Endurance Specialty 8K Endurance Reports Fourth Quarter 2014 Financial Results | ENH 5 Feb 15

Exhibit 99.2

Endurance Specialty Holdings Ltd.

INVESTOR FINANCIAL SUPPLEMENT

FOURTH QUARTER 2014

Endurance Specialty Holdings Ltd.

Waterloo House, 100 Pitts Bay Rd.

Pembroke HM 08, Bermuda

Investor Relations

Phone: (441) 278-0988

Fax: (441) 278-0493

email: investorrelations@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.

Financial Supplement Table of Contents



	Page
i. Basis of Presentation	i
I. Consolidated Financial Highlights	1
II. Consolidated Financial Statements
a. Consolidated Statements of Income (Loss) - Quarterly	2
b. Consolidated Statements of Income	3
c. Consolidated Balance Sheets	4
III. Other Financial Information
a. Probable Maximum Loss by Zone and Peril	5
b. Segment Distribution	6
c. Consolidated Segment Data	7
d. Return on Equity Analysis	19
e. ROE Component Analysis - Annualized Premium and Investment Leverage	20
f. Investment Portfolio Information	21
g. Largest Twenty-Five Corporate Holdings	22
IV. Loss Reserve Analysis
a. Activity in Reserve for Losses and Loss Expenses	23
b. Prior Year Reserve Development by Segment	24
c. Prior Year Reserve Development by Line of Business	25
d. Losses and Loss Expenses Incurred by Line of Business	26
e. Analysis of Unpaid Losses and Loss Expenses	27
V. Shareholder Return Analysis
a. Shareholder Return Analysis	28
b. Weighted Average Dilutive Shares Outstanding	29
c. Earnings per Share - Two Class Method	30
d. Operating Income Reconciliation - Two Class Method	31
e. Earnings per Share and Operating Income Reconciliation Excluding Proposed Acquisition Expenses	32
f. Book Value Per Share Analysis	33
VI. Regulation G	34

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

Some of the statements in this financial supplement may include and Endurance may make related oral 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 “should,” “would,” “expect,” “intend,” “plan,” “believe,” “project,” “target,” “anticipate,” “seek,” “will,” “deliver” 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.

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 materially from those indicated in the forward-looking statements. These factors include, but are not limited to, the effects of competitors’ pricing policies, greater frequency or severity of claims and loss activity, changes in market conditions in the agriculture insurance industry, termination of or changes in the terms of the U.S. multiple peril crop insurance program, a decreased demand for property and casualty insurance or reinsurance, changes in the availability, cost or quality of reinsurance or retrocessional coverage, our inability to renew business previously underwritten or acquired, our inability to maintain our applicable financial strength ratings, our inability to effectively integrate acquired operations, uncertainties in our reserving process, changes to our tax status, changes in insurance regulations, reduced acceptance of our existing or new products and services, a loss of business from and credit risk related to our broker counterparties, assessments for high risk or otherwise uninsured individuals, possible terrorism or the outbreak of war, a loss of key personnel, political conditions, changes in insurance regulation, changes in accounting policies, our investment performance, the valuation of our invested assets, a breach of our investment guidelines, the unavailability of capital in the future, developments in the world’s financial and capital markets and our access to such markets, government intervention in the insurance and reinsurance industry, illiquidity in the credit markets, changes in general economic conditions and other factors described in our Annual Report on Form 10-K for the year ended December 31, 2013 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.

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.

ENDURANCE SPECIALTY HOLDINGS LTD.

BASIS OF PRESENTATION

DEFINITIONS AND PRESENTATION


•	All financial information contained herein is unaudited, except the balance sheet and/or income statement data for the years ended December 31, 2013 and 2012 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.

•

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, 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.


•	NM - Not meaningful.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED FINANCIAL HIGHLIGHTS



		QUARTER ENDED DECEMBER 31,						YEAR ENDED DECEMBER 31,						Previous Quarter Change		Previous Year to Date Change
		2014			2013			2014			2013			Previous Quarter Change		Previous Year to Date Change
HIGHLIGHTS	Net income		$84,573			$67,181			$348,450			$311,915		25.9	%	11.7	%
	Net income available to common and participating common shareholders	76,387			58,995			315,700			279,165			29.5	%	13.1	%
	Net income allocated to common shareholders	74,175			57,367			306,582			272,721			29.3	%	12.4	%
	Operating income [a]	86,712			68,107			336,762			313,771			27.3	%	7.3	%
	Operating income available to common and participating common shareholders [a]	78,526			59,921			304,012			281,021			31.0	%	8.2	%
	Operating income allocated to common shareholders [a]	76,252			58,267			295,232			274,534			30.9	%	7.5	%
	Operating cash flow	214,089			174,498			266,261			157,924			22.7	%	68.6	%
	Net investment income	25,894			46,346			131,543			166,216			(44.1	)%	(20.9	)%
	Gross premiums written	421,026			370,809			2,894,076			2,665,244			13.5	%	8.6	%
	Net premiums written	233,968			280,064			1,934,206			2,048,933			(16.5	)%	(5.6	)%
	Net premiums earned	471,279			499,487			1,863,978			2,016,484			(5.6	)%	(7.6	)%
	Total assets	9,644,782			8,978,122			9,644,782			8,978,122			7.4	%	7.4	%
	Total shareholders’ equity	3,185,182			2,886,549			3,185,182			2,886,549			10.3	%	10.3	%
PER SHARE AND SHARES DATA	Basic earnings per common share
	Net income (as reported)		$1.71			$1.33			$7.07			$6.37		28.6	%	11.0	%
	Operating income (as reported) [a]		$1.75			$1.35			$6.80			$6.41		29.6	%	6.1	%
	Diluted earnings per common share
	Net income (as reported)		$1.70			$1.33			$7.06			$6.37		27.8	%	10.8	%
	Operating income (as reported) [a]		$1.75			$1.35			$6.80			$6.41		29.6	%	6.1	%

As Reported	Weighted average common shares outstanding	43,474			43,108			43,368			42,818			0.8	%	1.3	%
	Weighted average common shares outstanding & dilutive potential common shares [e]	43,557			43,120			43,415			42,818			1.0	%	1.4	%
	Common dividends paid per share		$0.34			$0.32			$1.36			$1.28		6.3	%	6.3	%
Book Value Per Common Share	Book value [b]		$63.38			$56.99			$63.38			$56.99		11.2	%	11.2	%
Book Value Per Common Share	Diluted book value (treasury stock method) [b]		$61.33			$55.18			$61.33			$55.18		11.1	%	11.1	%
FINANCIAL RATIOS	Return on average common equity (ROAE), net income [c]	2.8		%	2.4		%	12.1		%	11.8		%	0.4		0.3
FINANCIAL RATIOS	ROAE, operating income [a] [c]	2.9		%	2.5		%	11.7		%	11.9		%	0.4		(0.2	)
	Return on beg. common equity (ROBE), net income [d]	2.8		%	2.4		%	12.9		%	12.2		%	0.4		0.7
	ROBE, operating income [a] [d]	2.9		%	2.5		%	12.4		%	12.3		%	0.4		0.1

	Annualized ROAE, net income [c]	11.2		%	9.7		%	12.1		%	11.8		%	1.5		0.3
	Annualized ROAE, operating income [a] [c]	11.5		%	9.9		%	11.7		%	11.9		%	1.6		(0.2	)
	Annualized ROBE, net income [d]	11.4		%	9.8		%	12.9		%	12.2		%	1.6		0.7
	Annualized ROBE, operating income [a] [d]	11.7		%	9.9		%	12.4		%	12.3		%	1.8		0.1
	Annualized investment yield	1.6		%	3.0		%	2.0		%	2.6		%	(1.4	)	(0.6	)

GAAP	Loss ratio	51.7		%	60.7		%	52.1		%	60.5		%	(9.0	)	(8.4	)
	Acquisition expense ratio	16.0		%	16.4		%	17.1		%	15.1		%	(0.4	)	2.0
	General and administrative expense ratio	15.5		%	15.9		%	16.8		%	14.6		%	(0.4	)	2.2
	Combined ratio	83.2		%	93.0		%	86.0		%	90.2		%	(9.8	)	(4.2	)

[a] 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. Please see page 31 for a reconciliation to net income.

[b] For detailed calculations, please refer to page 33.

[c] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the $430 million liquidation value of the preferred shares.

[d] Beginning common equity for the stated periods excludes the $430 million liquidation value of the preferred shares.

