SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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FORM 8-K

 

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Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

November 2, 2015

Date of Report (Date of earliest event reported)

 

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Endurance Specialty Holdings Ltd.

(Exact name of registrant as specified in its charter)

 

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Bermuda		1-31599		98-0392908
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

Waterloo House, 100 Pitts Bay Road, Pembroke HM 08, Bermuda

(Address of principal executive offices, including zip code)

(441) 278-0440

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02. Results of Operations and Financial Condition.

On November 2, 2015, Endurance Specialty Holdings Ltd. issued a press release reporting its results for the quarter ended September 30, 2015. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In addition, a copy of the Endurance Specialty Holdings Ltd. Investor Financial Supplement for the quarter ended September 30, 2015 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

In accordance with general instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including exhibits, furnished pursuant to Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section.

Item 9.01. Financial Statements and Exhibits

 

(c)	Exhibits

The following exhibits are filed as part of this report:

Exhibit No.			Description
99.1			Third Quarter Results of Operations Press Release, dated November 2, 2015
99.2			Investor Financial Supplement for the quarter ended September 30, 2015

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 2, 2015

	By:		/s/ John V. Del Col
	Name:		John V. Del Col
	Title:		General Counsel & Secretary

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EXHIBIT INDEX

 

Exhibit No.			Description
99.1			Third Quarter Results of Operations Press Release, dated November 2, 2015
99.2			Investor Financial Supplement for the quarter ended September 30, 2015

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Exhibit 99.1

Endurance Reports Third Quarter 2015 Financial Results

 

PEMBROKE, Bermuda – November 2, 2015 – Endurance Specialty Holdings Ltd. (NYSE:ENH) today reported net income available to common shareholders of $43.6 million and $0.73 per diluted common share for the third quarter of 2015 versus net income of $68.0 million and $1.52 per diluted common share for the third quarter of 2014.

For the nine months ended September 30, 2015, Endurance reported net income available to common shareholders of $219.9 million and $4.39 per diluted common share versus net income of $239.3 million and $5.36 per diluted common share for the nine months ended September 30, 2014. Book value per diluted share was $65.02 at September 30, 2015, up 6.0% from December 31, 2014.

Acquisition of Montpelier

Endurance completed its acquisition of Montpelier Re Holdings Ltd. (“Montpelier”) on July 31, 2015. As a result of the acquisition, Endurance's consolidated results of operations for the third quarter of 2015 include those of Montpelier from August 1, 2015 through September 30, 2015. Endurance's third quarter and year to date results include $64.0 million and $68.5 million of one-time transaction and integration expenses associated with the acquisition of Montpelier. In addition, Endurance recognized $350.8 million of identifiable intangible assets and $87.6 million of goodwill in connection with the acquisition of Montpelier.

Operating Highlights

Operating highlights for the quarter ended September 30, 2015 were as follows:

•	Gross premiums written of $642.6 million, an increase of 2.6% compared to the same period in 2014;

•	Net premiums written of $336.7 million, a decrease of 13.7% compared to the same period in 2014;

•	Combined ratio of 87.9%, which included 12.1 percentage points of favorable prior year loss reserve development, 3.8 percentage points of net catastrophe losses from 2015 events, and 11.5 percentage points of one-time corporate expenses related to the acquisition of Montpelier;

•	Net investment income of $16.5 million, a decrease of $8.8 million from the same period in 2014;

•	Operating income, excluding $64.0 million of one-time expenses related to the acquisition of Montpelier, of $111.6 million and $1.87 per diluted common share; and

•	Operating return on average common equity for the quarter, excluding one-time expenses related to the acquisition of Montpelier, of 3.1% or 12.3% on an annualized basis.

Operating highlights for the nine months ended September 30, 2015 were as follows:

•	Gross premiums written of $2,805.2 million, an increase of 13.4% over the same period in 2014;

•	Net premiums written of $1,660.7 million, a decrease of 2.3% over the same period in 2014;

•	Combined ratio of 85.6%, which included 13.0 percentage points of favorable prior year loss reserve development, 2.9 percentage points of current year catastrophe losses, 1.3 percentage points of large property and energy losses, and 4.9 percentage points of one-time corporate expenses related to the acquisition of Montpelier;

•	Net investment income of $90.6 million, a decrease of $15.0 million over the same period in 2014;

•	Operating income, excluding $68.5 million of expenses related to the acquisition of Montpelier, of $286.8 million and $5.73 per diluted common share; and

•	Operating return on average common equity for the first nine months of the year, excluding expenses related to the acquisition of Montpelier, of 9.3% or 12.4% on an annualized basis.

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John R. Charman, Chairman and Chief Executive Officer, commented, “Against a backdrop of relentless global competition coupled with extremely challenging investment market conditions, I am very pleased with our ability to generate an attractive third quarter annualized operating return on equity, excluding one-time transaction costs, of 12.3%.  Our strong results ably reflect the high quality of our underwriting and risk management, our ongoing expense discipline as well as the benefits arising from a globally diversified specialty Insurance and Reinsurance platform.

In the third quarter we also completely integrated Montpelier’s global staff and operations into Endurance and we are highly confident in our ability to materially exceed our originally planned expense savings. With the powerful combination of our two companies, we are very well positioned within the global marketplace to better serve our valued clients and distribution partners with both increased capacity and a larger, more diversified product offering across our wide distribution network.  The absolute transformation of Endurance over the last three years uniquely positions us to generate continuous, superior value for our shareholders despite the challenging market conditions.”

Insurance Segment

Operating highlights for Endurance’s Insurance segment for the quarter ended September 30, 2015 were as follows:

•	Gross premiums written of $448.6 million, an increase of 6.7% from the third quarter of 2014;

•	Net premiums written of $174.9 million, a decrease of 11.5% from the third quarter of 2014; and

•	Combined ratio of 83.5%, which included favorable prior year loss reserve development of 9.6 percentage points and net catastrophe losses from 2015 events of $5.1 million or 2.0 percentage points.

Operating highlights for Endurance’s Insurance segment for the nine months ended September 30, 2015 were as follows:

•	Gross premiums written of $1,653.6 million, an increase of 18.6% from the same period in 2014;

•	Net premiums written of $669.3 million, a decrease of 7.0% from the same period in 2014; and

•	Combined ratio of 88.6%, which included favorable prior year loss reserve development of 10.8 percentage points, net catastrophe losses from 2015 events of $10.8 million or 1.8 percentage points and large property and energy losses of $16.0 million or 3.1 percentage points.

Gross premiums written in the Insurance segment increased $28.2 million and $259.5 million for the quarter and nine months ended September 30, 2015 compared to the same periods in 2014 as underwriting investments made over the past 30 months continue to drive growth within casualty and other specialty, professional lines and property, marine and energy lines of business. Partially offsetting this growth was a decline in the agriculture insurance line of business primarily due to lower commodity prices.

The non-agriculture insurance net premiums written increased $51.2 million and $125.8 million for the quarter and nine months ended September 30, 2015, compared to the same periods in 2014. Net premiums written growth lagged that of gross premiums written due to greater levels of reinsurance purchased, which included quota share protection for individual lines of business as well as protection purchased across the entire portfolio of non-agriculture insurance business lines. Within agriculture insurance, greater cessions to the federal government and increased purchases of third party reinsurance led to a decline in net premiums written of $73.9 million and $176.2 million for the quarter and nine months ended September 30, 2015 compared to the same periods in 2014.

The Insurance segment combined ratio for the quarter ended September 30, 2015 improved 17.9 percentage points compared to the same period in 2014, driven by lower net loss and general and administrative expense ratios partially offset by a higher acquisition expense ratio. The improvement in the net loss ratio largely reflects lower losses within agriculture insurance as the prior year was adversely impacted by significantly higher crop hail losses. The current quarter's net loss ratio also benefited from 9.6 percentage points of favorable loss reserve development compared to 8.0 percentage points in the third quarter of 2014. The current quarter's decline in the general and administrative expense ratio reflects higher ceding commissions received as a result of increased quota share reinsurance purchases. The acquisition expense ratio increased

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in the current quarter as business lines with higher related acquisition costs accounted for a greater percentage of earned premiums than a year ago. For the nine months ended September 30, 2015 compared to the same period in 2014, the combined ratio improved as lower net loss and general and administrative expense ratios were partially offset by a higher acquisition expense ratio.

Reinsurance Segment

Operating highlights for Endurance’s Reinsurance segment for the quarter ended September 30, 2015 were as follows:

•	Gross premiums written of $194.0 million, a decrease of 5.7% from the third quarter of 2014;

•	Net premiums written of $161.8 million, a decrease of 16.0% from the third quarter of 2014; and

•	Combined ratio of 68.1%, which included favorable prior year loss reserve development of 13.9 percentage points and net catastrophe losses from 2015 events of $16.2 million or 5.1 percentage points.

Operating highlights for Endurance’s Reinsurance segment for the nine months ended September 30, 2015 were as follows:

•	Gross premiums written of $1,151.6 million, an increase of 6.7% from the same period in 2014;

•	Net premiums written of $991.5 million, an increase of 1.1% from the same period in 2014; and

•	Combined ratio of 71.6%, which included favorable prior year loss reserve development of 14.6 percentage points and net catastrophe losses from 2015 events of $29.4 million or 3.6 percentage points.

Gross premiums written in the Reinsurance segment declined $11.7 million and grew $72.7 million for the quarter and nine months ended September 30, 2015 compared to the same periods in 2014. For the third quarter of 2015, the decline was driven by reductions in property, catastrophe and specialty lines of business, partially offset by growth in casualty and professional lines. The reduction in the catastrophe and property lines of business was driven by rate declines and by targeted non-renewals and line size reductions in response to the current competitive market. Specialty lines declined due to targeted non-renewals and due to the timing of the recognition of premiums as the third quarter of 2014 included premium adjustments in agriculture with no similar premium adjustments in the third quarter of 2015. Growth in the professional lines and casualty business lines predominantly resulted from new business, expansion of existing contracts at renewal and positive premium adjustments. For the nine months ended September 30, 2015, the growth in gross premiums was driven by growth in the casualty, specialty and professional lines of business, partially offset by declines in the catastrophe and property lines of business.

For the quarter ended September 30, 2015, net premiums written decreased $30.7 million from a year ago as greater levels of proportional and aggregate excess of loss retrocessional coverage were purchased for the Company’s catastrophe line of business and a whole account quota share retrocession contract was purchased for the majority of the specialty line of business. For the nine months ended September 30, 2015, net premiums written increased $10.9 million from a year ago as growth in the casualty, specialty and professional lines of business, was largely offset by declines in catastrophe and property lines of business.

The combined ratio in the Reinsurance segment for the third quarter of 2015 improved by 6.7 percentage points compared to the same period in 2014, due to lower acquisition and general and administrative expense ratios partially offset by a higher net loss ratio. The 7.5 percentage point improvement in the current quarter's acquisition expense ratio was largely attributed to the earning of premiums acquired from Montpelier that do not have related acquisition costs. The general and administrative expense ratio improved 2.0 percentage points in the third quarter of 2015 primarily as a result of expenses remaining flat on a higher earned premium base.

The net loss ratio increased by 2.8 percentage points in the current quarter compared to a year ago due to lower levels of favorable reserve development as the current quarter benefited from 13.9 percentage points of favorable reserve development compared to 15.4 percentage points a year ago. In addition the current quarter’s net loss ratio included 5.1 percentage points of attritional catastrophe losses while the third quarter of 2014 included 4.7 percentage points of catastrophe losses.

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Investments

Endurance’s net investment income for the quarter and nine months ended September 30, 2015 was $16.5 million and $90.6 million, a decrease of $8.8 million and $15.0 million, respectively, compared to the same periods in 2014. The total return of Endurance’s investment portfolio was (0.22)% and 0.59% for the quarter and nine months ended September 30, 2015, compared to (0.39)% and 2.38% for the quarter and nine months ended September 30, 2014. Investment income generated from Endurance’s trading and available for sale investments increased by $8.0 million and $9.4 million for the three and nine months ended September 30, 2015, compared to the same periods in 2014 due to an increase in invested assets. During the quarter and nine months ended September 30, 2015, Endurance’s net investment income on its alternative investment funds and high yield loan funds, which are included in other investments, included losses of $17.7 million and $1.8 million, as compared to losses of $1.8 million and gains of $22.5 million in the third quarter and the first nine months of 2014. The ending book yield on Endurance’s fixed maturity investments at September 30, 2015 was 2.03%, down from 2.22% at September 30, 2014.

At September 30, 2015, Endurance’s fixed maturity and short term investments, which comprises 82.7% of Endurance’s investments, had an average credit quality of AA- and a duration of 2.63 years. Endurance’s available for sale portfolio was in a net unrealized gain position of $13.7 million at September 30, 2015, a decrease of $72.4 million from December 31, 2014. Endurance recorded net realized and unrealized investment gains, net of impairments, of $5.0 million and $31.8 million during the third quarter and first nine months of 2015, compared to $9.7 million and $17.7 million during the third quarter and first nine months of 2014.

Endurance ended the third quarter of 2015 with cash and invested assets of $8.9 billion, which represents a 34.8% increase from December 31, 2014. Net operating cash outflow was $74.0 million for the nine months ended September 30, 2015 versus an inflow of $52.2 million for the same period in 2014.

Capitalization and Shareholders’ Equity

At September 30, 2015, Endurance’s shareholders’ equity was $5.06 billion or $65.02 per diluted common share versus $3.19 billion or $61.33 per diluted common share at December 31, 2014. For the quarter and nine months ended September 30, 2015, Endurance declared and paid common dividends of $0.35 and $1.05 per share, respectively. Subsequent to September 30, 2015, Endurance repaid $198.5 million in senior notes that matured on October 15, 2015.

