ENDURANCE SPECIALTY HOLDINGS LTD - FORM 8-K - EX-99.2

Attached files

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EX-99.1 - EX-99.1 - ENDURANCE SPECIALTY HOLDINGS LTD	enh8-kpressreleaseq26302016.htm
8-K - FORM 8-K - ENDURANCE SPECIALTY HOLDINGS LTD	enh8-kcoverpageq26302016.htm

Exhibit 99.2

Endurance Specialty Holdings Ltd.

INVESTOR FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

Endurance Specialty Holdings Ltd.

Waterloo House, 100 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
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. Probable Maximum Loss by Zone and Peril	5
b. Segment Distribution	6
c. Consolidated Segment Data	7
d. ROE Component Analysis - Annualized Premium and Investment Leverage	19
e. Investment Portfolio Information	20
IV. Loss Reserve Analysis
a. Activity in Reserve for Losses and Loss Expenses	21
b. Prior Year Reserve Development by Segment	22
c. Prior Year Reserve Development by Line of Business	23
d. Losses and Loss Expenses Incurred by Line of Business	24
e. Analysis of Unpaid Losses and Loss Expenses	25
V. Shareholder Return Analysis
a. Shareholder Return Analysis	26
b. Weighted Average Dilutive Shares Outstanding	27
c. Earnings per Share - Two Class Method	28
d. Operating Income Reconciliation - Two Class Method	29
e. Financial Statement Impact of Acquisition of Montpelier	30
f. Book Value Per Share Analysis	31
VI. Regulation G	32

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:

Some of the statements in this financial supplement may include and Endurance may make related oral 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 “should,” “would,” “expect,” “intend,” “plan,” “believe,” “project,” “target,” “anticipate,” “seek,” “will,” “deliver” 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.

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 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, 2015.

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.

ENDURANCE SPECIALTY HOLDINGS LTD.

BASIS OF PRESENTATION

DEFINITIONS AND PRESENTATION


•	All financial information contained herein is unaudited, except the balance sheet and/or income statement data for the years ended December 31, 2015 and 2014 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.

•

Endurance Specialty Holdings Ltd., along with others in the industry, uses underwriting ratios as measures of performance. The net 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 for the Company is the ratio of general and administrative expenses and corporate expenses to earned premiums. The general and administrative expense ratio for the segments is the ratio of general and administrative expenses to earned premiums. The combined ratio is the sum of the net 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.

CONSOLIDATED FINANCIAL HIGHLIGHTS



		QUARTER ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,						Previous Quarter Change		Previous Year to Date Change
		2016			2015			2016			2015			Previous Quarter Change		Previous Year to Date Change
HIGHLIGHTS	Net income		$87,628			$84,206			$212,272			$192,685		4.1	%	10.2	%
	Net income available to common and participating common shareholders	76,621			76,018			182,999			176,309			0.8	%	3.8	%
	Operating income [a]	62,091			87,718			155,717			187,105			(29.2	)%	(16.8	)%
	Operating income available to common and participating common shareholders [a]	54,798			79,530			139,221			170,729			(31.1	)%	(18.5	)%
	Operating cash flow	64,901			115,791			34,517			23,489			(43.9	)%	46.9	%
	Net investment income	43,977			32,252			55,158			74,113			36.4	%	(25.6	)%
	Gross premiums written	1,136,930			861,184			2,748,607			2,162,616			32.0	%	27.1	%
	Net premiums written	717,768			559,083			1,656,610			1,324,037			28.4	%	25.1	%
	Net premiums earned	599,608			458,135			1,152,799			847,994			30.9	%	35.9	%
	Total assets	14,831,667			10,711,653			14,831,667			10,711,653			38.5	%	38.5	%
	Total shareholders’ equity	5,104,489			3,302,906			5,104,489			3,302,906			54.5	%	54.5	%

PER SHARE AND SHARES DATA	Basic earnings per common share
	Net income (as reported)		$1.14			$1.69			$2.72			$3.92		(32.5	)%	(30.6	)%
	Operating income (as reported) [a]		$0.81			$1.76			$2.07			$3.80		(54.0	)%	(45.5	)%
	Diluted earnings per common share
	Net income (as reported)		$1.14			$1.68			$2.72			$3.91		(32.1	)%	(30.4	)%
	Operating income (as reported) [a]		$0.81			$1.76			$2.07			$3.78		(54.0	)%	(45.2	)%

As Reported	Weighted average common shares outstanding	65,965			43,737			65,786			43,640			50.8	%	50.7	%
	Weighted average common shares outstanding & dilutive potential common shares [b]	66,057			43,897			65,875			43,793			50.5	%	50.4	%

	Common dividends paid per share	$0.38			$0.35			$0.76			$0.70			8.6	%	8.6	%

Book Value Per Common Share	Book value [c]	$69.73			$65.53			$69.73			$65.53			6.4	%	6.4	%
Book Value Per Common Share	Diluted book value (treasury stock method) [c]	$68.20			$63.32			$68.20			$63.32			7.7	%	7.7	%

FINANCIAL RATIOS	Return on average common equity (ROAE), net income [d]	1.7		%	2.7		%	4.1		%	6.2		%	(1.0	)	(2.1	)
FINANCIAL RATIOS	ROAE, operating income [a] [d]	1.2		%	2.8		%	3.1		%	6.0		%	(1.6	)	(2.9	)

	Annualized ROAE, net income [d]	6.7		%	10.6		%	8.1		%	12.5		%	(3.9	)	(4.4	)
	Annualized ROAE, operating income [a] [d]	4.8		%	11.1		%	6.2		%	12.1		%	(6.3	)	(5.9	)
	Annualized investment yield	2.0		%	2.0		%	2.6		%	2.3		%	—		0.3

GAAP	Loss ratio	62.7		%	52.2		%	53.7		%	48.5		%	10.5		5.2
	Acquisition expense ratio	18.7		%	18.5		%	18.7		%	19.7		%	0.2		(1.0	)
	General and administrative expense ratio [e]	11.2		%	14.8		%	13.1		%	15.9		%	(3.6	)	(2.8	)
	Combined ratio	92.6		%	85.5		%	85.5		%	84.1		%	7.1		1.4

[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 29 for a reconciliation to net income.

[b] Options that are anti-dilutive are not included in the calculation of diluted shares outstanding. Options are anti-dilutive for earnings per share in any period in which there is a net loss and the anti-dilution is reflected as additional treasury method repurchases.

[c] For detailed calculations, please refer to page 31.

[d] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances by quarter for the stated periods, which excludes the $230 million (June 30, 2015 - $430 million) liquidation value of the preferred shares.

[e] General and administrative expense ratio includes general and administrative expenses and corporate expenses.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME - QUARTERLY



	QUARTERS ENDED
	JUNE 30, 2016			MAR. 31, 2016			DEC. 31, 2015			SEPT. 30, 2015			JUNE 30, 2015			JUNE 30, 2014
UNDERWRITING REVENUES
Gross premiums written		$1,136,930			$1,611,677			$515,648			$642,597			$861,184			$689,425
Premiums ceded	(419,162		)	(672,835		)	(225,905		)	(305,907		)	(302,101		)	(177,998		)
Net premiums written		$717,768			$938,842			$289,743			$336,690			$559,083			$511,427
Change in unearned premiums	(118,160		)	(385,651		)	283,713			220,313			(100,948		)	(29,889		)
Net premiums earned		$599,608			$553,191			$573,456			$557,003			$458,135			$481,538
Other underwriting income (loss)	930			(2,444		)	(7,716		)	227			1,389			(4,824		)
Total underwriting revenues		$600,538			$550,747			$565,740			$557,230			$459,524			$476,714
UNDERWRITING EXPENSES
Net losses and loss expenses		$376,112			$243,328			$242,057			$263,993			$239,122			$259,196
Acquisition expenses	111,961			103,842			90,364			90,457			84,971			78,601
General and administrative expenses	55,079			72,225			89,143			60,793			54,965			58,312
Total underwriting expenses		$543,152			$419,395			$421,564			$415,243			$379,058			$396,109
Underwriting income		$57,386			$131,352			$144,176			$141,987			$80,466			$80,605
OTHER OPERATING (EXPENSE) REVENUE
Net investment income		$43,977			$11,181			$23,180			$16,533			$32,252			$39,302
Corporate expenses	(11,830		)	(11,771		)	(15,219		)	(74,308		)	(12,634		)	(28,143		)
Interest expense	(11,357		)	(10,870		)	(10,815		)	(12,324		)	(9,062		)	(9,732		)
Amortization of intangibles	(20,943		)	(21,374		)	(16,124		)	(11,318		)	(1,579		)	(1,623		)
Total other operating (expense) revenue		($153	)		($32,834	)		($18,978	)		($81,417	)		$8,977			($196	)
INCOME BEFORE OTHER ITEMS		$57,233			$98,518			$125,198			$60,570			$89,443			$80,409
OTHER
Net foreign exchange gains (losses)		$32,751			$11,729			$2,190			($8,621	)		($12,981	)		($319	)
Net realized and unrealized gains (losses)	6,347			13,787			(20,238		)	5,029			9,680			3,411
Net impairment losses recognized in earnings	(9,841		)	(623		)	(2,604		)	(38		)	(424		)	(198		)
Income tax benefit (expense)	1,138			1,233			3,350			(2,410		)	(1,512		)	(140		)
NET INCOME		$87,628			$124,644			$107,896			$54,530			$84,206			$83,163
Net income attributable to non-controlling interests	(3,714		)	(9,063		)	(8,309		)	(2,707		)	—			—
NET INCOME AVAILABLE TO THE COMPANY	83,914			115,581			99,587			51,823			84,206			83,163
Preferred dividends	(7,293		)	(9,203		)	(8,186		)	(8,188		)	(8,188		)	(8,188		)
NET INCOME AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS		$76,621			$106,378			$91,401			$43,635			$76,018			$74,975

