Endurance Specialty (ENH) 8-K/A Results of Operations and Financial Condition

Exhibit 99.2

Endurance Specialty Holdings Ltd.

INVESTOR FINANCIAL SUPPLEMENT

FOURTH QUARTER 2005

Endurance Specialty Holdings Ltd.
Wellesley House, 90 Pitts Bay Rd.
Pembroke HM 08, Bermuda

Massa B. Cressall
Assistant VP, Strategy and Planning
Phone: (441) 278-0988
Fax: (441) 278-0493
email: mcressall@endurance.bm

This report is for information purposes only. It should be read in conjunction with other documents filed by Endurance Specialty Holdings Ltd. pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.

ENDURANCE SPECIALTY HOLDINGS LTD.
FINANCIAL SUPPLEMENT TABLE OF CONTENTS

	Page
i. Basis of Presentation	i
ii. Organizational Chart of Executive Management	ii
iii. Organizational Chart of Corporate Structure	iii
I. Financial Highlights	1
II. Consolidated Financial Statements
a. Consolidated Statements of Income	2
b. Consolidated Balance Sheets	3
c. Segment Distribution	4
d. Consolidated Segment Data	5
e. Impact of 2005 Catastrophe Losses	7
f. Deposit Accounting Adjustment Impacts on Segment Data	8
III. Other Financial Information
a. Return on Equity Analysis	10
b. ROE Component Analysis - Operating and Investment Leverage	11
c. Investment Portfolio Information	12
d. Unrealized Gains and Operating Cash Flow	13
IV. Loss Reserve Analysis
a. Activity in Reserve for Losses and Loss Expenses	14
b. Activity in Reserve for Losses and Loss Expenses by Segment	15
c. Analysis of Unpaid Losses and Loss Expense	16
V. Share Analysis
a. Weighted Average Dilutive Shares Outstanding	17
b. Operating Income Reconciliation	18
c. Dilutive Shares Sensitivity Analysis	19
d. Book Value Per Share Analysis	20
e. Shareholder Return Analysis	21
VII. Regulation G	22

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:

Some of the statements in this financial supplement may include forward-looking statements which reflect our current views with respect to future events and financial performance. Such statements may include forward-looking statements both with respect to us in general and the insurance and reinsurance sectors specifically, both as to underwriting and investment matters. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “seek,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements in this financial supplement for purposes of the U.S. federal securities laws or otherwise. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only to the date on which they are made. We undertake no obligation to publicly update or review any forward looking statement, when as a result of new information, future developments or otherwise.

All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or may be important factors that could cause actual results to differ from those indicated in the forward-looking statements. These factors include, but are not limited to, competition, possible terrorism or the outbreak of war, the frequency or severity of unpredictable catastrophic events, changes in demand for insurance or reinsurance, rating agency actions, uncertainties in our reserving process, a change in our tax status, acceptance of our products, the availability of reinsurance or retrocessional coverage, retention of key personnel, political conditions, the impact of current regulatory investigations, changes in accounting policies, changes in general economic conditions and other factors described in our Annual Report on Form 10-K for the year ended December 31, 2004 and our Current Report on Form 8-K dated October 3, 2005.

ENDURANCE SPECIALTY HOLDINGS LTD.
BASIS OF PRESENTATION

DEFINITIONS AND PRESENTATION

• All financial information contained herein is unaudited, except the balance sheet and income statement data for the years ended December 31, 2005, December 31, 2004 and December 31, 2003, which was derived from the Company’s audited financial statements.

• Unless otherwise noted, all data is in thousands, except for per share, percentage and ratio information.

• As used in this financial supplement, “common shares” refers to our ordinary shares and class A shares, collectively.

• Endurance Specialty Holdings Ltd., along with others in the industry, uses underwriting ratios as measures of performance. The loss ratio is the ratio of claims and claims adjustment expense to earned premiums. The acquisition expense ratio is the ratio of underwriting expenses (commissions, taxes, licenses and fees, as well as other underwriting expenses) to earned premiums. The general and administrative expense ratio is the ratio of general and administrative expenses to earned premiums. The combined ratio is the sum of the loss ratio, the acquisition expense ratio and the general and administrative expense ratio. These ratios are relative measurements that describe for every $100 of net premiums earned or written, the cost of losses and expenses, respectively. The combined ratio presents the total cost per $100 of earned premium. A combined ratio below 100% demonstrates underwriting profit; a combined ratio above 100% demonstrates underwriting loss.

• GAAP combined ratios differ from statutory combined ratios primarily due to the deferral of certain third party acquisition expenses for GAAP reporting purposes and the use of net premiums earned rather than net premiums written in the denominator when calculating the acquisition expense and the general & administrative expense ratios.

• NM - Not meaningful; NA - Not Applicable; LTM - Latest twelve months.

i

ENDURANCE SPECIALTY HOLDINGS LTD.

ORGANIZATION CHART

Endurance Specialty Holdings Ltd.

Chairman, President and Chief Executive Officer - Kenneth LeStrange

Chief Financial Officer - Michael McGuire     Chief Actuary and Chief Risk Officer - Michael Angelina   

General Counsel - John Del Col     Chief Operating Officer - Steven Carlsen

Chief Underwriting Officer - David Cash

Corporation of America

(Principal Operation - New York)

President -

William Jewett

Endurance Reinsurance

Endurance Specialty

Insurance Ltd.

(Principal Operation - Bermuda)

President -

Daniel Izard

Endurance

Services Limited

(Principal Operation - New York)

President -

John O'Connor

Endurance Worldwide

Insurance Limited

(Principal Operation - London)

Chief Executive Officer -  

Mark Boucher

Endurance U.S. Insurance

Operations

President -

Michael Fujii

ii

ENDURANCE SPECIALTY HOLDINGS LTD.

CORPORATE ORGANIZATION CHART

Endurance U.S.

Holdings Corp.

(U.S.)

Endurance

Services Limited

(U.K.)

Endurance Specialty Holdings Ltd.

(Bermuda)

Endurance

Worldwide

Holdings Limited

(U.K.)

Endurance

Worldwide

Insurance Limited

(U.K.)

Endurance

Specialty

Insurance Ltd.

(Bermuda)

Endurance U.S.

Specialty

Services

Corporation

(U.S.)

Endurance

Reinsurance

Corporation of

America

(U.S.)

Traders and

Pacific

Insurance

Company

(U.S.)

Endurance Elite

Assurance

Company Ltd.

(Bermuda)

Endurance

Specialty Insurance

Marketing Corp. of

California

(U.S.)

Endurance

Specialty

Insurance

Marketing Corp. of

Illinois

(U.S.)