Earnings Call

Endurance will host a conference call on November 3, 2015 at 9:00 a.m. Eastern time to discuss its financial results. The conference call can be accessed via telephone by dialing (888) 220-8451 or (913) 312-1482 (international) and entering pass code: 1907382. Those who intend to participate in the conference call should register at least ten minutes in advance to ensure access to the call. A telephone replay of the conference call will be available through November 17, 2015 by dialing (888) 203-1112 or (719) 457-0820 (international) and entering the pass code: 1907382.

The public may access a live broadcast of the conference call at the “Investors” section of Endurance’s website, www.endurance.bm. Following the live broadcast, an archived version will continue to be available on Endurance’s website.

A copy of Endurance’s financial supplement for the third quarter of 2015 will be available on Endurance’s website at www.endurance.bm shortly after the release of earnings.

Operating income, operating return on average common equity, operating income per diluted common share, operating income allocated to common shareholders and each of these operating metrics excluding one-time expenses related to the acquisition of Montpelier, and the combined ratio excluding prior year net loss reserve development are non-GAAP measures. Reconciliations of these measures to the appropriate GAAP measures are included in the attached tables.

About Endurance Specialty Holdings

Endurance Specialty Holdings Ltd. is a global specialty provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance writes agriculture, casualty and other specialty, professional lines and property, marine and energy lines of insurance and catastrophe, property, casualty, professional lines and specialty lines of reinsurance. We maintain excellent financial strength as evidenced by the ratings of A (Excellent) from A.M. Best (XV size category) and A (Strong) from Standard and Poor’s on our principal operating subsidiaries. Endurance’s headquarters are located at Waterloo House, 100 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda.  For more information about Endurance, please visit www.endurance.bm.

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Safe Harbor for Forward-Looking Statements

Some of the statements in this press release 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 press release 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, 2014 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors included in Endurance’s most recent reports on Form 10-K and Form 10-Q and other documents of Endurance on file with the Securities and Exchange Commission. Any forward-looking statements made in this material are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Endurance will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Endurance or its business or operations. Except as required by law, Endurance undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

The contents of any website referenced in this press release are not incorporated by reference herein.

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED BALANCE SHEETS

(In thousands of United States dollars, except share and per share amounts)

			September 30,				December 31,
			2015				2014
Assets
Cash and cash equivalents			$	1,242,997			$	745,472
Fixed maturity investments, trading, at fair value			1,372,030				—
Fixed maturity investments, available for sale, at fair value			4,656,145				5,092,581
Short-term investments, trading, at fair value			348,582				—
Short-term investments, available for sale, at fair value			16,356				9,014
Equity securities, trading, at fair value			2,150				—
Equity securities, available for sale, at fair value			496,035				331,368
Other investments			842,446				541,454
Premiums receivable, net			2,068,484				883,450
Insurance and reinsurance balances receivable			115,047				122,214
Deferred acquisition costs			282,975				207,368
Prepaid reinsurance premiums			650,967				354,940
Reinsurance recoverable on unpaid losses			830,116				670,795
Reinsurance recoverable on paid losses			163,137				218,291
Accrued investment income			31,057				27,183
Goodwill and intangible assets			573,956				153,405
Deferred tax asset			54,463				48,995
Net receivable on sales of investments			85,911				38,877
Other assets			195,981				199,375
Total Assets			$	14,028,835			$	9,644,782
Liabilities
Reserve for losses and loss expenses			$	4,489,836			$	3,846,859
Reserve for unearned premiums			2,230,552				1,254,519
Deposit liabilities			13,489				15,136
Reinsurance balances payable			794,935				375,711
Debt			915,147				527,715
Net payable on purchases of investments			157,671				151,682
Deferred tax liability			18,346				—
Other liabilities			352,515				287,978
Total Liabilities			8,972,491				6,459,600
Shareholders' Equity
Preferred shares
	Series A, non-cumulative - 8,000,000 issued and outstanding (2014 - 8,000,000)		8,000				8,000
	Series B, non-cumulative - 9,200,000 issued and outstanding (2014 - 9,200,000)		9,200				9,200
Common shares
	66,606,820 issued and outstanding (2014 - 44,765,153)		66,607				44,765
Additional paid-in capital			2,108,447				598,226
Accumulated other comprehensive (loss) income			(8,544		)		76,706
Retained earnings			2,613,160				2,448,285
Total Shareholders’ Equity Available to the Company			4,796,870				3,185,182
Non-controlling interests			259,474				—
Total Shareholders' Equity			5,056,344				3,185,182
Total Liabilities and Shareholders’ Equity			14,028,835				9,644,782
Book Value per Common Share
Dilutive common shares outstanding			67,161,321				44,920,768
Diluted book value per common share [a]			$	65.02			$	61.33

Note: All financial information contained herein is unaudited, except the balance sheet data for the year ended December 31, 2014, which was derived from Endurance’s audited financial statements.

[a] Excludes the $430 million liquidation value of the preferred shares.

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands of United States dollars, except share and per share amounts)

 

		Three Months Ended								Nine Months Ended
		September 30,				September 30,				September 30,				September 30,
		2015				2014				2015				2014
Revenues
Gross premiums written		$	642,597			$	626,110			$	2,805,213			$	2,473,050
Net premiums written		$	336,690			$	390,106			$	1,660,727			$	1,700,238
Change in unearned premiums		220,313				124,789				(255,730		)		(307,539		)
Net premiums earned		557,003				514,895				1,404,997				1,392,699
Other underwriting income (loss)		227				2,123				4,022				(3,939		)
Net investment income		16,533				25,357				90,646				105,649
Net realized and unrealized gains		5,029				9,788				32,898				18,071
Net impairment losses recognized in earnings		(38		)		(102		)		(1,111		)		(411		)
Total revenues		578,754				552,061				1,531,452				1,512,069
Expenses
Net losses and loss expenses		263,993				290,269				675,051				726,361
Acquisition expenses		90,457				93,392				257,521				244,150
General and administrative expenses		60,793				68,946				170,648				186,759
Corporate expenses [a]		74,308				11,969				99,210				53,817
Amortization of intangibles		11,318				1,623				14,496				4,863
Net foreign exchange losses		8,621				783				29,154				4,066
Interest expense		12,324				13,127				30,445				31,910
Total expenses		521,814				480,109				1,276,525				1,251,926
Income before income taxes		56,940				71,952				254,927				260,143
Income tax (expense) benefit		(2,410		)		4,282				(7,712		)		3,734
Net income		54,530				76,234				247,215				263,877
Net income attributable to non-controlling interests		(2,707		)		—				(2,707		)		—
Net income available to the Company		51,823				76,234				244,508				263,877
Preferred dividends		(8,188		)		(8,188		)		(24,564		)		(24,564		)
Net income available to common and participating common shareholders		$	43,635			$	68,046			$	219,944			$	239,313
Per share data
Basic earnings per common share		$	0.73			$	1.52			$	4.41			$	5.36
Diluted earnings per common share		$	0.73			$	1.52			$	4.39			$	5.36

[a] The Company incurred $64.0 million and $68.5 million of corporate expenses in relation to the Company's acquisition of Montpelier for the quarter and nine months ended September 30, 2015. For the quarter and nine months ended September 30, 2014, the Company incurred $2.3 million and $15.3 million of corporate expenses and $4.1 million and $4.8 million of interest expense, respectively, in relation to the Company's proposed acquisition of Aspen Insurance Holdings Limited.

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ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars, except ratios)

 

			Three Months Ended September 30, 2015
			Insurance				Reinsurance				Reported Totals
	Revenues
	Gross premiums written		$	448,563			$	194,034			$	642,597
	Ceded premiums written		(273,626		)		(32,281		)		(305,907		)
	Net premiums written		174,937				161,753				336,690
	Net premiums earned		234,143				322,860				557,003
	Other underwriting income		—				227				227
	Total underwriting revenues		234,143				323,087				557,230
	Expenses
	Net losses and loss expenses		139,141				124,852				263,993
	Acquisition expenses		24,375				66,082				90,457
	General and administrative expenses		31,880				28,913				60,793
			195,396				219,847				415,243
	Underwriting income		$	38,747			$	103,240			141,987
	Net investment income										16,533
	Corporate expenses										(74,308		)
	Interest expense										(12,324		)
	Amortization of intangibles										(11,318		)
	Net foreign exchange losses										(8,621		)
	Net realized and unrealized gains										5,029
	Net impairment losses recognized in earnings										(38		)
	Income before income taxes										$	56,940
	Net loss ratio		59.5		%		38.6		%		47.4		%
	Acquisition expense ratio		10.4		%		20.5		%		16.2		%
	General and administrative expense ratio		13.6		%		9.0		%		24.3		%	[a]
	Combined ratio		83.5		%		68.1		%		87.9		%

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

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- 9 -

ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars, except ratios)

 

			Three Months Ended September 30, 2014
			Insurance				Reinsurance				Reported Totals
	Revenues
	Gross premiums written		$	420,343			$	205,767			$	626,110
	Ceded premiums written		(222,704		)		(13,300		)		(236,004		)
	Net premiums written		197,639				192,467				390,106
	Net premiums earned		253,583				261,312				514,895
	Other underwriting income		—				2,123				2,123
	Total underwriting revenues		253,583				263,435				517,018
	Expenses
	Net losses and loss expenses		196,677				93,592				290,269
	Acquisition expenses		20,170				73,222				93,392
	General and administrative expenses		40,401				28,545				68,946
			257,248				195,359				452,607
	Underwriting (loss) income		$	(3,665	)		$	68,076			64,411
	Net investment income										25,357
	Corporate expenses										(11,969		)
	Interest expense										(13,127		)
	Amortization of intangibles										(1,623		)
	Net foreign exchange losses										(783		)
	Net realized and unrealized gains										9,788
	Net impairment losses recognized in earnings										(102		)
	Income before income taxes										$	71,952
	Net loss ratio		77.5		%		35.8		%		56.4		%
	Acquisition expense ratio		8.0		%		28.0		%		18.1		%
	General and administrative expense ratio		15.9		%		11.0		%		15.7		%	[a]
	Combined ratio		101.4		%		74.8		%		90.2		%

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

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- 10 -

ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars, except ratios)

 

			Nine Months Ended September 30, 2015
			Insurance				Reinsurance				Reported Totals
	Revenues
	Gross premiums written		$	1,653,647			$	1,151,566			$	2,805,213
	Ceded premiums written		(984,372		)		(160,114		)		(1,144,486		)
	Net premiums written		669,275				991,452				1,660,727
	Net premiums earned		571,467				833,530				1,404,997
	Other underwriting income		—				4,022				4,022
	Total underwriting revenues		571,467				837,552				1,409,019
	Expenses
	Net losses and loss expenses		359,136				315,915				675,051
	Acquisition expenses		57,960				199,561				257,521
	General and administrative expenses		89,289				81,359				170,648
			506,385				596,835				1,103,220
	Underwriting income		$	65,082			$	240,717			305,799
	Net investment income										90,646
	Corporate expenses										(99,210		)
	Interest expense										(30,445		)
	Amortization of intangibles										(14,496		)
	Net foreign exchange losses										(29,154		)
	Net realized and unrealized gains										32,898
	Net impairment losses recognized in earnings										(1,111		)
	Income before income taxes										$	254,927
	Net loss ratio		62.9		%		37.9		%		48.1		%
	Acquisition expense ratio		10.1		%		23.9		%		18.3		%
	General and administrative expense ratio		15.6		%		9.8		%		19.2		%	[a]
	Combined ratio		88.6		%		71.6		%		85.6		%

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

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- 11 -

ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars, except ratios)

 

			Nine Months Ended September 30, 2014
			Insurance				Reinsurance				Reported Totals
	Revenues
	Gross premiums written		$	1,394,145			$	1,078,905			$	2,473,050
	Ceded premiums written		(674,441		)		(98,371		)		(772,812		)
	Net premiums written		719,704				980,534				1,700,238
	Net premiums earned		616,167				776,532				1,392,699
	Other underwriting loss		—				(3,939		)		(3,939		)
	Total underwriting revenues		616,167				772,593				1,388,760
	Expenses
	Net losses and loss expenses		434,777				291,584				726,361
	Acquisition expenses		47,559				196,591				244,150
	General and administrative expenses		113,069				73,690				186,759
			595,405				561,865				1,157,270
	Underwriting income		$	20,762			$	210,728			231,490
	Net investment income										105,649
	Corporate expenses										(53,817		)
	Interest expense										(31,910		)
	Amortization of intangibles										(4,863		)
	Net foreign exchange losses										(4,066		)
	Net realized and unrealized gains										18,071
	Net impairment losses recognized in earnings										(411		)
	Income before income taxes										$	260,143
	Net loss ratio		70.6		%		37.6		%		52.2		%
	Acquisition expense ratio		7.7		%		25.3		%		17.5		%
	General and administrative expense ratio		18.3		%		9.5		%		17.3		%	[a]
	Combined ratio		96.6		%		72.4		%		87.0		%

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

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- 12 -

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED FINANCIAL RATIOS

 

As Reported
				Three Months Ended September 30,
				Insurance						Reinsurance						Total
				2015			2014			2015			2014			2015			2014
	Net loss ratio			59.5	%		77.5	%		38.6	%		35.8	%		47.4	%		56.4	%
	Acquisition expense ratio			10.4	%		8.0	%		20.5	%		28.0	%		16.2	%		18.1	%
	General and administrative expense ratio			13.6	%		15.9	%		9.0	%		11.0	%		24.3	%	[a]	15.7	%	[a]
	Combined ratio [b]			83.5	%		101.4	%		68.1	%		74.8	%		87.9	%		90.2	%
Effect of Prior Year Net Loss Reserve Development
Favorable / (Unfavorable)
				Three Months Ended September 30,
				Insurance						Reinsurance						Total
				2015			2014			2015			2014			2015			2014
	Net loss ratio			9.6	%		8.0	%		13.9	%		15.4	%		12.1	%		11.7	%
Net of Prior Year Net Loss Reserve Development
				Three Months Ended September 30,
				Insurance						Reinsurance						Total
				2015			2014			2015			2014			2015			2014
	Net loss ratio			69.1	%		85.5	%		52.5	%		51.2	%		59.5	%		68.1	%
	Acquisition expense ratio			10.4	%		8.0	%		20.5	%		28.0	%		16.2	%		18.1	%
	General and administrative expense ratio			13.6	%		15.9	%		9.0	%		11.0	%		24.3	%	[a]	15.7	%	[a]
	Combined ratio [b]			93.1	%		109.4	%		82.0	%		90.2	%		100.0	%		101.9	%
[a]	The total general and administrative expense ratio includes general and administrative expenses and corporate expenses.
[b]	The combined ratio is the sum of the net loss, acquisition expense and general and administrative expense ratios, and the total combined ratio includes corporate expenses. Endurance presents the combined ratio as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. The combined ratio, excluding prior year net loss reserve development, enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance’s results of underwriting activities in a manner similar to how management analyzes Endurance’s underlying business performance. The combined ratio, net of prior year net loss reserve development, should not be viewed as a substitute for the combined ratio.

