10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the period ended September 30, 2011,

or

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 1-31599

ENDURANCE SPECIALTY HOLDINGS LTD.

(Exact Name of Registrant as Specified in Its Charter)

Bermuda	98-0392908
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)

Wellesley House
90 Pitts Bay Road
Pembroke HM 08, Bermuda
(Address of principal executive offices,
including postal code)

Registrant’s Telephone Number, Including Area Code: (441) 278-0400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Common Shares Outstanding
Description of Class	as of November 1, 2011
Ordinary Shares — $1.00 par value	40,529,399

INDEX

	Page
Part I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2011 (unaudited) and December 31, 2010		2
Unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2011 and 2010		3
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2011 and 2010		4
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010		5
Notes to the Unaudited Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3. Quantitative and Qualitative Disclosures about Market Risk		60
Item 4. Controls and Procedures		62
Part II. OTHER INFORMATION
Item 1. Legal Proceedings		63
Item 1A. Risk Factors		63
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		64
Item 3. Defaults Upon Senior Securities		65
Item 4. (Removed and Reserved)		65
Item 5. Other Information		65
Item 6. Exhibits		65
SIGNATURES		66
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

1

ENDURANCE SPECIALTY HOLDINGS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of United States dollars except share amounts)

	SEPTEMBER 30,		DECEMBER 31,
	2011		2010
	(UNAUDITED)
ASSETS
Investments
Fixed maturity investments, available for sale at fair value (amortized cost: $4,868,323 and $5,010,147 at September 30, 2011 and December 31, 2010, respectively)	$	4,998,142	$	5,116,702
Short-term investments, available for sale at fair value (amortized cost:  $323,189 and $70,455 at September 30, 2011 and December 31, 2010, respectively)		323,119		70,444
Equity securities, available for sale at fair value (cost: $51,185 and $8,000 at September 30, 2011 and December 31, 2010, respectively)		49,323		13,565
Other investments		386,785		376,652
Total investments		5,757,369		5,577,363
Cash and cash equivalents		623,944		609,852
Premiums receivable, net		1,192,455		827,609
Deferred acquisition costs		203,455		154,484
Securities lending collateral		—		59,886
Prepaid reinsurance premiums		204,961		107,977
Losses recoverable		479,132		319,349
Accrued investment income		30,851		32,934
Goodwill and intangible assets		183,857		181,954
Deferred tax asset		40,253		33,684
Net receivable on sales of investments		37,947		602
Other assets		80,013		73,711
Total assets	$	8,834,237	$	7,979,405
LIABILITIES
Reserve for losses and loss expenses	$	3,910,537	$	3,319,927
Reserve for unearned premiums		1,299,864		842,154
Deposit liabilities		28,860		32,505
Reinsurance balances payable		244,769		228,860
Securities lending payable		—		59,886
Debt		528,664		528,411
Net payable on purchases of investments		56,496		—
Other liabilities		129,097		119,509
Total liabilities		6,198,287		5,131,252
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY
Preferred shares
Series A, non-cumulative — Par value $1.00 — 8,000,000 issued and outstanding (2010 — 8,000,000); aggregate liquidation preference $200,000 (2010 — $200,000)		8,000		8,000
Series B, non-cumulative — Par value $1.00 — 9,200,000 issued and outstanding (2010 — Nil); aggregate liquidation preference $230,000 (2010 — Nil)		9,200		—
Common shares
Ordinary — $1.00 par value, 40,517,222 issued and outstanding (2010 — 47,218,468)		40,517		47,218
Additional paid-in capital		512,323		613,915
Accumulated other comprehensive income		144,004		138,571
Retained earnings		1,921,906		2,040,449
Total shareholders’ equity		2,635,950		2,848,153
Total liabilities and shareholders’ equity	$	8,834,237	$	7,979,405

See accompanying notes to unaudited condensed consolidated financial statements

2

ENDURANCE SPECIALTY HOLDINGS LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

AND COMPREHENSIVE (LOSS) INCOME

(In thousands of United States dollars, except share and per share amounts)

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2011			2010			2011			2010
Revenues
Gross premiums written	$	700,866		$	555,574		$	2,204,148		$	1,864,011
Ceded premiums written		(149,539	)		(103,690	)		(412,191	)		(258,382	)
Net premiums written		551,327			451,884			1,791,957			1,605,629
Change in unearned premiums		10,166			17,909			(361,053	)		(314,252	)
Net premiums earned		561,493			469,793			1,430,904			1,291,377
Net investment income		14,100			53,654			106,443			143,484
Net realized and unrealized gains		1,033			8,973			26,340			15,174
Total other-than-temporary impairment losses		(168	)		(1,140	)		(1,908	)		(2,647	)
Portion of loss recognized in other comprehensive income		(72	)		(240	)		(911	)		(586	)
Net impairment losses recognized in (losses) earnings		(240	)		(1,380	)		(2,819	)		(3,233	)
Other underwriting (loss) income		(2,141	)		322			(2,122	)		(2,046	)
Total revenues		574,245			531,362			1,558,746			1,444,756
Expenses
Net losses and loss expenses		456,691			266,132			1,220,514			791,676
Acquisition expenses		72,249			67,443			205,754			198,095
General and administrative expenses		58,574			59,523			190,421			174,164
Amortization of intangibles		2,976			2,588			8,800			7,764
Net foreign exchange gains		(4,085	)		(12,565	)		(7,655	)		(6,465	)
Interest expense		9,055			9,051			27,166			25,709
Total expenses		595,460			392,172			1,645,000			1,190,943
(Loss) income before income taxes		(21,215	)		139,190			(86,254	)		253,813
Income tax benefit (expense)		1,197			(62	)		19,896			(303	)
Net (loss) income		(20,018	)		139,128			(66,358	)		253,510
Preferred dividends		(8,188	)		(3,875	)		(15,938	)		(11,625	)
Net (loss) income (attributable) available to common and participating common shareholders	$	(28,206	)	$	135,253		$	(82,296	)	$	241,885
Comprehensive (loss) income
Net (loss) income	$	(20,018	)	$	139,128		$	(66,358	)	$	253,510
Other comprehensive income
Net unrealized holding gains on investments arising during the period (net of applicable deferred income taxes of ($6,856) and ($10,619) for the nine months ended September 30, 2011 and 2010, respectively)		9,466			62,455			35,640			163,263
Portion of other-than-temporary impairment losses recognized in other comprehensive (loss) income (net of applicable deferred taxes of $69 and Nil for the nine months ended September 30, 2011 and 2010, respectively)		72			240			842			586
Foreign currency translation adjustments		(5,423	)		7,443			(1,956	)		(2,950	)
Reclassification adjustment for net realized gains included in net (loss) income		(1,273	)		(7,593	)		(29,159	)		(11,941	)
Reclassification adjustment for net losses on derivative designated as cash flow hedge included in net (loss) income		22			22			66			66
Other comprehensive income		2,864			62,567			5,433			149,024
Comprehensive (loss) income	$	(17,154	)	$	201,695		$	(60,925	)	$	402,534
Per share data
Basic (losses) earnings per common share	$	(0.71	)	$	2.64		$	(2.07	)	$	4.56
Diluted (losses) earnings per common share	$	(0.71	)	$	2.51		$	(2.07	)	$	4.33
Dividend per common share	$	0.30		$	0.25		$	0.90		$	0.75

See accompanying notes to unaudited condensed consolidated financial statements.

3

ENDURANCE SPECIALTY HOLDINGS LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands of United States dollars)

	NINE MONTHS ENDED
	SEPTEMBER 30,
	2011			2010
Preferred shares
Balance, beginning of period	$	8,000		$	8,000
Issuance of series B, non-cumulative preferred shares		9,200			—
Balance, end of period		17,200			8,000
Common shares
Balance, beginning of period		47,218			55,116
Issuance of common shares		790			752
Repurchase of common shares		(7,491	)		(6,183	)
Balance, end of period		40,517			49,685
Additional paid-in capital
Balance, beginning of period		613,915			929,577
Issuance of common shares		12,465			5,802
Issuance of series B, non-cumulative preferred shares		214,822			—
Repurchase of common shares and share equivalents		(333,313	)		(224,367	)
Issuance of restricted share units in lieu of dividends		—			(53	)
Public offering and registration costs		(656	)		63
Settlement of equity awards		(6,074	)		(5,179	)
Stock-based compensation expense		11,164			9,991
Balance, end of period		512,323			715,834
Accumulated other comprehensive income
Cumulative foreign currency translation adjustments:
Balance, beginning of period		10,877			16,109
Foreign currency translation adjustments		(1,956	)		(2,950	)
Balance, end of period		8,921			13,159
Unrealized holding gains on investments, net of deferred taxes:
Balance, beginning of period		129,814			38,247
Net unrealized holding gains arising during the period, net of reclassification adjustment		6,481			151,322
Other-than-temporary impairment losses during the period		842			586
Balance, end of period		137,137			190,155
Accumulated derivative loss on cash flow hedging instruments:
Balance, beginning of period		(2,120	)		(2,208	)
Net change from current period hedging transactions, net of reclassification adjustment		66			66
Balance, end of period		(2,054	)		(2,142	)
Total accumulated other comprehensive income		144,004			201,172
Retained earnings
Balance, beginning of period		2,040,449			1,742,442
Net (loss) income		(66,358	)		253,510
Issuance of restricted share units in lieu of dividends		—			53
Dividends on preferred shares		(15,938	)		(11,625	)
Dividends on common shares		(36,247	)		(39,386	)
Balance, end of period		1,921,906			1,944,994
Total shareholders’ equity	$	2,635,950		$	2,919,685

See accompanying notes to unaudited condensed consolidated financial statements.