[e] Options that are anti-dilutive are not included in the calculation of diluted shares outstanding. Options are anti-dilutive for earnings per share in any period in which there is a net loss and the anti-dilution is reflected as additional treasury

method repurchases.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) - QUARTERLY



	QUARTERS ENDED
	DEC. 31, 2014			SEPT. 30, 2014			JUNE 30, 2014			MAR. 31, 2014			DEC. 31, 2013			DEC. 31, 2012
UNDERWRITING REVENUES
Gross premiums written		$421,026			$626,110			$689,425			$1,157,515			$370,809			$262,046
Premiums ceded	(187,058		)	(236,004		)	(177,998		)	(358,810		)	(90,745		)	(74,100		)
Net premiums written		$233,968			$390,106			$511,427			$798,705			$280,064			$187,946
Change in unearned premiums	237,311			124,789			(29,889		)	(402,439		)	219,423			343,107
Net premiums earned		$471,279			$514,895			$481,538			$396,266			$499,487			$531,053
Other underwriting (loss) income	(1,847		)	2,123			(4,824		)	(1,238		)	(2,740		)	(520		)
Total underwriting revenues		$469,432			$517,018			$476,714			$395,028			$496,747			$530,533
UNDERWRITING EXPENSES
Net losses and loss expenses		$243,801			$290,269			$259,196			$176,896			$302,620			$504,808
Acquisition expenses	75,363			93,392			78,601			72,157			82,151			73,780
General and administrative expenses [c]	73,011			80,915			86,455			73,206			79,599			54,324
Total underwriting expenses		$392,175			$464,576			$424,252			$322,259			$464,370			$632,912
Underwriting income (loss)		$77,257			$52,442			$52,462			$72,769			$32,377			($102,379	)
OTHER OPERATING REVENUE
Net investment income		$25,894			$25,357			$39,302			$40,990			$46,346			$38,603
Interest expense [c]	(9,058		)	(13,127		)	(9,732		)	(9,051		)	(9,050		)	(9,042		)
Amortization of intangibles	(1,621		)	(1,623		)	(1,623		)	(1,617		)	(1,634		)	(2,359		)
Total other operating revenue		$15,215			$10,607			$27,947			$30,322			$35,662			$27,202
INCOME (LOSS) BEFORE OTHER ITEMS		$92,472			$63,049			$80,409			$103,091			$68,039			($75,177	)
OTHER
Net foreign exchange gains (losses)		$227			($783	)		($319	)		($2,964	)		($5,718	)		$1,212
Net realized and unrealized (losses) gains	(3,788		)	9,788			3,411			4,872			5,197			41,881
Total other-than-temporary impairment losses	(214		)	(102		)	(198		)	(111		)	(41		)	(90		)
Portion of loss recognised in other comprehensive income (loss)	—			—			—			—			—			—
Net impairment losses recognised in earnings	(214		)	(102		)	(198		)	(111		)	(41		)	(90		)
Income tax (expense) benefit	(4,124		)	4,282			(140		)	(408		)	(296		)	(453		)
NET INCOME (LOSS)		$84,573			$76,234			$83,163			$104,480			$67,181			($32,627	)
Preferred dividends	(8,186		)	(8,188		)	(8,188		)	(8,188		)	(8,186		)	(8,186		)
NET INCOME (LOSS) AVAILABLE (ATTRIBUTABLE) TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS [d]		$76,387			$68,046			$74,975			$96,292			$58,995			($40,813	)

KEY RATIOS/PER SHARE DATA
Loss ratio	51.7		%	56.4		%	53.8		%	44.6		%	60.7		%	95.1		%
Acquisition expense ratio	16.0		%	18.1		%	16.3		%	18.2		%	16.4		%	13.9		%
General and administrative expense ratio	15.5		%	15.7		%	18.0		%	18.5		%	15.9		%	10.2		%
Combined ratio	83.2		%	90.2		%	88.1		%	81.3		%	93.0		%	119.2		%

Basic earnings (losses) per common share		$1.71			$1.52			$1.68			$2.16			$1.33			($0.96	)
Diluted earnings (losses) per common share [b] [d]		$1.70			$1.52			$1.68			$2.16			$1.33			($0.96	)

ROAE, net income (loss) [a]	2.8		%	2.5		%	2.9		%	3.8		%	2.4		%	(1.8		)%

[a] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated periods, which excludes the liquidation value of the preferred shares of $430 million.

[b] Warrants and options that are anti-dilutive are not included in the calculation of diluted shares outstanding. Warrants and options are anti-dilutive for earnings per share in any period in which there is a net loss and the anti-dilution is reflected as additional treasury method repurchases.

[c] The quarter ended December 31, 2014 includes $0.2 million of general and administrative expenses incurred in relation to the Company’s proposed acquisition of Aspen Insurance Holdings Limited (“Aspen”).

[d] For the quarter ended December 31, 2014, adding back the $0.2 million of expenses incurred related to the Company’s proposed acquisition of Aspen, net income (loss) available (attributable) to common and participating common shareholders would increase to $76.6 million or $1.71 diluted earnings per common share. See reconciliation on page 32.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF INCOME



	YEARS ENDED
	DEC. 31, 2014			DEC. 31, 2013			DEC. 31, 2012
UNDERWRITING REVENUES
Gross premiums written		$2,894,076			$2,665,244			$2,549,026
Premiums ceded	(959,870		)	(616,311		)	(519,531		)
Net premiums written		$1,934,206			$2,048,933			$2,029,495
Change in unearned premiums	(70,228		)	(32,449		)	(15,595		)
Net premiums earned		$1,863,978			$2,016,484			$2,013,900
Other underwriting loss	(5,786		)	(2,046		)	(2,183		)
Total underwriting revenues		$1,858,192			$2,014,438			$2,011,717
UNDERWRITING EXPENSES
Net losses and loss expenses		$970,162			$1,219,684			$1,520,995
Acquisition expenses	319,513			304,430			303,179
General and administrative expenses [c]	313,587			294,906			235,689
Total underwriting expenses		$1,603,262			$1,819,020			$2,059,863
Underwriting income (loss)		$254,930			$195,418			($48,146	)
OTHER OPERATING REVENUE
Net investment income		$131,543			$166,216			$173,326
Interest expense [c]	(40,968		)	(36,188		)	(36,174		)
Amortization of intangibles	(6,484		)	(7,012		)	(10,347		)
Total other operating revenue		$84,091			$123,016			$126,805
INCOME BEFORE OTHER ITEMS		$339,021			$318,434			$78,659
OTHER
Net foreign exchange (losses) gains		($3,839	)		($14,214	)		$15,911
Net realized and unrealized gains	14,283			15,164			72,139
Total other-than-temporary impairment losses	(625		)	(1,616		)	(364		)
Portion of loss recognized in other comprehensive income (loss)	—			—			(483		)
Net impairment losses recognized in earnings	(625		)	(1,616		)	(847		)
Income tax expense	(390		)	(5,853		)	(3,346		)
NET INCOME		$348,450			$311,915			$162,516
Preferred dividends	(32,750		)	(32,750		)	(32,750		)
NET INCOME AVAILABLE TO COMMON AND PARTICIPATING COMMON SHAREHOLDERS [d]		$315,700			$279,165			$129,766

KEY RATIOS/PER SHARE DATA
Loss ratio	52.1		%	60.5		%	75.5		%
Acquisition expense ratio	17.1		%	15.1		%	15.1		%
General and administrative expense ratio	16.8		%	14.6		%	11.7		%
Combined ratio	86.0		%	90.2		%	102.3		%

Basic earnings per common share		$7.07			$6.37			$3.00
Diluted earnings per common share [b] [d]		$7.06			$6.37			$3.00

ROAE, net income [a]	12.1		%	11.8		%	5.8		%

[c] The year ended December 31, 2014, includes $15.5 million and $4.8 million of general and administrative expenses and interest expense, respectively, incurred in relation to the Company’s proposed acquisition of Aspen.

[d] For the year ended December 31, 2014, adding back the $20.3 million of expenses incurred related to the Company’s proposed acquisition of Aspen, net income available to common and participating common shareholders would increase to $336.0 million or $7.51 diluted earnings per common share. See reconciliation of page 32.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED BALANCE SHEETS



	DEC. 31, 2014			SEPT. 30, 2014			JUNE 30, 2014			MAR. 31, 2014			DEC. 31, 2013
ASSETS
Cash and cash equivalents		$745,472			$805,716			$801,028			$916,665			$845,851
Fixed maturity investments available for sale, at fair value	5,092,581			4,871,420			4,993,099			4,794,445			4,823,964
Short term investments available for sale, at fair value	9,014			11,844			24,564			46,167			35,028
Equity securities available for sale, at fair value	331,368			267,728			287,642			271,530			252,466
Other investments	541,454			658,678			648,642			621,914			617,478
Premiums receivable, net	883,450			1,452,228			1,380,858			1,265,371			669,198
Insurance and reinsurance balances receivable	122,214			123,432			134,750			136,733			127,722
Deferred acquisition costs	207,368			246,437			257,262			231,167			186,027
Prepaid reinsurance premiums	354,940			414,013			424,133			443,498			187,209
Reinsurance recoverable on unpaid losses	670,795			566,329			606,140			534,335			593,755
Reinsurance recoverable on paid losses	218,291			165,592			145,694			59,784			164,220
Accrued investment income	27,183			23,652			26,385			23,161			24,104
Goodwill and intangible assets	153,405			160,560			162,178			163,761			165,378
Deferred tax assets	48,995			53,403			45,782			48,496			51,703
Receivable on pending investment sales	38,877			84,699			67,578			83,445			54,910
Other assets	199,375			240,087			172,912			154,310			179,109
TOTAL ASSETS		$9,644,782			$10,145,818			$10,178,647			$9,794,782			$8,978,122

