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PEMBROKE, Bermuda, Feb 4, 2016 - (ACN Newswire) - Endurance Specialty Holdings Ltd. (NYSE:ENH) today reported net income available to common shareholders of $91.4 million and $1.36 per diluted common share for the fourth quarter of 2015 versus net income of $76.4 million and $1.70 per diluted common share for the fourth quarter of 2014.
For the year ended December 31, 2015, Endurance reported net income available to common shareholders of $311.3 million and $5.73 per diluted common share versus net income of $315.7 million and $7.06 per diluted common share for the year ended December 31, 2014. Book value per diluted share was $65.48 at December 31, 2015, up 6.8% from December 31, 2014.
John R. Charman, Chairman and Chief Executive Officer, commented, "2015 marked another year of excellent strategic and financial progress in the transformation of Endurance into a leading global specialty insurance and reinsurance carrier. Last year, we continued the strong organic expansion of our global underwriting capabilities that we began in 2013 by continuing to expand our underwriting expertise, our products and our geographies. We also completed the successful acquisition and smooth integration of Montpelier. Financially, our results were excellent, with a full year operating ROE of 12.0%, excluding expenses related to the acquisition and integration of Montpelier, and a full year combined ratio of 82.9%. Our greatly expanded global underwriting capabilities and substantially improved market relevance enabled our businesses to selectively grow our gross written premiums 14.7% to $3.3 billion in 2015 despite the significant headwinds we faced from an increasingly competitive global marketplace.
The actions we have taken over the last three years to increase our scale, expand our underwriting capabilities and improve our market presence globally have prepared us extremely well for the competitive conditions we face. We are uniquely positioned to continue generating strong shareholder value as we reap the benefits of our transformation and we further leverage the investments we have made in our underwriting and risk management capabilities."
Operating Highlights
Operating highlights for the quarter ended December 31, 2015 were as follows:
- Gross premiums written of $515.6 million, an increase of 22.5% compared to the same period in 2014.
- Net premiums written of $289.7 million, an increase of 23.8% compared to the same period in 2014.
- Combined ratio of 76.2% compared to 83.2% for the same period in 2014. The current period's combined ratio included 10.5 percentage points of favorable prior year loss reserve development, 0.9 percentage points of net catastrophe losses from 2015 events, and 1.4 percentage points of corporate expenses related to the acquisition of Montpelier Re Holdings Ltd. ("Montpelier").
- Net investment income of $23.2 million, a decrease of $2.7 million from the same period in 2014.
- Operating income, excluding $8.1 million of expenses related to the acquisition of Montpelier, of $121.8 million and $1.82 per diluted common share, an increase of 54.8% and 4.0%, respectively, compared to the same period in 2014.
- Operating return on average common equity for the quarter, excluding expenses related to the acquisition of Montpelier, of 2.8% or 11.1% on an annualized basis compared to 11.6% on an annualized basis in the same period in 2014.
Operating highlights for the year ended December 31, 2015:
- Gross premiums written of $3,320.9 million, an increase of 14.7% over the same period in 2014.
- Net premiums written of $1,950.5 million, an increase of 0.8% over the same period in 2014.
- Combined ratio of 82.9% compared to 86.0% for the same period in 2014. The current period's combined ratio included 12.3 percentage points of favorable prior year loss reserve development, 2.3 percentage points of current year catastrophe losses, 0.9 percentage points of large property and energy losses, and 3.9 percentage points of corporate expenses related to the acquisition of Montpelier.
- Net investment income of $113.8 million, a decrease of $17.7 million over the same period in 2014.
- Operating income, excluding $76.6 million of expenses related to the acquisition of Montpelier, of $408.6 million and $7.52 per diluted common share, an increase of 26.0% and 3.7% compared to the same period in 2014, which excludes $20.3 million of expenses related to the proposed acquisition of Aspen Insurance Holdings Limited ("Aspen").
- Operating return on average common equity for the year, excluding expenses related to the acquisition of Montpelier, of 12.0% compared to 12.3% in the same period in 2014, excluding expenses related to the proposed acquisition of Aspen.
