losses from these storms totaled $157.7 million. Losses net of reinstatement premiums, other loss sensitive accruals, loss recoveries and taxes were $122.8 million. The losses were incurred in the Company's property treaty, property catastrophe, property individual risk and aerospace and other specialty lines segments. The Company's loss estimates for these hurricanes were derived primarily from a review of in-force contracts and preliminary indications received from clients. However, because of the short amount of time elapsed since the hurricanes, the unusually close proximity of each of the four storm tracks, and the relatively short period of time between storms, loss estimation at this early stage is difficult. As a result, actual losses from these hurricanes may vary materially from estimated losses, and such differences will be recorded in the period in which they become known.

Premiums.    The increase in gross premiums written is primarily due to the continued expansion of underwriting activities at Endurance U.S. and Endurance U.K. The increase at Endurance U.S. was largely in the treaty casualty segment where premiums grew by $42 million in the three months ended September 30, 2004 compared to the equivalent period in 2003. Premiums in the marine line of the aerospace and other specialty lines segment grew $16 million at Endurance U.K. in the three months ended September 30, 2004 compared to the equivalent period in 2003. The increase in gross premiums written was offset by reduced premiums written in the Company's property catastrophe and property treaty segments due to the Company not renewing business where terms and conditions did not meet the Company's requirements.

Premiums ceded for the three months ended September 30, 2004 were $10.2 million compared with $0.7 million for the three months ended September 30, 2004, an increase of $9.5 million. During the third quarter of 2004 the Company purchased additional reinsurance to reduce its exposure to certain U.S. wind risks, predominantly in Florida. The reinsurance purchased covered the Company's exposures within the property per risk treaty reinsurance, treaty catastrophe reinsurance, property individual risk and aerospace and other specialty lines segments.

Net premiums earned increased in 2004 as a result of the earning of net premiums that were written in 2003 and 2002.

Net Investment Income.    Net investment income was derived primarily from interest earned on fixed maturity investments partially offset by investment management fees. The increase in net investment income was principally due to an increase in invested assets of approximately 51%. The increase in invested assets resulted from positive net operating cash flows throughout the last twelve months. Net investment income included $1.1 million of equity method earnings from the Company's investments in other ventures. Investment expenses for the three months ended September 30, 2004 were $0.9 million compared to investment expenses of $0.4 million for the same period in 2003.

The annualized period book yield (which is the average yield of the invested portfolio after adjusting for accretion and amortization from the purchase price) and total return of the investment portfolio (which includes realized and unrealized gains and losses) for the three months ended September 30, 2004 were 3.76% and 9.76%, respectively. For the three months ended September 30, 2003, the annualized period book yield and total return were 3.83% and 0.30%, respectively. The yield on the benchmark five year U.S. Treasury bond has fluctuated in a range of 59 basis points from a high of 3.84% to a low of 3.25% during the quarter. The Company has taken this opportunity to accumulate cash and reduce exposure to the mortgage market. Mortgages have been primarily responsible for the shortening of the portfolios duration to 2.91 years from 3.15 years at June 30, 2004 and 3.06 years at September 30, 2003. Overall, the annualized period book yield of the portfolio has remained consistent due to investments made during the last twelve months and the repositioning of some of the Company's portfolio from government securities into higher yielding fixed income investments.

Losses and Loss Expenses.    The reported loss ratio is characterized by various factors and is significantly impacted by the occurrence or absence of catastrophic events and subsequent loss emergence related to such events. As discussed above, the Company's loss ratio was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the three months ended September 30, 2004. The Company's estimated combined gross losses from these storms totaled $157.7 million. Losses net of reinstatement premiums, other loss sensitive accruals, loss recoveries and taxes were $122.8

23

million. The Company's loss estimates for these hurricanes were derived primarily from a review of in-force contracts and preliminary indications received from clients. However, because of the short amount of time elapsed since the hurricanes, the unusually close proximity of each of the four storm tracks, and the relatively short period of time between storms, loss estimation at this early stage is difficult. As a result, actual losses from these hurricanes may vary materially from estimated losses, and such differences will be recorded in the period in which they become known.

In the three months ended September 30, 2004, loss emergence for the 2002 and 2003 accident years was less than expected, and reserves held by the Company proved to be moderately redundant. During the period, the Company's previously estimated ultimate losses for those accident years were reduced by $50.9 million. This reduction in the Company's estimated losses for prior years was experienced most significantly in the property per risk treaty reinsurance and property catastrophe reinsurance segments.

The Company participates in lines of business where claims may not be reported for many years. Accordingly, management does not believe that reported claims are the only valid means for estimating ultimate obligations. Ultimate losses and loss expenses may differ materially from the amounts recorded in the Company's consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments, if any, are recorded in earnings in the period in which they are determined. The overall loss reserves were established by the Company's actuaries and reflect management's best estimate of ultimate losses. See "— Reserve for Losses and Loss Expenses" for further discussion.

Acquisition Expenses.    The acquisition cost ratio for the three months ended September 30, 2004 is consistent with the same period to September 30, 2003.

General and Administrative Expenses.    Growth in general and administrative expenses principally reflected the establishment of Endurance U.S. and Endurance U.K. At September 30, 2004, the Company had 273 employees compared to 214 employees at September 30, 2003. The general and administrative expense ratio for the three months ended September 30, 2004 was 7.9% compared to a general and administrative expense ratio of 8.6% for the three months ended September 30, 2003. The ratio has declined as a result of growth in premiums earned.

Net Income.    The decrease in net income for the three months ended September 30, 2004 compared to the same period in 2003 resulted from hurricane losses during the period offset by positive loss experience from prior periods and an increase in invested assets.

Underwriting results by operating segments

The determination of the Company's business segments was based on how the Company monitors the performance of its underwriting operations. Management measures segment results on the basis of the combined ratio, which is obtained by dividing the sum of the losses and loss expenses, acquisition expenses and general and administrative expenses by net premiums earned. The Company's historic combined ratios may not be indicative of future underwriting performance. The Company does not manage its assets by segment; accordingly, investment income and total assets are not allocated to the individual segments. General and administrative expenses incurred by segments are allocated directly. Remaining corporate overhead is allocated based on each segment's proportional share of gross premiums written. Group reinsurance protection and recoveries are allocated to segments based on the underlying exposures covered.

24

---

The following table summarizes the underwriting results and associated ratios for the Company's six business segments for the three month period ended September 30, 2004.

				Property Per Risk Treaty Reinsurance				Property Catastrophe Reinsurance				Casualty Treaty Reinsurance
				(in thousands)
Revenues
Gross premiums written				$	33,964			$	38,413			$	164,495
Net premiums written					28,796				35,476				164,468
Net premiums earned					106,583				65,079				94,904
Expenses
Losses and loss expenses					105,486				41,885				62,007
Acquisition expenses					31,558				7,248				21,748
General and administrative expenses					5,545				4,651				10,273
					142,589				53,784				94,028
Underwriting income (loss)				$	(36,006	)		$	11,295			$	876
Loss ratio					99.0	%			64.4	%			65.3	%
Acquisition expense ratio					29.6	%			11.1	%			22.9	%
General and administrative expense ratio					5.2	%			7.1	%			10.8	%
Combined ratio					133.8	%			82.6	%			99.0	%

				Property Individual Risk				Casualty Individual Risk				Aerospace and Other Specialty Lines				Total
				(in thousands)
Revenues
Gross premiums written				$	25,467			$	59,993			$	45,533			$	367,865
Net premiums written					23,930				59,993				45,037				357,700
Net premiums earned					26,953				61,406				54,562				409,487
Expenses
Losses and loss expenses					16,975				40,547				41,355				308,255
Acquisition expenses					3,105				5,831				11,657				81,147
General and administrative expenses					2,761				5,501				3,802				32,533
					22,841				51,879				56,814				421,935
Underwriting income (loss)				$	4,112			$	9,527			$	(2,252	)		$	(12,448	)
Loss ratio					63.0	%			66.0	%			75.8	%			75.3	%
Acquisition expense ratio					11.5	%			9.5	%			21.4	%			19.8	%
General and administrative expense ratio					10.2	%			9.0	%			7.0	%			7.9	%
Combined ratio					84.7	%			84.5	%			104.2	%			103.0	%

25

---

The following table summarizes the underwriting results and associated ratios for the Company's six business segments for the three month period ended September 30, 2003.

				Property Per Risk Treaty Reinsurance				Property Catastrophe Reinsurance				Casualty Treaty Reinsurance
				(in thousands)
Revenues
Gross premiums written				$	46,026			$	43,938			$	130,229
Net premiums written					46,026				43,938				130,197
Net premiums earned					86,577				48,453				80,988
Expenses
Losses and loss expenses					54,590				18,488				48,009
Acquisition expenses					22,643				4,887				22,754
General and administrative expenses					4,450				5,362				8,030
					81,683				28,737				78,793
Underwriting income				$	4,894			$	19,716			$	2,195
Loss ratio					63.1	%			38.2	%			59.3	%
Acquisition expense ratio					26.2	%			10.1	%			28.1	%
General and administrative expense ratio					5.1	%			11.1	%			9.9	%
Combined ratio					94.4	%			59.4	%			97.3	%

				Property Individual Risk				Casualty Individual Risk				Aerospace and Other Specialty Lines				Total
				(in thousands)
Revenues
Gross premiums written				$	20,734			$	51,543			$	32,600			$	325,070
Net premiums written					20,101				51,543				32,600				324,405
Net premiums earned					15,730				48,108				55,974				335,830
Expenses
Losses and loss expenses					6,711				33,331				37,536				198,665
Acquisition expenses					1,673				5,628				11,797				69,382
General and administrative expenses					2,985				5,054				3,024				28,905
					11,369				44,013				52,357				296,952
Underwriting income				$	4,361			$	4,095			$	3,617			$	38,878
Loss ratio					42.7	%			69.3	%			67.1	%			59.2	%
Acquisition expense ratio					10.6	%			11.7	%			21.1	%			20.7	%
General and administrative expense ratio					19.0	%			10.5	%			5.4	%			8.6	%
Combined ratio					72.3	%			91.5	%			93.6	%			88.5	%

Property Per Risk Treaty Reinsurance

The Company's Property Per Risk Treaty Reinsurance business segment reinsures individual property risks of ceding companies on a treaty basis. The Company's property per risk reinsurance contracts cover claims from individual insurance policies written by its ceding company clients and include both personal lines and commercial lines exposures. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Property Per Risk Treaty Reinsurance business segment for the three months ended September 30, 2004 and 2003, respectively.