LIABILITIES
Reserve for losses and loss expenses		$3,846,859			$3,897,483			$3,963,393			$3,847,774			$4,002,259
Reserve for unearned premiums	1,254,519			1,552,168			1,689,819			1,678,233			1,018,851
Deposit liabilities	15,136			17,521			21,987			18,684			19,458
Reinsurance balances payable	375,711			482,093			378,295			307,569			181,061
Debt	527,715			527,732			527,714			527,539			527,478
Payable on pending investment purchases	151,682			238,038			272,696			239,313			129,047
Other liabilities	287,978			310,329			209,068			174,561			213,419
TOTAL LIABILITIES		$6,459,600			$7,025,364			$7,062,972			$6,793,673			$6,091,573

SHAREHOLDERS’ EQUITY
Preferred shares
Series A, non-cumulative		$8,000			$8,000			$8,000			$8,000			$8,000
Series B, non-cumulative	9,200			9,200			9,200			9,200			9,200
Common shares	44,765			44,751			44,706			44,601			44,369
Additional paid-in capital	598,226			590,330			583,691			575,684			569,116
Accumulated other comprehensive income	76,706			81,299			136,038			89,359			62,731
Retained earnings	2,448,285			2,386,874			2,334,040			2,274,265			2,193,133
TOTAL SHAREHOLDERS’ EQUITY		$3,185,182			$3,120,454			$3,115,675			$3,001,109			$2,886,549
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$9,644,782			$10,145,818			$10,178,647			$9,794,782			$8,978,122

Book value per common share		$63.38			$61.90			$61.80			$59.42			$56.99
Diluted book value per common share (treasury stock method)		$61.33			$59.98			$60.00			$57.53			$55.18

RATIOS
Debt-to-capital	14.2		%	14.5		%	14.5		%	15.0		%	15.5		%

ENDURANCE SPECIALTY HOLDINGS LTD.

Probable Maximum Loss by Zone and Peril

(in millions of dollars)

Largest 1 in 100 year PML as of January 1, 2015 is equal to 10.3% of Shareholders’ Equity as of December 31, 2014.



		Estimated Occurrence Net Loss as of January 1, 2015										Jan. 1, 2014		Jan. 1, 2013
Zone	Peril	10 Year Return Period		25 Year Return Period		50 Year Return Period		100 Year Return Period		250 Year Return Period		100 Year Return Period		100 Year Return Period

United States	Hurricane		$111		$188		$249		$306		$402		$293		$429
Europe	Windstorm	86		137		217		328		448		317		346
California	Earthquake	37		137		192		238		318		238		395
Japan	Windstorm	28		84		119		131		148		144		201
Northwest U.S.	Earthquake	—		5		34		106		176		95		154
Japan	Earthquake	16		79		128		153		169		109		111
United States	Tornado/Hail	30		44		57		69		90		88		86
Australia	Earthquake	1		10		40		98		169		86		88
New Zealand	Earthquake	1		6		15		34		77		24		24
Australia	Windstorm	6		20		44		75		103		52		53
New Madrid	Earthquake	—		—		—		7		69		9		10

The net loss estimates by zone above represent estimated losses related to our property, catastrophe and other specialty lines of business, based upon our catastrophe models and assumptions regarding the location, size, magnitude, and frequency of the catastrophe events utilized to determine the above estimates. The net loss estimates are presented on an occurrence basis, before income tax and net of reinsurance recoveries and reinstatement premiums, if applicable. Return period refers to the frequency with which the related size of a catastrophic event is expected to occur.

Actual realized catastrophic losses could differ materially from our net loss estimates and our net loss estimates should not be considered as representative of the actual losses that we may incur in connection with any particular catastrophic event. The net loss estimates above rely significantly on computer models created to simulate the effect of catastrophes on insured properties based upon data emanating from past catastrophic events. Since comprehensive data collection regarding insured losses from catastrophe events is a relatively recent development in the insurance industry, the data upon which catastrophe models is based is limited, which has the potential to introduce inaccuracies into estimates of losses from catastrophic events, in particular those that occur infrequently. In addition, catastrophe models are significantly influenced by management’s assumptions regarding event characteristics, construction of insured property and the cost and duration of rebuilding after the catastrophe. Lastly, changes in Endurance’s underwriting portfolio risk control mechanisms and other factors, either before or after the date of the above net loss estimates, may also cause actual results to vary considerably from the net loss estimates above. For a listing of risks related to Endurance and its future performance, please see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013.

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT DISTRIBUTION

FOR THE YEAR ENDED DECEMBER 31, 2014

Net Premiums Written = $1,934.2 million

[a] Other specialty includes the agriculture line in the Insurance segment and the specialty line in the Reinsurance segment.

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED SEGMENT DATA



	FOR THE QUARTERS ENDED
	DEC. 31, 2014									DEC. 31, 2013
	Insurance			Reinsurance			Totals			Insurance			Reinsurance			Totals
UNDERWRITING REVENUES
Gross premiums written		$321,983			$99,043			$421,026			$200,726			$170,083			$370,809
Net premiums written		$140,702			$93,266			$233,968			$111,976			$168,088			$280,064
Net premiums earned		$217,745			$253,534			$471,279			$235,967			$263,520			$499,487
Other underwriting loss	—			(1,847		)	(1,847		)	—			(2,740		)	(2,740		)
Total underwriting revenues		$217,745			$251,687			$469,432			$235,967			$260,780			$496,747

UNDERWRITING EXPENSES
Net losses and loss expenses		$159,784			$84,017			$243,801			$230,708			$71,912			$302,620
Acquisition expenses	17,809			57,554			75,363			16,754			65,397			82,151
General and administrative expenses	40,645			32,366			73,011			42,804			36,795			79,599
Total expenses		$218,238			$173,937			$392,175			$290,266			$174,104			$464,370

UNDERWRITING (LOSS) INCOME		($493	)		$77,750			$77,257			($54,299	)		$86,676			$32,377

GAAP RATIOS
Loss ratio	73.3		%	33.1		%	51.7		%	97.8		%	27.3		%	60.7		%
Acquisition expense ratio	8.2		%	22.7		%	16.0		%	7.1		%	24.8		%	16.4		%
General and administrative expense ratio	18.7		%	12.8		%	15.5		%	18.1		%	14.0		%	15.9		%
Combined ratio AS REPORTED	100.2		%	68.6		%	83.2		%	123.0		%	66.1		%	93.0		%

Effect of favorable prior accident year reserve development	12.2		%	16.7		%	14.6		%	2.0		%	21.3		%	12.2		%

Combined ratio net of prior accident year reserve development	112.4		%	85.3		%	97.8		%	125.0		%	87.4		%	105.2		%

ENDURANCE SPECIALTY HOLDINGS LTD.

INSURANCE SEGMENT DATA



	FOR THE QUARTERS ENDED
	DEC. 31, 2014			SEPT. 30, 2014			JUNE 30, 2014			MAR. 31, 2014			DEC. 31, 2013			DEC. 31, 2012
UNDERWRITING REVENUES
Gross premiums written		$321,983			$420,343			$321,526			$652,276			$200,726			$177,116
Net premiums written		$140,702			$197,639			$179,038			$343,027			$111,976			$106,652
Net premiums earned		$217,745			$253,583			$218,563			$144,021			$235,967			$244,101
Total underwriting revenues		$217,745			$253,583			$218,563			$144,021			$235,967			$244,101

UNDERWRITING EXPENSES
Net losses and loss expenses		$159,784			$196,677			$149,567			$88,533			$230,708			$244,985
Acquisition expenses	17,809			20,170			15,128			12,261			16,754			17,332
General and administrative expenses	40,645			44,957			47,237			41,736			42,804			28,445
Total expenses		$218,238			$261,804			$211,932			$142,530			$290,266			$290,762

UNDERWRITING (LOSS) INCOME		($493	)		($8,221	)		$6,631			$1,491			($54,299	)		($46,661	)

GAAP RATIOS
Loss ratio	73.3		%	77.5		%	68.5		%	61.5		%	97.8		%	100.3		%
Acquisition expense ratio	8.2		%	8.0		%	6.9		%	8.5		%	7.1		%	7.1		%
General and administrative expense ratio	18.7		%	17.7		%	21.6		%	29.0		%	18.1		%	11.7		%
Combined ratio AS REPORTED	100.2		%	103.2		%	97.0		%	99.0		%	123.0		%	119.1		%

Effect of favorable prior accident year reserve development	12.2		%	8.0		%	10.1		%	8.1		%	2.0		%	3.0		%

Combined ratio net of prior accident year reserve development	112.4		%	111.2		%	107.1		%	107.1		%	125.0		%	122.1		%

ENDURANCE SPECIALTY HOLDINGS LTD.