KEY RATIOS/PER SHARE DATA
Loss ratio	62.7		%	43.9		%	42.2		%	47.4		%	52.2		%	53.8		%
Acquisition expense ratio	18.7		%	18.8		%	15.8		%	16.2		%	18.5		%	16.3		%
General and administrative expense ratio [a]	11.2		%	15.2		%	18.2		%	24.3		%	14.8		%	18.0		%
Combined ratio	92.6		%	77.9		%	76.2		%	87.9		%	85.5		%	88.1		%

Basic earnings per common share		$1.14			$1.58			$1.36			$0.73			$1.69			$1.68
Diluted earnings per common share [b]		$1.14			$1.58			$1.36			$0.73			$1.68			$1.68

ROAE, net income [c]	1.7		%	2.4		%	2.1		%	1.2		%	2.7		%	2.9		%

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.

[b] Warrants and options that are anti-dilutive are not included in the calculation of diluted shares outstanding. Options are anti-dilutive for earnings per share in any period in which there is a net loss and the anti-dilution is reflected as additional treasury method repurchases.

[c] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances by quarter for the stated periods, which excludes the liquidation value of the preferred shares of $230 million (March 31, 2016 and December 31, 2015 - $460 million; September 30, 2015 and prior - $430 million).

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME - YTD



	SIX MONTHS ENDED									YEARS ENDED
	JUNE 30, 2016			JUNE 30, 2015			JUNE 30, 2014			DEC. 31, 2015			DEC. 31, 2014
UNDERWRITING REVENUES
Gross premiums written		$2,748,607			$2,162,616			$1,846,940			$3,320,861			$2,894,076
Premiums ceded	(1,091,997		)	(838,579		)	(536,808		)	(1,370,391		)	(959,870		)
Net premiums written		$1,656,610			$1,324,037			$1,310,132			$1,950,470			$1,934,206
Change in unearned premiums	(503,811		)	(476,043		)	(432,328		)	27,983			(70,228		)
Net premiums earned		$1,152,799			$847,994			$877,804			$1,978,453			$1,863,978
Other underwriting (loss) income	(1,514		)	3,795			(6,062		)	(3,694		)	(5,786		)
Total underwriting revenues		$1,151,285			$851,789			$871,742			$1,974,759			$1,858,192
UNDERWRITING EXPENSES
Net losses and loss expenses		$619,440			$411,058			$436,092			$917,108			$970,162
Acquisition expenses	215,803			167,064			150,758			347,885			319,513
General and administrative expenses	127,304			109,855			117,813			259,791			247,387
Total underwriting expenses		$962,547			$687,977			$704,663			$1,524,784			$1,537,062
Underwriting income		$188,738			$163,812			$167,079			$449,975			$321,130
OTHER OPERATING (EXPENSE) REVENUE
Net investment income		$55,158			$74,113			$80,292			$113,826			$131,543
Corporate expenses	(23,601		)	(24,902		)	(41,848		)	(114,429		)	(66,200		)
Interest expense	(22,227		)	(18,121		)	(18,783		)	(41,260		)	(40,968		)
Amortization of intangibles	(42,317		)	(3,178		)	(3,240		)	(30,620		)	(6,484		)
Total other operating (expense) revenue		($32,987	)		$27,912			$16,421			($72,483	)		$17,891
INCOME BEFORE OTHER ITEMS		$155,751			$191,724			$183,500			$377,492			$339,021
OTHER
Net foreign exchange gains (losses)		$44,480			($20,533	)		($3,283	)		($26,964	)		($3,839	)
Net realized and unrealized gains	20,134			27,869			8,283			12,660			14,283
Net impairment losses recognized in earnings	(10,464		)	(1,073		)	(309		)	(3,715		)	(625		)
Income tax benefit (expense)	2,371			(5,302		)	(548		)	(4,362		)	(390		)
NET INCOME		$212,272			$192,685			$187,643			$355,111			$348,450
Net income attributable to non-controlling interests	(12,777		)	—			—			(11,016		)	—
NET INCOME AVAILABLE TO THE COMPANY	199,495			192,685			187,643			344,095			348,450
Preferred dividends	(16,496		)	(16,376		)	(16,376		)	(32,750		)	(32,750		)
NET INCOME AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS		$182,999			$176,309			$171,267			$311,345			$315,700

KEY RATIOS/PER SHARE DATA
Loss ratio	53.7		%	48.5		%	49.6		%	46.4		%	52.1		%
Acquisition expense ratio	18.7		%	19.7		%	17.2		%	17.6		%	17.1		%
General and administrative expense ratio [a]	13.1		%	15.9		%	18.2		%	18.9		%	16.8		%
Combined ratio	85.5		%	84.1		%	85.0		%	82.9		%	86.0		%

Basic earnings per common share		$2.72			$3.92			$3.84			$5.74			$7.07
Diluted earnings per common share [b]		$2.72			$3.91			$3.84			$5.73			$7.06

ROAE, net income [c]	4.1		%	6.2		%	6.7		%	9.1		%	12.0		%

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED BALANCE SHEETS



	JUNE 30, 2016			MAR. 31, 2016			DEC. 31, 2015			SEPT. 30, 2015			JUNE 30, 2015
ASSETS
Cash and cash equivalents		$1,092,977			$1,212,733			$1,177,750			$1,242,997			$622,642
Fixed maturity investments trading, at fair value	2,126,600			1,902,271			1,587,160			1,372,030			—
Fixed maturity investments available for sale, at fair value	3,892,479			4,261,560			4,359,019			4,656,145			4,933,776
Short term investments trading, at fair value	295,442			121,740			394,111			348,582			—
Short term investments available for sale, at fair value	18,849			25,481			25,685			16,356			16,366
Equity securities trading, at fair value	36,332			32,510			15,229			2,150			—
Equity securities available for sale, at fair value	506,010			551,968			513,585			496,035			420,411
Other investments	779,810			799,123			872,617			842,446			623,868
Premiums receivable, net	2,291,117			1,900,768			1,376,328			2,068,484			1,665,990
Insurance and reinsurance balances receivable	129,861			103,848			102,403			115,047			108,162
Deferred acquisition costs	363,406			321,654			255,501			282,975			296,568
Prepaid reinsurance premiums	885,892			891,268			498,574			650,967			668,964
Reinsurance recoverable on unpaid losses	1,105,617			935,593			907,944			830,116			785,472
Reinsurance recoverable on paid losses	348,219			330,951			288,026			163,137			157,287
Accrued investment income	30,299			29,556			30,213			31,057			25,118
Goodwill and intangible assets	511,649			532,589			553,960			573,956			150,296
Deferred tax assets	52,722			58,342			64,164			54,463			46,779
Receivable on pending investment sales	89,144			61,006			31,873			85,911			21,420
Other assets	275,242			209,225			187,383			192,589			168,534
TOTAL ASSETS		$14,831,667			$14,282,186			$13,241,525			$14,025,443			$10,711,653
LIABILITIES
Reserve for losses and loss expenses		$4,727,997			$4,458,189			$4,510,415			$4,489,836			$3,833,525
Reserve for unearned premiums	2,670,607			2,565,405			1,789,148			2,230,552			2,046,933
Deposit liabilities	12,573			13,112			13,674			13,489			13,376
Reinsurance balances payable	1,066,197			855,257			661,213			794,935			632,457
Debt	705,261			703,994			717,650			911,755			524,495
Payable on pending investment purchases	192,793			120,009			63,442			157,671			82,375
Deferred tax liability	15,817			16,532			17,315			18,346			—
Other liabilities	335,933			308,072			344,596			352,515			275,586
TOTAL LIABILITIES		$9,727,178			$9,040,570			$8,117,453			$8,969,099			$7,408,747
SHAREHOLDERS’ EQUITY
Preferred shares, Series A, non-cumulative		$—			$—			$—			$8,000			$8,000
Preferred shares, Series B, non-cumulative	—			9,200			9,200			9,200			9,200
Preferred shares, Series C, non-cumulative	9			9			9			—			—
Common shares	67,565			67,350			66,798			66,607			45,157
Additional paid-in capital	1,944,381			2,146,171			2,145,836			2,108,447			610,585
Accumulated other comprehensive income (loss)	19,949			(1,172		)	(46,634		)	(8,544		)	36,965
Retained earnings	2,812,734			2,761,799			2,681,053			2,613,160			2,592,999
TOTAL SHAREHOLDERS' EQUITY AVAILABLE TO THE COMPANY		$4,844,638			$4,983,357			$4,856,262			$4,796,870			$3,302,906
Non-controlling interests	259,851			258,259			267,810			259,474			—
TOTAL SHAREHOLDERS’ EQUITY		$5,104,489			$5,241,616			$5,124,072			$5,056,344			$3,302,906
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$14,831,667			$14,282,186			$13,241,525			$14,025,443			$10,711,653