26

---

				Three Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	33,964			$	46,026				(26.2	%)
Net premiums written					28,796				46,026				(37.4	%)
Net premiums earned					106,583				86,577				23.1	%
Expenses
Losses and loss expenses					105,486				54,590				93.2	%
Acquisition expenses					31,558				22,643				39.4	%
General and administrative expenses					5,545				4,450				24.6	%
					142,589				81,683				74.6	%
Underwriting (loss) income				$	(36,006	)		$	4,894				NM	(2)
Loss ratio					99.0	%			63.1	%			35.9
Acquisition expense ratio					29.6	%			26.2	%			3.4
General and administrative expense ratio					5.2	%			5.1	%			0.1
Combined ratio					133.8	%			94.4	%			39.4
Reserve for losses and loss expenses				$	358,961			$	149,100				140.8	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

(2)	Not meaningful.

Premiums.    The Company reduced gross premiums written in the three months ended September 30, 2004 due to certain business no longer meeting the Company's requirements on pricing, terms and conditions.

Premiums ceded for the three months ended September 30, 2004 were $5.2 million compared with $Nil million for the three months ended September 30, 2003. During the third quarter of 2004 the Company purchased additional reinsurance to reduce its exposure to certain U.S. wind risks, predominantly in Florida.

The premiums acquired in the Hart Re transaction and the growth over the past year at Endurance U.S. and Endurance U.K. have resulted in increased premiums earned. The growth in premiums earned also benefited significantly from the earning of premiums written in 2003.

Losses and Loss Expenses.    The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the three months ended September 30, 2004. The estimated combined gross losses of these storms totaled $73.4 million. Losses, net of reinstatement premiums, other loss sensitive accruals and loss recoveries, were $63.8 million for this segment, prior to the effect of taxes. Further offsetting the estimated gross losses was positive loss development from prior years of $18.0 million.

Acquisition Expenses.    The acquisition expense ratio for 2004 was largely consistent with 2003. The slight increase was due to a moderate shift in the mix of business.

General and Administrative Expenses.    General and administrative expenses have increased as a result of increased staffing. The increase in expenses is in line with growth in premiums earned resulting in an unchanged general and administrative ratio.

Property Catastrophe Reinsurance

The Company's Property Catastrophe Reinsurance business segment reinsures catastrophic perils for ceding companies on a treaty basis. The Company's property catastrophe reinsurance contracts provide protection for most catastrophic losses that are covered in the underlying insurance policies written by its ceding company clients. Protection under property catastrophe treaties is provided on an

27

---

occurrence basis, allowing the Company's ceding company clients to combine losses that have been incurred in any single event from multiple underlying policies. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Property Catastrophe Reinsurance business segment for the three months ended September 30, 2004 and 2003, respectively.

				Three Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	38,413			$	43,938				(12.6	%)
Net premiums written					35,476				43,938				(19.3	%)
Net premiums earned					65,079				48,453				34.3	%
Expenses
Losses and loss expenses					41,885				18,488				126.6	%
Acquisition expenses					7,248				4,887				48.3	%
General and administrative expenses					4,651				5,362				(13.3	%)
					53,784				28,737				87.2	%
Underwriting income				$	11,295			$	19,716				42.7	%
Loss ratio					64.4	%			38.2	%			26.2
Acquisition expense ratio					11.1	%			10.1	%			1.0
General and administrative expense ratio					7.1	%			11.1	%			(4.0	)
Combined ratio					82.6	%			59.4	%			23.2
Reserve for losses and loss expenses				$	103,188			$	62,636				64.7	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums.    The Company reduced gross premiums written in the three months ended September 30, 2003 due to certain business no longer meeting the Company's requirements on pricing, terms and conditions.

Premiums ceded for the three months ended September 30, 2004 were $2.9 million compared with $Nil million for the three months ended September 30, 2004. During the third quarter of 2004 the Company purchased additional reinsurance to reduce its exposure to certain U.S. wind risks, predominantly in Florida.

The growth in premiums earned is a result of the increase in premiums written in the twelve months to September 30, 2004 compared to the corresponding period to September 30, 2003.

Losses and Loss Expenses.    The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the three months ended September 30, 2004. The estimated combined gross losses of these storms totaled $62.0 million for this segment. Estimated losses, net of reinstatement premiums, other loss sensitive accruals and loss recoveries, were $52.6 million. Offsetting the effects of the hurricanes, positive loss development from prior years of $17.6 million was experienced in this segment.

Acquisition Expenses.    The increase in acquisition expense ratio is a result of the changing profile of business and the effect of reinsurance purchased on premiums earned.

General and Administrative Expenses.    The combination of general and administrative expenses stabilizing and increased premiums earned have resulted in a lower general and administrative expense ratio in this segment.

Casualty Treaty Reinsurance

The Company's Casualty Treaty Reinsurance business segment reinsures third party liability exposures from ceding companies on a treaty basis. The exposures that the Company reinsures include

28

---

automobile liability, professional liability, directors' and officers' liability, umbrella liability and workers' compensation. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Casualty Treaty Reinsurance business segment for the three months ended September 30, 2004 and 2003, respectively.

				Three Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	164,495			$	130,229				26.3	%
Net premiums written					164,468				130,197				26.3	%
Net premiums earned					94,904				80,988				17.2	%
Expenses
Losses and loss expenses					62,007				48,009				29.2	%
Acquisition expenses					21,748				22,754				(4.4	%)
General and administrative expenses					10,273				8,030				27.9	%
					94,028				78,793				19.3	%
Underwriting income				$	876			$	2,195				(60.1	% )
Loss ratio					65.3	%			59.3	%			6.0
Acquisition expense ratio					22.9	%			28.1	%			(5.2	)
General and administrative expense ratio					10.8	%			9.9	%			0.9
Combined ratio					99.0	%			97.3	%			1.7
Reserve for losses and loss expenses				$	406,780			$	189,485				114.7	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

(2)	Not meaningful.

Premiums.    The increase in gross premiums written is due to strong organic growth at Endurance U.S., which has generated $42.4 million in new and renewal business. This growth was offset by a $9.7 million reduction in premiums written at Endurance Bermuda compared to the same period in the prior year.

Losses and Loss Expenses.    Due to the long tail nature of this business, claims may not be reported for many years in the lines of business included in this segment resulting in increased uncertainty regarding the development of reserves related to this segment. The increase in loss ratio was a result of differences in the mix of business due to additional business generated by Endurance U.S.

Acquisition Expenses.    The acquisition expense ratio for the three months ended September 30, 2004 decreased due to a moderate shift in the mix of business resulting from the growth in premiums generated by Endurance U.S.

General and Administrative Expenses.    General and administrative expenses have increased in line with the growth in underwriting activity, increased corporate expenses, and higher staffing levels.

Property Individual Risk

The Company's Property Individual Risk business segment is comprised of the insurance and facultative reinsurance of commercial properties. The policies written in this segment provide coverage for one insured for each policy. The types of risks insured are generally commercial properties with sufficiently large values to require multiple insurers and reinsurers to accommodate their insurance capacity needs. This business is written by Endurance Bermuda and Endurance U.K. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Property Individual Risk business segment for the three months ended September 30, 2004 and 2003, respectively.

29

---

				Three Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	25,467			$	20,734				22.8	%
Net premiums written					23,930				20,101				19.0	%
Net premiums earned					26,953				15,730				71.3	%
Expenses
Losses and loss expenses					16,975				6,711				152.9	%
Acquisition expenses					3,105				1,673				85.6	%
General and administrative expenses					2,761				2,985				(7.5	%)
					22,841				11,369				100.9	%
Underwriting income				$	4,112			$	4,361				(5.7	%)
Loss ratio					63.0	%			42.7	%			20.3
Acquisition expense ratio					11.5	%			10.6	%			0.9
General and administrative expense ratio					10.2	%			19.0	%			(8.8	)
Combined ratio					84.7	%			72.3	%			12.4
Reserve for losses and loss expenses				$	66,541			$	29,903				122.5	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums.    Premiums written in the three months ended September 30, 2004 grew largely due to continued growth at Endurance U.K. which expanded its team of underwriters and support staff throughout 2004. Endurance U.K. generated new business of $7.5 million in the three month period ended September 30, 2004. Offsetting this growth, portions of this segment have seen decreases in pricing due to increased capacity and competition. This has resulted in reduced premiums recorded on those policies renewed and a portion of policies not being renewed due to less attractive terms. The increase in premiums earned was a result of the earning of premiums that were written over the last twelve months.

Losses and Loss Expenses.    The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the three months ended September 30, 2004. The estimated combined gross losses of these storms totaled $13.2 million for this segment. Losses net of reinstatement premiums, other loss sensitive accruals and loss recoveries were $10.8 million for this segment, prior to the effect of taxes.

