Attached files
| file | filename |
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| 8-K - FORM 8-K - ENDURANCE SPECIALTY HOLDINGS LTD | d710842d8k.htm |
| EX-99.2 - EX-99.2 - ENDURANCE SPECIALTY HOLDINGS LTD | d710842dex992.htm |
 Endurance and
Aspen: Creating a Global Leader in Specialty Insurance and Reinsurance
April 14, 2014
Exhibit 99.1 |
 Cautionary
Note
Regarding
Forward
Looking
Statements
Some of the statements in this presentation 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.
These
statements
may
also
include
assumptions
about
our
proposed
acquisition
of
Aspen
(including
its
benefits,
results,
effects
and
timing).
Statements
which
include
the
words
"should,"
"would,"
"expect,"
"intend,"
"plan,"
"believe,"
"project,"
"anticipate,"
"seek,"
"will,"
and
similar
statements
of
a
future
or
forward-looking
nature
identify
forward-looking
statements
in
this
presentation
for
purposes
of
the
U.S.
federal
securities
laws
or
otherwise.
We
intend
these
forward-looking
statements
to
be
covered
by
the
safe
harbor
provisions
for
forward-looking
statements
in
the
Private
Securities
Litigation
Reform
Act
of
1995.
All forward-looking statements address matters that involve risks and uncertainties.
Accordingly, there are or may be important factors that could cause actual results to differ materially 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
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, 2013. Additional
risks
and
uncertainties
related
to
the
proposed
transaction
include,
among
others,
uncertainty
as
to
whether
Endurance
will
be
able
to
enter
into
or
consummate
the
transaction
on
the
terms
set
forth
in
the
proposal,
the
risk
that
our
or
Aspen’s
shareholders
do
not
approve
the
transaction,
potential
adverse
reactions
or
changes
to
business
relationships
resulting
from
the
announcement
or
completion
of
the
transaction,
uncertainties
as
to
the
timing
of
the
transaction, uncertainty as to the actual premium of the Endurance share component of the
proposal that will be realized by Aspen shareholders in connection with the transaction, competitive responses to the transaction, the
risk
that
regulatory
or
other
approvals
required
for
the
transaction
are
not
obtained
or
are
obtained
subject
to
conditions
that
are
not
anticipated,
the
risk
that
the
conditions
to
the
closing
of
the
transaction
are
not
satisfied,
costs
and difficulties related to the integration of Aspen’s businesses and operations with
Endurance’s businesses and operations, the inability to obtain, or delays in obtaining, cost savings and synergies from the transaction, unexpected
costs, charges or expenses resulting from the transaction, litigation relating to the
transaction, the inability to retain key personnel, and any changes in general economic and/or industry specific conditions.
Forward-looking
statements
speak
only
as
of
the
date
on
which
they
are
made,
and
we
undertake
no
obligation
publicly
to
update
or
revise
any
forward-looking
statement,
whether
as
a
result
of
new
information,
future
developments or otherwise.
Regulation G Disclaimer
In this presentation, 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 proposed
transaction in a manner that allows for a more complete understanding. However, these
measures should not be viewed as a substitute for those determined in accordance with GAAP. For a complete description of non-GAAP
measures
and
reconciliations,
please
review
the
Investor
Financial
Supplement
on
our
web
site
at
www.endurance.bm.
The
combined
ratio
is
the
sum
of
the
loss,
acquisition
expense
and
general
and
administrative
expense
ratios.
Endurance
presents
the
combined
ratio
as
a
measure
that
is
commonly
recognized
as
a
standard
of
performance
by
investors,
analysts,
rating
agencies
and
other
users
of
its
financial
information.
The
combined
ratio,
excluding
prior
year
net
loss
reserve
development,
enables
investors,
analysts,
rating
agencies
and
other
users
of
its
financial
information to more easily analyze Endurance’s results of underwriting activities in a
manner similar to how management analyzes Endurance’s underlying business performance. The combined ratio, excluding prior year net loss
reserve development, should not be viewed as a substitute for the combined ratio.
Net premiums written is a non-GAAP internal performance measure used by Endurance in the
management of its operations. Net premiums written represents net premiums written and deposit premiums, which are premiums on
contracts
that
are
deemed
as
either
transferring
only
significant
timing
risk
or
transferring
only
significant
underwriting
risk
and
thus
are
required
to
be
accounted
for
under
GAAP
as
deposits.
