Endurance Specialty 8K Results of Operations and Financial Condition | ENH 29 Jul 08

Exhibit 99.1

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(ENDURANCE LOGO)


	Contact
	Investor Relations
	Phone: (441) 278-0988
	Email: investorrelations@endurance.bm

ENDURANCE REPORTS SECOND QUARTER NET INCOME OF $103.3 MILLION AND ANNUALIZED RETURN ON AVERAGE COMMON EQUITY OF 17.0%

PEMBROKE, Bermuda – July 29, 2008 – Endurance Specialty Holdings Ltd. (NYSE:ENH) today reported net income of $103.3 million and $1.56 per diluted common share for the second quarter of 2008 versus net income of $135.3 million and $1.85 per diluted common share in the second quarter of 2007.

For the six months ended June 30, 2008, net income was $181.1 million and $2.70 per diluted common share versus net income of $237.2 million and $3.22 per diluted common share for the six months ended June 30, 2007.

Operating highlights for the quarter ended June 30, 2008 were as follows:


	•	Gross premiums written of $518.1 million, an increase of 2.2% over the same period in 2007;

	•	Ceded premiums of $48.7 million versus $58.6 million in the second quarter of 2007;

	•	Combined ratio of 89.0%, which included 12.4 percentage points of favorable prior year loss reserve development;

	•	Net investment income of $60.5 million, a decrease of $18.1 million over the same period in 2007;

	•	Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, of $102.7 million and $1.55 per diluted common share; and

	•	Operating return on average common equity for the quarter of 4.2%, or 16.9% on an annualized basis.

Operating highlights for the six months ended June 30, 2008 were as follows:


	•	Gross premiums written of $1,386.7 million, an increase of 28.4% over the same period in 2007;

	•	Ceded premiums of $276.5 million versus $98.2 million in the first half of 2007;

	•	Combined ratio of 86.9%, which included 11.8 percentage points of favorable prior year loss reserve development;

	•	Net investment income of $107.4 million, a decrease of $46.0 million over the same period in 2007;

	•	Operating income, which excludes after-tax realized investment gains and losses and foreign exchange gains and losses, of $192.2 million and $2.87 per diluted common share;

	•	Operating return on average common equity for the first half of the year of 7.9%, or 15.9% on an annualized basis; and

	•	Book value of $36.72 per diluted common share, up 4.8% from December 31, 2007.

Kenneth J. LeStrange, Chairman and Chief Executive Officer, commented “Endurance produced another quarter of strong core earnings in the midst of increasing competition in the insurance and reinsurance markets and continued volatility in the financial markets, as well as increased levels of U.S. catastrophes

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and adverse crop growing conditions in many parts of the Midwestern United States. Our second quarter performance in spite of these obstacles is a testament to the quality of Endurance’s strategy of diversification and the effectiveness of Endurance’s underwriting, risk control and capital management.”

Operating Results

The 2.2% and 28.4% increases in gross premiums written in the three and six months ended June 30, 2008 over the same periods in 2007 resulted primarily from growth in the Insurance segment’s agriculture line of business from recently acquired ARMtech Insurance Services, Inc. and its affiliates (“ARMtech”) and from the Insurance segment’s workers’ compensation line of business. The growth in gross premiums written was partially offset by declines in premiums written within the Reinsurance segment, due to changes in client cessions, rate reductions and non-renewals of business which failed to meet the Company’s underwriting standards. Net premiums earned for the three and six months ended June 30, 2008 increased by $35.5 million or 8.5% and $30.5 million or 3.8% from the same periods in 2007 principally due to increases in written premiums in the agriculture line of the Insurance segment.

The Company’s operating results for the second quarter and first six months of 2008 included $56.2 million and $97.1 million of favorable prior year loss reserve development compared to $27.6 million and $83.5 million, respectively, for the same periods in 2007. Favorable development for the current periods resulted from lower than expected claims primarily in the short and long tail lines of the Insurance segment and the short tail and agriculture and other specialty lines of the Reinsurance segment.

The Company’s operating results for the second quarter of 2008 also included the impact of severe weather and worse than expected growing conditions for major crops in the U.S. resulting from heavy rains in parts of the Midwestern U.S. and drought conditions in other states. The Company’s relatively low exposure to the areas most significantly impacted by the adverse growing conditions and protection afforded by reinsurance reduced the impact of these events on the Company’s performance in the current periods. These conditions resulted in an increase to the Company’s loss ratio in the second quarter and first six months of 2008 of 3.1 percentage points and 1.7 percentage points, respectively.