Acquisition Expenses.    The acquisition expense ratio for the three months ended September 30, 2004 increased due to a moderate shift in the mix of business resulting from the growth in premiums generated by Endurance U.K.

General and Administrative Expenses.    General and administrative expenses have increased as a result of the growth in underwriting activity, increased corporate expenses, and higher staffing levels.

Casualty Individual Risk

The Company's Casualty Individual Risk business segment is comprised of the insurance and facultative reinsurance of third party liability exposures. This includes third party general liability insurance, directors' and officers' liability insurance, errors and omissions insurance and employment practices liability insurance, all written for a wide range of industry groups, as well as medical professional liability insurance which is written for large institutional healthcare providers. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Casualty Individual Risk business segment for the three months ended September 30, 2004 and 2003, respectively.

30

---

				Three Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	59,993			$	51,543				16.4	%
Net premiums written					59,993				51,543				16.4	%
Net premiums earned					61,406				48,108				27.6	%
Expenses
Losses and loss expenses					40,547				33,331				21.7	%
Acquisition expenses					5,831				5,628				3.6	%
General and administrative expenses					5,501				5,054				8.8	%
					51,879				44,013				17.9	%
Underwriting income				$	9,527			$	4,095				132.6	%
Loss ratio					66.0	%			69.3	%			(3.3	)
Acquisition expense ratio					9.5	%			11.7	%			(2.2	)
General and administrative expense ratio					9.0	%			10.5	%			(1.5	)
Combined ratio					84.5	%			91.5	%			(7.0	)
Reserve for losses and loss expenses				$	266,909			$	118,001				126.2	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums.    All premiums written by this segment are earned ratably over the terms of the insurance policies, typically a 12-month period. The Company has observed steady market conditions with pricing either holding firm or decreasing slightly. Capacity is increasing across all lines but has not yet impacted pricing significantly. Premiums in the healthcare lines have increased as a result of favorable market conditions. The increase in premiums earned was a result of higher premiums written in the twelve months ended September 30, 2004 against those written in the corresponding period to September 30, 2003.

Losses and Loss Expenses.    The Company has received only a limited number of notices of potential losses for this segment, very few of which have yet reached a level which would result in the Company incurring a claim. Accordingly, the reserve for losses and loss expenses established by the Company's actuaries was based primarily on historical industry loss data and business segment specific pricing information.

Acquisition Expenses.    The acquisition expense ratio for the three months ended September 30, 2004 decreased due to a moderate shift in the mix of business resulting from the growth in premiums generated by the healthcare line.

General and Administrative Expenses.    General and administrative expenses have increased in line with the growth in underwriting activity and increased corporate expenses.

Aerospace and Other Specialty Lines

The Company's Aerospace and Other Specialty Lines business segment is comprised primarily of the insurance and reinsurance of Aerospace lines, and a limited number of other reinsurance programs such as surety, marine, energy, personal accident, terrorism, agribusiness and others. Aerospace includes aviation hull, aircraft liability and aircraft products coverage, and satellite launch and in-orbit coverage. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Aerospace and Other Specialty Lines business segment for the three months ended September 30, 2004 and 2003, respectively.

31

---

				Three Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	45,533			$	32,600				39.7	%
Net premiums written					45,037				32,600				38.2	%
Net premiums earned					54,562				55,974				(2.5	%)
Expenses
Losses and loss expenses					41,355				37,536				10.2	%
Acquisition expenses					11,657				11,797				(1.2	%)
General and administrative expenses					3,802				3,024				25.7	%
					56,814				52,357				8.5	%
Underwriting (loss) income				$	(2,252	)		$	3,617				(162.3	%)
Loss ratio					75.8	%			67.1	%			8.7
Acquisition expense ratio					21.4	%			21.1	%			0.3
General and administrative expense ratio					7.0	%			5.4	%			1.6
Combined ratio					104.2	%			93.6	%			10.6
Reserve for losses and loss expenses				$	246,583			$	124,725				97.7	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums.    The increase in gross premiums written is due to an expansion in underwriting staff within the Company's marine team which contributed approximately $16 million in premiums during the three months ended September 30, 2004. Offsetting this increase was the non-renewal of business because terms and conditions did not meet the Company's requirements.

Losses and Loss Expenses.    The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the three months ended September 30, 2004. The estimated combined gross losses of these storms totaled $9.1 million. Estimated losses, net of reinstatement premiums, other loss sensitive accruals and loss recoveries were $8.0 million, prior to the effect of taxes.

Acquisition Expenses.    The acquisition cost ratio for the three months ended September 30, 2004 is consistent with the same period to September 30, 2003.

General and Administrative Expenses.    General and administrative expenses have increased in line with the growth in underwriting activity and increased corporate expenses.

32

---

Results of operations – for the nine month period ended September 30, 2004

Results of operations for the nine months ended September 30, 2004 and 2003 were as follows:

				2004				2003				Change (1)
Underwriting income				(in thousands)
Revenues
Gross premiums written				$	1,439,157			$	1,339,841				7.4	%
Net premiums written					1,425,306				1,336,808				6.6	%
Net premiums earned					1,221,300				817,949				49.3	%
Expenses
Losses and loss expenses					719,472				468,341				53.6	%
Acquisition expenses					249,332				161,423				54.5	%
General and administrative expenses					96,837				71,448				35.5	%
					1,065,641				701,212				52.0	%
Underwriting income					155,659				116,737				33.3	%
Net investment income					84,597				49,758				70.0	%
Net foreign exchange (losses) gains					(2,949	)			6,717				(143.9	%)
Net realized gains on sales of investments					5,376				6,985				(23.0	%)
Amortization of intangibles					(2,770	)			(2,294	)			20.8	%
Interest expense					(5,433	)			(3,393	)			60.1	%
Income tax benefit					7,996				25				NM	(2)
Net income				$	242,476			$	174,535				38.9	%
Loss ratio					58.9	%			57.3	%			1.6
Acquisition expense ratio					20.4	%			19.7	%			0.7
General and administrative expense ratio					7.9	%			8.7	%			(0.8	)
Combined ratio					87.2	%			85.7	%			1.5
Reserve for losses and loss expenses				$	1,448,962			$	673,850				115.0	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

(2)	Not meaningful.

In the nine months ended September 30, 2004 the Company's results were impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne. The Company's estimated combined gross losses from these storms totaled $157.7 million. Estimated losses net of reinstatement premiums, other loss sensitive accruals, loss recoveries and taxes were $122.8 million. The estimated losses were incurred in the Company's property treaty, property catastrophe, property individual risk and aerospace and other specialty lines segments. The Company's loss estimates for these hurricanes were derived primarily from a review of in-force contracts and preliminary indications received from clients. However, because of the short amount of time elapsed since the hurricanes, the unusually close proximity of each of the four storm tracks, and the relatively short period of time between storms, loss estimation at this early stage is difficult. As a result, actual losses from these hurricanes may vary materially from estimated losses, and such differences will be recorded in the period in which they become known.

Premiums.    Gross premiums written increased slightly during the nine months to September 30, 2004 as a result of growth from a number of factors. Premiums grew in the nine months ended September 30, 2003 as a result of the renewal of business obtained from the Hart Re portfolio acquisition, growth from the Company's U.S. and U.K. subsidiaries which commenced operations at the beginning of 2003, and other growth experienced in Bermuda. The growth in written premiums was experienced across a number of business segments including property catastrophe reinsurance, casualty treaty reinsurance, property individual risk and casualty individual risk. Premium growth of approximately $334 million in the nine month period resulted from new business written at Endurance

33

---

U.S. and Endurance U.K. which have observed favorable underwriting opportunities across the property per risk treaty, casualty treaty reinsurance and property individual risk segments. Significant premium growth has also been recorded in Endurance Bermuda within the property catastrophe reinsurance segment as the Company increased the capital allocated to that segment in the first half of the year, resulting in an increase in premiums written of $60.5 million for the nine month period. These specific areas of premium growth were modestly offset by business that was not renewed because terms and conditions did not meet the Company's requirements.

Premiums ceded for the nine months ended September 30, 2004 were $13.9 million compared with $3.0 million for the nine months ended September 30, 2003, an increase of $10.9 million. During the three months ended September 30, 2004, the Company purchased additional reinsurance to reduce its exposure to certain U.S. wind risks, predominantly in Florida. The reinsurance was primarily purchased within the property per risk treaty reinsurance, treaty catastrophe reinsurance and property individual risk segments.

Net premiums earned increased in 2004 as a result of the earning of net premiums that were written in 2003 and 2002.

Net Investment Income.    Net investment income was derived primarily from interest earned on fixed maturity investments partially offset by investment management fees. The increase in net investment income was principally due to an increase in invested assets of approximately 51% and an increase in interest rates. The increase in invested assets resulted from positive net operating cash flows throughout the last twelve months. Investment expenses for the nine months ended September 30, 2004 were $2.5 million compared to investment expenses of $1.5 million for the same period in 2003.

The annualized period book yield (which is the average yield of the invested portfolio after adjusting for accretion and amortization from the purchase price) and total return of the investment portfolio (which includes realized and unrealized gains and losses) for the nine months ended September 30, 2004 were 3.67% and 3.47%, respectively. For the nine months ended September 30, 2003, the annualized period book yield and total return were 3.83% and 3.22%, respectively. The yield on the benchmark five year U.S. Treasury bond has fluctuated in a range of 146 basis points from a high of 4.10% to a low of 2.64% during the last nine months. The Company has continued to invest operating cash flows opportunistically throughout this period of interest rate volatility, reducing mortgage and government exposure while increasing corporate and municipal allocations. The duration on the portfolio has shortened to 2.91 years from 3.08 years at December 31, 2003 and 3.06 years at September 30, 2003. Overall, this is due to the contraction of mortgage durations and a conservative allocation to cash. Overall, the annualized period book yield of the portfolio has decreased due to investing in a volatile interest rate cycle.