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- 13 -

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED FINANCIAL RATIOS

 

As Reported
				Nine Months Ended September 30,
				Insurance						Reinsurance						Total
				2015			2014			2015			2014			2015			2014
	Net loss ratio			62.9	%		70.6	%		37.9	%		37.6	%		48.1	%		52.2	%
	Acquisition expense ratio			10.1	%		7.7	%		23.9	%		25.3	%		18.3	%		17.5	%
	General and administrative expense ratio			15.6	%		18.3	%		9.8	%		9.5	%		19.2	%	[a]	17.3	%	[a]
	Combined ratio [b]			88.6	%		96.6	%		71.6	%		72.4	%		85.6	%		87.0	%
Effect of Prior Year Net Loss Reserve Development
Favorable / (Unfavorable)
				Nine Months Ended September 30,
				Insurance						Reinsurance						Total
				2015			2014			2015			2014			2015			2014
	Net loss ratio			10.8	%		8.8	%		14.6	%		14.3	%		13.0	%		11.8	%
Net of Prior Year Net Loss Reserve Development
				Nine Months Ended September 30,
				Insurance						Reinsurance						Total
				2015			2014			2015			2014			2015			2014
	Net loss ratio			73.7	%		79.4	%		52.5	%		51.9	%		61.1	%		64.0	%
	Acquisition expense ratio			10.1	%		7.7	%		23.9	%		25.3	%		18.3	%		17.5	%
	General and administrative expense ratio			15.6	%		18.3	%		9.8	%		9.5	%		19.2	%	[a]	17.3	%	[a]
	Combined ratio [b]			99.4	%		105.4	%		86.2	%		86.7	%		98.6	%		98.8	%
[a]	The total general and administrative expense ratio includes general and administrative expenses and corporate expenses.
[b]	The combined ratio is the sum of the net loss, acquisition expense and general and administrative expense ratios, and the total combined ratio includes corporate expenses. Endurance presents the combined ratio as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. The combined ratio, excluding prior year net loss reserve development, enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance’s results of underwriting activities in a manner similar to how management analyzes Endurance’s underlying business performance. The combined ratio, net of prior year net loss reserve development, should not be viewed as a substitute for the combined ratio.

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- 14 -

ENDURANCE SPECIALTY HOLDINGS LTD.

GROSS AND NET PREMIUMS WRITTEN BY SEGMENT

(in thousands of United States dollars)

The following tables show Endurance's gross and net premiums written for the three months ended September 30, 2015 and 2014:

		Three Months Ended								Three Months Ended
		September 30, 2015								September 30, 2014
		Gross Premiums Written				Net Premiums Written				Gross Premiums Written				Net Premiums Written
Insurance
	Agriculture	$	156,145			$	29,634			$	188,011			$	103,536
	Casualty and other specialty	128,509				64,490				115,895				50,750
	Professional lines	80,069				37,479				62,631				20,216
	Property, marine and energy	83,840				43,334				53,806				23,137
	Subtotal Insurance	448,563				174,937				420,343				197,639
Reinsurance
	Catastrophe	40,660				14,814				47,173				41,157
	Property	53,423				52,887				73,807				73,807
	Casualty	42,802				42,802				23,409				23,409
	Professional lines	31,705				31,705				21,520				21,520
	Specialty	25,444				19,545				39,858				32,574
	Subtotal Reinsurance	194,034				161,753				205,767				192,467
Total		$	642,597			$	336,690			$	626,110			$	390,106

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- 15 -

ENDURANCE SPECIALTY HOLDINGS LTD.

GROSS AND NET PREMIUMS WRITTEN BY SEGMENT

(in thousands of United States dollars)

The following tables show Endurance's gross and net premiums written for the nine months ended September 30, 2015 and 2014:

		Nine Months Ended								Nine Months Ended
		September 30, 2015								September 30, 2014
		Gross Premiums Written				Net Premiums Written				Gross Premiums Written				Net Premiums Written
Insurance
	Agriculture	$	785,073			$	254,771			$	796,445			$	431,007
	Casualty and other specialty	375,247				174,850				291,578				144,038
	Professional lines	231,565				105,153				176,061				64,632
	Property, marine and energy	261,762				134,501				130,061				80,027
	Subtotal Insurance	1,653,647				669,275				1,394,145				719,704
Reinsurance
	Catastrophe	$	304,900			$	190,579			$	332,193			$	243,531
	Property	209,683				206,454				283,107				283,015
	Casualty	149,032				149,032				139,266				137,669
	Professional lines	209,803				209,803				131,256				131,256
	Specialty	278,148				235,584				193,083				185,063
	Subtotal Reinsurance	1,151,566				991,452				1,078,905				980,534
Total		$	2,805,213			$	1,660,727			$	2,473,050			$	1,700,238

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- 16 -

ENDURANCE SPECIALTY HOLDINGS LTD.

RECONCILIATIONS

(in thousands of United States dollars, except share, per share amounts and ratios)

The following is a reconciliation of Endurance's net income, net income per basic or diluted common share, net income allocated to common shareholders under the two-class method and annualized return on average common equity to operating income, operating income per basic or diluted common share, operating income allocated to common shareholders under the two-class method and annualized operating return on average common equity (all non-GAAP measures) for the three and nine months ended September 30, 2015 and 2014:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2015				2014				2015				2014
Net income available to the Company		$	51,823			$	76,234			$	244,508			$	263,877
Add (less) after-tax items:
	Net foreign exchange losses	8,762				641				29,246				3,918
	Net realized and unrealized gains	(4,839		)		(9,593		)		(31,860		)		(18,156		)
	Net impairment losses recognized in earnings	33				102				991				411
Operating income before preferred dividends		55,779				67,384				$	242,885			$	250,050
	Preferred dividends	(8,188		)		(8,188		)		(24,564		)		(24,564		)
Operating income allocated to common and
	participating common shareholders	$	47,591			$	59,196			$	218,321			$	225,486
Operating income allocated to common
	shareholders under the two-class method	$	46,227			$	57,517			$	211,927			$	218,978
Weighted average diluted common shares		58,046,148				43,510,415				48,592,101				43,355,792
Operating income per diluted common share [b]		$	0.80			$	1.32			$	4.36			$	5.05
Average common equity [a]		$	3,619,888			$	2,688,065			$	3,092,926			$	2,610,095
Operating return on average common equity		1.3		%		2.2		%		7.1		%		8.6		%
Annualized operating return on average common equity		5.3		%		8.8		%		9.4		%		11.5		%
Net income available to the Company		51,823				76,234				244,508				263,877
	Preferred dividends	(8,188		)		(8,188		)		(24,564		)		(24,564		)
Net income available to common and
	participating common shareholders	$	43,635			$	68,046			$	219,944			$	239,313
Net income allocated to common shareholders
	under the two-class method	$	42,384			$	66,116			$	213,502			$	232,406
Net income per diluted common share [b]		$	0.73			$	1.52			$	4.39			$	5.36
Return on average common equity, Net income		1.2		%		2.5		%		7.1		%		9.2		%
Annualized return on average common equity, Net income		4.8		%		10.1		%		9.5		%		12.2		%

[a] Average common equity is calculated as the quarterly weighted average of the beginning and ending common equity balances for the stated period, which excludes the $430 million liquidation value of the preferred shares.

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

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- 17 -

ENDURANCE SPECIALTY HOLDINGS LTD.

RECONCILIATIONS

(in thousands of United States dollars, except share, per share amounts and ratios)

The following is a reconciliation of Endurance's net income available to common and participating common shareholders, net income per basic or diluted common share, net income allocated to common shareholders under the two-class method and annualized return on average common equity to net income, operating income available to common and participating common shareholders, operating income per basic or diluted common share, operating income allocated to common shareholders under the two-class method and annualized operating return on average common equity excluding expenses incurred related to the acquisition of Montpelier (all non-GAAP measures) for the three and nine months ended September 30, 2015:

		Three Months Ended												Nine Months Ended
		September 30, 2015												September 30, 2015
		As Reported				Expenses Incurred Related to the Acquisition of Montpelier [a]				Excluding Expenses Incurred Related to the Acquisition of Montpelier				As Reported				Expenses Incurred Related to the Acquisition of Montpelier [a]				Excluding Expenses Incurred Related to the Acquisition of Montpelier
Net income available to common and participating common shareholders		$	43,635			$	64,022			$	107,657			$	219,944			$	68,517			$	288,461
	Less amount allocated to participating common shareholders [b]	(1,251		)		(1,834		)		(3,085		)		(6,442		)		(2,005		)		(8,447		)
Net income allocated to common shareholders		$	42,384			$	62,188			$	104,572			$	213,502			$	66,512			$	280,014
Net income per diluted common share [c]		$	0.73			$	1.07			$	1.80			$	4.39			$	1.37			$	5.76
Return on average common equity, Net income [d]		1.2		%		1.8		%		3.0		%		7.1		%		2.2		%		9.3		%
Annualized return on average   common equity, Net income [d]		4.8		%		7.1		%		11.9		%		9.5		%		2.9		%		12.4		%
Operating income available to common and participating common shareholders		$	47,591			$	64,022			$	111,613			$	218,321			$	68,517			$	286,838
	Less amount allocated to   participating common shareholders [b]	(1,364		)		(1,834		)		(3,198		)		(6,394		)		(2,005		)		(8,399		)
Operating income allocated to   common shareholders		$	46,227			$	62,188			$	108,415			$	211,927			$	66,512			$	278,439
Operating income per diluted common share [c]		$	0.80			$	1.07			$	1.87			$	4.36			$	1.37			$	5.73
Return on average common equity, Operating income [d]		1.3		%		1.8		%		3.1		%		7.1		%		2.2		%		9.3		%
Annualized return on average   common equity, Operating income [d]		5.3		%		7.0		%		12.3		%		9.4		%		3.0		%		12.4		%

[a] The Company incurred $64.0 million of one time transaction and integration expenses in relation to the Company's acquisition of Montpelier for the three months ended September 30, 2015. For the nine months ended September 30, 2015, the Company incurred $68.5 million of one time transaction and integration expenses in relation to the Company's acquisition of Montpelier.

[b] 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.

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

[d] Average common equity is calculated as the quarterly weighted average of the beginning and ending common equity balances for the stated period, which excludes the $430 million liquidation value of the preferred shares.

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- 18 -

Net income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier, or net income per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, reflect the current period impact of those costs incurred by the Company and reflects the results of operations in a manner similar to that used by management to analyse the Company’s underlying business performance. Net income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier or net income per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, should not be viewed as a substitute for GAAP net income available to common and participating common shareholders, or basic or diluted earnings per common share, respectively.

Operating income and 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. 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. Endurance 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 and net income per dilutive common share determined in accordance with the two-class method under GAAP, Endurance believes that showing operating income and 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 and operating income per dilutive common share should not be viewed as substitutes for GAAP net income and net income per dilutive common share, respectively.

Operating income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier, or net operating per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, reflect the current period impact of those costs incurred by the Company and reflects the results of operations in a manner similar to that used by management to analyse the Company’s underlying business performance. Operating income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier or net operating per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, should not be viewed as a substitute for GAAP net income available to common and participating common shareholders, or basic or diluted earnings per common share, respectively.

Endurance presents return on equity as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

Contact:

Investor Relations

Phone: +1 441 278 0988

Email: investorrelations@endurance.bm

# # #

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Exhibit 99.2

 

Endurance Specialty Holdings Ltd.

INVESTOR FINANCIAL SUPPLEMENT

THIRD QUARTER 2015

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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.