Book value per common share		$69.73			$68.70			$67.18			$66.90			$65.53
Diluted book value per common share (treasury stock method)		$68.20			$67.03			$65.48			$65.02			$63.32
RATIOS
Debt-to-capital	12.7		%	12.4		%	12.9		%	16.0		%	13.7		%

ENDURANCE SPECIALTY HOLDINGS LTD.

Probable Maximum Loss by Zone and Peril

(as a percentage of shareholders' equity available to the company)

Largest 1 in 100 year PML as of July 1, 2016 is equal to 10.6% of Shareholders’ Equity available to the Company as of June 30, 2016.



		Estimated Occurrence Net Loss as of July 1, 2016										July 1, 2015		July 1, 2014
Zone	Peril	10 Year Return Period		25 Year Return Period		50 Year Return Period		100 Year Return Period		250 Year Return Period		100 Year Return Period		100 Year Return Period

United States	Hurricane	3.8	%	5.1	%	7.7	%	10.6	%	14.0	%	8.0	%	9.1	%
Europe	Windstorm	1.8	%	3.4	%	4.1	%	7.1	%	12.4	%	6.7	%	11.1	%
California	Earthquake	0.8	%	2.2	%	3.7	%	5.3	%	7.2	%	6.9	%	8.0	%
Japan	Windstorm	0.8	%	2.6	%	3.8	%	4.4	%	4.8	%	3.9	%	5.1	%
Northwest U.S.	Earthquake	—	%	0.1	%	0.4	%	0.8	%	2.0	%	3.0	%	2.9	%
Japan	Earthquake	0.5	%	1.8	%	4.1	%	5.0	%	7.3	%	4.7	%	5.2	%
United States	Tornado/Hail	0.7	%	1.0	%	1.3	%	1.8	%	2.6	%	2.2	%	2.5	%
Australia	Earthquake	—	%	0.2	%	0.6	%	1.2	%	2.7	%	2.3	%	3.9	%
New Zealand	Earthquake	—	%	0.1	%	0.2	%	0.5	%	1.0	%	1.0	%	1.1	%
Australia	Windstorm	0.2	%	0.4	%	0.7	%	0.9	%	1.9	%	1.7	%	2.8	%
New Madrid	Earthquake	—	%	—	%	—	%	0.2	%	1.2	%	0.3	%	0.2	%

The net loss estimates by zone above represent estimated losses related to our property, catastrophe and specialty lines of business, based upon our catastrophe models and assumptions regarding the location, size, magnitude, and frequency of the catastrophe events utilized to determine the above estimates. The net loss estimates are presented on an occurrence basis, before income tax and net of reinsurance recoveries and reinstatement premiums, if applicable. The net loss estimates include Endurance’s portion of the exposures assumed through its investment in Blue Capital Global Reinsurance Fund Limited and Blue Capital Reinsurance Holdings Ltd. Return period refers to the frequency with which the related size of a catastrophic event is expected to occur.

Actual realized catastrophic losses could differ materially from our net loss estimates and our net loss estimates should not be considered as representative of the actual losses that we may incur in connection with any particular catastrophic event. The net loss estimates above rely significantly on computer models created to simulate the effect of catastrophes on insured properties based upon data emanating from past catastrophic events. Since comprehensive data collection regarding insured losses from catastrophe events is a relatively recent development in the insurance industry, the data upon which catastrophe models is based is limited, which has the potential to introduce inaccuracies into estimates of losses from catastrophic events, in particular those that occur infrequently. In addition, catastrophe models are significantly influenced by management’s assumptions regarding event characteristics, construction of insured property and the cost and duration of rebuilding after the catastrophe. Lastly, changes in Endurance’s underwriting portfolio risk control mechanisms and other factors, either before or after the date of the above net loss estimates, may also cause actual results to vary considerably from the net loss estimates above. 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, 2015.

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT DISTRIBUTION

FOR THE SIX MONTHS ENDED JUNE 30, 2016

Gross Premiums Written = $2,748.6 million

[a] Other specialty includes the agriculture line in the Insurance segment and the specialty line in the Reinsurance segment.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED SEGMENT DATA



	FOR THE QUARTERS ENDED
	JUNE 30, 2016										JUNE 30, 2015
	Insurance			Reinsurance			Totals				Insurance			Reinsurance			Totals
UNDERWRITING REVENUES
Gross premiums written		$593,706			$543,224			$1,136,930				$468,866			$392,318			$861,184
Net premiums written		$239,602			$478,166			$717,768				$190,299			$368,784			$559,083
Net premiums earned		$253,784			$345,824			$599,608				$201,460			$256,675			$458,135
Other underwriting income	—			930			930				—			1,389			1,389
Total underwriting revenues		$253,784			$346,754			$600,538				$201,460			$258,064			$459,524

UNDERWRITING EXPENSES
Net losses and loss expenses		$173,858			$202,254			$376,112				$145,483			$93,639			$239,122
Acquisition expenses	32,868			79,093			111,961				17,702			67,269			84,971
General and administrative expenses	29,825			25,254			55,079				28,567			26,398			54,965
Total expenses		$236,551			$306,601			$543,152				$191,752			$187,306			$379,058
UNDERWRITING INCOME		$17,233			$40,153			$57,386				$9,708			$70,758			$80,466

OTHER OPERATING REVENUE
Net investment income								$43,977										$32,252
Corporate expenses							(11,830		)								(12,634		)
Interest expense							(11,357		)								(9,062		)
Amortization of intangibles							(20,943		)								(1,579		)
Net foreign exchange gains (losses)							32,751										(12,981		)
Net realized and unrealized gains							6,347										9,680
Net impairment loss recognized in earnings							(9,841		)								(424		)
INCOME BEFORE INCOME TAXES								$86,490										$85,718

GAAP RATIOS
Loss ratio	68.4		%	58.5		%	62.7		%		72.2		%	36.5		%	52.2		%
Acquisition expense ratio	13.0		%	22.9		%	18.7		%		8.8		%	26.2		%	18.5		%
General and administrative expense ratio	11.8		%	7.3		%	11.2		%	[a]	14.2		%	10.3		%	14.8		%	[a]
Combined ratio AS REPORTED	93.2		%	88.7		%	92.6		%		95.2		%	73.0		%	85.5		%

Effect of favorable prior accident year reserve development	9.5		%	10.0		%	9.8		%		9.2		%	15.7		%	12.8		%
Combined ratio net of prior accident year reserve development	102.7		%	98.7		%	102.4		%		104.4		%	88.7		%	98.3		%

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.

ENDURANCE SPECIALTY HOLDINGS LTD.