Endurance
believes
these
amounts
are
significant to its business and underwriting process and excluding them distorts the analysis
of its premium trends. In addition to presenting gross premiums written determined in accordance with GAAP, Endurance believes that
net premiums written enables investors, analysts, rating agencies and other users of its
financial information to more easily analyze Endurance’s results of underwriting activities in a manner similar to how management analyzes
Endurance’s underlying business performance. Net premiums written should not be
viewed as a substitute for gross premiums written determined in accordance with GAAP.
Return on Equity (ROE) is comprised using the average common equity calculated as the
arithmetic average of the beginning and ending common equity balances 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. Certain
information included in this presentation has been sourced from third parties. Endurance does not make any representations regarding the accuracy, completeness or timeliness of such third party information. Permission
to cite such information has neither been sought nor obtained.
All information in this presentation regarding Aspen, including its businesses, operations and
financial results, was obtained from public sources. While Endurance has no knowledge that any such information is inaccurate or
incomplete, Endurance has not had the opportunity to verify any of that information.
Additional
Information
This
presentation
does
not
constitute
an
offer
to
sell
or
the
solicitation
of
an
offer
to
buy
any
securities
or
a
solicitation
of
any
vote
or
approval.
All
references
in
this
presentation
to
“$”
refer
to
United
States
dollars.
The
contents
of any website referenced in this presentation are not incorporated by reference herein.
Forward looking statements & Regulation G disclaimer
2
Third Party-Sourced Information
|
 Endurance
and
Aspen
–
A
Compelling
Combination
Transaction will yield significant value for shareholders and create a company with greater
scale, market presence, diversification and profit potential
3
•
Proposed transaction offers upfront and long-term value for Aspen’s
shareholders –
Substantial premium valuation
–
Opportunity to receive cash and/or Endurance shares
•
The combination of Endurance and Aspen is a unique opportunity to create a global leader in
the specialty insurance and reinsurance sector
–
Over $5 billion of combined annual gross premiums written, diversified across products and
geographies –
Over
$5
billion
of
pro
forma
common
shareholders’
equity
and
$7.6
billion
in
total
capital,
yielding
a
large and strong capital base to compete in the increasingly competitive global market
•
The transaction will create a company with a superior financial profile
–
Increased scale, diversification, market presence and relevance
–
Enhanced profitability driven by:
•
Strong management team comprised of industry-leading talent from both companies
•
World-class underwriting expertise
•
Meaningful synergies from the transaction |
 Proposed
Transaction Summary Compelling
value
for
Aspen
shareholders
and
significant
earnings
and
ROE
accretion
for
Endurance
shareholders
4
Notes
1.
Based
on
66.7MM
fully-diluted
Aspen
shares
as
of
2/24/2014
Transaction Proposal
•
Value
•
–
–
Consideration
•
•
Financing
•
•
Endurance CEO
Investment
•
Pro Forma Ownership
•
•
•
Financial Benefits
•
•
Endurance to acquire all of the common shares of Aspen
Aggregate consideration mix of 40% cash and 60% stock
$1.3
billion
of
cash
consideration
to
be
funded
through
Endurance’s
substantial
cash
resources
and
a
new
equity
investment
Endurance
has
received
a
written
commitment
for
the
purchase
of
$1.05
billion
of
newly
issued
common
shares
provided
by
investors
led
by
funds
advised
by
CVC
Capital
Partners
Advisory
(U.S.),
Inc.
and
its
affiliates
John Charman, Endurance’s Chairman and Chief Executive Officer, has committed to
purchase an additional $25 million of Endurance common shares in connection with the
transaction 44%
by Endurance shareholders
35%
by Aspen shareholders
21%
by New Investors
Significant EPS and ROE accretion for Endurance shareholders
Over $100 million of annual synergies
1.16x diluted book value per share at 12/31/2013 and 13.4x 2014 consensus Street earnings
estimates 21% premium to Aspen’s closing share price on 4/11/2014 and 15% premium
to all-time high Proposal
values
Aspen
at
$47.50
per
share
or
$3.2
billion
(1)
Aspen shareholders can elect to receive (i) $47.50 in cash per Aspen share, (ii) 0.8826
Endurance common shares for each Aspen share, or (iii) a combination of cash and
Endurance shares, subject to customary proration |
 Combined Company
Will Have Scale to Compete With Market Leaders
5
Notes
1.