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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. Return on Equity Analysis	19
e. ROE Component Analysis - Annualized Premium and Investment Leverage	20
f. Investment Portfolio Information	21
g. Largest Twenty-Five Corporate Holdings	22
IV. Loss Reserve Analysis
a. Activity in Reserve for Losses and Loss Expenses	23
b. Prior Year Reserve Development by Segment	24
c. Prior Year Reserve Development by Line of Business	25
d. Losses and Loss Expenses Incurred by Line of Business	26
e. Analysis of Unpaid Losses and Loss Expenses	27
V. Shareholder Return Analysis
a. Shareholder Return Analysis	28
b. Weighted Average Dilutive Shares Outstanding	29
c. Earnings per Share - Two Class Method	30
d. Operating Income Reconciliation - Two Class Method	31
e. Earnings per Share and Operating Income Reconciliation Excluding Acquisition Expenses	32
f. Financial Statement Impact of Acquisition of Montpelier	33
g. 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 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, 2014 and in our most recently filed Quarterly Report on Form 10-Q.

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.

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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, 2014 and 2013 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.

i

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED FINANCIAL HIGHLIGHTS

				QUARTER ENDED   SEPTEMBER 30,								NINE MONTHS ENDED   SEPTEMBER 30,								Previous Quarter Change			Previous Year to Date Change
				2015				2014				2015				2014
HIGHLIGHTS		Net income			$54,530				$76,234				$247,215				$263,877			(28.5	)%		(6.3	)%
		Net income available to common and participating common shareholders		43,635				68,046				219,944				239,313				(35.9	)%		(8.1	)%
		Net income available to common and participating common shareholders, excluding one-time costs [f]		107,657				74,399				288,461				259,402				44.7	%		11.2	%
		Operating income [a]		55,779				67,384				242,885				250,050				(17.2	)%		(2.9	)%
		Operating income available to common and participating common shareholders [a]		47,591				59,196				218,321				225,486				(19.6	)%		(3.2	)%
		Operating income available to common and participating common shareholders, excluding one-time costs [a] [f]		111,613				65,549				286,838				245,575				70.3	%		16.8	%
		Operating cash flow		(97,518		)		32,505				(74,029		)		52,172				NM			NM
		Net investment income		16,533				25,357				90,646				105,649				(34.8	)%		(14.2	)%
		Gross premiums written		642,597				626,110				2,805,213				2,473,050				2.6	%		13.4	%
		Net premiums written		336,690				390,106				1,660,727				1,700,238				(13.7	)%		(2.3	)%
		Net premiums earned		557,003				514,895				1,404,997				1,392,699				8.2	%		0.9	%
		Total assets		14,028,835				10,145,818				14,028,835				10,145,818				38.3	%		38.3	%
		Total shareholders’ equity		5,056,344				3,120,454				5,056,344				3,120,454				62.0	%		62.0	%
PER SHARE AND SHARES DATA		Basic earnings per common share
		Net income (as reported)			$0.73				$1.52				$4.41				$5.36			(52.0	)%		(17.7	)%
		Operating income (as reported) [a]			$0.80				$1.32				$4.37				$5.05			(39.4	)%		(13.5	)%
		Diluted earnings per common share
		Net income (as reported)			$0.73				$1.52				$4.39				$5.36			(52.0	)%		(18.1	)%
		Operating income (as reported) [a]			$0.80				$1.32				$4.36				$5.05			(39.4	)%		(13.7	)%
		Operating income, excluding one-time costs [a] [f]			$1.87				$1.46				$5.73				$5.50			28.1	%		4.2	%
As Reported		Weighted average common shares outstanding		57,923				43,465				48,453				43,332				33.3	%		11.8	%
		Weighted average common shares outstanding & dilutive potential common shares [e]		58,046				43,510				48,592				43,356				33.4	%		12.1	%
		Common dividends paid per share		$0.35				$0.34				$1.05				$1.02				2.9	%		2.9	%
Book Value Per Common Share		Book value [b]		$66.90				$61.90				$66.90				$61.90				8.1	%		8.1	%
		Diluted book value (treasury stock method) [b]		$65.02				$59.98				$65.02				$59.98				8.4	%		8.4	%
FINANCIAL RATIOS		Return on average common equity (ROAE), net income [c]		1.2		%		2.5		%		7.1		%		9.2		%		(1.3	)		(2.1	)
		ROAE, operating income [a] [c]		1.3		%		2.2		%		7.1		%		8.6		%		(0.9	)		(1.5	)
		Return on average common equity (ROAE), net income, excluding one-time costs [c] [f]		3.0		%		2.8		%		9.3		%		9.9		%		0.2			(0.6	)
		ROAE, operating income, excluding one-time costs [a] [c] [f]		3.1		%		2.4		%		9.3		%		9.4		%		0.7			(0.1	)
		Annualized ROAE, net income [c]		4.8		%		10.1		%		9.5		%		12.2		%		(5.3	)		(2.7	)
		Annualized ROAE, operating income [a] [c]		5.3		%		8.8		%		9.4		%		11.5		%		(3.5	)		(2.1	)
		Annualized ROAE, net income, excluding one-time costs [c] [f]		11.9		%		11.1		%		12.4		%		13.3		%		0.8			(0.9	)
		Annualized ROAE, operating income, excluding one-time costs [a] [c]		12.3		%		9.8		%		12.4		%		12.5		%		2.5			(0.1	)
		Annualized investment yield		0.9		%		1.6		%		1.6		%		2.2		%		(0.7	)		(0.6	)
GAAP		Loss ratio		47.4		%		56.4		%		48.1		%		52.2		%		(9.0	)		(4.1	)
		Acquisition expense ratio		16.2		%		18.1		%		18.3		%		17.5		%		(1.9	)		0.8
		General and administrative expense ratio		24.3		%		15.7		%		19.2		%		17.3		%		8.6			1.9
		Combined ratio		87.9		%		90.2		%		85.6		%		87.0		%		(2.3	)		(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 31 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 by quarter for the stated periods, which excludes the $430 million liquidation value of the preferred shares.

[d] Beginning common equity for the stated periods excludes the $430 million liquidation value of the preferred shares.

[e] 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.

[f] One-time costs incurred related the acquisition of Montpelier Re Holdings Ltd. ("Montpelier") in 2015 and the proposed acquisition of Aspen Insurance Holdings Limited ("Aspen") in 2014. For detailed calculations, please refer to page 32.

1

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME - QUARTERLY

		QUARTERS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2013
UNDERWRITING REVENUES
Gross premiums written			$642,597				$861,184				$1,301,432				$421,026				$626,110				$544,363
Premiums ceded		(305,907		)		(302,101		)		(536,478		)		(187,058		)		(236,004		)		(149,030		)
Net premiums written			$336,690				$559,083				$764,954				$233,968				$390,106				$395,333
Change in unearned premiums		220,313				(100,948		)		(375,095		)		237,311				124,789				158,212
Net premiums earned			$557,003				$458,135				$389,859				$471,279				$514,895				$553,545
Other underwriting income (loss)		227				1,389				2,406				(1,847		)		2,123				(943		)
Total underwriting revenues			$557,230				$459,524				$392,265				$469,432				$517,018				$552,602
UNDERWRITING EXPENSES
Net losses and loss expenses			$263,993				$239,122				$171,936				$243,801				$290,269				$339,036
Acquisition expenses		90,457				84,971				82,093				75,363				93,392				78,775
General and administrative expenses		60,793				54,965				54,890				60,628				68,946				51,757
Total underwriting expenses			$415,243				$379,058				$308,919				$379,792				$452,607				$469,568
Underwriting income			$141,987				$80,466				$83,346				$89,640				$64,411				$83,034
OTHER OPERATING (EXPENSE) REVENUE
Net investment income			$16,533				$32,252				$41,861				$25,894				$25,357				$38,097
Corporate expenses [a]		(74,308		)		(12,634		)		(12,268		)		(12,383		)		(11,969		)		(15,713		)
Interest expense [a]		(12,324		)		(9,062		)		(9,059		)		(9,058		)		(13,127		)		(9,048		)
Amortization of intangibles		(11,318		)		(1,579		)		(1,599		)		(1,621		)		(1,623		)		(1,652		)
Total other operating (expense) revenue			($81,417	)			$8,977				$18,935				$2,832				($1,362	)			$11,684
INCOME BEFORE OTHER ITEMS			$60,570				$89,443				$102,281				$92,472				$63,049				$94,718
OTHER
Net foreign exchange (losses) gains			($8,621	)			($12,981	)			($7,552	)			$227				($783	)			($2,201	)
Net realized and unrealized gains (losses)		5,029				9,680				18,189				(3,788		)		9,788				(6,640		)
Net impairment losses recognised in earnings		(38		)		(424		)		(649		)		(214		)		(102		)		(190		)
Income tax (expense) benefit		(2,410		)		(1,512		)		(3,790		)		(4,124		)		4,282				(2,271		)
NET INCOME			$54,530				$84,206				$108,479				$84,573				$76,234				$83,416
Net income attributable to non-controlling interests		(2,707		)		—				—				—				—				—
NET INCOME AVAILABLE TO THE COMPANY		51,823				84,206				108,479				84,573				76,234				83,416
Preferred dividends		(8,188		)		(8,188		)		(8,188		)		(8,186		)		(8,188		)		(8,188		)
NET INCOME AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS			$43,635				$76,018				$100,291				$76,387				$68,046				$75,228
KEY RATIOS/PER SHARE DATA
Loss ratio		47.4		%		52.2		%		44.1		%		51.7		%		56.4		%		61.3		%
Acquisition expense ratio		16.2		%		18.5		%		21.1		%		16.0		%		18.1		%		14.2		%
General and administrative expense ratio [b]		24.3		%		14.8		%		17.2		%		15.5		%		15.7		%		12.2		%
Combined ratio		87.9		%		85.5		%		82.4		%		83.2		%		90.2		%		87.7		%
Basic earnings per common share			$0.73				$1.69				$2.24				$1.71				$1.52				$1.70
Diluted earnings per common share [c]			$0.73				$1.68				$2.23				$1.70				$1.52				$1.70
ROAE, net income [d]		1.2		%		2.7		%		3.6		%		2.8		%		2.5		%		3.2		%

[a] The Company incurred $64.0 million of corporate expenses in relation to the Company's acquisition of Montpelier for the quarter ended September 30, 2015. For the quarter ended September 30, 2014, the Company incurred $2.3 million of corporate expenses and $4.1 million of interest expense, respectively, in relation to the Company's proposed acquisition of Aspen.

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

[c] 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.

[d] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the liquidation value of the preferred shares of $430 million.

2

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME - YTD

		NINE MONTHS ENDED												YEARS ENDED
		SEPT. 30, 2015				SEPT. 30, 2014				SEPT. 30, 2013				DEC. 31, 2014				DEC. 31, 2013
UNDERWRITING REVENUES
Gross premiums written			$2,805,213				$2,473,050				$2,294,435				$2,894,076				$2,665,244
Premiums ceded		(1,144,486		)		(772,812		)		(525,566		)		(959,870		)		(616,311		)
Net premiums written			$1,660,727				$1,700,238				$1,768,869				$1,934,206				$2,048,933
Change in unearned premiums		(255,730		)		(307,539		)		(251,872		)		(70,228		)		(32,449		)
Net premiums earned			$1,404,997				$1,392,699				$1,516,997				$1,863,978				$2,016,484
Other underwriting income (loss)		4,022				(3,939		)		694				(5,786		)		(2,046		)
Total underwriting revenues			$1,409,019				$1,388,760				$1,517,691				$1,858,192				$2,014,438
UNDERWRITING EXPENSES
Net losses and loss expenses			$675,051				$726,361				$917,064				$970,162				$1,219,684
Acquisition expenses		257,521				244,150				222,279				319,513				304,430
General and administrative expenses		170,648				186,759				170,211				247,387				236,873
Total underwriting expenses			$1,103,220				$1,157,270				$1,309,554				$1,537,062				$1,760,987
Underwriting income			$305,799				$231,490				$208,137				$321,130				$253,451
OTHER OPERATING (EXPENSE) REVENUE
Net investment income			$90,646				$105,649				$119,870				$131,543				$166,216
Corporate expenses [a]		(99,210		)		(53,817		)		(45,096		)		(66,200		)		(58,033		)
Interest expense		(30,445		)		(31,910		)		(27,138		)		(40,968		)		(36,188		)
Amortization of intangibles		(14,496		)		(4,863		)		(5,378		)		(6,484		)		(7,012		)
Total other operating (expense) revenue			($53,505	)			$15,059				$42,258				$17,891				$64,983
INCOME BEFORE OTHER ITEMS			$252,294				$246,549				$250,395				$339,021				$318,434
OTHER
Net foreign exchange losses			($29,154	)			($4,066	)			($8,496	)			($3,839	)			($14,214	)
Net realized and unrealized gains		32,898				18,071				9,967				14,283				15,164
Net impairment losses recognised in earnings		(1,111		)		(411		)		(1,575		)		(625		)		(1,616		)
Income tax (expense) benefit		(7,712		)		3,734				(5,557		)		(390		)		(5,853		)
NET INCOME			$247,215				$263,877				$244,734				$348,450				$311,915
Net income attributable to non-controlling interests		(2,707		)		—				—				—				—
NET INCOME AVAILABLE TO THE COMPANY		244,508				263,877				244,734				348,450				311,915
Preferred dividends		(24,564		)		(24,564		)		(24,564		)		(32,750		)		(32,750		)
NET INCOME AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS			$219,944				$239,313				$220,170				$315,700				$279,165
KEY RATIOS/PER SHARE DATA
Loss ratio		48.1		%		52.2		%		60.4		%		52.1		%		60.5		%
Acquisition expense ratio		18.3		%		17.5		%		14.7		%		17.1		%		15.1		%
General and administrative expense ratio [b]		19.2		%		17.3		%		14.2		%		16.8		%		14.6		%
Combined ratio		85.6		%		87.0		%		89.3		%		86.0		%		90.2		%
Basic earnings per common share			$4.41				$5.36				$5.04				$7.07				$6.37
Diluted earnings per common share [c]			$4.39				$5.36				$5.04				$7.06				$6.37
ROAE, net income [d]		7.1		%		9.2		%		9.4		%		12.1		%		11.8		%

[a] The Company incurred $68.5 million of corporate expenses in relation to the Company's acquisition of Montpelier for the nine months ended September 30, 2015. For the nine months ended September 30, 2014, the Company incurred $15.3 million of corporate expenses and $4.8 million of interest expense, respectively, in relation to the Company's proposed acquisition of Aspen.