Losses and Loss Expenses.    The reported loss ratio is characterized by various factors and is significantly impacted by the occurrence or absence of catastrophic events and subsequent loss emergence related to such events. For the first half of 2004, the Company's loss ratio was positively impacted by both the absence of major catastrophes and lower than expected loss emergence related to prior periods. The Company's loss ratio was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the nine months ended September 30, 2004. The Company's estimated combined gross losses from these storms totaled $157.7 million. Estimated losses, net of reinstatement premiums, other loss sensitive accruals, loss recoveries and taxes, were $122.8 million.

In the nine months ended September 30, 2004, loss emergence related to the 2002 and 2003 accident years was lower than expected and reserves held by the Company proved to be moderately redundant. During the period, the Company's previously estimated ultimate losses for those accident years were reduced by $111.0 million. This reduction in the Company's estimated losses for prior years was experienced most significantly in the Company's property segments.

The Company participates in lines of business where claims may not be reported for many years. Accordingly, management does not believe that reported claims are the only valid means for estimating ultimate obligations. Ultimate losses and loss expenses may differ materially from the

34

---

amounts recorded in the Company's consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments, if any, are recorded in earnings in the period in which they are determined. The overall loss reserves were established by the Company's actuaries and reflect management's best estimate of ultimate losses. See "- Reserve for Losses and Loss Expenses" for further discussion.

Acquisition Expenses.    The slight increase in acquisition expense ratio is due to changes in the mix of business resulting from the growth of the Company's underwriting activities, most notably at Endurance U.S. which wrote a number of large treaty contracts.

General and Administrative Expenses.    Growth in general and administrative expenses principally reflected the establishment of Endurance U.S. and Endurance U.K. At September 30, 2004, the Company had 273 employees compared to 214 employees at September 30, 2003. The general and administrative expense ratio for the nine months ended September 30, 2004 was 7.9% compared to a general and administrative expense ratio of 8.7% for the nine months ended September 30, 2003. The ratio has declined as a result of growth in premiums earned.

Net Income.    The increase in net income for the nine months ended September 30, 2004 compared to the same period in 2003 was due to the growth of the Company's premiums, strong underwriting margin and an increase in invested assets, offset by third quarter hurricane losses. Net income in the first nine months of 2004 was primarily impacted by the positive results of the Company's property catastrophe reinsurance, property individual risk and casualty individual risk segments.

35

---

Underwriting results by operating segments

The following table summarizes the underwriting results and associated ratios for the Company's six business segments for the nine month period ended September 30, 2004.

				Property Per Risk Treaty Reinsurance				Property Catastrophe Reinsurance				Casualty Treaty Reinsurance
				(in thousands)
Revenues
Gross premiums written				$	332,628			$	230,885			$	404,341
Net premiums written					327,460				227,948				401,536
Net premiums earned					336,593				175,259				290,191
Expenses
Losses and loss expenses					224,917				48,297				185,141
Acquisition expenses					91,918				20,357				74,008
General and administrative expenses					21,322				15,667				25,432
					338,157				84,321				284,581
Underwriting income (loss)				$	(1,564	)		$	90,938			$	5,610
Loss ratio					66.8	%			27.6	%			63.8	%
Acquisition expense ratio					27.3	%			11.6	%			25.5	%
General and administrative expense ratio					6.3	%			8.9	%			8.8	%
Combined ratio					100.4	%			48.1	%			98.1	%

				Property Individual Risk				Casualty Individual Risk				Aerospace and Other Specialty Lines				Total
				(in thousands)
Revenues
Gross premiums written				$	85,454			$	194,499			$	191,350			$	1,439,157
Net premiums written					83,349				194,159				190,854				1,425,306
Net premiums earned					74,266				175,675				169,316				1,221,300
Expenses
Losses and loss expenses					33,946				114,445				112,726				719,472
Acquisition expenses					8,850				18,155				36,044				249,332
General and administrative expenses					8,027				15,435				10,954				96,837
					50,823				148,035				159,724				1,065,641
Underwriting income				$	23,443			$	27,640			$	9,592			$	155,659
Loss ratio					45.7	%			65.1	%			66.6	%			58.9	%
Acquisition expense ratio					11.9	%			10.3	%			21.3	%			20.4	%
General and administrative expense ratio					10.8	%			8.8	%			6.5	%			7.9	%
Combined ratio					68.4	%			84.2	%			94.4	%			87.2	%

36

---

The following table summarizes the underwriting results and associated ratios for the Company's six business segments for the nine month period ended September 30, 2003.

				Property Per Risk Treaty Reinsurance				Property Catastrophe Reinsurance				Casualty Treaty Reinsurance
				(in thousands)
Revenues
Gross premiums written				$	360,417			$	170,410			$	332,585
Net premiums written					360,417				171,120				330,254
Net premiums earned					205,868				127,953				194,689
Expenses
Losses and loss expenses					124,431				29,931				124,070
Acquisition expenses					53,905				14,347				53,541
General and administrative expenses					16,219				10,592				15,995
					194,555				54,870				193,606
Underwriting income				$	11,313			$	73,083			$	1,083
Loss ratio					60.4	%			23.4	%			63.7	%
Acquisition expense ratio					26.2	%			11.2	%			27.5	%
General and administrative expense ratio					7.9	%			8.3	%			8.2	%
Combined ratio					94.5	%			42.9	%			99.4	%

				Property Individual Risk				Casualty Individual Risk				Aerospace and Other Specialty Lines				Total
				(in thousands)
Revenues
Gross premiums written				$	58,486			$	154,495			$	263,448			$	1,339,841
Net premiums written					57,074				154,495				263,448				1,336,808
Net premiums earned					47,558				118,474				123,407				817,949
Expenses
Losses and loss expenses					16,823				84,044				89,042				468,341
Acquisition expenses					4,928				13,505				21,197				161,423
General and administrative expenses					5,189				11,226				12,227				71,448
					26,940				108,775				122,466				701,212
Underwriting income				$	20,618			$	9,699			$	941			$	116,737
Loss ratio					35.4	%			70.9	%			72.2	%			57.3	%
Acquisition expense ratio					10.4	%			11.4	%			17.2	%			19.7	%
General and administrative expense ratio					10.9	%			9.5	%			9.9	%			8.7	%
Combined ratio					56.7	%			91.8	%			99.3	%			85.7	%

37

---

Property Per Risk Treaty Reinsurance

The Company's Property Per Risk Treaty Reinsurance business segment reinsures individual property risks of ceding companies on a treaty basis. The Company's property per risk reinsurance contracts cover claims from individual insurance policies written by its ceding company clients and include both personal lines and commercial lines exposures. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Property Per Risk Treaty Reinsurance business segment for the nine months ended September 30, 2004 and 2003, respectively.

				Nine Months Ended
				September 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	332,628			$	360,417				(7.7	%)
Net premiums written					327,460				360,417				(9.1	%)
Net premiums earned					336,593				205,868				63.5	%
Expenses
Losses and loss expenses					224,917				124,431				80.8	%
Acquisition expenses					91,918				53,905				70.5	%
General and administrative expenses					21,322				16,219				31.5	%
					338,157				194,555				73.8	%
Underwriting (loss) income				$	(1,564	)		$	11,313				(113.8	%)
Loss ratio					66.8	%			60.4	%			6.4
Acquisition expense ratio					27.3	%			26.2	%			1.1
General and administrative expense ratio					6.3	%			7.9	%			(1.6	)
Combined ratio					100.4	%			94.5	%			(5.9	)
Reserve for losses and loss expenses				$	358,961			$	149,100				140.8	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums. The decrease in gross premiums written was in large part due to certain business that has not been renewed where pricing has declined or terms and conditions have no longer met the Company's criteria. The growth in premiums earned benefited significantly from the earning of premiums written in 2003. The Company increased premiums ceded in the third quarter, ceding $5.2 million of premiums in the nine months ended September 30, 2004 compared to ceded premiums of $Nil million for the nine months ended September 30, 2003.

Losses and Loss Expenses. The low loss ratios in 2004 reflected the generally low level of loss activity in the first half of the year. The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the nine months ended September 30, 2004. The estimated combined gross losses of these storms totaled $73.4 million. Estimated losses net of reinstatement premiums, other loss sensitive accruals and loss recoveries were $63.8 million, prior to the effect of taxes. These losses were partially offset by $30.9 million of positive loss development from prior years.

Acquisition Expenses. The acquisition expense ratio for 2004 was consistent with the corresponding period in 2003.

General and Administrative Expenses. The increase in general and administrative expenses reflected the growth in the underwriting staff at Endurance U.S. and Endurance U.K. during the twelve months ended September 30, 2004. General and administrative expenses as a percentage of net premiums earned have decreased as premium earnings have increased significantly.

38

---

Property Catastrophe Reinsurance

The Company's Property Catastrophe Reinsurance business segment reinsures catastrophic perils for ceding companies on a treaty basis. The Company's property catastrophe reinsurance contracts provide protection for most catastrophic losses that are covered in the underlying insurance policies written by its ceding company clients. Protection under property catastrophe treaties is provided on an occurrence basis, allowing the Company's ceding company clients to combine losses that have been incurred in any single event from multiple underlying policies. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Property Catastrophe Reinsurance business segment for the nine months ended September 30, 2004 and 2003, respectively.