As of 12/31/2013, pro forma for transaction, excluding purchase accounting adjustments and
transaction expenses Common Shareholders’
Equity of Peer Companies
As of 12/31/2013
$Bn
(1)
10.0
7.0
5.9
5.4
5.3
5.2
3.7
3.5
3.5
2.7
2.5
1.7
1.6
1.5
0.0
2.0
4.0
6.0
8.0
10.0
12.0
XL
RE
PRE
ENH+AHL
ACGL
AXS
VR
AWH
RNR
AHL
ENH
PTP
AGII
MRH |
 Transaction
Creates Company With Improved Market Presence and Diversification
6
Diversified Platform Across Products
and Geographies
Increased Scale and Market Presence
•
Combination creates an enterprise with
over $5 billion of annual gross premiums
written
•
Expanded leadership and underwriting
expertise
•
Increased size allows organization to better
capitalize on distribution relationships
•
Greater scale better positions combined
company to compete with largest players
as competition intensifies
•
Endurance and Aspen share certain
common businesses; however, the relative
weighting of each is quite complementary
•
Aspen’s strength in the Lloyd’s market and
Endurance’s market-leading U.S.
agriculture business are examples of
uncorrelated and diversified businesses
•
The global breadth and diversity of the
combined business will be more relevant
for brokers and customers
•
Aspen’s Lloyd’s platform complements
global insurance and reinsurance footprint
and is highly attractive to Endurance |
 Transaction
Creates Company With Stronger Capitalization and Enhanced Profitability
7
Enhanced Profitability
•
With common shareholders’
equity of
$5.4 billion and total capital of $7.6
billion, the combined company will
have scale comparable to many of its
key competitors
(1)
•
Larger, stronger balance sheet will be
better positioned to pursue growth and
withstand volatility
•
Additional capital efficiencies due to
improved business diversification
•
Combined company will be well
positioned to produce an improved ROE
•
Meaningful transaction synergies
through cost savings, underwriting
improvements and capital efficiencies
•
Larger asset base will enable the
combined company to capitalize on
investment opportunities as they arise
Strong Balance Sheet and Capital Position
Notes
1.
Figures as of 12/31/2013, pro forma for transaction, excluding purchase accounting adjustments
and transaction expenses |
 Casualty
& Specialty
21%
Combined Business Well Diversified Across Business Lines and Sectors
Geographic and distribution diversification benefits are also achieved
8
Endurance
Aspen
Combined
Property
2%
Agriculture
36%
Professional
Lines
6%
Casualty &
Other Specialty
12%
Property
9%
Casualty &
Other
Specialty
16%
Financial &
Professional
Lines
13%
Marine, Energy
& Transportation
20%
Catastrophe
13%
Property
11%
Casualty &
Specialty
20%
Property
Catastrophe
10%
Other
Property
11%
Casualty &
Specialty
21%
GPW: $2.7Bn
GPW: $2.6Bn
GPW: $5.3Bn
Insurance 55%
Reinsurance 45%
Insurance 57%
Reinsurance 43%
Catastrophe
12%
Insurance 56%
Reinsurance 44%
Agriculture
18%
Property
5%
Casualty &
Other
Specialty
14%
Professional
Lines
9%
Marine, Energy
& Transportation
10%
Property
11%
Notes
1.
Includes Professional Lines reinsurance segment for Endurance
2.
Includes Programs insurance segment for Aspen
(1)
(2)
(1)
(2) |
 Proposal Provides
Compelling Value for Aspen Shareholders 9
Notes
1.
For the 30 calendar days ending 4/11/2014
2.
Based on diluted book value per share at 12/31/2013
3.