Endurance

Specialty

Insurance

Marketing Corp. of

Massachusetts

(U.S.)

iii

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED FINANCIAL HIGHLIGHTS

		QUARTER ENDED DECEMBER 31,						YEAR ENDED DECEMBER 31,
		2005			2004			2005			2004
HIGHLIGHTS	Net (loss) income	($	49,771	)	$	113,108		($	220,484	)	$	355,584
	Net (loss) income available to common shareholders		(52,491	)		113,108			(223,204	)		355,584
	Operating (loss) income available to common shareholders[a]		(47,701	)		108,437			(211,041	)		348,443
	Gross premiums written		192,632			272,200			1,668,877			1,711,357
	Net premiums earned		407,009			411,300			1,723,694			1,632,600
	Total assets		6,352,537			5,225,838			6,352,537			5,225,838
	Total shareholders’ equity		1,872,543			1,862,455			1,872,543			1,862,455
PER SHAREAND SHARES DATA	Basic earnings per share
	Net (loss) income (as reported)	($	0.80	)	$	1.83		($	3.60	)	$	5.66
	Operating (loss) income (as reported)[a]	($	0.72	)	$	1.76		($	3.40	)	$	5.55
	Diluted earnings per share
	Net (loss) income (as reported)	($	0.80	)	$	1.71		($	3.60	)	$	5.28
	Operating (loss) income (as reported)[a]	($	0.72	)	$	1.64		($	3.40	)	$	5.18
As Reported	Weighted average common shares outstanding		65,952			61,684			62,029			62,781
	Weighted average common shares outstanding and dilutive potential common shares		65,952			66,086			62,029			67,283
Book Value Per	Book value per common share[b]	$	25.18		$	30.30		$	25.18		$	30.30
Common Share	Diluted book value per common share (treasury stock method)[b]	$	23.17		$	27.91		$	23.17		$	27.91
FINANCIAL RATIOS	Return on av. equity (ROAE) per common share, net (loss) income[c]		(3.2	) %		6.2	%		(12.6	) %		20.3	%
	ROAE, operating (loss) income per common share[a] [c]		(3.0	) %		6.0	%		(11.9	) %		19.9	%
	Return on beg. equity (ROBE), net (loss) income per common share		(3.4	) %		6.4	%		(12.0	) %		21.6	%
	ROBE, operating (loss) income per common share[a]		(3.1	) %		6.1	%		(11.3	) %		21.2	%
	Annualized investment yield		4.5	%		4.1	%		4.0	%		3.7	%
	Loss ratio		94.9	%		53.0	%		95.8	%		57.4	%
GAAP	Acquisition expense ratio		19.3	%		19.6	%		19.1	%		20.2	%
	General and administrative expense ratio		7.8	%		9.0	%		8.6	%		8.2	%
	Combined ratio		122.0	%		81.6	%		123.5	%		85.8	%
STAT	Acquisition expense ratio		20.1	%		21.4	%		18.3	%		20.1	%
	General and administrative expense ratio		18.0	%		13.6	%		9.1	%		7.9	%
	Combined ratio		133.0	%		88.0	%		123.2	%		85.4	%

		Previous Quarter Change			Previous Year to Date Change
HIGHLIGHTS	Net (loss) income		(144.0	) %		(162.0	) %
	Net (loss) income available to common shareholders		(146.4	) %		(162.8	) %
	Operating (loss) income available to common shareholders[a]		(144.0	) %		(160.6	) %
	Gross premiums written		(29.2	) %		(2.5	) %
	Net premiums earned		(1.0	) %		5.6	%
	Total assets		21.6	%		21.6	%
	Total shareholders’ equity		0.5	%		0.5	%
PER SHAREAND SHARES DATA	Basic earnings per share
	Net (loss) income (as reported)		(143.4	) %		(163.5	) %
	Operating (loss) income (as reported)[a]		(141.1	) %		(161.3	) %
	Diluted earnings per share
	Net (loss) income (as reported)		(146.5	) %		(168.1	) %
	Operating (loss) income (as reported)[a]		(144.1	) %		(165.7	) %
As Reported	Weighted average common shares outstanding		6.9	%		(1.2	) %
	Weighted average common shares outstanding and dilutive potential common shares		(0.2	) %		(7.8	) %
Book Value Per	Book value per common share[b]		(16.9	) %		(16.9	) %
Common Share	Diluted book value per common share (treasury stock method)[b]		(17.0	) %		(17.0	) %
FINANCIAL RATIOS	Return on av. equity (ROAE) per common share, net (loss) income[c]		(9.5	) %		(32.9	) %
	ROAE, operating (loss) income per common share[a] [c]		(8.9	) %		(31.8	) %
	Return on beg. equity (ROBE), net (loss) income per common share		(9.8	) %		(33.6	) %
	ROBE, operating (loss) income per common share[a]		(9.2	) %		(32.5	) %
	Annualized investment yield		0.5	%		0.3	%
	Loss ratio		41.9	%		38.4	%
GAAP	Acquisition expense ratio		(0.3	) %		(1.1	) %
	General and administrative expense ratio		(1.2	) %		0.4	%
	Combined ratio		40.4	%		37.7	%
STAT	Acquisition expense ratio		(1.3	) %		(1.8	) %
	General and administrative expense ratio		4.4	%		1.2	%
	Combined ratio		45.0	%		37.8	%

[a]	Operating (loss) income represents after-tax operational results excluding, as applicable, after-tax net realized capital gains or losses and after-tax net foreign exchange gains or losses. Please see page 18 for a reconciliation to net (loss) income.
[b]	For detailed calculations please refer to page 20.
[c]	Average equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the $200 million liquidation value of the preferred shares.

