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	c12109e8vk.htm
EX-99.1 - EXHIBIT 99.1 - ENDURANCE SPECIALTY HOLDINGS LTD	c12109exv99w1.htm

Exhibit 99.2

Endurance Specialty Holdings Ltd.

INVESTOR FINANCIAL SUPPLEMENT

FOURTH QUARTER 2010

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 — YTD		3
c. Consolidated Balance Sheets		4
III. Other Financial Information
a. Endurance Operating Income Profile		5
b. Segment Distribution		7
c. Consolidated Segment Data		8
d. Return on Equity Analysis		20
e. ROE Component Analysis — Annualized Premium and Investment Leverage		21
f. Investment Portfolio Information		22
g. Structured Securities Detail		23
h. Largest Twenty-Five Corporate Holdings		24
IV. Loss Reserve Analysis
a. Activity in Reserve for Losses and Loss Expenses		25
b. Prior Year Reserve Development by Segment		26
c. Prior Year Reserve Development by Development Tail		27
d. Analysis of Unpaid Losses and Loss Expenses		28
V. Shareholder Return Analysis
a. Shareholder Return Analysis		29
b. Weighted Average Dilutive Shares Outstanding		30
c. Earnings per Share — Two Class Method		31
d. Operating Income Reconciliation — Two Class Method		32
e. Dilutive Shares Sensitivity Analysis		33
f. Book Value Per Share Analysis		34

VI. Regulation G		35

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, 2009.

ENDURANCE SPECIALTY HOLDINGS LTD.
BASIS OF PRESENTATION

DEFINITIONS AND PRESENTATION

•		All financial information contained herein is unaudited, except the balance sheet and income statement data for the years ended December 31, 2009 and December 31, 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						FOR THE YEAR ENDED						Previous			Previous
	DECEMBER 31,						DECEMBER 31,						Quarter			Year to Date
	2010			2009			2010			2009			Change			Change

HIGHLIGHTS
Net income	$	111,228		$	154,825		$	364,738		$	536,104			(28.2	)%		(32.0	)%
Net income available to common and participating common shareholders		107,353			150,950			349,238			520,604			(28.9	)%		(32.9	)%
Net income allocated to common shareholders		105,317			148,541			342,643			511,500			(29.1	)%		(33.0	)%
Operating income [a]		108,260			153,663			345,535			520,702			(29.5	)%		(33.6	)%
Operating income available to common and participating common shareholders [a]		104,385			149,788			330,035			505,202			(30.3	)%		(34.7	)%
Operating income allocated to common shareholders [a]		102,405			147,397			323,800			496,366			(30.5	)%		(34.8	)%
Operating cash flow		16,594			40,718			407,174			471,906			(59.2	)%		(13.7	)%
Gross premiums written		189,225			209,367			2,053,236			2,021,450			(9.6	)%		1.6	%
Net premiums written		158,115			146,442			1,763,744			1,606,050			8.0	%		9.8	%
Net premiums earned		449,736			393,943			1,741,113			1,633,192			14.2	%		6.6	%
Total assets		7,979,405			7,666,694			7,979,405			7,666,694			4.1	%		4.1	%
Total shareholders’ equity		2,848,153			2,787,283			2,848,153			2,787,283			2.2	%		2.2	%

PER SHARE AND SHARES DATA
Basic earnings per common share
Net income (as reported)	$	2.22		$	2.69		$	6.73		$	9.14			(17.5	)%		(26.4	)%
Operating income (as reported) [a]	$	2.16		$	2.67		$	6.36		$	8.87			(19.1	)%		(28.3	)%
Diluted earnings per common share
Net income (as reported)	$	2.09		$	2.56		$	6.38		$	8.69			(18.4	)%		(26.6	)%
Operating income (as reported) [a]	$	2.04		$	2.54		$	6.03		$	8.43			(19.7	)%		(28.5	)%

As Reported
Weighted average common shares outstanding		47,385			55,171			50,882			55,929			(14.1	)%		(9.0	)%
Weighted average common shares outstanding and dilutive potential common shares		50,303			58,052			53,728			58,874			(13.3	)%		(8.7	)%

Book Value Per Common Share
Book value [b]	$	57.25		$	47.74		$	57.25		$	47.74			19.9	%		19.9	%
Diluted book value (treasury stock method) [b]	$	52.74		$	44.61		$	52.74		$	44.61			18.2	%		18.2	%

FINANCIAL RATIOS
Return on average common equity (ROAE), net income [c]		4.0	%		5.9	%		13.3	%		22.7	%		(1.9	)		(9.4	)
ROAE, operating income [a] [c]		3.9	%		5.9	%		12.6	%		22.0	%		(2.0	)		(9.4	)
Return on beg. common equity (ROBE), net income [d]		3.9	%		6.0	%		13.5	%		25.9	%		(2.1	)		(12.4	)
ROBE, operating income [a] [d]		3.8	%		6.0	%		12.8	%		25.2	%		(2.2	)		(12.4	)

Annualized ROAE, net income [c]		16.0	%		23.7	%		13.3	%		22.7	%		(7.7	)		(9.4	)
Annualized ROAE, operating income [a] [c]		15.6	%		23.5	%		12.6	%		22.0	%		(7.9	)		(9.4	)
Annualized ROBE, net income [d]		15.6	%		24.0	%		13.5	%		25.9	%		(8.4	)		(12.4	)
Annualized ROBE, operating income [a] [d]		15.2	%		24.0	%		12.8	%		25.2	%		(8.8	)		(12.4	)
Annualized investment yield		3.3	%		4.1	%		3.3	%		5.0	%		(0.8	)		(1.7	)

GAAP
Loss ratio		54.8	%		41.6	%		59.6	%		53.1	%		13.2			6.5
Acquisition expense ratio		14.7	%		18.5	%		15.2	%		16.4	%		(3.8	)		(1.2	)
General and administrative expense ratio		15.1	%		14.7	%		13.9	%		14.5	%		0.4			(0.6	)

Combined ratio		84.6	%		74.8	%		88.7	%		84.0	%		9.8			4.7


[a]		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. Please see page 32 for a reconciliation to net income.

