ENDURANCE SPECIALTY HOLDINGS LTD - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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8-K - FORM 8-K - ENDURANCE SPECIALTY HOLDINGS LTD	c16316e8vk.htm
EX-99.1 - EXHIBIT 99.1 - ENDURANCE SPECIALTY HOLDINGS LTD	c16316exv99w1.htm

Exhibit 99.2

Endurance Specialty Holdings Ltd.

INVESTOR FINANCIAL SUPPLEMENT

FIRST QUARTER 2011

Endurance Specialty Holdings Ltd.
Wellesley House, 90 Pitts Bay Rd.
Pembroke HM 08, Bermuda

Investor Relations
Phone: (441) 278-0988
Fax: (441) 278-0493
email: investorrelations@endurance.bm

This report is for information purposes only. It should be read in conjunction with other documents filed by Endurance Specialty Holdings Ltd. pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.

Financial Supplement Table of Contents


	Page
i. Basis of Presentation		i
ii. Corporate Organization Chart	ii
I. Consolidated Financial Highlights		1
II. Consolidated Financial Statements
a. Consolidated Statements of Income — Quarterly		2
b. Consolidated Statements of Income — Prior Years		3
c. Consolidated Balance Sheets		4
III. Other Financial Information
a. Endurance Operating Income Profile		6
b. Segment Distribution		7
c. Consolidated Segment Data		8
d. Return on Equity Analysis		14
e. ROE Component Analysis — Annualized Premium and Investment Leverage		15
f. Investment Portfolio Information		16
g. Structured Securities Detail		17
h. Largest Twenty-Five Corporate Holdings		18
IV. Loss Reserve Analysis
a. Activity in Reserve for Losses and Loss Expenses		19
b. Prior Year Reserve Development by Segment		20
c. Prior Year Reserve Development by Development Tail		21
d. Analysis of Unpaid Losses and Loss Expenses		22
V. Shareholder Return Analysis
a. Shareholder Return Analysis		23
b. Weighted Average Dilutive Shares Outstanding		24
c. Earnings per Share — Two Class Method		25
d. Operating Income Reconciliation — Two Class Method		26
e. Dilutive Shares Sensitivity Analysis		27
f. Book Value Per Share Analysis		28

VI. Regulation G		29

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:

Some of the statements in this financial supplement may include forward-looking statements which reflect our current views with respect to future events and financial performance. Such statements may include forward-looking statements both with respect to us in general and the insurance and reinsurance sectors specifically, both as to underwriting and investment matters. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “seek,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements in this financial supplement for purposes of the U.S. federal securities laws or otherwise. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only to the date on which they are made. We undertake no obligation to publicly update or review any forward looking statement, when as a result of new information, future developments or otherwise.

All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or may be important factors that could cause actual results to differ from those indicated in the forward-looking statements. These factors include, but are not limited to, the effects of competitors’ pricing policies, greater frequency or severity of claims and loss activity, changes in market conditions in the agriculture insurance industry, termination of or changes in the terms of the U.S. multiple peril crop insurance program, a decreased demand for property and casualty insurance or reinsurance, changes in the availability, cost or quality of reinsurance or retrocessional coverage, our inability to renew business previously underwritten or acquired, our inability to maintain our applicable financial strength ratings, our inability to effectively integrate acquired operations, uncertainties in our reserving process, changes to our tax status, changes in insurance regulations, reduced acceptance of our existing or new products and services, a loss of business from and credit risk related to our broker counterparties, assessments for high risk or otherwise uninsured individuals, possible terrorism or the outbreak of war, a loss of key personnel, political conditions, changes in insurance regulation, changes in accounting policies, our investment performance, the valuation of our invested assets, a breach of our investment guidelines, the unavailability of capital in the future, developments in the world’s financial and capital markets and our access to such markets, government intervention in the insurance and reinsurance industry, illiquidity in the credit markets, changes in general economic conditions and other factors described in our Annual Report on Form 10-K for the year ended December 31, 2010.

ENDURANCE SPECIALTY HOLDINGS LTD.
BASIS OF PRESENTATION

DEFINITIONS AND PRESENTATION

•		All financial information contained herein is unaudited, except the balance sheet and/or income statement data for the years ended December 31, 2010, 2009 and 2008 which was derived from the Company’s audited financial statements.

•		Unless otherwise noted, all data is in thousands, except for per share, percentage and ratio information.

•		As used in this financial supplement, “common shares” refers to our ordinary shares and class A shares, collectively.

•		Endurance Specialty Holdings Ltd., along with others in the industry, uses underwriting ratios as measures of performance. The loss ratio is the ratio of claims and claims adjustment expense to earned premiums. The acquisition expense ratio is the ratio of underwriting expenses (commissions, taxes, licenses and fees, as well as other underwriting expenses) to earned premiums. The general and administrative expense ratio is the ratio of general and administrative expenses to earned premiums. The combined ratio is the sum of the loss ratio, the acquisition expense ratio and the general and administrative expense ratio. These ratios are relative measurements that describe for every $100 of net premiums earned, the cost of losses and expenses, respectively. The combined ratio presents the total cost per $100 of earned premium. A combined ratio below 100% demonstrates underwriting profit; a combined ratio above 100% demonstrates underwriting loss.

•		NM — Not meaningful.

ENDURANCE SPECIALTY HOLDINGS LTD.
CORPORATE ORGANIZATION CHART

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED FINANCIAL HIGHLIGHTS


	QUARTER ENDED						Previous
	MARCH 31,						Quarter
	2011			2010			Change

HIGHLIGHTS
Net (loss) income	$	(87,417	)	$	55,789			(256.7	)%
Net (loss) income (attributable) available to common and participating common shareholders		(91,292	)		51,914			(275.9	)%
Net (loss) income allocated to common shareholders		(91,567	)		50,978			(279.6	)%
Operating (loss) income [a]		(96,643	)		60,172			(260.6	)%
Operating (loss) income (attributable) available to common and participating common shareholders [a]		(100,518	)		56,297			(278.5	)%
Operating (loss) income allocated to common shareholders [a]		(100,793	)		55,283			(282.3	)%
Operating cash flow		181,282			127,710			41.9	%
Gross premiums written		1,000,358			818,869			22.2	%
Net premiums written		798,872			702,942			13.6	%
Net premiums earned		382,833			365,189			4.8	%
Total assets		8,416,181			8,196,553			2.7	%
Total shareholders’ equity		2,408,264			2,821,087			(14.6	)%


PER SHARE AND SHARES DATA
Basic (loss) earnings per common share
Net (loss) income (as reported)	$	(2.25	)	$	0.95			(336.8	)%
Operating (loss) income (as reported) [a]	$	(2.47	)	$	1.04			(337.5	)%
Diluted (loss) earnings per common share
Net (loss) income (as reported)	$	(2.25	)	$	0.91			(347.3	)%
Operating (loss) income (as reported) [a]	$	(2.47	)	$	0.98			(352.0	)%

As Reported
Weighted average common shares outstanding		40,750			53,412			(23.7	)%
Weighted average common shares outstanding and dilutive potential common shares		40,750			56,296			(27.6	)%

Book Value Per Common Share
Book value [b]	$	55.91		$	49.44			13.1	%
Diluted book value (treasury stock method) [b]	$	51.52		$	45.89			12.3	%


FINANCIAL RATIOS
Return on average common equity (ROAE), net income [c]		(3.8	)%		2.0	%		(5.8	)
ROAE, operating (loss) income [a] [c]		(4.1	)%		2.2	%		(6.3	)
Return on beg. common equity (ROBE), net income [d]		(3.4	)%		2.0	%		(5.4	)
ROBE, operating (loss) income [a] [d]		(3.8	)%		2.2	%		(6.0	)

Annualized ROAE, net (loss) income [c]		(15.0	)%		8.0	%		(23.0	)
Annualized ROAE, operating (loss) income [a] [c]		(16.6	)%		8.6	%		(25.2	)
Annualized ROBE, net (loss) income [d]		(13.8	)%		8.0	%		(21.8	)
Annualized ROBE, operating (loss) income [a] [d]		(15.2	)%		8.7	%		(23.9	)
Annualized investment yield		3.5	%		3.8	%		(0.3	)

GAAP
Loss ratio		105.0	%		63.7	%		41.3
Acquisition expense ratio		17.1	%		17.5	%		(0.4	)
General and administrative expense ratio		17.2	%		16.1	%		1.1

Combined ratio		139.3	%		97.3	%		42.0


[a]		Operating (loss) income represents after-tax operational results excluding, as applicable, after-tax net realized capital gains or losses and after-tax net foreign exchange gains or losses. Please see page 26 for a reconciliation to net (loss) income.

