Print page
Email page
Download PDF
« Previous Release | Next Release »
PEMBROKE, Bermuda, Feb 17, 2010 (GlobeNewswire via COMTEX News Network) -- Endurance Specialty Holdings Ltd. (NYSE:ENH) today reported net income of $154.8 million and $2.56 per diluted common share for the fourth quarter of 2009 versus net income of $16.9 million and $0.22 per diluted common share for the fourth quarter of 2008.
For the year ended December 31, 2009, net income was a record $536.1 million and $8.69 per diluted common share versus net income of $98.6 million and $1.31 per diluted common share for the year ended December 31, 2008.
Operating highlights for the quarter ended December 31, 2009 were as follows:
-- Net premiums written of $146.4 million, a decrease of 18.7% over the
same period in 2008;
-- Combined ratio of 74.8%, which included 10.5 percentage points of
favorable prior year loss reserve development;
-- Net investment income of $59.3 million, an increase of $63.9 million
over the same period in 2008;
-- Operating income, which excludes after-tax realized investment gains and
losses and foreign exchange gains and losses, of $153.7 million and
$2.54 per diluted common share; and
-- Operating return on average common equity for the quarter of 5.9%, or
23.5% on an annualized basis.
Operating highlights for the year ended December 31, 2009 were as follows:
-- Net premiums written of $1,606.1 million, a decrease of 10.0% over 2008;
-- Combined ratio of 84.0%, which included 9.2 percentage points of
favorable prior year loss reserve development;
-- Net investment income of $284.2 million, an increase of $154.0 million
over 2008;
-- Operating income, which excludes after-tax realized investment gains and
losses and foreign exchange gains and losses, of $520.7 million and
$8.43 per diluted common share;
-- Operating return on average common equity for the year of 22.0%; and
-- Book value of $44.61 per diluted common share, up 34.9% from December
31, 2008.
Kenneth J. LeStrange, Chairman, President and Chief Executive Officer, commented, "Our excellent results in the fourth quarter capped a record year for Endurance. Solid underwriting results, strong performance from our investment portfolio and disciplined capital management contributed to outstanding results and growth in book value per share in 2009. We begin 2010 with an exceptionally strong balance sheet and excellent strategic position that should enable Endurance to continue to deliver on our commitments to our shareholders, clients and employees."
Insurance Segment
Operating highlights for Endurance's Insurance segment for the quarter ended December 31, 2009 were as follows:
-- Net premiums written of $88.4 million, a decrease of 37.5% from the
fourth quarter of 2008;
-- Combined ratio of 87.2%, an improvement of 6.4 percentage points from
the fourth quarter of 2008; and
-- Favorable prior year loss reserve development of 11.2 percentage points
during the current period, compared to 10.3 percentage points of
favorable prior year loss reserve development in the fourth quarter of
2008.
Operating highlights for Endurance's Insurance segment for the year ended December 31, 2009 were as follows:
-- Net premiums written of $740.3 million, a decrease of 24.5% from the
prior year;
-- Combined ratio of 92.0%, an improvement of 4.6 percentage points from
2008; and
-- Favorable prior year loss reserve development of 11.2 percentage points
during the current period, compared to 7.7 percentage points of
favorable prior year loss reserve development in 2008.
Net premiums written in the Insurance segment decreased for the current periods compared to the same periods in 2008, largely driven by the strategic decisions to exit the California workers' compensation and U.K. property insurance lines in early 2009. The workers' compensation and U.K. property lines contributed $51.6 million in the fourth quarter and $254.5 million in the full year of 2008 compared to nil in the fourth quarter of 2009 and $9.2 million in the full year of 2009. Outside of these discontinued lines of business, 2009 net premiums written were relatively flat for the fourth quarter and modestly higher for the full year compared to 2008. The increase in full year net premiums written, excluding the discontinued lines, was predominantly driven by growth in professional lines, where our underwriters were able to capitalize on opportunities created by disruption at several of our larger peer companies and from the launch of a small risk environmental insurance program in late 2008. Partially offsetting this growth was a decline in agriculture premiums resulting from lower commodity prices.