[b]		For detailed calculations, please refer to page 34.

[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 INCOME — QUARTERLY


	QUARTERS ENDED
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2009			DEC. 31, 2008
UNDERWRITING REVENUES
Gross premiums written	$	189,225		$	555,574		$	489,568		$	818,869		$	209,367		$	235,622
Premiums ceded		(31,110	)		(103,690	)		(38,765	)		(115,927	)		(62,925	)		(55,527	)

Net premiums written	$	158,115		$	451,884		$	450,803		$	702,942		$	146,442		$	180,095
Change in unearned premiums		291,621			17,909			5,592			(337,753	)		247,501			251,633

Net premiums earned	$	449,736		$	469,793		$	456,395		$	365,189		$	393,943		$	431,728
Other underwriting income (loss)		410			322			(2,663	)		295			(284	)		(2,454	)

Total underwriting revenues	$	450,146		$	470,115		$	453,732		$	365,484		$	393,659		$	429,274

UNDERWRITING EXPENSES
Losses and loss expenses	$	246,424		$	266,132		$	292,947		$	232,597		$	164,005		$	225,103
Acquisition expenses		66,133			67,443			66,708			63,944			72,821			79,306
General and administrative expenses		67,756			59,523			55,676			58,965			57,932			56,059

Total underwriting expenses	$	380,313		$	393,098		$	415,331		$	355,506		$	294,758		$	360,468

Underwriting income	$	69,833		$	77,017		$	38,401		$	9,978		$	98,901		$	68,806

OTHER OPERATING REVENUE
Net investment income	$	56,874		$	53,654		$	33,351		$	56,479		$	59,257		$	(4,594	)
Interest expense		(9,053	)		(9,051	)		(9,050	)		(7,608	)		(7,541	)		(7,568	)
Amortization of intangibles		(2,696	)		(2,588	)		(2,588	)		(2,588	)		(2,699	)		(2,762	)

Total other operating revenue	$	45,125		$	42,015		$	21,713		$	46,283		$	49,017		$	(14,924	)

INCOME BEFORE OTHER ITEMS	$	114,958		$	119,032		$	60,114		$	56,261		$	147,918		$	53,882
OTHER
Net foreign exchange (losses) gains	$	(3,476	)	$	12,565		$	(129	)	$	(5,971	)	$	(1,008	)	$	(40,741	)
Net realized gains on investment sales		7,314			8,973			2,657			3,544			3,166			29,286

Total other-than-temporary impairment losses		(48	)		(1,140	)		(738	)		(769	)		(561	)		(41,086	)
Portion of loss recognised in other comprehensive income		(663	)		(240	)		(254	)		(92	)		(423	)		—

Net impairment losses recognised in earnings [a]		(711	)		(1,380	)		(992	)		(861	)		(984	)		(41,086	)

Income tax (expense) benefit		(6,857	)		(62	)		(3,057	)		2,816			5,733			15,523

NET INCOME	$	111,228		$	139,128		$	58,593		$	55,789		$	154,825		$	16,864
Preferred dividends		(3,875	)		(3,875	)		(3,875	)		(3,875	)		(3,875	)		(3,875	)


NET INCOME AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS	$	107,353		$	135,253		$	54,718		$	51,914		$	150,950		$	12,989


KEY RATIOS/PER SHARE DATA
Loss ratio		54.8	%		56.6	%		64.2	%		63.7	%		41.6	%		52.1	%
Acquisition expense ratio		14.7	%		14.4	%		14.6	%		17.5	%		18.5	%		18.4	%
General and administrative expense ratio		15.1	%		12.7	%		12.2	%		16.1	%		14.7	%		13.0	%

Combined ratio		84.6	%		83.7	%		91.0	%		97.3	%		74.8	%		83.5	%


Basic earnings per common share	$	2.22		$	2.64		$	1.02		$	0.95		$	2.69		$	0.23
Diluted earnings per common share	$	2.09		$	2.51		$	0.97		$	0.91		$	2.56		$	0.22

ROAE, net income [b]		4.0	%		5.0	%		2.1	%		2.0	%		5.9	%		0.6	%


[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 — YTD


	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


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

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


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

TOTAL LIABILITIES	$	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
Common shares		47,218			49,685			52,664			54,230			55,116
Additional paid-in capital		613,915			715,834			822,572			882,684			929,577
Accumulated other comprehensive income		138,571			201,172			138,605			95,413			52,148
Retained earnings		2,040,449			1,944,994			1,822,264			1,780,760			1,742,442

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

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


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

RATIOS
Debt-to-capital		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, 2009.

ENDURANCE SPECIALTY HOLDINGS LTD.
Annual Operating Income Profile Comparison


										Change from Jan. 1, 2010 - Dec. 31, 2010 to						Change from Jul. 1, 2010 - June 30, 2011 to
										Jan. 1, 2011 - Dec. 31, 2011						Jan. 1, 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 YEAR ENDED DECEMBER 31, 2010

Net Premiums Written = $1.764 billion


[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 QUARTER ENDED DEC. 31, 2010


	Insurance			Reinsurance			Totals
UNDERWRITING REVENUES
Gross premiums written	$	112,664		$	76,561		$	189,225

Net premiums written	$	81,643		$	76,472		$	158,115

Net premiums earned	$	205,528		$	244,208		$	449,736
Other underwriting income		4			406			410

Total underwriting revenues	$	205,532		$	244,614		$	450,146


UNDERWRITING EXPENSES
Losses and loss expenses	$	129,168		$	117,256		$	246,424
Acquisition expenses		12,220			53,913			66,133
General and administrative expenses		36,812			30,944			67,756

Total expenses	$	178,200		$	202,113		$	380,313


UNDERWRITING INCOME	$	27,332		$	42,501		$	69,833


GAAP RATIOS
Loss ratio		62.9	%		48.0	%		54.8	%
Acquisition expense ratio		5.9	%		22.1	%		14.7	%
General and administrative expense ratio		17.9	%		12.7	%		15.1	%