				Nine Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	230,885			$	170,410				35.5	%
Net premiums written					227,948				171,120				33.2	%
Net premiums earned					175,259				127,953				37.0	%
Expenses
Losses and loss expenses					48,297				29,931				61.4	%
Acquisition expenses					20,357				14,347				41.9	%
General and administrative expenses					15,667				10,592				47.9	%
					84,321				54,870				53.7	%
Underwriting income				$	90,938			$	73,083				24.4	%
Loss ratio					27.6	%			23.4	%			4.2
Acquisition expense ratio					11.6	%			11.2	%			0.4
General and administrative expense ratio					8.9	%			8.3	%			0.6
Combined ratio					48.1	%			42.9	%			5.2
Reserve for losses and loss expenses				$	103,188			$	62,636				64.7	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums. The increase in gross premiums written is due to increased capital committed to this segment in the first half of the year. As a result of growth in total capital and diversity provided by other lines, the Company has been able to increase property catastrophe premiums while maintaining its objective of limiting the expected economic loss from a one in one hundred year series of catastrophic events to no more than 25% of total capital. The growth in premiums earned is a result of the increase in premiums written in the twelve months to September 30, 2004 compared to the corresponding period to September 30, 2003. The Company increased premiums ceded in the third quarter, ceding $2.9 million of premiums in the nine months ended September 30, 2004 compared to ceded premiums of $Nil million for the nine months ended September 30, 2003.

Losses and Loss Expenses. The relatively low loss ratios for the nine month periods ended September 30, 2004 and 2003 reflected the generally low level of catastrophic loss events and loss emergence during both years. The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the nine months ended September 30, 2004. The estimated combined gross losses of these storms totaled $62.0 million. Estimated losses net of reinstatement premiums, other loss sensitive accruals and loss recoveries were $52.6 million. Positive development on the Company's losses and loss expense reserves related to prior periods had a more marked effect in the period ended September 30, 2004 than the corresponding period to September 30, 2003.

39

---

Acquisition Expenses. The acquisition expense ratio for 2004 was consistent with the corresponding period in 2003.

General and Administrative Expenses. General and administrative expenses have increased in line with the growth in underwriting activity and increased corporate expenses.

Casualty Treaty Reinsurance

The Company's Casualty Treaty Reinsurance business segment reinsures third party liability exposures from ceding companies on a treaty basis. The exposures that the Company reinsures include automobile liability, professional liability, directors' and officers' liability, umbrella liability and workers' compensation. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Casualty Treaty Reinsurance business segment for the nine months ended September 30, 2004 and 2003, respectively.

				Nine Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	404,341			$	332,585				21.6	%
Net premiums written					401,536				330,254				21.6	%
Net premiums earned					290,191				194,689				49.1	%
Expenses
Losses and loss expenses					185,141				124,070				49.2	%
Acquisition expenses					74,008				53,541				38.2	%
General and administrative expenses					25,432				15,995				59.0	%
					284,581				193,606				47.0	%
Underwriting income				$	5,610			$	1,083				418.0	%
Loss ratio					63.8	%			63.7	%			0.1
Acquisition expense ratio					25.5	%			27.5	%			(2.0	)
General and administrative expense ratio					8.8	%			8.2	%			0.6
Combined ratio					98.1	%			99.4	%			(1.3	)
Reserve for losses and loss expenses				$	406,780			$	189,485				114.7	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums. The increase in gross premiums written was in large part due to organic growth the Company has experienced at Endurance Bermuda and Endurance U.S. which have generated $30 million and $137 million in new business, respectively. These areas of premium growth have been offset by certain business that has not been renewed where terms and conditions have no longer met the Company's criteria. The growth in premiums earned benefited significantly from the earning of premiums written in 2003.

Losses and Loss Expenses. Claims may not be reported for many years in the lines of business included in this segment. Increased uncertainty exists regarding the development of reserves due to the long tail nature of this business. The loss ratio for the nine month ended September 30, 2004 was consistent with the loss ratio for the corresponding period in the prior year.

Acquisition Expenses. The acquisition cost ratio for the nine months ended September 30, 2004 is largely consistent with the same period to September 30, 2003. The slight decrease is due to a moderate shift in the mix of business.

General and Administrative Expenses. General and administrative expenses have increased in line with the growth in underwriting activity, increased corporate expenses, and higher staffing levels.

40

---

Property Individual Risk

The Company's Property Individual Risk business segment is comprised of the insurance and facultative reinsurance of commercial properties. The policies written in this segment provide coverage for one insured for each policy. The types of risks insured are generally commercial properties with sufficiently large values to require multiple insurers and reinsurers to accommodate their insurance capacity needs. This business is written by Endurance Bermuda and Endurance U.K. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Property Individual Risk business segment for the nine months ended September 30, 2004 and 2003, respectively.

				Nine Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	85,454			$	58,486				46.1	%
Net premiums written					83,349				57,074				46.0	%
Net premiums earned					74,266				47,558				56.2	%
Expenses
Losses and loss expenses					33,946				16,823				101.8	%
Acquisition expenses					8,850				4,928				79.6	%
General and administrative expenses					8,027				5,189				54.7	%
					50,823				26,940				88.7	%
Underwriting income				$	23,443			$	20,618				13.7	%
Loss ratio					45.7	%			35.4	%			10.3
Acquisition expense ratio					11.9	%			10.4	%			1.5
General and administrative expense ratio					10.8	%			10.9	%			(0.1	)
Combined ratio					68.4	%			56.7	%			11.7
Reserve for losses and loss expenses				$	66,541			$	29,903				122.5	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums. Premiums written in the nine months ended September 30, 2004 grew largely due to new business generated by Endurance U.K., which expanded its team of underwriters and support staff throughout 2003. Endurance U.K. generated new business of $36 million in the nine month period ended September 30, 2004. Certain areas of this segment have seen decreases in pricing due to increased capacity and competition. This has resulted in reduced premiums recorded on those policies renewed and a portion of policies not being renewed due to less attractive terms. The increase in premiums earned was a result of the earning of premiums that were written over the last twelve months.

Losses and Loss Expenses. In general, losses in this segment were lower than expected reflecting a lack of large individual property losses experienced by the market in the first six months of 2004. The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the nine months ended September 30, 2004. The estimated combined gross losses of these storms totaled $13.2 million. Estimated losses net of reinstatement premiums, other loss sensitive accruals and loss recoveries were $10.8 million, prior to the effect of taxes.

Acquisition Expenses. The acquisition expense ratio for the nine months ended September 30, 2004 experienced a slight increase due to a moderate shift in the mix of business resulting from the growth in premiums generated by Endurance U.K.

41

---

General and Administrative Expenses. General and administrative expenses have increased in line with the growth in underwriting activity, increased corporate expenses, and higher staffing levels.

Casualty Individual Risk

The Company's Casualty Individual Risk business segment is comprised of the insurance and facultative reinsurance of third party liability exposures. This includes third party general liability insurance, directors' and officers' liability insurance, errors and omissions insurance and employment practices liability insurance, all written for a wide range of industry groups, as well as medical professional liability insurance which is written for large institutional healthcare providers. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Casualty Individual Risk business segment for the nine months ended September 30, 2004 and 2003, respectively.

				Nine Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	194,499			$	154,495				25.9	%
Net premiums written					194,159				154,495				25.7	%
Net premiums earned					175,675				118,474				48.3	%
Expenses
Losses and loss expenses					114,445				84,044				36.2	%
Acquisition expenses					18,155				13,505				34.4	%
General and administrative expenses					15,435				11,226				37.5	%
					148,035				108,775				36.1	%
Underwriting income				$	27,460			$	9,699				183.1	%
Loss ratio					65.1	%			70.9	%			(5.8	)
Acquisition expense ratio					10.3	%			11.4	%			(1.1	)
General and administrative expense ratio					8.8	%			9.5	%			(0.7	)
Combined ratio					84.2	%			91.8	%			(7.6	)
Reserve for losses and loss expenses				$	266,909			$	118,001				126.2	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums. All premiums written by this segment are earned ratably over the terms of the insurance policies, typically a 12-month period. In the nine month period ended September 30, 2004, the Company has observed stable pricing overall compared to the same period in 2003. Premiums written have increased from the nine months ended September 30, 2003 as a result of additional staff and strong renewals of existing business. The increase in premiums earned was a result of higher premiums written in the twelve months ended September 30, 2004 against those written in the corresponding period to September 30, 2003.

Losses and Loss Expenses. The Company has received only a limited number of notices of potential losses for this segment, very few of which have yet reached a level that would result in the Company paying a claim. Accordingly, the reserve for losses and loss expenses established by the Company's actuaries was based on historical industry loss data and business segment specific pricing information. In addition, results in this segment were positively impacted by reductions in expected losses related to prior underwriting periods.

Acquisition Expenses. The acquisition expense ratio for the nine months ended September 30, 2004 was largely consistent with the corresponding period in 2003. The slight decrease reflects variations in individual contract terms.

42

---

General and Administrative Expenses. The increase in general and administrative expenses was due to the increase in the number of staff dedicated to this segment.

Aerospace and Other Specialty Lines

The Company's Aerospace and Other Specialty Lines business segment is comprised primarily of the insurance and reinsurance of Aerospace lines, and a limited number of other reinsurance programs such as surety, marine, energy, personal accident, terrorism and others. Aerospace includes aviation hull, aircraft liability and aircraft products coverage, and satellite launch and in-orbit coverage. The following table summarizes the underwriting results, associated ratios and the reserve for losses and loss expenses for the Aerospace and Other Specialty Lines business segment for the nine months ended September 30, 2004 and 2003, respectively.