1

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF INCOME

	QUARTER ENDED DECEMBER 31,						YEAR ENDED DECEMBER 31,
	2005			2004			2005			2004
UNDERWRITING REVENUES
Gross premiums written	$	192,632		$	272,200		$	1,668,877		$	1,711,357
Premiums ceded		(15,695	)		(486	)		(49,528	)		(14,337	)
Net premiums written		176,937			271,714			1,619,349			1,697,020
Change in unearned premiums		230,072			139,586			104,345			(64,420	)
Net premiums earned	$	407,009		$	411,300		$	1,723,694		$	1,632,600
UNDERWRITING EXPENSES
Losses and loss expenses	$	386,360		$	217,858		$	1,650,943		$	937,330
Acquisition expenses		78,488			80,452			329,692			329,784
General and administrative expenses		31,862			36,888			148,036			133,725
Other underwriting expenses		6,294			—			5,342			—
Total underwriting expenses		503,004			335,198			2,134,013			1,400,839
Underwriting (loss) income	($	95,995	)	$	76,102		($	410,319	)	$	231,761
OTHER OPERATING REVENUE/EXPENSES
Net investment income	$	51,774		$	37,462		$	180,975		$	122,059
Interest expense		(7,321	)		(4,526	)		(24,210	)		(9,959	)
Amortization of intangibles		(1,158	)		(1,220	)		(4,694	)		(3,990	)
Total other operating revenue/expenses	$	43,295		$	31,716		$	152,071		$	108,110
(LOSS) INCOME BEFORE OTHER ITEMS		(52,700	)		107,818			(258,248	)		339,871
OTHER
Net foreign exchange (losses) gains	($	2,786	)	$	2,735		($	5,140	)	($	214	)
Net realized (losses) gains on investments		(3,310	)		754			(8,244	)		6,130
Income tax benefit		9,025			1,801			51,148			9,797
NET (LOSS) INCOME	($	49,771	)	$	113,108		($	220,484	)	$	355,584
Preferred dividends		(2,720	)		—			(2,720	)		—
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS	($	52,491	)	$	113,108		($	223,204	)	$	355,584
KEY RATIOS/PER SHARE DATA
Loss ratio		94.9	%		53.0	%		95.8	%		57.4	%
Acquisition expense ratio		19.3	%		19.6	%		19.1	%		20.2	%
General and administrative expense ratio		7.8	%		9.0	%		8.6	%		8.2	%
Combined ratio		122.0	%		81.6	%		123.5	%		85.8	%
Weighted average basic shares outstanding		65,952			61,684			62,029			62,781
Weighted average dilutive shares outstanding		65,952			66,086			62,029			67,283
Basic EPS	($	0.80	)	$	1.83		($	3.60	)	$	5.66
Diluted EPS	($	0.80	)	$	1.71		($	3.60	)	$	5.28
ROAE[a]		(3.2	)%		6.2	%		(12.6	)%		20.3	%

[a] Average equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the $200 million liquidation value of the preferred shares.

2

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED BALANCE SHEETS

	DEC. 31, 2005			DEC. 31, 2004
ASSETS
Cash and cash equivalents	$	468,015		$	271,143
Fixed maturity investments available for sale, at fair value		4,323,339			3,578,174
Investments in other ventures, under equity method		161,883			91,036
Premiums receivable, net		575,109			545,352
Deferred acquisition costs		166,720			195,419
Securities lending collateral		408,663			407,527
Prepaid reinsurance premiums		27,132			5,248
Losses recoverable		17,248			12,203
Accrued investment income		33,734			28,378
Intangible assets		65,633			47,107
Deferred tax assets		69,360			16,378
Other assets		35,701			27,873
TOTAL ASSETS	$	6,352,537		$	5,225,838
LIABILITIES
Reserve for losses and loss expenses	$	2,603,590		$	1,549,661
Reserve for unearned premiums		803,629			897,605
Deposit liabilities		92,523			—
Reinsurance balances payable		85,281			70,507
Securities lending payable		408,663			407,527
Debt		447,092			391,280
Other liabilities		39,216			46,803
TOTAL LIABILITIES	$	4,479,994		$	3,363,383
SHAREHOLDERS’ EQUITY
Preferred shares
Series A, non-cumulative - 8,000 issued and outstanding (2004 - nil)	$	8,000			—
Common shares
66,139 issued and outstanding (2004 - 61,255)		66,139			61,255
Additional paid-in capital		1,453,722			1,111,633
Accumulated other comprehensive income		(19,672	)		39,473
Retained earnings		364,354			650,094
TOTAL SHAREHOLDERS’ EQUITY	$	1,872,543		$	1,862,455
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,352,537		$	5,225,838
Book value per common share	$	25.18		$	30.30
Diluted book value per common share (treasury stock method)	$	23.17		$	27.91
RATIOS
Debt to total capitalization		19.3	%		17.4	%

3

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT DISTRIBUTION

FOR THE YEAR ENDED DECEMBER 31, 2005

Gross Premiums Written = $1,812 million [a]

[a]

Prior to deposit accounting adjustments.

Source of Business

Casualty

46%

Property

48%

Other Specialty

6%

Type of Business

Insurance

26%

Reinsurance

74%

Broker Distribution

Benfield

9%

Other

26%

Aon

24%

Marsh

27%

Willis

14%

4

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED SEGMENT DATA
FOR THE QUARTER ENDED DECEMBER 31, 2005

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk
UNDERWRITING REVENUES
Gross premiums written	$	20,626		$	18,169		$	51,588		$	25,694		$	72,679
Net premiums written	$	20,622		$	18,168		$	51,367		$	16,068		$	66,417
Net premiums earned	$	91,411		$	60,390		$	113,830		$	25,201		$	69,828
UNDERWRITING EXPENSES
Losses and loss expenses	$	91,697		$	131,679		$	49,216		$	17,437		$	33,772
Acquisition expenses		28,362			7,852			33,633			2,002			3,522
General and administrative expenses		4,984			4,214			7,567			2,826			7,554
Other underwriting expenses		—			—			—			—			—
Total expenses		125,043			143,745			90,416			22,265			44,848
UNDERWRITING (LOSS) INCOME	($	33,632	)	($	83,355	)	$	23,414		$	2,936		$	24,980
GAAP RATIOS
Loss ratio		100.3	%		218.0	%		43.2	%		69.2	%		48.4	%
Acquisition expense ratio		31.0	%		13.0	%		29.5	%		7.9	%		5.0	%
General and administrative expense ratio		5.5	%		7.0	%		6.6	%		11.2	%		10.8	%
Combined ratio		136.8	%		238.0	%		79.3	%		88.3	%		64.2	%
STATUTORY RATIOS
Loss ratio		100.3	%		218.0	%		43.2	%		69.2	%		48.4	%
Acquisition expense ratio		53.9	%		13.0	%		33.5	%		3.8	%		5.3	%
General and administrative expense ratio		24.2	%		23.2	%		14.7	%		17.6	%		11.4	%
Combined ratio		178.4	%		254.2	%		91.4	%		90.6	%		65.1	%

	Aerospace and Other Specialty Lines				Total Company Sub-total			Deposit Accounting Adjustment [a]				Reported Totals
UNDERWRITING REVENUES
Gross premiums written		$	25,032		$	213,788			($	21,156	)	$	192,632
Net premiums written		$	25,451		$	198,093			($	21,156	)	$	176,937
Net premiums earned		$	80,784		$	441,444			($	34,435	)	$	407,009
UNDERWRITING EXPENSES
Losses and loss expenses		$	96,128		$	419,929			($	33,569	)	$	386,360
Acquisition expenses			12,322			87,693				(9,205	)		78,488
General and administrative expenses			4,717			31,862				—			31,862
Other underwriting expenses			—			—				6,294			6,294
Total expenses			113,167			539,484				(36,480	)		503,004
UNDERWRITING (LOSS) INCOME		($	32,383	)	($	98,040	)		$	2,045		($	95,995	)
GAAP RATIOS
Loss ratio			119.0	%		95.1	%			97.5	%		94.9	%
Acquisition expense ratio			15.3	%		19.9	%			26.7	%		19.3	%
General and administrative expense ratio			5.8	%		7.2	%			—			7.8	%
Combined ratio			140.1	%		122.2	%			124.2	%		122.0	%
STATUTORY RATIOS
Loss ratio			119.0	%		95.1	%			97.5	%		94.9	%
Acquisition expense ratio			11.1	%		19.0	%			9.5	%		20.1	%
General and administrative expense ratio			18.5	%		16.1	%			—			18.0	%
Combined ratio			148.6	%		130.2	%			107.0	%		133.0	%

