S&P Affirms Endurance Ratings

June 9, 2005

Standard & Poor’s Ratings Services announced that it has affirmed its “BBB” counterparty credit and senior debt ratings on Bermuda-based Endurance Specialty Holdings Ltd. with a positive outlook.

S&P also assigned its “BBB” preliminary senior debt rating, “BBB-” preliminary subordinated debt rating and “BB+” preliminary preferred stock rating to Endurance following the company’s increasing its existing universal shelf registration statement to $750 million in debt capacity from the existing $250 million.

“The ratings on Endurance reflect its strong competitive position supported by a diversified business platform, strong capital adequacy, and strong operating performance,” explained S&P credit analyst Damien Magarelli. “Offsetting these positives is Endurance’s minimal use of reinsurance that could potentially lead to capital and earnings volatility, and a management team that has not been through difficult market cycles while at the company.”

S&P noted: “Endurance has filed this universal shelf that will enable offerings of debt securities, preference shares, ordinary shares, depositary shares, and warrants. The company expects to use the net proceeds of these offerings for potential acquisitions and repurchases of debt securities, though no drawdowns are expected at this time, and for general corporate purposes. Endurance measured a debt to capital ratio of 17.7 percent and interest coverage of 35x at year-end 2004 in support of nonstandard notching.”

The rating agency said it had based its positive outlook on its “expectation that Endurance will maintain strong earnings.” S&P indicated it “expects capital adequacy to remain strong at more than 155 percent in support of the current rating. In addition, the company is expected to exhibit the risk-management skills and underwriting discipline to control the volume and profitability of business in a softening market, but this will be proven over the next few years.

“Endurance is expected to maintain debt leverage at less than 20 percent and interest coverage of more than 10x in support of nonstandard notching.

“Lastly, Standard & Poor’s expects the company to continue to diversify and expand its U.S. insurance operations.”

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