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

[c] 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.

[d] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the liquidation value of the preferred shares of $430 million.

3

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED BALANCE SHEETS

 

		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014
ASSETS
Cash and cash equivalents			$1,242,997				$622,642				$657,194				$745,472				$805,716
Fixed maturity investments trading, at fair value		1,372,030				—				—				—				—
Fixed maturity investments available for sale, at fair value		4,656,145				4,933,776				4,953,893				5,092,581				4,871,420
Short term investments trading, at fair value		348,582				—				—				—				—
Short term investments available for sale, at fair value		16,356				16,366				2,822				9,014				11,844
Equity securities trading, at fair value		2,150				—				—				—				—
Equity securities available for sale, at fair value		496,035				420,411				366,897				331,368				267,728
Other investments		842,446				623,868				575,974				541,454				658,678
Premiums receivable, net		2,068,484				1,665,990				1,446,205				883,450				1,452,228
Insurance and reinsurance balances receivable		115,047				108,162				109,545				122,214				123,432
Deferred acquisition costs		282,975				296,568				258,753				207,368				246,437
Prepaid reinsurance premiums		650,967				668,964				692,466				354,940				414,013
Reinsurance recoverable on unpaid losses		830,116				785,472				605,809				670,795				566,329
Reinsurance recoverable on paid losses		163,137				157,287				136,642				218,291				165,592
Accrued investment income		31,057				25,118				23,165				27,183				23,652
Goodwill and intangible assets		573,956				150,296				151,816				153,405				160,560
Deferred tax assets		54,463				46,779				43,105				48,995				53,403
Receivable on pending investment sales		85,911				21,420				86,367				38,877				84,699
Other assets		195,981				172,162				269,491				199,375				240,087
TOTAL ASSETS			$14,028,835				$10,715,281				$10,380,144				$9,644,782				$10,145,818
LIABILITIES
Reserve for losses and loss expenses			$4,489,836				$3,833,525				$3,621,728				$3,846,859				$3,897,483
Reserve for unearned premiums		2,230,552				2,046,933				1,964,307				1,254,519				1,552,168
Deposit liabilities		13,489				13,376				13,722				15,136				17,521
Reinsurance balances payable		794,935				632,457				502,339				375,711				482,093
Debt		915,147				528,123				527,781				527,715				527,732
Payable on pending investment purchases		157,671				82,375				163,891				151,682				238,038
Deferred tax liability		18,346				—				—				—				—
Other liabilities		352,515				275,586				311,530				287,978				310,329
TOTAL LIABILITIES			$8,972,491				$7,412,375				$7,105,298				$6,459,600				$7,025,364
SHAREHOLDERS’ EQUITY
Preferred shares, Series A, non-cumulative			$8,000				$8,000				$8,000				$8,000				$8,000
Preferred shares, Series B, non-cumulative		9,200				9,200				9,200				9,200				9,200
Common shares		66,607				45,157				45,121				44,765				44,751
Additional paid-in capital		2,108,447				610,585				601,986				598,226				590,330
Accumulated other comprehensive (loss) income		(8,544		)		36,965				77,759				76,706				81,299
Retained earnings		2,613,160				2,592,999				2,532,780				2,448,285				2,386,874
TOTAL SHAREHOLDERS' EQUITY AVAILABLE TO THE COMPANY			$4,796,870				$3,302,906				$3,274,846				$3,185,182				$3,120,454
Non-controlling interests		259,474				—				—				—				—
TOTAL SHAREHOLDERS’ EQUITY			$5,056,344				$3,302,906				$3,274,846				$3,185,182				$3,120,454
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$14,028,835				$10,715,281				$10,380,144				$9,644,782				$10,145,818
Book value per common share			$66.90				$65.53				$65.14				$63.38				$61.90
Diluted book value per common share (treasury stock method)			$65.02				$63.32				$62.79				$61.33				$59.98
RATIOS
Debt-to-capital		16.0		%		13.8		%		13.9		%		14.2		%		14.5		%

4

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ENDURANCE SPECIALTY HOLDINGS LTD.

Probable Maximum Loss by Zone and Peril

(in millions of dollars)

Largest 1 in 100 year PML as of July 1, 2015 is equal to 12.3% of Shareholders’ Equity available to the Company as of September 30, 2015.

				Estimated Occurrence Net Loss as of July 1, 2015																				July 1, 2014				July 1, 2013
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			$259				$373				$500				$591				$730				$284				$350
Europe		Windstorm		134				229				308				505				689				345				331
California		Earthquake		44				145				350				411				519				250				284
Japan		Windstorm		51				117				143				156				192				158				230
Northwest U.S.		Earthquake		—				5				40				111				193				91				89
Japan		Earthquake		18				156				255				332				448				163				137
United States		Tornado/Hail		69				103				128				153				184				78				89
Australia		Earthquake		1				13				50				126				204				121				87
New Zealand		Earthquake		2				9				21				45				102				35				23
Australia		Windstorm		10				30				61				105				159				88				58
New Madrid		Earthquake		—				—				—				11				107				6				7

The net loss estimates by zone above represent the combined Endurance and Montpelier exposure as of July 1, 2015. The net loss estimates by zone represent estimated losses related to our property, catastrophe and other 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. 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, 2014 and in our most recently filed Quarterly Report on Form 10-Q.

5

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ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT DISTRIBUTION

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

Gross Premiums Written = $2,805.2 million

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

6

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED SEGMENT DATA

		FOR THE QUARTERS ENDED
		SEPT. 30, 2015													SEPT. 30, 2014
		Insurance				Reinsurance				Totals					Insurance				Reinsurance				Totals
UNDERWRITING REVENUES
Gross premiums written			$448,563				$194,034				$642,597					$420,343				$205,767				$626,110
Net premiums written			$174,937				$161,753				$336,690					$197,639				$192,467				$390,106
Net premiums earned			$234,143				$322,860				$557,003					$253,583				$261,312				$514,895
Other underwriting income		—				227				227					—				2,123				2,123
Total underwriting revenues			$234,143				$323,087				$557,230					$253,583				$263,435				$517,018
UNDERWRITING EXPENSES
Net losses and loss expenses			$139,141				$124,852				$263,993					$196,677				$93,592				$290,269
Acquisition expenses		24,375				66,082				90,457					20,170				73,222				93,392
General and administrative expenses		31,880				28,913				60,793					40,401				28,545				68,946
Total expenses			$195,396				$219,847				$415,243					$257,248				$195,359				$452,607
UNDERWRITING INCOME (LOSS)			$38,747				$103,240				$141,987					($3,665	)			$68,076				$64,411
OTHER OPERATING REVENUE
Net investment income											$16,533													$25,357
Corporate expenses										(74,308		)											(11,969		)
Interest expense										(12,324		)											(13,127		)
Amortization of intangibles										(11,318		)											(1,623		)
Net foreign exchange losses										(8,621		)											(783		)
Net realized and unrealized gains										5,029													9,788
Net impairment loss recognized in earnings										(38		)											(102		)
INCOME BEFORE INCOME TAXES											$56,940													$71,952
GAAP RATIOS
Loss ratio		59.5		%		38.6		%		47.4		%			77.5		%		35.8		%		56.4		%
Acquisition expense ratio		10.4		%		20.5		%		16.2		%			8.0		%		28.0		%		18.1		%
General and administrative expense ratio		13.6		%		9.0		%		24.3		%	[a]		15.9		%		11.0		%		15.7		%	[a]
Combined ratio AS REPORTED		83.5		%		68.1		%		87.9		%			101.4		%		74.8		%		90.2		%
Effect of favorable prior accident year reserve development		9.6		%		13.9		%		12.1		%			8.0		%		15.4		%		11.7		%
Combined ratio net of prior accident year reserve development		93.1		%		82.0		%		100.0		%			109.4		%		90.2		%		101.9		%

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

7

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ENDURANCE SPECIALTY HOLDINGS LTD.

INSURANCE SEGMENT DATA

 

		FOR THE QUARTERS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2013
UNDERWRITING REVENUES
Gross premiums written			$448,563				$468,866				$736,218				$321,983				$420,343				$344,819
Net premiums written			$174,937				$190,299				$304,039				$140,702				$197,639				$224,338
Net premiums earned			$234,143				$201,460				$135,864				$217,745				$253,583				$291,477
Total underwriting revenues			$234,143				$201,460				$135,864				$217,745				$253,583				$291,477
UNDERWRITING EXPENSES
Net losses and loss expenses			$139,141				$145,483				$74,512				$159,784				$196,677				$228,409
Acquisition expenses		24,375				17,702				15,883				17,809				20,170				18,440
General and administrative expenses		31,880				28,567				28,842				35,406				40,401				30,047
Total expenses			$195,396				$191,752				$119,237				$212,999				$257,248				$276,896
UNDERWRITING INCOME (LOSS)			$38,747				$9,708				$16,627				$4,746				($3,665	)			$14,581
GAAP RATIOS
Loss ratio		59.5		%		72.2		%		54.9		%		73.3		%		77.5		%		78.4		%
Acquisition expense ratio		10.4		%		8.8		%		11.7		%		8.2		%		8.0		%		6.3		%
General and administrative expense ratio		13.6		%		14.2		%		21.2		%		16.3		%		15.9		%		10.3		%
Combined ratio AS REPORTED		83.5		%		95.2		%		87.8		%		97.8		%		101.4		%		95.0		%
Effect of favorable prior accident year reserve development		9.6		%		9.2		%		15.2		%		12.2		%		8.0		%		2.1		%
Combined ratio net of prior accident year reserve development		93.1		%		104.4		%		103.0		%		110.0		%		109.4		%		97.1		%

 

8

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ENDURANCE SPECIALTY HOLDINGS LTD.

REINSURANCE SEGMENT DATA

		FOR THE QUARTERS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2013
UNDERWRITING REVENUES
Gross premiums written			$194,034				$392,318				$565,214				$99,043				$205,767				$199,544
Net premiums written			$161,753				$368,784				$460,915				$93,266				$192,467				$170,995
Net premiums earned			$322,860				$256,675				$253,995				$253,534				$261,312				$262,068
Other underwriting income (loss)		227				1,389				2,406				(1,847		)		2,123				(943		)
Total underwriting revenues			$323,087				$258,064				$256,401				$251,687				$263,435				$261,125
UNDERWRITING EXPENSES
Net losses and loss expenses			$124,852				$93,639				$97,424				$84,017				$93,592				$110,627
Acquisition expenses		66,082				67,269				66,210				57,554				73,222				60,335
General and administrative expenses		28,913				26,398				26,048				25,222				28,545				21,710
Total expenses			$219,847				$187,306				$189,682				$166,793				$195,359				$192,672
UNDERWRITING INCOME			$103,240				$70,758				$66,719				$84,894				$68,076				$68,453
GAAP RATIOS
Loss ratio		38.6		%		36.5		%		38.3		%		33.1		%		35.8		%		42.3		%
Acquisition expense ratio		20.5		%		26.2		%		26.1		%		22.7		%		28.0		%		23.0		%
General and administrative expense ratio		9.0		%		10.3		%		10.3		%		10.0		%		11.0		%		8.2		%
Combined ratio AS REPORTED		68.1		%		73.0		%		74.7		%		65.8		%		74.8		%		73.5		%
Effect of favorable prior accident year reserve development		13.9		%		15.7		%		14.4		%		16.7		%		15.4		%		16.0		%
Combined ratio net of prior accident year reserve development		82.0		%		88.7		%		89.1		%		82.5		%		90.2		%		89.5		%

 

9

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ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS

		FOR THE QUARTERS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2013
INSURANCE SEGMENT
Agriculture			$156,145				$112,012				$516,916				$69,580				$188,011				$200,062
Casualty and other specialty		128,509				146,056				100,682				104,535				115,895				92,474
Professional lines		80,069				96,736				54,760				87,477				62,631				34,221
Property, marine and energy		83,840				114,062				63,860				60,391				53,806				18,062
TOTAL INSURANCE			$448,563				$468,866				$736,218				$321,983				$420,343				$344,819
REINSURANCE SEGMENT
Catastrophe			$40,660				$139,833				$124,407				$11,020				$47,173				$38,676
Property		53,423				30,560				125,700				4,219				73,807				91,653
Casualty		42,802				48,132				58,098				20,267				23,409				27,649
Professional lines		31,705				134,241				43,857				43,400				21,520				25,670
Specialty		25,444				39,552				213,152				20,137				39,858				15,896
TOTAL REINSURANCE			$194,034				$392,318				$565,214				$99,043				$205,767				$199,544
REPORTED TOTALS			$642,597				$861,184				$1,301,432				$421,026				$626,110				$544,363

 

