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FOR IMMEDIATE RELEASE
OLDWICK - MAY 28, 2015 11:12 AM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a" of Endurance Specialty Insurance Ltd. (Endurance) (Bermuda) and its subsidiaries. Concurrently, A.M. Best has affirmed the ICR of "bbb" and debt ratings of their publicly traded parent, Endurance Specialty Holdings Ltd. (Bermuda) [NYSE: ENH]. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)
The ratings reflect Endurance's strong level of risk-adjusted capitalization, specialty-focused diversified business profile, solid operating performance, experienced management team and its strong enterprise risk management (ERM) program. Endurance continues to execute its strategy of providing specialty insurance and reinsurance, while the management team works toward transforming the company by increasing its scale and market presence. However, there continues to be market challenges that need to be overcome, as rates remain soft, capacity is plentiful and investment yields are low, which can impact overall profitability. While the market environment remains competitive, Endurance continues to adhere to its strict underwriting guidelines and declines business that does not meet its underwriting criteria.
Endurance has built a solid ERM framework that consists of strong internal controls, which are enhanced by strong analytics. The company's ERM structure has evolved with the company and allows the entire organization to absorb significant losses. Management views its ERM program as critical to sustaining profitability and reducing volatility.
Factors that could lead to rating upgrades and/or an outlook revision to positive include Endurance maintaining strong risk-adjusted capital levels and the continuation of consistently strong operating profitability relative to its peer group. Factors that could lead to rating downgrades and/or a negative outlook include outsized catastrophe and/or investment losses relative to its peer group, unfavorable operating profitability trends and a significant decline in risk-adjusted capital that would not be supportive of the current rating level.
The FSR of A (Excellent) and the ICRs of "a" have been affirmed for Endurance Specialty Insurance Ltd. and its following affiliates:
The following debt ratings have been affirmed:
Endurance Specialty Holdings Ltd.—
— "bbb" on $335 million 7.0% senior unsecured notes, due 2034
— "bbb" on $200 million 6.15% senior unsecured notes, due 2015
— "bb+" on $200 million 7.75% Series A non-cumulative preferred shares
— "bb+" on $230 million 7.50% 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
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.