[b]		For detailed calculations, please refer to page 28.

[c]		Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the $200 million liquidation value of the preferred shares.

[d]		Beginning common equity for the stated periods excludes the $200 million liquidation value of the preferred shares.

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME — QUARTERLY


	QUARTERS ENDED
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			MAR. 31, 2009
UNDERWRITING REVENUES
Gross premiums written	$	1,000,358		$	189,225		$	555,574		$	489,568		$	818,869		$	783,306
Premiums ceded		(201,486	)		(31,110	)		(103,690	)		(38,765	)		(115,927	)		(200,391	)

Net premiums written	$	798,872		$	158,115		$	451,884		$	450,803		$	702,942		$	582,915
Change in unearned premiums		(416,039	)		291,621			17,909			5,592			(337,753	)		(204,640	)

Net premiums earned	$	382,833		$	449,736		$	469,793		$	456,395		$	365,189		$	378,275
Other underwriting (loss) income		(1,069	)		410			322			(2,663	)		295			3,597

Total underwriting revenues	$	381,764		$	450,146		$	470,115		$	453,732		$	365,484		$	381,872

UNDERWRITING EXPENSES
Losses and loss expenses	$	401,853		$	246,424		$	266,132		$	292,947		$	232,597		$	220,136
Acquisition expenses		65,618			66,133			67,443			66,708			63,944			68,274
General and administrative expenses		65,961			67,756			59,523			55,676			58,965			60,257

Total underwriting expenses	$	533,432		$	380,313		$	393,098		$	415,331		$	355,506		$	348,667

Underwriting (loss) income	$	(151,668	)	$	69,833		$	77,017		$	38,401		$	9,978		$	33,205

OTHER OPERATING REVENUE
Net investment income	$	52,501		$	56,874		$	53,654		$	33,351		$	56,479		$	64,550
Interest expense		(9,054	)		(9,053	)		(9,051	)		(9,050	)		(7,608	)		(7,555	)
Amortization of intangibles		(2,798	)		(2,696	)		(2,588	)		(2,588	)		(2,588	)		(2,588	)

Total other operating revenue	$	40,649		$	45,125		$	42,015		$	21,713		$	46,283		$	54,407

(LOSS) INCOME BEFORE OTHER ITEMS	$	(111,019	)	$	114,958		$	119,032		$	60,114		$	56,261		$	87,612
OTHER
Net foreign exchange gains (losses)	$	6,918		$	(3,476	)	$	12,565		$	(129	)	$	(5,971	)	$	62
Net realized and unrealized investment gains		3,775			7,314			8,973			2,657			3,544			3,241

Total other-than-temporary impairment losses		(1,256	)		(48	)		(1,140	)		(738	)		(769	)		(12,126	)
Portion of loss recognised in other comprehensive income		(391	)		(663	)		(240	)		(254	)		(92	)		—

Net impairment losses recognised in earnings [a]		(1,647	)		(711	)		(1,380	)		(992	)		(861	)		(12,126	)

Income tax benefit (expense)		14,556			(6,857	)		(62	)		(3,057	)		2,816			(492	)

NET (LOSS) INCOME	$	(87,417	)	$	111,228		$	139,128		$	58,593		$	55,789		$	78,297
Preferred dividends		(3,875	)		(3,875	)		(3,875	)		(3,875	)		(3,875	)		(3,875	)


NET (LOSS) INCOME (ATTRIBUTABLE) AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS	$	(91,292	)	$	107,353		$	135,253		$	54,718		$	51,914		$	74,422


KEY RATIOS/PER SHARE DATA

Loss ratio		105.0	%		54.8	%		56.6	%		64.2	%		63.7	%		58.2	%
Acquisition expense ratio		17.1	%		14.7	%		14.4	%		14.6	%		17.5	%		18.1	%
General and administrative expense ratio		17.2	%		15.1	%		12.7	%		12.2	%		16.1	%		15.9	%

Combined ratio		139.3	%		84.6	%		83.7	%		91.0	%		97.3	%		92.2	%


Basic (losses) earnings per common share	$	(2.25	)	$	2.22		$	2.64		$	1.02		$	0.95		$	1.30
Diluted (losses) earnings per common share	$	(2.25	)	$	2.09		$	2.51		$	0.97		$	0.91		$	1.24

ROAE, net (loss) income [b]		(3.8	)%		4.0	%		5.0	%		2.1	%		2.0	%		3.7	%


[a]		Effective April 1, 2009, the Company adopted new accounting guidance related to the recognition and presentation of other-than-temporary impairments, which required the Company to identify whether an investment was in an unrealized loss position due to credit or non-credit related factors. Only credit related impairments are recognized in earnings.

[b]		Average common equity is calculated as the arithmetic average of the beginning and ending equity balances for the stated periods, which excludes the $200 million liquidation value of the preferred shares.

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF INCOME — PRIOR YEARS


	YEAR ENDED
	DEC. 31, 2010			DEC. 31, 2009			DEC. 31, 2008

UNDERWRITING REVENUES
Gross premiums written	$	2,053,236		$	2,021,450		$	2,246,420
Premiums ceded		(289,492	)		(415,400	)		(462,130	)

Net premiums written	$	1,763,744		$	1,606,050		$	1,784,290
Change in unearned premiums		(22,631	)		27,142			(17,805	)

Net premiums earned	$	1,741,113		$	1,633,192		$	1,766,485
Other underwriting (loss) income		(1,636	)		3,914			(3,973	)

Total underwriting revenues	$	1,739,477		$	1,637,106		$	1,762,512

UNDERWRITING EXPENSES
Losses and loss expenses	$	1,038,100		$	866,640		$	1,135,431
Acquisition expenses		264,228			267,971			299,913
General and administrative expenses		241,920			237,154			216,365

Total underwriting expenses	$	1,544,248		$	1,371,765		$	1,651,709

Underwriting income	$	195,229		$	265,341		$	110,803

OTHER OPERATING REVENUE
Net investment income	$	200,358		$	284,200		$	130,176
Interest expense		(34,762	)		(30,174	)		(30,171	)
Amortization of intangibles		(10,460	)		(10,463	)		(10,675	)

Total other operating revenue	$	155,136		$	243,563		$	89,330


INCOME BEFORE OTHER ITEMS	$	350,365		$	508,904		$	200,133
OTHER
Net foreign exchange gains (losses)	$	2,989		$	29,740		$	(53,704	)
Net realized gains on investment sales		22,488			6,303			24,769

Total other-than-temporary impairment losses		(2,695	)		(50,993	)		(82,135	)
Portion of loss recognised in other comprehensive income		(1,249	)		30,742			—

Net impairment losses recognised in earnings [a]		(3,944	)		(20,251	)		(82,135	)

Income tax (expense) benefit		(7,160	)		11,408			9,561

NET INCOME	$	364,738		$	536,104		$	98,624
Preferred dividends		(15,500	)		(15,500	)		(15,500	)


NET INCOME AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS	$	349,238		$	520,604		$	83,124


KEY RATIOS/PER SHARE DATA
Loss ratio		59.6	%		53.1	%		64.3	%
Acquisition expense ratio		15.2	%		16.4	%		17.0	%
General and administrative expense ratio		13.9	%		14.5	%		12.2	%

Combined ratio		88.7	%		84.0	%		93.5	%


Basic earnings per common share	$	6.73		$	9.14		$	1.41
Diluted earnings per common share	$	6.38		$	8.69		$	1.31

ROAE, net income [b]		13.3	%		22.7	%		3.8	%


[a]		Effective April 1, 2009, the Company adopted new accounting guidance related to the recognition and presentation of other-than-temporary impairments, which required the Company to identify whether an investment was in an unrealized loss position due to credit or non-credit related factors. Only credit related impairments are recognized in earnings.