Combined ratio AS REPORTED		86.7	%		82.8	%		84.6	%


Effect of favorable prior accident year reserve development		5.6	%		4.9	%		5.2	%


Combined ratio net of prior accident year reserve development		92.3	%		87.7	%		89.8	%

ENDURANCE SPECIALTY HOLDINGS LTD.
INSURANCE SEGMENT DATA


	FOR THE QUARTERS ENDED
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2009			DEC. 31, 2008
UNDERWRITING REVENUES
Gross premiums written	$	112,664		$	303,561		$	231,626		$	464,341		$	150,471		$	196,323

Net premiums written	$	81,643		$	204,293		$	194,987		$	348,941		$	88,432		$	141,466

Net premiums earned	$	205,528		$	242,766		$	227,858		$	145,676		$	191,151		$	236,726
Other underwriting income (loss)		4			473			—			(2	)		89			—

Total underwriting revenues	$	205,532		$	243,239		$	227,858		$	145,674		$	191,240		$	236,726


UNDERWRITING EXPENSES
Losses and loss expenses	$	129,168		$	172,015		$	170,773		$	86,084		$	119,297		$	168,137
Acquisition expenses		12,220			17,356			16,554			17,426			18,619			27,601
General and administrative expenses		36,812			29,256			27,146			30,121			28,813			25,904

Total expenses	$	178,200		$	218,627		$	214,473		$	133,631		$	166,729		$	221,642


UNDERWRITING INCOME	$	27,332		$	24,612		$	13,385		$	12,043		$	24,511		$	15,084


GAAP RATIOS
Loss ratio		62.9	%		70.9	%		74.9	%		59.0	%		62.4	%		71.0	%
Acquisition expense ratio		5.9	%		7.1	%		7.3	%		12.0	%		9.7	%		11.7	%
General and administrative expense ratio		17.9	%		12.1	%		11.9	%		20.7	%		15.1	%		10.9	%

Combined ratio AS REPORTED		86.7	%		90.1	%		94.1	%		91.7	%		87.2	%		93.6	%


Effect of favorable prior accident year reserve development		5.6	%		3.9	%		3.6	%		12.1	%		11.2	%		10.3	%

Combined ratio net of prior accident year reserve development		92.3	%		94.0	%		97.7	%		103.8	%		98.4	%		103.9	%

ENDURANCE SPECIALTY HOLDINGS LTD.
REINSURANCE SEGMENT DATA


	FOR THE QUARTERS ENDED
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2009			DEC. 31, 2008
UNDERWRITING REVENUES
Gross premiums written	$	76,561		$	252,013		$	257,942		$	354,528		$	58,896		$	39,299

Net premiums written	$	76,472		$	247,591		$	255,816		$	354,001		$	58,010		$	38,629

Net premiums earned	$	244,208		$	227,027		$	228,537		$	219,513		$	202,792		$	195,002
Other underwriting income (loss)		406			(151	)		(2,663	)		297			(373	)		(2,454	)

Total underwriting revenues	$	244,614		$	226,876		$	225,874		$	219,810		$	202,419		$	192,548


UNDERWRITING EXPENSES
Losses and loss expenses	$	117,256		$	94,117		$	122,174		$	146,513		$	44,708		$	56,966
Acquisition expenses		53,913			50,087			50,154			46,518			54,202			51,705
General and administrative expenses		30,944			30,267			28,530			28,844			29,119			30,155

Total expenses	$	202,113		$	174,471		$	200,858		$	221,875		$	128,029		$	138,826


UNDERWRITING INCOME (LOSS)	$	42,501		$	52,405		$	25,016		$	(2,065	)	$	74,390		$	53,722


GAAP RATIOS
Loss ratio		48.0	%		41.5	%		53.5	%		66.8	%		22.0	%		29.2	%
Acquisition expense ratio		22.1	%		22.1	%		21.9	%		21.2	%		26.7	%		26.5	%
General and administrative expense ratio		12.7	%		13.3	%		12.5	%		13.1	%		14.4	%		15.5	%

Combined ratio AS REPORTED		82.8	%		76.9	%		87.9	%		101.1	%		63.1	%		71.2	%


Effect of favorable prior accident year reserve development		4.9	%		11.3	%		9.4	%		9.5	%		9.7	%		8.5	%

Combined ratio net of prior accident year reserve development		87.7	%		88.2	%		97.3	%		110.6	%		72.8	%		79.7	%

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


	FOR THE QUARTERS ENDED
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2009			DEC. 31, 2008
INSURANCE SEGMENT
Agriculture	$	6,930		$	156,162		$	54,170		$	350,199		$	33,430		$	30,126
Professional lines		36,690			43,381			56,567			33,508			49,915			49,640
Casualty		37,377			40,538			55,406			34,228			31,680			27,810
Property		22,134			30,295			43,158			26,523			26,479			40,291
Healthcare liability		10,811			34,024			22,442			20,316			9,650			10,704
Workers’ compensation		(1,278	)		(839	)		(117	)		(433	)		(683	)		37,752

TOTAL INSURANCE	$	112,664		$	303,561		$	231,626		$	464,341		$	150,471		$	196,323


REINSURANCE SEGMENT
Catastrophe	$	17,896		$	45,513		$	123,808		$	122,669		$	13,939		$	13,986
Casualty		47,970			81,167			56,919			107,974			34,543			2,445
Property		8,628			111,395			39,999			64,522			9,710			10,352
Aerospace and Marine		2,380			4,184			24,131			18,066			1,716			9,920
Surety and other specialty		(313	)		9,754			13,085			41,297			(1,012	)		2,596

TOTAL REINSURANCE	$	76,561		$	252,013		$	257,942		$	354,528		$	58,896		$	39,299


REPORTED TOTALS	$	189,225		$	555,574		$	489,568		$	818,869		$	209,367		$	235,622

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


	FOR THE QUARTERS ENDED
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2009			DEC. 31, 2008
INSURANCE SEGMENT
Agriculture	$	2,372		$	89,119		$	45,169		$	268,107		$	697		$	4,947
Professional lines		33,171			38,522			49,422			27,602			44,456			43,169
Casualty		25,536			23,700			37,527			21,038			19,875			18,403
Property		11,895			21,366			40,950			14,088			14,932			25,467
Healthcare liability		9,946			32,393			22,031			18,523			9,129			10,704
Workers’ compensation		(1,277	)		(807	)		(112	)		(417	)		(657	)		38,776

