ENDURANCE SPECIALTY HOLDINGS LTD - 10-Q Quarterly Report

(State or other jurisdiction
of incorporation or organization)

(I.R.S. Employer Identification No.)

Wellesley House
90 Pitts Bay Road
Pembroke HM 08, Bermuda
(Address of principal executive offices, including postal code)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the period ended March 31, 2005, or

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 1-31599

ENDURANCE SPECIALTY HOLDINGS LTD.

(Exact Name of Registrant as Specified in Its Charter)

Registrant's Telephone Number, Including Area Code: (441) 278-0400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

INDEX


	Page
Part I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2005 and December 31, 2004		2
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2005 and 2004		3
Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 2005 and 2004		4
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004		5
Notes to the Unaudited Condensed Consolidated Financial Statements		6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		13
Item 4. Controls and Procedures		30
Part II. OTHER INFORMATION
Item 1. Legal Proceedings		32
Item 2. Changes in Securities		32
Item 3. Defaults Upon Senior Securities		32
Item 4. Submission of Matters to a Vote of Security Holders		33
Item 5. Other Information		33
Item 6. Exhibits		33
SIGNATURES		34

ENDURANCE SPECIALTY HOLDINGS LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of United States dollars except share amounts)


	MARCH 31, 2005			DECEMBER 31, 2004
	(UNAUDITED)
ASSETS
Cash and cash equivalents	$	273,785		$	271,143
Fixed maturity investments available for sale, at fair value (amortized cost: $3,704,988 and $3,570,487 at March 31, 2005 and December 31, 2004, respectively)		3,673,191			3,578,174
Investment in other ventures, under equity method		108,536			91,036
Premiums receivable, net (includes $37,283 and $9,439 from related parties at March 31, 2005 and December 31, 2004, respectively)		847,327			545,352
Deferred acquisition costs		238,182			195,419
Securities lending collateral		404,673			407,527
Prepaid reinsurance premiums		5,990			5,248
Losses recoverable		12,434			12,203
Accrued investment income		32,166			28,378
Intangible assets		42,364			47,107
Other assets		56,440			44,251
Total assets	$	5,695,088		$	5,225,838
LIABILITIES
Reserve for losses and loss expenses	$	1,706,957		$	1,549,661
Reserve for unearned premiums		1,157,973			897,605
Deposit liabilities		56,108			—
Reinsurance balances payable		67,319			70,507
Securities lending payable		404,673			407,527
Debt		391,286			391,280
Other liabilities		28,132			46,803
Total liabilities		3,812,448			3,363,383
SHAREHOLDERS' EQUITY
Common shares
Ordinary − 60,578,708 issued and outstanding (2004 − 61,254,992)		60,579			61,255
Additional paid-in capital		1,091,722			1,111,633
Accumulated other comprehensive (loss) income		(662	)		39,473
Retained earnings		731,001			650,094
Total shareholders' equity		1,882,640			1,862,455
Total liabilities and shareholders' equity	$	5,695,088		$	5,225,838

See accompanying notes to unaudited condensed consolidated financial statements.

ENDURANCE SPECIALTY HOLDINGS LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(In thousands of United States dollars, except share and per share amounts)


	2005			2004
Revenues
Gross premiums written	$	702,491		$	720,631
Net premiums written		699,178			717,007
Change in unearned premiums		(261,580	)		(301,181	)
Net premiums earned (includes $1,916 and $496 million from related parties in three months ended March 31, 2005 and 2004, respectively)		437,598			415,826
Net investment income		40,011			24,675
Net realized (losses) gains on sales of investments		(4,453	)		5,176
Other underwriting income		171			—
Total revenues		473,327			445,677
Expenses
Losses and loss expenses (includes $2,251 and $241 from related parties in three months ended March 31, 2005 and 2004, respectively)		251,059			222,009
Acquisition expenses (includes $517 and $123 from related parties in three months ended March 31, 2005 and 2004, respectively)		86,775			85,518
General and administrative expenses		33,546			31,767
Amortization of intangibles		1,220			944
Net foreign exchange losses		2,421			3,159
Interest expense		5,471			828
Total expenses		380,492			344,225
Income before income taxes		92,835			101,452
Income tax benefit (expense)