Endurance Specialty Tries IPO Market

"There have been only five IPOs so far this year–the market has been extremely light. And none of them are trading at premiums. None of them really worked," said Sal Morreale, who follows the IPO market for Cantor Fitzgerald L.P. in Los Angeles.

The problem is that most institutions are now waiting until the last minute before deciding whether to buy or not, so this is not a great environment for the IPO market, Mr. Morreale told National Underwriter.

For example, Infinity Property & Casualty Corp. of Alpharetta, Ga., which went ahead with its initial offering after some delay earlier this month, first announced that its stock would be priced between $21 and $23 per share, but then revised it down to $18 to $20. Then, to get the deal done, the company had to lower it again to $16 per share, Mr. Morreale recalled.

"And its stock has been trading below $16, so this gives you an idea of what the market is like," he said.

Peter Dickey, an analyst at A.M. Best Company in Oldwick, N.J., agreed that the timing is an issue for Endurance.

"When I spoke with them six weeks ago, the company said it was concerned, like everyone else, with what's going on with the capital markets," Mr. Dickey said.

"I don't know what changed since then to prompt them to make the move. I don't know what the reason is, but one speculation is that with the war against Iraq looking inevitable in the near future, maybe it's better to make the move now rather than later," he said.

Endurance is a young company–it was founded in 2001, and going public has been part of the plan for the company since its beginning, Mr. Dickey noted. "I wish them luck and I wish they will get everything they can get," he said.

At New York-based Fitch Ratings, Jim Auden, senior director, said that thanks to its short history, Endurance may have what it takes to endure the cold IPO market.

"It doesn't have the legacy issues. The things we are worried about for insurers and reinsurers are adverse developments from prior years, such as asbestos liabilities. But Endurance doesn't have any of that. It has a cleaner balance sheet. So maybe that might help its valuation," Mr. Auden said.

Endurance offers a variety of property-casualty coverage through its subsidiaries in Bermuda, the U.K. and the United States, with an emphasis on catastrophe policies.

The company's primary lines include property individual risk and casualty individual risk, while reinsurance lines include property per risk treaty reinsurance and property catastrophe reinsurance, as well as casualty treaty reinsurance. Chicago-based Aon Corporation owns 26 percent of Endurance before the planned IPO.