Endurance posts solid results despite failed takeover costs

06-02-2015

Bermuda-based Endurance Specialty posted a strong set of results for 2014 with an increase in profits and gross written premiums (GWP), despite $20.3 million of expenses related to its failed takeover of Aspen.

Its insurance divisions contributed more to the growth while its reinsurance business battled competitive market conditions.

John Charman, the company’s chief executive, said the company was determined to continue to achieve a profitable transformation of Endurance and declared he is determined to deliver “superior shareholder returns, regardless of how challenging market conditions become”.

The company’s net profit hit $315.7 million in 2014 compared with $279.2 million a year earlier, while its GWP increased by 8.6 percent to $2.9 billion. Within this, its insurance unit contributed $1.7 billion, an increase of 16.3 percent, and its reinsurance segment $1.2 billion, a decrease of one percent compared with the same period in 2013.

The company’s overall combined ratio was 86 percent.

The decline in its reinsurance unit was most starkly seen in the fourth quarter of 2014 when GWP in this unit decreased by $71 million compared with the year before. For the whole of 2014, the decline was $11.9 million. Endurance said the Q4 decrease was driven by declines within catastrophe, property, casualty and professional lines partially offset by an increase within the specialty line of business.

Catastrophe and property gross premiums written decreased $7.9 million in the quarter compared to a year ago. It said it is not renewing select contracts due to margins no longer meeting its return targets.

Casualty gross premiums written also declined $9.6 million largely due to negative premium adjustments in the quarter compared to positive premium adjustments a year ago. Within professional lines, gross premiums declined $69.7 million as the renewal for a large contract written a year ago was extended in the second quarter of 2014. Gross premiums written in the specialty lines of business grew $16.2 million in the quarter compared to a year ago principally due to new business generated by its recently expanded marine, international agriculture and trade credit and surety teams.

For the full year 2014, the reinsurance segment reported a combined ratio of 74.6 percent compared with 76.8 percent for the same period in 2013 principally due to a lower net loss ratio partially offset by higher acquisition and general and administrative expense ratios.

Charman said: “The fourth quarter capped a very strong year for Endurance both financially and strategically; this performance was even more commendable when taking into account the continued root and branch transformation within our company.

“We generated a strong return on equity and double digit growth in book value per share as well as continuing to profitably grow our underwriting business by products and geographies.

“Endurance is now firmly established as a leading underwriter with a significantly improved global presence and much broader underwriting capability in the specialty insurance and reinsurance markets. Importantly, we are increasingly relevant to our global clients and broker distribution channels in terms of access, capability and capacity across the board.

“Our 2014 results were a strong, early confirmation that our efforts over the last couple of years are paying off as company-wide gross premiums written, excluding agriculture insurance, grew 18.5 percent, while accident year loss ratios continued to improve throughout both segments.

“We are resolute in our determination and commitment to continue the profitable transformation of Endurance during 2015 and beyond and we remain highly focused on generating superior shareholder returns, regardless of how challenging market conditions become.”

Endurance, Bermuda. Aspen, John Charman, 2014 Results

Bermuda Re