INSURANCE SEGMENT DATA



	FOR THE QUARTERS ENDED
	JUNE 30, 2016			MAR. 31, 2016			DEC. 31, 2015			SEPT. 30, 2015			JUNE 30, 2015			JUNE 30, 2014
UNDERWRITING REVENUES
Gross premiums written		$593,706			$835,117			$432,254			$448,563			$468,866			$321,526
Net premiums written		$239,602			$370,944			$211,098			$174,937			$190,299			$179,038
Net premiums earned		$253,784			$219,569			$253,085			$234,143			$201,460			$218,563
Total underwriting revenues		$253,784			$219,569			$253,085			$234,143			$201,460			$218,563

UNDERWRITING EXPENSES
Net losses and loss expenses		$173,858			$127,803			$144,425			$139,141			$145,483			$149,567
Acquisition expenses	32,868			30,358			22,292			24,375			17,702			15,128
General and administrative expenses	29,825			38,429			50,723			31,880			28,567			35,969
Total expenses		$236,551			$196,590			$217,440			$195,396			$191,752			$200,664

UNDERWRITING INCOME		$17,233			$22,979			$35,645			$38,747			$9,708			$17,899

GAAP RATIOS
Loss ratio	68.4		%	58.2		%	57.1		%	59.5		%	72.2		%	68.5		%
Acquisition expense ratio	13.0		%	13.8		%	8.8		%	10.4		%	8.8		%	6.9		%
General and administrative expense ratio	11.8		%	17.5		%	20.0		%	13.6		%	14.2		%	16.4		%
Combined ratio AS REPORTED	93.2		%	89.5		%	85.9		%	83.5		%	95.2		%	91.8		%

Effect of favorable prior accident year reserve development	9.5		%	10.6		%	8.0		%	9.6		%	9.2		%	10.1		%

Combined ratio net of prior accident year reserve development	102.7		%	100.1		%	93.9		%	93.1		%	104.4		%	101.9		%

ENDURANCE SPECIALTY HOLDINGS LTD.

REINSURANCE SEGMENT DATA



	FOR THE QUARTERS ENDED
	JUNE 30, 2016			MAR. 31, 2016			DEC. 31, 2015			SEPT. 30, 2015			JUNE 30, 2015			JUNE 30, 2014
UNDERWRITING REVENUES
Gross premiums written		$543,224			$776,560			$83,394			$194,034			$392,318			$367,899
Net premiums written		$478,166			$567,898			$78,645			$161,753			$368,784			$332,389
Net premiums earned		$345,824			$333,622			$320,371			$322,860			$256,675			$262,975
Other underwriting income (loss)	930			(2,444		)	(7,716		)	227			1,389			(4,824		)
Total underwriting revenues		$346,754			$331,178			$312,655			$323,087			$258,064			$258,151

UNDERWRITING EXPENSES
Net losses and loss expenses		$202,254			$115,525			$97,632			$124,852			$93,639			$109,629
Acquisition expenses	79,093			73,484			68,072			66,082			67,269			63,473
General and administrative expenses	25,254			33,796			38,420			28,913			26,398			22,343
Total expenses		$306,601			$222,805			$204,124			$219,847			$187,306			$195,445

UNDERWRITING INCOME		$40,153			$108,373			$108,531			$103,240			$70,758			$62,706

GAAP RATIOS
Loss ratio	58.5		%	34.7		%	30.5		%	38.6		%	36.5		%	41.7		%
Acquisition expense ratio	22.9		%	22.0		%	21.2		%	20.5		%	26.2		%	24.1		%
General and administrative expense ratio	7.3		%	10.1		%	12.0		%	9.0		%	10.3		%	8.5		%
Combined ratio AS REPORTED	88.7		%	66.8		%	63.7		%	68.1		%	73.0		%	74.3		%

Effect of favorable prior accident year reserve development	10.0		%	11.4		%	12.5		%	13.9		%	15.7		%	12.2		%

Combined ratio net of prior accident year reserve development	98.7		%	78.2		%	76.2		%	82.0		%	88.7		%	86.5		%

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED
	JUNE 30, 2016		MAR. 31, 2016		DEC. 31, 2015			SEPT. 30, 2015		JUNE 30, 2015		JUNE 30, 2014
INSURANCE SEGMENT
Agriculture		$66,922		$496,216		$55,372			$156,145		$112,012		$80,540
Casualty and other specialty	178,081		138,255		138,956			128,509		146,056		108,030
Professional lines	122,679		77,415		112,917			80,069		96,736		74,650
Property, marine/energy and aviation	226,024		123,231		125,009			83,840		114,062		58,306
TOTAL INSURANCE		$593,706		$835,117		$432,254			$448,563		$468,866		$321,526

REINSURANCE SEGMENT
Catastrophe		$236,995		$200,830		$7,014			$40,660		$139,833		$158,372
Property	30,646		156,466		(291		)	53,423		30,560		42,887
Casualty	82,263		98,720		27,474			42,802		48,132		30,875
Professional lines	135,638		48,549		38,807			31,705		134,241		84,117
Specialty	57,682		271,995		10,390			25,444		39,552		51,648
TOTAL REINSURANCE		$543,224		$776,560		$83,394			$194,034		$392,318		$367,899

REPORTED TOTALS		$1,136,930		$1,611,677		$515,648			$642,597		$861,184		$689,425

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED
	JUNE 30, 2016			MAR. 31, 2016		DEC. 31, 2015			SEPT. 30, 2015		JUNE 30, 2015		JUNE 30, 2014
INSURANCE SEGMENT
Agriculture		($2,962	)		$208,627		$13,119			$29,634		$22,677		$45,826
Casualty and other specialty	77,965			63,497		73,704			64,490		65,302		56,475
Professional lines	51,204			43,334		51,765			37,479		43,443		29,846
Property, marine/energy and aviation	113,395			55,486		72,510			43,334		58,877		46,891
TOTAL INSURANCE		$239,602			$370,944		$211,098			$174,937		$190,299		$179,038

REINSURANCE SEGMENT
Catastrophe		$197,681			$88,868		$4,083			$14,814		$122,305		$123,411
Property	31,304			150,056		(455		)	52,887		30,118		42,886
Casualty	80,921			98,719		27,455			42,802		48,132		30,868
Professional lines	135,031			48,220		38,807			31,705		134,241		84,117
Specialty	33,229			182,035		8,755			19,545		33,988		51,107
TOTAL REINSURANCE		$478,166			$567,898		$78,645			$161,753		$368,784		$332,389

REPORTED TOTALS		$717,768			$938,842		$289,743			$336,690		$559,083		$511,427

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS EARNED BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED
	JUNE 30, 2016		MAR. 31, 2016		DEC. 31, 2015		SEPT. 30, 2015		JUNE 30, 2015		JUNE 30, 2014
INSURANCE SEGMENT
Agriculture		$74,692		$38,746		$74,912		$85,106		$97,270		$127,421
Casualty and other specialty	68,978		68,856		65,955		57,160		47,712		50,012
Professional lines	43,092		42,795		39,836		32,976		27,000		24,219
Property, marine/energy and aviation	67,022		69,172		72,382		58,901		29,478		16,911
TOTAL INSURANCE		$253,784		$219,569		$253,085		$234,143		$201,460		$218,563

REINSURANCE SEGMENT
Catastrophe		$94,126		$82,223		$87,913		$79,973		$61,977		$65,705
Property	69,781		74,087		63,488		72,367		55,866		76,705
Casualty	52,707		44,281		41,753		46,062		33,905		50,102
Professional lines	64,468		65,094		58,392		57,178		50,147		36,325
Specialty	64,742		67,937		68,825		67,280		54,780		34,138
TOTAL REINSURANCE		$345,824		$333,622		$320,371		$322,860		$256,675		$262,975

REPORTED TOTALS		$599,608		$553,191		$573,456		$557,003		$458,135		$481,538

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED SEGMENT DATA



	FOR THE SIX MONTHS ENDED
	JUNE 30, 2016										JUNE 30, 2015
	Insurance			Reinsurance			Totals				Insurance			Reinsurance			Totals
UNDERWRITING REVENUES
Gross premiums written		$1,428,823			$1,319,784			$2,748,607				$1,205,084			$957,532			$2,162,616
Net premiums written		$610,546			$1,046,064			$1,656,610				$494,338			$829,699			$1,324,037
Net premiums earned		$473,353			$679,446			$1,152,799				$337,324			$510,670			$847,994
Other underwriting (loss) income	—			(1,514		)	(1,514		)		—			3,795			3,795
Total underwriting revenues		$473,353			$677,932			$1,151,285				$337,324			$514,465			$851,789

UNDERWRITING EXPENSES
Losses and loss expenses		$301,661			$317,779			$619,440				$219,995			$191,063			$411,058
Acquisition expenses	63,226			152,577			215,803				33,585			133,479			167,064
General and administrative expenses	68,254			59,050			127,304				57,409			52,446			109,855
Total expenses		$433,141			$529,406			$962,547				$310,989			$376,988			$687,977