10

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ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS WRITTEN BY LINE OF BUSINESS

		FOR THE QUARTERS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2013
INSURANCE SEGMENT
Agriculture			$29,634				$22,677				$202,460				$28,142				$103,536				$120,617
Casualty and other specialty		64,490				65,302				45,058				51,889				50,750				69,492
Professional lines		37,479				43,443				24,231				29,008				20,216				20,972
Property, marine and energy		43,334				58,877				32,290				31,663				23,137				13,257
TOTAL INSURANCE			$174,937				$190,299				$304,039				$140,702				$197,639				$224,338
REINSURANCE SEGMENT
Catastrophe			$14,814				$122,305				$53,460				$9,442				$41,157				$12,551
Property		52,887				30,118				123,449				4,220				73,807				90,528
Casualty		42,802				48,132				58,098				20,278				23,409				27,648
Professional lines		31,705				134,241				43,857				43,400				21,520				25,670
Specialty		19,545				33,988				182,051				15,926				32,574				14,598
TOTAL REINSURANCE			$161,753				$368,784				$460,915				$93,266				$192,467				$170,995
REPORTED TOTALS			$336,690				$559,083				$764,954				$233,968				$390,106				$395,333

 

11

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ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS EARNED BY LINE OF BUSINESS

		FOR THE QUARTERS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2013
INSURANCE SEGMENT
Agriculture			$85,106				$97,270				$39,494				$124,959				$162,710				$200,739
Casualty and other specialty		57,160				47,712				45,659				45,043				45,134				54,832
Professional lines		32,976				27,000				24,613				24,460				24,795				24,220
Property, marine and energy		58,901				29,478				26,098				23,283				20,944				11,686
TOTAL INSURANCE			$234,143				$201,460				$135,864				$217,745				$253,583				$291,477
REINSURANCE SEGMENT
Catastrophe			$79,973				$61,977				$55,995				$58,869				$61,613				$67,778
Property		72,367				55,866				64,006				75,227				68,481				88,195
Casualty		46,062				33,905				41,593				41,146				44,668				61,244
Professional lines		57,178				50,147				47,295				45,288				39,534				15,181
Specialty		67,280				54,780				45,106				33,004				47,016				29,670
TOTAL REINSURANCE			$322,860				$256,675				$253,995				$253,534				$261,312				$262,068
REPORTED TOTALS			$557,003				$458,135				$389,859				$471,279				$514,895				$553,545

 

12

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED SEGMENT DATA

		FOR THE NINE MONTHS ENDED
		SEPT. 30, 2015													SEPT. 30, 2014
		Insurance				Reinsurance				Totals					Insurance				Reinsurance				Totals
UNDERWRITING REVENUES
Gross premiums written			$1,653,647				$1,151,566				$2,805,213					$1,394,145				$1,078,905				$2,473,050
Net premiums written			$669,275				$991,452				$1,660,727					$719,704				$980,534				$1,700,238
Net premiums earned			$571,467				$833,530				$1,404,997					$616,167				$776,532				$1,392,699
Other underwriting income (loss)		—				4,022				4,022					—				(3,939		)		(3,939		)
Total underwriting revenues			$571,467				$837,552				$1,409,019					$616,167				$772,593				$1,388,760
UNDERWRITING EXPENSES
Losses and loss expenses			$359,136				$315,915				$675,051					$434,777				$291,584				$726,361
Acquisition expenses		57,960				199,561				257,521					47,559				196,591				244,150
General and administrative expenses		89,289				81,359				170,648					113,069				73,690				186,759
Total expenses			$506,385				$596,835				$1,103,220					$595,405				$561,865				$1,157,270
UNDERWRITING INCOME			$65,082				$240,717				$305,799					$20,762				$210,728				$231,490
OTHER OPERATING REVENUE
Net investment income											$90,646													$105,649
Corporate expenses										(99,210		)											(53,817		)
Interest expense										(30,445		)											(31,910		)
Amortization of intangibles										(14,496		)											(4,863		)
Net foreign exchange losses										(29,154		)											(4,066		)
Net realized and unrealized gains										32,898													18,071
Net impairment loss recognized in earnings										(1,111		)											(411		)
INCOME BEFORE INCOME TAXES											$254,927													$260,143
GAAP RATIOS
Loss ratio		62.9		%		37.9		%		48.1		%			70.6		%		37.6		%		52.2		%
Acquisition expense ratio		10.1		%		23.9		%		18.3		%			7.7		%		25.3		%		17.5		%
General and administrative expense ratio		15.6		%		9.8		%		19.2		%	[a]		18.3		%		9.5		%		17.3		%	[a]
Combined ratio AS REPORTED		88.6		%		71.6		%		85.6		%			96.6		%		72.4		%		87.0		%
Effect of favorable prior accident year reserve development		10.8		%		14.6		%		13.0		%			8.8		%		14.3		%		11.8		%
Combined ratio net of prior accident year reserve development		99.4		%		86.2		%		98.6		%			105.4		%		86.7		%		98.8		%

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

13

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ENDURANCE SPECIALTY HOLDINGS LTD.

INSURANCE SEGMENT DATA

		FOR THE NINE MONTHS ENDED												FOR THE YEAR ENDED
		SEPT. 30, 2015				SEPT. 30, 2014				SEPT. 30, 2013				DEC. 31, 2014				DEC. 31, 2013
UNDERWRITING REVENUES
Gross premiums written			$1,653,647				$1,394,145				$1,274,703				$1,716,128				$1,475,429
Net premiums written			$669,275				$719,704				$820,534				$860,406				$932,510
Net premiums earned			$571,467				$616,167				$710,507				$833,912				$946,474
Total underwriting revenues			$571,467				$616,167				$710,507				$833,912				$946,474
UNDERWRITING EXPENSES
Losses and loss expenses			$359,136				$434,777				$543,717				$594,561				$774,425
Acquisition expenses		57,960				47,559				48,024				65,368				64,778
General and administrative expenses		89,289				113,069				97,996				148,475				136,588
Total expenses			$506,385				$595,405				$689,737				$808,404				$975,791
UNDERWRITING INCOME (LOSS)			$65,082				$20,762				$20,770				$25,508				($29,317	)
GAAP RATIOS
Loss ratio		62.9		%		70.6		%		76.4		%		71.4		%		81.8		%
Acquisition expense ratio		10.1		%		7.7		%		6.8		%		7.8		%		6.8		%
General and administrative expense ratio		15.6		%		18.3		%		13.9		%		17.7		%		14.5		%
Combined ratio AS REPORTED		88.6		%		96.6		%		97.1		%		96.9		%		103.1		%
Effect of favorable prior accident year reserve development		10.8		%		8.8		%		4.1		%		9.7		%		3.6		%
Combined ratio net of prior accident year reserve development		99.4		%		105.4		%		101.2		%		106.6		%		106.7		%

14

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ENDURANCE SPECIALTY HOLDINGS LTD.

REINSURANCE SEGMENT DATA

		FOR THE NINE MONTHS ENDED												FOR THE YEARS ENDED
		SEPT. 30, 2015				SEPT. 30, 2014				SEPT. 30, 2013				DEC. 31, 2014				DEC. 31, 2013
UNDERWRITING REVENUES
Gross premiums written			$1,151,566				$1,078,905				$1,019,732				$1,177,948				$1,189,815
Net premiums written			$991,452				$980,534				$948,335				$1,073,800				$1,116,423
Net premiums earned			$833,530				$776,532				$806,490				$1,030,066				$1,070,010
Other underwriting income (loss)		4,022				(3,939		)		694				(5,786		)		(2,046		)
Total underwriting revenues			$837,552				$772,593				$807,184				$1,024,280				$1,067,964
UNDERWRITING EXPENSES
Losses and loss expenses			$315,915				$291,584				$373,347				$375,601				$445,259
Acquisition expenses		199,561				196,591				174,255				254,145				239,652
General and administrative expenses		81,359				73,690				72,215				98,912				100,285
Total expenses			$596,835				$561,865				$619,817				$728,658				$785,196
UNDERWRITING INCOME			$240,717				$210,728				$187,367				$295,622				$282,768
GAAP RATIOS
Loss ratio		37.9		%		37.6		%		46.3		%		36.4		%		41.6		%
Acquisition expense ratio		23.9		%		25.3		%		21.6		%		24.7		%		22.4		%
General and administrative expense ratio		9.8		%		9.5		%		9.0		%		9.6		%		9.4		%
Combined ratio AS REPORTED		71.6		%		72.4		%		76.9		%		70.7		%		73.4		%
Effect of favorable prior accident year reserve development		14.6		%		14.3		%		16.4		%		14.9		%		17.6		%
Combined ratio net of prior accident year reserve development		86.2		%		86.7		%		93.3		%		85.6		%		91.0		%

 

15

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ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS

		FOR THE NINE MONTHS ENDED												FOR THE YEARS ENDED
		SEPT. 30, 2015				SEPT. 30, 2014				SEPT. 30, 2013				DEC. 31, 2014				DEC. 31, 2013
INSURANCE SEGMENT
Agriculture			$785,073				$796,445				$896,169				$866,025				$954,389
Casualty and other specialty		375,247				291,578				234,213				396,113				303,803
Professional lines		231,565				176,061				93,481				263,538				148,537
Property, marine and energy		261,762				130,061				50,840				190,452				68,700
TOTAL INSURANCE			$1,653,647				$1,394,145				$1,274,703				$1,716,128				$1,475,429
REINSURANCE SEGMENT
Catastrophe			$304,900				$332,193				$341,973				$343,213				$355,751
Property		209,683				283,107				288,448				287,326				297,806
Casualty		149,032				139,266				211,458				159,533				241,358
Professional lines		209,803				131,256				50,505				174,656				163,594
Specialty		278,148				193,083				127,348				213,220				131,306
TOTAL REINSURANCE			$1,151,566				$1,078,905				$1,019,732				$1,177,948				$1,189,815
REPORTED TOTALS			$2,805,213				$2,473,050				$2,294,435				$2,894,076				$2,665,244

16

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ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS WRITTEN BY LINE OF BUSINESS

		FOR THE NINE MONTHS ENDED												FOR THE YEARS ENDED
		SEPT. 30, 2015				SEPT. 30, 2014				SEPT. 30, 2013				DEC. 31, 2014				DEC. 31, 2013
INSURANCE SEGMENT
Agriculture			$254,771				$431,007				$546,284				$459,149				$570,738
Casualty and other specialty		174,850				144,038				173,991				195,927				218,298
Professional lines		105,153				64,632				62,963				93,640				95,101
Property, marine and energy		134,501				80,027				37,296				111,690				48,373
TOTAL INSURANCE			$669,275				$719,704				$820,534				$860,406				$932,510
REINSURANCE SEGMENT
Catastrophe			$190,579				$243,531				$281,990				$252,973				$294,260
Property		206,454				283,015				283,455				287,235				292,872
Casualty		149,032				137,669				210,030				157,947				239,525
Professional lines		209,803				131,256				50,505				174,656				163,594
Specialty		235,584				185,063				122,355				200,989				126,172
TOTAL REINSURANCE			$991,452				$980,534				$948,335				$1,073,800				$1,116,423
REPORTED TOTALS			$1,660,727				$1,700,238				$1,768,869				$1,934,206				$2,048,933

17

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ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS EARNED BY LINE OF BUSINESS

		FOR THE NINE MONTHS ENDED												FOR THE YEARS ENDED
		SEPT. 30, 2015				SEPT. 30, 2014				SEPT. 30, 2013				DEC. 31, 2014				DEC. 31, 2013
INSURANCE SEGMENT
Agriculture			$221,870				$346,444				$429,662				$471,403				$573,538
Casualty and other specialty		150,531				146,909				164,524				191,952				220,181
Professional lines		84,589				73,355				82,901				97,815				108,717
Property, marine and energy		114,477				49,459				33,420				72,742				44,038
TOTAL INSURANCE			$571,467				$616,167				$710,507				$833,912				$946,474
REINSURANCE SEGMENT
Catastrophe			$197,945				$190,244				$239,133				$249,113				$305,159
Property		192,239				222,104				265,684				297,331				352,716
Casualty		121,560				143,024				168,106				184,170				229,324
Professional lines		154,620				109,053				43,176				154,341				67,969
Specialty		167,166				112,107				90,391				145,111				114,842
TOTAL REINSURANCE			$833,530				$776,532				$806,490				$1,030,066				$1,070,010
REPORTED TOTALS			$1,404,997				$1,392,699				$1,516,997				$1,863,978				$2,016,484

18

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ENDURANCE SPECIALTY HOLDINGS LTD.

RETURN ON EQUITY ANALYSIS

	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
Average common equity [a]		$3,092,926
Net premiums earned		$1,404,997
Combined ratio	85.6		%
Operating margin	14.4		%
Premium leverage	0.45x
Implied ROAE from underwriting activity	6.5		%
Average cash and invested assets		$6,862,437
Investment leverage	2.22x
Year to date investment income yield, pretax	1.3		%
Implied ROAE from investment activity	2.9		%
Financing Costs [b]	(1.8		)%
Implied Pre-tax Operating ROAE, for period [c]	7.6		%
Implied Pre-tax Operating ROAE, annualized [c]	10.1		%

[a] Average common equity is calculated as the average of the beginning and ending common equity balances by quarter for the stated periods, which excludes the

liquidation value of the preferred shares (liquidation value of $430 million).

[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 activities and the tax-effected impact of amortization expense.

19

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ENDURANCE SPECIALTY HOLDINGS LTD.