				Nine Months Ended
				September 30, 2004				September 30, 2003				Change (1)
				(in thousands)
Revenues
Gross premiums written				$	191,350			$	263,448				(27.4	%)
Net premiums written					190,854				263,448				(27.6	%)
Net premiums earned					169,316				123,407				37.2	%
Expenses
Losses and loss expenses					112,726				89,042				26.6	%
Acquisition expenses					36,044				21,197				70.0	%
General and administrative expenses					10,954				12,227				(10.4	%)
					159,724				122,466				30.4	%
Underwriting income (loss)				$	9,592			$	941				919.3	%
Loss ratio					66.6	%			72.2	%			(5.6	)
Acquisition expense ratio					21.3	%			17.2	%			4.1
General and administrative expense ratio					6.5	%			9.9	%			(3.4	)
Combined ratio					94.4	%			99.3	%			(4.9	)
Reserve for losses and loss expenses				$	246,583			$	124,725				97.7	%

(1)	With respect to ratios, changes show increase or decrease in percentage points.

Premiums. The decrease in gross premiums written was in large part due to certain business that has not been renewed where terms and conditions have no longer met the Company's criteria including a large workers' compensation contract. Offsetting these decreases was premium growth generated by an expansion within the Company's marine and personal accident underwriting teams, which combined have contributed $46 million. The growth in premiums earned was largely due to the earning of premiums written in 2003.

Losses and Loss Expenses. The loss ratio for this segment was impacted by the effects of Hurricanes Charley, Frances, Ivan and Jeanne in the nine months ended September 30, 2004. The estimated combined gross losses of these storms totaled $9.1 million. Estimated losses net of reinstatement premiums, other loss sensitive accruals and loss recoveries were $8.0 million, prior to the effect of taxes. Offsetting the losses was comparatively lower loss emergence in the nine months ended September 30, 2004 against the corresponding period in 2003.

Acquisition Expenses. The increase in expense ratio was due to the changes in mix of business towards proportional reinsurance contracts in aerospace lines.

General and Administrative Expenses. General and administrative expenses have decreased due to a reduction of staff in the Company's Alternative Risk line. The general and administrative expense ratio has decreased as a result of the reduced staff and an increase in premiums earned.

43

---

Significant transactions and events

On March 9, 2004, certain of the Company's founding shareholders consummated a secondary public offering of the Company's ordinary shares, par value $1.00 per share. Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as joint bookrunning managers, together with Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., JP Morgan Securities Inc. and Wachovia Capital Markets, LLC, as the representatives of the underwriters. The ordinary shares sold in the offering were registered under the Securities Act of 1933, as amended, on a Registration Statement on Form S-1 (Registration No. 333-112258) that was declared effective by the Securities and Exchange Commission on March 3, 2004. Of the ordinary shares registered under the Registration Statement, 8,850,000 were sold at a price to the public of $34.85 per share. The underwriters had an option, exercisable until April 2, 2004, to acquire up to an additional 1,327,500 ordinary shares registered on the Registration Statement to cover over-allotments. On March 12, 2004, the underwriters exercised this option to purchase an additional 944,500 ordinary shares at a price of $34.85 per share. All of the ordinary shares were sold by certain founding shareholders and neither the Company nor any of its officers or directors received any proceeds from the offering.

On May 21, 2004, the Company repurchased 2,036,834 of its ordinary shares owned by Lightyear Capital, initial investors at the formation of the Company. The purchase price was $31.779 per share, representing a 1% discount to the closing price for the ordinary shares on May 21, 2004. The purchase price totaled $64.7 million. The Company used existing cash on hand to fund the repurchase. The Company also announced a share repurchase program under which the Company may repurchase up to 2 million additional ordinary shares or share equivalents. The repurchases will be accomplished in open market or privately negotiated transactions, from time to time, depending on market conditions. The share repurchase program is currently authorized to continue until May 2006.

On June 15, 2004, the Company filed an unallocated universal Shelf Registration Statement on Form S-3 (Registration No. 333-116505) that was declared effective by the Securities and Exchange Commission on June 30, 2004. The Shelf Registration Statement permits the Company to issue, in one or more offerings, up to $500 million of debt, equity, trust preferred securities or a combination of the above. In addition to the $500 million of securities eligible to be sold from time to time by the Company, the Shelf Registration Statement also registers for possible future sales up to 38,069,699 ordinary shares beneficially owned by certain of the Company's founding shareholders. The registration of the founding shareholders' ordinary shares does not obligate these shareholders to offer or sell any of these shares. The Company has not been asked to assist in any offerings of ordinary shares by the founding shareholders at this time, nor will the Company receive any proceeds from any sale of shares by the selling shareholders.

On July 15, 2004, the Company issued $250 million principal amount of 7% Senior Notes pursuant to a prospectus supplement to the Shelf Registration Statement. The Senior Notes were offered by the underwriters at a price of 99.108% of their principal amount, providing an effective yield to investors of 7.072%, and, unless previously redeemed, will mature on July 15, 2034. On July 15, 2004, the Company used a portion of the net proceeds from the offering to repay the $103 million term loan outstanding under its bank credit facility.

The Senior Notes are senior unsecured obligations of the Company and rank equally with all of the Company's existing and future unsecured and unsubordinated debt. The Senior Notes are also effectively junior to claims of creditors of the Company's subsidiaries, including policyholders, trade creditors, debt holders and taxing authorities.

The indenture governing the Senior Notes contains certain customary covenants, including:

•	limitations on liens on the stock of restricted subsidiaries;

•	restrictions as to the disposition of the stock of restricted subsidiaries; and

•	limitations on consolidation, merger, amalgamation and sale of assets.

In addition, the following events constitute an event of default under the indenture governing the Senior Notes:

44

---

•	a default in payment of principal or any premium under the Senior Notes when due;

•	a default for 30 days in payment of any interest under the Senior Notes;

•	a failure to observe or perform any other covenant or agreement in the Senior Notes or indenture, other than a covenant or agreement included solely for the benefit of a different series of debt securities, after 90 days written notice of the failure;

•	certain events of bankruptcy, insolvency or reorganization; or

•

a continuing default, for more than 30 days after the Company receives notice of the default, under any other indenture, mortgage, bond, debenture, note or other instrument, under which the Company or its restricted subsidiaries may incur recourse indebtedness for borrowed money in an aggregate principal amount exceeding $50,000,000, if the default resulted in the acceleration of that indebtedness, and such acceleration has not been waived or cured.

Where an event of default occurs and is continuing, either the indenture trustee or the holders of not less than 25% in principal amount of the Senior Notes, may declare the principal and accrued interest of the Senior Notes to be due and payable immediately. If an event of default occurs involving certain events of bankruptcy, insolvency or reorganization, all unpaid principal of all the Senior Notes then outstanding, and interest accrued thereon, if any, shall be due and payable immediately, without any declaration or other act on the part of the indenture trustee or any holder of the Senior Notes.

On August 6, 2004, the Company and its lenders replaced its existing letter of credit and revolving credit facility with a new three-year $850 million letter of credit and revolving credit facility. The full amount of the new credit facility may be used to issue letters of credit or for revolving credit borrowings. Up to $412.5 million of borrowings or letter of credit issuances under the credit facility may be secured by a portion of the investment portfolio of the individual borrower under the credit facility. The new credit facility expires on August 6, 2007. The lenders under the new credit facility are Bank of America, N.A., Barclays Bank PLC, Calyon, Comerica Bank, Commerzbank AG, Credit Suisse First Boston, Deutsche Bank AG, Goldman Sachs Credit Partners L.P., HSBC Bank USA, National Association, ING Bank N.V., JPMorgan Chase Bank, Lloyds TSB Bank plc, Merrill Lynch Bank USA, The Bank of New York, The Bank of Nova Scotia, The Bank of N.T. Butterfield & Son Limited, The Royal Bank of Scotland plc, and Wachovia Bank, National Association. The administrative agent is JPMorgan Chase Bank. The administrative agent is JPMorgan Chase Bank.

As of August 6, 2004, the Company had no revolving loans and $233.4 million of letters of credit outstanding under the new credit facility.

Proceeds of the revolving credit facility may be used by the Company or its subsidiaries for general corporate and working capital purposes and repurchases of its outstanding ordinary or class A shares and warrants to purchase its ordinary or class A shares. The Company cannot use more than $500 million of the proceeds for equity repurchases. The credit facility also provides for the issuance of standby letters of credit, of which up to $412.5 million may be secured by a portion of the investment portfolio of the individual borrower under the facility. Endurance Holdings guaranteed the obligations of those of its subsidiaries that are parties to the credit facility.

The interest rate for revolving loans under the credit facility is either (i) the higher of (a) the Federal Funds Effective Rate plus ½% of 1% and (b) the prime commercial lending rate of JPMorgan Chase Bank or (ii) LIBOR. For letters of credit issued on an unsecured basis, the Company is required to pay a fee ranging from 0.40% to 0.70% on the daily stated amount of such letters of credit. For letters of credit issued on a secured basis, the Company is required to pay a fee ranging from 0.20% to 0.30% on the daily stated amount of such letters of credit. In each case, the applicable fee is determined based upon the ratio of the Company's outstanding indebtedness to total capital, which is referred to as the Company's leverage ratio. If the Company fails to timely repay any revolving loan or timely reimburse any lender for a drawing under a letter of credit, the Company is obligated to pay interest on the unpaid or unreimbursed amount at the applicable rate, plus 2.0%.

The credit facility requires the Company to pay to the lenders a facility fee that ranges from 0.10% to 0.175% of the total commitments outstanding under the credit facility depending on the

45

---

Company's leverage ratio. The Company must also pay the lenders a utilization fee that ranges from 0.125% to 0.25% of the total amount of revolving loans outstanding when the aggregate amount of those loans is equal to 50% of the aggregate lending commitments outstanding under the credit facility.

