Endurance Posts Record $198.8 Million Q4 Net ; $498 Million Full Year

Bermuda-based Endurance Specialty Holdings Ltd. reported net income of $198.8 million and $2.70 per diluted common share for the fourth quarter of 2006 versus a net loss of ($49.8) million and ($0.80) per diluted common share in the fourth quarter of 2005.

For the year ended December 31, 2006, net income was $498.1 million and $6.73 per diluted common share versus a net loss of ($220.5) million and ($3.60) per diluted common share for the year ended December 31, 2005. The report noted that “net income for the years ended December 31, 2006 and 2005 included favorable prior year loss reserve development of $57.7 million and $162.5 million, respectively.”

Endurance selected the following fourth quarter earnings highlights:
— Total premiums written of $297.9 million, which include gross premiums written and deposit premiums, increased 39.3 percent over the same period in 2005. Excluding 2005 reinstatement premiums of $11.6 million related to Hurricanes Katrina, Rita and Wilma, total premiums written increased 47.3 percent from the fourth quarter of 2005;
— Total ceded premiums of $42.3 million versus $15.7 million in the fourth quarter of 2005;
— Total net premiums written, including net premiums written and deposit premiums, increased 29.0 percent over the fourth quarter of 2005;
— Combined ratio, excluding 6.6 percentage points of favorable prior year loss reserve development, was 72.1 percent;
— Net investment income of $72.0 million increased 35.9 percent over the same period in 2005;
— Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, was $193.6 million and $2.62 per diluted common share; and
— Operating return on average common equity for the quarter was 9.7 percent.

Operating highlights for the year ended December 31, 2006 were as follows:
— Total premiums written of $1,948.6 million, which include gross premiums written and deposit premiums, increased 7.5 percent over the same period in 2005. Excluding 2005 reinstatement premiums of $46.1 million related to Hurricanes Katrina, Rita and Wilma, total premiums written increased 10.3 percent from 2005;
— Total ceded premiums of $204.1 million versus $49.5 million over the same period in 2005;
— Total net premiums written, including net premiums written and deposit premiums, decreased 1.0 percent over the same period in 2005;
— Combined ratio, excluding 3.5 percentage points of favorable prior year loss reserve development, was 85.0 percent;
— Net investment income increased 42.7 percent to $257.4 million over the year ended December 31, 2005;
— Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, was $500.9 million and $6.76 per diluted common share; and
— Operating return on average common equity was 25.7 percent.

Chairman and CEO Kenneth J. LeStrange commented, “I am extremely pleased with the record earnings that Endurance achieved both for the fourth quarter and for the full year of 2006. In addition to posting record earnings this year, we took significant steps to further expand and balance our book of business through growth in our specialty lines and we significantly reduced our catastrophe risk profile – accomplishments we believe will serve us well in 2007 and beyond.”

“During 2006, Endurance established two new global leadership roles within the Company to lead our Reinsurance and Insurance business segments. I am pleased to announce that William Jewett has been appointed the President and Chief Executive Officer of our reinsurance business and will be responsible for strategy, profitability and underwriting results for our reinsurance business worldwide.

“This appointment compliments our earlier appointment in 2006 of Michael Fujii to lead our global insurance business. Mr. Fujii has now assumed additional responsibilities in this business segment as the President and Chief Executive Officer.

“In addition, as part of our management realignment, Dan Izard has been appointed Chief Operating Officer of Endurance, assuming global responsibility for operating effectiveness and shared services for all of our subsidiaries. I believe the management changes we have implemented will improve our ability to coordinate our activities across the geographies in which we operate and enhance our ability to achieve our strategic objectives.”

The full earnings release, a fourth quarter supplement and a replay of the earnings conference call are available on the Company’s web site under the “Investors” section at: www.endurance.bm.

The telephone replay of the conference call will be available through February 22, 2007 by dialing (888) 203-1112 (toll-free) or (719) 457-0820 (international) and entering the pass code: 4767099.