ANNUALIZED PREMIUM & INVESTMENT LEVERAGE

		FOR THE QUARTERS ENDED																YEARS ENDED DECEMBER 31,
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				2014				2013
Average common equity [a]			$3,619,888				$2,858,876				$2,800,014				$2,722,818				$2,605,866				$2,368,573
Net premiums earned			$557,003				$458,135				$389,859				$471,279				$1,863,978				$2,016,484
Premium leverage		0.15x				0.16x				0.14x				0.17x				0.72x				0.85x
Annualized premium leverage		0.62x				0.64x				0.56x				0.69x				0.72x				0.85x
Average cash and invested assets			$7,701,893				$6,440,588				$6,444,831				$6,455,205				$6,487,847				$6,439,797
Investment leverage		2.13x				2.25x				2.30x				2.37x				2.48x				2.72x

[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.

20

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ENDURANCE SPECIALTY HOLDINGS LTD.

INVESTMENT PORTFOLIO

AS OF SEPTEMBER 30, 2015 AND DECEMBER 31, 2014

		September 30, 2015							December 31, 2014
Type of Investment		Fair Value				Percentage			Fair Value				Percentage
Cash and equivalents [a]			$1,171,237			13.2	%			$632,667			9.6	%
Short-term investments		364,938				4.1	%		9,014				0.1	%
Fixed maturity investments
U.S. government and government agencies notes		806,143				9.1	%		587,411				8.9	%
Government and agency guaranteed corporates		65,930				0.7	%		48,102				0.7	%
U.S. government agency residential mortgage-backed securities		1,142,707				12.8	%		1,082,142				16.4	%
U.S. government agency commercial mortgage-backed securities		77,100				0.9	%		50,981				0.8	%
Municipals		28,936				0.3	%		39,413				0.6	%
Foreign government		157,212				1.8	%		240,536				3.6	%
Corporate securities		1,878,766				21.1	%		1,361,462				20.5	%
Non-agency residential mortgage-backed securities		80,098				0.9	%		92,864				1.4	%
Non-agency commercial mortgage-backed securities		760,672				8.4	%		928,438				14.1	%
Asset-backed securities		611,736				6.9	%		413,221				6.3	%
Collateralized loan and debt obligations		418,875				4.7	%		248,011				3.8	%
Equity securities
Equity investments		369,525				4.1	%		202,535				3.1	%
Emerging market debt fund		58,853				0.7	%		60,150				0.9	%
Convertible funds		45,854				0.5	%		46,111				0.7	%
Preferred equity investments		19,028				0.2	%		15,836				0.2	%
Short-term fixed income fund		4,925				0.1	%		6,736				0.1	%
Other investments [b]		842,446				9.5	%		541,454				8.2	%
Total			$8,904,981			100.0	%			$6,607,084			100.0	%
Ratings [c]		Fair Value				Percentage			Fair Value				Percentage
U.S. government and government agencies notes		806,143				12.6	%			$587,411			11.5	%
AAA/Aaa		1,238,060				19.4	%		1,206,252				23.6	%
AA/Aa		2,151,278				33.6	%		1,717,343				33.7	%
A/A		1,226,680				19.2	%		1,045,301				20.5	%
BBB		619,419				9.7	%		427,018				8.4	%
Below BBB		311,270				4.9	%		96,244				1.9	%
Not Rated		40,263				0.6	%		22,026				0.4	%
Total			$6,393,113			100.0	%			$5,101,595			100.0	%
Performance									September 30, 2015				December 31, 2014
Yield [d]									0.9		%		2.0	%
Duration in years [e]									2.63 years				2.91 years

Net Investment Income		Quarter Ended   Sept. 30, 2015				Quarter Ended June 30, 2015				Quarter Ended Mar. 31, 2015				Quarter Ended Dec. 31, 2014				Quarter Ended Sept. 30, 2014				Year Ended Dec. 31, 2014
Cash and available for sale securities			$34,249				$28,682				$29,473				$28,827				$27,142				$106,245
Other investments		(17,716		)		3,570				12,388				(2,933		)		(1,785		)		19,609
Total net investment income			$16,533				$32,252				$41,861				$25,894				$25,357				$125,854

[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 September 30, 2015 and twelve months ending December 31, 2014 excludes realized and unrealized gains and losses on fixed maturity investments.

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

21

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ENDURANCE SPECIALTY HOLDINGS LTD.

LARGEST TWENTY-FIVE CORPORATE HOLDINGS

AS OF SEPTEMBER 30, 2015

		September 30, 2015
ISSUER (1) (2) (3)		Amortized Cost				Fair Value				Unrealized Gain (Loss)				Credit Quality (4)
JPMORGAN CHASE & CO			$42,187				$42,130				($57	)		A
GENERAL ELECTRIC CO		41,309				41,791				482				AA+
MORGAN STANLEY		41,495				41,737				242				A-
GOLDMAN SACHS GROUP INC		38,729				39,073				344				A-
BANK OF AMERICA CORP		38,199				38,415				216				A-
HSBC HOLDINGS PLC		35,670				35,739				69				A+
CREDIT SUISSE GROUP AG		35,391				35,502				111				A-
CITIGROUP INC		32,783				32,986				203				A-
AMERICAN EXPRESS COMPANY		31,891				31,978				87				A-
VERIZON COMMUNICATIONS INC		27,429				27,330				(99		)		BBB+
COMCAST CORPORATION		26,340				26,740				400				A-
PNC FINANCIAL SERVICES GROUP INC		24,113				24,137				24				A
WELLS FARGO & COMPANY		23,598				23,696				98				A+
UBS GROUP AG		22,784				22,813				29				A
FORD MOTOR COMPANY		21,932				21,893				(39		)		BBB-
ABBVIE INC		21,749				21,767				18				A
BP PLC		19,946				19,952				6				A
ALLERGAN PLC		18,897				18,859				(38		)		BBB-
US BANCORP		18,109				18,203				94				A+
NATIONAL GRID PLC		16,564				17,769				1,205				A-
HEWLETT-PACKARD COMPANY		17,459				17,516				57				BBB
ANHEUSER-BUSCH INBEV NV		17,253				17,182				(71		)		A
CISCO SYSTEMS INC		16,031				16,207				176				AA-
KEYCORP		15,525				15,506				(19		)		A-
SCHULMBERGER NV		14,752				14,767				15				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)	Includes preferred equity securities.

(4)	Represents weighted average credit quality of underlying issues.

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ENDURANCE SPECIALTY HOLDINGS LTD.

ACTIVITY IN RESERVE FOR LOSSES AND LOSS EXPENSES

		THREE MONTHS ENDED SEPT. 30, 2015												NINE MONTHS ENDED SEPT. 30, 2015
		GROSS				RECOVERIES				NET				GROSS				RECOVERIES				NET
Reserve for losses and loss expenses
Balance, beginning of period			$3,833,525				($785,472	)			$3,048,053				$3,846,859				($670,795	)			$3,176,064
Incurred related to:
Current year		517,882				(186,542		)		331,340				1,430,188				(571,796		)		858,392
Prior years		(81,338		)		13,991				(67,347		)		(129,859		)		(53,482		)		(183,341		)
Total Incurred		436,544				(172,551		)		263,993				1,300,329				(625,278		)		675,051
Paid related to:
Current year		(256,714		)		143,609				(113,105		)		(315,031		)		176,090				(138,941		)
Prior years		(230,564		)		27,706				(202,858		)		(1,037,686		)		333,477				(704,209		)
Total Paid		(487,278		)		171,315				(315,963		)		(1,352,717		)		509,567				(843,150		)
Amounts acquired(1)		719,922				(44,903		)		675,019				719,922				(44,903		)		675,019
Foreign currency translation and other		(12,877		)		1,495				(11,382		)		(24,557		)		1,293				(23,264		)
Balance, end of period			$4,489,836				($830,116	)			$3,659,720				$4,489,836				($830,116	)			$3,659,720

(1) Represents the fair value of Montpelier's reserve for losses and loss expenses and reinsurance recoverable acquired at July 31, 2015.

23

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ENDURANCE SPECIALTY HOLDINGS LTD.

PRIOR YEAR RESERVE DEVELOPMENT BY SEGMENT

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE NINE MONTHS ENDED SEPT. 30, 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		)
Nine months ended September 30, 2015			($61,827	)			($121,514	)			($183,341	)

(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	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2013

		Insurance				Reinsurance				Total Company
Incurred related to prior years
Quarter ended March 31, 2013			($17,295	)			($33,373	)			($50,668	)
Quarter ended June 30, 2013		(5,625		)		(57,180		)		(62,805		)
Quarter ended September 30, 2013		(6,210		)		(41,850		)		(48,060		)
Quarter ended December 31, 2013		(4,773		)		(56,086		)		(60,859		)
Year ended December 31, 2013			($33,903	)			($188,489	)			($222,392	)

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ENDURANCE SPECIALTY HOLDINGS LTD.

PRIOR YEAR RESERVE DEVELOPMENT BY LINE OF BUSINESS

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT

		FOR THE QUARTERS ENDED																				FOR THE NINE MONTHS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2015				SEPT. 30, 2014
INSURANCE SEGMENT
Agriculture			($212	)			($1,547	)			$392				($1,847	)			($1,260	)			($1,367	)			($5,588	)
Casualty and other specialty		(12,581		)		(16,663		)		(18,710		)		(20,184		)		(15,141		)		(47,954		)		(37,080		)
Professional lines		345				(119		)		(120		)		(692		)		(866		)		106				(5,985		)
Property, marine and energy		(10,108		)		(246		)		(2,258		)		(3,840		)		(3,044		)		(12,612		)		(5,354		)
TOTAL INSURANCE			($22,556	)			($18,575	)			($20,696	)			($26,563	)			($20,311	)			($61,827	)			($54,007	)
REINSURANCE SEGMENT
Catastrophe			($11,734	)			($13,385	)			($2,236	)			($15,497	)			($16,012	)			($27,355	)			($31,486	)
Property		(8,101		)		(579		)		(8,437		)		(5,100		)		(9,043		)		(17,117		)		(33,302		)
Casualty		(9,787		)		(12,739		)		(6,427		)		(2,528		)		(5,269		)		(28,953		)		(10,841		)
Professional lines		(6,614		)		(6,212		)		(11,123		)		(8,519		)		(3,162		)		(23,949		)		(7,742		)
Specialty		(8,555		)		(7,346		)		(8,239		)		(10,626		)		(6,672		)		(24,140		)		(27,604		)
TOTAL REINSURANCE			($44,791	)			($40,261	)			($36,462	)			($42,270	)			($40,158	)			($121,514	)			($110,975	)
REPORTED TOTALS			($67,347	)			($58,836	)			($57,158	)			($68,833	)			($60,469	)			($183,341	)			($164,982	)

25

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ENDURANCE SPECIALTY HOLDINGS LTD.

LOSSES AND LOSS EXPENSES INCURRED BY LINE OF BUSINESS

		FOR THE QUARTERS ENDED																				FOR THE NINE MONTHS ENDED
		SEPT. 30, 2015				JUNE 30, 2015				MAR. 31, 2015				DEC. 31, 2014				SEPT. 30, 2014				SEPT. 30, 2015				SEPT. 30, 2014
INSURANCE SEGMENT
Agriculture			$64,933				$85,584				$34,957				$125,520				$158,564				$185,474				$318,465
Casualty and other specialty		21,714				15,819				8,693				10,611				15,374				46,226				51,934
Professional lines		22,325				17,492				17,245				16,704				14,509				57,062				43,934
Property, marine and energy		30,169				26,588				13,617				6,949				8,230				70,374				20,444
TOTAL INSURANCE			$139,141				$145,483				$74,512				$159,784				$196,677				$359,136				$434,777
REINSURANCE SEGMENT
Catastrophe			$4,827				$3,049				$9,031				($10,236	)			$1,013				$16,907				$24,967
Property		39,875				31,324				29,311				36,175				24,011				100,510				87,952
Casualty		24,603				11,765				22,888				24,936				23,765				59,256				77,084
Professional lines		25,062				23,888				15,665				17,358				19,797				64,615				56,147
Specialty		30,485				23,613				20,529				15,784				25,006				74,627				45,434
TOTAL REINSURANCE			$124,852				$93,639				$97,424				$84,017				$93,592				$315,915				$291,584
REPORTED TOTALS			$263,993				$239,122				$171,936				$243,801				$290,269				$675,051				$726,361

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ENDURANCE SPECIALTY HOLDINGS LTD.