4

ENDURANCE SPECIALTY HOLDINGS LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of United States dollars)

	NINE MONTHS ENDED
	SEPTEMBER 30,
	2011			2010
Cash flows provided by operating activities
Net (loss) income	$	(66,358	)	$	253,510
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization of net premium on investments		12,470			5,860
Amortization of other intangibles and depreciation		17,095			15,513
Net realized gains on investment sales		(26,340	)		(15,174	)
Net impairment losses recognized in earnings		2,819			3,233
Deferred taxes		(16,280	)		(22,412	)
Stock-based compensation expense		11,164			9,991
Equity in earnings of other investments		7,583			(23,833	)
Premiums receivable, net		(364,846	)		(474,341	)
Deferred acquisition costs		(48,971	)		(45,215	)
Prepaid reinsurance premiums		(96,984	)		(39,129	)
Losses recoverable		(159,783	)		142,907
Accrued investment income		2,083			(1,948	)
Other assets		(6,035	)		1,263
Reserve for losses and loss expenses		590,610			244,286
Reserve for unearned premiums		457,710			353,440
Deposit liabilities		(3,645	)		(5,686	)
Reinsurance balances payable		15,377			(10,784	)
Other liabilities		9,830			(901	)
Net cash provided by operating activities		337,499			390,580
Cash flows used in investing activities
Proceeds from sales of available for sale investments		2,382,637			2,341,024
Proceeds from maturities and calls on available for sale investments		657,051			1,076,954
Proceeds from the redemption of other investments		13,877			14,758
Purchases of available for sale investments		(3,164,298	)		(3,546,955	)
Purchases of other investments		(31,593	)		(202	)
Net settlements of other assets		(448	)		—
Purchases of fixed assets		(7,920	)		(3,620	)
Change in securities lending collateral received		59,886			(60,767	)
Net cash paid for subsidiary acquisition		(3,173	)		(857	)
Net cash flows used in investing activities		(93,981	)		(179,665	)
Cash flows used in financing activities
Issuance of common shares		13,096			6,422
Issuance of series B, non-cumulative preferred shares		224,022			—
Repurchase of common shares		(344,272	)		(227,637	)
Change in securities lending payable		(59,886	)		60,713
Settlement of equity awards		(6,074	)		(5,179	)
Offering and registration costs paid		(586	)		(2,064	)
Proceeds from issuance of debt		718			81,675
Repayments of debt		(597	)		(1,023	)
Dividends on preferred shares		(15,938	)		(11,625	)
Dividends on common shares		(36,247	)		(39,372	)
Net cash flows used in financing activities		(225,764	)		(138,090	)
Effect of exchange rate changes on cash and cash equivalents		(3,662	)		(1,542	)
Net increase in cash and cash equivalents		14,092			71,283
Cash and cash equivalents, beginning of period		609,852			528,944
Cash and cash equivalents, end of period	$	623,944		$	600,227

See accompanying notes to unaudited condensed consolidated financial statements.

5

ENDURANCE SPECIALTY HOLDINGS LTD.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

1. General

Endurance Specialty Holdings Ltd. (“Endurance Holdings”) was organized as a Bermuda holding company on June 27, 2002. Endurance Holdings writes specialty lines of insurance and reinsurance on a global basis through its wholly-owned operating subsidiaries:

Operating Subsidiaries	Domicile
Endurance Specialty Insurance Ltd.	Bermuda
Endurance Worldwide Insurance Limited	England
Endurance Reinsurance Corporation of America	Delaware
Endurance American Insurance Company	Delaware
Endurance American Specialty Insurance Company	Delaware
Endurance Risk Solutions Assurance Co.	Delaware
American Agri-Business Insurance Company	Texas

2. Summary of significant accounting policies

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The unaudited condensed consolidated financial statements include the accounts of Endurance Holdings and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Management is required to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying disclosures. Actual results could differ from those estimates. Among other matters, significant estimates and assumptions are used to record premiums written and ceded, fair value of investments, and to record reserves for losses and loss expenses and contingencies. Estimates and assumptions are periodically reviewed and the effects of revisions are recorded in the consolidated financial statements in the period that they are determined to be necessary.

The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2010 contained in Endurance Holdings’ Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2010 (the “2010 Annual Report on Form 10-K”).

Certain reclassifications have been made for 2010 to conform to the 2011 presentation and have no impact on net income previously reported.

6

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

2. Summary of significant accounting policies, cont’d.

There were no material changes in the Company’s significant accounting and reporting policies subsequent to the 2010 Annual Report on Form 10-K with the exception of the additions to the Company’s accounting policies described below relating to the Company’s investment in equity securities and entry into derivative instruments commencing in the first quarter of 2011.

(a)	Equity Investments
	The Company currently classifies its investments in equity securities as “available for sale” and accordingly, they are carried at estimated fair value, with related net unrealized gains or losses excluded from earnings and included in shareholders’ equity as a component of accumulated other comprehensive income. The Company determines the fair value of its available for sale securities in accordance with current accounting guidance, which defines fair value and establishes a fair value hierarchy based on inputs to the various valuation techniques used for each fair value measurement. The use of valuation techniques for any given investment requires a significant amount of judgment and consideration of factors specific to the underlying investment. Fair value measurements determined by the Company seek to maximize observable inputs and minimize the use of unobservable inputs.
	The Company determines the estimated fair value of each individual security utilizing the highest level inputs available. Transfers between levels are assumed to occur at the end of each period.
	For equity securities, the Company considers its ability and intent to hold an equity security in an unrealized loss position for a reasonable period of time to allow for a full recovery. When the Company determines that the decline in value of an equity security is other-than-temporary, the Company reduces the cost of the equity security to its fair value and recognizes the loss in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. The new cost basis is not changed for subsequent recoveries in fair value.
(b)	Derivatives
	Current accounting guidance requires the recognition of all derivative financial instruments including embedded derivative instruments, as either assets or liabilities in the Consolidated Balance Sheets at fair value.
	The Company may use various derivative instruments such as foreign exchange forward contracts, foreign currency option contracts, futures, options, interest rate swaps, total return swaps, swaptions, credit default swaps, foreign currency forward contracts and commodity futures and options to enhance the efficiency of the investment portfolio and economically hedge certain risks. These contracts do not qualify, and are not designated, as hedges. Thus, changes in fair value and any realized gains or losses are recognized in net realized and unrealized gains, net foreign exchange gains and other underwriting (loss) income in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. Margin balances required of counterparties are included in cash and cash equivalents. Where the Company has entered into master netting agreements with counterparties, or the Company has the legal and contractual right to offset positions, the derivative positions are generally netted by the counterparty and are reported accordingly in other assets and other liabilities.

7

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

2. Summary of significant accounting policies, cont’d.

(c)

Recent accounting pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-4”). ASU 2011-4 amends Accounting Standards Codification Topic 820, “Fair Value Measurement” (“ASC 820”) to change several requirements for measuring fair value and disclosing information about fair value measurements. Among the more significant changes, ASU 2011-4 amends ASC 820 to clarify certain existing fair value measurement and disclosure requirements as follows:

• The “highest-and-best-use” and “valuation-premise” concepts only apply to measuring the fair value of nonfinancial assets. The previous guidance permitted the application of these concepts to financial assets and liabilities.

• A reporting entity is required to measure the fair value of its own equity instruments from the perspective of a market participant that holds that instrument as an asset.

• Reporting entities are required to disclose quantitative information about inputs used in estimating Level 3 fair value measurements.

ASU 2011-4 will be effective for the first quarter of 2012, with early adoption prohibited. The Company does not expect this standard to have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 eliminates the option in current GAAP to permit the presentation of other comprehensive income in the statement of changes in shareholders’ equity. The remaining two options are:

• A single continuous statement of net income and comprehensive income; or

• Two separate, but consecutive, statements of net income and other comprehensive income

ASU 2011-05 is effective for interim and annual reporting periods ending on or after December 15, 2011. Early adoption is permitted and full retrospective application is required. The Company does not expect this standard to have a material impact on the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”). Under ASU 2011-08, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. In addition, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test.

ASU 2011-08 will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not expect this standard to have a material impact on the Company’s consolidated financial statements.