For the three and six months ended June 30, 2008, the Company’s operating results were impacted by declines of $18.1 million and $46.0 million in net investment income compared to the same periods in 2007. In the second quarter and first six months of 2008, the Company recorded $0.5 million and $16.6 million of losses, respectively, related to its alternative investments and high yield funds, compared to $13.5 million and $25.7 million of income in the second quarter and first six months of 2007, respectively. Current year investment losses were due to mark to market adjustments experienced as a result of the broadly negative credit and equity markets during the first six months of 2008, particularly from the months of February, March and June. The investment income generated by the Company’s fixed maturity investments for the second quarter and first six months of 2008 was consistent with the same periods in 2007.

Insurance Segment

Gross premiums written in Endurance’s Insurance segment for the three and six months ended June 30, 2008 were $272.0 million and $857.1 million compared to $198.0 million and $345.0 million for the same periods in 2007. Premium growth for the Insurance segment was largely due to agriculture premiums written by ARMtech, resulting in $50.9 million and $464.3 million of additional gross written premiums, and $93.2 million and $126.0 million of additional net earned premiums in the quarter and six months ended June 30, 2008, respectively. In addition, the Company’s Insurance segment recorded $12.7 million and $34.6 million more workers’ compensation premiums in the second quarter and first six months of 2008 as compared to the same periods in 2007. The Insurance segment’s growth in these lines of business was partially offset by modest declines in gross premiums written in the casualty and healthcare liability lines of business in the second quarter and first six months of 2008 as compared to the same periods in 2007.

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Endurance’s Insurance segment combined ratios were 98.7% and 100.8% in the three and six months ended June 30, 2008 versus combined ratios of 79.4% and 84.5% for the three and six months ended June 30, 2007. The increases in the combined ratios in the second quarter and first six months of 2008 compared to the same periods in 2007 were driven predominantly by increases in the current periods’ net loss ratios related to the Company’s agriculture business line, international property business and from lower favorable development of prior year loss reserves, partially offset by improvements in the Insurance segment’s acquisition and general and administrative expense ratios.

During the second quarter of 2008, severe weather and worse than expected growing conditions were experienced for major crops in the U.S. due to heavy rains in parts of the Midwestern U.S. and drought conditions in other states, resulting in an increase of 5.7 percentage points and 3.4 percentage points to the Insurance segment’s net loss ratios for the second quarter and first six months of 2008, respectively. In addition, during the second quarter, several large fires resulted in international property losses which added 3.0 percentage points and 1.8 percentage points to the Insurance segment’s net loss ratios for the three and six months ended June 30, 2008, respectively. The Insurance segment’s net loss ratios for the current periods compared to the same periods in 2007 also increased due to changes in the mix of business with more premiums earned for the current periods in the agriculture line, which has a higher associated initial expected loss ratio. These losses were partially offset by favorable prior year loss reserve development of $25.6 million, or 10.4 percentage points for the second quarter and $29.3 million, or 7.1 percentage points, for the first six months of 2008, compared to favorable prior year loss reserve development of $18.7 million, or 15.1 percentage points and $45.2 million, or 19.3 percentage points, for the same quarter and first six months a year ago. The current periods’ favorable prior year loss reserve development emerged in the short tail property and the long tail healthcare liability lines, while in the same periods of 2007 favorable loss reserve development was primarily recorded in the short tail property lines.

The increase in the net loss ratio in the Insurance segment was partially offset by an improvement in the Insurance segment’s acquisition and general and administrative expense ratios for the current periods compared to the three and six months ended June 30, 2007 due to growth in premiums and the addition of the agriculture line, which benefited from third party commissions and expense reimbursements.

Reinsurance Segment

Total premiums written in Endurance’s Reinsurance segment for the three and six months ended June 30, 2008 were $246.4 million and $531.9 million, compared to $328.8 million and $758.3 million of total premiums written in the same periods in 2007. Declines in the Company’s catastrophe, property and surety and other specialty lines resulted from changes in client cessions, rate reductions and the non-renewal of contracts that no longer met the Company’s underwriting standards. Agriculture premiums declined due to expected attrition stemming from the acquisition of ARMtech, which competes with many of the Company’s agriculture reinsurance clients, and the non-renewal of contracts that no longer met the Company’s underwriting standards.