UNDERWRITING INCOME		$40,212			$148,526			$188,738				$26,335			$137,477			$163,812

OTHER OPERATING REVENUE
Net investment income								$55,158										$74,113
Corporate expenses							(23,601		)								(24,902		)
Interest expense							(22,227		)								(18,121		)
Amortization of intangibles							(42,317		)								(3,178		)
Net foreign exchange gains (losses)							44,480										(20,533		)
Net realized and unrealized gains							20,134										27,869
Net impairment loss recognized in earnings							(10,464		)								(1,073		)
INCOME BEFORE INCOME TAXES								$209,901										$197,987

GAAP RATIOS
Loss ratio	63.7		%	46.7		%	53.7		%		65.2		%	37.4		%	48.5		%
Acquisition expense ratio	13.4		%	22.5		%	18.7		%		10.0		%	26.1		%	19.7		%
General and administrative expense ratio	14.4		%	8.7		%	13.1		%	[a]	17.0		%	10.3		%	15.9		%	[a]
Combined ratio AS REPORTED	91.5		%	77.9		%	85.5		%		92.2		%	73.8		%	84.1		%

Effect of favorable prior accident year reserve development	10.0		%	10.6		%	10.4		%		11.6		%	15.0		%	13.7		%
Combined ratio net of prior accident year reserve development	101.5		%	88.5		%	95.9		%		103.8		%	88.8		%	97.8		%

[a] General and administrative expense ratio includes general and administrative expenses and corporate expenses.

ENDURANCE SPECIALTY HOLDINGS LTD.

INSURANCE SEGMENT DATA



	FOR THE SIX MONTHS ENDED									FOR THE YEAR ENDED
	JUNE 30, 2016			JUNE 30, 2015			JUNE 30, 2014			DEC. 31, 2015			DEC. 31, 2014
UNDERWRITING REVENUES
Gross premiums written		$1,428,823			$1,205,084			$973,802			$2,085,901			$1,716,128
Net premiums written		$610,546			$494,338			$522,065			$880,373			$860,406
Net premiums earned		$473,353			$337,324			$362,584			$824,552			$833,912
Total underwriting revenues		$473,353			$337,324			$362,584			$824,552			$833,912

UNDERWRITING EXPENSES
Losses and loss expenses		$301,661			$219,995			$238,100			$503,561			$594,561
Acquisition expenses	63,226			33,585			27,389			80,252			65,368
General and administrative expenses	68,254			57,409			72,668			140,012			148,475
Total expenses		$433,141			$310,989			$338,157			$723,825			$808,404

UNDERWRITING INCOME		$40,212			$26,335			$24,427			$100,727			$25,508

GAAP RATIOS
Loss ratio	63.7		%	65.2		%	65.7		%	61.1		%	71.4		%
Acquisition expense ratio	13.4		%	10.0		%	7.6		%	9.7		%	7.8		%
General and administrative expense ratio	14.4		%	17.0		%	20.0		%	17.0		%	17.7		%
Combined ratio AS REPORTED	91.5		%	92.2		%	93.3		%	87.8		%	96.9		%

Effect of favorable prior accident year reserve development	10.0		%	11.6		%	9.3		%	9.9		%	9.7		%

Combined ratio net of prior accident year reserve development	101.5		%	103.8		%	102.6		%	97.7		%	106.6		%

ENDURANCE SPECIALTY HOLDINGS LTD.

REINSURANCE SEGMENT DATA



	FOR THE SIX MONTHS ENDED									FOR THE YEARS ENDED
	JUNE 30, 2016			JUNE 30, 2015			JUNE 30, 2014			DEC. 31, 2015			DEC. 31, 2014
UNDERWRITING REVENUES
Gross premiums written		$1,319,784			$957,532			$873,138			$1,234,960			$1,177,948
Net premiums written		$1,046,064			$829,699			$788,067			$1,070,097			$1,073,800
Net premiums earned		$679,446			$510,670			$515,220			$1,153,901			$1,030,066
Other underwriting (loss) income	(1,514		)	3,795			(6,062		)	(3,694		)	(5,786		)
Total underwriting revenues		$677,932			$514,465			$509,158			$1,150,207			$1,024,280

UNDERWRITING EXPENSES
Losses and loss expenses		$317,779			$191,063			$197,992			$413,547			$375,601
Acquisition expenses	152,577			133,479			123,369			267,633			254,145
General and administrative expenses	59,050			52,446			45,145			119,779			98,912
Total expenses		$529,406			$376,988			$366,506			$800,959			$728,658

UNDERWRITING INCOME		$148,526			$137,477			$142,652			$349,248			$295,622

GAAP RATIOS
Loss ratio	46.7		%	37.4		%	38.5		%	35.8		%	36.4		%
Acquisition expense ratio	22.5		%	26.1		%	23.9		%	23.2		%	24.7		%
General and administrative expense ratio	8.7		%	10.3		%	8.7		%	10.4		%	9.6		%
Combined ratio AS REPORTED	77.9		%	73.8		%	71.1		%	69.4		%	70.7		%

Effect of favorable prior accident year reserve development	10.6		%	15.0		%	13.7		%	14.0		%	14.9		%

Combined ratio net of prior accident year reserve development	88.5		%	88.8		%	84.8		%	83.4		%	85.6		%

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE SIX MONTHS ENDED						FOR THE YEARS ENDED
	JUNE 30, 2016		JUNE 30, 2015		JUNE 30, 2014		DEC. 31, 2015		DEC. 31, 2014
INSURANCE SEGMENT
Agriculture		$563,138		$628,928		$608,434		$840,445		$866,025
Casualty and other specialty	316,336		246,738		175,683		514,203		396,113
Professional lines	200,094		151,496		113,430		344,482		263,538
Property, marine/energy and aviation	349,255		177,922		76,255		386,771		190,452
TOTAL INSURANCE		$1,428,823		$1,205,084		$973,802		$2,085,901		$1,716,128

REINSURANCE SEGMENT
Catastrophe		$437,825		$264,240		$285,020		$311,914		$343,213
Property	187,112		156,260		209,300		209,392		287,326
Casualty	180,983		106,230		115,857		176,506		159,533
Professional lines	184,187		178,098		109,736		248,610		174,656
Specialty	329,677		252,704		153,225		288,538		213,220
TOTAL REINSURANCE		$1,319,784		$957,532		$873,138		$1,234,960		$1,177,948

REPORTED TOTALS		$2,748,607		$2,162,616		$1,846,940		$3,320,861		$2,894,076

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE SIX MONTHS ENDED						FOR THE YEARS ENDED
	JUNE 30, 2016		JUNE 30, 2015		JUNE 30, 2014		DEC. 31, 2015		DEC. 31, 2014
INSURANCE SEGMENT
Agriculture		$205,665		$225,137		$327,471		$267,890		$459,149
Casualty and other specialty	141,462		110,360		93,288		248,554		195,927
Professional lines	94,538		67,674		44,416		156,918		93,640
Property, marine/energy and aviation	168,881		91,167		56,890		207,011		111,690
TOTAL INSURANCE		$610,546		$494,338		$522,065		$880,373		$860,406

REINSURANCE SEGMENT
Catastrophe		$286,549		$175,765		$202,374		$194,662		$252,973
Property	181,360		153,567		209,208		205,999		287,235
Casualty	179,640		106,230		114,260		176,487		157,947
Professional lines	183,251		178,098		109,736		248,610		174,656
Specialty	215,264		216,039		152,489		244,339		200,989
TOTAL REINSURANCE		$1,046,064		$829,699		$788,067		$1,070,097		$1,073,800

REPORTED TOTALS		$1,656,610		$1,324,037		$1,310,132		$1,950,470		$1,934,206

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS EARNED BY LINE OF BUSINESS



	FOR THE SIX MONTHS ENDED						FOR THE YEARS ENDED
	JUNE 30, 2016		JUNE 30, 2015		JUNE 30, 2014		DEC. 31, 2015		DEC. 31, 2014
INSURANCE SEGMENT
Agriculture		$113,438		$136,764		$183,734		$296,782		$471,403
Casualty and other specialty	137,834		93,371		101,775		216,486		191,952
Professional lines	85,887		51,613		48,560		124,425		97,815
Property, marine/energy and aviation	136,194		55,576		28,515		186,859		72,742
TOTAL INSURANCE		$473,353		$337,324		$362,584		$824,552		$833,912

REINSURANCE SEGMENT
Catastrophe		$176,349		$117,972		$128,631		$285,858		$249,113
Property	143,868		119,872		153,623		255,727		297,331
Casualty	96,988		75,498		98,356		163,313		184,170
Professional lines	129,562		97,442		69,519		213,012		154,341
Specialty	132,679		99,886		65,091		235,991		145,111
TOTAL REINSURANCE		$679,446		$510,670		$515,220		$1,153,901		$1,030,066

REPORTED TOTALS		$1,152,799		$847,994		$877,804		$1,978,453		$1,863,978

ENDURANCE SPECIALTY HOLDINGS LTD.