The improvement in the Insurance segment combined ratio in the fourth quarter of 2009 compared to 2008 was driven by lower loss and acquisition expense ratios, partially offset by a higher general and administrative expense ratio. The 2009 fourth quarter net loss ratio improved by 8.6 percentage points primarily due to the absence of midwestern flood and commodity price losses in the agriculture line that occurred in 2008. The net loss ratio was also positively impacted by increased favorable prior year loss reserve development and lower earned premiums in our recently exited workers' compensation line of business that had higher net loss ratios. The 2009 fourth quarter general and administrative expense ratio increased 4.2 percentage points due to reduced earned premiums, lower third party commissions and expense reimbursement offsets in the agriculture line of business and higher incentive compensation expenses reflecting significantly improved company wide profitability compared to 2008.
For the year ended December 31, 2009, the Insurance segment combined ratio improved compared to the same period in 2008 due to increased levels of favorable prior year loss reserve development partially offset by higher general and administrative expenses. Favorable prior year loss reserve development emerged in both the fourth quarter and for the year ended 2009 across most lines of business as claims did not develop as originally estimated.
Reinsurance Segment
Operating highlights for Endurance's Reinsurance segment for the quarter ended December 31, 2009 were as follows:
-- Net premiums written of $58.0 million, an increase of 50.2% from the
fourth quarter of 2008;
-- Combined ratio of 63.1%, an improvement of 8.1 percentage points from
the fourth quarter of 2008; and
-- Favorable prior year loss reserve development of 9.7 percentage points
during the current period, compared to 8.5 percentage points of
favorable prior year loss reserve development in the fourth quarter of
2008.
Operating highlights for Endurance's Reinsurance segment for the year ended December 31, 2009 were as follows:
-- Net premiums written of $865.7 million, an increase of 7.7% from 2008;
-- Combined ratio of 75.9%, an improvement of 14.3 percentage points from
the prior year; and
-- Favorable prior year loss reserve development of 7.3 percentage points
during the current period, compared to 10.1 percentage points of
favorable prior year loss reserve development in 2008.
The increase in net premiums written in the Reinsurance segment during the fourth quarter of 2009 resulted primarily from growth in the casualty line of business and an absence of the downward premium adjustments that occurred in the fourth quarter of 2008. Partially offsetting this growth were reduced favorable premium adjustments in other lines year over year and the non-renewal of contracts that no longer met the Company's pricing and underwriting requirements. For the full year 2009, net premiums written increased 7.7% from growth in new business written primarily in the casualty and property lines, which was partially offset by declines in net premiums written in the aerospace and marine as well as in surety and other specialty lines as a result of the non-renewal of contracts that no longer met the Company's pricing and underwriting requirements.
The combined ratios in the Reinsurance segment for the quarter and year ended December 31, 2009 improved from the same periods a year ago due to the absence of significant catastrophe events and favorable claims trends. Partially offsetting the decrease in the net loss ratio for the year ended December 31, 2009 was less favorable prior year loss reserve development compared to the same period in 2008 and higher general and administrative expenses, driven predominantly by higher incentive compensation expenses reflecting significantly improved profitability from a year ago.
Investments
Endurance's net investment income increased $63.9 million for the quarter ended December 31, 2009 and $154.0 million for the year ended December 31, 2009 as compared to the same periods in 2008. During the fourth quarter and year ended December 31, 2009, Endurance's net investment income included gains of $16.8 million and $98.1 million on its alternative investments and high yield loan funds included in other investments, as compared to losses of $62.2 million and $111.6 million in the fourth quarter and year ended 2008. Investment income generated from Endurance's fixed maturity investments declined by $12.6 million and $49.9 million for the three months and year ended December 31, 2009 compared to the same periods in 2008. The decrease in investment income from fixed maturity investments resulted from lower reinvestment rates during 2009, driven by lower market yields and a shorter portfolio duration, as the Company actively allocated a larger portion of its investments to cash, cash equivalents and short duration securities during a portion of 2009. For the same reasons, the ending book yield on Endurance's fixed maturity investments at December 31, 2009 was 3.29%, down from 4.45% at December 31, 2008.