8

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3. Investments

Composition of Net Investment Income and Invested Assets

The components of net investment income for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Available for sale investments	$	39,841		$	43,124		$	123,916		$	130,451
Other investments		(22,522	)		13,815			(7,583	)		23,833
Cash and cash equivalents		205			157			639			349
	$	17,524		$	57,096		$	116,972		$	154,633
Investment expenses		(3,424	)		(3,442	)		(10,529	)		(11,149	)
Net investment income	$	14,100		$	53,654		$	106,443		$	143,484

The following table summarizes the composition of the investment portfolio by type at September 30, 2011 and December 31, 2010:

	September 30, 2011					December 31, 2010
Type of Investment	Fair Value		Percentage			Fair Value		Percentage
Fixed maturity securities	$	4,998,142		78.5	%	$	5,116,702		82.7	%
Cash and cash equivalents(1)		605,395		9.5	%		610,454		9.9	%
Other investments(2)		386,785		6.1	%		376,652		6.1	%
Short term investments		323,119		5.1	%		70,444		1.1	%
Equity securities		49,323		0.8	%		13,565		0.2	%
Total	$	6,362,764		100.0	%	$	6,187,817		100.0	%

(1)	Includes net receivable on sales of investments and net payable on purchases of investments.
(2)	Consists of investments in alternative funds and high yield loan funds.

The following table summarizes the composition of the fixed income investment portion of the portfolio, which includes fixed maturity securities and short term investments, by investment ratings assigned by rating agencies at September 30, 2011 and December 31, 2010. In some cases, where bonds are unrated, the rating of the issuer has been applied.

	September 30, 2011					December 31, 2010
Ratings(1)	Fair Value		Percentage			Fair Value		Percentage
U.S. government and agencies securities	$	1,235,350		23.2	%	$	1,010,819		19.5	%
AAA / Aaa		1,049,638		19.7	%		2,639,682		50.9	%
AA / Aa		1,994,716		37.5	%		465,315		9.0	%
A / A		786,973		14.8	%		793,980		15.3	%
BBB		132,961		2.5	%		50,733		1.0	%
Below BBB		118,942		2.2	%		221,848		4.2	%
Not rated		2,681		0.1	%		4,769		0.1	%
Total	$	5,321,261		100.0	%	$	5,187,146		100.0	%

⁽¹⁾ The credit rating for each asset reflected above was determined based on the rating assigned to the individual security by Standard & Poor’s. If a rating is not supplied by Standard & Poor’s, the equivalent rating supplied by either Moody’s Investor Service or Fitch Ratings is used.

9

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3. Investments, cont’d.

Contractual maturities of the fixed income portfolio are shown below as of September 30, 2011 and December 31, 2010. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2011				December 31, 2010
	Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value
Due within one year	$	660,817	$	663,098	$	390,886	$	393,333
Due after one year through five years		1,905,068		1,948,058		2,240,820		2,279,581
Due after five years through ten years		599,007		619,401		404,322		413,462
Due after ten years		70,996		80,709		64,663		68,988
Residential mortgage-backed securities
Agency mortgage-backed securities		950,027		987,145		855,637		883,948
Non-agency mortgage-backed securities		128,343		123,729		254,138		246,410
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,217		33,851		22,130		22,889
Non-agency mortgage-backed securities		520,886		541,128		578,951		604,820
Asset-backed securities		323,151		324,142		269,055		273,715
Total	$	5,191,512	$	5,321,261	$	5,080,602	$	5,187,146

At September 30, 2011 and December 31, 2010, the Company held $24.0 million and $27.6 million of insurance enhanced bonds (asset-backed securities), respectively, representing 0.4% and 0.5% of the available for sale securities, respectively. At September 30, 2011, the overall credit quality of the insurance enhanced bond portfolio was an average rating of “Ba” from Moody’s and “AA” from Standard & Poor’s. The overall credit quality of the financial guarantors had an average rating of “Ca” by Moody’s and most were not rated by Standard & Poor’s.

In addition to the Company’s available for sale investments, the Company invests in (i) hedge funds and private equity funds that generally invest in senior secured bank debt, high yield securities, distressed debt, distressed real estate, derivatives and equity long/short strategies (“alternative funds”) and (ii) high yield loan funds. The Company’s alternative funds and high yield loan funds are recorded on the Company’s balance sheet as “Other Investments.” At September 30, 2011 and December 31, 2010, the Company had invested, net of capital returned, a total of $297.4 million and $279.6 million, respectively, in Other Investments. At September 30, 2011 and December 31, 2010, the carrying value of Other Investments was $386.8 million and $376.7 million, respectively. Certain of Other Investments are subject to redemption restriction provisions (see Note 9).

10

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3.	Investments, cont’d.
	Net Realized and Unrealized Investment Gains

Realized and unrealized investment gains and losses are recognized in earnings using the first in and first out method. The analysis of net realized and unrealized investment gains for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Gross realized gains on investment sales	$	6,904		$	9,488		$	40,563		$	23,655
Gross realized losses on investment sales		(5,735	)		(515	)		(13,928	)		(8,481	)
Change in fair value of derivative financial instruments(1)		(136	)		—			(295	)		—
Net realized and unrealized investment gains	$	1,033		$	8,973		$	26,340		$	15,174

(1) See Note 6

Unrealized Gains and Losses and Other-than-temporary Impairments

The amortized cost, fair value and related gross unrealized gains and losses and non-credit other-than-temporary impairment (“OTTI”) losses on the Company’s securities classified as available for sale at September 30, 2011 and December 31, 2010 are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized					Non-Credit
	Cost		Gains		Losses			Fair Value		OTTI (2)
September 30, 2011
U.S. government and agencies securities	$	1,185,145	$	50,557	$	(352	)	$	1,235,350	$	—
U.S. state and municipal securities		53,790		1,372		(61	)		55,101		—
Foreign government securities		75,909		2,241		(205	)		77,945		—
Government guaranteed corporate securities		396,479		4,074		(107	)		400,446		—
Corporate securities		1,201,376		31,239		(13,310	)		1,219,305		—
Residential mortgage-backed securities
Agency mortgage-backed securities		950,027		37,360		(242	)		987,145		—
Non-agency mortgage-backed securities		128,343		1,398		(6,012	)		123,729		(8,472	)
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,217		634		—			33,851		—
Non-agency mortgage-backed securities(1)		520,886		24,219		(3,977	)		541,128		(83	)
Asset-backed securities		323,151		2,979		(1,988	)		324,142		—
Total fixed maturity investments	$	4,868,323	$	156,073	$	(26,254	)	$	4,998,142	$	(8,555	)
Short term investments		323,189		9		(79	)		323,119		—
Total fixed income investments	$	5,191,512	$	156,082	$	(26,333	)	$	5,321,261	$	(8,555	)
Equity securities	$	51,185	$	1,913	$	(3,775	)	$	49,323	$	—

(1)	Balances include amounts related to collateralized debt obligations held with total fair values of $24.7 million.
(2)	Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2011, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $0.7 million.

11

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3. Investments, cont’d.

			Gross		Gross
	Amortized		Unrealized		Unrealized					Non-Credit
	Cost		Gains		Losses			Fair Value		OTTI (2)
December 31, 2010
U.S. government and agencies securities	$	993,667	$	23,576	$	(6,424	)	$	1,010,819	$	—
U.S. state and municipal securities		29,472		745		(238	)		29,979		—
Foreign government securities		138,157		2,557		(253	)		140,461		—
Government guaranteed corporate securities		663,709		7,806		(365	)		671,150		—
Corporate securities		1,205,231		31,174		(3,894	)		1,232,511		—
Residential mortgage-backed securities
Agency mortgage-backed securities		855,637		30,946		(2,635	)		883,948		—
Non-agency mortgage-backed securities		254,138		4,457		(12,185	)		246,410		(29,495	)
Commercial mortgage-backed securities
Agency mortgage-backed securities		22,130		761		(2	)		22,889		—
Non-agency mortgage-backed securities(1)		578,951		28,673		(2,804	)		604,820		(109	)
Asset-backed securities		269,055		6,168		(1,508	)		273,715		—
Total fixed maturity investments	$	5,010,147	$	136,863	$	(30,308	)	$	5,116,702	$	(29,604	)
Short term investments		70,455		3		(14	)		70,444		—
Total fixed income investments	$	5,080,602	$	136,866	$	(30,322	)	$	5,187,146	$	(29,604	)
Equity securities	$	8,000	$	5,583	$	(18	)	$	13,565	$	—

(1)	Balances include amounts related to collateralized debt obligations held with total fair values of $13.1 million.
(2)	Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At December 31, 2010, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $6.2 million.

12

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3. Investments, cont’d.

The following tables summarize, for all available for sale securities in an unrealized loss position at September 30, 2011 and December 31, 2010, the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position.