ANNUALIZED PREMIUM & INVESTMENT LEVERAGE



	FOR THE QUARTERS ENDED								YEARS ENDED DECEMBER 31,
	JUNE 30, 2016		MAR. 31, 2016		DEC. 31, 2015		SEPT. 30, 2015		2015		2014

Average common equity [a]		$4,568,998		$4,459,810		$4,381,566		$3,619,888		$3,415,086		$2,638,276

Net premiums earned		$599,608		$553,191		$573,456		$557,003		$1,978,453		$1,863,978

Premium leverage	0.13x		0.12x		0.13x		0.15x		0.58x		0.72x

Annualized premium leverage	0.52x		0.50x		0.52x		0.62x		0.58x		0.72x

Average cash and invested assets		$8,746,617		$8,864,749		$8,909,284		$7,730,545		$7,434,542		$6,515,156

Investment leverage	1.91x		1.99x		2.03x		2.13x		2.18x		2.48x

[a] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances by quarter for the stated periods, which excludes the liquidation value of the preferred shares outstanding at the beginning and end of each period.

ENDURANCE SPECIALTY HOLDINGS LTD.

INVESTMENT PORTFOLIO

AS OF JUNE 30, 2016 AND DECEMBER 31, 2015



	June 30, 2016				December 31, 2015
Type of Investment	Fair Value		Percentage		Fair Value			Percentage
Cash and equivalents [a]		$989,328	11.4	%		$1,146,181		12.9	%
Short-term investments	314,291		3.6	%	419,796			4.7	%
Fixed maturity investments
U.S. government and government agencies notes	732,853		8.5	%	818,468			9.2	%
Government and agency guaranteed corporates	47,457		0.5	%	57,753			0.6	%
U.S. government agency residential mortgage-backed securities	1,318,538		15.4	%	1,236,040			13.9	%
U.S. government agency commercial mortgage-backed securities	106,828		1.2	%	99,638			1.1	%
Municipals	27,385		0.3	%	22,406			0.3	%
Foreign government	193,933		2.2	%	160,976			1.8	%
Corporate securities	1,957,382		22.7	%	1,849,934			20.8	%
Non-agency residential mortgage-backed securities	58,284		0.7	%	75,333			0.8	%
Non-agency commercial mortgage-backed securities	694,132		8.0	%	713,248			8.0	%
Asset-backed securities	485,245		5.6	%	507,255			5.7	%
Collateralized loan and debt obligations	397,042		4.6	%	405,128			4.5	%
Equity securities
Equity investments	364,771		4.2	%	393,829			4.4	%
Emerging market debt fund	86,167		1.0	%	56,421			0.6	%
Convertible funds	46,001		0.5	%	46,185			0.5	%
Preferred equity investments	14,698		0.2	%	17,623			0.2	%
Short-term fixed income fund	30,705		0.4	%	14,756			0.2	%
Other investments [b]	779,810		9.0	%	872,617			9.8	%
Total		$8,644,850	100.0	%		$8,913,587		100.0	%

Ratings [c]	Fair Value		Percentage		Fair Value			Percentage
U.S. government and government agencies notes	732,853		11.6	%		$818,468		12.9	%
AAA/Aaa	1,132,118		17.8	%	1,204,763			18.9	%
AA/Aa	2,335,476		36.9	%	2,237,707			35.1	%
A/A	1,062,763		16.8	%	1,094,590			17.2	%
BBB	667,950		10.5	%	703,817			11.1	%
Below BBB	354,651		5.6	%	268,030			4.2	%
Not Rated	47,559		0.8	%	38,600			0.6	%
Total		$6,333,370	100.0	%		$6,365,975		100.0	%

Performance					June 30, 2016			December 31, 2015
Yield [d]					2.0		%	1.5	%
Duration in years [e]					2.57			2.74



Net Investment Income	Quarter Ended June 30, 2016		Quarter Ended Mar. 31, 2016			Quarter Ended Dec. 31, 2015			Quarter Ended Sept 30, 2015			Quarter Ended June 30, 2015		Year Ended Dec. 31, 2015
Cash and securities		$38,725		$39,438			$34,975			$34,249			$28,682		$127,379
Other investments	5,252		(28,257		)	(11,795		)	(17,716		)	3,570		(13,553		)
Total net investment income		$43,977		$11,181			$23,180			$16,533			$32,252		$113,826

[a] Cash and equivalents, including operating cash, are shown net of investments pending settlement.

[b] Other investments includes investments in alternative and specialty funds.

[c] Excludes cash and equivalents, equity securities and other investments.

[d] Earned yield for the quarter ending June 30, 2016 and twelve months ending December 31, 2015 excludes realized and unrealized gains and losses on fixed maturity investments.

[e] Duration excludes equity securities, other investments and operating cash.

ENDURANCE SPECIALTY HOLDINGS LTD.

ACTIVITY IN RESERVE FOR LOSSES AND LOSS EXPENSES



	THREE MONTHS ENDED JUNE 30, 2016									SIX MONTHS ENDED JUNE 30, 2016
	GROSS			RECOVERIES			NET			GROSS			RECOVERIES			NET
Reserve for losses and loss expenses
Balance, beginning of period		$4,458,189			($935,593	)		$3,522,596			$4,510,415			($907,944	)		$3,602,471

Incurred related to:
Current year	695,247			(260,500		)	434,747			1,140,852			(401,668		)	739,184
Prior years	(67,350		)	8,715			(58,635		)	(136,396		)	16,652			(119,744		)
Total Incurred	627,897			(251,785		)	376,112			1,004,456			(385,016		)	619,440

Paid related to:
Current year	(69,819		)	23,306			(46,513		)	(79,599		)	26,035			(53,564		)
Prior years	(264,430		)	56,834			(207,596		)	(700,365		)	159,541			(540,824		)
Total Paid	(334,249		)	80,140			(254,109		)	(779,964		)	185,576			(594,388		)

Foreign currency translation and other	(23,841		)	1,621			(22,220		)	(6,911		)	1,767			(5,144		)

Balance, end of period		$4,727,996			($1,105,617	)		$3,622,379			$4,727,996			($1,105,617	)		$3,622,379

ENDURANCE SPECIALTY HOLDINGS LTD.

PRIOR YEAR RESERVE DEVELOPMENT BY SEGMENT

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE SIX MONTHS ENDED JUNE 30, 2016



	Insurance			Reinsurance			Total Company
Incurred related to prior years
Quarter ended March 31, 2016		($23,176	)		($37,933	)		($61,109	)
Quarter ended June 30, 2016	(24,217		)	(34,418		)	(58,635		)
Six months ended June 30, 2016		($47,393	)		($72,351	)		($119,744	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2015



	Insurance			Reinsurance			Total Company
Incurred related to prior years
Quarter ended March 31, 2015		($20,696	)		($36,462	)		($57,158	)
Quarter ended June 30, 2015	(18,575		)	(40,261		)	(58,836		)
Quarter ended September 30, 2015	(22,556		)	(44,791		)	(67,347		)
Quarter ended December 31, 2015	(20,174		)	(39,949		)	(60,123		)
Year ended December 31, 2015		($82,001	)		($161,463	)		($243,464	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2014



	Insurance			Reinsurance			Total Company
Incurred related to prior years
Quarter ended March 31, 2014		($11,648	)		($38,664	)		($50,312	)
Quarter ended June 30, 2014	(22,048		)	(32,153		)	(54,201		)
Quarter ended September 30, 2014	(20,311		)	(40,158		)	(60,469		)
Quarter ended December 31, 2014	(26,563		)	(42,270		)	(68,833		)
Year ended December 31, 2014		($80,570	)		($153,245	)		($233,815	)

ENDURANCE SPECIALTY HOLDINGS LTD.