REINSURANCE SEGMENT DATA



	FOR THE QUARTERS ENDED
	DEC. 31, 2014			SEPT. 30, 2014			JUNE 30, 2014			MAR. 31, 2014			DEC. 31, 2013			DEC. 31, 2012
UNDERWRITING REVENUES
Gross premiums written		$99,043			$205,767			$367,899			$505,239			$170,083			$84,930
Net premiums written		$93,266			$192,467			$332,389			$455,678			$168,088			$81,294
Net premiums earned		$253,534			$261,312			$262,975			$252,245			$263,520			$286,952
Other underwriting (loss) income	(1,847		)	2,123			(4,824		)	(1,238		)	(2,740		)	(520		)
Total underwriting revenues		$251,687			$263,435			$258,151			$251,007			$260,780			$286,432

UNDERWRITING EXPENSES
Net losses and loss expenses		$84,017			$93,592			$109,629			$88,363			$71,912			$259,823
Acquisition expenses	57,554			73,222			63,473			59,896			65,397			56,448
General and administrative expenses	32,366			35,958			39,218			31,470			36,795			25,879
Total expenses		$173,937			$202,772			$212,320			$179,729			$174,104			$342,150

UNDERWRITING INCOME (LOSS)		$77,750			$60,663			$45,831			$71,278			$86,676			($55,718	)

GAAP RATIOS
Loss ratio	33.1		%	35.8		%	41.7		%	35.0		%	27.3		%	90.5		%
Acquisition expense ratio	22.7		%	28.0		%	24.1		%	23.7		%	24.8		%	19.7		%
General and administrative expense ratio	12.8		%	13.8		%	14.9		%	12.6		%	14.0		%	9.0		%
Combined ratio AS REPORTED	68.6		%	77.6		%	80.7		%	71.3		%	66.1		%	119.2		%

Effect of favorable prior accident year reserve development	16.7		%	15.4		%	12.2		%	15.3		%	21.3		%	7.2		%

Combined ratio net of prior accident year reserve development	85.3		%	93.0		%	92.9		%	86.6		%	87.4		%	126.4		%

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED
	DEC. 31, 2014		SEPT. 30, 2014		JUNE 30, 2014		MAR. 31, 2014		DEC. 31, 2013		DEC. 31, 2012
INSURANCE SEGMENT
Agriculture		$69,580		$188,011		$80,540		$527,894		$58,220		$64,798
Casualty and other specialty	104,535		115,895		108,030		67,653		69,590		59,942
Professional lines	87,477		62,631		74,650		38,780		55,056		39,242
Property, marine and energy	60,391		53,806		58,306		17,949		17,860		13,134
TOTAL INSURANCE		$321,983		$420,343		$321,526		$652,276		$200,726		$177,116

REINSURANCE SEGMENT
Catastrophe		$11,020		$47,173		$158,372		$126,648		$13,778		$24,112
Property	4,219		73,807		42,887		166,413		9,358		31,065
Casualty	20,267		23,409		30,875		84,982		29,900		15,909
Professional lines	43,400		21,520		84,117		25,619		113,089		8,849
Specialty	20,137		39,858		51,648		101,577		3,958		4,995
TOTAL REINSURANCE		$99,043		$205,767		$367,899		$505,239		$170,083		$84,930

REPORTED TOTALS		$421,026		$626,110		$689,425		$1,157,515		$370,809		$262,046

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED
	DEC. 31, 2014		SEPT. 30, 2014		JUNE 30, 2014		MAR. 31, 2014		DEC. 31, 2013		DEC. 31, 2012
INSURANCE SEGMENT
Agriculture		$28,142		$103,536		$45,826		$281,645		$24,454		$25,413
Casualty and other specialty	51,889		50,750		56,475		36,813		44,307		43,683
Professional lines	29,008		20,216		29,846		14,570		32,138		30,044
Property, marine and energy	31,663		23,137		46,891		9,999		11,077		7,512
TOTAL INSURANCE		$140,702		$197,639		$179,038		$343,027		$111,976		$106,652

REINSURANCE SEGMENT
Catastrophe		$9,442		$41,157		$123,411		$78,963		$12,270		$22,073
Property	4,220		73,807		42,886		166,322		9,417		31,065
Casualty	20,278		23,409		30,868		83,392		29,495		15,907
Professional lines	43,400		21,520		84,117		25,619		113,089		8,849
Specialty	15,926		32,574		51,107		101,382		3,817		3,400
TOTAL REINSURANCE		$93,266		$192,467		$332,389		$455,678		$168,088		$81,294

REPORTED TOTALS		$233,968		$390,106		$511,427		$798,705		$280,064		$187,946

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS EARNED BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED
	DEC. 31, 2014		SEPT. 30, 2014		JUNE 30, 2014		MAR. 31, 2014		DEC. 31, 2013		DEC. 31, 2012
INSURANCE SEGMENT
Agriculture		$124,959		$162,710		$127,421		$56,313		$143,876		$142,851
Casualty and other specialty	45,043		45,134		50,012		51,763		55,657		55,425
Professional lines	24,460		24,795		24,219		24,341		25,816		35,530
Property, marine and energy	23,283		20,944		16,911		11,604		10,618		10,295
TOTAL INSURANCE		$217,745		$253,583		$218,563		$144,021		$235,967		$244,101

REINSURANCE SEGMENT
Catastrophe		$58,869		$61,613		$65,705		$62,926		$66,026		$95,050
Property	75,227		68,481		76,705		76,918		87,032		92,757
Casualty	41,146		44,668		50,102		48,254		61,218		56,931
Professional lines	45,288		39,534		36,325		33,194		24,793		13,894
Specialty	33,004		47,016		34,138		30,953		24,451		28,320
TOTAL REINSURANCE		$253,534		$261,312		$262,975		$252,245		$263,520		$286,952

REPORTED TOTALS		$471,279		$514,895		$481,538		$396,266		$499,487		$531,053

ENDURANCE SPECIALTY HOLDINGS LTD.

CONSOLIDATED SEGMENT DATA



	FOR THE YEARS ENDED
	DEC. 31, 2014									DEC. 31, 2013
	Insurance			Reinsurance			Totals			Insurance			Reinsurance			Totals
UNDERWRITING REVENUES
Gross premiums written		$1,716,128			$1,177,948			$2,894,076			$1,475,429			$1,189,815			$2,665,244
Net premiums written		$860,406			$1,073,800			$1,934,206			$932,510			$1,116,423			$2,048,933
Net premiums earned		$833,912			$1,030,066			$1,863,978			$946,474			$1,070,010			$2,016,484
Other underwriting loss	—			(5,786		)	(5,786		)	—			(2,046		)	(2,046		)
Total underwriting revenues		$833,912			$1,024,280			$1,858,192			$946,474			$1,067,964			$2,014,438

UNDERWRITING EXPENSES
Losses and loss expenses		$594,561			$375,601			$970,162			$774,425			$445,259			$1,219,684
Acquisition expenses	65,368			254,145			319,513			64,778			239,652			304,430
General and administrative expenses	174,575			139,012			313,587			157,596			137,310			294,906
Total expenses		$834,504			$768,758			$1,603,262			$996,799			$822,221			$1,819,020

UNDERWRITING (LOSS) INCOME		($592	)		$255,522			$254,930			($50,325	)		$245,743			$195,418

GAAP RATIOS
Loss ratio	71.4		%	36.4		%	52.1		%	81.8		%	41.6		%	60.5		%
Acquisition expense ratio	7.8		%	24.7		%	17.1		%	6.8		%	22.4		%	15.1		%
General and administrative expense ratio	20.9		%	13.5		%	16.8		%	16.7		%	12.8		%	14.6		%
Combined ratio AS REPORTED	100.1		%	74.6		%	86.0		%	105.3		%	76.8		%	90.2		%

Effect of favorable prior accident year reserve development	9.7		%	14.9		%	12.5		%	3.6		%	17.6		%	11.0		%

Combined ratio net of prior accident year reserve development	109.8		%	89.5		%	98.5		%	108.9		%	94.4		%	101.2		%

ENDURANCE SPECIALTY HOLDINGS LTD.

INSURANCE SEGMENT DATA



	FOR THE YEARS ENDED
	DEC. 31, 2014			DEC. 31, 2013			DEC. 31, 2012
UNDERWRITING REVENUES
Gross premiums written		$1,716,128			$1,475,429			$1,429,930
Net premiums written		$860,406			$932,510			$942,357
Net premiums earned		$833,912			$946,474			$955,089
Other underwriting loss	—			—			(2,684		)
Total underwriting revenues		$833,912			$946,474			$952,405

UNDERWRITING EXPENSES
Losses and loss expenses		$594,561			$774,425			$855,941
Acquisition expenses	65,368			64,778			75,597
General and administrative expenses	174,575			157,596			125,108
Total expenses		$834,504			$996,799			$1,056,646

UNDERWRITING LOSS		($592	)		($50,325	)		($104,241	)

GAAP RATIOS
Loss ratio	71.4		%	81.8		%	89.6		%
Acquisition expense ratio	7.8		%	6.8		%	7.9		%
General and administrative expense ratio	20.9		%	16.7		%	13.1		%
Combined ratio AS REPORTED	100.1		%	105.3		%	110.6		%

Effect of favorable prior accident year reserve development	9.7		%	3.6		%	4.8		%

Combined ratio net of prior accident year reserve development	109.8		%	108.9		%	115.4		%

ENDURANCE SPECIALTY HOLDINGS LTD.