[b]		Average common equity is calculated as the arithmetic average of the beginning and ending equity balances for the stated periods, which excludes the $200 million liquidation value of the preferred shares.

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED BALANCE SHEETS


	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2009
ASSETS
Cash and cash equivalents	$	568,770		$	609,852		$	600,227		$	690,761		$	668,049		$	528,944
Fixed maturity investments available for sale, at fair value		5,014,226			5,116,702			5,063,873			4,908,774			4,793,451			4,548,618
Short term investments available for sale, at fair value		48,186			70,444			326,846			272,706			389,937			534,678
Equity securities available for sale, at fair value		25,333			13,565			12,773			11,952			12,329			11,023
Other investments		401,450			376,652			360,629			346,938			368,035			351,352
Premiums receivable, net		1,049,129			827,609			1,039,689			1,086,818			935,244			565,348
Deferred acquisition costs		178,486			154,484			192,194			175,479			163,639			146,979
Securities lending collateral		72,657			59,886			127,680			281,391			128,299			66,913
Prepaid reinsurance premiums		248,275			107,977			160,070			143,438			179,603			120,941
Losses recoverable		340,908			319,349			324,757			247,888			246,583			467,664
Accrued investment income		29,164			32,934			32,315			30,880			28,746			30,367
Goodwill and intangible assets		189,501			181,954			184,543			186,657			189,246			191,450
Deferred tax assets		49,370			33,684			29,130			25,941			30,502			17,252
Receivable on pending investment sales		128,867			602			372			1,935			8,859			632
Other assets		71,859			73,711			80,139			78,880			54,031			84,533

TOTAL ASSETS	$	8,416,181		$	7,979,405		$	8,535,237		$	8,490,438		$	8,196,553		$	7,666,694


LIABILITIES
Reserve for losses and loss expenses	$	3,566,198		$	3,319,927		$	3,401,312		$	3,274,637		$	3,138,905		$	3,157,026
Reserve for unearned premiums		1,398,610			842,154			1,186,001			1,186,857			1,228,559			832,561
Deposit liabilities		32,768			32,505			36,952			39,641			39,729			42,638
Reinsurance balances payable		143,305			228,860			209,651			209,533			153,174			220,435
Securities lending payable		72,657			59,886			127,681			281,391			128,265			66,968
Debt		528,569			528,411			528,425			528,363			528,357			447,664
Payable on pending investment purchases		164,744			—			17,042			39,906			79,245			25
Other liabilities		101,066			119,509			108,488			86,005			79,232			112,094

TOTAL LIABILITIES	$	6,007,917		$	5,131,252		$	5,615,552		$	5,646,333		$	5,375,466		$	4,879,411

SHAREHOLDERS’ EQUITY
Preferred shares
Series A, non-cumulative	$	8,000		$	8,000		$	8,000		$	8,000		$	8,000		$	8,000
Common shares		40,325			47,218			49,685			52,664			54,230			55,116
Additional paid-in capital		289,920			613,915			715,834			822,572			882,684			929,577
Accumulated other comprehensive income		132,806			138,571			201,172			138,605			95,413			52,148
Retained earnings		1,937,213			2,040,449			1,944,994			1,822,264			1,780,760			1,742,442

TOTAL SHAREHOLDERS’ EQUITY	$	2,408,264		$	2,848,153		$	2,919,685		$	2,844,105		$	2,821,087		$	2,787,283

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	8,416,181		$	7,979,405		$	8,535,237		$	8,490,438		$	8,196,553		$	7,666,694


Book value per common share	$	55.91		$	57.25		$	55.83		$	51.17		$	49.44		$	47.74
Diluted book value per common share (treasury stock method)	$	51.52		$	52.74		$	51.83		$	47.78		$	45.89		$	44.61

RATIOS
Debt-to-capital		18.0	%		15.6	%		15.3	%		15.7	%		15.8	%		13.8	%

ENDURANCE SPECIALTY HOLDINGS LTD.

The above chart represents a cumulative analysis of our in-force underwriting portfolio on a full year basis based on thousands of potential scenarios. Loss years are driven largely by the occurrence of natural catastrophes and incorrect pricing of other property and casualty exposures. The operating income depicted includes net premiums earned plus net investment income, less acquisition expenses and G&A expenses. The operating income depicted excludes the effects of income tax (expenses) benefits, amortization of intangibles and interest expense. Forecasted investment income, acquisition and G&A expenses are held constant across all scenarios. Losses included above are net of reinsurance. Our stated objective is to maintain a risk management tolerance that limits our loss in a 1-in-100 year to no more than 25% of our shareholders’ equity.

Changes in Endurance’s underwriting portfolio, investment portfolio, risk control mechanisms, market conditions and other factors may cause actual results to vary considerably from those indicated by our value at risk curve. For a listing of risks related to Endurance and its future performance, please see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010.

ENDURANCE SPECIALTY HOLDINGS LTD.
Annual Operating Income Profile Comparison


										Change from Jan. 1, 2010 - Dec. 31, 2010 to Jan. 1,						Change from Jul. 1, 2010 - June 30, 2011 to Jan. 1,
										2011 - Dec. 31, 2011						2011 - Dec. 31, 2011
	Jan. 1, 2010 -			Jul. 1, 2010 -			Jan. 1, 2011 -			$			$			$			$
(in millions)	Dec. 31, 2010			June 30, 2011			Dec. 31, 2011			Change			Change			Change			Change

Median Result	$	339		$	373		$	322		$	(17	)		(5.0	%)	$	(51	)		(13.7	%)
Average Result		286			320			268			(18	)		(6.3	%)		(52	)		(16.3	%)

1 in 10 year annual gain		(34	)		8			(36	)		(2	)		5.9	%		(44	)		(550.0	%)
1 in 25 year annual loss		(234	)		(197	)		(261	)		(27	)		11.5	%		(64	)		32.5	%
1 in 50 year annual loss		(385	)		(366	)		(427	)		(42	)		10.9	%		(61	)		16.7	%
1 in 100 year annual loss		(562	)		(545	)		(600	)		(38	)		6.8	%		(55	)		10.1	%
1 in 250 year annual loss		(801	)		(785	)		(849	)		(48	)		6.0	%		(64	)		8.2	%
1 in 500 year annual loss		(940	)		(978	)		(1,038	)		(98	)		10.4	%		(60	)		6.1	%

ENDURANCE SPECIALTY HOLDINGS LTD.
SEGMENT DISTRIBUTION

FOR THE QUARTER ENDED MARCH 31, 2011

Net Premiums Written = $799 million


Source of Business		Business Segments



Broker Distribution — Insurance		Broker Distribution — Reinsurance


[a]		Other specialty includes the agriculture line in the Insurance segment and aerospace and marine and surety and other specialty lines in the Reinsurance segment.