The credit facility requires that the outstanding principal of revolving loans be repaid in full on August 6, 2007.

The credit facility requires the Company's compliance with certain customary restrictive covenants. These include certain financial covenants, such as maintaining a leverage ratio (no greater than 0.35:1.00 at any time), a consolidated tangible net worth (no less than $1.25 billion at any time), and unencumbered cash and investment grade assets in excess of the greater of $400 million or the Company's outstanding debt and letters of credit. In addition, each of the Company's regulated insurance subsidiaries that has a claims paying rating from A.M. Best must maintain a rating of at least B++ at all times. The terms of the Company's credit facility restrict the declaration or payment of dividends if the Company is already in default or the payment or declaration would cause a default under the terms of the loan facilities. The credit facility also includes other covenants restricting such activities as:

•	changes in business;

•	consolidation or merger with another entity;

•	disposal of assets;

•	incurrence of additional indebtedness;

•	incurrence of liens on our property;

•	issuance of preferred or preference equity securities;

•	dissolution or liquidation;

•	transactions with affiliates; and

•	changes of control.

It is an event of default under the credit facility if there occurs any one of the following:

•	a failure of the Company to pay principal when due, interest or fees within three business days or other amounts under the credit facility following notice or demand;

•	a representation made by the Company is untrue in any material respect;

•	a failure by the Company to perform its covenants;

•	a default in connection with other indebtedness in excess of $30 million;

•	bankruptcy;

•	a material ERISA violation;

•	an adverse judgment in excess of $30 million;

•	suspension of one or more insurance licenses, with the suspension having a material adverse effect on the Company;

•	cessation of the Endurance Holdings guarantee;

•	a failure of the lenders to have a first priority perfected security interest in the collateral; or

•	a change in control of the Company.

Upon the occurrence of an event of default under the credit facility, the lenders can terminate their commitments under the revolving credit facility, require repayment of any outstanding revolving loans, give notice of termination of any outstanding letters of credit in accordance with their terms, require the delivery of cash collateral for outstanding letters of credit and foreclose on any security held by the lenders under the credit facility.

46

---

Given that the Company's Senior Notes (described above) and the credit facility contain cross default provisions, this may result in the holders of the Senior Notes and the lenders under the credit facility declaring such debt due and payable and an acceleration of all debt due under both the Senior Notes and the revolving credit facility. If this were to occur, the Company may not have liquid funds sufficient at that time to repay any or all of such indebtedness.

As of September 30, 2004, the Company had invested $77.5 million in investments in other ventures. At its meeting in May 2004, the Company's Board of Directors approved the investment of up to $100 million (less than 3% of the Company's current invested assets) with performance incentive based alternative investment managers.

During the three months ended September 30, 2004, the Company repurchased 356,800 ordinary shares at an average price of $32.84 per share. Under the previously announced share repurchase program, the Company is authorized to repurchase up to an additional 1,643,200 ordinary shares and share equivalents. The repurchases will be accomplished in open market or privately negotiated transactions, from time to time, depending on market conditions. The share repurchase program is currently authorized to continue until May 2006.

Endurance U.S. entered into a Renewal Rights Purchase Agreement, dated as of October 1, 2004, pursuant to which Endurance U.S. will acquire a majority of the surety reinsurance business of XL Reinsurance America Inc. ("XL Re America") on a prospective basis. Endurance U.S. will pay XL Re America a commission on the surety reinsurance business renewed by Endurance U.S. Endurance U.S. is not obligated to pay any commission prior to the renewal of the business or any minimum amount of commission. In addition, Endurance U.S. will assist XL Re America with the ongoing management of the current in force and expired surety reinsurance portfolio.

The Company has entered into contingent commission arrangements with the largest brokers in the industry, including Marsh & McLennan, Aon, Willis and Benfield. The Company has accrued contingent commissions in accordance with the terms of existing agreements with brokers through September 30, 2004. To date, the Company has not been subpoenaed in connection with any governmental organization's investigation, including the New York Attorney General, and, to our knowledge, the Company is not under investigation by the New York Attorney General or any other governmental organization. Based upon the internal reviews the Company conducted to date, the Company believes it has not engaged in the anti-competitive practices alleged by the New York Attorney General in its complaint against Marsh & McLennan. To validate these initial findings, the Company is conducting on-going confirmatory reviews.

Liquidity and capital resources

Endurance Holdings is a holding company that does not have any significant operations or assets other than its ownership of the shares of its direct and indirect subsidiaries, including Endurance Bermuda, Endurance U.K. and Endurance U.S. Endurance Holdings relies primarily on dividends and other permitted distributions from its insurance subsidiaries to pay its operating expenses, interest on debt and dividends, if any, on its common shares. There are restrictions on the payment of dividends by Endurance Bermuda, Endurance U.K. and Endurance U.S. to Endurance Holdings, which are described in more detail below.

The ability of Endurance Bermuda to pay dividends is dependent on its ability to meet the requirements of applicable Bermuda law and regulations. Under Bermuda law, Endurance Bermuda may not declare or pay a dividend if there are reasonable grounds for believing that Endurance Bermuda is, or would after the payment be, unable to pay its liabilities as they become due, or the realizable value of Endurance Bermuda's assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts. Further, Endurance Bermuda, as a regulated insurance company in Bermuda, is subject to additional regulatory restrictions on the payment of dividends or distributions. As of September 30, 2004, Endurance Bermuda could pay a dividend or return additional paid-in capital totaling approximately $302.8 million without prior regulatory approval based upon insurance and Bermuda Companies Act regulations.

The Company has agreed with the New York Insurance Department not to take a dividend from Endurance U.S. until December 2004 without prior regulatory approval. In addition, Endurance U.S.

47

---

and Endurance U.K. are each subject to significant regulatory restrictions limiting their ability to pay dividends. Accordingly, the Company does not currently intend to seek a dividend from Endurance U.S. or Endurance U.K.

The Company's aggregate invested assets as of September 30, 2004 totaled $3.8 billion compared to aggregate invested assets of $2.7 billion as of December 31, 2003. The increase in invested assets since December 31, 2003 resulted from collections of premiums on insurance policies and reinsurance contracts and investment income, offset by loss and loss expenses paid, acquisition expenses paid, reinsurance premiums paid and general and administrative expenses paid.

On an ongoing basis, the Company expects its internally generated funds, together with borrowings available under its credit facilities, capital from its notes offering and capital base established by its initial public offering and the private placement, to be sufficient to operate its business. However, there can be no assurance that the Company will not incur additional indebtedness in order to implement its business strategy or pay claims.

Currency

The Company's functional currency is U.S. dollars for Endurance Bermuda and Endurance U.S. and British Sterling for Endurance U.K. The reporting currency for all entities is U.S. dollars. The Company maintains a portion of its investments and liabilities in currencies other than the U.S. dollar. The Company has made a significant investment in the capitalization of Endurance U.K. Endurance U.K. is subject to the United Kingdom's Financial Services Authority rules concerning the matching of the currency of its assets to the currency of its liabilities. Depending on the profile of Endurance U.K.'s liabilities, it may be required to hold some of its assets in currencies corresponding to the currencies of its liabilities. The Company may, from time to time, experience losses resulting from fluctuations in the values of foreign currencies, which could have a material adverse effect on the Company's results of operations.

Effects of inflation

The effects of inflation could cause the severity of claims to rise in the future. The Company's estimates for losses and loss expenses include assumptions about future payments for settlement of claims and claims handling expenses, such as medical treatments and litigation costs. To the extent inflation causes these costs to increase above reserves established for these claims, the Company will be required to increase the reserve for losses and loss expenses with a corresponding reduction in its earnings in the period in which the deficiency is identified.

Reserve for losses and loss expenses

As of September 30, 2004, the Company had accrued losses and loss expense reserves of $1.45 billion. This amount represents the Company's actuarial best estimate of the ultimate liability for payment of losses and loss expenses. During the three month period ended September 30, 2004, the Company paid losses and loss expenses of $49.9 million.

As of September 30, 2004, the Company had been notified of a moderate number of claims and potential claims under its insurance policies and reinsurance contracts. Of these notifications, management expects some of the claims to penetrate layers in which the Company provides coverage and case reserves have been established for these expected losses. The Company participates in lines of business where claims may not be reported for many years. Accordingly, management does not believe that reported claims are currently a valid means for estimating ultimate obligations. Ultimate losses and loss expenses may differ materially from the amounts recorded in the Company's consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments, if any, are recorded in earnings in the period in which they are determined. See "Critical Accounting Policies — Reserve for Losses and Loss Expenses." included in the 2003 Annual Report on Form 10-K.

48

---

Incurred losses for the three months ended September 30, 2004 are summarized as follows:

				Property per Risk Treaty Reinsurance				Property Catastrophe Reinsurance				Casualty Treaty Reinsurance				Property Individual Risk				Casualty Individual Risk				Aerospace & Other Specialty Lines				Total
				(in thousands)
Incurred related to:
Current year				$	123,533			$	59,528			$	67,408			$	20,057			$	42,398			$	46,264			$	359,188
Prior years					(18,047	)			(17,643	)			(5,401	)			(3,082	)			(1,851	)			(4,909	)			(50,933	)
Total Incurred Losses				$	105,485			$	41,885			$	62,007			$	16,975			$	40,547			$	41,355			$	308,255

Incurred losses for the three months ended September 30, 2004 include approximately $50.9 million in positive development of reserves relating to the prior accident years. The positive loss reserve development experienced during the three months ended September 30, 2004 benefited the Company's reported loss ratio by 12.4 percentage points.