Insurance Segment
Operating highlights for Endurance's Insurance segment for the quarter ended December 31, 2015:
- Gross premiums written of $432.3 million, an increase of $110.3 million or 34.2% from the fourth quarter of 2014.
-- Non-agriculture lines of business, which include casualty and other specialty, professional lines and property, marine/energy and aviation lines of business grew 49.3% from a year ago driven by the underwriting and geographic expansion completed over the last three years as well as the addition of business written in the Company's Lloyd's syndicate acquired from Montpelier.
-- The agriculture insurance line of business declined 20.4% primarily as a result of reduced commodity prices.
- Net premiums written of $211.1 million, an increase of $70.4 million or 50.0% from the fourth quarter of 2014.
-- Non-agriculture lines of business increased 75.9% due to strong growth in gross premiums written combined with a modestly lower percentage of premiums ceded to third party reinsurers.
-- The agriculture line of business decreased 53.4% due to reduced commodity prices, increased reinsurance purchases and higher cessions to the U.S. federal government.
- Combined ratio of 85.9% compared to 97.8% for the same period in 2014. The current quarter's combined ratio included 8.0 percentage points of favorable prior year loss reserve development and net catastrophe losses from 2015 events of $2.6 million or 0.5 percentage points.
-- The accident year net loss ratio improved 20.4 percentage points predominantly driven by lower losses within the agriculture and professional lines of business partially offset by a higher loss ratio within the casualty and other specialty line of business.
-- An increase in the general and administrative expense ratio of 3.7 percentage points reflecting a reduction in agriculture earned premiums on a slightly higher expense base partially offset by additional ceding commissions and increasing scale in our other insurance lines of business.
-- The acquisition expense ratio increased 0.6 percentage points in the current quarter as business lines with higher acquisition costs accounted for a greater percentage of earned premiums than a year ago, partially offset by earned premiums acquired from Montpelier that do not have related acquisition costs, as these acquisition costs were written off on purchase.
Operating highlights for Endurance's Insurance segment for the year ended December 31, 2015:
- Gross premiums written of $2,085.9 million, an increase of $369.8 million or 21.5% over the same period in 2014.
- Net premiums written of $880.4 million, an increase of 2.3% over the same period in 2014.
- Combined ratio of 87.8% compared to 96.9% for the same period in 2014. The current period's combined ratio included 9.9 percentage points of favorable prior year loss reserve development, net catastrophe losses from 2015 events of $13.4 million or 1.4 percentage points and large property and energy losses of $15.8 million or 2.1 percentage points.
Reinsurance Segment
Operating highlights for Endurance's Reinsurance segment for the quarter ended December 31, 2015:
- Gross premiums written of $83.4 million, a decrease of $15.6 million or 15.8% from the fourth quarter of 2014.
-- The catastrophe and property lines of business declined by $8.5 million due to rate decreases, targeted non-renewals and line size reductions in response to the current competitive market, and negative premium adjustments, partially offset by the renewal of a Montpelier property contract.
-- The specialty line of business declined $9.7 million largely due to $20.5 million of premium adjustments reflecting a reduction in worldwide commodity prices, partially offset by several new contracts within the surety line of business.
-- Within professional lines, the $4.6 million decline in premiums was largely due to lower positive premium adjustments in the current quarter as compared to the fourth quarter of 2014.
-- Casualty lines increased $7.2 million, predominantly driven by new business and positive premium adjustments, partially offset by select non-renewals of business that no longer met our profit objectives.
- Net premiums written of $78.6 million, a decrease of $14.6 million or 15.7% from the fourth quarter of 2014, consistent with the reduction in gross premiums written.
- Combined ratio of 63.7% compared to 65.8% for the same period in 2014. The current period's combined ratio included 12.5 percentage points of favorable prior year loss reserve development and net catastrophe losses from 2015 events of $4.1 million or 1.2 percentage points.
-- The accident year net loss ratio improved 6.8 percentage points in the current quarter due to improvements within the catastrophe and specialty lines of business on a higher earned premium base.
-- The 1.5 percentage point improvement in the current quarter's acquisition expense ratio was largely attributed to the earning of premiums acquired from Montpelier that do not have related acquisition costs as these were written off on purchase.