REINSURANCE SEGMENT DATA



	FOR THE YEARS ENDED
	DEC. 31, 2014			DEC. 31, 2013			DEC. 31, 2012
UNDERWRITING REVENUES
Gross premiums written		$1,177,948			$1,189,815			$1,119,096
Net premiums written		$1,073,800			$1,116,423			$1,087,138
Net premiums earned		$1,030,066			$1,070,010			$1,058,811
Other underwriting (loss) income	(5,786		)	(2,046		)	501
Total underwriting revenues		$1,024,280			$1,067,964			$1,059,312

UNDERWRITING EXPENSES
Losses and loss expenses		$375,601			$445,259			$665,054
Acquisition expenses	254,145			239,652			227,582
General and administrative expenses	139,012			137,310			110,581
Total expenses		$768,758			$822,221			$1,003,217

UNDERWRITING INCOME		$255,522			$245,743			$56,095

GAAP RATIOS
Loss ratio	36.4		%	41.6		%	62.8		%
Acquisition expense ratio	24.7		%	22.4		%	21.5		%
General and administrative expense ratio	13.5		%	12.8		%	10.4		%
Combined ratio AS REPORTED	74.6		%	76.8		%	94.7		%

Effect of favorable prior accident year reserve development	14.9		%	17.6		%	7.0		%

Combined ratio net of prior accident year reserve development	89.5		%	94.4		%	101.7		%

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE YEARS ENDED
	DEC. 31, 2014		DEC. 31, 2013		DEC. 31, 2012
INSURANCE SEGMENT
Agriculture		$866,025		$954,389		$903,730
Casualty and other specialty	396,113		303,803		296,325
Professional lines	263,538		148,537		169,815
Property, marine and energy	190,452		68,700		60,060
TOTAL INSURANCE		$1,716,128		$1,475,429		$1,429,930

REINSURANCE SEGMENT
Catastrophe		$343,213		$355,751		$378,387
Property	287,326		297,806		349,579
Casualty	159,533		241,358		208,353
Professional lines	174,656		163,594		59,076
Specialty	213,220		131,306		123,701
TOTAL REINSURANCE		$1,177,948		$1,189,815		$1,119,096

REPORTED TOTALS		$2,894,076		$2,665,244		$2,549,026

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS WRITTEN BY LINE OF BUSINESS



	FOR THE YEARS ENDED
	DEC. 31, 2014		DEC. 31, 2013		DEC. 31, 2012
INSURANCE SEGMENT
Agriculture		$459,149		$570,738		$553,762
Casualty and other specialty	195,927		218,298		216,780
Professional lines	93,640		95,101		137,885
Property, marine and energy	111,690		48,373		33,930
TOTAL INSURANCE		$860,406		$932,510		$942,357

REINSURANCE SEGMENT
Catastrophe		$252,973		$294,260		$351,140
Property	287,235		292,872		349,586
Casualty	157,947		239,525		207,113
Professional lines	174,656		163,594		59,076
Specialty	200,989		126,172		120,223
TOTAL REINSURANCE		$1,073,800		$1,116,423		$1,087,138

REPORTED TOTALS		$1,934,206		$2,048,933		$2,029,495

ENDURANCE SPECIALTY HOLDINGS LTD.

SEGMENT NET PREMIUMS EARNED BY LINE OF BUSINESS



	FOR THE YEARS ENDED
	DEC. 31, 2014		DEC. 31, 2013		DEC. 31, 2012
INSURANCE SEGMENT
Agriculture		$471,403		$573,538		$548,800
Casualty and other specialty	191,952		220,181		215,476
Professional lines	97,815		108,717		141,710
Property, marine and energy	72,742		44,038		49,103
TOTAL INSURANCE		$833,912		$946,474		$955,089

REINSURANCE SEGMENT
Catastrophe		$249,113		$305,159		$344,704
Property	297,331		352,716		306,499
Casualty	184,170		229,324		224,813
Professional lines	154,341		67,969		62,622
Specialty	145,111		114,842		120,173
TOTAL REINSURANCE		$1,030,066		$1,070,010		$1,058,811

REPORTED TOTALS		$1,863,978		$2,016,484		$2,013,900

ENDURANCE SPECIALTY HOLDINGS LTD.

RETURN ON EQUITY ANALYSIS



	FOR THE YEAR ENDED
	DECEMBER 31, 2014

Average common equity [a]		$2,605,866

Net premiums earned		$1,863,978
Combined ratio	86.0		%
Operating margin	14.0		%
Premium leverage	0.72x

Implied ROAE from underwriting activity	10.0		%

Average cash and invested assets at amortized cost		$6,487,847
Investment leverage	2.48x
Year to date investment income yield, pretax	2.0		%

Implied ROAE from investment activity	5.0		%

Financing Costs [b]	(2.8		)%

Implied Pre-tax Operating ROAE, for period [c]	12.2		%

[b] Financing costs include interest expense and preferred dividends.

[c] Implied pre-tax Operating ROAE considers only the main components of the Company’s return on equity - underwriting and investment returns. As such, it differs from operating ROE primarily due to the exclusion of tax on underwriting, financing and investment activities and the tax-effected impact of amortization expense.

ENDURANCE SPECIALTY HOLDINGS LTD.

ANNUALIZED PREMIUM & INVESTMENT LEVERAGE



	FOR THE QUARTERS ENDED								YEARS ENDED DECEMBER 31,
	DEC. 31, 2014		SEPT. 30, 2014		JUNE 30, 2014		MAR. 31, 2014		2014		2013

Average common equity [a]		$2,722,818		$2,688,065		$2,628,392		$2,513,829		$2,605,866		$2,368,573

Net premiums earned		$471,279		$514,895		$481,538		$396,266		$1,863,978		$2,016,484

Premium leverage	0.17x		0.19x		0.18x		0.16x		0.72x		0.85x

Annualized premium leverage	0.69x		0.77x		0.72x		0.64x		0.72x		0.85x

Average cash and invested assets at amortized cost		$6,455,205		$6,416,146		$6,434,200		$6,448,260		$6,487,847		$6,439,797

Investment leverage	2.37x		2.39x		2.45x		2.57x		2.48x		2.72x

ENDURANCE SPECIALTY HOLDINGS LTD.

INVESTMENT PORTFOLIO

AS OF DECEMBER 31, 2014 AND 2013



	December 31, 2014				December 31, 2013
Type of Investment	Fair Value		Percentage		Fair Value			Percentage
Cash and equivalents [a]		$632,667	9.6	%		$771,714		11.9	%
Short-term investments	9,014		0.1	%	35,028			0.5	%
Fixed maturity investments
U.S. government and government agencies notes	587,411		8.9	%	769,343			11.8	%
Government and agency guaranteed corporates	48,102		0.7	%	35,145			0.5	%
U.S. government agency residential mortgage-backed securities	1,082,142		16.4	%	1,106,403			17.1	%
U.S. government agency commercial mortgage-backed securities	50,981		0.8	%	49,431			0.8	%
Municipals	39,413		0.6	%	26,854			0.4	%
Foreign government	240,536		3.6	%	182,647			2.8	%
Corporate securities	1,361,462		20.5	%	1,227,299			18.9	%
Non-agency residential mortgage-backed securities	92,864		1.4	%	80,788			1.2	%
Non-agency commercial mortgage-backed securities	928,438		14.1	%	898,246			13.9	%
Asset-backed securities	413,221		6.3	%	353,256			5.4	%
Collateralized loan and debt obligations	248,011		3.8	%	94,552			1.5	%
Equity securities
Equity investments	202,535		3.1	%	174,669			2.7	%
Emerging market debt fund	60,150		0.9	%	60,844			0.9	%
Convertible funds	46,111		0.7	%	—			—	%
Preferred equity investments	15,836		0.2	%	8,223			0.1	%
Short-term fixed income fund	6,736		0.1	%	8,730			0.1	%
Other investments [b]	541,454		8.2	%	617,478			9.5	%
Total		$6,607,084	100.0	%		$6,500,650		100.0	%

Ratings [c]	Fair Value		Percentage		Fair Value			Percentage
U.S. government and government agencies notes		$587,411	11.5	%		$769,343		15.8	%
AAA/Aaa	1,206,252		23.6	%	972,820			20.0	%
AA/Aa	1,717,343		33.7	%	1,771,156			36.5	%
A/A	1,045,301		20.5	%	895,549			18.4	%
BBB	427,018		8.4	%	363,722			7.5	%
Below BBB	96,244		1.9	%	66,791			1.4	%
Not Rated	22,026		0.4	%	19,611			0.4	%
Total		$5,101,595	100.0	%		$4,858,992		100.0	%

Performance					December 31, 2014			December 31, 2013
Yield [d]					2.0		%	2.6	%
Duration in years [e]					2.91			3.11



	Year Ended		Quarter Ended			Quarter Ended			Quarter Ended		Quarter Ended		Year Ended
Investment Income	Dec. 31, 2014		Dec. 31, 2014			Sept. 30, 2014			June 30, 2014		Mar. 31, 2014		Dec. 31, 2013
Cash and available for sale securities		$111,934		$28,827			$27,142			$28,517		$27,448		$101,895
Other investments	19,609		(2,933		)	(1,785		)	10,785		13,542		64,321
Total net investment income		$131,543		$25,894			$25,357			$39,302		$40,990		$166,216

[a] Cash and equivalents, including operating cash, are shown net of investments pending settlement.