Based on consensus Street estimates for 2014 EPS as of 4/11/2014
Substantial Premium to Trading Prices
Attractive Valuation Multiples
vs. 5-year Average P/BV
Proposal Price Per Share
$47.50
vs. Diluted BVPS
(2)
$40.90
1.16x
0.79x
+46.8%
vs. 2014E Earnings
(3)
$3.55
13.4x
Proposal Price Per Share
$47.50
vs. Price
as of 4/11/2014
$39.37
+20.7%
vs. 1-month VWAP
(1)
$39.27
+21.0%
vs. All Time High
$41.43
+14.7% |
 Proposed
Valuation Well Above Aspen’s Historical Trading Prices 10
1.16x
0.96x
$47.50
$39.37
Aspen
Share
Price
–
Last
5
Years
4/11/2009
–
4/11/2014
Aspen
P/BV
–
Last
5
Years
4/11/2009
–
4/11/2014
5-Yr Average: 0.79x
$20
$30
$40
$50
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Historical Share Price
Proposed Purchase Price
0.50x
0.75x
1.00x
1.25x
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Historical P/BV
Proposed Purchase Price |
 •
Over $100 million of annual synergies, including:
–
Cost savings
–
Underwriting improvements
–
Capital efficiencies
–
Enhanced capital management opportunities
Financially Compelling Transaction
Transaction economics are highly attractive for ongoing Endurance shareholders
11
Notes
1.
As of 12/31/2013, pro forma for transaction, excluding purchase accounting adjustments and
transaction expenses 2.
Excluding integration charges
Key Financial Drivers
Combined Balance Sheet Strength
(1)
Summary of Financial Impact to Endurance
EPS
(2)
•
>10% accretion in 2015
ROE
(2)
•
11 –
13% pro forma ROE in 2015; 100bps
increase vs. standalone Endurance ROE
Book Value Per Share
•
Modest initial dilution to book value per share
Endurance
Pro Forma
Common Shareholders’
Equity
$2.5Bn
$5.4Bn
Cash and Invested Assets
$6.6Bn
$14.6Bn
Total Capital
$3.4Bn
$7.6Bn
Debt / Total Capital
15.5%
14.9% |
 Illustrative
Future
Value
of
Aspen
Shares
(1)(2)
•
Based on consensus Street
estimates for Aspen’s ROE
and current trading
multiples, it will take Aspen
over 2 years to surpass the
$47.50 proposed
acquisition price
•
The transaction provides
Aspen shareholders the
ability to achieve values
meaningfully higher than
Aspen’s future value
implied by consensus
Street estimates
Transaction Provides Substantial Premium and Significant
Upside Potential
12
Notes
1.
Assumes Aspen shareholders receive 0.8826 shares of Endurance for each share of Aspen
2.
Assumes Aspen and pro forma dividend yield maintained at current
level as of 4/11/2014 in all scenarios; dividend yield based on
trailing 12-months dividends per share divided by current share price
3.
Assumes P/BV of 1.0x-1.2x for 11-13% ROE
4.
Assumes P/BV of 1.0x; consensus Street estimates for Aspen’s ROE based on median 2014 ROE
estimate of 8.4% for +1 year and median 2015 ROE estimate of 8.6% for +2 years and +3 years; estimates as of 4/11/2014
Historical Aspen
Share Price
Pro forma at
11-13% ROE
(3)
Current
+1 Year
+2 Years
+3 Years
-1 Year
Aspen standalone
at consensus
Street estimates
(4)
$39.37
$43
$46
$50
$61
$47.50
$77
$30
$40
$50
$60
$70
$80 |
 Common Equity
Financing Industry-leading investors making substantial investment in the combined
company 13
•
Endurance has received a written commitment for the purchase of $1.05 billion of newly issued
common shares
by
investors
led
by
funds
advised
by
CVC
Capital
Partners
Advisory
(U.S.),
Inc.