At December 31, 2009, Endurance's fixed maturity portfolio, which comprises 83.5% of Endurance's investments, had an average credit quality of AA+. Endurance's fixed maturity portfolio was in an unrealized gain position of $38.9 million at December 31, 2009, an improvement of $173.0 million from December 31, 2008 (an improvement of $206.2 million from December 31, 2008 after adjusting for a change in accounting policy related to the recognition and presentation of other-than-temporary impairments which Endurance adopted in the second quarter of 2009). Endurance recorded net realized gains (losses) on investment sales, including impairment losses recognized in earnings, of $2.2 million and ($13.9) million during the fourth quarter and full year of 2009 compared to net realized investment losses of $11.8 million and $57.4 million during the same periods in 2008.
Endurance ended the fourth quarter of 2009 with cash and invested assets of $6.0 billion, which represents an 11.5% increase from December 31, 2008. Net operating cash flow was $457.3 million for the year ended December 31, 2009 versus $479.4 million for the year ended December 31, 2008.
Capitalization and Shareholders' Equity
At December 31, 2009, Endurance's shareholders' equity was $2.8 billion or $44.61 per diluted common share versus $2.2 billion or $33.06 per diluted common share at December 31, 2008. During the three months ended December 31, 2009, Endurance repurchased 1.7 million of its common shares and share equivalents for an aggregate repurchase price of $63.8 million. For the full year of 2009, Endurance repurchased 3.5 million common shares and share equivalents for an aggregate repurchase price of $116.2 million and an average price of $32.87 which is 74% of our book value per share at December 31, 2009.
Earnings Call
Endurance will host a conference call on February 18, 2010 at 8:30 a.m. Eastern time to discuss its financial results. The conference call can be accessed via telephone by dialing (866) 416-5346 or (913) 312-1411 (international) and entering pass code: 8000245. 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 March 4, 2010 by dialing (888) 203-1112 or (719) 457-0820 (international) and entering the pass code: 8000245.
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 2009 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 dilutive 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 and professional lines of insurance and property, catastrophe, casualty, agriculture, aerospace and marine, 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 & Poor's. 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, developments in the world's financial and capital markets that could adversely affect the performance of Endurance's investment portfolio or access to capital, changes in the composition of Endurance's investment portfolio, competition, possible terrorism or the outbreak of war, the frequency or severity of unpredictable catastrophic events, changes in demand for insurance or reinsurance, rating agency actions, uncertainties in our reserving process, a change in our tax status, acceptance of our products, the availability of reinsurance or retrocessional coverage, retention of key personnel, political conditions, the impact of current regulatory investigations, changes in accounting policies, changes in general economic conditions and other factors described in our Annual Report on Form 10-K for the year ended December 31, 2008 as amended on May 8, 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 December
31, 2009 31, 2008
---------- ----------
Assets
Cash and cash equivalents $528,944 $1,061,994
Fixed maturity investments,
available for sale, at fair
value 4,548,618 3,875,137
Short term investments,
available for sale, at fair
value 534,678 111,333
Preferred equity securities,
available for sale, at fair
value 11,023 25,360
Other investments 351,352 284,263
Premiums receivable, net 565,348 609,387
Deferred acquisition costs 146,979 160,870
Securities lending collateral 66,913 112,940
Prepaid reinsurance premiums 120,941 149,591
Losses recoverable 467,664 557,834
Accrued investment income 30,367 30,872
Goodwill and intangible assets 191,450 200,791
Deferred tax assets 17,252 20,691
Receivable on pending investment
sales 632 3,104
Other assets 84,533 68,303
---------- ----------
Total Assets $7,666,694 $7,272,470
========== ==========
Liabilities
Reserve for losses and loss
expenses $3,157,026 $3,235,456
Reserve for unearned premiums 832,561 885,488