[a] For internal management reporting purposes, underwriting results by segment are presented on the basis of applying reinsurance accounting to all reinsurance contracts written. However, for financial statement presentation purposes, management determined that certain reinsurance contracts written during the period were more appropriately accounted for under the deposit method of accounting specified by AICPA SOP 98-7 whereby net premiums due on such contracts were recorded as deposit liabilities. The adjustment herein reconciles the Company’s underwriting results by segment to the Company’s financial statement presentation.

5

ENDURANCE SPECIALTY HOLDINGS LTD.
CONSOLIDATED SEGMENT DATA
FOR THE YEAR ENDED DECEMBER 31, 2005

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk
UNDERWRITING REVENUES
Gross premiums written	$	361,859		$	250,469		$	436,027		$	112,736		$	308,695
Net premiums written	$	360,517		$	246,604		$	430,727		$	91,774		$	295,878
Net premiums earned	$	425,035		$	252,828		$	445,324		$	103,710		$	260,464
UNDERWRITING EXPENSES
Losses and loss expenses	$	442,084		$	321,507		$	267,454		$	185,075		$	158,501
Acquisition expenses		120,278			30,681			119,389			11,114			14,752
General and administrative expenses		28,213			21,109			34,733			11,699			25,905
Other underwriting expenses		—			—			—			—			—
Total expenses		590,575			373,297			421,576			207,888			199,158
UNDERWRITING (LOSS) INCOME	($	165,540	)	($	120,469	)		23,748		($	104,178	)	$	61,306
GAAP RATIOS
Loss ratio		104.0	%		127.2	%		60.1	%		178.5	%		60.9	%
Acquisition expense ratio		28.3	%		12.1	%		26.8	%		10.7	%		5.7	%
General and administrative expense ratio		6.6	%		8.3	%		7.8	%		11.3	%		9.9	%
Combined ratio		138.9	%		147.6	%		94.7	%		200.5	%		76.5	%
STATUTORY RATIOS
Loss ratio		104.0	%		127.2	%		60.1	%		178.5	%		60.9	%
Acquisition expense ratio		28.1	%		12.2	%		27.0	%		8.0	%		4.8	%
General and administrative expense ratio		7.8	%		8.6	%		8.1	%		12.7	%		8.8	%
Combined ratio		139.9	%		148.0	%		95.2	%		199.2	%		74.5	%

	Aerospace and Other Specialty Lines				Total Company Sub-total			Deposit Accounting Adjustment [a]				Reported Totals
UNDERWRITING REVENUES
Gross premiums written		$	342,382		$	1,812,168			$	(143,291	)	$	1,668,877
Net premiums written		$	337,140		$	1,762,640			$	(143,291	)	$	1,619,349
Net premiums earned		$	316,081		$	1,803,442			$	(79,748	)	$	1,723,694
UNDERWRITING EXPENSES
Losses and loss expenses		$	337,240		$	1,711,861			$	(60,918	)	$	1,650,943
Acquisition expenses			56,888			353,102				(23,410	)		329,692
General and administrative expenses			26,377			148,036				—			148,036
Other underwriting expenses			—			—				5,342			5,342
Total expenses			420,505			2,212,999				(78,986	)		2,134,013
UNDERWRITING (LOSS) INCOME		($	104,424	)	($	409,557	)		($	762	)	($	410,319	)
GAAP RATIOS
Loss ratio			106.7	%		94.9	%			76.4	%		95.8	%
Acquisition expense ratio			18.0	%		19.6	%			29.4	%		19.1	%
General and administrative expense ratio			8.3	%		8.2	%			—			8.6	%
Combined ratio			133.0	%		122.7	%			105.8	%		123.5	%
STATUTORY RATIOS
Loss ratio			106.7	%		94.9	%			76.4	%		95.8	%
Acquisition expense ratio			20.3	%		19.2	%			28.8	%		18.3	%
General and administrative expense ratio			7.8	%		8.4	%			—			9.1	%
Combined ratio			134.8	%		122.5	%			105.2	%		123.2	%

[a] For internal management reporting purposes, underwriting results by segment are presented on the basis of applying reinsurance accounting to all reinsurance contracts written. However, for financial statement presentation purposes, management determined that certain reinsurance contracts written during the period were more appropriately accounted for under the deposit method of accounting specified by AICPA SOP 98-7 whereby net premiums due on such contracts were recorded as deposit liabilities. The adjustment herein reconciles the Company’s underwriting results by segment to the Company’s financial statement presentation.

6

ENDURANCE SPECIALTY HOLDINGS LTD.
IMPACT OF 2005 CATASTROPHE LOSSES [a]
FOR THE YEAR ENDED DECEMBER 31, 2005

RESULTS EXCLUDING CATASTROPHE LOSSES

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk			Aerospace and Other Specialty Lines			Total Company
Net premiums earned	$	423,502		$	226,598		$	445,324		$	103,955		$	260,464		$	294,158		$	1,754,001
Losses and loss expenses		166,924			20,319			267,454			49,501			158,501			167,265			829,964
Acquisition expenses		122,361			30,681			119,389			11,114			14,752			56,888			355,185
General and administrative expenses		28,213			21,109			34,733			11,699			25,905			26,377			148,036
Total expenses		317,498			72,109			421,576			72,314			199,158			250,530			1,333,185
UNDERWRITING INCOME	$	106,004		$	154,489		$	23,748		$	31,641		$	61,306		$	43,628		$	420,816
GAAP RATIOS
Loss ratio		39.4	%		9.0	%		60.1	%		47.6	%		60.9	%		56.9	%		47.3	%
Acquisition expense ratio		28.9	%		13.5	%		26.8	%		10.7	%		5.7	%		19.3	%		20.2	%
General and administrative expense ratio		6.7	%		9.3	%		7.8	%		11.3	%		9.9	%		9.0	%		8.4	%
Combined ratio		75.0	%		31.8	%		94.7	%		69.6	%		76.5	%		85.2	%		75.9	%
IMPACT OF 2005 CATASTROPHE LOSSES
	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk			Aerospace and Other Specialty Lines			Total Company
Net premiums earned	$	1,533		$	26,230			—		($	245	)		—		$	21,923		$	49,441
Losses and loss expenses		275,160			301,188			—			135,574			—			169,975			881,897
Acquisition expenses		(2,083	)		—			—			—			—			—			(2,083	)
General and administrative expenses		—			—			—			—			—			—			—
Total expenses		273,077			301,188			—			135,574			—			169,975			879,814
UNDERWRITING (LOSS)		($271,544	)		($274,958	)		—			($135,819	)		—			($148,052	)	($	830,373	)
GAAP RATIOS
Loss ratio		64.6	%		118.2	%		—			130.9	%		—			49.8	%		47.6	%
Acquisition expense ratio		(0.6	)%		(1.4	)%		—			—			—			(1.3	)%		(0.6	)%
General and administrative expense ratio		(0.1	)%		(1.0	)%		—			—			—			(0.7	)%		(0.2	)%
Combined ratio		63.9	%		115.8	%		—			130.9	%		—			47.8	%		46.8	%