-- The general and administrative expense ratio increased 2.0 percentage points in the fourth quarter of 2015 primarily as a result of higher incentive compensation.
Operating highlights for Endurance's Reinsurance segment for the year ended December 31, 2015:
- Gross premiums written of $1,235.0 million, increased $57.0 million or 4.8% over the same period in 2014.
- Net premiums written of $1,070.1 million, decreased 0.3% over the same period in 2014.
- The combined ratio of 69.4% compared to 70.7% for the same period in 2014. The current period's combined ratio included favorable prior year loss reserve development of 14.0 percentage points and net catastrophe losses from 2015 events of $33.5 million or 2.9 percentage points.
Investments
Endurance's net investment income for the quarter and year ended December 31, 2015 was $23.2 million and $113.8 million, a decrease of $2.7 million and $17.7 million, respectively, compared to the same periods in 2014. The total return of Endurance's investment portfolio was (0.52)% and 0.06% for the quarter and year ended December 31, 2015, respectively, compared to 0.40% and 2.79% for the quarter and year ended December 31, 2014, respectively. Investment income generated from Endurance's trading and available for sale investments increased by $7.8 million and $17.2 million for the quarter and year ended December 31, 2015 compared to the same periods in 2014 due to an increase in invested assets. During the quarter and year ended December 31, 2015, Endurance's net investment income on its alternative investment funds and high yield loan funds, which are included in other investments, included losses of $11.8 million and $13.6 million, as compared to losses of $2.9 million and gains of $19.6 million in the quarter and year ended December 31, 2014, respectively. The ending book yield on Endurance's fixed maturity investments at December 31, 2015 was 2.12%, down from 2.21% at December 31, 2014.
At December 31, 2015, Endurance's fixed maturity and short term investments, which comprises 82.0% of Endurance's investments, had an average credit quality of AA- and a duration of 2.74 years. Endurance's available for sale portfolio was in a net unrealized loss position of $12.6 million at December 31, 2015, a decrease of $98.7 million from December 31, 2014. Endurance recorded net realized and unrealized investment losses, net of impairments, of $22.8 million and gains of $8.9 million during the quarter and year ended December 31, 2015, compared to gains of $1.4 million and $19.1 million during the quarter and year ended December 31, 2014.
Endurance ended the fourth quarter of 2015 with cash and invested assets of $8.9 billion, which represents a 34.9% increase from December 31, 2014. Net cash flows provided by operating activities was $245.5 million for the year ended December 31, 2015 versus $266.3 million for the same period in 2014.
Capitalization and Shareholders' Equity
At December 31, 2015, Endurance's shareholders' equity was $5.12 billion or $65.48 per diluted common share versus $3.19 billion or $61.33 per diluted common share at December 31, 2014. For the quarter and year ended December 31, 2015, Endurance declared and paid common dividends of $0.35 and $1.40 per share, respectively. Endurance repaid $198.5 million in senior notes upon maturity on October 15, 2015.
On November 24, 2015, Endurance issued 9,200,000 Depositary Shares, each of which represents a 1/1,000th interest in a share of Endurance's 6.350% Non-Cumulative Preferred Shares, Series C, $1.00 par value and $25,000 liquidation preference per share (equivalent to $25 per Depositary Share). The $230.0 million offering included the exercise in full of the underwriters' overallotment option. Endurance received approximately $222.0 million from the offering, after deducting the underwriting discount and estimated offering expenses. On December 24, 2015, Endurance redeemed all 8,000,000 shares outstanding of its 7.75% Non-Cumulative Series A Preferred Shares for $200.0 million, or $25.00 per share. In the third quarter of 2015, the Company issued 21.5 million Endurance common shares and restricted share units valued at $1.47 billion as part of its acquisition of Montpelier.
Earnings Call
Endurance will host a conference call on February 4, 2016 at 9:00 a.m. Eastern time to discuss its financial results. The conference call can be accessed via telephone by dialing (888) 337-8198 or (719) 325-2376 (international) and entering pass code: 2972174. Those who intend to participate in the conference call should register at least ten minutes in advance to ensure access to the call. A telephone replay of the conference call will be available through February 18, 2016 by dialing (888) 203-1112 or (719) 457-0820 (international) and entering the pass code: 2972174.
