Net Income Increases 113% to $66.8 Million
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HAMILTON, Bermuda--(BUSINESS WIRE)--July 29, 2003--Endurance
Specialty Holdings Ltd. (NYSE:ENH), today reported second quarter 2003
net income of $66.8 million or $0.99 per diluted share versus net
income of $31.3 million or $0.52 per diluted share in the second
quarter of 2002. In the second quarter 2003, operating income, which
excludes after-tax realized investment gains and foreign exchange
gains, was $61.3 million or $0.91 per diluted share, 111% higher than
for the second quarter of 2002. For the six months ended June 30,
2003, net income was $118.0 million or $1.85 per diluted share.
Operating income for the first half of 2003 was $106.2 million or
$1.66 per diluted share, up 226% from the first half of 2002.
Annualized operating return on average equity during the second
quarter of 2003 was 16.3%.
Kenneth J. LeStrange, Chairman and Chief Executive Officer,
commented, "The strong results for the quarter provide further
evidence of the success of our strategy of writing both casualty and
property businesses, maintaining a conservative balance sheet, and
identifying and delivering value-enhancing acquisitions. In the second
quarter, we experienced increasingly strong results from our casualty
segments, which benefited from selective underwriting and a continued
strong pricing environment."
"We created Endurance to consistently deliver profitable growth
for our shareholders," continued LeStrange. "In May, Endurance
purchased the renewal rights to the property casualty line of business
from HartRe. After exhaustive due diligence, we acquired the rights to
profitable business without assuming any historical liability risk.
The transaction contributed $8.5 million in underwriting profits in
the second quarter."
Gross premiums written and acquired were $652.7 million in the
quarter ended June 30, 2003, an increase of 147% from the $264.3
million in gross premiums written and acquired for the second quarter
of 2002. For the first half of 2003, Endurance had gross premiums
written and acquired of $1.0 billion. Earned premiums in the quarter
were $292.5 million, an increase of 289% from the second quarter of
2002.
Gross premiums in the quarter included $396 million in gross
premiums acquired as part of the Company's acquisition of the majority
of the in-force assumed reinsurance business underwritten by HartRe
Company L.L.C. In the second quarter of 2002, Endurance acquired the
property catastrophe portfolio of LaSalle Re Limited, which added $88
million in gross premiums during the period.
The combined ratio was 84.2% in the second quarter of 2003
compared to 75.0% in the second quarter of 2002. The loss ratio was
56.6% in the quarter compared to 48.3% in the second quarter of 2002,
reflecting an increasing mix of casualty insurance, casualty treaty
reinsurance, and working layer property reinsurance business. The
business mix in the second quarter of 2002 included a relatively high
proportion of property catastrophe business as a result of the LaSalle
Re transaction.
The acquisition expense ratio increased from 16.1% in the second
quarter of 2002 to 19.7% in the second quarter of 2003 as a result of
an increase in the portion of the Company's business underwritten as
reinsurance. During the quarter, Endurance's reinsurance business grew
both organically and also from the reinsurance business acquired from
HartRe. The general and administrative expense ratio fell to 7.9% in
the second quarter of 2003, reflecting a significant increase in
premiums earned from business in prior periods.
At June 30, 2003, the Company's GAAP shareholder's equity was
$1.55 billion or $22.68 per diluted share. Total assets were $3.3
billion and cash and invested assets were $2.34 billion, up over $1.1
billion since the Company's formation in December 2001. Operating cash
flow was $226 million in the second quarter of 2003 and $387 million
in the first half of 2003, reflecting the continued strong cash flows
from Endurance's businesses.
Endurance will host a conference call on Wednesday, July 30, 2003
at 8:30 AM Eastern to discuss the financial results. A live broadcast
of the conference call will be available at the investor relations
section of Endurance's website, http://www.endurance.bm. Please refer
to our website under Investors.
A copy of the Company's financial supplement for the second
quarter of 2003 may be obtained on the Company's website at
http://www.endurance.bm or by contacting the Company directly.