[a] Catastrophe losses include all 2005 property events with a loss to Endurance of greater than $5 million during the year. Results are presented before the application of deposit accounting.

7

ENDURANCE SPECIALTY HOLDINGS LTD.
DEPOSIT ACCOUNTING ADJUSTMENT IMPACTS ON SEGMENT DATA
FOR THE QUARTER ENDED DECEMBER 31, 2005

INCLUDING DEPOSIT ACCOUNTING ADJUSTMENTS

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk			Aerospace and Other Specialty Lines			Total Company
UNDERWRITING REVENUES
Gross premiums written	$	13,362		$	18,169		$	37,272		$	25,694		$	72,679		$	25,456		$	192,632
Net premiums written	$	13,357		$	18,169		$	37,051		$	16,068		$	66,417		$	25,875		$	176,937
Net premiums earned	$	79,581		$	57,707		$	95,031		$	25,201		$	69,828		$	79,661		$	407,009
UNDERWRITING EXPENSES
Losses and loss expenses	$	79,069		$	123,059		$	37,884		$	17,437		$	33,772		$	95,139		$	386,360
Acquisition expenses		26,363			7,248			27,432			2,002			3,522			11,921			78,488
General and administrative expenses		4,984			4,214			7,567			2,826			7,554			4,717			31,862
Other underwriting expenses		1,467			6,956			(2,214	)		—			—			85			6,294
Total expenses		111,883			141,477			70,669			22,265			44,848			111,862			503,004
UNDERWRITING (LOSS) INCOME	($	32,302	)	($	83,770	)	$	24,362		$	2,936		$	24,980		($	32,201	)	($	95,995	)
GAAP RATIOS
Loss ratio		99.4	%		213.2	%		39.9	%		69.2	%		48.4	%		119.4	%		94.9	%
Acquisition expense ratio		33.1	%		12.6	%		28.9	%		7.9	%		5.0	%		15.0	%		19.3	%
General and administrative expense ratio		6.3	%		7.3	%		8.0	%		11.2	%		10.8	%		5.9	%		7.8	%
Combined ratio		138.8	%		233.1	%		76.8	%		88.3	%		64.2	%		140.3	%		122.0	%

EXCLUDING DEPOSIT ACCOUNTING ADJUSTMENTS

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk			Aerospace and Other Specialty Lines			Total Company
UNDERWRITING REVENUES
Gross premiums written	$	20,626		$	18,169		$	51,588		$	25,694		$	72,679		$	25,032		$	213,788
Net premiums written	$	20,622		$	18,168		$	51,367		$	16,068		$	66,417		$	25,451		$	198,093
Net premiums earned	$	91,411		$	60,390		$	113,830		$	25,201		$	69,828		$	80,784		$	441,444
UNDERWRITING EXPENSES
Losses and loss expenses	$	91,697		$	131,679		$	49,216		$	17,437		$	33,772		$	96,128		$	419,929
Acquisition expenses		28,362			7,852			33,633			2,002			3,522			12,322			87,693
General and administrative expenses		4,984			4,214			7,567			2,826			7,554			4,717			31,862
Total expenses		125,043			143,745			90,416			22,265			44,848			113,167			539,484
UNDERWRITING (LOSS) INCOME	($	33,632	)	($	83,355	)	$	23,414		$	2,936		$	24,980		($	32,383	)	($	98,040	)
GAAP RATIOS
Loss ratio		100.3	%		218.0	%		43.2	%		69.2	%		48.4	%		119.0	%		95.1	%
Acquisition expense ratio		31.0	%		13.0	%		29.5	%		7.9	%		5.0	%		15.3	%		19.9	%
General and administrative expense ratio		5.5	%		7.0	%		6.6	%		11.2	%		10.8	%		5.8	%		7.2	%
Combined ratio		136.8	%		238.0	%		79.3	%		88.3	%		64.2	%		140.1	%		122.2	%

8

ENDURANCE SPECIALTY HOLDINGS LTD.
DEPOSIT ACCOUNTING ADJUSTMENT IMPACTS ON SEGMENT DATA
FOR THE YEAR ENDED DECEMBER 31, 2005

INCLUDING DEPOSIT ACCOUNTING ADJUSTMENTS

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance				Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk			Aerospace and Other Specialty Lines			Total Company
UNDERWRITING REVENUES
Gross premiums written	$	312,619			$	239,834		$	363,129		$	112,736		$	308,695		$	331,864		$	1,668,877
Net premiums written	$	311,277			$	235,969		$	357,829		$	91,774		$	295,878		$	326,622		$	1,619,349
Net premiums earned	$	386,586			$	247,414		$	411,674		$	103,710		$	260,464		$	313,846		$	1,723,694
UNDERWRITING EXPENSES
Losses and loss expenses	$	413,114			$	310,356		$	248,100		$	185,075		$	158,501		$	335,797		$	1,650,943
Acquisition expenses		110,853				29,463			107,355			11,114			14,752			56,155			329,692
General and administrative expenses		28,213				21,109			34,733			11,699			25,905			26,377			148,036
Other underwriting expenses		1,742				6,956			(3,309	)		—			—			(47	)		5,342
Total expenses		553,922				367,884			386,879			207,888			199,158			418,282			2,134,013
UNDERWRITING (LOSS) INCOME	($	167,336	)		($	120,470	)	$	24,795		($	104,178	)	$	61,306		($	104,436	)	($	410,319	)
GAAP RATIOS
Loss ratio		106.9	%			125.4	%		60.3	%		178.5	%		60.9	%		107.0	%		95.8	%
Acquisition expense ratio		28.7	%			11.9	%		26.1	%		10.7	%		5.7	%		17.9	%		19.1	%
General and administrative expense ratio		7.3	%			8.5	%		8.4	%		11.3	%		9.9	%		8.4	%		8.6	%
Combined ratio		142.9	%			145.8	%		94.8	%		200.5	%		76.5	%		133.3	%		123.5	%

