Best Affirms Endurance Specialty and Subs Ratings; Outlooks Stable

May 7, 2014

A.M. Best has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Bermuda-based Endurance Specialty Insurance Ltd. and its affiliates, as well as the ICR of “bbb” and debt ratings of their publicly traded parent, Endurance Specialty Holdings, Ltd.

The outlook for all of the ratings is stable.

Best said the “ratings reflect Endurance’s strong level of risk-adjusted capitalization, specialty focused, diversified business profile, relatively solid operating performance, experienced management team and its solid enterprise risk management (ERM) program. Endurance continues to execute its strategy of providing specialty insurance and reinsurance, while the management team works towards transforming the company by increasing its scale and market presence.”

Best also indicated, however, that there “continues to be market challenges that will need to be overcome, as casualty rates remain soft, capacity is abundant, investment yields are low and global economic uncertainty remains part of the landscape. While the market environment remains competitive, Endurance continues to adhere to its underwriting standards and declines business that does not meet its underwriting criteria.”

Best added that Endurance “has built a solid ERM framework that has evolved with the company and allows the entire organization to absorb significant losses. Nonetheless, operating performance can help drive balance sheet strength or erode it. As a result Best said it would “continue to monitor Endurance concerning that aspect as part of its overall analysis.

“Factors that could lead to rating upgrades and/or a positive outlook include Endurance maintaining strong risk-adjusted capital levels and the continuation of a consistently strong operating profitability relative to its peer group.

“Factors that could lead to rating downgrades and/or a negative outlook include outsized catastrophe or investment losses relative to its peer group, unfavorable operating profitability trends and/or a significant decline in risk-adjusted capital that would not be supportive of the current rating level.

Best summarized the ratings affected by its report as follows:

The FSR of ‘A’ (Excellent) and ICRs of “a” have been affirmed for Endurance Specialty Insurance Ltd and its following affiliates:

  • Endurance Reinsurance Corporation of America
  • Endurance Worldwide Insurance Limited
  • Endurance American Specialty Insurance Company
  • Endurance American Insurance Company
  • Endurance Risk Solutions Assurance Co.
  • American Agri-Business Insurance Company

The following debt ratings have been affirmed:

Endurance Specialty Holdings, Ltd—

— “bbb” on $335 million 7.0 percent senior unsecured notes, due 2034

— “bbb” on $200 million 6.15 percent senior unsecured notes, due 2015

— “bb+” on $200 million 7.75 percent Series A non-cumulative preferred shares

— “bb+” on $230 million 7.50 percent Series B non-cumulative preferred shares

The following indicative shelf ratings have been affirmed for debt securities available under the existing shelf registration:

Endurance Specialty Holdings, Ltd—

— “bbb” on senior unsecured debt

— “bbb-“on subordinated debt

— “bb+” on preferred stock

Endurance Holdings Capital Trust I & II (guaranteed by Endurance Specialty Holdings, Ltd)—

— “bb+” on preferred securities

Source: A.M. Best

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