Best Assigns Ratings to Endurance Shelf Registration

A.M. Best Co. announced that it has assigned indicative ratings of “bbb” senior unsecured debt, “bbb-” subordinated debt and “bb+” preferred stock to Endurance Specialty Holdings Ltd.’s recently filed $500 million universal shelf offering (See IJ Website June 16-17).

Best also said it has “assigned indicative debt ratings of “bb+” preferred securities to Endurance Holdings Capital Trust I and Endurance Holdings Capital Trust II, which will be fully guaranteed by Endurance. The outlook for all the ratings is stable.”

After describing the terms of the shelf registration, Best said it “anticipates that any issuance under the registration will be used judiciously to support additional growth and financial flexibility. Following any debt issues, Endurance’s debt-to-adjusted capital is expected to remain in the low 20 percent range with fixed charge coverage sustained in the high single digit range.”

It also noted that Endurance has profited from “higher market rates, light catastrophes and an unencumbered balance sheet,” which helped it achieve an 82 percent combined ratio for the first quarter of 2004. “The company has established a diversified book of business, both geographically and by line. The operating strategy focuses on broker-sourced short-tail and long-tail lines, including property per risk, property catastrophe and casualty reinsurance,” Best continued. “Furthermore, Endurance has expanded operations through the formation of affiliated companies in the United States and the United Kingdom.

“Partially offsetting these strengths is potential market pressure on pricing, which could dampen expected returns and exposure to low frequency, high severity property catastrophe losses. Furthermore, Endurance’s short operating history has not fully tested management’s underwriting expertise.”