	Less than 12 months					12 months or greater					Total
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses(1)			Value		Losses(1)			Value		Losses(1)			Value
September 30, 2011
U.S. government and agencies securities	$	(352	)	$	115,911	$	—		$	—	$	(352	)	$	115,911
U.S. state and municipal securities		(61	)		16,963		—			—		(61	)		16,963
Foreign government securities		(197	)		17,641		(8	)		4,665		(205	)		22,306
Government guaranteed corporate securities		(11	)		22,502		(96	)		56,471		(107	)		78,973
Corporate securities		(13,185	)		298,002		(125	)		1,680		(13,310	)		299,682
Residential mortgage-backed securities
Agency mortgage-backed securities		(242	)		56,461		—			—		(242	)		56,461
Non-agency mortgage-backed securities		(511	)		22,663		(5,501	)		64,914		(6,012	)		87,577
Commercial mortgage-backed securities
Agency mortgage-backed securities		—			—		—			—		—			—
Non-agency mortgage-backed securities		(3,057	)		108,055		(920	)		7,865		(3,977	)		115,920
Asset-backed securities		(1,478	)		157,343		(510	)		9,541		(1,988	)		166,884
Total fixed maturity investments	$	(19,094	)	$	815,541	$	(7,160	)	$	145,136	$	(26,254	)	$	960,677
Short term investments		(79	)		184,442		—			—		(79	)		184,442
Total fixed income investments	$	(19,173	)	$	999,983	$	(7,160	)	$	145,136	$	(26,333	)	$	1,145,119
Equity securities	$	(3,775	)	$	43,312	$	—		$	—	$	(3,775	)	$	43,312

⁽¹⁾ Gross unrealized losses include unrealized losses on non-OTTI and non-credit OTTI securities recognized in accumulated other comprehensive income at September 30, 2011.

As of September 30, 2011, 666 available for sale securities were in an unrealized loss position. Of those, 89 securities had been in a continuous unrealized loss position for twelve months or greater.

13

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3. Investments, cont’d.

	Less than 12 months					12 months or greater					Total
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses(1)			Value		Losses(1)			Value		Losses(1)			Value
December 31, 2010
U.S. government and agencies securities	$	(6,424	)	$	368,452	$	—		$	—	$	(6,424	)	$	368,452
U.S. state and municipal securities		(238	)		9,301		—			—		(238	)		9,301
Foreign government securities		(253	)		22,585		—			—		(253	)		22,585
Government guaranteed corporate securities		(356	)		131,980		(9	)		4,714		(365	)		136,694
Corporate securities		(3,556	)		243,307		(338	)		5,429		(3,894	)		248,736
Residential mortgage-backed securities
Agency mortgage-backed securities		(2,635	)		160,532		—			—		(2,635	)		160,532
Non-agency mortgage-backed securities		(473	)		26,205		(11,712	)		172,665		(12,185	)		198,870
Commercial mortgage-backed securities
Agency mortgage-backed securities		(2	)		455		—			—		(2	)		455
Non-agency mortgage-backed securities		(1,227	)		75,626		(1,577	)		10,590		(2,804	)		86,216
Asset-backed securities		(555	)		70,218		(953	)		13,218		(1,508	)		83,436
Total fixed maturity investments	$	(15,719	)	$	1,108,661	$	(14,589	)	$	206,616	$	(30,308	)	$	1,315,277
Short term investments		(14	)		30,178		—			—		(14	)		30,178
Total fixed income investments	$	(15,733	)	$	1,138,839	$	(14,589	)	$	206,616	$	(30,322	)	$	1,345,455
Equity securities	$	(18	)	$	640	$	—		$	—	$	(18	)	$	640

⁽¹⁾ Gross unrealized losses include unrealized losses on non-OTTI and OTTI securities recognized in accumulated other comprehensive income at December 31, 2010.

As of December 31, 2010, 376 available for sale securities were in an unrealized loss position. Of those, 112 securities had been in a continuous unrealized loss position for twelve months or greater.

The analysis of OTTI for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Total other-than-temporary impairment losses	$	(168	)	$	(1,140	)	$	(1,908	)	$	(2,647	)
Portion of loss recognized in other comprehensive income (loss)		(72	)		(240	)		(911	)		(586	)
Net impairment losses recognized in (losses) earnings	$	(240	)	$	(1,380	)	$	(2,819	)	$	(3,233	)

14

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3. Investments, cont’d.

Of the $0.2 million (2010: $1.4 million) of OTTI losses recognized by the Company in the third quarter of 2011, the majority of it related to reductions in expected recovery values on mortgage-backed securities during the period, along with certain credit related downgrades in corporate securities. At September 30, 2011, the Company did not have the intent to sell securities in an unrealized loss position and determined that it was unlikely that the Company would be required to sell securities in an unrealized loss position.

The following table provides a roll-forward of the amount related to credit losses for the Company’s fixed income investments recognized in (losses) earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income for the three and nine months ended September 30, 2011:

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Beginning balance	$	(10,138	)	$	(13,427	)	$	(10,214	)	$	(13,122	)
Addition for the amount related to the credit loss for which an other-than-temporary impairment was not previously recognized		—			—			(12	)		—
Addition for the amount related to the credit loss for which an other-than-temporary impairment was previously recognized		(72	)		(240	)		(1,161	)		(586	)
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security		—			—			—			—
Reductions for securities sold during the period		7,905			64			9,082			105
Ending balance	$	(2,305	)	$	(13,603	)	$	(2,305	)	$	(13,603	)

Securities Lending

The Company participated in a securities lending program until July 2011. Under this program fixed maturity investments were loaned by the Company to third parties, primarily major brokerage firms and commercial banks. The borrowers of the Company’s securities provided the Company with collateral, typically cash, which the Company separately maintained. The Company typically invested such collateral in overnight repurchase agreements. Securities with an estimated fair value of $58.7 million were on loan under the program at December 31, 2010. The Company was liable for collateral under the Company’s control of $59.9 million at December 31, 2010. As of December 31, 2010, the fair value of the investments purchased with the cash collateral received from the borrower was $59.9 million. All securities on loan were issued on a term or overnight basis and were subject to daily recall at the Company’s discretion. Upon the termination of the securities lending program, the Company recalled all securities on loan and refunded all collateral previously held as part of the program.

15

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

3. Investments, cont’d.

Variable Interest Entities

Entities that do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristics of a controlling financial interest are referred to as variable interest entities (“VIE”). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.

The Company is involved in the normal course of business with VIEs primarily as a passive investor in residential and commercial mortgage-backed securities and through its interests in other investments in alternative and high yield loan funds that are structured as limited partnerships considered to be third party VIEs. The Company determined that it was not the primary beneficiary for any of these investments as of September 30, 2011. The Company believes its exposure to loss with respect to these investments is generally limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded investment commitments.

4. Fair value measurement

The Company determines the fair value of its fixed income investments and equity securities in accordance with current accounting guidance, which defines fair value and establishes a fair value hierarchy based on inputs to the various valuation techniques used for each fair value measurement. The Company determines the estimated fair value of each individual security utilizing the highest level inputs available. Valuation inputs by security type may include the following:

• Government and agencies securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical models which may incorporate option adjusted spreads, daily interest rate data and market/sector news. The Company generally classifies the fair values of government and agencies securities in Level 2. Current issue U.S. government securities are generally valued based on Level 1 inputs, which use the market approach valuation technique.

• Government guaranteed corporate securities — These securities are generally priced by pricing services or index providers. The pricing service or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical spread models which may incorporate inputs from the U.S treasury curve or LIBOR. The Company generally classifies the fair values of its government guaranteed corporate securities in Level 2.

• Corporate securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers typically use discounted cash flow models that incorporate benchmark curves for treasury, swap and high issuance credits. Credit spreads are developed from current market observations for like or similar securities. The Company generally classifies the fair values of its corporate securities in Level 2.

16

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

4. Fair value measurement, cont’d.

• Preferred equity securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers typically use discounted cash flow models that incorporate benchmark curves for treasury, swap and high issuance credits. Credit spreads are developed from current market observations for like or similar securities. The Company generally classifies the fair values of its preferred equity securities in Level 2.

• Common equity securities — The Company primarily invests in equity securities through the investment in exchange traded funds. These funds and underlying securities are generally priced by pricing services based on quoted market prices in active markets. The Company generally classifies the fair values of its common equity securities in Level 1.

• Derivative instruments — These instruments are generally priced by pricing services, broker/dealers and/or recent trading activity. The market value approach valuation technique is used to estimate the fair value for these derivatives based on significant observable market inputs. Certain derivative instruments are priced by pricing services based on quoted market prices in active markets. These derivative instruments are generally classified in Level 1. Other derivative instruments are priced using industry valuation models and are considered Level 2, as the inputs to the valuation model are based on observable market inputs.

• Structured securities including agency and non-agency, residential and commercial, mortgage and asset-backed securities — These securities are generally priced by broker/dealers. Broker/dealers may use current market trades for securities with similar qualities. If no such trades are available, inputs such as bid and offer, prepayment speeds, the U.S. treasury curve, swap curve and cash settlement may be used in a discounted cash flow model to determine the fair value of a security. The Company generally classifies the fair values of its structured securities in Level 2.

Transfers between levels are assumed to occur at the end of each period.