PRIOR YEAR RESERVE DEVELOPMENT BY LINE OF BUSINESS

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT



	FOR THE QUARTERS ENDED															FOR THE YEAR ENDED
	JUNE 30, 2016			MAR. 31, 2016			DEC. 31, 2015			SEPT. 30, 2015			JUNE 30, 2015			DEC. 31, 2015
INSURANCE SEGMENT
Agriculture		($1,292	)		($13,265	)		$36			($212	)		($1,547	)		($1,331	)
Casualty and other specialty	(15,045		)	(7,138		)	(6,640		)	(12,581		)	(16,663		)	(54,594		)
Professional lines	357			(187		)	(300		)	345			(119		)	(194		)
Property, marine/energy and aviation	(8,237		)	(2,586		)	(13,270		)	(10,108		)	(246		)	(25,882		)
TOTAL INSURANCE		($24,217	)		($23,176	)		($20,174	)		($22,556	)		($18,575	)		($82,001	)

REINSURANCE SEGMENT
Catastrophe		($7,344	)		($15,465	)		($4,905	)		($11,734	)		($13,385	)		($32,260	)
Property	(414		)	(3,565		)	(12,247		)	(8,101		)	(579		)	(29,364		)
Casualty	(6,163		)	(5,674		)	(5,777		)	(9,787		)	(12,739		)	(34,730		)
Professional lines	(12,333		)	(3,619		)	(2,159		)	(6,614		)	(6,212		)	(26,108		)
Specialty	(8,164		)	(9,610		)	(14,861		)	(8,555		)	(7,346		)	(39,001		)
TOTAL REINSURANCE		($34,418	)		($37,933	)		($39,949	)		($44,791	)		($40,261	)		($161,463	)

REPORTED TOTALS		($58,635	)		($61,109	)		($60,123	)		($67,347	)		($58,836	)		($243,464	)

ENDURANCE SPECIALTY HOLDINGS LTD.

LOSSES AND LOSS EXPENSES INCURRED BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED												FOR THE YEAR ENDED
	JUNE 30, 2016		MAR. 31, 2016			DEC. 31, 2015			SEPT. 30, 2015		JUNE 30, 2015		DEC. 31, 2015
INSURANCE SEGMENT
Agriculture		$63,830		$18,051			$54,785			$64,933		$85,584		$240,259
Casualty and other specialty	34,527		38,186			46,739			21,714		15,819		92,965
Professional lines	27,117		25,277			22,910			22,325		17,492		79,972
Property, marine/energy and aviation	48,384		46,289			19,991			30,169		26,588		90,365
TOTAL INSURANCE		$173,858		$127,803			$144,425			$139,141		$145,483		$503,561

REINSURANCE SEGMENT
Catastrophe		$65,892		($9,592	)		($3,190	)		$4,827		$3,049		$13,717
Property	46,606		39,287			20,843			39,875		31,324		121,353
Casualty	30,916		21,794			18,152			24,603		11,765		77,408
Professional lines	20,288		34,591			33,318			25,062		23,888		97,933
Specialty	38,552		29,445			28,509			30,485		23,613		103,136
TOTAL REINSURANCE		$202,254		$115,525			$97,632			$124,852		$93,639		$413,547

REPORTED TOTALS		$376,112		$243,328			$242,057			$263,993		$239,122		$917,108

ENDURANCE SPECIALTY HOLDINGS LTD.

ANALYSIS OF UNPAID LOSSES AND LOSS EXPENSES



	Insurance															Reinsurance																		Reported Totals
	Agriculture			Casualty and other specialty			Professional lines			Property, marine/ energy and aviation			Subtotal			Catastrophe			Property			Casualty			Professional lines			Specialty			Subtotal			Total
AT JUNE 30, 2016
Case reserves		$187,249			$279,262			$139,615			$245,045			$851,171			$142,088			$244,972			$240,143			$76,359			$144,471			$848,033			$1,699,204
Total reserves		$302,292			$1,330,458			$638,045			$371,799			$2,642,594			$236,656			$348,236			$752,691			$388,596			$359,224			$2,085,403			$4,727,997
Case reserves/Total reserves	61.9		%	21.0		%	21.9		%	65.9		%	32.2		%	60.0		%	70.3		%	31.9		%	19.6		%	40.2		%	40.7		%	35.9		%

IBNR / Total reserves	38.1		%	79.0		%	78.1		%	34.1		%	67.8		%	40.0		%	29.7		%	68.1		%	80.4		%	59.8		%	59.3		%	64.1		%

AT MAR. 31, 2016
Case reserves		$61,000			$273,192			$117,252			$246,715			$698,159			$103,378			$232,578			$237,228			$81,995			$144,949			$800,128			$1,498,287
Total reserves		$162,708			$1,306,763			$597,136			$369,123			$2,435,730			$186,287			$352,100			$758,160			$381,175			$344,737			$2,022,459			$4,458,189
Case reserves/Total reserves	37.5		%	20.9		%	19.6		%	66.8		%	28.7		%	55.5		%	66.1		%	31.3		%	21.5		%	42.0		%	39.6		%	33.6		%

IBNR / Total reserves	62.5		%	79.1		%	80.4		%	33.2		%	71.3		%	44.5		%	33.9		%	68.7		%	78.5		%	58.0		%	60.4		%	66.4		%

AT DEC. 31, 2015
Case reserves		$226,753			$271,234			$116,920			$226,894			$841,801			$109,374			$229,283			$244,445			$70,301			$142,217			$795,620			$1,637,421
Total reserves		$284,552			$1,291,427			$581,558			$349,824			$2,507,361			$199,108			$341,309			$774,231			$355,993			$332,413			$2,003,054			$4,510,415
Case reserves/Total reserves	79.7		%	21.0		%	20.1		%	64.9		%	33.6		%	54.9		%	67.2		%	31.6		%	19.7		%	42.8		%	39.7		%	36.3		%

IBNR / Total reserves	20.3		%	79.0		%	79.9		%	35.1		%	66.4		%	45.1		%	32.8		%	68.4		%	80.3		%	57.2		%	60.3		%	63.7		%

AT SEPT. 30, 2015
Case reserves		$245,070			$271,553			$114,158			$221,570			$852,351			$125,099			$242,323			$247,649			$63,203			$125,773			$804,047			$1,656,398
Total reserves		$274,583			$1,263,971			$551,637			$352,630			$2,442,821			$233,936			$370,123			$791,395			$333,228			$318,333			$2,047,015			$4,489,836
Case reserves/Total reserves	89.3		%	21.5		%	20.7		%	62.8		%	34.9		%	53.5		%	65.5		%	31.3		%	19.0		%	39.5		%	39.3		%	36.9		%

IBNR / Total reserves	10.7		%	78.5		%	79.3		%	37.2		%	65.1		%	46.5		%	34.5		%	68.7		%	81.0		%	60.5		%	60.7		%	63.1		%

AT June 30, 2015
Case reserves		$203,303			$266,165			$112,578			$75,914			$657,960			$87,309			$180,630			$240,892			$62,282			$98,301			$669,414			$1,327,374
Total reserves		$323,686			$1,208,710			$525,604			$99,769			$2,157,769			$141,519			$249,659			$748,431			$285,488			$250,659			$1,675,756			$3,833,525
Case reserves/Total reserves	62.8		%	22.0		%	21.4		%	76.1		%	30.5		%	61.7		%	72.4		%	32.2		%	21.8		%	39.2		%	39.9		%	34.6		%

IBNR / Total reserves	37.2		%	78.0		%	78.6		%	23.9		%	69.5		%	38.3		%	27.6		%	67.8		%	78.2		%	60.8		%	60.1		%	65.4		%

ENDURANCE SPECIALTY HOLDINGS LTD.

SHAREHOLDER RETURN ANALYSIS



	SIX MONTHS ENDED			YEARS ENDED DECEMBER 31,						INCEPTION TO
	JUNE 30, 2016			2015			2014			JUNE 30, 2016
Income and Return on Equity:
Net income available to common and participating common shareholders		$182,999			$311,345			$315,700			$3,560,355

Operating income available to common and participating common shareholders	139,221			332,025			304,012			3,435,720

Average Shareholders’ equity [a]	4,514,404			3,415,086			2,638,276			2,259,012

Net income return on average equity	4.1		%	9.1		%	12.0		%	10.9		%	[c]
Operating return on average equity	3.1		%	9.7		%	11.5		%	10.5		%	[c]

Book value and dividends per share:
Diluted book value per common share (treasury stock method)		$68.20			$65.48			$61.33			$68.20

Dividends paid per share	0.76			1.40			1.36			14.37

Change in diluted book value per common share	4.2		%	6.8		%	11.1		%	17.4		%	[c]

Total return to common shareholders [b]	5.3		%	9.0		%	13.6		%	22.5		%	[c]

[a] Excludes the $230 million (2015 - $460 million; 2014 - $430 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 JUNE 30,						SIX MONTHS ENDED JUNE 30,
		2016			2015			2016			2015
DILUTIVE SHARES OUTSTANDING: AS REPORTED	Average market price per share		$65.54			$62.19			$64.08			$62.40