Net deposit liabilities 42,638 58,622
Securities lending payable 66,968 115,603
Reinsurance balances payable 220,435 233,561
Debt 447,664 447,468
Payable on pending investment
purchases 25 9
Other liabilities 112,094 88,980
---------- ----------
Total Liabilities 4,879,411 5,065,187
========== ==========
Shareholders' Equity
Preferred shares
Series A, non-cumulative --
8,000,000 issued and
outstanding (2008 --
8,000,000) 8,000 8,000
Common shares
55,115,702 issued and
outstanding (2008 --
57,203,454) 55,116 57,203
Additional paid-in capital 929,577 1,029,363
Accumulated other comprehensive
income (loss) 52,148 (132,665)
Retained earnings 1,742,442 1,245,382
---------- ----------
Total Shareholders' Equity 2,787,283 2,207,283
---------- ----------
Total Liabilities and
Shareholders' Equity $7,666,694 $7,272,470
========== ==========
Book Value per Common Share
Dilutive common shares
outstanding 57,996,331 60,718,312
Diluted book value per common
share[a] $44.61 $33.06
========== ==========
Note: All financial information contained herein is
unaudited, except the balance sheet data for the year
ended December 31, 2008, 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 December December December
31, 2009 31, 2008 31, 2009 31, 2008
--------- -------- ---------- ----------
Revenues
Gross premiums written $209,367 $235,622 $2,021,450 $2,246,420
========= ======== ========== ==========
Net premiums written $146,442 $180,095 $1,606,050 $1,784,290
Change in unearned premiums 247,501 251,633 27,142 (17,805)
--------- -------- ---------- ----------
Net premiums earned 393,943 431,728 1,633,192 1,766,485
Other underwriting (loss) income (284) (2,454) 3,914 (3,973)
Net investment income (loss) 59,257 (4,594) 284,200 130,176
Net realized gains on investment
sales 3,166 29,286 6,303 24,769
Total other-than-temporary
impairment losses (561) (41,086) (50,993) (82,135)
Portion of loss recognized in
accumulated other comprehensive
income (loss) (423) -- 30,742 --
--------- -------- ---------- ----------
Net impairment losses recognized
in earnings(1) (984) (41,086) (20,251) (82,135)
--------- -------- ---------- ----------
Total revenues 455,098 412,880 1,907,358 1,835,322
--------- -------- ---------- ----------
Expenses
Losses and loss expenses 164,005 225,103 866,640 1,135,431
Acquisition expenses 72,821 79,306 267,971 299,913
General and administrative
expenses 57,932 56,059 237,154 216,365
Amortization of intangibles 2,699 2,762 10,463 10,675
Net foreign exchange losses
(gains) 1,008 40,741 (29,740) 53,704
Interest expense 7,541 7,568 30,174 30,171
--------- -------- ---------- ----------
Total expenses 306,006 411,539 1,382,662 1,746,259
--------- -------- ---------- ----------
Income before income taxes 149,092 1,341 524,696 89,063
Income tax benefit 5,733 15,523 11,408 9,561
--------- -------- ---------- ----------
Net income 154,825 16,864 536,104 98,624
Preferred dividends (3,875) (3,875) (15,500) (15,500)
--------- -------- ---------- ----------
Net income available to common
and participating common
shareholders $150,950 $12,989 $520,604 $83,124
========= ======== ========== ==========
Per share data
Basic earnings per common
share(2) $2.69 $0.23 $9.14 $1.41
========= ======== ========== ==========
Diluted earnings per common
share(2) $2.56 $0.22 $8.69 $1.31
========= ======== ========== ==========
(1) Effective April 1, 2009, the Company adopted new accounting guidance
related to the recognition and presentation of other-than-temporary
impairments, which required the Company to identify whether an investment was
in an unrealized loss position due to credit or non-credit related factors.
Only credit related impairments are recognized in earnings.
(2) Effective January 1, 2009, the Company adopted new accounting guidance
related to the calculation of earnings per share which requires basic and
diluted earnings per share to be calculated under the two-class method if
there are participating securities. Participating securities include unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents. The Company's unvested restricted shares issued under
its stock compensation plans receive nonforfeitable cash dividends and thus
are participating securities as defined by the guidance. Amounts for the
periods ended December 31, 2008 have been restated to reflect this change.
For more information on the guidance and its effect on the Company's
financial statements, please refer to our most recently filed Quarterly
Report on Form 10-Q.
ENDURANCE SPECIALTY HOLDINGS LTD.