For the three and six months ended June 30, 2008, the Reinsurance segment’s combined ratios were 77.0% and 73.0% versus 82.0% and 85.0% during the three and six months ended June 30, 2007. The combined ratios for the current periods benefited primarily from overall lower levels of catastrophe losses as compared to 2007, which included losses due to Windstorm Kyrill in the six months ended June 30, 2007. In addition, the Reinsurance segment recorded favorable prior year loss reserve development of $33.0 million or 15.7 percentage points in the second quarter and $68.5 million or 16.5 percentage points in the first six months of 2008 compared to $8.4 million or 2.6 percentage points and $31.5 million or 5.1 percentage points of favorable prior year loss reserve development for the same periods in 2007. The current periods’ favorable prior year loss reserve development resulted from lower than expected claims reported in the Reinsurance segment’s short tail and agriculture and other specialty lines of business.

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The decreases in the net loss ratios for the second quarter and first six months of 2008 were partially offset by growth in the current periods’ acquisition expense ratios and general and administrative expense ratios compared to the same periods in 2007. Growth in the current periods’ acquisition expense ratios was generally due to changes in the earned premium mix with pronounced decreases in the agriculture line, which has lower acquisition expenses than the Company’s other reinsurance lines. Growth in the general and administrative expense ratios in the current periods was primarily due to declines in earned premiums from the same periods in 2007.

Investments

Endurance’s net investment income decreased 23.0% or $18.1 million for the quarter ended June 30, 2008 and 30.0% or $46.0 million for the six months ended June 30, 2008 as compared to the same periods in 2007. During the second quarter and six months ended June 30, 2008, the Company’s net investment income included mark to market losses of $0.5 million and $16.6 million on its alternative investments and high yield funds included in other investments, as compared to gains of $13.5 million and $25.7 million in the second quarter and first six months of 2007. Although recent market volatility has negatively impacted the carrying value and related net investment income contribution from its alternative and high yield fund investments, the Company has achieved an inception to date annualized return on these investments of 9.6% through June 30, 2008. Investment income generated from the Company’s fixed maturity investments, which comprises approximately 92.6% of the Company’s invested assets, including fixed maturity and other investments, as of June 30, 2008, was consistent period over period. The ending book yield on the Company’s fixed maturity investments at June 30, 2008 was 5.1%, down slightly from December 31, 2007 as a result of modest trading activity and modestly lower reinvestment rates during the current quarter.

Endurance’s fixed maturity portfolio maintained an average credit quality of AAA as of June 30, 2008, and to date has not been materially impacted by downgrades or defaults. During the second quarter of 2008, the Company recorded net realized investment losses of $4.0 million, which included $4.2 million of losses from other than temporary impairments (“OTTI”). For the six months ended June 30, 2008, the Company recorded $15.5 million of net realized investment losses, of which $18.5 million were from OTTI losses. The Company’s OTTI losses were primarily due to interest rate changes and spread widening experienced in the fixed income markets in the second quarter and first six months of 2008. Endurance continues to record its fixed maturity investments at fair value, with differences between amortized cost and fair value reflected as a component of other comprehensive income provided such differences are deemed to be temporary.

Endurance ended the second quarter of 2008 with cash and invested assets of $5.6 billion, which represents a slight increase from December 31, 2007. Net operating cash flow was $269.8 million for the six months ended June 30, 2008 versus $240.7 million for the same period in 2007.

Capitalization and Shareholders’ Equity

At June 30, 2008, Endurance’s GAAP shareholders’ equity was $2.5 billion or $36.72 per diluted common share versus $2.5 billion or $35.05 per diluted common share at December 31, 2007. During the three months ended June 30, 2008, the Company repurchased approximately 706,000 of its common shares and share equivalents in private and open market transactions for an aggregate repurchase price of $23.9 million. Year to date, the Company has repurchased approximately 1.7 million shares and share equivalents in private and open market transactions for an aggregate repurchase price of $64.4 million.

Earnings Call

Endurance will host a conference call on July 30, 2008 at 10:30 a.m. Eastern time to discuss its financial results. The conference call can be accessed via telephone by dialing (877) 672-9216 or (706) 634-9637 (international) and entering pass code: 28044854. Those who intend to participate in the conference call should register at least ten minutes in advance to ensure access to the call. A telephone replay of the

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conference call will be available through August 13, 2008 by dialing (800) 642-1687 or (706) 645-9291 (international) and entering the pass code: 28044854.