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED SEGMENT DATA


	FOR THE QUARTERS ENDED
	MAR. 31, 2011									MAR. 31, 2010
	Insurance			Reinsurance			Totals			Insurance			Reinsurance			Totals
UNDERWRITING REVENUES
Gross premiums written	$	625,831		$	374,527		$	1,000,358		$	464,341		$	354,528		$	818,869

Net premiums written	$	432,296		$	366,576		$	798,872		$	348,941		$	354,001		$	702,942

Net premiums earned	$	162,492		$	220,341		$	382,833		$	145,676		$	219,513		$	365,189
Other underwriting (loss) income		—			(1,069	)		(1,069	)		(2	)		297			295

Total underwriting revenues	$	162,492		$	219,272		$	381,764		$	145,674		$	219,810		$	365,484


UNDERWRITING EXPENSES
Losses and loss expenses	$	98,836		$	303,017		$	401,853		$	86,084		$	146,513		$	232,597
Acquisition expenses		16,308			49,310		$	65,618			17,426			46,518			63,944
General and administrative expenses		36,806			29,155		$	65,961			30,121			28,844			58,965

Total expenses	$	151,950		$	381,482		$	533,432		$	133,631		$	221,875		$	355,506


UNDERWRITING INCOME (LOSS)	$	10,542		$	(162,210	)	$	(151,668	)	$	12,043		$	(2,065	)	$	9,978


GAAP RATIOS
Loss ratio		60.8	%		137.5	%		105.0	%		59.0	%		66.8	%		63.7	%
Acquisition expense ratio		10.0	%		22.4	%		17.1	%		12.0	%		21.2	%		17.5	%
General and administrative expense ratio		22.7	%		13.2	%		17.2	%		20.7	%		13.1	%		16.1	%

Combined ratio AS REPORTED		93.5	%		173.1	%		139.3	%		91.7	%		101.1	%		97.3	%


Effect of favorable prior accident year reserve development		21.3	%		6.4	%		12.7	%		12.1	%		9.5	%		10.6	%


Combined ratio net of prior accident year reserve development		114.8	%		179.5	%		152.0	%		103.8	%		110.6	%		107.9	%

ENDURANCE SPECIALTY HOLDINGS LTD.
INSURANCE SEGMENT DATA


	FOR THE QUARTERS ENDED
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			MAR. 31, 2009
UNDERWRITING REVENUES
Gross premiums written	$	625,831		$	112,664		$	303,561		$	231,626		$	464,341		$	522,214

Net premiums written	$	432,296		$	81,643		$	204,293		$	194,987		$	348,941		$	322,430

Net premiums earned	$	162,492		$	205,528		$	242,766		$	227,858		$	145,676		$	180,674
Other underwriting income (loss)		—			4			473			—			(2	)		2,959

Total underwriting revenues	$	162,492		$	205,532		$	243,239		$	227,858		$	145,674		$	183,633


UNDERWRITING EXPENSES
Losses and loss expenses	$	98,836		$	129,168		$	172,015		$	170,773		$	86,084		$	98,804
Acquisition expenses		16,308			12,220			17,356			16,554			17,426			24,841
General and administrative expenses		36,806			36,812			29,256			27,146			30,121			29,759

Total expenses	$	151,950		$	178,200		$	218,627		$	214,473		$	133,631		$	153,404


UNDERWRITING INCOME	$	10,542		$	27,332		$	24,612		$	13,385		$	12,043		$	30,229


GAAP RATIOS
Loss ratio		60.8	%		62.9	%		70.9	%		74.9	%		59.0	%		54.7	%
Acquisition expense ratio		10.0	%		5.9	%		7.1	%		7.3	%		12.0	%		13.7	%
General and administrative expense ratio		22.7	%		17.9	%		12.1	%		11.9	%		20.7	%		16.5	%

Combined ratio AS REPORTED		93.5	%		86.7	%		90.1	%		94.1	%		91.7	%		84.9	%


Effect of favorable prior accident year reserve development		21.3	%		5.6	%		3.9	%		3.6	%		12.1	%		20.4	%

Combined ratio net of prior accident year reserve development		114.8	%		92.3	%		94.0	%		97.7	%		103.8	%		105.3	%

ENDURANCE SPECIALTY HOLDINGS LTD.
REINSURANCE SEGMENT DATA


	FOR THE QUARTERS ENDED
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			MAR. 31, 2009
UNDERWRITING REVENUES
Gross premiums written	$	374,527		$	76,561		$	252,013		$	257,942		$	354,528		$	261,092

Net premiums written	$	366,576		$	76,472		$	247,591		$	255,816		$	354,001		$	260,485

Net premiums earned	$	220,341		$	244,208		$	227,027		$	228,537		$	219,513		$	197,601
Other underwriting (loss) income		(1,069	)		406			(151	)		(2,663	)		297			638

Total underwriting revenues	$	219,272		$	244,614		$	226,876		$	225,874		$	219,810		$	198,239


UNDERWRITING EXPENSES
Losses and loss expenses	$	303,017		$	117,256		$	94,117		$	122,174		$	146,513		$	121,332
Acquisition expenses		49,310			53,913			50,087			50,154			46,518			43,433
General and administrative expenses		29,155			30,944			30,267			28,530			28,844			30,498

Total expenses	$	381,482		$	202,113		$	174,471		$	200,858		$	221,875		$	195,263


UNDERWRITING (LOSS) INCOME	$	(162,210	)	$	42,501		$	52,405		$	25,016			($2,065	)	$	2,976


GAAP RATIOS
Loss ratio		137.5	%		48.0	%		41.5	%		53.5	%		66.8	%		61.4	%
Acquisition expense ratio		22.4	%		22.1	%		22.1	%		21.9	%		21.2	%		22.0	%
General and administrative expense ratio		13.2	%		12.7	%		13.3	%		12.5	%		13.1	%		15.4	%

Combined ratio AS REPORTED		173.1	%		82.8	%		76.9	%		87.9	%		101.1	%		98.8	%


Effect of favorable prior accident year reserve development		6.4	%		4.9	%		11.3	%		9.4	%		9.5	%		1.3	%

Combined ratio net of prior accident year reserve development		179.5	%		87.7	%		88.2	%		97.3	%		110.6	%		100.1	%

ENDURANCE SPECIALTY HOLDINGS LTD.
SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS


	FOR THE QUARTERS ENDED
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			MAR. 31, 2009
INSURANCE SEGMENT
Agriculture	$	508,705		$	6,930		$	156,162		$	54,170		$	350,199		$	378,410
Professional lines		35,469			36,690			43,381			56,567			33,508			35,137
Casualty		38,882			37,377			40,538			55,406			34,228			30,624
Property		24,690			22,134			30,295			43,158			26,523			27,751
Healthcare liability		18,137			10,811			34,024			22,442			20,316			19,713
Workers’ compensation		(52	)		(1,278	)		(839	)		(117	)		(433	)		30,579

TOTAL INSURANCE	$	625,831		$	112,664		$	303,561		$	231,626		$	464,341		$	522,214


REINSURANCE SEGMENT
Catastrophe	$	138,247		$	17,896		$	45,513		$	123,808		$	122,669		$	109,448
Casualty		116,352			47,970			81,167			56,919			107,974			75,392
Property		70,087			8,628			111,395			39,999			64,522			34,788
Aerospace and Marine		20,838			2,380			4,184			24,131			18,066			12,227
Surety and other specialty		29,003			(313	)		9,754			13,085			41,297			29,237

TOTAL REINSURANCE	$	374,527		$	76,561		$	252,013		$	257,942		$	354,528		$	261,092


REPORTED TOTALS	$	1,000,358		$	189,225		$	555,574		$	489,568		$	818,869		$	783,306

ENDURANCE SPECIALTY HOLDINGS LTD.
SEGMENT NET PREMIUMS WRITTEN BY LINE OF BUSINESS


	FOR THE QUARTERS ENDED
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			MAR. 31, 2009
INSURANCE SEGMENT
Agriculture	$	346,472		$	2,372		$	89,119		$	45,169		$	268,107		$	223,303
Professional lines		31,124			33,171			38,522			49,422			27,602			29,622
Casualty		25,759			25,536			23,700			37,527			21,038			17,880
Property		12,585			11,895			21,366			40,950			14,088			17,487
Healthcare liability		16,406			9,946			32,393			22,031			18,523			17,209
Workers’ compensation		(50	)		(1,277	)		(807	)		(112	)		(417	)		16,929