17

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

4. Fair value measurement, cont’d.

The following tables set forth the Company’s available for sale investments and derivative instruments categorized by the level within the hierarchy in which the fair value measurements fall, on a recurring basis at September 30, 2011 and December 31, 2010:

	Fair Value Measurements at September 30, 2011
				Quoted
				Prices in
				Active
				Markets		Significant
				for		Other			Significant
	Total at			Identical		Observable			Unobservable
	September 30,			Assets		Inputs			Inputs
	2011			(Level 1)		(Level 2)			(Level 3)
Assets
U.S. government and agencies securities	$	1,235,350		$	67,818	$	1,167,532		$	—
U.S. state and municipal securities		55,101			—		55,101			—
Foreign government securities		77,945			—		77,945			—
Government guaranteed corporate securities		400,446			—		400,446			—
Corporate securities		1,219,305			—		1,219,096			209
Residential mortgage-backed securities
Agency mortgage-backed securities		987,145			—		987,145			—
Non-agency mortgage-backed securities		123,729			—		123,195			534
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,851			—		33,851			—
Non-agency mortgage-backed securities		541,128			—		533,354			7,774
Asset-backed securities		324,142			—		324,142			—
Total fixed maturity investments	$	4,998,142		$	67,818	$	4,921,807		$	8,517
Short term investments		323,119			—		323,119			—
Equity securities		49,323			40,272		9,051			—
Other assets (see Note 6)		1,033			—		1,033			—
Total assets	$	5,371,617		$	108,090	$	5,255,010		$	8,517
Liabilities
Other liabilities (see Note 6)	$	(550	)	$	—	$	(550	)	$	—

During the nine months ended September 30, 2011, certain corporate and commercial mortgaged-backed securities were acquired and classified as Level 3 securities. The Company used pricing models with significant unobservable inputs in order to determine the fair value of these securities.

During the nine months ended September 30, 2011, certain of the Company’s fixed maturity investments were transferred from Level 2 to Level 3. The reclassifications were largely related to high yield commercial mortgage-backed and collateralized debt obligation securities where market activity had decreased. During the quarter ended September 30, 2011, the market activity for many of these high yield commercial mortgage-backed securities and collateralized debt obligations had recovered and therefore observable inputs were available at September 30, 2011. As such, the Company transferred these securities from Level 3 to Level 2 during the quarter.

18

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

4. Fair value measurement, cont’d.

During the nine months ended September 30, 2011, fixed maturity and short-term investments were transferred out of Level 1 to Level 2 as they no longer qualified as on-the-run U.S. treasury securities. During the nine months ended September 30, 2011, the Company purchased exchange traded funds, comprised of equity securities, which are classified as Level 1 securities.

During the three months ended September 30, 2011, certain corporate and commercial mortgaged-backed securities previously classified as Level 3 securities were sold.

	Fair Value Measurements at December 31, 2010
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
	Total at		Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Assets
U.S. government and agencies securities	$	1,010,819	$	38,275	$	972,544	$	—
U.S. state and municipal securities		29,979		—		29,979		—
Foreign government securities		140,461		—		140,461		—
Government guaranteed corporate securities		671,150		—		671,150		—
Corporate securities		1,232,511		—		1,232,511		—
Residential mortgage-backed securities
Agency mortgage-backed securities		883,948		—		883,948		—
Non-agency mortgage-backed securities		246,410		—		245,325		1,085
Commercial mortgage-backed securities
Agency mortgage-backed securities		22,889		—		22,889		—
Non-agency mortgage-backed securities		604,820		—		597,512		7,308
Asset-backed securities		273,715		—		272,469		1,246
Total fixed maturity investments	$	5,116,702	$	38,275	$	5,068,788	$	9,639
Short term investments		70,444		—		70,444		—
Equity securities		13,565		—		13,565		—
Other assets		—		—		—		—
Total assets	$	5,200,711	$	38,275	$	5,152,797	$	9,639
Liabilities
Other liabilities	$	—	$	—	$	—	$	—

19

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

4. Fair value measurement, cont’d.

Level 3 securities are primarily comprised of corporate debt securities, non-agency commercial mortgage-backed securities, collateralized debt obligations and non-agency residential mortgage-backed securities. Level 3 assets represented less than 0.16% and 0.19% of the Company’s total available for sale assets at September 30, 2011 and December 31, 2010, respectively. Net impairment losses recognized in earnings included losses on Level 3 securities for the three and nine months ended September 30, 2011 in the amount of $25,000 and $0.2 million, respectively ($0.3 million and $1.1 million for the three and nine months ended September 30, 2010, respectively), representing realized losses due to OTTI.

There were no material changes in the Company’s valuation techniques for the nine months ended September 30, 2011.

The following tables present the securities lending collateral reinvested by the Company in connection with its securities lending program, categorized by the level within the hierarchy in which the fair value measurements fall, on a recurring basis at September 30, 2011 and December 31, 2010, respectively:

			Fair Value Measurements at September 30, 2011
			Quoted Prices		Significant
			in Active		Other		Significant
	Total at		Markets for		Observable		Unobservable
	September 30,		Identical Assets		Inputs		Inputs
	2011		(Level 1)		(Level 2)		(Level 3)
Securities lending collateral	$	—	$	—	$	—	$	—

			Fair Value Measurements at December 31, 2010
			Quoted Prices		Significant
			in Active		Other		Significant
	Total at		Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Securities lending collateral	$	59,886	$	—	$	59,886	$	—

20

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

4. Fair value measurement, cont’d.

The following tables present a reconciliation of the beginning and ending balances for all available for sale investments measured at fair value on a recurring basis using Level 3 inputs during the three and nine months ended September 30, 2011 and 2010, respectively:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Level 3, beginning of period	$	28,466		$	15,485		$	9,639		$	5,554
Total net realized gains included in earnings		22			82			33			91
Total net realized and unrealized losses included in earnings		(25	)		(366	)		(495	)		(1,237	)
Change in unrealized gains included in other comprehensive income		571			1,512			2,067			3,581
Change in unrealized losses included in other comprehensive income		(2,036	)		(326	)		(2,207	)		(663	)
Purchases		—			17			—			2,848
Sales		(1,165	)		(3,110	)		(3,105	)		(3,278	)
Transfers in to Level 3		266			209			36,931			11,768
Transfers out of Level 3		(17,582	)		(8,832	)		(34,346	)		(13,993	)
Level 3, end of period	$	8,517		$	4,671		$	8,517		$	4,671

At September 30, 2011 and December 31, 2010, the carrying value of the Company’s other investments was $386.8 million and $376.7 million, respectively, which approximates fair value.

At September 30, 2011 and December 31, 2010, the carrying value of the Company’s senior notes was $528.5 million and $528.3 million, respectively, and the fair value was $561.3 million and $536.9 million, respectively.

5. Earnings per share

The two-class method utilized by the Company is an earnings allocation formula that determines (losses) earnings per share for the holders of Endurance Holdings’ ordinary and class A shares (also referred to as “common shares”) and participating common shares, which includes unvested restricted shares which receive cash dividends, according to dividends declared and participation rights in undistributed earnings. Net (loss) income (attributable) available to common and participating common shareholders is reduced by the amount of dividends declared in the current period and by the contractual amount of dividends that must be paid for the current period related to the Company’s common and participating common shares. Any remaining undistributed earnings are allocated to the common and participating common shareholders to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. In periods of loss, no losses are allocated to participating common shareholders. Instead, all such losses are allocated solely to the common shareholders.

Basic (losses) earnings per common share are calculated by dividing net (loss) income (attributable) available to common shareholders by the weighted average number of common shares outstanding. The weighted average number of common shares excludes any dilutive effect of outstanding warrants, options and convertible securities such as unvested restricted shares.

21

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

5. Earnings per share, cont’d.

Diluted (losses) earnings per common share are based on the weighted average number of common shares and assumes the exercise of all dilutive stock warrants and options and the vesting or conversion of all convertible securities such as unvested restricted shares using the two-class method described above.

The following table sets forth the computation of basic and diluted (losses) earnings per share for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Numerator:
Net (loss) income (attributable) available to common and participating common shareholders	$	(28,206	)	$	135,253		$	(82,296	)	$	241,885
Less amount allocated to participating common shareholders(1)		(224	)		(2,468	)		(740	)		(4,565	)
Net (loss) income (attributed) allocated to common shareholders	$	(28,430	)	$	132,785		$	(83,036	)	$	237,320
Denominator:
Weighted average shares — basic
Outstanding		39,764,756			50,295,575			40,071,340			52,057,963
Vested restricted share units		—			—			—			2,661
Weighted average shares — basic		39,764,756			50,295,575			40,071,340			52,060,624
Share equivalents:
Warrants		—			1,954,566			—			1,945,705
Options		—			739,109			—			835,089
Restricted share units		—			7,869			—			9,831
Weighted average shares — diluted		39,764,756			52,997,119			40,071,340			54,851,249
Basic (losses) earnings per common share	$	(0.71	)	$	2.64		$	(2.07	)	$	4.56
Diluted (losses) earnings per common share	$	(0.71	)	$	2.51		$	(2.07	)	$	4.33

(1) Represents earnings attributable to holders of unvested restricted shares issued under the Company’s equity compensation plans that are considered participating. In periods of loss, no losses are allocated to participating common shareholders (unvested restricted shares).