The public may access a live broadcast of the conference call at the “Investors” section of Endurance’s website,www.endurance.bm.

A copy of Endurance’s financial supplement for the second quarter of 2008 will be available on Endurance’s website atwww.endurance.bm shortly after the release of earnings.

Operating income, operating return on average common equity, operating income per dilutive common share, total premiums written and combined ratio are non-GAAP measures. Reconciliations of these measures to the appropriate GAAP measures are included in the attached tables.

About Endurance Specialty Holdings

Endurance Specialty Holdings Ltd. is a global specialty provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance writes property, casualty, healthcare liability, agriculture, workers’ compensation, professional lines of insurance and property, catastrophe, casualty, agriculture, marine, aerospace, and surety and other specialty lines of reinsurance. We maintain excellent financial strength as evidenced by the ratings of A (Excellent) from A.M. Best (XV size category) and A (Strong) from Standard and Poor’s on our operating subsidiaries (other than American Agri-Business Insurance Company) and A- (Excellent) from A.M. Best for American Agri-Business Insurance Company. Endurance’s headquarters are located at Wellesley House, 90 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda. For more information about Endurance, please visithttp://www.endurance.bm.

Safe Harbor for Forward-Looking Statements

Some of the statements in this press release 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 press release 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.

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, 2007.

Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation publicly to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED BALANCE SHEETS

(in thousands of United States dollars, except share and per share amounts)


	June 30, 2008			December 31, 2007

Assets
Cash and cash equivalents	$	656,158			$	567,825
Fixed maturity investments available for sale, at fair value		4,604,653				4,660,236
Other investments		366,886				358,128
Premiums receivable, net		1,101,610				723,832
Deferred acquisition costs		194,390				168,968
Securities lending collateral		153,062				173,041
Prepaid reinsurance premiums		205,454				122,594
Losses recoverable		270,053				187,354
Accrued investment income		37,930				38,543
Goodwill and intangible assets		205,635				206,632
Deferred tax assets		14,788				—
Other assets		73,667				63,574

Total Assets	$	7,884,286			$	7,270,727


Liabilities
Reserve for losses and loss expenses	$	3,080,274			$	2,892,224
Reserve for unearned premiums		1,222,830				855,085
Net deposit liabilities		89,718				108,943
Securities lending payable		153,062				173,041
Reinsurance balances payable		272,901				162,899
Debt		448,793				448,753
Deferred tax liability		—				922
Other liabilities		82,813				116,601

Total Liabilities		5,350,391				4,758,468


Shareholders’ Equity
Preferred shares
Series A, non-cumulative – 8,000,000 issued and outstanding (2007 – 8,000,000)		8,000				8,000
Common shares
59,641,896 issued and outstanding (2007 – 60,364,488)		59,642				60,364
Additional paid-in capital		1,107,219				1,165,300
Accumulated other comprehensive (loss) income		(5,282	)			57,725
Retained earnings		1,364,316				1,220,870

Total Shareholders’ Equity		2,533,895				2,512,259


Total Liabilities and Shareholders’ Equity	$	7,884,286			$	7,270,727


Book Value per Common Share
Dilutive common shares outstanding		63,562,916				65,978,030
Diluted book value per common share[a]	$	36.72			$	35.05

Note: All financial information contained herein is unaudited, except the balance sheet data for the year ended December 31, 2007, which was derived from Endurance’s audited financial statements.

[a] Excludes the $200 million liquidation value of the preferred shares.

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ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands of United States dollars, except share and per share amounts)


	Quarter Ended						For the Six Months Ended

	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007

Revenues
Gross premiums written	$	518,063		$	506,803		$	1,386,654		$	1,080,094


Net premiums written		469,385			448,226			1,110,172			981,891
Change in unearned premiums		(16,300	)		(30,675	)		(285,044	)		(187,295	)


Net premiums earned		453,085			417,551			825,128			794,596
Other underwriting income (loss)		1,933			(3,203	)		1,193			(9,139	)
Net investment income		60,482			78,548			107,360			153,361
Net realized losses on investments		(4,013	)		(9,038	)		(15,497	)		(11,122	)