TOTAL INSURANCE	$	432,296		$	81,643		$	204,293		$	194,987		$	348,941		$	322,430


REINSURANCE SEGMENT
Catastrophe	$	131,123		$	17,896		$	41,154		$	123,808		$	122,759		$	109,448
Casualty		115,554			47,965			81,163			56,831			107,263			75,168
Property		70,087			8,628			111,395			39,999			64,522			34,788
Aerospace and Marine		20,839			2,380			4,184			22,101			18,031			12,132
Surety and other specialty		28,973			(397	)		9,695			13,077			41,426			28,949

TOTAL REINSURANCE	$	366,576		$	76,472		$	247,591		$	255,816		$	354,001		$	260,485


REPORTED TOTALS	$	798,872		$	158,115		$	451,884		$	450,803		$	702,942		$	582,915

ENDURANCE SPECIALTY HOLDINGS LTD.
SEGMENT NET PREMIUMS EARNED BY LINE OF BUSINESS


	FOR THE QUARTERS ENDED
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			MAR. 31, 2009
INSURANCE SEGMENT
Agriculture	$	59,808		$	100,177		$	134,864		$	115,990		$	46,612		$	49,268
Professional lines		36,175			37,167			38,085			39,626			39,606			30,496
Casualty		29,742			28,415			25,682			26,315			24,658			21,732
Property		16,593			20,362			24,000			26,153			15,793			21,691
Healthcare liability		20,224			20,684			20,942			19,886			19,588			19,989
Workers’ compensation		(50	)		(1,277	)		(807	)		(112	)		(581	)		37,498

TOTAL INSURANCE	$	162,492		$	205,528		$	242,766		$	227,858		$	145,676		$	180,674


REINSURANCE SEGMENT
Catastrophe	$	76,335		$	79,617		$	74,675		$	79,528		$	81,888		$	74,716
Casualty		64,953			74,702			71,844			64,906			61,516			50,417
Property		52,452			64,229			56,975			56,646			49,432			44,308
Aerospace and Marine		13,587			11,312			8,602			12,751			12,253			14,606
Surety and other specialty		13,014			14,348			14,931			14,706			14,424			13,554

TOTAL REINSURANCE	$	220,341		$	244,208		$	227,027		$	228,537		$	219,513		$	197,601


REPORTED TOTALS	$	382,833		$	449,736		$	469,793		$	456,395		$	365,189		$	378,275

ENDURANCE SPECIALTY HOLDINGS LTD.
RETURN ON EQUITY ANALYSIS


	FOR THE QUARTER
	ENDED MAR. 31, 2011

Average common equity [a]	$	2,428,209

Net premiums earned	$	382,833
Combined ratio		139.3	%
Operating margin		(39.3	)%
Premium leverage		0.16	x


Implied ROAE from underwriting activity		(6.3	)%


Average cash and invested assets at amortized cost	$	5,979,366
Investment leverage		2.46	x
Year to date investment income yield, pretax		0.9	%


Implied ROAE from investment activity		2.2	%


Financing Costs [b]		(0.5	)%


Implied Pre-tax Operating ROAE, for period [c]		(4.6	)%


[a]		Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated period, which excludes the $200 million liquidation value of the preferred shares.

[b]		Financing costs include interest expense and preferred dividends.

[c]		Implied pre-tax Operating ROAE considers only the main components of the Company’s return on equity — underwriting and investment returns. As such, it differs from operating ROE primarily due to the exclusion of tax on underwriting, financing and investment activites and the tax-effected impact of amortization expense.

ENDURANCE SPECIALTY HOLDINGS LTD.
ANNUALIZED PREMIUM & INVESTMENT LEVERAGE


	FOR THE QUARTERS ENDED												YEARS ENDED DECEMBER 31,
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			2010			2009

Average common equity [a]	$	2,428,209		$	2,683,919		$	2,681,895		$	2,632,596		$	2,617,718		$	2,297,283

Net premiums earned	$	382,833		$	449,736		$	469,793		$	456,395		$	1,741,113		$	1,633,192

Premium leverage		0.16	x		0.17	x		0.18x			0.17	x		0.67	x		0.71	x


Annualized premium leverage		0.64	x		0.68	x		0.72	x		0.68	x		0.67	x		0.71	x


Average cash and invested assets at amortized cost	$	5,979,366		$	6,107,765		$	6,107,817		$	6,064,800		$	5,997,489		$	5,716,443


Investment leverage		2.46	x		2.28	x		2.28	x		2.30	x		2.29	x		2.49	x


[a]		Average common equity is calculated as the arithmetic average of the beginning and ending equity balances for the stated periods and excludes the $200 million

ENDURANCE SPECIALTY HOLDINGS LTD.
INVESTMENT PORTFOLIO
AS OF MARCH 31, 2011 AND DECEMBER 31, 2010


	March 31, 2011					December 31, 2010
Type of Investment	Fair Value		Percentage			Fair Value		Percentage
Cash and equivalents [a]	$	532,893		8.9	%	$	610,454		9.9	%
Short-term investments		48,186		0.8	%		70,444		1.1	%
U.S. government and government agencies notes		831,804		13.8	%		1,010,819		16.3	%
Government and agency guaranteed corporates		526,600		8.7	%		671,150		10.8	%
U.S. government agency residential mortgage-backed securities		1,009,393		16.8	%		883,948		14.3	%
U.S. government agency commercial mortgage-backed securities		30,603		0.5	%		22,889		0.4	%
Municipals		49,218		0.8	%		29,979		0.5	%
Foreign government		89,560		1.5	%		140,461		2.3	%
Corporate securities		1,333,851		22.1	%		1,232,511		19.9	%
Non-agency residential mortgage-backed securities		240,305		4.0	%		246,410		4.0	%
Non-agency commercial mortgage-backed securities		597,272		9.9	%		604,820		9.8	%
Asset-backed securities		305,620		5.1	%		273,715		4.4	%
Equity securities		25,333		0.4	%		13,565		0.2	%
Other investments [b]		401,450		6.7	%		376,652		6.1	%

Total	$	6,022,088		100.0	%	$	6,187,817		100.0	%


Ratings [e]	Fair Value		Percentage			Fair Value		Percentage
U.S. government and government agencies notes	$	831,804		15.2	%	$	1,010,819		18.2	%
AAA/Aaa		2,576,000		47.2	%		2,639,682		47.3	%
AA/Aa		519,094		9.5	%		465,315		8.4	%
A/A		816,493		14.9	%		793,980		14.3	%
BBB		93,598		1.7	%		50,733		0.9	%
Below BBB		221,451		4.1	%		221,848		4.0	%
Not Rated		3,972		0.1	%		4,769		0.1	%
Other investments [b]		401,450		7.3	%		376,652		6.8	%

Total	$	5,463,862		100.0	%	$	5,563,798		100.0	%


Performance	March 31, 2011			December 31, 2010
Yield [c]		3.5	%		3.3	%
Duration in years [d]		2.44			2.39


	Quarter Ended		Quarter Ended		Quarter Ended		Quarter Ended			Quarter Ended
Investment Income	Mar. 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010			Mar. 31, 2010
Cash and fixed income securities	$	38,744	$	40,425	$	39,839	$	40,302		$	39,510
Other Investments		13,757		16,449		13,815		(6,951	)		16,969

Total net investment income	$	52,501	$	56,874	$	53,654	$	33,351		$	56,479


Note:	[a]	Cash and equivalents, including operating cash, are shown net of investments pending settlement.