EXCLUDING DEPOSIT ACCOUNTING ADJUSTMENTS

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk			Aerospace and Other Specialty Lines			Total Company
UNDERWRITING REVENUES
Gross premiums written	$	361,859		$	250,469		$	436,027		$	112,736		$	308,695		$	342,382		$	1,812,168
Net premiums written	$	360,517		$	246,604		$	430,727		$	91,774		$	295,878		$	337,140		$	1,762,640
Net premiums earned	$	425,035		$	252,828		$	445,324		$	103,710		$	260,464		$	316,081		$	1,803,442
UNDERWRITING EXPENSES
Losses and loss expenses	$	442,084		$	321,507		$	267,454		$	185,075		$	158,501		$	337,240		$	1,711,861
Acquisition expenses		120,278			30,681			119,389			11,114			14,752			56,888			353,102
General and administrative expenses		28,213			21,109			34,733			11,699			25,905			26,377			148,036
Total expenses		590,575			373,297			421,576			207,888			199,158			420,505			2,212,999
UNDERWRITING (LOSS) INCOME	($	165,540	)	($	120,469	)	$	23,748		($	104,178	)	$	61,306		($	104,424	)	($	409,557	)
GAAP RATIOS
Loss ratio		104.0	%		127.2	%		60.1	%		178.5	%		60.9	%		106.7	%		94.9	%
Acquisition expense ratio		28.3	%		12.1	%		26.8	%		10.7	%		5.7	%		18.0	%		19.6	%
General and administrative expense ratio		6.6	%		8.3	%		7.8	%		11.3	%		9.9	%		8.3	%		8.2	%
Combined ratio		138.9	%		147.6	%		94.7	%		200.5	%		76.5	%		133.0	%		122.7	%

9

ENDURANCE SPECIALTY HOLDINGS LTD.
RETURN ON EQUITY ANALYSIS

	YEAR ENDED DEC. 31, 2005
Average common equity[a]	$	1,767,499
Net premiums earned	$	1,723,694
Combined ratio		123.5	%
Operating margin		(23.5	)%
Premium leverage		0.98	x
Implied ROAE from underwriting activity		(22.9	)%
Average invested assets at amortized cost	$	4,463,908
Investment leverage		2.53	x
Year to date investment income yield, pretax		4.1	%
Implied ROAE from investment activity		10.2	%
Implied Pre-tax Operating ROAE, for period		(12.7	)%

[a] Average equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the $200 million liquidation value of the preferred shares.

10

ENDURANCE SPECIALTY HOLDINGS LTD.
ANNUALIZED OPERATING & INVESTMENT LEVERAGE

													Year Ended December 31,
	1Q 2005			2Q 2005			3Q 2005			4Q 2005			2005			2004
Average total equity [a]	$	1,872,548		$	1,934,883		$	1,772,610		$	1,715,319		$	1,867,499		$	1,753,635
Net premiums earned	$	437,598		$	437,921			441,166		$	407,009		$	1,723,694		$	1,632,600
Operating leverage		0.23	x		0.23	x		0.25	x		0.24	x		0.92	x		0.93	x
Annualized operating leverage		0.93	x		0.91	x		1.00	x		0.95	x		0.92	x		0.93	x
Avg. invested assets at amortized cost	$	4,009,987		$	4,187,712			4,397,080		$	4,750,427		$	4,463,908		$	3,277,276
Investment leverage		2.14	x		2.16	x		2.48	x		2.77	x		2.39	x		1.87	x

[a] Average equity is calculated as the arithmetic average of the beginning and ending equity balances for the stated periods and includes the $200 million liquidation value of the preferred shares.

11

ENDURANCE SPECIALTY HOLDINGS LTD.
INVESTMENT PORTFOLIO
AS OF DECEMBER 31, 2005

Type of Investment	Fair Value		Percentage
Cash and equivalents[a]	$	468,639		9.5	%
U.S. government and agencies		990,673		20.0	%
Corporate securities		681,096		13.7	%
Foreign government		229,303		4.6	%
Municipals		—		—
Asset-backed securities		595,788		12.0	%
Mortgage-backed securities		1,826,479		36.9	%
Investments in other ventures		161,883		3.3	%
Total	$	4,953,861		100.0	%

Ratings		Fair Value	Percentage
U.S. Government and agencies	$	990,673	20.0	%
AAA/Aaa		3,189,874	64.4	%
AA/Aa		210,779	4.2	%
A/A		400,652	8.1	%
BBB and below		—	—
Investments in other ventures/Not rated		161,883	3.3	%
Total	$	4,953,861	100.0	%

Performance	December 31, 2005
Annualized yield, year to date[b]	4.0	%
Duration[c]	2.72

Investment Income		Quarter Ended March 31, 2005		Quarter Ended June 30, 2005		Quarter Ended Sept. 30, 2005		Quarter Ended December 31, 2005
Income from investments in other ventures	$	3,749	$	168	$	6,611	$	2,818
Total net investment income	$	40,011	$	39,696	$	49,494	$	51,774

Note:	[a]	Cash and equivalents are shown net of investments pending settlement.
	[b]	Annualized yield excludes realized and unrealized gains and losses on fixed maturity investments
	[c]	Duration excludes investments in other ventures

12

ENDURANCE SPECIALTY HOLDINGS LTD.
PERIOD END UNREALIZED GAINS AND QUARTERLY OPERATING CASH FLOW

	1Q 2005			2Q 2005		3Q 2005			4Q 2005
Unrealized holding gains (losses) on investments, period end	($	31,797	)	$	14,519	($	30,242	)	($	44,039	)
Operating cash flow	$	220,080		$	252,105	$	262,717		$	68,543

13

ENDURANCE SPECIALTY HOLDINGS LTD.
ACTIVITY IN RESERVE FOR LOSSES AND LOSS EXPENSES

	QUARTER			QUARTER			QUARTER			QUARTER			YEAR
	ENDED			ENDED			ENDED			ENDED			ENDED
	MARCH 31, 2005			JUNE 30, 2005			SEPT. 30, 2005			DEC. 31, 2005			DEC. 31, 2005
Incurred related to:
Current year	$	297,060		$	256,664		$	808,484		$	451,197		$	1,813,405
Prior years		(46,001	)		(27,748	)		(23,876	)		(64,837	)		(162,462	)
Total incurred		251,059			228,916			784,608			386,360			1,650,943
Paid related to:
Current year	($	3,021	)	($	14,025	)	($	26,678	)	($	229,008	)	($	272,732	)
Prior years		(86,769	)		(94,706	)		(68,658	)		(57,124	)		(307,257	)
Total paid		(89,790	)		(108,731	)		(95,336	)		(286,132	)		(579,989	)