Total revenues		511,487			483,858			918,184			927,696


Expenses
Losses and loss expenses		275,325			207,179			464,827			417,773
Acquisition expenses		75,636			73,941			150,010			141,471
General and administrative expenses		52,493			48,664			102,537			97,493
Amortization of intangibles		2,637			1,127			5,325			2,254
Net foreign exchange (gains) losses		(5,621	)		(2,072	)		(2,514	)		541
Interest expense		7,534			7,531			15,068			15,060

Total expenses		408,004			336,370			735,253			674,592


Income before income taxes		103,483			147,488			182,931			253,104
Income tax expense		(145	)		(12,147	)		(1,782	)		(15,928	)

Net income		103,338			135,341			181,149			237,176

Preferred dividends		(3,875	)		(3,875	)		(7,750	)		(7,750	)

Net income available to common shareholders	$	99,463		$	131,466		$	173,399		$	229,426

Per share data
Weighted average number of common and common equivalent shares outstanding:
Basic		58,557,637			65,530,868			58,690,558			66,068,935
Diluted		63,711,684			70,930,107			64,195,512			71,294,303
Basic earnings per common share	$	1.70		$	2.01		$	2.95		$	3.47

Diluted earnings per common share	$	1.56		$	1.85		$	2.70		$	3.22

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ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars)


	For the quarter ended June 30, 2008

	Insurance				Reinsurance				Total Company Subtotal				Deposit Accounting⁽¹⁾				Reported Totals


Revenues
Gross premiums written		$	271,973			$	246,386			$	518,359			$	(296	)		$	518,063
Ceded premiums written			(37,583	)			(11,095	)			(48,678	)			—				(48,678	)

Net premiums written			234,390				235,291				469,681				(296	)			469,385

Net premiums earned			245,383				210,001				455,384				(2,299	)			453,085
Other underwriting loss			—				—				—				1,933				1,933

Total underwriting revenues			245,383				210,001				455,384				(366	)			455,018

Expenses
Net losses and loss expenses			188,171				86,737				274,908				417				275,325
Acquisition expenses			29,000				47,499				76,499				(863	)			75,636
General and administrative expenses			25,071				27,422				52,493				—				52,493

			242,242				161,658				403,900				(446	)			403,454

Underwriting income		$	3,141			$	48,343			$	51,484			$	80			$	51,564


Net loss ratio			76.7	%			41.3	%			60.4	%							60.7	%
Acquisition expense ratio			11.8	%			22.6	%			16.8	%							16.7	%
General and administrative expense ratio			10.2	%			13.1	%			11.5	%							11.6	%

Combined ratio			98.7	%			77.0	%			88.7	%							89.0	%


⁽¹⁾Reconciles the Company’s underwriting results by segment to the Company’s financial statement presentation.

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ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars)


	For the quarter ended June 30, 2007

	Insurance				Reinsurance				Total Company Subtotal				Deposit Accounting⁽¹⁾				Reported Totals


Revenues
Gross premiums written		$	197,967			$	328,815			$	526,782			$	(19,979	)		$	506,803
Ceded premiums written			(45,967	)			(12,610	)			(58,577	)			—				(58,577	)

Net premiums written			152,000				316,205				468,205				(19,979	)			448,226

Net premiums earned			124,057				324,318				448,375				(30,824	)			417,551
Other underwriting loss			—				—				—				(3,203	)			(3,203	)

Total underwriting revenues			124,057				324,318				448,375				(34,027	)			414,348

Expenses
Net losses and loss expenses			63,422				171,172				234,594				(27,415	)			207,179
Acquisition expenses			16,528				64,555				81,083				(7,142	)			73,941
General and administrative expenses			18,592				30,072				48,664				—				48,664

			98,542				265,799				364,341				(34,557	)			329,784

Underwriting income		$	25,515			$	58,519			$	84,034			$	530			$	84,564


Net loss ratio			51.1	%			52.8	%			52.3	%							49.6	%
Acquisition expense ratio			13.3	%			19.9	%			18.1	%							17.7	%
General and administrative expense ratio			15.0	%			9.3	%			10.9	%							11.7	%

Combined ratio			79.4	%			82.0	%			81.3	%							79.0	%


⁽¹⁾Reconciles the Company’s underwriting results by segment to the Company’s financial statement presentation.