TOTAL INSURANCE	$	81,643		$	204,293		$	194,987		$	348,941		$	88,432		$	141,466


REINSURANCE SEGMENT
Catastrophe	$	17,896		$	41,154		$	123,808		$	122,759		$	12,753		$	13,986
Casualty		47,965			81,163			56,831			107,263			34,537			2,251
Property		8,628			111,395			39,999			64,522			9,710			10,351
Aerospace and Marine		2,380			4,184			22,101			18,031			1,721			9,608
Surety and other specialty		(397	)		9,695			13,077			41,426			(711	)		2,433

TOTAL REINSURANCE	$	76,472		$	247,591		$	255,816		$	354,001		$	58,010		$	38,629


REPORTED TOTALS	$	158,115		$	451,884		$	450,803		$	702,942		$	146,442		$	180,095

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


	FOR THE QUARTERS ENDED
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2009		DEC. 31, 2008
INSURANCE SEGMENT
Agriculture	$	100,177		$	134,864		$	115,990		$	46,612		$	81,065	$	88,951
Professional lines		37,167			38,085			39,626			39,606			39,948		26,672
Casualty		28,415			25,682			26,315			24,658			23,525		21,992
Property		20,362			24,000			26,153			15,793			16,929		22,431
Healthcare liability		20,684			20,942			19,886			19,588			19,943		20,087
Workers’ compensation		(1,277	)		(807	)		(112	)		(581	)		9,741		56,593

TOTAL INSURANCE	$	205,528		$	242,766		$	227,858		$	145,676		$	191,151	$	236,726


REINSURANCE SEGMENT
Catastrophe	$	79,617		$	74,675		$	79,528		$	81,888		$	75,937	$	69,012
Casualty		74,702			71,844			64,906			61,516			55,805		40,974
Property		64,229			56,975			56,646			49,432			46,829		48,444
Aerospace and Marine		11,312			8,602			12,751			12,253			11,155		21,717
Surety and other specialty		14,348			14,931			14,706			14,424			13,066		14,855

TOTAL REINSURANCE	$	244,208		$	227,027		$	228,537		$	219,513		$	202,792	$	195,002


REPORTED TOTALS	$	449,736		$	469,793		$	456,395		$	365,189		$	393,943	$	431,728

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED SEGMENT DATA
FOR THE YEAR ENDED DEC. 31, 2010


							Reported
	Insurance			Reinsurance			Totals
UNDERWRITING REVENUES
Gross premiums written	$	1,112,192		$	941,044		$	2,053,236

Net premiums written	$	829,864		$	933,880		$	1,763,744

Net premiums earned	$	821,828		$	919,285		$	1,741,113
Other underwriting income (loss)		475			(2,111	)		(1,636	)

Total underwriting revenues	$	822,303		$	917,174		$	1,739,477


UNDERWRITING EXPENSES
Losses and loss expenses	$	558,040		$	480,060		$	1,038,100
Acquisition expenses		63,556			200,672			264,228
General and administrative expenses		123,335			118,585			241,920

Total expenses	$	744,931		$	799,317		$	1,544,248


UNDERWRITING INCOME	$	77,372		$	117,857		$	195,229


GAAP RATIOS
Loss ratio		67.9	%		52.2	%		59.6	%
Acquisition expense ratio		7.7	%		21.8	%		15.2	%
General and administrative expense ratio		15.0	%		12.9	%		13.9	%

Combined ratio AS REPORTED		90.6	%		86.9	%		88.7	%


Effect of favorable prior accident year reserve development		5.7	%		8.7	%		7.3	%


Combined ratio net of prior accident year reserve development		96.3	%		95.6	%		96.0	%

ENDURANCE SPECIALTY HOLDINGS LTD.
INSURANCE SEGMENT DATA


	FOR THE YEARS ENDED
	DEC. 31, 2010			DEC. 31, 2009			DEC. 31, 2008
UNDERWRITING REVENUES
Gross premiums written	$	1,112,192		$	1,152,150		$	1,426,366

Net premiums written	$	829,864		$	740,310		$	980,598

Net premiums earned	$	821,828		$	823,703		$	920,389
Other underwriting income		475			3,533			—

Total underwriting revenues	$	822,303		$	827,236		$	920,389


UNDERWRITING EXPENSES
Losses and loss expenses	$	558,040		$	553,008		$	681,735
Acquisition expenses		63,556			84,724			103,783
General and administrative expenses		123,335			119,766			103,211

Total expenses	$	744,931		$	757,498		$	888,729


UNDERWRITING INCOME	$	77,372		$	69,738		$	31,660


GAAP RATIOS
Loss ratio		67.9	%		67.1	%		74.1	%
Acquisition expense ratio		7.7	%		10.3	%		11.3	%
General and administrative expense ratio		15.0	%		14.6	%		11.2	%

Combined ratio AS REPORTED		90.6	%		92.0	%		96.6	%


Effect of favorable prior accident year reserve development		5.7	%		11.2	%		7.7	%

Combined ratio net of prior accident year reserve development		96.3	%		103.2	%		104.3	%

ENDURANCE SPECIALTY HOLDINGS LTD.
REINSURANCE SEGMENT DATA


	FOR THE YEARS ENDED
	DEC. 31, 2010			DEC. 31, 2009			DEC. 31, 2008
UNDERWRITING REVENUES
Gross premiums written	$	941,044		$	869,300		$	820,054

Net premiums written	$	933,880		$	865,740		$	803,692

Net premiums earned	$	919,285		$	809,489		$	846,096
Other underwriting (loss) income		(2,111	)		381			(3,973	)

Total underwriting revenues	$	917,174		$	809,870		$	842,123


UNDERWRITING EXPENSES
Losses and loss expenses	$	480,060		$	313,632		$	453,696
Acquisition expenses		200,672			183,247			196,130
General and administrative expenses		118,585			117,388			113,154

