Fitch Affirms Endurance Ratings
Ratings agency Fitch has affirmed the ‘A’ Insurer Financial Strength (IFS) rating of Bermuda-based Endurance Specialty Insurance Ltd.
Fitch has also affirmed the following ratings for Endurance: Issuer Default Rating (IDR) at ‘A-’;
Senior unsecured notes at ‘BBB+’; Non-cumulative perpetual preferred shares at ‘BBB-’. Fitch’s rating outlook is stable for all ratings.
Endurance Specialty Holdings Ltd. is a global specialty provider of insurance and reinsurance with mor than 700 employees in Bermuda, the United Kingdom, Singapore, Switzerland and the United States.
Launched in 2001 and headquartered in Wellesley House on Pitts Bay Road, Endurance is publicly traded on the New York Stock Excchange and has grown to approximately $8.5 billion in assets and $2.9 billion in shareholders’ equity.
Fitch’s ratings for Endurance continue to reflect the company’s solid profitability and interest coverage, moderate financial leverage, and high-quality and liquid investment portfolio.
Partially offsetting these positives are the inherent earnings volatility derived from the company’s catastrophe exposure, potential uncertainty in the company’s loss reserve estimates for “long-tail” business lines, and the fact that premium rates in many of the company’s core business lines continue to face downward cyclical pressure, with no apparent near-term catalyst for a reversal.
Fitch views Endurance’s use of financial leverage as moderate and its operating earnings-based interest coverage as good. At September. 30, 2010, Endurance’s equity-credit-adjusted ratio of debt plus preferred shares-to-total capital was approximately 14 percent.
Although earnings and coverage are materially exposed to catastrophe-related claims, Endurance’s annual interest requirements are modest at roughly $36 million and the company’s operating subsidiaries have significant dividend capacity.
Endurance’s operating earnings-based interest coverage has averaged a strong 10.6 times over the past five full years, although coverage has been negative in some periods due to higher catastrophe losses.
Fitch views Endurance’s investment portfolio as high-quality and liquid with nearly the entire portfolio invested in cash and fixed income securities.
The company’s portfolio is dominated by agency mortgage-backed securities, government issued debt, and highly rated corporate bonds.