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ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars)


	For the six months ended June 30, 2008

	Insurance			Reinsurance				Total Company Subtotal			Deposit Accounting⁽¹⁾				Reported Totals

Revenues
Gross premiums written	$	857,107			$	531,864		$	1,388,971			$	(2,317	)	$	1,386,654
Ceded premiums written		(266,576	)			(9,906	)		(276,482	)			—			(276,482	)

Net premiums written		590,531				521,958			1,112,489				(2,317	)		1,110,172

Net premiums earned		413,364				415,737			829,101				(3,973	)		825,128
Other underwriting income		—				—			—				1,193			1,193

Total underwriting revenues		413,364				415,737			829,101				(2,780	)		826,321


Expenses
Net losses and loss expenses		319,122				147,937			467,059				(2,232	)		464,827
Acquisition expenses		52,117				98,655			150,772				(762	)		150,010
General and administrative expenses		45,632				56,905			102,537				—			102,537

		416,871				303,497			720,368				(2,994	)		717,374

Underwriting (loss) income	$	(3,507	)		$	112,240		$	108,733			$	214		$	108,947


Net loss ratio		77.2	%			35.6	%		56.3	%						56.3	%
Acquisition expense ratio		12.6	%			23.7	%		18.2	%						18.2	%
General and administrative expense ratio		11.0	%			13.7	%		12.4	%						12.4	%

Combined ratio		100.8	%			73.0	%		86.9	%						86.9	%


⁽¹⁾ Reconciles the Company’s underwriting results by segment to the Company’s financial statement presentation.

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ENDURANCE SPECIALTY HOLDINGS LTD.

RESULTS BY SEGMENT

(in thousands of United States dollars)


	For the six months ended June 30, 2007

	Insurance			Reinsurance				Total Company Subtotal			Deposit Accounting⁽¹⁾				Reported Totals

Revenues
Gross premiums written	$	345,000			$	758,288		$	1,103,288			$	(23,194	)	$	1,080,094
Ceded premiums written		(84,911	)			(13,292	)		(98,203	)			—			(98,203	)

Net premiums written		260,089				744,996			1,005,085				(23,194	)		981,891

Net premiums earned		234,382				615,713			850,095				(55,499	)		794,596
Other underwriting loss		—				—			—				(9,139	)		(9,139	)

Total underwriting revenues		234,382				615,713			850,095				(64,638	)		785,457


Expenses
Net losses and loss expenses		126,951				340,871			467,822				(50,049	)		417,773
Acquisition expenses		30,354				125,973			156,327				(14,856	)		141,471
General and administrative expenses		40,809				56,684			97,493				—			97,493

		198,114				523,528			721,642				(64,905	)		656,737

Underwriting income	$	36,268			$	92,185		$	128,453			$	267		$	128,720


Net loss ratio		54.2	%			55.4	%		55.0	%						52.6	%
Acquisition expense ratio		13.0	%			20.5	%		18.4	%						17.8	%
General and administrative expense ratio		17.3	%			9.1	%		11.5	%						12.3	%

Combined ratio		84.5	%			85.0	%		84.9	%						82.7	%


⁽¹⁾ Reconciles the Company’s underwriting results by segment to the Company’s financial statement presentation.

- 12 -

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED FINANCIAL RATIOS

As Reported



	For the quarter ended June 30

	Insurance				Reinsurance				Total

	2008		2007		2008		2007		2008		2007

Loss ratio	76.7	%	51.1	%	41.3	%	52.8	%	60.7	%	49.6	%
Acquisition expense ratio	11.8	%	13.3	%	22.6	%	19.9	%	16.7	%	17.7	%
General and administrative expense ratio	10.2	%	15.0	%	13.1	%	9.3	%	11.6	%	11.7	%

Combined ratio	98.7	%	79.4	%	77.0	%	82.0	%	89.0	%	79.0	%

Effect of Prior Year Net Loss Reserve Development

Favorable / (Unfavorable)



	For the quarter ended June 30

	Insurance				Reinsurance				Total

	2008		2007		2008		2007		2008		2007

Loss ratio	10.4	%	15.1	%	15.7	%	2.6	%	12.4	%	6.6	%

Net of Prior Year Net Loss Reserve Development



	For the quarter ended June 30

	Insurance				Reinsurance				Total

	2008		2007		2008		2007		2008		2007

Loss ratio	87.1	%	66.2	%	57.0	%	55.4	%	73.1	%	56.2	%
Acquisition expense ratio	11.8	%	13.3	%	22.6	%	19.9	%	16.7	%	17.7	%
General and administrative expense ratio	10.2	%	15.0	%	13.1	%	9.3	%	11.6	%	11.7	%

Combined ratio	109.1	%	94.5	%	92.7	%	84.6	%	101.4	%	85.6	%

The combined ratio is the sum of the loss, acquisition expense and general and administrative expense ratios. Endurance presents the combined ratio as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. The combined ratio, excluding prior year net loss reserve development, enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance’s results of underwriting activities in a manner similar to how management analyzes Endurance’s underlying business performance. The combined ratio, excluding prior year net loss reserve development, should not be viewed as a substitute for the combined ratio.