Total expenses	$	799,317		$	614,267		$	762,980


UNDERWRITING INCOME	$	117,857		$	195,603		$	79,143


GAAP RATIOS
Loss ratio		52.2	%		38.8	%		53.6	%
Acquisition expense ratio		21.8	%		22.6	%		23.2	%
General and administrative expense ratio		12.9	%		14.5	%		13.4	%

Combined ratio AS REPORTED		86.9	%		75.9	%		90.2	%


Effect of favorable prior accident year reserve development		8.7	%		7.3	%		10.1	%

Combined ratio net of prior accident year reserve development		95.6	%		83.2	%		100.3	%

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


	FOR THE YEARS ENDED
	DEC. 31, 2010			DEC. 31, 2009		DEC. 31, 2008
INSURANCE SEGMENT
Agriculture	$	567,461		$	572,096	$	690,318
Professional lines		170,146			193,799		142,253
Casualty		167,549			152,580		120,867
Property		122,110			124,621		159,408
Healthcare liability		87,593			82,955		80,692
Workers’ compensation		(2,667	)		26,099		232,828

TOTAL INSURANCE	$	1,112,192		$	1,152,150	$	1,426,366


REINSURANCE SEGMENT
Catastrophe	$	309,886		$	303,404	$	315,262
Casualty		294,030			255,142		161,583
Property		224,544			215,085		192,652
Aerospace and Marine		48,761			44,696		80,521
Surety and other specialty		63,823			50,973		70,036

TOTAL REINSURANCE	$	941,044		$	869,300	$	820,054


REPORTED TOTALS	$	2,053,236		$	2,021,450	$	2,246,420

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


	FOR THE YEARS ENDED
	DEC. 31, 2010			DEC. 31, 2009		DEC. 31, 2008
INSURANCE SEGMENT
Agriculture	$	404,767		$	324,480	$	380,699
Professional lines		148,717			167,091		119,427
Casualty		107,801			91,071		86,610
Property		88,299			68,011		98,012
Healthcare liability		82,893			78,284		80,002
Workers’ compensation		(2,613	)		11,373		215,848

TOTAL INSURANCE	$	829,864		$	740,310	$	980,598


REINSURANCE SEGMENT
Catastrophe	$	305,617		$	302,218	$	302,070
Casualty		293,222			254,897		162,617
Property		224,544			215,085		192,625
Aerospace and Marine		46,696			42,563		76,991
Surety and other specialty		63,801			50,977		69,389

TOTAL REINSURANCE	$	933,880		$	865,740	$	803,692


REPORTED TOTALS	$	1,763,744		$	1,606,050	$	1,784,290

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


	FOR THE YEARS ENDED
	DEC. 31, 2010			DEC. 31, 2009		DEC. 31, 2008
INSURANCE SEGMENT
Agriculture	$	397,643		$	331,960	$	343,909
Professional lines		154,484			152,547		85,781
Casualty		105,070			89,340		86,252
Property		86,308			76,245		75,584
Healthcare liability		81,100			80,219		86,423
Workers’ compensation		(2,777	)		93,392		242,440

TOTAL INSURANCE	$	821,828		$	823,703	$	920,389


REINSURANCE SEGMENT
Catastrophe	$	315,708		$	296,982	$	299,459
Casualty		272,968			208,865		182,258
Property		227,282			198,606		199,704
Aerospace and Marine		44,918			49,088		84,822
Surety and other specialty		58,409			55,948		79,853

TOTAL REINSURANCE	$	919,285		$	809,489	$	846,096


REPORTED TOTALS	$	1,741,113		$	1,633,192	$	1,766,485

ENDURANCE SPECIALTY HOLDINGS LTD.
RETURN ON EQUITY ANALYSIS


	FOR THE YEAR
	ENDED DEC. 31, 2010

Average common equity [a]	$	2,617,718

Net premiums earned	$	1,741,113
Combined ratio		88.7	%
Operating margin		11.3	%
Premium leverage		0.67	x

Implied ROAE from underwriting activity		7.6	%


Average cash and invested assets at amortized cost	$	5,997,489
Investment leverage		2.29	x
Year to date investment income yield, pretax		3.3	%

Implied ROAE from investment activity		7.6	%


Financing Costs [b]		(1.9	)%


Implied Pre-tax Operating ROAE, for period [c]		13.3	%


[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,
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			2010			2009

Average common equity [a]	$	2,683,919		$	2,681,895		$	2,632,596		$	2,604,185		$	2,617,718		$	2,297,283

Net premiums earned	$	449,736		$	469,793		$	456,395		$	365,189		$	1,741,113		$	1,633,192

Premium leverage		0.17	x		0.18	x		0.17	x		0.14	x		0.67	x		0.71	x


Annualized premium leverage		0.68	x		0.72	x		0.68	x		0.56	x		0.67	x		0.71	x


Average cash and invested assets at amortized cost	$	6,107,765		$	6,107,817		$	6,064,800		$	6,004,232		$	5,997,489		$	5,716,443


Investment leverage		2.28	x		2.28	x		2.30	x		2.31	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 liquidation value of the preferred shares.

ENDURANCE SPECIALTY HOLDINGS LTD.
INVESTMENT PORTFOLIO
AS OF DECEMBER 31, 2010 AND 2009


	December 31, 2010					December 31, 2009
Type of Investment	Fair Value		Percentage			Fair Value		Percentage
Cash and equivalents [a]	$	610,454		9.9	%	$	529,551		8.9	%
Short-term investments		70,444		1.1	%		534,678		8.9	%
U.S. government and government agencies notes		1,010,819		16.3	%		774,996		13.0	%
Government and agency guaranteed corporates		671,150		10.8	%		913,569		15.3	%
U.S. government agency residential mortgage-backed securities		883,948		14.3	%		923,422		15.5	%
U.S. government agency commercial mortgage-backed securities		22,889		0.4	%		32,851		0.5	%
Municipals		29,979		0.5	%		89,644		1.5	%
Foreign government		140,461		2.3	%		146,271		2.4	%
Corporate securities		1,232,511		19.9	%		603,738		10.1	%
Non-agency residential mortgage-backed securities		246,410		4.0	%		256,748		4.3	%
Non-agency commercial mortgage-backed securities		604,820		9.8	%		529,911		8.9	%
Asset-backed securities		273,715		4.4	%		277,468		4.6	%
Preferred equity securities		13,565		0.2	%		11,023		0.2	%
Other investments [b]		376,652		6.1	%		351,352		5.9	%

