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Endurance Specialty Holdings' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Mike McGuire – Chief Financial Officer

Thanks, David and good morning everyone. In the second quarter, Endurance generated net income to common shareholders of $64.3 million and $1.48 per diluted share and operating income of $50.4 million and $1.18 per diluted share. Our diluted book value per share ended the quarter at $53.48 up 5.8% from year end 2011 and up 7% when excluding the $0.62 per share in dividends paid in the first half of 2012.

Compared to 2011, the improvement in our operating results reflected a lower level of catastrophe losses in our reinsurance segment and improved ex-cat accident year results in both our insurance and reinsurance segments which was partially offset by lower net investment income.

Net premiums written in the second quarter were $484.4 million, an increase of 9.7% over 2011 as we experienced strong growth in both our insurance and reinsurance segments. Within our insurance segment, second quarter net premiums written of $186.7 million increased 7.6% over 2011. Premium growth in our agricultural line of business was partially offset by reductions in our property line of business. Agricultural growth is driven by higher policy accounts, which was partially offset by higher sessions to the Federal Reinsurance Program.

Reduced property insurance premiums reflect a strategy of shifting US wind capacity from all risk insurance to catastrophe reinsurance which we believe has higher margin and return potential. Reinsurance segment net premiums written were $297.8 million in the quarter up 11% from 2011. Catastrophe premium growth was driven by improved pricing, strong retentions, expansion of existing client relationships and increased capacity allocated to our cat lines. The shift in US wind capacity from insurance to reinsurance enabled us to grow premiums while reducing overall PMLs for US wind.

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