Endurance Speciality Reports $128.2 Million Q3 Net Income

October 27, 2006

Bermuda’s Endurance Specialty Holdings Ltd. reported net income of $128.2 million and $1.74 per diluted common share for the third quarter of 2006 versus a net loss of $377 million and $6.26 per diluted common share in the third quarter of 2005.

For the nine months ended September 30, 2006, net income was $299.3 million and $4.03 per diluted common share versus a net loss of $170.7 million and $2.81 per diluted common share for the nine months ended September 30, 2005. Net income for the nine months ended September 30, 2006 and 2005 included favorable prior year loss reserve development of $31.0 million and $97.6 million, respectively.

Q3 operating highlights cited by the Company are as follows:
— Total premiums written of $482.8 million, including gross premiums written of $476.2 million and deposit premiums of $6.6 million, increased 19.0 percent over the same period in 2005. Excluding 2005 reinstatement premiums of $34.5 million related to Hurricanes Katrina and Rita, total premiums written increased 30.0 percent;
— Total ceded premiums of $90.8 million included $38.5 million related to the collateralized catastrophe reinsurance agreement entered into with Shackleton Re Ltd. during the quarter that provides protection for 18-24 months;
— Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, was $137.2 million and $1.87 per diluted common share;
— Annualized operating return on average common equity was 29.2 percent;
— Net investment income increased 29.7 percent to $63.6 million over the same period in 2005; and the
— Combined ratio, excluding 2.5 percentage points of favorable prior year loss reserve development, was 80.6 percent.

Operating highlights for the nine months ended September 30, 2006 are as follows:
— Total premiums written of $1,650.7 million, including gross premiums written of $1,498.8 million and deposit premiums of $151.9 million, increased 3.3 percent over the same period in 2005. Excluding 2005 reinstatement premiums of $34.5 million related to Hurricanes Katrina and Rita, total premiums written increased 5.6 percent;
— Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, was $307.3 million and $4.14 per diluted common share;
— Annualized operating return on average common equity was 22.0 percent;
— Net investment income increased 45.4 percent to $185.4 million over the nine months ended September 30, 2005; and the
— Combined ratio, excluding 2.5 percentage points of favorable prior year loss reserve development, was 89.2 percent.

Chairman and CEO Kenneth J. LeStrange commented, “I am extremely pleased with the record level of earnings that Endurance achieved this quarter. Our results benefited from strong pricing and lower than expected losses in our catastrophe exposed businesses. We continue to see significant opportunities and believe our portfolio has the potential to continue generating attractive returns for Endurance.”

Endurance noted that an “increase in total ceded premiums for the quarter resulted primarily from $38.5 million of reinsurance premiums ceded to Shackleton Re Ltd. under multi-year, collateralized catastrophe reinsurance agreements entered into in the third quarter of 2006. In addition, Endurance also purchased other retrocessional reinsurance coverages during the quarter at various retention levels. These reinsurance contracts increased the difference between the Company’s gross and net written premiums in the third quarter of 2006 and will reduce the Company’s net premiums earned over the next 12-24 months.

“Endurance’s combined ratio was 78.1 percent in the third quarter of 2006 versus 204.4 percent for the third quarter of 2005, which included 115.5 percentage points related to Hurricanes Katrina and Rita. The current quarter combined ratio was impacted by $10.0 million of prior year loss reserve reductions driven by favorable loss experience in the Casualty Individual Risk and Casualty Treaty Reinsurance segments. In comparison, in the third quarter of 2005, Endurance recorded $23.9 million of prior year loss reserve reductions resulting from favorable claims development primarily related to the 2004 accident year.”

The full report, as well as access to a replay of the investors and analysts conference call may obtained on the Company’s Website at: www.endurance.bm. A telephone replay of the conference call will be available through November 9, 2006 by dialing (888) 203-1112 (toll-free) or (719) 457-0820 (international) and entering the pass code: 9555040.

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