Total	$	6,187,817		100.0	%	$	5,975,222		100.0	%


Ratings [e]	Fair Value		Percentage			Fair Value		Percentage
U.S. government and government agencies notes	$	1,010,819		18.1	%	$	774,996		14.2	%
AAA/Aaa		2,639,682		47.4	%		3,388,723		62.2	%
AA/Aa		470,533		8.4	%		219,746		4.0	%
A/A		802,142		14.4	%		473,779		8.7	%
BBB		50,733		0.9	%		46,646		0.9	%
Below BBB		221,848		4.0	%		189,188		3.5	%
Not Rated		4,954		0.1	%		1,241		—
Other investments [b]		376,652		6.7	%		351,352		6.5	%

Total	$	5,577,363		100.0	%	$	5,445,671		100.0	%


	December 31,			December 31,
Performance	2010			2009
Yield [c]		3.3	%		5.0	%
Duration in years [d]		2.39			2.30


	Year Ended		Quarter Ended		Quarter Ended		Quarter Ended			Quarter Ended
Investment Income	Dec. 31, 2010		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010			Mar. 31, 2010
Cash and fixed income securities	$	160,076	$	40,425	$	39,839	$	40,302		$	39,510
Other Investments		40,282		16,449		13,815		(6,951	)		16,969

Total net investment income	$	200,358	$	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 twelve months ending 12/31/10 and twelve months ending 12/31/09 excludes realized and unrealized gains and losses on fixed maturity investments.

	[d]	Duration excludes other investments and operating cash.

	[e]	Excludes cash and equivalents.

ENDURANCE SPECIALTY HOLDINGS LTD.
STRUCTURED SECURITIES DETAIL
AS OF DEC. 31, 2010


						Percentage of
Securitized (RMBS, CMBS, ABS and CDO) securities ratings	Fair Value		Percentage			Investment Portfolio
U.S. Government and agencies	$	906,837		44.6	%		14.7	%
AAA/Aaa		781,017		38.5	%		12.6	%
AA/Aa		60,852		3.0	%		1.0	%
A/A		72,980		3.6	%		1.2	%
BBB		45,436		2.2	%		0.7	%
Below BBB		162,471		8.0	%		2.6	%
Not Rated		2,189		0.1	%		—

Total	$	2,031,782		100.0	%		32.8	%


						Percentage of
Structured securities sectors (RMBS, CMBS, ABS and CDO)	Fair Value		Percentage			Investment Portfolio
Commercial
Agency	$	22,889		1.1	%		0.4	%
Non Agency		626,347		30.8	%		10.1	%
Residential
Agency		885,508		43.6	%		14.2	%
Non Agency		247,078		12.2	%		4.0	%
Consumer
Agency		4,505		0.2	%		0.1	%
Non Agency		245,455		12.1	%		4.0	%

Total	$	2,031,782		100.0	%		32.8	%

Spread Duration 3.33 years


						Percentage of
Commercial real estate collateralized debt obligations ( CRE CDO’s)	Fair Value		Percentage			Investment Portfolio
AAA/Aaa	$	1,826		13.9	%		—
AA/Aa		3,124		23.9	%		0.1	%
A/A		4,650		35.5	%		0.1	%
BBB		1,488		11.4	%		—
Below BBB		2,007		15.3	%		—

Total	$	13,095		100.0	%		0.2	%

Spread Duration 2.06 years

ENDURANCE SPECIALTY HOLDINGS LTD.
LARGEST TWENTY-FIVE CORPORATE HOLDINGS
AS OF DEC. 31, 2010


	December 31, 2010
	Amortized				Unrealized			Credit
ISSUER (1) (2) (4)	Cost		Fair Value		Gain (Loss)			Quality (3)

NOVARTIS AG	$	44,626	$	45,870	$	1,244		AA-
VERIZON COMMUNICATIONS INC.		41,574		43,504		1,930		A-
JPMORGAN CHASE & CO		40,466		40,786		320		A+
CREDIT SUISSE GROUP AG		37,113		38,012		898		A+
WAL-MART STORES INC		33,270		33,591		321		AA
METLIFE INC		32,529		32,997		467		A
US BANCORP		29,811		29,787		(23	)	A+
ROYAL DUTCH SHELL PLC		28,644		28,929		286		AA
AT&T INC		25,906		26,801		895		A-
MORGAN STANLEY		25,613		26,025		412		A
HSBC HOLDINGS PLC		24,641		25,681		1,040		AA-
BANK OF NEW YORK MELLON CORP/T		23,321		23,678		357		AA-
ORACLE CORPORATION		21,799		23,128		1,328		A
BANK OF NOVA SCOTIA		21,922		22,300		378		AA-
WESTPAC BANKING CORP		21,543		21,705		162		AA
NEW YORK LIFE INSURANCE COMPANY		20,068		20,309		241		AAA
RABOBANK NEDERLAND		16,655		18,623		1,968		AA+
EDISON INTERNATIONAL INC		17,522		17,862		341		A
OCCIDENTAL PETROLEUM CORPORATION		16,914		17,067		153		A
PEPSICO INC		14,921		16,403		1,482		A
COCA-COLA COMPANY (THE)		16,423		16,073		(350	)	A+
CANADIAN IMPERIAL BANK OF COMMERCE		15,809		15,677		(131	)	A+
ABBOTT LABORATORIES		15,236		15,450		214		AA
UNITED PARCEL SERVICE INC		14,777		14,857		80		AA-
MASSMUTUAL FINANCIAL GROUP		14,212		14,725		512		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 DEC. 31, 2010									YEAR ENDED DEC. 31, 2010
	GROSS			RECOVERIES			NET			GROSS			RECOVERIES			NET
Reserve for losses and loss expenses
Balance, beginning of period		3,401,312			(324,757	)		3,076,555			3,157,026			(467,664	)		2,689,362