RESULTS BY SEGMENT
(in thousands of United States dollars)
For the quarter ended December
31, 2009
--------------------------------
Reported
Insurance Reinsurance 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 quarter ended December
31, 2008
--------------------------------
Reported
Insurance Reinsurance Totals
--------- ----------- --------
Revenues
Gross premiums written $196,323 $39,299 $235,622
Ceded premiums written (54,857) (670) (55,527)
--------- ----------- --------
Net premiums written 141,466 38,629 180,095
--------- ----------- --------
Net premiums earned 236,726 195,002 431,728
Other underwriting loss -- (2,454) (2,454)
--------- ----------- --------
Total underwriting revenues 236,726 192,548 429,274
--------- ----------- --------
Expenses
Net losses and loss
expenses 168,137 56,966 225,103
Acquisition expenses 27,601 51,705 79,306
General and administrative
expenses 25,904 30,155 56,059
--------- ----------- --------
221,642 138,826 360,468
--------- ----------- --------
Underwriting income $15,084 $53,722 $68,806
========= =========== ========
Net loss ratio 71.0% 29.2% 52.1%
Acquisition expense ratio 11.7% 26.5% 18.4%
General and administrative
expense ratio 10.9% 15.5% 13.0%
--------- ----------- --------
Combined ratio 93.6% 71.2% 83.5%
========= =========== ========
ENDURANCE SPECIALTY HOLDINGS LTD.
RESULTS BY SEGMENT
(in thousands of United States dollars)
For the year ended December 31,
2009
-----------------------------------
Reported
Insurance Reinsurance 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.
RESULTS BY SEGMENT
(in thousands of United States dollars)
For the year ended December 31,
2008
-----------------------------------
Reported
Insurance Reinsurance Totals
---------- ----------- ----------
Revenues
Gross premiums written $1,426,366 $820,054 $2,246,420
Ceded premiums written (445,768) (16,362) (462,130)
---------- ----------- ----------
Net premiums written 980,598 803,692 1,784,290
---------- ----------- ----------
Net premiums earned 920,389 846,096 1,766,485
Other underwriting loss -- (3,973) (3,973)
---------- ----------- ----------
Total underwriting revenues 920,389 842,123 1,762,512
---------- ----------- ----------
Expenses
Net losses and loss
expenses 681,735 453,696 1,135,431
Acquisition expenses 103,783 196,130 299,913
General and administrative
expenses 103,211 113,154 216,365
---------- ----------- ----------
888,729 762,980 1,651,709
---------- ----------- ----------
Underwriting income $31,660 $79,143 $110,803
========== =========== ==========
Net loss ratio 74.1% 53.6% 64.3%
Acquisition expense ratio 11.3% 23.2% 17.0%
General and administrative
expense ratio 11.2% 13.4% 12.2%
---------- ----------- ----------
Combined ratio 96.6% 90.2% 93.5%
========== =========== ==========
ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED FINANCIAL RATIOS
As Reported
For the quarter ended December 31
---------------------------------------------------
Insurance Reinsurance Total
----------------- ------------------ ------------
2009 2008 2009 2008 2009 2008
Net loss ratio 62.4% 71.0% 22.0% 29.2% 41.6% 52.1%
Acquisition expense ratio 9.7% 11.7% 26.7% 26.5% 18.5% 18.4%
General and administrative
expense ratio 15.1% 10.9% 14.4% 15.5% 14.7% 13.0%
--------- ------ ----------- ----- ----- -----
Combined ratio 87.2% 93.6% 63.1% 71.2% 74.8% 83.5%
========= ====== =========== ===== ===== =====
Effect of Prior Year Net Loss Reserve
Development
Favorable / (Unfavorable)
For the quarter ended December 31