	[b]	Other investments includes investments in alternative and high yield bank loan funds.

	[c]	Annualized earned yield for the quarter ending 3/31/11 and twelve months ending 12/31/10 excludes realized and unrealized gains and losses on fixed maturity investments.

	[d]	Duration excludes other investments and operating cash.

	[e]	Excludes cash and equivalents and equity securities.

ENDURANCE SPECIALTY HOLDINGS LTD.
STRUCTURED SECURITIES DETAIL
AS OF MARCH 31, 2011


						Percentage of
Securitized (RMBS, CMBS, ABS and CDO) securities ratings	Fair Value		Percentage			Investment Portfolio
U.S. Government and agencies	$	1,039,996		47.7	%		17.3	%
AAA/Aaa		789,891		36.3	%		13.1	%
AA/Aa		69,904		3.2	%		1.2	%
A/A		79,343		3.6	%		1.3	%
BBB		43,978		2.0	%		0.7	%
Below BBB		154,365		7.1	%		2.6	%
Not Rated		1,397		0.1	%		—

Total	$	2,178,874		100.0	%		36.2	%


							Percentage of
Structured securities sectors (RMBS, CMBS, ABS and CDO)		Fair Value		Percentage			Investment Portfolio
Commercial
Agency		$	34,758		1.6	%		0.6	%
Non Agency			636,816		29.2	%		10.6	%
Residential
Agency			1,009,393		46.3	%		16.7	%
Non Agency			241,201		11.1	%		4.0	%
Consumer
Non Agency			256,706		11.8	%		4.3	%

Total		$	2,178,874		100.0	%		36.2	%

Spread Duration	3.31 years

							Percentage of
Commercial real estate collateralized debt obligations (CRE CDO’s)		Fair Value		Percentage			Investment Portfolio
AAA/Aaa		$	16,940		52.8	%		0.3	%
AA/Aa			5,836		18.2	%		0.1	%
A/A			5,084		15.8	%		0.1	%
BBB			1,898		5.9	%		—
Below BBB			2,330		7.3	%		—

Total		$	32,088		100.0	%		0.5	%

Spread Duration	2.17 years

ENDURANCE SPECIALTY HOLDINGS LTD.
LARGEST TWENTY-FIVE CORPORATE HOLDINGS
AS OF MARCH 31, 2011


	March 31, 2011
	Amortized				Unrealized			Credit
ISSUER (1) (2) (4)	Cost		Fair Value		Gain (Loss)			Quality (3)

JPMORGAN CHASE & CO	$	50,976	$	51,845	$	420		A+
NOVARTIS AG		44,630		45,628		998		AA-
METLIFE INC		41,529		41,885		355		A
CREDIT SUISSE GROUP AG		37,319		38,253		934		A+
MORGAN STANLEY		37,262		37,903		641		A
VERIZON COMMUNICATIONS INC		31,947		33,691		1,743		A-
WAL-MART STORES INC		33,175		33,580		291		AA
US BANCORP		30,371		30,423		52		A+
HSBC HOLDINGS PLC		28,315		29,795		421		AA-
AT&T INC		25,852		26,777		925		A-
WESTPAC BANKING CORP		22,016		23,295		139		AA
BANK OF AMERICA CORP		21,872		22,828		157		A
BANK OF NOVA SCOTIA		19,956		20,330		374		AA-
NEW YORK LIFE INSURANCE COMPANY		18,921		19,214		293		AAA
ROYAL DUTCH SHELL PLC		18,134		18,834		412		AA
EDISON INTERNATIONAL INC		17,222		17,590		368		A
LOWES COMPANIES INC		16,390		16,696		306		A
PEPSICO INC		14,917		16,276		1,359		A
BNP PARIBAS		14,813		15,978		134		AA
ABBOTT LABORATORIES		15,237		15,474		237		AA
GOLDMAN SACHS GROUP INC/THE		14,591		14,648		(42	)	A
MASSMUTUAL FINANCIAL GROUP		14,215		14,613		398		AA+
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD		14,358		14,447		89		AA
NATIONAL GRID PLC		13,929		14,156		227		A-
TOTAL SA		12,272		14,029		95		AA


(1)		Corporate issuers exclude government-backed, government-sponsored enterprises, covered bonds and cash and cash equivalents.

(2)		Credit exposures represent only direct exposure to fixed maturities and short term investments of the parent issuer and its major subsidiaries.

(3)		Represents weighted average credit quality of underlying issues.

(4)		Includes preferred equity securities.

ENDURANCE SPECIALTY HOLDINGS LTD.
ACTIVITY IN RESERVE FOR LOSSES AND LOSS EXPENSES


	THREE MONTHS ENDED MAR. 31, 2011
	GROSS			RECOVERIES			NET
Reserve for losses and loss expenses
Balance, beginning of period	$	3,319,927		$	(319,349	)	$	3,000,578

Incurred related to:
Current year		530,291			(79,733	)		450,558
Prior years		(72,063	)		23,358			(48,705	)

Total Incurred		458,228			(56,375	)		401,853


Paid related to:
Current year		(3,090	)		132			(2,958	)
Prior years		(215,188	)		34,734			(180,454	)

Total Paid		(218,278	)		34,866			(183,412	)


Foreign currency translation		6,321			(50	)		6,271


Balance, end of period	$	3,566,198		$	(340,908	)	$	3,225,290

ENDURANCE SPECIALTY HOLDINGS LTD.
PRIOR YEAR RESERVE DEVELOPMENT BY SEGMENT

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE PERIOD ENDED MAR. 31, 2011


							Total
	Insurance			Reinsurance			Company

Incurred related to prior years

Quarter ended March 31, 2011	$	(34,612	)	$	(14,093	)	$	(48,705	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2010


							Total
	Insurance			Reinsurance			Company

Incurred related to prior years

Quarter ended March 31, 2010	$	(17,679	)	$	(20,915	)	$	(38,594	)
Quarter ended June 30, 2010		(8,099	)		(21,379	)		(29,478	)
Quarter ended September 30, 2010		(9,568	)		(25,566	)		(35,134	)
Quarter ended December 31, 2010		(11,525	)		(12,071	)		(23,596	)

Year ended December 31, 2010	$	(46,871	)	$	(79,931	)	$	(126,802	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2009


							Total
	Insurance			Reinsurance			Company

Incurred related to prior years

Quarter ended March 31, 2009	$	(36,798	)	$	(2,520	)	$	(39,318	)
Quarter ended June 30, 2009		(19,842	)		(16,132	)		(35,974	)
Quarter ended September 30, 2009		(13,952	)		(20,449	)		(34,401	)
Quarter ended December 31, 2009		(21,486	)		(19,710	)		(41,196	)

Year ended December 31, 2009	$	(92,078	)	$	(58,811	)	$	(150,889	)

ENDURANCE SPECIALTY HOLDINGS LTD.
PRIOR YEAR RESERVE DEVELOPMENT BY DEVELOPMENT TAIL

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT


																FOR THE
	FOR THE QUARTERS ENDED															YEAR ENDED
	MAR. 31, 2011			DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2010
INSURANCE SEGMENT
Short tail[a]	$	(9,274	)	$	(4,445	)	$	(5,359	)	$	(5,632	)	$	(5,913	)	$	(21,349	)
Long tail[b]		(2,560	)		(7,075	)		(3,480	)		347			(1,441	)		(11,649	)
Other[c]		(22,778	)		(5	)		(729	)		(2,814	)		(10,325	)		(13,873	)

TOTAL INSURANCE		(34,612	)		(11,525	)		(9,568	)		(8,099	)		(17,679	)		(46,871	)


REINSURANCE SEGMENT
Short tail[a]		(13,090	)		(8,606	)		(17,666	)		(18,108	)		(19,546	)		(63,926	)
Long tail[b]		624			(3,414	)		(6,010	)		(3,848	)		1,376			(11,896	)
Other[c]		(1,627	)		(51	)		(1,890	)		577			(2,745	)		(4,109	)

TOTAL REINSURANCE		(14,093	)		(12,071	)		(25,566	)		(21,379	)		(20,915	)		(79,931	)


REPORTED TOTALS	$	(48,705	)	$	(23,596	)	$	(35,134	)	$	(29,478	)	$	(38,594	)	$	(126,802	)


[a]		Short tail business is that for which development typically emerges within a period of several quarters. The Company’s short tail line of business in the Insurance segment includes its property line of business. The Company’s short tail lines in its Reinsurance segment include property, catastrophe, aerospace and marine and surety.