[b] Other investments includes investments in alternative and specialty funds.

[c] Excludes cash and equivalents, equity securities and other investments.

[d] Earned yield for the years ending December 31, 2014 and 2013 excludes realized and unrealized gains and losses on fixed maturity investments.

[e] Duration excludes equity securities, other investments and operating cash.

ENDURANCE SPECIALTY HOLDINGS LTD.

LARGEST TWENTY-FIVE CORPORATE HOLDINGS

AS OF DECEMBER 31, 2014



	December 31, 2014
ISSUER (1) (2) (3)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			Credit Quality (4)
MORGAN STANLEY		$61,902		$62,428		$526		A-
BANK OF AMERICA CORP	48,025		48,321		296			A-
GOLDMAN SACHS GROUP INC/THE	44,539		44,900		361			A-
JPMORGAN CHASE & CO	41,859		42,070		211			A
CITIGROUP INC	32,506		32,881		375			A-
COMCAST CORPORATION	31,090		31,527		437			A-
GENERAL ELECTRIC CO	28,599		28,811		212			AA+
HSBC HOLDINGS PLC	22,855		23,038		183			A+
MITSUBISHI UFJ FINANCIAL GROUP INC	21,697		21,789		92			A+
FORD MOTOR COMPANY	21,283		21,327		44			BBB-
AMERICAN EXPRESS COMPANY	21,089		21,083		(6		)	A-
BB&T CORP	19,192		19,251		59			A-
AT&T INC	18,728		18,679		(49		)	A-
VERIZON COMMUNICATIONS INC	18,729		18,566		(163		)	BBB+
BP PLC	18,111		17,890		(221		)	A
NATIONAL GRID PLC	15,864		17,393		1,529			A-
WELLS FARGO & COMPANY	17,144		17,149		5			A+
HONDA MOTOR CO LTD	14,553		14,561		8			A+
UBS AG	14,291		14,316		25			A
US BANCORP	12,469		12,435		(34		)	AA-
CREDIT SUISSE GROUP AG	11,771		12,050		279			BBB+
PHILIP MORRIS INTERNATIONAL INC	11,823		11,831		8			A
PNC FINANCIAL SERVICES GROUP INC (THE)	11,705		11,709		4			A
NEW YORK LIFE INSURANCE COMPANY	10,942		11,007		65			AA+
BARCLAYS PLC	10,664		10,691		27			A-


(1)	Corporate issuers exclude government-backed, government-sponsored enterprises, covered bonds and cash and cash equivalents.


(2)	Credit exposures represent only direct exposure to fixed maturities and short term investments of the parent issuer and its major subsidiaries.


(3)	Includes preferred equity securities.


(4)	Represents weighted average credit quality of underlying issues.

ENDURANCE SPECIALTY HOLDINGS LTD.

ACTIVITY IN RESERVE FOR LOSSES AND LOSS EXPENSES



	THREE MONTHS ENDED DEC. 31, 2014									YEAR ENDED DEC. 31, 2014
	GROSS			RECOVERIES			NET			GROSS			RECOVERIES			NET
Reserve for losses and loss expenses
Balance, beginning of period		$3,897,483			($566,329	)		$3,331,154			$4,002,259			($593,755	)		$3,408,504

Incurred related to:
Current year	452,472			(139,838		)	312,634			1,790,254			(586,277		)	1,203,977
Prior years	(89,864		)	21,031			(68,833		)	(244,430		)	10,615			(233,815		)
Total Incurred	362,608			(118,807		)	243,801			1,545,824			(575,662		)	970,162

Paid related to:
Current year	(252,876		)	(2,891		)	(255,767		)	(671,563		)	232,394			(439,169		)
Prior years	(140,667		)	16,499			(124,168		)	(983,542		)	264,499			(719,043		)
Total Paid	(393,543		)	13,608			(379,935		)	(1,655,105		)	496,893			(1,158,212		)

Foreign currency translation and other	(19,689		)	733			(18,956		)	(46,119		)	1,729			(44,390		)

Balance, end of period		$3,846,859			($670,795	)		$3,176,064			$3,846,859			($670,795	)		$3,176,064

ENDURANCE SPECIALTY HOLDINGS LTD.

PRIOR YEAR RESERVE DEVELOPMENT BY SEGMENT

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2014



	Insurance			Reinsurance			Total Company
Incurred related to prior years
Quarter ended March 31, 2014		($11,648	)		($38,664	)		($50,312	)
Quarter ended June 30, 2014	(22,048		)	(32,153		)	(54,201		)
Quarter ended September 30, 2014	(20,311		)	(40,158		)	(60,469		)
Quarter ended December 30, 2014	(26,563		)	(42,270		)	(68,833		)
Year ended December 31, 2014		($80,570	)		($153,245	)		($233,815	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2013



	Insurance			Reinsurance			Total Company
Incurred related to prior years
Quarter ended March 31, 2013		($17,295	)		($33,373	)		($50,668	)
Quarter ended June 30, 2013	(5,625		)	(57,180		)	(62,805		)
Quarter ended September 30, 2013	(6,210		)	(41,850		)	(48,060		)
Quarter ended December 31, 2013	(4,773		)	(56,086		)	(60,859		)
Year ended December 31, 2013		($33,903	)		($188,489	)		($222,392	)

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT DURING THE YEAR ENDED DEC. 31, 2012



	Insurance			Reinsurance			Total Company
Incurred related to prior years
Quarter ended March 31, 2012		($7,847	)		($9,054	)		($16,901	)
Quarter ended June 30, 2012	(13,633		)	(5,919		)	(19,552		)
Quarter ended September 30, 2012	(17,439		)	(38,203		)	(55,642		)
Quarter ended December 31, 2012	(7,267		)	(20,795		)	(28,062		)
Year ended December 31, 2012		($46,186	)		($73,971	)		($120,157	)

ENDURANCE SPECIALTY HOLDINGS LTD.

PRIOR YEAR RESERVE DEVELOPMENT BY LINE OF BUSINESS

(FAVORABLE) ADVERSE PRIOR ACCIDENT YEAR DEVELOPMENT



	FOR THE QUARTERS ENDED												FOR THE YEARS ENDED
	DEC. 31, 2014			SEPT. 30, 2014			JUNE 30, 2014			MAR. 31, 2014			DEC. 31, 2014			DEC. 31, 2013
INSURANCE SEGMENT
Agriculture		($1,847	)		($1,260	)		($2,188	)		($2,140	)		($7,435	)		($5,597	)
Casualty and other specialty	(20,184		)	(15,141		)	(12,226		)	(9,713		)	(57,264		)	(16,605		)
Professional lines	(692		)	(866		)	(3,991		)	(1,128		)	(6,677		)	(979		)
Property, marine and energy	(3,840		)	(3,044		)	(3,643		)	1,333			(9,194		)	(10,722		)
TOTAL INSURANCE		($26,563	)		($20,311	)		($22,048	)		($11,648	)		($80,570	)		($33,903	)

REINSURANCE SEGMENT
Catastrophe		($15,497	)		($16,012	)		($7,713	)		($7,761	)		($46,983	)		($61,186	)
Property	(5,100		)	(9,043		)	(9,502		)	(14,757		)	(38,402		)	(57,394		)
Casualty	(2,528		)	(5,269		)	(2,821		)	(2,751		)	(13,369		)	(20,370		)
Professional lines	(8,519		)	(3,162		)	(2,551		)	(2,029		)	(16,261		)	(13,947		)
Specialty	(10,626		)	(6,672		)	(9,566		)	(11,366		)	(38,230		)	(35,592		)
TOTAL REINSURANCE		($42,270	)		($40,158	)		($32,153	)		($38,664	)		($153,245	)		($188,489	)

REPORTED TOTALS		($68,833	)		($60,469	)		($54,201	)		($50,312	)		($233,815	)		($222,392	)

ENDURANCE SPECIALTY HOLDINGS LTD.

