Endurance in ‘Forward Sale’ of Shares to Deutsche Bank

September 11, 2007

Bermuda-based Endurance Specialty Holdings Ltd. announced that it has entered into a variable equity forward sale agreement under which it is entitled to sell its ordinary shares to Deutsche Bank Securities Inc., referred to as the “forward counterparty”, for proceeds to the Company of approximately $150 million.

CFO Michael J. McGuire explained that the “variable delivery forward is an important enhancement to our capital structure and provides us with a committed source of equity capital over the next three years.” He added that it gives Endurance “excellent financial flexibility,” in that it gives the Company the chance to profit from a rise in the price of its shares, while retaining the ability to manage its capital.

Essentially the deal is a sophisticated variation on a put option. The settlement date begins July 15, 2010. If Endurance elects to sell the shares, the counterparty – Deutsche Bank Securities – will receive how ever many shares Endurance decides to sell, up to the full amount. The purchase price is “based on the average market price of the ordinary shares at that time, subject to the specified minimum and maximum number of shares.”

Endurance explained that, “at higher stock prices the Company will issue a smaller number of shares and at lower stock prices the Company will issue a larger number of shares. This variability in number of shares delivered to the forward counterparty provides the Company with the right to retain certain upside in all of the shares subject to the transaction. In lieu of issuing ordinary shares in full physical settlement of the forward sale agreement at maturity, the Company may elect to net share settle or cash settle the forward sale agreement.”

Source: Endurance – www.endurance.bm

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