- 13 -

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED FINANCIAL RATIOS

As Reported



	For the six months ended June 30

	Insurance				Reinsurance				Total

	2008		2007		2008		2007		2008		2007

Loss ratio	77.2	%	54.2	%	35.6	%	55.4	%	56.3	%	52.6	%
Acquisition expense ratio	12.6	%	13.0	%	23.7	%	20.5	%	18.2	%	17.8	%
General and administrative expense ratio	11.0	%	17.3	%	13.7	%	9.1	%	12.4	%	12.3	%

Combined ratio	100.8	%	84.5	%	73.0	%	85.0	%	86.9	%	82.7	%

Effect of Prior Year Net Loss Reserve Development

Favorable / (Unfavorable)



	For the six months ended June 30

	Insurance				Reinsurance				Total

	2008		2007		2008		2007		2008		2007

Loss ratio	7.1	%	19.3	%	16.5	%	5.1	%	11.8	%	10.5	%

Net of Prior Year Net Loss Reserve Development



	For the six months ended June 30

	Insurance				Reinsurance				Total

	2008		2007		2008		2007		2008		2007

Loss ratio	84.3	%	73.5	%	52.1	%	60.5	%	68.1	%	63.1	%
Acquisition expense ratio	12.6	%	13.0	%	23.7	%	20.5	%	18.2	%	17.8	%
General and administrative expense ratio	11.0	%	17.3	%	13.7	%	9.1	%	12.4	%	12.3	%

Combined ratio	107.9	%	103.8	%	89.5	%	90.1	%	98.7	%	93.2	%

-14 - -

ENDURANCE SPECIALTY HOLDINGS LTD.

RECONCILIATION

TOTAL PREMIUMS WRITTEN BY SEGMENT

(in thousands of United States dollars)

The following is a reconciliation of Endurance’s total premiums written including gross premiums written and deposit premiums (a non-GAAP measure) to gross premiums written for the quarters and six months ended June 30, 2008 and 2007:


	Quarter Ended June 30, 2008										Quarter Ended June 30, 2007


	Gross Premiums Written			Deposit Premiums				Total Premiums Written			Gross Premiums Written			Deposit Premiums			Total Premiums Written


Insurance
Property		$	52,360			—			$	52,360		$	40,835			—		$	40,835
Casualty			38,737			—				38,737			42,343			—			42,343
Healthcare liability			25,485			—				25,485			28,054			—			28,054
Workers’ compensation			69,888			—				69,888			57,142			—			57,142
Agriculture			50,921			—				50,921			—			—			—
Professional lines			34,582			—				34,582			29,593			—			29,593

Subtotal Insurance		$	271,973			—			$	271,973		$	197,967			—		$	197,967


Reinsurance
Casualty		$	36,258		$	(14	)		$	36,244		$	22,135		$	5,653		$	27,788
Property			34,604			282				34,886			52,504			12,972			65,476
Catastrophe			130,217			—				130,217			147,506			—			147,506
Agriculture			5,822			—				5,822			24,118			—			24,118
Aerospace and Marine			24,250			—				24,250			31,343			1,140			32,483
Surety and other specialty			14,939			28				14,967			31,230			214			31,444

Subtotal Reinsurance		$	246,090		$	296			$	246,386		$	308,836		$	19,979		$	328,815


Total		$	518,063		$	296			$	518,359		$	506,803		$	19,979		$	526,782

Total premiums written is a non-GAAP internal performance measure used by Endurance in the management of its operations. Total premiums written represents gross premiums written and deposit premiums, which are premiums on contracts that are deemed as either transferring only significant timing risk or transferring only significant underwriting risk and thus are required to be accounted for under GAAP as deposits. Endurance believes these amounts are significant to its business and underwriting process and excluding them distorts the analysis of its premium trends. In addition to presenting gross premiums written determined in accordance with GAAP, Endurance believes that total premiums written enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance’s results of underwriting activities in a manner similar to how management analyzes Endurance’s underlying business performance. Total premiums written should not be viewed as a substitute for gross premiums written determined in accordance with GAAP.