LOSSES AND LOSS EXPENSES INCURRED BY LINE OF BUSINESS



	FOR THE QUARTERS ENDED									FOR THE YEARS ENDED
	DEC. 31, 2014			SEPT. 30, 2014		JUNE 30, 2014		MAR. 31, 2014		DEC. 31, 2014		DEC. 31, 2013
INSURANCE SEGMENT
Agriculture		$125,520			$158,564		$111,685		$48,216		$443,985		$559,838
Casualty and other specialty	10,611			15,374		21,597		14,963		62,545		139,701
Professional lines	16,704			14,509		12,513		16,912		60,638		72,578
Property, marine and energy	6,949			8,230		3,772		8,442		27,393		2,308
TOTAL INSURANCE		$159,784			$196,677		$149,567		$88,533		$594,561		$774,425

REINSURANCE SEGMENT
Catastrophe		($10,236	)		$1,013		$15,907		$8,047		$14,731		$74,221
Property	36,175			24,011		34,127		29,814		124,127		136,155
Casualty	24,936			23,765		25,636		25,916		100,253		159,512
Professional lines	17,358			19,797		18,414		17,936		73,505		27,167
Specialty	15,784			25,006		15,545		6,650		62,985		48,204
TOTAL REINSURANCE		$84,017			$93,592		$109,629		$88,363		$375,601		$445,259

REPORTED TOTALS		$243,801			$290,269		$259,196		$176,896		$970,162		$1,219,684

ENDURANCE SPECIALTY HOLDINGS LTD.

ANALYSIS OF UNPAID LOSSES AND LOSS EXPENSES



		Insurance															Reinsurance																		Reported Totals
		Agriculture			Casualty and other specialty			Professional lines			Property, marine and energy			Subtotal			Catastrophe			Property			Casualty			Professional lines			Specialty			Subtotal			Total
AT	DEC. 31, 2014
Case reserves			$222,570			$325,415			$119,453			$33,264			$700,702			$126,837			$178,875			$248,933			$60,915			$99,142			$714,702			$1,415,404
Total reserves			$295,191			$1,258,009			$517,101			$53,471			$2,123,772			$176,610			$272,164			$780,880			$258,840			$234,593			$1,723,087			$3,846,859
Case reserves/Total reserves		75.4		%	25.9		%	23.1		%	62.2		%	33.0		%	71.8		%	65.7		%	31.9		%	23.5		%	42.3		%	41.5		%	36.8		%

IBNR/Total reserves		24.6		%	74.1		%	76.9		%	37.8		%	67.0		%	28.2		%	34.3		%	68.1		%	76.5		%	57.7		%	58.5		%	63.2		%

AT	SEPT. 30, 2014
Case reserves			$272,485			$343,537			$110,988			$32,935			$759,945			$139,400			$173,326			$246,483			$58,261			$97,691			$715,161			$1,475,106
Total reserves			$307,994			$1,276,916			$500,457			$49,618			$2,134,985			$213,001			$272,421			$789,713			$249,836			$237,527			$1,762,498			$3,897,483
Case reserves/Total reserves		88.5		%	26.9		%	22.2		%	66.4		%	35.6		%	65.4		%	63.6		%	31.2		%	23.3		%	41.1		%	40.6		%	37.8		%

IBNR/Total reserves		11.5		%	73.1		%	77.8		%	33.6		%	64.4		%	34.6		%	36.4		%	68.8		%	76.7		%	58.9		%	59.4		%	62.2		%

AT	JUNE 30, 2014
Case reserves			$213,720			$346,765			$96,271			$20,603			$677,359			$151,530			$183,619			$252,827			$62,612			$88,683			$739,271			$1,416,630
Total reserves			$335,172			$1,285,787			$481,541			$41,421			$2,143,921			$246,809			$298,901			$802,621			$236,771			$234,370			$1,819,472			$3,963,393
Case reserves/Total reserves		63.8		%	27.0		%	20.0		%	49.7		%	31.6		%	61.4		%	61.4		%	31.5		%	26.4		%	37.8		%	40.6		%	35.7		%

IBNR/Total reserves		36.2		%	73.0		%	80.0		%	50.3		%	68.4		%	38.6		%	38.6		%	68.5		%	73.6		%	62.2		%	59.4		%	64.3		%

AT	MAR. 31, 2014
Case reserves			$66,471			$316,759			$113,911			$26,843			$523,984			$155,088			$180,130			$241,452			$60,856			$98,289			$735,815			$1,259,799
Total reserves			$199,656			$1,278,360			$501,131			$44,672			$2,023,819			$255,949			$308,471			$768,394			$226,711			$264,430			$1,823,955			$3,847,774
Case reserves/Total reserves		33.3		%	24.8		%	22.7		%	60.1		%	25.9		%	60.6		%	58.4		%	31.4		%	26.8		%	37.2		%	40.3		%	32.7		%

IBNR/Total reserves		66.7		%	75.2		%	77.3		%	39.9		%	74.1		%	39.4		%	41.6		%	68.6		%	73.2		%	62.8		%	59.7		%	67.3		%

AT	DEC. 31, 2013
Case reserves			$257,939			$315,010			$110,880			$24,570			$708,399			$167,152			$196,715			$239,385			$65,353			$101,716			$770,321			$1,478,720
Total reserves			$342,368			$1,273,779			$501,755			$40,988			$2,158,890			$265,626			$323,798			$769,067			$215,235			$269,643			$1,843,369			$4,002,259
Case reserves/Total reserves		75.3		%	24.7		%	22.1		%	59.9		%	32.8		%	62.9		%	60.8		%	31.1		%	30.4		%	37.7		%	41.8		%	36.9		%

IBNR/Total reserves		24.7		%	75.3		%	77.9		%	40.1		%	67.2		%	37.1		%	39.2		%	68.9		%	69.6		%	62.3		%	58.2		%	63.1		%

ENDURANCE SPECIALTY HOLDINGS LTD.

SHAREHOLDER RETURN ANALYSIS



	YEARS ENDED DECEMBER 31,									INCEPTION TO
	2014			2013			2012			DEC. 31, 2014
Income and Return on Equity:
Net income available to common and participating common shareholders		$315,700			$279,165			$129,766			$3,066,012

Operating income available to common and participating common shareholders	304,012			281,021			54,295			2,977,508

Average Shareholders’ equity [a]	2,605,866			2,368,573			2,230,881			2,071,325

Net income return on average equity	12.1		%	11.8		%	5.8		%	11.4		%	[c]
Operating return on average equity	11.7		%	11.9		%	2.4		%	11.1		%	[c]

Book value and dividends per share:
Dilutive book value per common share (treasury stock method)		$61.33			$55.18			$52.88			$61.33

Dividends paid per share	1.36			1.28			1.24			12.21

Change in diluted book value per common share	11.1		%	4.3		%	4.6		%	16.7		%	[c]

Total return to common shareholders [b]	13.6		%	6.8		%	7.0		%	21.5		%	[c]

[a] Excludes the $430 million liquidation value of the preferred shares.

[b] Total return to common shareholders is calculated as the change in diluted book value per common share plus dividends paid divided by beginning diluted book value per share.

[c] Represents average non-compounded annual returns since December 31, 2001.

ENDURANCE SPECIALTY HOLDINGS LTD.

DILUTIVE SHARES FOR EPS CALCULATION - TWO CLASS METHOD



		QUARTERS ENDED						YEARS ENDED
		DEC. 31,						DEC. 31,
		2014			2013			2014			2013
DILUTIVE SHARES OUTSTANDING: AS REPORTED	Average market price per share		$57.49			$55.76			$54.52			$50.34

	Basic weighted average common shares outstanding [a]	43,474			43,108			43,368			42,818

	Add: weighted avg. unvested restricted share units	—			—			—			1
	Weighted average exercise price per share	—			—			—			—
	Proceeds from unrecognized restricted share unit expense	—				$3		—				$3
	Less: restricted share units bought back via treasury method	—			—			—			(1		)

	Add: weighted avg. dilutive options outstanding	800			815			807			495
	Weighted average exercise price per share		$48.20			$47.94			$48.08			$47.55
	Proceeds from unrecognized option expense		$2,624			$5,687			$2,624			$5,687
	Less: options bought back via treasury method	(717		)	(803		)	(760		)	(495		)
	Weighted average dilutive shares outstanding [b]	43,557			43,120			43,415			42,818

[a] Excludes unvested restricted shares outstanding which are considered participating securities under the two-class method for calculation of EPS.

[b] Options that are anti-dilutive are not included in the calculation of diluted shares outstanding. Options 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.

ENDURANCE SPECIALTY HOLDINGS LTD.

EARNINGS PER SHARE INFORMATION - TWO CLASS METHOD



	QUARTERS ENDED						YEARS ENDED
	DEC. 31,						DEC. 31,
	2014			2013			2014			2013

Net income		$84,573			$67,181			$348,450			$311,915
Less preferred dividends	(8,186		)	(8,186		)	(32,750		)	(32,750		)
Net income available to common and participating common shareholders		$76,387			$58,995			$315,700			$279,165
Less amount allocated to participating common shareholders [a]	(2,212		)	(1,628		)	(9,118		)	(6,444		)
Net income allocated to common shareholders		$74,175			$57,367			$306,582			$272,721

Denominator:
Weighted average shares - basic	43,474			43,108			43,368			42,818

Share Equivalents
Options	83			12			47			—
Weighted average shares - diluted	43,557			43,120			43,415			42,818

Basic earnings per common share		$1.71			$1.33			$7.07			$6.37

Diluted earnings per common share [b]		$1.70			$1.33			$7.06			$6.37

[a] Represents earnings and dividends allocated to holders of unvested restricted shares issued under the Company’s stock compensation plans that are considered participating securities related to the calculation of earnings per share under the two-class method. In periods of loss, no losses are allocated to participating common shareholders.