	Basic weighted average common shares outstanding [a]	65,965			43,737			65,786			43,640

	Add: weighted avg. unvested restricted shares	88			52			79			34
	Weighted average exercise price per share		$—			$—		—			—
	Proceeds from unrecognized restricted shares expense		$3,740			$2,822			$3,278			$1,920
	Less: restricted shares bought back via treasury method	(57		)	(42		)	(51		)	(29		)

	Add: weighted avg. dilutive options outstanding	267			800			294			800
	Weighted average exercise price per share		$48.20			$48.20			$48.20			$48.20
	Proceeds from unrecognized option expense		$589			$1,837			$737			$2,113
	Less: options bought back via treasury method	(206		)	(650		)	(233		)	(652		)
	Weighted average dilutive shares outstanding [b]	66,057			43,897			65,875			43,793

[a] 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 JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2016			2015			2016			2015

Net income available to common and participating common shareholders		$76,621			$76,018			$182,999			$176,309
Less amount allocated to participating common shareholders [a]	(1,634		)	(2,273		)	(4,008		)	(5,237		)
Net income allocated to common shareholders		$74,987			$73,745			$178,991			$171,072

Denominator:
Weighted average shares - basic	65,965			43,737			65,786			43,640

Share Equivalents
Options	62			150			61			148
Restricted shares	30			10			28			5
Weighted average shares - diluted	66,057			43,897			65,875			43,793

Basic earnings per common share		$1.14			$1.69			$2.72			$3.92

Diluted earnings per common share [b]		$1.14			$1.68			$2.72			$3.91

[a] Represents earnings and dividends allocated 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. In periods of loss, no losses are allocated to participating common shareholders.

[b] Represents diluted earnings per share calculated under the two-class method which was the lower of the two-class method and the treasury stock method.

ENDURANCE SPECIALTY HOLDINGS LTD.

OPERATING INCOME RECONCILIATION

EARNINGS PER SHARE INFORMATION - TWO CLASS METHOD



	Two-Class Method						Two-Class Method
	QUARTERS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2016			2015			2016			2015

Net income available to Endurance Holdings		$83,914			$84,206			$199,495			$192,685
(Less) add items:
Net foreign exchange (gains) losses	(32,751		)	12,981			(44,480		)	20,533
Net realized and unrealized gains	(6,347		)	(9,680		)	(20,134		)	(27,869		)
Net impairment losses recognized in earnings	9,841			424			10,464			1,073
Income tax expense (benefit)	7,434			(213		)	10,372			683
Operating income before preferred dividends		$62,091			$87,718			$155,717			$187,105
Preferred dividends	(7,293		)	(8,188		)	(16,496		)	(16,376		)
Operating income available to common and participating common shareholders		$54,798			$79,530			$139,221			$170,729
Less amount allocated to participating common shareholders [a]	(1,169		)	(2,378		)	(3,050		)	(5,072		)
Operating income allocated to common shareholders		$53,629			$77,152			$136,171			$165,657

Weighted average common shares outstanding
Basic	65,965			43,737			65,786			43,640
Dilutive	66,057			43,897			65,875			43,793

Basic per common share data
Net income allocated to common shareholders		$1.14			$1.69			$2.72			$3.92
(Less) add items:
Net foreign exchange (gains) losses	(0.50		)	0.29			(0.67		)	0.47
Net realized and unrealized gains	(0.09		)	(0.23		)	(0.30		)	(0.63		)
Net impairment losses recognized in earnings	0.15			0.01			0.16			0.02
Income tax expense (benefit)	0.11			—			0.16			0.02
Operating income allocated to common shareholders [b]		$0.81			$1.76			$2.07			$3.80

Diluted per common share data
Net income allocated to common shareholders		$1.14			$1.68			$2.72			$3.91
(Less) add items:
Net foreign exchange (gains) losses	(0.50		)	0.29			(0.67		)	0.47
Net realized and unrealized gains	(0.09		)	(0.22		)	(0.30		)	(0.64		)
Net impairment losses recognized in earnings	0.15			0.01			0.16			0.02
Income tax expense (benefit)	0.11			—			0.16			0.02
Operating income allocated to common shareholders [b]		$0.81			$1.76			$2.07			$3.78

[b] Represents diluted earnings per share calculated under the two-class method which was the lower of the two-class method and the treasury stock method.

ENDURANCE SPECIALTY HOLDINGS LTD.

PROJECTED FINANCIAL STATEMENT IMPACT OF SELECTED ITEMS

RELATED TO THE ACQUISITION OF MONTPELIER




	BALANCE SHEET AMOUNT AT JULY 31, 2015			INCOME STATEMENT IMPACT FOR THE YEAR ENDED DECEMBER 31,
				2015 [c]			2016			2017			2018			2019			THEREAFTER



Finite lived intangibles		$293,200			($24,334	)		($79,195	)		($58,103	)		($31,760	)		($21,484	)		($78,324	)
Indefinite lived intangibles [a]	57,600			—			—			—			—			—			—
Goodwill [a]	87,625			—			—			—			—			—			—
Total goodwill and intangible assets	438,425			(24,334		)	(79,195		)	(58,103		)	(31,760		)	(21,484		)	(78,324		)

Deferred acquisition costs [b]	91,715			(42,411		)	(35,001		)	(4,673		)	(2,651		)	(2,067		)	(4,912		)

Unearned premiums	(430,490		)	220,623			165,976			12,381			9,358			6,690			15,462


[a] Indefinite lived intangibles and goodwill are not amortized but are subject to annual impairment testing.
[b] Deferred acquisition costs are written off under purchase GAAP. Income statement impact shown above represents the acquisition expenses that would have been recognized by Montpelier as the related premiums were earned.

[c] Amounts shown above for 2015 are for the period subsequent to the closing of the acquisition of Montpelier from August 1, 2015 through December 31, 2015.

ENDURANCE SPECIALTY HOLDINGS LTD.

BOOK VALUE PER SHARE



		JUNE 30,						DEC. 31,
		2016			2015			2015
DILUTIVE COMMON SHARES OUTSTANDING: AS-IF CONVERTED [a]	Price per share at period end		$67.16			$65.70			$63.99

	Basic common shares outstanding	66,174			43,839			65,441
	Add: unvested restricted shares and restricted share units	1,442			1,316			1,617
	Add: dilutive options outstanding	160			800			320
	Weighted average exercise price per share		$48.20			$48.20			$48.20

	Book Value [b]		$4,614,638			$2,872,906			$4,396,262
	Add: proceeds from converted options	7,712			38,560			15,424
	Pro forma book value		$4,622,350			$2,911,466			$4,411,686
	Dilutive shares outstanding	67,776			45,955			67,378
	Basic book value per common share		$69.73			$65.53			$67.18
	Diluted book value per common share		$68.20			$63.35			$65.48

DILUTIVE COMMON SHARES OUTSTANDING: TREASURY STOCK METHOD	Price per share at period end		$67.16			$65.70			$63.99

	Basic common shares outstanding	66,174			43,839			65,441
	Add: unvested restricted shares and restricted share units	1,442			1,316			1,617
	Add: dilutive options outstanding	160			800			320
	Weighted average exercise price per share		$48.20			$48.20			$48.20
	Less: options bought back via treasury method	(115		)	(587		)	(241		)
	Dilutive shares outstanding	67,661			45,368			67,137
	Basic book value per common share		$69.73			$65.53			$67.18
	Diluted book value per common share		$68.20			$63.32			$65.48

[a] The as-if converted method assumes that the proceeds received upon exercise of options will be retained by the Company and the resulting common shares from exercise will remain outstanding.

[b] Excludes the $230 million (December 31, 2015 - $460 million; June 30, 2015 - $430 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 and unrealized 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 to that used by management to analyze the Company’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. Please see page 29 for a reconciliation of operating income to net income.

Operating income per basic or diluted common share are internal performance measures used by Endurance in the management of its operations. Operating income allocated to common shareholders (excludes unvested restricted shares outstanding which are considered participating) per diluted common share represents operating income divided by weighted average dilutive common shares, which has been calculated in accordance with the two-class method under U.S. GAAP. Endurance believes that showing operating income per dilutive common share enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance’s results of operations in a manner similar to that used by management to analyze the Company’s underlying business performance. Operating income per dilutive common share should not be viewed as substitutes for GAAP net income per dilutive common share. Please see page 29 for a reconciliation of operating income per basic and diluted common share to net income per basic and diluted common share.

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 by quarter 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 31 for a reconciliation of diluted book value per common share to basic book value per common share.

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