14

ENDURANCE SPECIALTY HOLDINGS LTD.
ACTIVITY IN RESERVE FOR LOSSES AND LOSS EXPENSES BY SEGMENT

FAVORABLE (ADVERSE) DEVELOPMENT DURING THE YEAR ENDED DECEMBER 31, 2004

	QUARTER ENDED MARCH 31, 2004		QUARTER ENDED JUNE 30, 2004		QUARTER ENDED SEPT. 30, 2004		QUARTER ENDED DEC. 31, 2004			YEAR ENDED DEC. 31, 2004
Incurred related to prior years
Property Per Risk Treaty Reinsurance		2,392		10,467		18,047		17,132			48,038
Property Catastrophe Reinsurance		7,288		10,000		17,643		5,483			40,414
Casualty Treaty Reinsurance		1,827		4,020		5,401		(11,170	)		78
Property Individual Risk		6,294		3,486		3,082		2,881			15,743
Casualty Individual Risk		372		6,396		1,851		6,491			15,110
Aerospace and Other Specialty Lines		1,199		6,325		4,909		4,864			17,297
Total Company		19,372		40,694		50,933		25,681			136,680

FAVORABLE (ADVERSE) DEVELOPMENT DURING THE YEAR ENDED DECEMBER 31, 2005

	QUARTER ENDED MARCH 31, 2005			QUARTER ENDED JUNE 30, 2005			QUARTER ENDED SEPT. 30, 2005		QUARTER ENDED DEC. 31, 2005			YEAR ENDED DEC. 31, 2005
Incurred related to prior years
Property Per Risk Treaty Reinsurance		28,900			11,994			13,506		19,441			73,841
Property Catastrophe Reinsurance		5,146			2,117			1,667		(4,694	)		4,236
Casualty Treaty Reinsurance		1,929			(9,670	)		2,530		11,971			6,760
Property Individual Risk		(2,477	)		6,788			2,351		12,299			18,961
Casualty Individual Risk		12,265			9,361			438		16,971			39,035
Aerospace and Other Specialty Lines		238			7,158			3,384		8,849			19,629
Total Company		46,001			27,748			23,876		64,837			162,462

15

ENDURANCE SPECIALTY HOLDINGS LTD.
ANALYSIS OF UNPAID LOSSES AND LOSS EXPENSE

	Property Per Risk Treaty Reinsurance			Property Catastrophe Reinsurance			Casualty Treaty Reinsurance			Property Individual Risk			Casualty Individual Risk			Aerospace and Other Specialty Lines			Total Company			Deposit Accounting Adjustment [a]			Reported Totals
AT DECEMBER 31, 2005
Case reserves	$	332,001		$	173,984		$	140,986		$	150,267		$	9,083		$	225,747		$	1,032,068		($	13,576	)	$	1,018,492
Total reserves	$	563,723		$	219,453		$	690,548		$	211,591		$	459,178		$	505,722		$	2,650,215		($	46,625	)	$	2,603,590
Case reserves / Total reserves		58.9	%		79.3	%		20.4	%		71.0	%		2.0	%		44.6	%		38.9	%		29.1	%		39.1	%
IBNR / Total reserves		41.1	%		20.7	%		79.6	%		29.0	%		98.0	%		55.4	%		61.1	%		70.9	%		60.9	%

[a] For internal management reporting purposes, underwriting results by segment are presented on the basis of applying reinsurance accounting to all reinsurance contracts written. However, for financial statement presentation purposes, management determined that certain reinsurance contracts written during the period were more appropriately accounted for under the deposit method of accounting specified by AICPA SOP 98-7 whereby net premiums due on such contracts were recorded as deposit liabilities. The adjustment herein reconciles the Company’s underwriting results by segment to the Company’s financial statement presentation.

16

ENDURANCE SPECIALTY HOLDINGS LTD.
DILUTIVE SHARES FOR EPS CALCULATION

		QUARTER ENDED						YEAR ENDED
		DECEMBER 31,						DECEMBER 31,
		2005			2004			2005			2004
DILUTIVE SHARES OUTSTANDING:	Average market price per share	$	34.37		$	33.03		$	35.92		$	33.70
AS REPORTED	Basic weighted average common shares outstanding		65,952			61,684			62,029			62,781
	Add: weighted ave. unvested restricted share units		679			—			636			—
	Weighted average exercise price per share		—			—			—			—
	Proceeds from unrecognized restricted share unit expense	$	12,482		$	15,250		$	12,482		$	15,250
	Less: restricted share units bought back via treasury method		(679	)		—			(636	)		—
	Add: weighted ave. dilutive warrants outstanding		7,202			7,238			7,202			7,242
	Weighted average exercise price per share	$	17.87		$	18.87		$	17.87		$	18.87
	Less: warrants bought back via treasury method		(7,202	)		(4,136	)		(7,202	)		(4,055	)
	Add: weighted ave. dilutive options outstanding		3,128			3,194			3,179			3,305
	Weighted average exercise price per share	$	18.45		$	19.15		$	18.46		$	19.86
	Proceeds from unrecognized option expense	$	365		$	1,427		$	365		$	1,427
	Less: options bought back via treasury method		(3,128	)		(1,895	)		(3,179	)		(1,990	)
	Weighted average dilutive shares outstanding		65,952			66,086			62,029			67,283

Note: Warrants, options and unvested restricted share units that are anti-dilutive are not included in the calculation of diluted shares outstanding. Warrants, options and unvested restricted share units are anti-dilutive for earnings per share in any period in which there is a net loss and the anti-dilution is reflected in the calculations above as additional treasury method repurchases. Restricted share units are included in the calculation of basic and diluted weighted shares outstanding. The treasury stock method assumes that the proceeds received from the exercise of options or warrants will be used to repurchase the Company's common shares at the average market price during the period of calculation. SFAS No. 123 also requires that any unrecognized stock based compensation expense that will be recorded in future periods be included as proceeds for purposes of the treasury stock repurchases.