-15 - -

ENDURANCE SPECIALTY HOLDINGS LTD.

RECONCILIATION

TOTAL PREMIUMS WRITTEN BY SEGMENT

(in thousands of United States dollars)


	Six Months Ended June 30, 2008							Six Months Ended June 30, 2007


	Gross Premiums Written		Deposit Premiums			Total Premiums Written		Gross Premiums Written		Deposit Premiums			Total Premiums Written


Insurance
Property	$	83,542			—	$	83,542	$	67,877			—	$	67,877
Casualty		63,861			—		63,861		69,140			—		69,140
Healthcare liability		41,978			—		41,978		46,843			—		46,843
Workers’ compensation		153,367			—		153,367		118,775			—		118,775
Agriculture		464,340			—		464,340		—			—		—
Professional lines		50,019			—		50,019		42,365			—		42,365

Subtotal Insurance	$	857,107			—	$	857,107	$	345,000			—	$	345,000


Reinsurance
Casualty	$	105,223		$	322	$	105,545	$	111,703		$	8,022	$	119,725
Property		69,222			1,912		71,134		88,598			13,579		102,177
Catastrophe		235,451			—		235,451		288,005			—		288,005
Agriculture		16,734			—		16,734		116,980			199		117,179
Aerospace and Marine		60,785			—		60,785		70,862			1,180		72,042
Surety and other Specialty		42,132			83		42,215		58,946			214		59,160

Subtotal Reinsurance	$	529,547		$	2,317	$	531,864	$	735,094		$	23,194	$	758,288


Total	$	1,386,654		$	2,317	$	1,388,971	$	1,080,094		$	23,194	$	1,103,288

-16 - -

ENDURANCE SPECIALTY HOLDINGS LTD.

RECONCILIATIONS

(in thousands of United States dollars, except share and per share amounts)

The following is a reconciliation of Endurance’s net income and net income per diluted common share to operating income, operating income per diluted common share and annualized operating return on average common equity (all non-GAAP measures) for the quarters and six months ended June 30, 2008 and 2007:


	Quarter Ended						Six Months Ended

	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007

Net income	$	103,338		$	135,341		$	181,149		$	237,176

Add (Less) after-tax items:
Net foreign exchange gains		(4,071	)		(1,914	)		(4,081	)		(372	)
Net realized losses on investments		3,411			7,750			15,137			9,569

Operating income before preferred dividends		102,678		$	141,177			192,205		$	246,373
Preferred dividends		(3,875	)		(3,875	)		(7,750	)		(7,750	)

Operating income available to common shareholders	$	98,803		$	137,302		$	184,455		$	238,623


Weighted average dilutive common shares		63,711,684			70,930,107			64,195,512			71,294,303


Operating income per diluted share	$	1.55		$	1.94		$	2.87		$	3.35


Average common equity[a]	$	2,336,035		$	2,173,196		$	2,323,077		$	2,138,860

Operating return on average common equity		4.2	%		6.3	%		7.9	%		11.2	%

Annualized operating return on average common equity		16.9	%		25.3	%		15.9	%		22.3	%


Diluted per common share data
Net income	$	103,338		$	135,341		$	181,149		$	237,176
Preferred dividends		(3,875	)		(3,875	)		(7,750	)		(7,750	)

Net income available to common shareholders	$	99,463		$	131,466		$	173,399		$	229,426


Return on average common equity, Net income		4.3	%		6.0	%		7.5	%		10.7	%

Annualized return on average common equity, Net income		17.0	%		24.2	%		14.9	%		21.5	%

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

Operating income and operating income per diluted common share are internal performance measures used by Endurance in the management of its operations. Operating income per diluted common share represents operating income divided by weighted average dilutive common shares. 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. Endurance 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 and net income per dilutive common share determined in accordance with GAAP, Endurance believes that showing operating income and operating income per dilutive common share enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Endurance’s results of operations in a manner similar to how management analyzes Endurance’s underlying business performance. Operating income and operating income per dilutive common share should not be viewed as substitutes for GAAP net income and net income per dilutive common share, respectively.

Endurance presents return on equity as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

# # #

Endurance Specialty (ENH) Inactive 8-KResults of Operations and Financial Condition