(attributable)
available to
  common and

participating
common
    shareholders $  (40,813)   $  (35,563)   $  129,766    $  (117,859)
---------------- ---------------- ---------------- ----------------


Net (loss)
income
(attributable)
available to
  common

shareholders
under the
two-class
    method $  (41,019)   $  (35,784)   $  127,653    $  (118,820)
---------------- ---------------- ---------------- ----------------


Net (loss)
income per
diluted common
  share $  (0.96)   $  (0.88)   $  3.00    $  (2.95)
---------------- ---------------- ---------------- ----------------


(Loss) return
on average
common equity,
  Net

    (loss) income    (1.8) %      (1.6) %      5.8  %      (4.9) %
---------------- ---------------- ---------------- ----------------
Annualized
(loss) return
on average
common equity,
  Net

    (loss) income    (7.0) %      (6.5) %      5.8  %      (4.9) %
---------------- ---------------- ---------------- ----------------


[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 (2011: $430 million;
  2010: $200 million)

[b] Represents diluted losses per share calculated under the two-class method
  which was the lower of the treasury stock method and the two-class method.


Operating (loss) income and operating (loss) income per diluted common share are
internal performance measures used by Endurance in the management of its
operations.  Operating (loss) income (attributable) allocated to common
shareholders (excludes unvested restricted shares outstanding which are
considered participating) per diluted common share represents operating (loss)
income divided by weighted average dilutive common shares, which has been
calculated in accordance with the two-class method under U.S. GAAP.  Operating
(loss) 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 (loss) income and net
(loss) income per dilutive common share determined in accordance with the two-
class method under GAAP, Endurance believes that showing operating (loss) income
and operating (loss) 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
(loss) income and operating (loss) income per dilutive common share should not
be viewed as substitutes for GAAP net (loss) income and net (loss) 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 informatio


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