22

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

5. Earnings per share cont’d.

Endurance Holdings declared a dividend of $0.484375 per Series A preferred share and $0.46875 per Series B preferred share on August 3, 2011 (2010 — Series A: $0.484375, Series B: Nil). The Series A and Series B preferred share dividends were paid on September 15, 2011 to shareholders of record on September 1, 2011. Endurance Holdings also declared a dividend of $0.30 per common share on August 3, 2011 (2010 — $0.25). The dividend was paid on September 30, 2011 to shareholders of record on September 16, 2011.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Dividends declared per Series A preferred share	$	0.484375	$	0.484375	$	1.453125	$	1.453125
Dividends declared per Series B preferred share		0.468750		—		0.468750		—
Dividends declared per common share	$	0.30	$	0.25	$	0.90	$	0.75

6. Derivatives

The Company’s derivative instruments are recorded in the Consolidated Balance Sheet at fair value, with changes in fair value and gains and losses recognized in net realized and unrealized investment gains, net foreign exchange gains and other underwriting (loss) income in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. The majority of the Company’s derivatives are not designated as hedges under current accounting guidance. The Company may enter derivative transactions directly or as part of strategies employed by its external investment managers. The Company’s objectives for holding these derivatives are as follows:

Interest Rate Futures, Swaps, Swaptions and Options

The Company may use interest rate futures, swaps, swaptions and options within its portfolio of fixed maturity investments to manage its exposure to interest rate risk, which can include increasing or decreasing its exposure to this risk through modification of the portfolio composition and duration.

Foreign Exchange Forwards, Futures and Options

The Company may utilize foreign exchange forward contracts and options as part of its overall currency risk management and investment strategies.

Credit Default Swaps

The Company may purchase protection through credit default swaps to mitigate the risk associated with its underwriting operations, most notably in the credit/surety line, and to manage market exposures.

The Company may assume or economically hedge credit risk through credit default swaps to replicate or hedge investment positions. The original term of these credit default swaps is generally five years or less.

Commodity Futures and Options

The Company may utilize commodity futures and options to economically hedge certain underwriting risks.

23

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

6. Derivatives, cont’d.

The fair values and the related notional values of derivatives included in the Company’s Consolidated Balance Sheet at September 30, 2011 are noted below. The Company first entered into these derivatives in the first quarter of 2011.

	September 30, 2011
			Notional
	Fair		Principal
	Value		Amount
Foreign exchange forward contracts	$	347	$	8,674
Interest rate swaps		193		3,000
Commodity put options		493		799,043
Total recorded in other assets	$	1,033	$	810,717
Foreign exchange forward contracts	$	298	$	3,454
Interest rate swaps		122		2,000
Credit default swaps		122		1,850
Interest rate futures		8		200,000
Total recorded in other liabilities	$	550	$	207,304
Net derivative asset	$	483	$	1,018,021

The fair values of all derivatives at September 30, 2011 were recorded in other assets or other liabilities in the Company’s Consolidated Balance Sheet. None of the above derivatives have been designated as hedges under current accounting guidance.

The gains and losses on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for derivatives for the three and nine months ended September 30, 2011 were as follows:

	Three Months			Nine Months
	Ended			Ended
	September 30,			September 30,
	2011			2011
Total included in net foreign exchange gains from foreign exchange forward contracts	$	204		$	(162	)
Futures contracts	$	572		$	822
Credit default swaps		(106	)		(100	)
Interest rate swaps		(620	)		(1,054	)
Interest rate swaptions		18			37
Total included in net realized and unrealized investment gains	$	(136	)	$	(295	)
Total included in other underwriting (loss) income from commodity put options	$	(2,875	)	$	(2,875	)
Total losses from derivatives	$	(2,807	)	$	(3,332	)

24

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

7. Stock-based employee compensation and other stock plans

The Company has a stock-based employee compensation plan, which provides the Company with the ability to grant options to purchase the Company’s ordinary shares, share appreciation rights, restricted shares, share bonuses and other equity incentive awards to key employees.

No options were granted, expired or vested during the quarters ended September 30, 2011 and 2010. The total intrinsic value of options exercised during the quarter ended September 30, 2011 was $32,000 (2010 — $25,000). The Company received proceeds of $39,000 (2010 — $72,000) from the exercise of options during the quarter ended September 30, 2011. The Company issued new ordinary shares in connection with the exercise of the above options. There were no unrecognized stock-based compensation expenses related to unvested stock options at September 30, 2011 and 2010.

No options were granted, expired or vested during the nine months ended September 30, 2011 and 2010. The total intrinsic value of options exercised during the nine months ended September 30, 2011 was $21.6 million (2010 — $9.3 million). The Company received proceeds of $12.2 million (2010 — $5.8 million) from the exercise of options during the nine months ended September 30, 2011. The Company issued new ordinary shares in connection with the exercise of the above options.

During the quarter ended September 30, 2011, the Company granted an aggregate of 430 (2010 — 3,224) restricted shares and restricted share units with weighted average grant date fair values of $15,000 (2010 — $0.1 million). During the quarter ended September 30, 2011, the aggregate fair value of restricted shares and restricted share units that vested was $0.4 million (2010 — $0.5 million). For the quarter ended September 30, 2011, compensation costs recognized in earnings for all restricted shares and restricted share units were $3.0 million (2010 — $2.9 million). At September 30, 2011, compensation costs not yet recognized related to unvested restricted shares and restricted share units was $13.0 million (2010 — $17.4 million).

During the nine months ended September 30, 2011, the Company granted an aggregate of 305,422 (2010 — 530,312) restricted shares and restricted share units with weighted average grant date fair values of $14.8 million (2010 — $20.3 million). During the nine months ended September 30, 2011, the aggregate fair value of restricted shares and restricted share units that vested was $14.4 million (2010 — $14.2 million). For the nine months ended September 30, 2011, compensation costs recognized in earnings for all restricted shares and restricted share units were $11.2 million (2010 — $10.2 million).

The Company also has an Employee Share Purchase Plan under which employees of Endurance Holdings and certain of its subsidiaries may purchase Endurance Holdings’ ordinary shares. For the quarter ended September 30, 2011, total expenses related to the Company’s Employee Share Purchase Plan were approximately $52,000 (2010 — $42,000) and $159,000 (2010 -$132,000) for the nine months ended September 30, 2011.

25

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

8. Segment reporting

The determination of the Company’s business segments is based on how the Company monitors the performance of its underwriting operations. The Company has two reportable business segments, Insurance and Reinsurance, which are comprised of the following lines of business:

Insurance segment lines of business

• Agriculture

• Professional Lines

• Casualty

• Property

• Healthcare Liability

• Workers’ Compensation

Reinsurance segment lines of business

• Catastrophe

• Casualty

• Property

• Aerospace and Marine

• Surety and Other Specialty

Management measures segment results on the basis of the combined ratio, which is obtained by dividing the sum of the net losses and loss expenses, acquisition expenses and general and administrative expenses by net premiums earned. When purchased within a single line of business, ceded reinsurance and recoveries are accounted for within that line of business. When purchased across multiple lines of business, ceded reinsurance and recoveries are allocated to the lines of business in proportion to the related risks assumed. The Company does not manage its assets by segment; accordingly, investment income and total assets are not allocated to the individual business segments. General and administrative expenses incurred by the segments are allocated directly. Remaining general and administrative expenses not directly incurred by the segments are allocated primarily based on estimated consumption, headcount and other variables deemed relevant to the allocation of such expenses.

