Best Downgrades FSR for Endurance

November 2, 2005

A.M. Best Co. has downgraded the financial strength rating (FSR) to A- (Excellent) from A (Excellent) and the issuer credit rating (ICR) to “a-” from “a” of Endurance Specialty Insurance Ltd. (Endurance) (Hamilton, Bermuda) and its operating affiliates.

Concurrently, A.M. Best has downgraded the ICR to “bbb-” from “bbb” of Endurance Specialty Holdings Ltd. and downgraded all existing debt ratings. All ratings have been removed from under review with negative implications and assigned a stable outlook.

The rating action reflects the fact that Endurance’s share of Hurricane Katrina losses was outside of A.M. Best’s original expectations for a diversified multi-line reinsurance company. Endurance’s business mix profile, which includes property, casualty and specialty lines of business, was expected to have more limited correlation and produce less overall volatility.

However, the current rating continues to reflect Endurance’s strong market profile, which enabled it to re-capitalize with a combination of equity and debt offerings immediately following Hurricane Katrina. The company’s recently completed capital raising activities brings Endurance’s risk-based capital to an appropriate level for its new rating and outlook.

Following detailed discussions with the company’s management, A.M. Best believes that prudent adjustments to the company’s underwriting strategy are now being implemented to better manage the potential accumulation of losses from a single large catastrophic event.

The FSR has been downgraded to A- (Excellent) from A (Excellent) and the ICRs have been downgraded to “a-” from “a” for Endurance Specialty Insurance Ltd and the following subsidiaries:

* Endurance Reinsurance Corporation of America
* Endurance Worldwide Insurance Limited.

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