---------------------------------------------------
Insurance Reinsurance Total
----------------- ------------------ ------------
2009 2008 2009 2008 2009 2008
Net loss ratio 11.2% 10.3% 9.7% 8.5% 10.5% 9.5%
========= ====== =========== ===== ===== =====
Net of Prior Year Net Loss Reserve
Development
For the quarter ended December 31
---------------------------------------------------
Insurance Reinsurance Total
----------------- ------------------ ------------
2009 2008 2009 2008 2009 2008
Net loss ratio 73.6% 81.3% 31.7% 37.7% 52.1% 61.6%
Acquisition expense ratio 9.7% 11.7% 26.7% 26.5% 18.5% 18.4%
General and administrative
expense ratio 15.1% 10.9% 14.4% 15.5% 14.7% 13.0%
--------- ------ ----------- ----- ----- -----
Combined ratio 98.4% 103.9% 72.8% 79.7% 85.3% 93.0%
========= ====== =========== ===== ===== =====
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
----------------- ------------------- -------------
2009 2008 2009 2008 2009 2008
Net loss ratio 67.1% 74.1% 38.8% 53.6% 53.1% 64.3%
Acquisition expense ratio 10.3% 11.3% 22.6% 23.2% 16.4% 17.0%
General and administrative
expense ratio 14.6% 11.2% 14.5% 13.4% 14.5% 12.2%
--------- ------ ----------- ------ ----- ------
Combined ratio 92.0% 96.6% 75.9% 90.2% 84.0% 93.5%
========= ====== =========== ====== ===== ======
Effect of Prior Year Net Loss Reserve
Development
Favorable / (Unfavorable)
For the year ended December 31
-----------------------------------------------------
Insurance Reinsurance Total
----------------- ------------------- -------------
2009 2008 2009 2008 2009 2008
Net loss ratio 11.2% 7.7% 7.3% 10.1% 9.2% 8.9%
========= ====== =========== ====== ===== ======
Net of Prior Year Net Loss Reserve
Development
For the year ended December 31
-----------------------------------------------------
Insurance Reinsurance Total
----------------- ------------------- -------------
2009 2008 2009 2008 2009 2008
Net loss ratio 78.3% 81.8% 46.1% 63.7% 62.3% 73.2%
Acquisition expense ratio 10.3% 11.3% 22.6% 23.2% 16.4% 17.0%
General and administrative
expense ratio 14.6% 11.2% 14.5% 13.4% 14.5% 12.2%
--------- ------ ----------- ------ ----- ------
Combined ratio 103.2% 104.3% 83.2% 100.3% 93.2% 102.4%
========= ====== =========== ====== ===== ======
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, 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, 2009 and 2008:
Quarter Ended Quarter Ended
December 31, 2009 December 31, 2008
-------------------- --------------------
Gross Net Gross Net
Premiums Premiums Premiums Premiums
Written Written Written Written
--------- --------- --------- ---------
Insurance
Agriculture $ 33,430 $ 697 $ 30,126 $ 4,947
Professional
lines 49,915 44,456 49,640 43,169
Casualty 31,680 19,875 27,810 18,403
Property 26,479 14,932 40,291 25,467
Healthcare
liability 9,650 9,129 10,704 10,704
Workers'
compensation (683) (657) 37,752 38,776
--------- --------- --------- ---------
Subtotal
Insurance $ 150,471 $ 88,432 $ 196,323 $ 141,466
--------- --------- --------- ---------
Reinsurance
Catastrophe $ 13,939 $ 12,753 $ 13,986 $ 13,986
Casualty 34,543 34,537 2,445 2,251
Property 9,710 9,710 10,352 10,351
Aerospace and
Marine 1,716 1,721 9,920 9,608
Surety and other
specialty (1,012) (711) 2,596 2,433
--------- --------- --------- ---------
Subtotal
Reinsurance $ 58,896 $ 58,010 $ 39,299 $ 38,629
--------- --------- --------- ---------
Total $ 209,367 $ 146,442 $ 235,622 $ 180,095
========= ========= ========= =========
ENDURANCE SPECIALTY HOLDINGS LTD.
