A.M. Best Affirms Ratings of Endurance Specialty Holdings, Ltd. and Its Subsidiaries

A.M. Best Affirms Ratings of Endurance Specialty Holdings, Ltd. and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a" of Endurance Specialty Insurance Ltd. (Endurance) and its affiliates. Concurrently, A.M. Best has affirmed the ICR of "bbb" and debt ratings of the publicly traded parent, Endurance Specialty Holdings, Ltd. [NYSE: ENH]. Both companies are domiciled in Bermuda. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect Endurance's strong level of risk-adjusted capitalization, specialty focused, diversified business profile and the company's relatively solid operating performance given the natural catastrophes in the past few years. Approximately 30% of Endurance's net premiums written are related to agriculture insurance, which gives it a somewhat unique profile when compared to many of its peers. Historically the agriculture business has been profitable for Endurance since it was acquired in 2007. However, in 2012 there was a severe drought in the United States, which resulted in a loss for this line of business. While the agricultural losses were in line with Endurance's risk profile and it still reported an overall net profit, the losses dampened operating results in 2012 and came on the back of a net income loss in 2011 as a result of global catastrophes.

Endurance has built a solid enterprise risk management framework that has evolved with the company and allows the organization to absorb the aforementioned losses. Nonetheless, operating performance can help drive balance sheet strength or erode it, and Endurance will continually be monitored in that aspect as part of A.M. Best's overall analysis. Endurance continues to execute its strategy, and in recent months, there have been some management changes that are expected to augment the company's capabilities. However, there continues to be broad market challenges going forward as casualty rates remain soft, investment yields are low and global economic uncertainty remains part of the landscape.

These challenges and other rating factors, which could lead to Endurance's ratings being downgraded or a revision of the outlook to negative, include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to expectations and peers, adverse loss reserve development and/or a material decline in risk-adjusted capital. Alternatively, factors that could lead to a ratings upgrade include sustained favorable operating profitability, coupled with maintenance of strong risk-adjusted capital levels and robust enterprise risk management.

The FSR of A (Excellent) and ICRs of "a" have been affirmed for Endurance Specialty Insurance Ltd and its following affiliates:

  • Endurance Reinsurance Corporation of America
  • Endurance Worldwide Insurance Limited
  • Endurance American Specialty Insurance Company
  • Endurance American Insurance Company
  • Endurance Risk Solutions Assurance Co.
  • American Agri-Business Insurance Company

The following debt ratings have been affirmed:

Endurance Specialty Holdings, Ltd—

-- "bbb" on $335 million 7.0% senior unsecured notes, due 2034
-- "bbb" on $200 million 6.15% senior unsecured notes, due 2015
-- "bb+" on $200 million 7.75% Series A non-cumulative preferred shares
-- "bb+" on $230 million 7.50% Series B non-cumulative preferred shares

The following indicative shelf ratings have been affirmed for debt securities available under the existing shelf registration:

Endurance Specialty Holdings, Ltd—

-- "bbb" on senior unsecured debt
-- "bbb-" on subordinated debt
-- "bb+" on preferred stock

Endurance Holdings Capital Trust I & II (guaranteed by Endurance Specialty Holdings, Ltd)

-- "bb+" on preferred securities

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visitwww.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Greg Reisner, 908-439-2200, ext. 5224
Managing Senior Financial Analyst
Peter Dickey, 908-439-2200, ext. 5053
Assistant Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations

KEYWORDS:   United States  Bermuda  Europe  North America  Caribbean  New Jersey


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