[b]		Long tail business is that for which development emerges over many years. The Company’s long tail lines of business in the Insurance segment includes casualty, healthcare liability, workers’ compensation and professional lines. The Company’s long tail line of business in the Reinsurance segment includes casualty.

[c]		The Company writes certain specialty lines of business for which the loss emergence is considered to be unique in nature and thus, has been included as other. The Company’s other lines of business included in the Insurance segment is agriculture and in the Reinsurance segment is other specialty.

ENDURANCE SPECIALTY HOLDINGS LTD.
ANALYSIS OF UNPAID LOSSES AND LOSS EXPENSES


	Insurance												Reinsurance												Reported
	Short Tail			Long Tail			Other			Total			Short Tail			Long Tail			Other			Total			Totals
AT MAR. 31, 2011
Case reserves	$	18,089		$	378,010		$	73,374		$	469,473		$	322,236		$	253,453		$	2,750		$	578,439		$	1,047,912
Total reserves	$	45,739		$	1,539,977		$	187,017		$	1,772,733		$	848,293		$	889,957		$	55,215		$	1,793,465		$	3,566,198

Case reserves / Total reserves		39.5	%		24.5	%		39.2	%		26.5	%		38.0	%		28.5	%		5.0	%		32.3	%		29.4	%


IBNR / Total reserves		60.5	%		75.5	%		60.8	%		73.5	%		62.0	%		71.5	%		95.0	%		67.7	%		70.6	%


AT DEC. 31, 2010
Case reserves	$	14,730		$	325,750		$	116,687		$	457,167		$	318,922		$	247,053		$	3,207		$	569,182		$	1,026,349
Total reserves	$	45,330		$	1,493,398		$	190,865		$	1,729,593		$	650,921		$	877,019		$	62,394		$	1,590,334		$	3,319,927

Case reserves / Total reserves		32.5	%		21.8	%		61.1	%		26.4	%		49.0	%		28.2	%		5.1	%		35.8	%		30.9	%


IBNR / Total reserves		67.5	%		78.2	%		38.9	%		73.6	%		51.0	%		71.8	%		94.9	%		64.2	%		69.1	%


AT SEPT. 30, 2010
Case reserves	$	15,019		$	378,887		$	205,079		$	598,985		$	318,546		$	240,800		$	4,936		$	564,282		$	1,163,267
Total reserves	$	48,572		$	1,545,195		$	233,189		$	1,826,956		$	659,724		$	857,242		$	57,390		$	1,574,356		$	3,401,312

Case reserves / Total reserves		30.9	%		24.5	%		87.9	%		32.8	%		48.3	%		28.1	%		8.6	%		35.8	%		34.2	%


IBNR / Total reserves		69.1	%		75.5	%		12.1	%		67.2	%		51.7	%		71.9	%		91.4	%		64.2	%		65.8	%


AT JUNE 30, 2010
Case reserves	$	21,529		$	305,802		$	164,639		$	491,970		$	319,094		$	243,640		$	4,323		$	567,057		$	1,059,027
Total reserves	$	48,703		$	1,480,283		$	182,932		$	1,711,918		$	667,755		$	839,981		$	54,983		$	1,562,719		$	3,274,637

Case reserves / Total reserves		44.2	%		20.7	%		90.0	%		28.7	%		47.8	%		29.0	%		7.9	%		36.3	%		32.3	%


IBNR / Total reserves		55.8	%		79.3	%		10.0	%		71.3	%		52.2	%		71.0	%		92.1	%		63.7	%		67.7	%


AT MAR. 31, 2010
Case reserves	$	24,754		$	284,110		$	57,347		$	366,211		$	333,455		$	240,149		$	7,693		$	581,297		$	947,508
Total reserves	$	54,630		$	1,428,991		$	118,019		$	1,601,640		$	652,179		$	821,814		$	63,272		$	1,537,265		$	3,138,905

Case reserves / Total reserves		45.3	%		19.9	%		48.6	%		22.9	%		51.1	%		29.2	%		12.2	%		37.8	%		30.2	%


IBNR / Total reserves		54.7	%		80.1	%		51.4	%		77.1	%		48.9	%		70.8	%		87.8	%		62.2	%		69.8	%

ENDURANCE SPECIALTY HOLDINGS LTD.
SHAREHOLDER RETURN ANALYSIS


	QUARTER ENDED			YEARS ENDED DECEMBER 31,												INCEPTION TO
	MAR. 31, 2011			2010			2009			2008			2007			MAR. 31, 2011
(Loss) Income and Return on Equity:
Net (loss) income available to common and participating common shareholders	$	(91,292	)	$	349,238		$	520,604		$	83,121		$	505,607		$	2,347,790

Operating (loss) income available to common and participating common shareholders		(100,518	)		330,035			505,202			182,539			525,450			2,420,907

Average Shareholders’ equity [a]		2,428,209			2,617,718			2,297,283			2,159,771			2,205,067			1,936,681


Net (loss) income return on average equity		(3.8	)%		13.3	%		22.7	%		3.8	%		22.9	%		13.1	%[c]
Operating return on average equity		(4.1	)%		12.6	%		22.0	%		8.5	%		23.8	%		13.6	%[c]


Book value and dividends per share:
Dilutive book value per common share (treasury stock method)	$	51.52		$	52.74		$	44.61		$	33.06		$	35.05		$	51.52

Dividends paid per share		0.30			1.00			1.00			1.00			1.00			7.43


Change in diluted book value per common share		(2.3	)%		18.2	%		34.9	%		(5.7	)%		21.4	%		17.9	%[c]


Total return to common shareholders [b]		(1.7	)%		20.5	%		38.0	%		(2.8	)%		24.9	%		22.1	%[c]


[a]		Excludes the $200 million liquidation value of the preferred shares.

[b]		Total return to common shareholders is calculated as the change in diluted book value per common share plus dividends paid divided by beginning diluted book value per share.

[c]		Represents average non-compounded annual returns since December 31, 2001.

ENDURANCE SPECIALTY HOLDINGS LTD.
DILUTIVE SHARES FOR EPS CALCULATION — TWO CLASS METHOD


	QUARTERS ENDED
	MARCH 31,
	2011			2010

DILUTIVE SHARES OUTSTANDING:
AS REPORTED
Average market price per share	$	47.17		$	37.18
Basic weighted average common shares outstanding ⁽¹⁾		40,750			53,412

Add: weighted avg. unvested restricted share units		16			25
Weighted average exercise price per share		—			—
Proceeds from unrecognized restricted share unit expense	$	186		$	373
Less: restricted share units bought back via treasury method		(16	)		(10	)

Add: weighted avg. dilutive warrants outstanding		2,955			2,995
Weighted average exercise price per share	$	12.57		$	13.62
Less: warrants bought back via treasury method		(2,955	)		(1,098	)

Add: weighted avg. dilutive options outstanding		1,211			1,746
Weighted average exercise price per share	$	16.01		$	16.46
Proceeds from unrecognized option expense		—		$	1
Less: options bought back via treasury method		(1,211	)		(774	)

Weighted average dilutive shares outstanding		40,750			56,296


Notes:		⁽¹⁾ Excludes unvested restricted shares outstanding which are considered participating securities under the two-class method for calculation of EPS.