and
its
affiliates
–
The investors have already completed due diligence on Endurance and the merits of the
transaction –
The
investment
is
subject
to
customary
due
diligence
of
Aspen
by
the
investors,
in
coordination
with
Endurance, and the closing of the proposed transaction, as well as other customary conditions
to closing •
Key terms of the $1.05 billion investment:
–
Endurance common shares at a pre-negotiated discount to an average market price of
Endurance common shares prior to the announcement of Endurance’s proposal to
acquire Aspen –
Warrants to purchase additional Endurance common shares with an exercise price higher than an
average market price of Endurance common shares prior to the announcement of
Endurance’s proposal to acquire Aspen
–
Customary governance rights for a significant minority investment in a publicly traded
company •
John
Charman
has
committed
to
purchase
an
additional
$25
million
of
Endurance
common
shares
at
an
average market price of Endurance common shares prior to the announcement of Endurance’s
proposal to acquire Aspen
–
No discount
–
No warrants to purchase additional shares
–
This additional investment is subject to the closing of the proposed transaction
|
 •
Proposed transaction offers upfront and long-term value for Aspen’s
shareholders –
Substantial premium valuation
–
Opportunity to receive cash and/or Endurance shares
•
The combination of Endurance and Aspen is a unique opportunity to create a global leader in
the specialty insurance and reinsurance sector
–
Over $5 billion of combined annual gross premiums written, diversified across products and
geographies
–
Over
$5
billion
of
pro
forma
common
shareholders’
equity
and
$7.6
billion
in
total
capital,
yielding
a
large and strong capital base to compete in the increasingly competitive global market
•
The transaction will create a company with a superior financial profile
–
Increased scale, diversification, market presence and relevance
–
Enhanced profitability driven by:
•
Strong management team comprised of industry-leading talent from both companies
•
World-class underwriting expertise
•
Meaningful synergies from the transaction
Conclusion
14
Endurance and Aspen: A Global Leader in Specialty Insurance and Reinsurance
|
 Additional
Information About Endurance |
 •
“A”
ratings from AM Best and S&P
•
$3.4 billion of total capital
•
Conservative, short-duration, AA
rated investment portfolio
•
Prudent reserves
•
Diversified and efficient capital
structure
•
Since inception, returned $2.0
billion to investors through
dividends and share repurchases
Endurance Has Strong Foundation to Build on
Strong balance sheet, diversified portfolio and robust infrastructure
16
Strategic Initiatives
•
Substantially expanded global
underwriting and leadership talent
•
Optimized balance of insurance and
reinsurance portfolios to lower
volatility and improve profitability
•
Streamlined support operations to
generate significant savings to fund
underwriting additions
•
Improved financial results reflect
recent actions
Diversified Portfolio of Businesses
•
Portfolio of approximately $2.7
billion in annual gross premiums
written
•
Book of business diversified
between insurance and reinsurance
as well as short tail and long tail
lines of business
•
Proven leader in U.S. agriculture
insurance business
•
Focus on specialty lines of business,
with industry-leading talent
Strong Balance Sheet and Capital
Strong and seasoned franchise
Inception to date operating ROE of 11.0%
10 year book value per share plus dividends CAGR of 10.6%
Continuous improvement in performance and market positioning |
 Endurance Share
Price Performance Reflects Investor Confidence Endurance’s strategy has been
strongly supported by the investment community 17
Notes
1.
Peers include ACGL, AGII, AWH, AXS, MRH, PRE, PTP, RE, RNR, VR and XL
Share Price Performance: Endurance vs. Peers
(1)
1/1/2013 –
4/11/2014
%
+29%
+36%
+23%
Equity Research #1
-
February 6, 2014
“The company has laid out a goal to dramatically grow its insurance
premiums
over
the
next
three
years
excluding
its
crop
business.
The
fourth
quarter
already
demonstrated
signs
of
such
growth.
Excluding
crop, the gross insurance premiums grew by 27% in the quarter. As new
teams join the company and Endurance expands its presence in London,
we would expect this double digit [growth] to continue.” “Earlier
this week, we spent a day with recently appointed CEO John Charman visiting with
investors. We walked away from the meetings with increased confidence in
Endurance's long-term prospects, with the company now having the vision and
direction it has long lacked and a plan for growth that we see as largely achievable
over a three-year period.” Equity
Research #2 -
December 6, 2013
Equity Research #3
-
May 28, 2013
“Mr. Charman has an excellent long-term underwriting track
record, particularly in specialty insurance ... Mr. Charman made a name for
himself in the London insurance market. The syndicate he ran
dramatically outperformed the Lloyd’s market over a 13 year period
before
he
left.
...
Axis
performed
well
during
Mr.