26

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

8. Segment reporting, cont’d.

The following table provides a summary of segment revenues, results and reserves for losses and loss expenses for the three months ended September 30, 2011:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	450,451		$	250,415		$	700,866
Ceded premiums written		(147,241	)		(2,298	)		(149,539	)
Net premiums written		303,210			248,117			551,327
Net premiums earned		318,602			242,891			561,493
Other underwriting (loss) income		(2,875	)		734			(2,141	)
		315,727			243,625			559,352
Expenses
Net losses and loss expenses		260,206			196,485			456,691
Acquisition expenses		18,738			53,511			72,249
General and administrative expenses		29,328			29,246			58,574
		308,272			279,242			587,514
Underwriting income (loss)	$	7,455		$	(35,617	)	$	(28,162	)
Net loss ratio		81.7	%		81.0	%		81.3	%
Acquisition expense ratio		5.9	%		22.0	%		12.9	%
General and administrative expense ratio		9.2	%		12.0	%		10.4	%
Combined ratio		96.8	%		115.0	%		104.6	%
Reserve for losses and loss expenses	$	2,032,636		$	1,877,901		$	3,910,537

27

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

8. Segment reporting, cont’d.

The following table provides a summary of segment revenues, results and reserves for losses and loss expenses for the three months ended September 30, 2010:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	303,561		$	252,013		$	555,574
Ceded premiums written		(99,268	)		(4,422	)		(103,690	)
Net premiums written		204,293			247,591			451,884
Net premiums earned		242,766			227,027			469,793
Other underwriting income (loss)		473			(151	)		322
		243,239			226,876			470,115
Expenses
Net losses and loss expenses		172,015			94,117			266,132
Acquisition expenses		17,356			50,087			67,443
General and administrative expenses		29,256			30,267			59,523
		218,627			174,471			393,098
Underwriting income	$	24,612		$	52,405		$	77,017
Net loss ratio		70.9	%		41.5	%		56.6	%
Acquisition expense ratio		7.1	%		22.1	%		14.4	%
General and administrative expense ratio		12.1	%		13.3	%		12.7	%
Combined ratio		90.1	%		76.9	%		83.7	%
Reserve for losses and loss expenses	$	1,826,956		$	1,574,356		$	3,401,312

The following table reconciles total segment results to (loss) income before income taxes for the three months ended September 30, 2011 and 2010:

	Three Months Ended
	September 30,
	2011			2010
Total underwriting (loss) income	$	(28,162	)	$	77,017
Net investment income		14,100			53,654
Net foreign exchange gains		4,085			12,565
Net realized and unrealized investment gains		1,033			8,973
Net impairment losses recognized in earnings		(240	)		(1,380	)
Amortization of intangibles		(2,976	)		(2,588	)
Interest expense		(9,055	)		(9,051	)
(Loss) income before income taxes	$	(21,215	)	$	139,190

28

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

8. Segment reporting, cont’d.

The following table provides gross and net premiums written by line of business for the three months ended September 30, 2011 and 2010:

	Gross		Net		Gross			Net
	premiums		premiums		premiums			premiums
	written		written		written			written
Business Segment	2011		2011		2010			2010
Insurance
Agriculture	$	289,656	$	185,017	$	156,162		$	89,119
Professional lines		39,559		30,812		43,381			38,522
Casualty		57,520		37,664		40,538			23,700
Property		30,049		17,681		30,295			21,366
Healthcare liability		33,652		32,021		34,024			32,393
Workers’ compensation		15		15		(839	)		(807	)
Total Insurance		450,451		303,210		303,561			204,293
Reinsurance
Catastrophe		46,275		43,868		45,513			41,154
Casualty		56,293		56,292		81,167			81,163
Property		129,203		129,203		111,395			111,395
Aerospace and marine		5,891		6,002		4,184			4,184
Surety and other specialty		12,753		12,752		9,754			9,695
Total Reinsurance		250,415		248,117		252,013			247,591
Total	$	700,866	$	551,327	$	555,574		$	451,884

29

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

8. Segment reporting, cont’d.

The following table provides a summary of the segment revenues and results for the nine months ended September 30, 2011:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	1,302,032		$	902,116		$	2,204,148
Ceded premiums written		(393,020	)		(19,171	)		(412,191	)
Net premiums written		909,012			882,945			1,791,957
Net premiums earned		730,491			700,413			1,430,904
Other underwriting (loss) income		(2,875	)		753			(2,122	)
		727,616			701,166			1,428,782
Expenses
Net losses and loss expenses		550,438			670,076			1,220,514
Acquisition expenses		50,907			154,847			205,754
General and administrative expenses		102,361			88,060			190,421
		703,706			912,983			1,616,689
Underwriting income (loss)	$	23,910		$	(211,817	)	$	(187,907	)
Net loss ratio		75.3	%		95.6	%		85.3	%
Acquisition expense ratio		7.0	%		22.1	%		14.4	%
General and administrative expense ratio		14.0	%		12.6	%		13.3	%
Combined ratio		96.3	%		130.3	%		113.0	%

30

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

8. Segment reporting, cont’d.

The following table provides a summary of the segment revenues and results for the nine months ended September 30, 2010:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	999,528		$	864,483		$	1,864,011
Ceded premiums written		(251,307	)		(7,075	)		(258,382	)
Net premiums written		748,221			857,408			1,605,629
Net premiums earned		616,300			675,077			1,291,377
Other underwriting income (loss)		471			(2,517	)		(2,046	)
		616,771			672,560			1,289,331
Expenses
Net losses and loss expenses		428,872			362,804			791,676
Acquisition expenses		51,336			146,759			198,095
General and administrative expenses		86,523			87,641			174,164
		566,731			597,204			1,163,935
Underwriting income	$	50,040		$	75,356		$	125,396
Net loss ratio		69.6	%		53.7	%		61.3	%
Acquisition expense ratio		8.4	%		21.8	%		15.3	%
General and administrative expense ratio		14.0	%		13.0	%		13.5	%
Combined ratio		92.0	%		88.5	%		90.1	%

The following table reconciles total segment results to (loss) income before income taxes for the nine months ended September 30, 2011 and 2010, respectively:

	Nine Months Ended
	September 30,
	2011			2010
Total underwriting (loss) income	$	(187,907	)	$	125,396
Net investment income		106,443			143,484
Net foreign exchange gains		7,655			6,465
Net realized and unrealized investment gains		26,340			15,174
Net impairment losses recognized in earnings		(2,819	)		(3,233	)
Amortization of intangibles		(8,800	)		(7,764	)
Interest expense		(27,166	)		(25,709	)
(Loss) income before income taxes	$	(86,254	)	$	253,813

31

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

8. Segment reporting, cont’d.

The following table provides gross and net premiums written by line of business for the nine months ended September 30, 2011 and 2010:

	Gross			Net			Gross			Net
	premiums			premiums			premiums			premiums
	written			written			written			written
Business Segment	2011			2011			2010			2010
Insurance
Agriculture	$	855,486		$	577,538		$	560,531		$	402,395
Professional lines		124,209			99,560			133,456			115,546
Casualty		159,580			107,234			130,172			82,265
Property		90,643			56,262			99,976			76,404
Healthcare liability		72,243			68,542			76,782			72,947
Workers’ compensation		(129	)		(124	)		(1,389	)		(1,336	)
Total Insurance		1,302,032			909,012			999,528			748,221
Reinsurance
Catastrophe		330,771			314,328			291,990			287,721
Casualty		218,264			217,463			246,060			245,257
Property		251,475			251,475			215,916			215,916
Aerospace and marine		53,472			51,567			46,381			44,316
Surety and other specialty		48,134			48,112			64,136			64,198
Total Reinsurance		902,116			882,945			864,483			857,408
Total	$	2,204,148		$	1,791,957		$	1,864,011		$	1,605,629

9. Commitments and contingencies

Concentrations of credit risk. The Company’s reinsurance recoverables at September 30, 2011 and December 31, 2010 amounted to $479.1 million and $319.3 million, respectively. At September 30, 2011, substantially all reinsurance recoverables were due from the U.S. government or from reinsurers rated A- or better by A.M. Best or Standard & Poor’s.

Major production sources. The following table shows the percentage of net premiums written generated through the Company’s largest brokers for the nine months ended September 30, 2011 and 2010, respectively:

Broker	2011			2010
Aon Benfield		18.2	%		21.2	%
Marsh & McLennan Companies, Inc.		15.9	%		19.8	%
Willis Companies		13.0	%		12.7	%
Total of largest brokers		47.1	%		53.7	%

32

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

9. Commitments and contingencies, cont’d.

Letters of credit. As of September 30, 2011, the Company had issued letters of credit of $403.3 million (December 31, 2010 — $439.3 million) under its credit facility in favor of certain ceding companies to collateralize obligations.

Investment commitments. As of September 30, 2011 and December 31, 2010, the Company had pledged cash and cash equivalents and fixed maturity investments of $129.9 million and $143.6 million, respectively, in favor of certain ceding companies to collateralize obligations. As of September 30, 2011 and December 31, 2010, the Company had also pledged $467.5 million and $500.9 million of its cash and fixed maturity investments as required to meet collateral obligations for $403.3 million and $439.3 million in letters of credit outstanding under its credit facility, respectively. In addition, at September 30, 2011 and December 31, 2010, cash and fixed maturity investments with fair values of $370.6 million and $369.1 million were on deposit with U.S. state regulators, respectively, and cash and fixed maturity investments with fair values of $10.3 million and $10.7 million were on deposit with Canadian regulators, respectively.

The Company is subject to certain commitments with respect to Other Investments at September 30, 2011 and December 31, 2010. The Company is generally subject to redemption restriction provisions of between one to five years from the date of the original commitment and rolling redemption restrictions on a one or two year basis thereafter. Due to redemption restrictions, the Company is prohibited from requesting redemptions during 2011 of $107.4 million (December 31, 2010 — $118.9 million) of its Other Investments held at September 30, 2011. In addition, as of September 30, 2011 the Company was committed to investing a further $17.4 million (December 31, 2010 — $11.7 million) in various investment funds classified as Other Investments.

