Background
Headquartered
in Bermuda, Endurance Specialty Holdings, through its operating subsidiaries,
is a global provider of property and casualty insurance and reinsurance.
Using a highly analytical approach to risk, Endurance helps risk managers,
reinsurance buyers and their brokers solve their insurance and reinsurance
needs.
Endurance launched operations at
the end of 2001 after raising approximately $1.2 billion from a diverse
and well-known group of investors. To help accelerate Endurance’s
Bermuda business, it acquired LaSalle Re’s
property and catastrophe reinsurance business in May 2002.
In September that year, Endurance
repurchased $100m in equity from initial investor Zurich Financial Services.
By the end of 2002, Endurance had also formed and licenced operating
subsidiaries in the US and London.
In February 2003, Endurance raised
$202.3m in a successful initial public offering of its stock. Several
months later, Endurance augmented its US platform with the purchase of
the majority of HartRe’s
reinsurance business, and added about 20 key staff members from HartRe.
By the end of May 2003, Endurance
had been upgraded by A.M. Best to an “A” and
received a financial strength rating of “A-“ from Standard & Poor’s.
Endurance Worldwide Insurance currently
focuses on commercial property risks, predominantly in the UK, and international
treaty business, mainly sourced from Europe. Endurance Reinsurance of
America is headquartered in White Plains, New York and focuses primarily
on the North American broker market reinsurance business.
In the past 18 months, the shareholder
base of Endurance has greatly expanded, with the sale by a number of
the founding shareholders of some or all of their holdings. Having used
their capital to launch the company, the investors now found that the
money could be used elsewhere. Their stock sales were converted via the
merchant banks to public ownership, and that side of Endurance’s
launch can be said to have been essentially completed.
Spotlight – Capital management
A
key element of Endurance’s strategy is its capital management programme.
The strategy
is built on the company’s belief that throughout an underwriting cycle,
the strong profitability of the businesses that it has built will generate
more capital than can consistently and efficiently be used, given the cyclical
nature of the industry.
For that reason, the company believes it
is in the best interests of Endurance and its shareholders that capital
in excess of prudent and conservative levels be returned to shareholders,
rather than held as excess capital.
Endurance therefore carefully matches its
operating requirements for capital, and the cost of various alternative
capital options. The company undertakes transactions and actions designed
to optimise the use of its capital, increase its financial flexibility,
reduce the cost of capital, expand the company’s access to the
capital markets, and continue its evolution from a privately-owned company
to a broadly-held public institution.
Analysis
Endurance
currently writes property per risk treaty, property catastrophe reinsurance,
casualty treaty reinsurance, property individual risks, casualty individual
risks, and other specialty lines, through four major platforms:
Endurance
Specialty Insurance, Bermuda;
Endurance
Worldwide Insurance, UK;
Endurance
Reinsurance of America, US; and
Endurance US Insurance.
In just
three years, Endurance has been established as a leading global insurance
and reinsurance provider operating from platforms in Bermuda, the United
States and the United
Kingdom. The company has assembled a management team with strong execution
skills, transaction capabilities, and capital management experience.
A durable information technology infrastructure and control environment
has been put in place.
Endurance
underwrites 22 specialty lines of business, almost all of which earned
an attractive return during 2004,
The company’s
strategy is uncomplicated: in every market in which it chooses to compete,
it aims to be a leader in its ability to analyse, understand and assume
risk. Respected industry leaders head each of the company’s operating
subsidiaries and product lines.
Endurance approaches each market
as experts, bringing deep insight and knowledge to all of its businesses.
The company focuses its underwriting expertise on select, profitable,
specialty product lines, supported by a legacy-free balance sheet and
centralised, state-of-the-art analytic expertise and technology.
Endurance has identified and acted
on suitable external opportunities to grow its specialty insurance and
reinsurance businesses, through acquisitions.
The company
is just past the half-way point of its initial five-year development
phase. No business plan is ever realised exactly as written, but at this stage
Endurance has achieved or exceeded all the goals that were set when the company
was founded.
To build
Endurance into a lasting organisation that will deliver on all its promises,
its plans must be sufficiently flexible to accommodate change without
sacrificing consistency.
Senior management
Chairman, president and CEO: Kenneth LeStrange
COO: Steven Carlsen
CFO: Jim Kroner
Financial data
(half-year to June 30, 2005)
Gross premiums written: $1.106 billion, up 3 percent
Net premiums earned: $.876 million, up 8 percent
Net income: $206.3 million, down 4 percent
Shareholders’ equity: $1.987 billion, up 15 percent
Website
www.endurance.bm
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