The public may access a live broadcast of the conference call at the "Investors" section of Endurance's website, www.endurance.bm. Following the live broadcast, an archived version will continue to be available on Endurance's website.
A copy of Endurance's financial supplement for the fourth quarter of 2015 will be available on Endurance's website at www.endurance.bm shortly after the release of earnings.
Operating income, operating return on average common equity, operating income per diluted common share, operating income allocated to common shareholders and each of these operating metrics excluding expenses related to the acquisition of Montpelier and the proposed acquisition of Aspen, and the combined ratio excluding prior year net loss reserve development are non-GAAP measures. Reconciliations of these measures to the appropriate GAAP measures are included in the attached tables.
About Endurance Specialty Holdings
Endurance Specialty Holdings Ltd. is a global specialty provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance writes agriculture, casualty and other specialty, professional lines and property, marine/energy and aviation lines of insurance and catastrophe, property, casualty, professional lines and specialty lines of reinsurance. We maintain excellent financial strength as evidenced by the ratings of A (Excellent) from A.M. Best (XV size category) and A (Strong) from Standard and Poor's on our principal operating subsidiaries. Endurance's headquarters are located at Waterloo House, 100 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda. For more information about Endurance, please visit www.endurance.bm.
Safe Harbor for Forward-Looking Statements
Some of the statements in this press release may include, and Endurance may make related oral forward-looking statements which reflect our current views with respect to future events and financial performance. Such statements may include forward-looking statements both with respect to us in general and the insurance and reinsurance sectors specifically, both as to underwriting and investment matters. Statements which include the words "should," "would," "expect," "intend," "plan," "believe," "project," "target," "anticipate," "seek," "will," "deliver," and similar statements of a future or forward-looking nature identify forward-looking statements in this press release for purposes of the U.S. federal securities laws or otherwise. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the Private Securities Litigation Reform Act of 1995.
All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or may be important factors that could cause actual results to differ materially from those indicated in the forward-looking statements. These factors include, but are not limited to, the effects of competitors' pricing policies, greater frequency or severity of claims and loss activity, changes in market conditions in the agriculture insurance industry, termination of or changes in the terms of the U.S. multiple peril crop insurance program, a decreased demand for property and casualty insurance or reinsurance, changes in the availability, cost or quality of reinsurance or retrocessional coverage, our inability to renew business previously underwritten or acquired, our inability to maintain our applicable financial strength ratings, our inability to effectively integrate acquired operations, uncertainties in our reserving process, changes to our tax status, changes in insurance regulations, reduced acceptance of our existing or new products and services, a loss of business from and credit risk related to our broker counterparties, assessments for high risk or otherwise uninsured individuals, possible terrorism or the outbreak of war, a loss of key personnel, political conditions, changes in insurance regulation, changes in accounting policies, our investment performance, the valuation of our invested assets, a breach of our investment guidelines, the unavailability of capital in the future, developments in the world's financial and capital markets and our access to such markets, government intervention in the insurance and reinsurance industry, illiquidity in the credit markets, changes in general economic conditions and other factors described in our Annual Report on Form 10-K for the year ended December 31, 2014 and in our most recently filed Quarterly Report on Form 10-Q.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors included in Endurance's most recent reports on Form 10-K and Form 10-Q and other documents of Endurance on file with the Securities and Exchange Commission. Any forward-looking statements made in this material are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Endurance will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Endurance or its business or operations. Except as required by law, Endurance undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
The contents of any website referenced in this press release are not incorporated by reference herein.
Contact:
Investor Relations
Phone: +1-441-278-0988
Email: investorrelations@endurance.bm
Press release: http://bit.ly/209SX3T
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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Endurance Specialty Holdings Ltd via Globenewswire
Topic: Earnings
Source: Endurance Specialty Holdings Ltd.
https://www.acnnewswire.com
From the Asia Corporate News Network
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