ANALYSIS OF UNPAID LOSSES AND LOSS EXPENSES

		Insurance																				Reinsurance																								Reported Totals
		Agriculture				Casualty and other specialty				Professional lines				Property, marine and energy				Subtotal				Catastrophe				Property				Casualty				Professional lines				Specialty				Subtotal				Total
AT SEPT. 30, 2015
Case reserves			$245,070				$271,553				$114,158				$221,570				$852,351				$125,108				$250,287				$236,368				$74,545				$117,739				$804,047				$1,656,398
Total reserves			$274,583				$1,263,971				$551,637				$352,630				$2,442,821				$233,945				$398,037				$739,859				$388,724				$286,450				$2,047,015				$4,489,836
Case reserves/Total reserves		89.3		%		21.5		%		20.7		%		62.8		%		34.9		%		53.5		%		62.9		%		31.9		%		19.2		%		41.1		%		39.3		%		36.9		%
IBNR / Total reserves		10.7		%		78.5		%		79.3		%		37.2		%		65.1		%		46.5		%		37.1		%		68.1		%		80.8		%		58.9		%		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		%
AT MAR. 31, 2015
Case reserves			$32,029				$249,507				$148,246				$38,023				$467,805				$93,872				$175,766				$241,073				$58,587				$99,219				$668,517				$1,136,322
Total reserves			$153,215				$1,203,561				$532,660				$62,841				$1,952,277				$149,341				$256,769				$760,752				$268,714				$233,875				$1,669,451				$3,621,728
Case reserves/Total reserves		20.9		%		20.7		%		27.8		%		60.5		%		24.0		%		62.9		%		68.5		%		31.7		%		21.8		%		42.4		%		40.0		%		31.4		%
IBNR / Total reserves		79.1		%		79.3		%		72.2		%		39.5		%		76.0		%		37.1		%		31.5		%		68.3		%		78.2		%		57.6		%		60.0		%		68.6		%
AT DEC. 31, 2014
Case reserves			$222,570				$325,415				$119,453				$33,264				$700,702				$126,837				$178,875				$248,933				$60,915				$99,142				$714,702				$1,415,404
Total reserves			$295,191				$1,258,009				$517,101				$53,471				$2,123,772				$176,610				$272,164				$780,880				$258,840				$234,593				$1,723,087				$3,846,859
Case reserves/Total reserves		75.4		%		25.9		%		23.1		%		62.2		%		33.0		%		71.8		%		65.7		%		31.9		%		23.5		%		42.3		%		41.5		%		36.8		%
IBNR / Total reserves		24.6		%		74.1		%		76.9		%		37.8		%		67.0		%		28.2		%		34.3		%		68.1		%		76.5		%		57.7		%		58.5		%		63.2		%
AT SEPT. 30, 2014
Case reserves			$272,485				$343,537				$110,988				$32,935				$759,945				$139,400				$173,326				$246,483				$58,261				$97,691				$715,161				$1,475,106
Total reserves			$307,994				$1,276,916				$500,457				$49,618				$2,134,985				$213,001				$272,421				$789,713				$249,836				$237,527				$1,762,498				$3,897,483
Case reserves/Total reserves		88.5		%		26.9		%		22.2		%		66.4		%		35.6		%		65.4		%		63.6		%		31.2		%		23.3		%		41.1		%		40.6		%		37.8		%
IBNR / Total reserves		11.5		%		73.1		%		77.8		%		33.6		%		64.4		%		34.6		%		36.4		%		68.8		%		76.7		%		58.9		%		59.4		%		62.2		%

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ENDURANCE SPECIALTY HOLDINGS LTD.

SHAREHOLDER RETURN ANALYSIS

		NINE MONTHS ENDED				YEARS ENDED DECEMBER 31,								INCEPTION TO
		SEPT. 30, 2015				2014				2013				SEPT. 30, 2015
Income and Return on Equity:
Net income available to common and participating common shareholders			$219,944				$315,700				$279,165				$3,285,956
Operating income available to common and participating common shareholders		218,321				304,012				281,021				3,194,819
Average Shareholders’ equity [a]		3,092,926				2,605,866				2,368,573				2,152,597
Net income return on average equity		7.1		%		12.1		%		11.8		%		11.1		%		[c]
Operating return on average equity		7.1		%		11.7		%		11.9		%		10.8		%		[c]
Book value and dividends per share:
Diluted book value per common share (treasury stock method)			$65.02				$61.33				$55.18				$65.02
Dividends paid per share		1.05				1.36				1.28				13.26
Change in diluted book value per common share		6.0		%		11.1		%		4.3		%		17.1		%		[c]
Total return to common shareholders [b]		7.7		%		13.6		%		6.8		%		22.1		%		[c]

[a] Excludes the $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.

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ENDURANCE SPECIALTY HOLDINGS LTD.

DILUTIVE SHARES FOR EPS CALCULATION - TWO CLASS METHOD

				QUARTERS ENDED   SEPT. 30,								NINE MONTHS ENDED   SEPT. 30,
				2015				2014				2015				2014
DILUTIVE SHARES OUTSTANDING: AS REPORTED		Average market price per share			$65.25				$55.33				$63.37				$53.50
		Basic weighted average common shares outstanding [a]		57,923				43,465				48,453				43,332
		Add: weighted avg. unvested restricted shares		53				—				36				—
		Weighted average exercise price per share		—				—				—				—
		Proceeds from unrecognized restricted shares expense			$2,735			—					$2,247			—
		Less: restricted shares bought back via treasury method		(42		)		—				(34		)		—
		Add: weighted avg. dilutive options outstanding		513				800				703				809
		Weighted average exercise price per share			$48.20				$48.20				$48.20				$48.04
		Proceeds from unrecognized option expense			$1,454				$3,177				$1,964				$3,177
		Less: options bought back via treasury method		(401		)		(755		)		(566		)		(785		)
		Weighted average dilutive shares outstanding [b]		58,046				43,510				48,592				43,356

[a] Excludes unvested restricted shares outstanding which are considered participating securities under the two-class method for calculation of EPS.

[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 in the calculations above as additional treasury method repurchases.

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ENDURANCE SPECIALTY HOLDINGS LTD.

EARNINGS PER SHARE INFORMATION - TWO CLASS METHOD

		QUARTERS ENDED SEPT. 30,								NINE MONTHS ENDED SEPT. 30,
		2015				2014				2015				2014
Net income available to common and participating common shareholders			$43,635				$68,046				$219,944				$239,313
Less amount allocated to participating common shareholders [a]		(1,251		)		(1,930		)		(6,442		)		(6,907		)
Net income allocated to common shareholders			$42,384				$66,116				$213,502				$232,406
Denominator:
Weighted average shares - basic		57,923				43,465				48,453				43,332
Share Equivalents
Options		112				45				137				24
Restricted shares		11				—				2				—
Weighted average shares - diluted		58,046				43,510				48,592				43,356
Basic earnings per common share			$0.73				$1.52				$4.41				$5.36
Diluted earnings per common share [b]			$0.73				$1.52				$4.39				$5.36

[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.

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ENDURANCE SPECIALTY HOLDINGS LTD.

OPERATING INCOME RECONCILIATION

EARNINGS PER SHARE INFORMATION - TWO CLASS METHOD

		Two-Class Method								Two-Class Method
		QUARTERS ENDED SEPT. 30,								NINE MONTHS ENDED SEPT. 30,
		2015				2014				2015				2014
Net income available to Endurance Holdings			$51,823				$76,234				$244,508				$263,877
Add (less) after-tax items:
Net foreign exchange losses		8,762				641				29,246				3,918
Net realized and unrealized gains		(4,839		)		(9,593		)		(31,860		)		(18,156		)
Net impairment losses recognized in earnings		33				102				991				411
Operating income before preferred dividends			$55,779				$67,384				$242,885				$250,050
Preferred dividends		(8,188		)		(8,188		)		(24,564		)		(24,564		)
Operating income available to common and participating common shareholders			$47,591				$59,196				$218,321				$225,486
Less amount allocated to participating common shareholders [a]		(1,364		)		(1,679		)		(6,394		)		(6,508		)
Operating income allocated to common shareholders			$46,227				$57,517				$211,927				$218,978
Weighted average common shares outstanding
Basic		57,923				43,465				48,453				43,332
Dilutive		58,046				43,510				48,592				43,356
Basic per common share data
Net income allocated to common shareholders			$0.73				$1.52				$4.41				$5.36
Add (less) after-tax items:
Net foreign exchange losses		0.15				0.02				0.60				0.10
Net realized and unrealized gains		(0.08		)		(0.22		)		(0.66		)		(0.42		)
Net impairment losses recognized in earnings		—				—				0.02				0.01
Operating income allocated to common shareholders [b]			$0.80				$1.32				$4.37				$5.05
Diluted per common share data
Net income allocated to common shareholders			$0.73				$1.52				$4.39				$5.36
Add (less) after-tax items:
Net foreign exchange losses		0.15				0.02				0.60				0.10
Net realized and unrealized gains		(0.08		)		(0.22		)		(0.65		)		(0.42		)
Net impairment losses recognized in earnings		—				—				0.02				0.01
Operating income allocated to common shareholders [b]			$0.80				$1.32				$4.36				$5.05

[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.

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ENDURANCE SPECIALTY HOLDINGS LTD.

NET INCOME AND OPERATING INCOME EXCLUDING EXPENSES

INCURRED RELATED TO THE ACQUISITON OF MONTPELIER

		QUARTER ENDED SEPT. 30, 2015												NINE MONTHS ENDED SEPT. 30, 2015
		As reported				Expenses Incurred Related to the Acquisition of Montpelier [a]				Excluding Expenses Incurred Related to the Acquisition of Montpelier				As reported				Expenses Incurred Related to the Acquisition of Montpelier [a]				Excluding Expenses Incurred Related to the Acquisition of Montpelier
Net income available to common and participating common shareholders			$43,635				$64,022				$107,657				$219,944				$68,517				$288,461
Less amount allocated to participating common shareholders [a]		(1,251		)		(1,834		)		(3,085		)		(6,442		)		(2,005		)		(8,447		)
Net income allocated to common shareholders			$42,384				$62,188				$104,572				$213,502				$66,512				$280,014
Basic earnings per common share			$0.73				$1.08				$1.81				$4.41				$1.37				$5.78
Diluted earnings per common share [c]			$0.73				$1.07				$1.80				$4.39				$1.37				$5.76
ROAE, net income [d]		1.2		%		1.8		%		3.0		%		7.1		%		2.2		%		9.3		%
Annualized ROAE, net income [d]		4.8		%		7.1		%		11.9		%		9.5		%		2.9		%		12.4		%
Operating income available to common and participating common shareholders			$47,591				$64,022				$111,613				$218,321				$68,517				$286,838
Less amount allocated to participating common shareholders [a]		(1,364		)		(1,834		)		(3,198		)		(6,394		)		(2,005		)		(8,399		)
Operating income allocated to common shareholders			$46,227				$62,188				$108,415				$211,927				$66,512				$278,439
Basic operating income per common share [c]			$0.80				$1.07				$1.87				$4.37				$1.38				$5.75
Diluted operating income per common share [c]			$0.80				$1.07				$1.87				$4.36				$1.37				$5.73
ROAE, operating income [d]		1.3		%		1.8		%		3.1		%		7.1		%		2.2		%		9.3		%
Annualized ROAE, operating income [d]		5.3		%		7.0		%		12.3		%		9.4		%		3.0		%		12.4		%

[a] The Company incurred $64.0 million of one-time transaction and integration expenses in relation to the Company's acquisition of Montpelier for the quarter ended September 30, 2015. For the nine months ended September 30, 2015, the Company incurred $68.5 million of one-time expenses in relation to the Company's acquisition of Montpelier.

[b] 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.

[c] 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.

[d] Average common equity is calculated as the quarterly weighted average of the beginning and ending common equity balances for the stated period, which excludes the $430 million liquidation value of the preferred shares.

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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.

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ENDURANCE SPECIALTY HOLDINGS LTD.

BOOK VALUE PER SHARE

				SEPT. 30,								DEC. 31,
				2015				2014				2014
DILUTIVE COMMON SHARES OUTSTANDING: AS-IF CONVERTED [a]		Price per share at period end			$61.03				$55.18				$59.84
		Basic common shares outstanding		65,276				43,467				43,474
		Add: unvested restricted shares and restricted share units		1,818				1,284				1,291
		Add: dilutive options outstanding		320				800				800
		Weighted average exercise price per share			$48.20				$48.20				$48.20
		Book Value [b]			$4,366,870				$2,690,454				$2,755,182
		Add: proceeds from converted options		15,424				38,560				38,560
		Pro forma book value			$4,382,294				$2,729,014				$2,793,742
		Dilutive shares outstanding		67,414				45,551				45,565
		Basic book value per common share			$66.90				$61.90				$63.38
		Diluted book value per common share			$65.01				$59.91				$61.31
DILUTIVE COMMON SHARES OUTSTANDING: TREASURY STOCK METHOD		Price per share at period end			$61.03				$55.18				$59.84
		Basic common shares outstanding		65,276				43,467				43,474
		Add: unvested restricted shares and restricted share units		1,818				1,284				1,291
		Add: dilutive options outstanding		320				800				800
		Weighted average exercise price per share			$48.20				$48.20				$48.20
		Less: options bought back via treasury method		(253		)		(699		)		(644		)
		Dilutive shares outstanding		67,161				44,852				44,921
		Basic book value per common share			$66.90				$61.90				$63.38
		Diluted book value per common share			$65.02				$59.98				$61.33

[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 $430 million liquidation value of the preferred shares.

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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.

Net income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier, or net income per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, reflect the current period impact of those costs incurred by the Company and reflects the results of operations in a manner similar to that used by management to analyse the Company’s underlying business performance. Net income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier or net income per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, should not be viewed as a substitute for GAAP net income available to common and participating common shareholders, or basic or diluted earnings per common share, respectively.

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 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 31 for a reconciliation of operating income to net income.

Operating income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier, or net operating per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, reflect the current period impact of those costs incurred by the Company and reflects the results of operations in a manner similar to that used by management to analyse the Company’s underlying business performance. Operating income available to common and participating common shareholders, excluding expenses incurred related to the acquisition of Montpelier or net operating per basic or diluted common share, excluding expenses incurred related to the acquisition of Montpelier, should not be viewed as a substitute for GAAP net income available to common and participating common shareholders, or basic or diluted earnings per common share, respectively.

Return on Average Equity (ROAE) is comprised using the average common equity calculated as the 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 34 for a reconciliation of diluted book value per common share to basic book value per common share.

35