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ENDURANCE SPECIALTY HOLDINGS LTD.
OPERATING INCOME RECONCILIATION
EARNINGS PER SHARE INFORMATION - AS REPORTED, GAAP

	QUARTER ENDED						YEAR ENDED
	DECEMBER 31,						DECEMBER 31,
	2005			2004			2005			2004
Net (loss) income before preferred dividends	($	49,771	)	$	113,108		($	220,484	)	$	355,584
Add (Less) after-tax items:
Net foreign exchange losses (gains)		1,692			(3,824	)		4,704			(1,238	)
Net realized losses (gains) on investments		3,098			(847	)		7,459			(5,903	)
Operating (loss) income before preferred dividends		(44,981	)		108,437			(208,321	)		348,443
Preferred dividends		(2,720	)		—			(2,720	)		—
Operating (loss) income available to common shareholders	($	47,701	)	$	108,437		($	211,041	)	$	348,443
Weighted average common shares outstanding
Basic		65,952			61,684			62,029			62,781
Dilutive		65,952			66,086			62,029			67,283
Basic per share data
Net (loss) income per common share	($	0.80	)	$	1.83		($	3.60	)	$	5.66
Add (Less) after-tax items:
Net foreign exchange (gains) losses		0.03			(0.06	)		0.08			(0.02	)
Net realized losses (gains) on investments		0.05			(0.01	)		0.12			(0.09	)
Operating (loss) income per common share	($	0.72	)	$	1.76		($	3.40	)	$	5.55
Diluted per share data
Net (loss) income per common share	($	0.80	)	$	1.71		($	3.60	)	$	5.28
Add (Less) after-tax items:
Net foreign exchange (gains) losses		0.03			(0.06	)		0.08			(0.02	)
Net realized losses (gains) on investments		0.05			(0.01	)		0.12			(0.09	)
Operating (loss) income per common share	($	0.72	)	$	1.64		($	3.40	)	$	5.18

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ENDURANCE SPECIALTY HOLDINGS LTD.
DILUTIVE COMMON SHARES SENSITIVITY ANALYSIS

DILUTIVE COMMON SHARES OUSTANDING
Market Price per Share
$30.00	$31.00	$32.00	$33.00	$34.00	$35.00	$36.00	$37.00	$38.00	$39.00	$40.00
71,164	71,363	71,550	71,726	71,891	72,047	72,195	72,334	72,466	72,591	72,710

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ENDURANCE SPECIALTY HOLDINGS LTD.
BOOK VALUE PER COMMON SHARE

		DECEMBER 31,
		2005			2004
DILUTIVE COMMON SHARES OUTSTANDING:	Price per share at period end	$	35.85		$	34.20
AS-IF CONVERTED [a]	Basic common shares outstanding[b]		66,413			61,473
	Add: unvested restricted share units		652			596
	Add: dilutive warrants outstanding		7,202			7,202
	Weighted average exercise price per share	$	17.87		$	18.87
	Add: dilutive options outstanding		3,081			3,204
	Weighted average exercise price per share	$	18.45		$	18.91
	Book Value[c]	$	1,672,543		$	1,862,455
	Add: proceeds from converted warrants		128,706			135,908
	Add: proceeds from converted options		56,845			60,582
	Pro forma book value	$	1,858,094		$	2,058,945
	Dilutive shares outstanding		77,349			72,475
	Basic book value per common share	$	25.18		$	30.30
	Diluted book value per common share	$	24.02		$	28.41
DILUTIVE COMMON SHARES OUTSTANDING:	Price per share at period end	$	35.85		$	34.20
TREASURY STOCK METHOD	Basic common shares outstanding[b]		66,413			61,473
	Add: unvested restricted share units		652			596
	Add: dilutive warrants outstanding		7,202			7,202
	Weighted average exercise price per share	$	17.87		$	18.87
	Less: warrants bought back via treasury method		(3,590	)		(3,974	)
	Add: dilutive options outstanding		3,081			3,204
	Weighted average exercise price per share	$	18.45		$	18.91
	Less: options bought back via treasury method		(1,586	)		(1,771	)
	Dilutive shares outstanding		72,173			66,729
	Basic book value per common share	$	25.18		$	30.30
	Diluted book value per common share	$	23.17		$	27.91

[a]	The as-if converted method assumes that the proceeds received upon exercise of options and warrants will be retained by the Company and the resulting common shares from exercise will remain outstanding.
[b]	Basic common shares include vested restricted share units.
[c]	Excludes the $200 million liquidation value of the preferred shares.

20

ENDURANCE SPECIALTY HOLDINGS LTD.
SHAREHOLDER RETURN ANALYSIS

	YEAR ENDED DECEMBER 31,
	2005			2004			2003			2002
Net (loss) income available to common shareholders	($	223,204	)	$	355,584		$	263,437		$	102,066
Dividends paid to common shareholders		(61,695	)		(50,346	)		(20,505	)		—
Shareholders’ equity [a]		1,672,543			1,862,455			1,644,815			1,217,500
Return on beginning equity		(12.0	)%		21.6	%		21.6	%
Dividend payout ratio [b]		3.3	%		3.1	%		1.7	%
Dilutive common shares outstanding		72,173			66,729			68,445			56,017
Diluted book value per common share (treasury stock method)	$	23.17		$	27.91		$	24.03		$	21.73
Change in diluted book value per common share		(17.0	)%		16.1	%		10.6	%
Total return to common shareholders [c]		(13.7	)%		19.2	%		12.3	%

[a]	Excludes the $200 million liquidation value of the preferred shares.
[b]	Dividend payout ratio is calculated as dividends paid divided by beginning shareholders’ equity.
[c]	Total return to common shareholders is calculated as the sum of the change in diluted book value per common share and the dividend payout ratio.

21

ENDURANCE SPECIALTY HOLDINGS LTD.
REGULATION G

In presenting the Company’s results, management has included and discussed certain non-GAAP measures. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the Company’s results of operations in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP.

Operating income is an internal performance measure used by the Company in the management of its operations. Operating income represents after-tax operational results excluding, as applicable, after-tax net realized capital gains or losses and after-tax net foreign exchange gains or losses because the amount of these gains or losses is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. The Company believes these amounts are largely independent of its business and underwriting process and including them distorts the analysis of trends in its operations. In addition to presenting net income determined in accordance with GAAP, the Company believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the Company’s results of operations in a manner similar to how management analyzes the Company’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. Please see page 16 for a reconciliation of operating income to net income.

Return on Average Equity (ROAE) is comprised using the average common equity calculated as the arithmetic average of the beginning and ending common equity balances for stated periods. Return on Beginning Equity (ROBE) is comprised using the beginning common equity for stated periods. The Company presents various measures of Return on Equity that are commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

Investment yield is provided by the Company’s investment managers and is calculated by dividing net investment income by average invested assets at amortized cost. The Company utilizes and presents the investment yield in order to better disclose the performance of the Company’s investments and to show the components of the Company’s ROE.

The Company has included diluted book value per common share because it takes into account the effect of dilutive securities; therefore, the Company believes it is a better measure of calculating shareholder returns than book value per common share. Please see page 18 for a reconciliation of diluted book value per common share to basic book value per common share.

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