During the three months ended September 30, 2004, the reduction in the Company's initial estimated losses for prior accident years was experienced most significantly in the property per risk treaty reinsurance segment, where the initial estimate was reduced by approximately $18.0 million; and the property catastrophe treaty reinsurance segment, where the initial estimate was also reduced by approximately $17.6 million. The balance of the $50.9 million was experienced across all the remaining business segments.

The above net reduction in estimated losses for prior accident years reflects lower than expected emergence of catastrophic and attritional losses.

Reserves for losses and loss expenses are comprised of the following at September 30, 2004:

				Property per Risk Treaty Reinsurance				Property Catastrophe Reinsurance				Casualty Treaty Reinsurance				Property Individual Risk				Casualty Individual Risk				Aerospace & Other Specialty Lines				Total
				(in thousands)
Case Reserves				$	117,585			$	19,473			$	59,650			$	20,998			$	5,000			$	60,641			$	283,347
IBNR					241,376				83,715				347,130				45,543				261,909				185,942				1,165,615
Reserve for Losses and Loss Expenses				$	358,961			$	103,188			$	406,780			$	66,541			$	266,909			$	246,583			$	1,448,962

Cautionary statement regarding forward-looking statements and risks

Some of the statements contained herein, and certain statements that the Company may make in a press release or that Company officials may make orally may include forward-looking statements which reflect the Company's current views with respect to future events and financial performance. Such statements 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 for purposes of the federal securities laws or otherwise.

All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements. The Company believes that these factors include, but are not limited to, the following:

-	the effects of competitors' pricing policies, and of recent governmental action and changes in laws and regulations on competition, including those regarding contingent commissions, industry consolidation and development of competing financial products;

-	the impact of acts of terrorism and acts of war;

-	the effects of terrorist related insurance legislation and laws;

49

---

-	greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than the Company's underwriting, reserving or investment practices have anticipated;

-	decreased level of demand for property and casualty insurance or reinsurance or increased competition due to an increase in capacity of property and casualty reinsurers;

-	the inability to obtain or maintain financial strength or claims-paying ratings by one or more of the Company's subsidiaries;

-	uncertainties in the Company's reserving process;

-	Endurance Holdings or Endurance Bermuda becomes subject to income taxes in the United States or the United Kingdom;

-	changes in regulations or tax laws applicable to us, the Company's subsidiaries, brokers or customers;

-	acceptance of the Company's products and services, including new products and services;

-	the inability to renew business previously underwritten or acquired;

-	changes in the availability, cost or quality of reinsurance or retrocessional coverage;

-	loss of key personnel;

-	political stability of Bermuda;

-	changes in accounting policies or practices; and

-	changes in general economic conditions, including inflation, foreign currency exchange rates and other factors which could affect the Company's investment portfolio.

On October 14, 2004, the New York Attorney General's Office filed a civil complaint against Marsh Inc. and Marsh & McLennan Companies, Inc. (collectively, "Marsh") alleging, among other things, that Marsh and certain insurance companies participated in anti-competitive practices in connection with the process of placing and underwriting certain classes of business insurance. We cannot predict the effect that any investigation of the New York Attorney General or any other regulatory authority related to such anti-competitive practices in the insurance industry or contingent commissions arrangements with brokers generally will have on the industry or our business. The receipt of a subpoena in connection with any governmental organization's investigation, including the investigation of the New York Attorney General, and the related negative publicity, fines and penalties or rating agency actions could have a material adverse effect on our business, results of operations and financial condition. In addition, since we assume a degree of credit risk associated with brokers with respect to most of our insurance and reinsurance business, our results of operations could be adversely affected in the event that the credit quality of Marsh or our other brokers is severely impacted by the current investigations or changes to current contingent commission practices.

The foregoing review of important factors and risks should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the 2003 Annual Report on Form 10-K. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

50

---

Item 3. Quantitative and Qualitative Information about Market Risk

The Company believes that it is principally exposed to four types of market risk: interest rate risk, equity risk, foreign currency risk and credit risk. With the exception of the following, the Company believes that there have been no material changes in market risk from the information provided under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Information about Market Risk" included in the 2003 Annual Report on Form 10-K.

Interest Rate Risk. The Company's investments in other ventures are exposed to interest rate risk. To the extent that the securities underlying these investments are fixed maturities, fluctuations in interest rates have a direct impact on the market valuation of these investments.

Equity Risk. The Company's investments in other ventures are exposed to equity risk. To the extent that the securities underlying these investments are equity securities, fluctuations in the equity markets have a direct impact on the market valuation of these investments.

The Company's investment in other ventures at September 30, 2004 was $78.6 million which represents 2.4% of the Company's invested assets.

Item 4. Controls and Procedures

a)   Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

b)   Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company's first fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

51

---

PART II
OTHER INFORMATION

Item 1.    Legal Proceedings

The Company is party to various legal proceedings generally arising in the normal course of its business. The Company does not believe that the eventual outcome of any such proceeding will have a material effect on its financial condition or business. The Company's subsidiaries are regularly engaged in the investigation and the defense of claims arising out of the conduct of their business. Pursuant to the Company's insurance and reinsurance arrangements, disputes are generally required to be finally settled by arbitration.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

(d)    Use of Proceeds from Registered Securities

On March 5, 2003, the Company consummated the initial public offering of its ordinary shares, $1.00 par value per share. The managing underwriters were Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Credit Suisse First Boston LLC and Deutsche Bank Securities Inc. The ordinary shares sold in the offering were registered under the Securities Act of 1933, as amended on a Registration Statement on Form S-1 (Registration No. 333-102026) that was declared effective by the U.S. Securities and Exchange Commission on February 27, 2003. Of the ordinary shares registered under the Registration Statement, 9,600,000 were sold at a price to the public of $23.00 per share. All of the ordinary shares were sold by the Company and there were no selling shareholders in the offering. The offering terminated without the sale of 1,440,000 ordinary shares registered on the Registration Statement. The aggregate gross proceeds from the ordinary shares sold by the Company were $220.8 million. The estimated aggregate net proceeds to the Company from the offering were approximately $201.5 million after deducting an aggregate of $15.5 million in underwriting discounts and commissions paid to the underwriters and an estimated $3.8 million in other direct expenses incurred in connection with the offering.

None of the proceeds from the offering were paid, directly or indirectly, to any of the Company's officers or directors or any of their associates, or to any persons owning ten percent or more of the Company's outstanding ordinary shares or to any of the Company's affiliates. Upon consummation of the offering, the Company applied $50.6 million of the net proceeds of the offering to the repayment of principal under the Company's term loan facility. On June 12, 2003, the Company contributed $50 million to the capital of its subsidiary, Endurance Specialty Insurance Ltd., for further contribution to its United States subsidiary, Endurance Reinsurance Corporation of America. On September 27, 2003, the Company used $38.4 million of the next proceeds of the offering for the scheduled repayment of principal under the Company's term loan facility. In July 2004, the Company invested the remaining net proceeds of the offering in alternative investment vehicles and on September 1, 2004, contributed such investments to the capital of its subsidiary, Endurance Specialty Insurance Ltd.

52

---

(e)    Purchases of Equity Securities by the Issuer and Affiliated Purchasers

ISSUER PURCHASES OF EQUITY SECURITIES
Period				(a) Total Number of Shares (or Units) Purchased (1)				(b) Average Price Paid per Share (or Unit)				(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) (2)				(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) (2)
July 1, 2004 – July 31, 2004					72,000			$	32.86				72,000				1,928,000
August 1, 2004 – August 31, 2004					269,800			$	33.21				269,800				1,658,200
September 1, 2004 – September 30, 2004					15,000			$	32.47				15,000				1,643,200
Total					356,800			$	32.84				356,800				1,643,200

(1)	Ordinary shares or share equivalents.

(2)	On May 24, 2004, the Company initiated a share repurchase program. Under this program, the Company will repurchase up to 2,000,000 of its ordinary shares and share equivalents. The repurchases will be accomplished in open market or privately negotiated transactions, from time to time, depending on market conditions. The share repurchase program is currently authorized to continue until May 2006.

Item 3.    Defaults Upon Senior Securities

None

Item 4.    Submissions of Matters to a Vote of Security Holders

None

Item 5.    Other Information

None

Item 6.    Exhibits

The following sets forth those exhibits filed pursuant to Item 601 of Regulation S-K:

Exhibit Number				Description
10.1				Form of Option Agreement
10.2				Form of Restricted Share Unit Agreement
10.3				Credit Agreement, dated as of August 6, 2004, among the Company, various designated subsidiary borrowers, various lending institutions and JPMorgan Chase Bank, as Administrative Agent.*
10.4				Pledge and Security Agreement, dated as of August 6, 2004, by and among the Company, various designated subsidiary borrowers, The Bank of New York, as Collateral Agent and Custodian and JPMorgan Chase Bank, as Administrative Agent.**
10.5				Account Control Agreement, dated as of August 6, 2004, by and among the Company, Endurance Specialty Insurance Ltd., Endurance U.S. Holdings Corp., Endurance Worldwide Holdings Limited, Endurance Worldwide Insurance Limited and The Bank of New York, as Custodian.***
31.1				Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.

53

---

Exhibit Number				Description
31.2				Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
32				Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Incorporate herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004

**	Incorporate herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004

***	Incorporate herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004

54

---

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 12, 2004				By:  /s/   Kenneth J. LeStrange                                 Kenneth J. LeStrange Chairman of the Board, Chief Executive Officer, President
Date: November 12, 2004				By:  /s/ James R. Kroner                                         James R. Kroner Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

55

---