ENDURANCE SPECIALTY HOLDINGS LTD.
(LOSS) EARNINGS PER SHARE INFORMATION — TWO CLASS METHOD


	QUARTERS ENDED MARCH 31,
	2011			2010
Net (loss) income	$	(87,417	)	$	55,789
Less preferred dividends		(3,875	)		(3,875	)

Net (loss) income (attributable) available to common and participating common shareholders	$	(91,292	)	$	51,914
Less amount allocated to participating common shareholders [a]		(275	)		(936	)

Net (loss) income (attributable) allocated to common shareholders	$	(91,567	)	$	50,978


Denominator:
Weighted average shares — basic
Outstanding		40,750			53,404
Vested restricted share units		—			8

		40,750			53,412


Share Equivalents
Warrants		—			1,897
Options		—			972
Restricted share units		—			15

Weighted average shares — diluted		40,750			56,296


Basic (loss) earnings per common share	$	(2.25	)	$	0.95


Diluted (loss) earnings per common share	$	(2.25	)[b]	$	0.91


[a]		Represents earnings and dividends allocated to holders of unvested restricted shares issued under the Company’s stock compensation plans that are considered participating securities related to the calculation of earnings per share under the two-class method. In periods of loss, no losses are allocated to participating common shareholders.

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

ENDURANCE SPECIALTY HOLDINGS LTD.
OPERATING (LOSS) INCOME RECONCILIATION
(LOSS) EARNINGS PER SHARE INFORMATION — TWO CLASS METHOD


	Two-Class Method
	QUARTERS ENDED MAR 31,
	2011			2010

Net (loss) income	$	(87,417	)	$	55,789
(Less) Add after-tax items:
Net foreign exchange (gains) losses		(6,851	)		5,873
Net realized and unrealized investment gains		(4,022	)		(2,351	)
Net impairment losses recognized in (losses) earnings		1,647			861

Operating (loss) income before preferred dividends	$	(96,643	)	$	60,172
Preferred dividends		(3,875	)		(3,875	)

Operating (loss) income (attributable) available to common and participating common shareholders	$	(100,518	)	$	56,297
Less amount (attributed) allocated to participating common shareholders [a]		(275	)		(1,014	)

Operating (loss) income (attributed) allocated to common shareholders	$	(100,793	)	$	55,283


Weighted average common shares outstanding
Basic		40,750			53,412
Dilutive		40,750			56,296

Basic per common share data
Net (loss) income (attributed) allocated to common shareholders	$	(2.25	)	$	0.95
(Less) Add after-tax items:
Net foreign exchange (gains) losses		(0.16	)		0.11
Net realized and unrealized investment gains		(0.10	)		(0.04	)
Net impairment losses recognized in (losses) earnings		0.04			0.02

Operating (loss) income (attributed) allocated to common shareholders	$	(2.47	)	$	1.04


Diluted per common share data
Net (loss) income (attributed) allocated to common shareholders	$	(2.25	)	$	0.91
(Less) Add after-tax items:
Net foreign exchange (gains) losses		(0.16	)		0.10
Net realized and unrealized investment gains		(0.10	)		(0.04	)
Net impairment losses recognized in (losses) earnings		0.04			0.01

Operating (loss) income (attributed) allocated to common shareholders	$	(2.47	)[b]	$	0.98


[a]		Represents earnings and dividends allocated to holders of unvested restricted shares issued under the Company’s stock compensation plans that are considered participating securities related to the calculation of earnings per share under the two-class method. In periods of loss, no losses are allocated to participating common shareholders.

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

ENDURANCE SPECIALTY HOLDINGS LTD.
DILUTIVE SHARES SENSITIVITY ANALYSIS


DILUTIVE SHARES OUSTANDING
Market Price per Share
$	42.00	$	43.00	$	44.00	$	45.00	$	46.00	$	47.00	$	48.00	$	49.00	$	50.00	$	51.00	$	52.00

	42,710		42,735		42,760		42,782		42,805		42,825		42,846		42,865		42,883		42,901		42,918

ENDURANCE SPECIALTY HOLDINGS LTD.
BOOK VALUE PER SHARE


	MAR. 31,						DEC. 31,
	2011			2010			2010

DILUTIVE COMMON SHARES OUTSTANDING:
AS-IF CONVERTED [a]

Price per share at period end	$	48.82		$	37.15		$	46.07

Basic common shares outstanding [b]		39,499			53,016			46,259
Add: unvested restricted shares and restricted share units		835			1,226			980
Add: dilutive warrants outstanding		2,896			2,996			2,986
Weighted average exercise price per share	$	12.57		$	13.62		$	12.87
Add: dilutive options outstanding		561			1,746			1,278
Weighted average exercise price per share	$	16.01		$	16.46		$	16.50

Book Value [c]	$	2,208,264		$	2,621,087		$	2,648,153
Add: proceeds from converted warrants		36,403			40,806			38,430
Add: proceeds from converted options		8,982			28,739			21,087

Pro forma book value	$	2,253,649		$	2,690,632		$	2,707,670
Dilutive shares outstanding		43,791			58,984			51,503
Basic book value per common share	$	55.91		$	49.44		$	57.25
Diluted book value per common share	$	51.46		$	45.62		$	52.57
DILUTIVE COMMON SHARES OUTSTANDING:
TREASURY STOCK METHOD

Price per share at period end	$	48.82		$	37.15		$	46.07

Basic common shares outstanding [b]		39,499			53,016			46,259

Add: unvested restricted shares and restricted share units		835			1,226			980
Add: dilutive warrants outstanding		2,896			2,996			2,986
Weighted average exercise price per share	$	12.57		$	13.62		$	12.87
Less: warrants bought back via treasury method		(746	)		(1,098	)		(834	)
Add: dilutive options outstanding		561			1,746			1,278
Weighted average exercise price per share	$	16.01		$	16.46		$	16.50
Less: options bought back via treasury method		(184	)		(774	)		(458	)

Dilutive shares outstanding		42,861			57,112			50,211
Basic book value per common share	$	55.91		$	49.44		$	57.25
Diluted book value per common share	$	51.52		$	45.89		$	52.74


[a]		The as-if converted method assumes that the proceeds received upon exercise of options and warrants will be retained by the Company and the resulting common shares from exercise will remain outstanding

[b]		Basic common shares includes vested restricted share units.

[c]		Excludes the $200 million liquidation value of the preferred shares.

ENDURANCE SPECIALTY HOLDINGS LTD.
REGULATION G

In presenting the Company’s results, management has included and discussed certain non-GAAP measures. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the Company’s results of operations in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP.

Operating income is an internal performance measure used by the Company in the management of its operations. Operating income represents after-tax operational results excluding, as applicable, after-tax net realized capital gains or losses and after-tax net foreign exchange gains or losses because the amount of these gains or losses is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. The Company believes these amounts are largely independent of its business and underwriting process and including them distorts the analysis of trends in its operations. In addition to presenting net income determined in accordance with GAAP, the Company believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the Company’s results of operations in a manner similar to how management analyzes the Company’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. Please see page 26 for a reconciliation of operating income to net income.

Return on Average Equity (ROAE) is comprised using the average common equity calculated as the arithmetic average of the beginning and ending common equity balances for stated periods. Return on Beginning Equity (ROBE) is comprised using the beginning common equity for stated periods. The Company presents various measures of Return on Equity that are commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

Investment yield is provided by the Company’s investment managers and is calculated by dividing net investment income by average invested assets at amortized cost. The Company utilizes and presents the investment yield in order to better disclose the performance of the Company’s investments and to show the components of the Company’s ROE.

The Company has included diluted book value per common share because it takes into account the effect of dilutive securities; therefore, the Company believes it is a better measure of calculating shareholder returns than book value per common share. Please see page 28 for a reconciliation of diluted book value per common share to basic book value per common share.

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