[b] Represents diluted earnings per share calculated under the two-class method which was the lower of the two-class method and the treasury stock method.

ENDURANCE SPECIALTY HOLDINGS LTD.

OPERATING INCOME RECONCILIATION

EARNINGS PER SHARE INFORMATION - TWO CLASS METHOD



	Two-Class Method						Two-Class Method
	QUARTERS ENDED						YEARS ENDED
	DEC. 31,						DEC. 31,
	2014			2013			2014			2013

Net income		$84,573			$67,181			$348,450			$311,915
(Less) add after-tax items:
Net foreign exchange (gains) losses	(246		)	5,708			3,672			14,352
Net realized and unrealized losses (gains)	2,187			(4,808		)	(15,969		)	(14,064		)
Net impairment losses recognized in earnings	198			26			609			1,568
Operating income before preferred dividends		$86,712			$68,107			$336,762			$313,771
Preferred dividends	(8,186		)	(8,186		)	(32,750		)	(32,750		)
Operating income available to common and participating common shareholders		$78,526			$59,921			$304,012			$281,021
Less amount allocated to participating common shareholders [a]	(2,274		)	(1,654		)	(8,780		)	(6,487		)
Operating income allocated to common shareholders		$76,252			$58,267			$295,232			$274,534

Weighted average common shares outstanding
Basic	43,474			43,108			43,368			42,818
Dilutive	43,557			43,120			43,415			42,818

Basic per common share data
Net income allocated to common shareholders		$1.71			$1.33			$7.07			$6.37
(Less) add after-tax items:
Net foreign exchange (gains) losses	(0.01		)	0.13			0.09			0.33
Net realized and unrealized losses (gains)	0.05			(0.11		)	(0.37		)	(0.33		)
Net impairment losses recognized in earnings	—			—			0.01			0.04
Operating income allocated to common shareholders		$1.75			$1.35			$6.80			$6.41

Diluted per common share data
Net income allocated to common shareholders		$1.70			$1.33			$7.06			$6.37
(Less) add after-tax items:
Net foreign exchange (gains) losses	—			0.13			0.09			0.33
Net realized and unrealized losses (gains)	0.05			(0.11		)	(0.36		)	(0.33		)
Net impairment losses recognized in earnings	—			—			0.01			0.04
Operating income allocated to common shareholders [b]		$1.75			$1.35			$6.80			$6.41

[b] Represents diluted earnings per share calculated under the two-class method which was the lower of the two-class method and the treasury stock method.

ENDURANCE SPECIALTY HOLDINGS LTD.

NET INCOME AND OPERATING INCOME EXCLUDING EXPENSES

INCURRED RELATED TO THE PROPOSED ACQUISITON OF ASPEN



	QUARTER ENDED DEC. 31, 2014									YEAR ENDED DEC. 31, 2014
	As reported			Expenses Incurred Related to the Proposed Acquisition of Aspen [a]			Excluding Expenses Incurred Related to the Proposed Acquisition of Aspen			As reported			Expenses Incurred Related to the Proposed Acquisition of Aspen [a]			Excluding Expenses Incurred Related to the Proposed Acquisition of Aspen
Net income available to common and participating common shareholders		$76,387			$171			$76,558			$315,700			$20,260			$335,960
Less amount allocated to participating common shareholders [b]	(2,212		)	(5		)	(2,217		)	(9,118		)	(585		)	(9,703		)
Net income allocated to common shareholders		$74,175			$166			$74,341			$306,582			$19,675			$326,257

Basic earnings per common share		$1.71			$—			$1.71			$7.07			$0.45			$7.52
Diluted earnings per common share [c]		$1.70			$0.01			$1.71			$7.06			$0.45			$7.51

ROAE, net income [d]	2.8		%	—		%	2.8		%	12.1		%	0.8		%	12.9		%
Annualized ROAE, net income [d]	11.2		%	—		%	11.2		%	12.1		%	0.8		%	12.9		%

Operating income available to common and participating common shareholders		$78,526			$171			$78,697			$304,012			$20,260			$324,272
Less amount allocated to participating common shareholders [b]	(2,274		)	(5		)	(2,279		)	(8,780		)	(585		)	(9,365		)
Operating income allocated to common shareholders		$76,252			$166			$76,418			$295,232			$19,675			$314,907

Basic operating income per common share		$1.75			$0.01			$1.76			$6.80			$0.46			$7.26
Diluted operating income per common share [c]		$1.75			$—			$1.75			$6.80			$0.45			$7.25

ROAE, operating income [d]	2.9		%	—		%	2.9		%	11.7		%	0.7		%	12.4		%
Annualized ROAE, operating income [d]	11.5		%	0.1		%	11.6		%	11.7		%	0.7		%	12.4		%

[a] The Company incurred $0.2 million of general and administrative expenses in relation to the Company's proposed acquisition of Aspen for the quarter ended December 31, 2014. For the year ended December 31, 2014, the Company incurred $15.5 million and $4.8 million of general and administrative expenses and interest expense, respectively, in relation to the Company's proposed acquisition of Aspen.

[b] Represents earnings and dividends allocated to holders of unvested restricted shares issued under the Company's stock compensation plans that are considered participating securities related to the calculation of earnings per share under the two-class method. In periods of loss, no losses are allocated to participating common shareholders.

[c] Represents diluted earnings per share calculated under the two-class method which was the lower of the two-class method and the treasury stock method.

[d] Average common equity is calculated as the arithmetic average of the beginning and ending common equity balances for the stated period, which excludes the $430 million liquidation value of the preferred shares.

ENDURANCE SPECIALTY HOLDINGS LTD.

BOOK VALUE PER SHARE



		DECEMBER 31,
		2014			2013
DILUTIVE COMMON SHARES OUTSTANDING: AS-IF CONVERTED [a]	Price per share at period end		$59.84			$58.67

	Basic common shares outstanding	43,474			43,108
	Add: unvested restricted shares and restricted share units	1,291			1,261
	Add: dilutive options outstanding	800			815
	Weighted average exercise price per share		$48.20			$47.94

	Book Value [b]		$2,755,182			$2,456,549
	Add: proceeds from converted options	38,560			39,071
	Pro forma book value		$2,793,742			$2,495,620
	Dilutive shares outstanding	45,565			45,184
	Basic book value per common share		$63.38			$56.99
	Diluted book value per common share		$61.31			$55.23

DILUTIVE COMMON SHARES OUTSTANDING: TREASURY STOCK METHOD	Price per share at period end		$59.84			$58.67

	Basic common shares outstanding	43,474			43,108
	Add: unvested restricted shares and restricted share units	1,291			1,261
	Add: dilutive options outstanding	800			815
	Weighted average exercise price per share		$48.20			$47.94
	Less: options bought back via treasury method	(644		)	(666		)
	Dilutive shares outstanding	44,921			44,518
	Basic book value per common share		$63.38			$56.99
	Diluted book value per common share		$61.33			$55.18

[a] The as-if converted method assumes that the proceeds received upon exercise of options will be retained by the Company and the resulting common shares from exercise will remain outstanding.

[b] Excludes the $430 million liquidation value of the preferred shares.

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.

Net income available to common and participating common shareholders, excluding expenses incurred related to the proposed acquisition of Aspen Insurance Holdings Limited (“Aspen”), or net income per basic or diluted common share, excluding expenses incurred related to the proposed acquisition of Aspen, reflect the current period impact of these costs incurred by the Company and reflects the results of operations in a manner similar to that used by management to analyze the Company’s underlying business performance. Net income available to common and participating common shareholders, excluding expenses incurred related to the proposed acquisition of Aspen or net income per basic or diluted common share, excluding expenses incurred related to the proposed acquisition of Aspen, should not be viewed as a substitute for GAAP net income available to common and participating common shareholders, or basic or diluted earnings per common share, respectively. Please see page 32 for a reconciliation of net income available to common and participating common shareholders, excluding expenses incurred related to the proposed acquisition of Aspen to net income available to common and participating common shareholders.

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 to that used by management to analyze the Company’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. Please see page 31 for a reconciliation of operating income to net income.

Operating income available to common and participating common shareholders, excluding expenses incurred related to the proposed acquisition of Aspen, or net operating per basic or diluted common share, excluding expenses incurred related to the proposed acquisition of Aspen, reflect the current period impact of these costs incurred by the Company and reflect the results of operations in a manner similar to that used by management to analyze the Company’s underlying business performance. Operating income available to common and participating common shareholders, excluding expenses incurred related to the proposed acquisition of Aspen or net operating per basic or diluted common share, excluding expenses incurred related to the proposed acquisition of Aspen, should not be viewed as a substitute for GAAP net income available to common and participating common shareholders, or basic or diluted earnings per common share, respectively. Please see page 32 for a reconciliation of operating income available to common and participating common shareholders, excluding expenses incurred related to the proposed acquisition of Aspen to net income available to common and participating common shareholders.

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 33 for a reconciliation of diluted book value per common share to basic book value per common share.

Endurance Specialty (ENH) Inactive 8-KEndurance Reports Fourth Quarter 2014 Financial Results