GROSS AND NET PREMIUMS WRITTEN BY SEGMENT
(in thousands of United States dollars)
Year Ended Year Ended
December 31, 2009 December 31, 2008
------------------------- -------------------------
Gross Net Gross Net
Premiums Premiums Premiums Premiums
Written Written Written Written
------------ ----------- ------------ -----------
Insurance
Agriculture $ 572,096 $ 324,480 $ 690,318 $ 380,699
Professional lines 193,799 167,091 142,253 119,427
Casualty 152,580 91,071 120,867 86,610
Property 124,621 68,011 159,408 98,012
Healthcare liability 82,955 78,284 80,692 80,002
Workers' compensation 26,099 11,373 232,828 215,848
------------ ----------- ------------ -----------
Subtotal Insurance $ 1,152,150 $ 740,310 $ 1,426,366 $ 980,598
------------ ----------- ------------ -----------
Reinsurance
Catastrophe $ 303,404 $ 302,218 $ 315,262 $ 302,070
Casualty 255,142 254,897 161,583 162,617
Property 215,085 215,085 192,652 192,625
Aerospace and Marine 44,696 42,563 80,521 76,991
Surety and other
Specialty 50,973 50,977 70,036 69,389
------------ ----------- ------------ -----------
Subtotal Reinsurance $ 869,300 $ 865,740 $ 820,054 $ 803,692
------------ ----------- ------------ -----------
Total $ 2,021,450 $ 1,606,050 $ 2,246,420 $ 1,784,290
============ =========== ============ ===========
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 operating return on average common equity (all non-GAAP measures) for the quarters and years ended December 31, 2009 and 2008:
Quarter Ended Year Ended
December 31, December 31,
------------------------------------------------- ------------------------------------------------
2009 2008 2009 2008
------------------------ ----------------------- ----------------------- -----------------------
Net income $ 154,825 $ 16,864 $ 536,104 $ 98,624
(Less) Add
after-tax items:
Net foreign
exchange
losses (gains) 1,116 32,129 (29,372) 44,925
Net realized
(gains) losses
on investment
sales (3,262) (30,051) (6,281) (27,645)
Net impairment
losses
recognized in
earnings 984 41,086 20,251 82,135
------------------------ ----------------------- ----------------------- -----------------------
Operating income
before preferred
dividends $ 153,663 $ 60,028 $ 520,702 $ 198,039
Preferred
dividends (3,875) (3,875) (15,500) (15,500)
------------------------ ----------------------- ----------------------- -----------------------
Operating income
available to
common and
participating
common
shareholders $ 149,788 $ 56,153 $ 505,202 $ 182,539
======================== ======================= ======================= =======================
Operating income
allocated to
common
shareholders
under the
two-class method $ 147,397 $ 55,129 $ 496,366 $ 179,055
======================== ======================= ======================= =======================
Weighted average
dilutive common
shares 58,052,021 59,182,946 58,874,114 62,135,649
======================== ======================= ======================= =======================
Operating income
per diluted
common share $ 2.54 $ 0.93 $ 8.43 $ 2.88
======================== ======================= ======================= =======================
Average common
equity [a] $ 2,547,817 $ 2,038,000 $ 2,297,283 $ 2,159,771
Operating return
on average
common equity 5.9% 2.8% 22.0% 8.5%
------------------------ ----------------------- ----------------------- -----------------------
Annualized
operating return
on average
common equity 23.5% 11.0% 22.0% 8.5%
======================== ======================= ======================= =======================
Net income $ 154,825 $ 16,864 $ 536,104 $ 98,624
Preferred
dividends (3,875) (3,875) (15,500) (15,500)
------------------------ ----------------------- ----------------------- -----------------------
Net income
available to
common and
participating
common
shareholders $ 150,950 $ 12,989 $ 520,604 $ 83,124
======================== ======================= ======================= =======================
Net income
allocated to
common
shareholders
under the
two-class method $ 148,541 $ 12,744 $ 511,500 $ 81,493
======================== ======================= ======================= =======================
Net income per
diluted common
share $ 2.56 $ 0.22 $ 8.69 $ 1.31
======================== ======================= ======================= =======================
Return on average
common equity,
Net income 5.9% 0.6% 22.7% 3.8%
======================== ======================= ======================= =======================
Annualized return
on average
common equity,
Net income 23.7% 2.6% 22.7% 3.8%
======================== ======================= ======================= =======================
[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.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Endurance Services Limited
CONTACT: Endurance Specialty Holdings Ltd. Investor Relations (441) 278-0988 investorrelations@endurance.bm
(C) Copyright 2010 GlobeNewswire, Inc. All rights reserved.
News Provided by COMTEX