About Endurance Specialty Holdings
Endurance Specialty Holdings Ltd. is a global provider of property
and casualty insurance and reinsurance. Through its operating
subsidiaries, Endurance currently writes property per risk treaty
reinsurance, property catastrophe reinsurance, casualty treaty
reinsurance, property individual risks, casualty individual risks, and
other specialty lines. Endurance's operating subsidiaries have been
assigned a group rating of A (Excellent) from A.M. Best and A- from
Standard & Poor's. Endurance's headquarters are located at Crown
House, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda. Its mailing
address is Endurance Group, Suite No. 784, No. 48 Par-la-Ville Road,
Hamilton HM 11, Bermuda. For more information about Endurance, please
visit http://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 "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, 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, changes in accounting policies, changes in general
economic conditions and other factors described in our Final
Prospectus (File No. 333-102026) filed with the U.S. Securities and
Exchange Commission on February 28, 2003 in connection with our
initial public offering.
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 per share amounts)

June 30, December 31,
2003 2002
---------- ------------
Assets
Cash and cash equivalents $290,983 $256,840
Fixed maturity investments available for sale,
at fair value 2,044,726 1,406,409
Premiums receivable, net 654,446 264,355
Deferred acquisition costs 198,855 81,676
Prepaid reinsurance premiums 3,517 7,501
Accrued investment income 16,020 11,209
Intangible assets 34,058 14,344
Other assets 15,267 12,260
----------- -----------
Total Assets $3,257,872 $2,054,594
=========== ===========

Liabilities
Reserve for losses and loss expenses $492,739 $200,840
Reserve for unearned premiums 929,969 403,305
Reinsurance balances payable 27,262 16,443
Bank debt 141,429 192,000
Net payable for investments purchased 95,210 6,470
Other liabilities 23,461 18,036
----------- -----------
Total Liabilities 1,710,070 837,094
----------- -----------

Shareholders' Equity
Common shares
Ordinary - 63,661,185 issued and outstanding
(2002 - 54,061,185) 63,661 54,061
Class A - 938,815 issued and outstanding (2002
- 938,815) 939 939
Additional paid-in capital 1,205,875 1,009,415
Accumulated other comprehensive income 62,136 50,707
Retained earnings 215,191 102,378
----------- -----------
Total shareholders' equity 1,547,802 1,217,500
----------- -----------

Total liabilities and shareholders' equity $3,257,872 $2,054,594
=========== ===========

Book Value per Common Share
Diluted common shares outstanding 68,253 56,017
Diluted book value per common share $22.68 $21.73
=========== ===========





ENDURANCE SPECIALTY HOLDINGS LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

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

Quarter Ended Six Months Ended
------------------- ---------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
--------- --------- ----------- ---------
Revenues
Gross premiums written and
acquired $652,656 $264,266 $1,014,771 $395,187
========= ========= =========== =========

Net premiums written and
acquired $652,349 $242,773 $1,012,403 $373,694
Change in unearned premiums (359,883) (167,643) (530,284) (280,932)
--------- --------- ----------- ---------

Net premiums earned 292,466 75,130 482,119 92,762
Net investment income 16,666 10,249 31,022 15,867
Net foreign exchange gains 2,088 1,403 4,594 1,118
Net realized gains on sales
of investments 3,513 892 7,917 892
--------- --------- ----------- ---------
Total revenues 314,733 87,674 525,652 110,639
--------- --------- ----------- ---------

Expenses
Losses and loss expenses 165,531 36,293 269,676 45,864
Acquisition expenses 57,481 12,069 92,041 14,777
General and administrative
expenses 23,077 7,992 42,543 15,421
Amortization of intangibles 945 - 1,350 -
Interest expense 1,173 - 2,380 -
--------- --------- ----------- ---------
Total expenses 248,207 56,354 407,990 76,062
--------- --------- ----------- ---------

Income before income taxes 66,526 31,320 117,662 34,577
Income tax benefit 265 - 330 -
--------- --------- ----------- ---------
Net income $66,791 $31,320 $117,992 $34,577
========= ========= =========== =========

Per share data
Weighted average number of
common and common equivalent
shares outstanding:
Basic 64,733 60,000 61,614 60,000
Diluted 67,658 60,000 63,771 60,000
Basic earnings per share $1.03 $0.52 $1.92 $0.58
========= ========= =========== =========
Diluted earnings per share $0.99 $0.52 $1.85 $0.58
========= ========= =========== =========






ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED FINANCIAL RATIOS

Quarter Ended Six Months Ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------- -------- -------- --------
GAAP Ratios
Losses and loss expenses ratio 56.6% 48.3% 55.9% 49.4%
Acquisition expense ratio 19.7% 16.1% 19.1% 15.9%
General and administrative
expense ratio 7.9% 10.6% 8.8% 16.6%
------ ------- ------ ------
Combined ratio 84.2% 75.0% 83.8% 81.9%
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