Charman’s
time
at
the
helm
with
compound
annual
growth
in
book
value
of
14%
(including
dividends).” |
 Endurance Has
Delivered Strong Financial Results Since Inception 18
Growth in Diluted Book Value Per Common Share ($)
From December 31, 2001 –
December 31, 2013
19.37
21.73
24.03
27.91
23.17
28.87
35.05
33.06
44.61
52.74
50.56
52.88
55.18
0.32
1.13
4.13
5.13
6.13
7.13
8.33
9.57
10.85
$0
$10
$20
$30
$40
$50
$60
$70
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Book Value Per Share
Cumulative Dividends
2.13
3.13 |
 Specialty
Insurance Strategic Direction Expanding underwriting talent, refocusing underwriting,
rebalancing the portfolio and improving positioning and relevance in the market
19
Initial products include:
•
•
•
•
Misc. commercial
classes
•
Fin. institutions
•
Inland marine
•
Excess casualty (E&S
and retail)
•
Ocean marine
•
Numerous professional
line underwriters
•
Misc.
commercial
classes
•
Financial
institutions
•
Lawyers
•
Commercial
management liability
•
Surety
•
Healthcare
•
Jack Kuhn
CEO , Global Insurance
•
Graham Evans
EVP & Head of
International Insurance
•
Doug Worman
EVP & Head of U.S.
Insurance
•
Richard Allen
EVP & Head of
Professional Lines
•
Richard Housley
EVP & General
Manager of London
Insurance
•
Cliff Easton
EVP & Global Head of
Energy
Energy
Property
Professional Lines
Significantly
enhancing the
leadership team
Increased
Market
Presence
and
Diversity
Opened an insurance office
in London
Meaningfully
expanded
underwriting abilities
in 2013 |
 Insurance GPW
(ex. Agriculture) •
Significant and tangible improvements in 2013
to increase market presence and diversity
–
Attracted and retained teams of high
quality underwriters
–
Expanded underwriting and product
capabilities
–
Withdrew from unprofitable lines
Endurance Has an Attractive and Growing Specialty Insurance Franchise
Two pillars of a unique insurance platform with demonstrated improvement across specialty
lines to complement market-leading Agriculture franchise
20
Established Market Leader in Agriculture
•
ARMtech is a top 5 player in the attractive
multi peril crop insurance (MPCI) market
–
Favorable market dynamics with only 17
licensed companies in 2013
–
Federal government sponsored
reinsurance and loss sharing mitigates
downside risk
–
Newly passed Federal Farm Bill provides
stability going forward
–
Not correlated with broader P&C market
–
Historic average combined ratio less than
90%
(1)
–
High risk adjusted returns
Enhanced Specialty Insurance Franchise
$MM
Notes
1.
Historic
average
loss
ratio
post
U.S.
Federal
cessions
has
been
82.9%
(adjusted
for
the
2011
Federal
reinsurance
terms);
current
expense
run
rate
after
A&O
subsidy
is
approximately
6%
-
8%
Insurance Business Has Generated Approximately $200 Million of Underwriting Profits Since
Inception With a Combined Ratio of 97%
Attractive market characteristics |
 •
Improve profitability and consistency of results through
enhanced market presence, improved underwriting and
risk selection
Reinsurance Strategic Direction
Enhancing profitability by recruiting top flight underwriting talent, developing strategic
partnerships with key clients and brokers, and improving underwriting and risk
selection Reinsurance Focusing on Growing Profitable Specialty Lines of Business
With Less Volatile Exposures
21
Strategic Priorities for Global Reinsurance
•
Third quarter 2012 additions
–
Engineering Risk Underwriter
–
Trade Credit and Surety Team
–
Global Weather Unit
•
August
2013
–
Hired
Peter
Mills,
Head
of
Global
Specialty
& Europe P&C Reinsurance
•
October
2013
–
Hired
Chris
Donelan,
Head
of
U.S.
Reinsurance and team of underwriters
•
January
2014
–
Hired
Marine
Reinsurance
Team
based
in
Zurich (starting in August 2014)
Recent Key Hires
•
Reinsurance business has a demonstrated track record of profitability
–
Over $1 billion of premiums and combined ratio of 77% in 2013
–
Generated almost $1 billion of underwriting profits with a combined ratio of 92% since
inception Demonstrated Track Record of Profitability
–
Hired Jerome Faure in March 2013 as CEO of Global
Reinsurance
–
Completed the consolidation of European
reinsurance underwriting in Zurich
–
Focus on profitable growth and diversification
through existing and new specialty reinsurance units
•
Manage volatility through improved portfolio management
and opportunistic retro purchases
•
Eliminate substandard businesses with insufficient margins |
 22
Endurance and Aspen:
Creating a Global Leader in Specialty
Insurance and Reinsurance |