Incurred related to:
Current year		305,564			(35,544	)		270,020			1,340,083			(175,181	)		1,164,902
Prior years		(41,372	)		17,776			(23,596	)		(163,065	)		36,263			(126,802	)

Total Incurred		264,192			(17,768	)		246,424			1,177,018			(138,918	)		1,038,100


Paid related to:
Current year		(190,559	)		200			(190,359	)		(313,026	)		13,466			(299,560	)
Prior years		(157,380	)		23,091			(134,289	)		(691,348	)		273,652			(417,696	)

Total Paid		(347,939	)		23,291			(324,648	)		(1,004,374	)		287,118			(717,256	)


Foreign currency translation		2,362			(115	)		2,247			(9,743	)		115			(9,628	)


Balance, end of period	$	3,319,927		$	(319,349	)	$	3,000,578		$	3,319,927		$	(319,349	)	$	3,000,578

ENDURANCE SPECIALTY HOLDINGS LTD.
PRIOR YEAR RESERVE DEVELOPMENT BY SEGMENT

(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	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2008


							Total
	Insurance			Reinsurance			Company

Incurred related to prior years

Quarter ended March 31, 2008	$	(3,743	)	$	(37,211	)	$	(40,954	)
Quarter ended June 30, 2008		(25,583	)		(30,599	)		(56,182	)
Quarter ended September 30, 2008		(17,242	)		(1,202	)		(18,444	)
Quarter ended December 31, 2008		(24,430	)		(16,530	)		(40,960	)

Year ended December 31, 2008	$	(70,998	)	$	(85,542	)	$	(156,540	)

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

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT


	FOR THE QUARTERS ENDED												FOR THE YEAR ENDED
	DEC. 31, 2010			SEPT. 30, 2010			JUNE 30, 2010			MAR. 31, 2010			DEC. 31, 2010			DEC. 31, 2009
INSURANCE SEGMENT
Short tail[a]	$	(4,445	)	$	(5,359	)	$	(5,632	)	$	(5,913	)	$	(21,349	)	$	(26,485	)
Long tail[b]		(7,075	)		(3,480	)		347			(1,441	)		(11,649	)		(51,349	)
Other[c]		(5	)		(729	)		(2,814	)		(10,325	)		(13,873	)		(14,244	)

TOTAL INSURANCE		(11,525	)		(9,568	)		(8,099	)		(17,679	)		(46,871	)		(92,078	)


REINSURANCE SEGMENT
Short tail[a]		(8,606	)		(17,666	)		(18,108	)		(19,546	)		(63,926	)		(40,001	)
Long tail[b]		(3,414	)		(6,010	)		(3,848	)		1,376			(11,896	)		(1,806	)
Other[c]		(51	)		(1,890	)		577			(2,745	)		(4,109	)		(17,004	)

TOTAL REINSURANCE		(12,071	)		(25,566	)		(21,379	)		(20,915	)		(79,931	)		(58,811	)


REPORTED TOTALS	$	(23,596	)	$	(35,134	)	$	(29,478	)	$	(38,594	)	$	(126,802	)	$	(150,889	)


[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 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	%


AT DEC. 31, 2009
Case reserves	$	30,371		$	277,148		$	182,838		$	490,357		$	338,161		$	256,668		$	7,759		$	602,588		$	1,092,945
Total reserves	$	61,080		$	1,418,806		$	200,104		$	1,679,990		$	604,380		$	808,290		$	64,366		$	1,477,036		$	3,157,026

Case reserves / Total reserves		49.7	%		19.5	%		91.4	%		29.2	%		56.0	%		31.8	%		12.1	%		40.8	%		34.6	%

IBNR / Total reserves		50.3	%		80.5	%		8.6	%		70.8	%		44.0	%		68.2	%		87.9	%		59.2	%		65.4	%

ENDURANCE SPECIALTY HOLDINGS LTD.
SHAREHOLDER RETURN ANALYSIS


	YEARS ENDED DECEMBER 31,															INCEPTION TO
	2010			2009			2008			2007			2006			DEC. 31, 2010
Income and Return on Equity:
Net income available to common and participating common shareholders	$	349,238		$	520,604		$	83,121		$	505,607		$	482,626		$	2,439,082

Operating income available to common and participating common shareholders		330,035			505,202			182,539			525,450			485,409			2,521,245

Average Shareholders’ equity [a]		2,617,718			2,297,283			2,159,771			2,205,067			1,885,209			1,923,027


Net income return on average equity		13.3	%		22.7	%		3.8	%		22.9	%		25.6	%		14.1	% [c]
Operating return on average equity		12.6	%		22.0	%		8.5	%		23.8	%		25.7	%		14.6	% [c]


Book value and dividends per share:
Dilutive book value per common share (treasury stock method)	$	52.74		$	44.61		$	33.06		$	35.05		$	28.87		$	52.74

Dividends paid per share		1.00			1.00			1.00			1.00			1.00			7.13


Change in diluted book value per common share		18.2	%		34.9	%		(5.7	)%		21.4	%		24.6	%		19.1	% [c]


Total return to common shareholders [b]		20.5	%		38.0	%		(2.8	)%		24.9	%		28.9	%		23.2	% [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						YEARS ENDED
	DEC. 31,						DEC. 31,
	2010			2009			2010			2009

DILUTIVE SHARES OUTSTANDING:
Average market price per share	$	43.49		$	37.01		$	39.04		$	30.94

AS REPORTED
Basic weighted average common shares outstanding ⁽¹⁾		47,385			55,171			50,882			55,929

Add: weighted avg. unvested restricted share units		18			29			18			28
Weighted average exercise price per share		—			—			—			—
Proceeds from unrecognized restricted share unit expense	$	239		$	518		$	239		$	518
Less: restricted share units bought back via treasury method		(5	)		(14	)		(7	)		(17	)

