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A.M. Best Affirms Ratings Of Endurance Specialty Holdings, Ltd. And Its Subsidiaries

Stocks in this article: ENH

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of Endurance Specialty Insurance Ltd. (Endurance) and its affiliates. Concurrently, A.M. Best has affirmed the ICR of “bbb” and debt ratings of the publicly traded parent, Endurance Specialty Holdings, Ltd. [NYSE: ENH]. Both companies are domiciled in Bermuda. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect Endurance’s strong level of risk-adjusted capitalization, solid historical operating performance over the last few years and its specialty focused, diversified business profile. Endurance has continued to focus on writing agriculture insurance, which now accounts for approximately 30% of the company’s net premiums written, up from 20% in 2009. Some of that increase can be attributed to rising commodity prices. The agriculture insurance business is not linked to the property/casualty pricing cycle so it can offer a balance to the total underwriting portfolio. In addition, Endurance has built a solid enterprise risk management framework that has evolved with the company. In that regard, Endurance’s losses from the rash of global catastrophes in 2011 were within A.M. Best’s expectations.

Partially offsetting these positive rating factors is Endurance’s exposure to large catastrophe losses as well as the current soft casualty market environment and uncertain financial markets. These challenges and other rating factors, which could lead to a ratings downgrade or a revision of the outlook to negative, include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to expectations and peers, significant adverse loss reserve development and/or a material decline in risk-adjusted capital. Alternatively, factors that could lead to a ratings upgrade include sustained favorable operating profitability, coupled with maintenance of strong risk-adjusted capital levels.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for Endurance Specialty Insurance Ltd and its following affiliates:

  • Endurance Reinsurance Corporation of America
  • Endurance Worldwide Insurance Limited
  • Endurance American Specialty Insurance Company
  • Endurance American Insurance Company
  • Endurance Risk Solutions Assurance Co.
  • American Agri-Business Insurance Company

The following debt ratings have been affirmed:

   

Endurance Specialty Holdings, Ltd—

-- “bbb” on $335 million 7.0% senior unsecured notes, due 2034
-- “bbb” on $200 million 6.15% senior unsecured notes, due 2015
-- “bb+” on $200 million 7.75% Series A non-cumulative preferred shares
-- “bb+” on $230 million 7.50% Series B non-cumulative preferred shares
 
The following indicative shelf ratings have been affirmed for debt securities available under the existing shelf registration:
 

Endurance Specialty Holdings, Ltd—

-- “bbb” on senior unsecured debt
-- “bbb-”on subordinated debt
-- “bb+” on preferred stock
 

Endurance Holdings Capital Trust I & II (guaranteed by Endurance Specialty Holdings, Ltd)—

-- “bb+” on preferred securities

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; “Catastrophe Analysis in A.M. Best Ratings”; “Rating Members of Insurance Groups”; and “A.M. Best’s Ratings & the Treatment of Debt.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.



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