Endurance Says Quarterly Profit Doubled

Endurance Says Quarterly Profit Doubled

The company said the gross premiums written and acquired for the fourth quarter were $262.2 million, a 50 percent increase from the $175.3 million reported for the 2002 fourth quarter. Earned premiums in the quarter were $356.0 million, a 116 percent increase from the 2002 fourth quarter. The quarterly combined ratio also improved to 82.5 percent, down from 87.1 one year ago.

For overall 2003, Endurance said it has earned $263.4 million in net income. Its gross premiums written and acquired for the year were $1.6 billion, double the prior year. The combined ratio for the year was 84.7 percent, better than 86.2 reported for 2002.

Kenneth LeStrange, chief executive of the Bermuda-based Endurance, told analysts in today's conference call that "every segment" of the business performed well in 2003.

In overall underwriting results, Endurance had $62.3 million of underwriting income for the fourth quarter and $179 million for 2003. All reporting segments--including property-catastrophe, noncatastrophe, aerospace and other specialty lines--generated underwriting income for the quarter and for 2003, Mr. LeStrange said.

Mr. LeStrange said 2003 was a very busy year for Endurance. "We doubled our revenue in 2003 while maintaining strong underwriting discipline, and our U.S. and U.K. subsidiaries had a very successful first year of operations," he said.

Additionally, Endurance mentioned it successfully acquired and integrated a Hart Re portfolio, the p-c reinsurance business of The Hartford Financial Services Group Inc., and it achieved an upgrade in its A.M. Best rating from "A-minus" to "A" and an initial rating of "A-minus" from Standard & Poor's Ratings Services.

Endurance said it generated an 18.4 percent return on average equity in 2003, its second year of operations. "The achievement of this level of return is evidence that Endurance's strategy and execution, as well as talent, experience and commitment of our people, the application of technology, and favorable market conditions have all come together to create what we aspired to achieve when we started Endurance," Mr. LeStrange said.

Mr. LeStrange forecast that based on his current view of market conditions, expected loss levels and other key variables, a 15.5-to-17.5 percent after-tax operating return on average equity can be expected for 2004.

Reflecting Endurance's healthy profit level, the company management plans to recommend at its next board meeting in February a 50 percent increase in the first-quarter dividend, Mr. LeStrange noted.

Separately, Endurance said it plans to register up to 8.05 million shares for sale in a rights offering, following a request by some of its founding shareholders. The company currently has some 68.4 million shares outstanding.

"A group of our founding shareholders has served notice to the company, exercising their demand-registration rights," Mr. LeStrange explained. "We intend to file shortly an S-1 that will lead to a secondary offering of some 8 million shares, subject to market conditions." This transaction, he said, is designed to enhance liquidity for the company.

Founded in 2001 in the wake of the Sept. 11 terrorist attacks, 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. Endurance was 26 percent-owned by Chicago-based Aon Corporation before the initial public offering in March 2003.