Add: weighted avg. dilutive warrants outstanding		2,986			2,996			2,990			3,711
Weighted average exercise price per share	$	12.87		$	13.87		$	12.87		$	13.87
Less: warrants bought back via treasury method		(884	)		(1,123	)		(986	)		(1,664	)

Add: weighted avg. dilutive options outstanding		1,294			1,801			1,424			1,933
Weighted average exercise price per share	$	16.50		$	16.60		$	16.27		$	16.74
Proceeds from unrecognized option expense		—			—			—			—
Less: options bought back via treasury method		(491	)		(808	)		(593	)		(1,046	)

Weighted average dilutive shares outstanding		50,303			58,052			53,728			58,874


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.
EARNINGS PER SHARE INFORMATION — TWO CLASS METHOD


	QUARTERS ENDED DEC. 31,						YEARS ENDED DEC. 31,
	2010			2009			2010			2009

Net income	$	111,228		$	154,825		$	364,738		$	536,104
Less preferred dividends		(3,875	)		(3,875	)		(15,500	)		(15,500	)

Net income available to common and participating common shareholders	$	107,353		$	150,950		$	349,238		$	520,604

Less amount allocated to participating common shareholders [a]		(2,036	)		(2,409	)		(6,595	)		(9,104	)

Net income allocated to common shareholders	$	105,317		$	148,541		$	342,643		$	511,500


Denominator:
Weighted average shares — basic
Outstanding		47,385			55,158			50,880			55,909
Vested restricted share units		—			13			2			20

		47,385			55,171			50,882			55,929


Share Equivalents
Warrants		2,102			1,873			2,004			2,047
Options		803			993			831			887
Restricted share units		13			15			11			11

Weighted average shares — diluted		50,303			58,052			53,728			58,874


Basic earnings per common share	$	2.22		$	2.69		$	6.73		$	9.14


Diluted earnings per common share	$	2.09		$	2.56		$	6.38		$	8.69


[a]		Represents earnings attributable 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.

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


	Two-Class Method						Two-Class Method
	QUARTERS ENDED DEC. 31,						YEARS ENDED DEC. 31,
	2010			2009			2010			2009
Net income	$	111,228		$	154,825		$	364,738		$	536,104
(Less) Add after-tax items:
Net foreign exchange losses (gains)		3,496			1,116			(2,967	)		(29,372	)
Net realized (gains) losses on investments sales		(7,176	)		(3,262	)		(20,180	)		(6,281	)
Net impairment losses recognized in earnings		712			984			3,944			20,251

Operating income before preferred dividends	$	108,260		$	153,663		$	345,535		$	520,702
Preferred dividends		(3,875	)		(3,875	)		(15,500	)		(15,500	)

Operating income available to common and participating common shareholders	$	104,385		$	149,788		$	330,035		$	505,202
Less amount allocated to participating common shareholders [a]		(1,980	)		(2,391	)		(6,235	)		(8,836	)

Operating income allocated to common shareholders	$	102,405		$	147,397		$	323,800		$	496,366


Weighted average common shares outstanding
Basic		47,385			55,171			50,882			55,929
Dilutive		50,303			58,052			53,728			58,874

Basic per common share data
Net income allocated to common shareholders	$	2.22		$	2.69		$	6.73		$	9.14
(Less) Add after-tax items:
Net foreign exchange losses (gains)		0.07			0.02			(0.05	)		(0.53	)
Net realized (gains) losses on investments sales		(0.15	)		(0.06	)		(0.40	)		(0.11	)
Net impairment losses recognized in earnings		0.02			0.02			0.08			0.37

Operating income allocated to common shareholders	$	2.16		$	2.67		$	6.36		$	8.87


Diluted per common share data
Net income allocated to common shareholders	$	2.09		$	2.56		$	6.38		$	8.69
(Less) Add after-tax items:
Net foreign exchange losses (gains)		0.07			0.02			(0.05	)		(0.49	)
Net realized (gains) losses on investments sales		(0.14	)		(0.06	)		(0.37	)		(0.11	)
Net impairment losses recognized in earnings		0.02			0.02			0.07			0.34

Operating income allocated to common shareholders	$	2.04		$	2.54		$	6.03		$	8.43


[a]		Represents earnings attributable 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.

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

	50,086		50,119		50,151		50,180		50,210		50,236		50,263		50,289		50,312		50,336		50,358

ENDURANCE SPECIALTY HOLDINGS LTD.
BOOK VALUE PER SHARE


	DEC. 31,
	2010			2009
DILUTIVE COMMON SHARES OUTSTANDING:
Price per share at period end	$	46.07		$	37.23

AS-IF CONVERTED [a]
Basic common shares outstanding [b]		46,259			54,195

Add: unvested restricted shares and restricted share units		980			954

Add: dilutive warrants outstanding		2,986			2,996
Weighted average exercise price per share	$	12.87		$	13.87

Add: dilutive options outstanding		1,278			1,746
Weighted average exercise price per share	$	16.50		$	16.60

Book Value [c]	$	2,648,153		$	2,587,283
Add: proceeds from converted warrants		38,430			41,555
Add: proceeds from converted options		21,087			28,984

Pro forma book value	$	2,707,670		$	2,657,822

Dilutive shares outstanding		51,503			59,891


Basic book value per common share	$	57.25		$	47.74
Diluted book value per common share	$	52.57		$	44.38


DILUTIVE COMMON SHARES OUTSTANDING:
Price per share at period end	$	46.07		$	37.23

TREASURY STOCK METHOD
Basic common shares outstanding [b]		46,259			54,195

Add: unvested restricted shares and restricted share units		980			954

Add: dilutive warrants outstanding		2,986			2,996
Weighted average exercise price per share	$	12.87		$	13.87
Less: warrants bought back via treasury method		(834	)		(1,116	)

Add: dilutive options outstanding		1,278			1,746
Weighted average exercise price per share	$	16.50		$	16.60
Less: options bought back via treasury method		(458	)		(779	)

Dilutive shares outstanding		50,211			57,996


Basic book value per common share	$	57.25		$	47.74
Diluted book value per common share	$	52.74		$	44.61


[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 32 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 34 for a reconciliation of diluted book value per common share to basic book value per common share.

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