Reinsurance commitments. In the ordinary course of business, the Company enters into reinsurance agreements that may include terms which could require the Company to collateralize certain of its obligations.

Employment agreements. The Company has entered into employment agreements with certain officers that provide for equity incentive awards, executive benefits and severance payments under certain circumstances.

Operating leases. The Company leases office space and office equipment under operating leases. Future minimum lease commitments at September 30, 2011 are as follows:

Twelve months ended September 30,	Amount
2012	$	13,332
2013		14,022
2014		8,911
2015		7,626
2016		5,638
2017 and thereafter		24,612
	$	74,141

Total lease expense under operating leases for the nine months ended September 30, 2011 was $9.2 million (2010 — $8.0 million).

33

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

9. Commitments and contingencies, cont’d.

Taxation. The Canada Revenue Agency (“CRA”) has commenced an examination of income tax returns for 2008 and 2009 for the Canadian branch of one of the Company’s U.S. subsidiaries. The Company believes that its income tax filing positions and deductions will be sustained and does not expect to receive any adjustments that would result in a material change to its financial position and therefore no reserves for uncertain income tax positions have been established

Legal proceedings. The Company is party to various legal proceedings generally arising in the normal course of its business. While any proceeding contains an element of uncertainty, the Company does not believe that the eventual outcome of any litigation or arbitration proceeding to which it is presently a party could have a material adverse effect on its financial condition or business. Pursuant to the Company’s insurance and reinsurance agreements, disputes are generally required to be settled by arbitration.

10. Shareholders’ equity

On June 1, 2011, Endurance Holdings issued 9,200,000 shares of its 7.5% Non-Cumulative Preferred Shares, Series B (the “Series B Preferred Shares”). The Series B Preferred Shares sold in the offering were registered under the Securities Act of 1933, as amended, and are traded on the New York Stock Exchange. The Series B Preferred Shares were issued at a price to the public of $25.00 per share. Endurance Holdings received net proceeds from this offering of $224.0 million after expenses and underwriting discounts. The proceeds from this offering were used to provide additional capital to Endurance Holdings’ subsidiaries and for other general corporate purposes.

The Series B Preferred Shares have no stated maturity date and are redeemable in whole or in part at the option of Endurance Holdings any time after June 1, 2016 at a redemption price of $25.00 per share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Endurance Holdings may redeem all but not less than all of the Series B Preferred Shares before that date at a redemption price of $26.00 per share, plus any declared and unpaid dividends, to the date of redemption, if Endurance Holdings is required to submit a proposal to the holders of the Series B Preferred Shares concerning an amalgamation, consolidation, merger, similar corporate transaction or change in Bermuda law.

Dividends on the Series B Preferred Shares, when, as and if declared by the Board of Directors of Endurance Holdings or a duly authorized committee of the board, accrue and are payable on the liquidation preference amount from the original issue date, quarterly in arrears on each dividend payment date, at an annual rate of 7.5%. Dividends on the Series B Preferred Shares are not cumulative.

34

ENDURANCE SPECIALTY HOLDINGS LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(Amounts in tables expressed in thousands of United States dollars, except
for ratios, share and per share amounts)

10. Shareholder’s equity, cont’d.

Upon any voluntary or involuntary liquidation, dissolution or winding-up of Endurance Holdings, holders of the Series B Preferred Shares and any parity shares are entitled to receive out of Endurance Holdings’ assets available for distribution to shareholders, before any distribution is made to holders of Endurance Holdings’ common equity securities, a liquidating distribution in the amount of $25.00 per Series B Preferred Share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

Holders of the Series B Preferred Shares have no voting rights, except with respect to certain fundamental changes in the terms of the Series B Preferred Shares and in the case of certain dividend non-payments or as otherwise required by Bermuda law or Endurance Holdings’ bye-laws.

35

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the financial condition and results of operations for the three and nine months ended September 30, 2011 of Endurance Specialty Holdings Ltd. (“Endurance Holdings”) and its wholly-owned subsidiaries (collectively, the “Company”). This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) as well as the audited consolidated financial statements and related notes for the fiscal year ended December 31, 2010, the discussions of critical accounting policies and the qualitative and quantitative disclosure about market risk contained in Endurance Holdings’ Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2010 (the “2010 Annual Report on Form 10-K”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q, including information with respect to the Company’s plans and strategy for its business, includes forward-looking statements that involve risk and uncertainties. Please see the section “Cautionary Statement Regarding Forward-Looking Statements” below for more information on factors that could cause actual results to differ materially from the results described in or implied by any forward-looking statements contained in this discussion and analysis. You should review the “Risk Factors” set forth in the 2010 Annual Report on Form 10-K, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein.

Overview

Endurance Holdings was organized as a Bermuda holding company on June 27, 2002 and has seven wholly-owned operating subsidiaries:

• Endurance Specialty Insurance Ltd. (“Endurance Bermuda”), domiciled in Bermuda with branch offices in Zurich and Singapore;

• Endurance Worldwide Insurance Limited (“Endurance U.K.”), domiciled in England;

• Endurance Reinsurance Corporation of America (“Endurance U.S. Reinsurance”), domiciled in Delaware;

• Endurance American Insurance Company (“Endurance American”), domiciled in Delaware;

• Endurance American Specialty Insurance Company (“Endurance American Specialty”), domiciled in Delaware;

• Endurance Risk Solutions Assurance Co. (“Endurance Risk Solutions”), domiciled in Delaware; and

• American Agri-Business Insurance Company, domiciled in Texas and managed by ARMtech Insurance Services, Inc. (together “ARMtech”).

The Company writes specialty lines of property and casualty insurance and reinsurance on a global basis and seeks to create a portfolio of specialty lines of business that are profitable and have limited correlation with one another. The Company’s portfolio of specialty lines of business is organized into two business segments, Insurance and Reinsurance.

In the Insurance segment, the Company writes agriculture, professional lines, casualty, property, healthcare liability and workers’ compensation insurance. In the Reinsurance segment, the Company writes catastrophe, casualty, property, aerospace and marine and surety and other specialty reinsurance.

36

The Company’s Insurance and Reinsurance segments both include property related coverages which provide insurance or reinsurance of an insurable interest in tangible property for property loss, damage or loss of use. In addition, the Company’s Insurance and Reinsurance segments include various casualty insurance and reinsurance coverages which are primarily concerned with the losses caused by injuries to third parties, i.e., not the insured, or to property owned by third parties and the legal liability imposed on the insured resulting from such injuries.

Application of Critical Accounting Estimates

The Company’s condensed consolidated financial statements are based on the selection of accounting policies and application of significant accounting estimates which require management to make significant estimates and assumptions. The Company believes that some of the more critical judgments in the areas of accounting estimates and assumptions that affect its financial condition and results of operations are related to the recognition of premiums written and ceded, reserves for losses and loss expenses, other-than-temporary impairments within the investment portfolio, fair value measurements of certain portions of the investment portfolio and contingencies. For a detailed discussion of the Company’s critical accounting estimates, please refer to the 2010 Annual Report on Form 10-K, and the Notes to the Unaudited Condensed Consolidated Financial Statements in this Form 10-Q. There were no material changes in the application of the Company’s critical accounting estimates subsequent to that report, other than as described in the Notes to the Unaudited Condensed Consolidated Financial Statements in this Form 10-Q relating to the Company’s investment in equities and the use of derivative financial instruments. Management has discussed the application of these critical accounting estimates with the Company’s Board of Directors and the Audit Committee of the Board of Directors.

37

Consolidated Results of Operations — For the Three Months Ended September 30, 2011 and 2010

Results of operations for the three months ended September 30, 2011 and 2010 were as follows:

	Three Months Ended September 30,
	2011			2010			Change(1)
	(U.S. dollars in thousands, except for ratios)
Revenues
Gross premiums written	$	700,866		$	555,574			26.2	%
Ceded premiums written		(149,539	)		(103,690	)		44.2	%
Net premiums written		551,327			451,884			22.0	%
Net premiums earned		561,493			469,793			19.5	%
Net investment income		14,100			53,654			(73.7	)%
Net realized and unrealized gains		1,033			8,973			(88.5	)%
Net impairment losses recognized in earnings		(240	)		(1,380	)		(82.6	)%
Other underwriting (loss) income		(2,141	)		322		NM		(2)
Total revenues		574,245			531,362			8.1	%
Expenses
Losses and loss expenses		456,691			266,132			71.6	%
Acquisition expenses		72,249			67,443			7.1	%
General and administrative expenses		58,574			59,523			(1.6	)%
Amortization of intangibles		2,976			2,588			15.0	%
Net foreign exchange gains		(4,085	)		(12,565	)		(67.5	)%
Interest expense		9,055			9,051			—	%
Income tax (benefit) expense		(1,197	)		62		NM		(2)
Net (loss) income	$	(20,018	)	$	139,128			NM	(2)
Net loss ratio		81.3	%		56.6	%		24.7
Acquisition expense ratio		12.9	%		14.4	%		(1.5	)
General and administrative expense ratio		10.4	%		12.7	%		(2.3	)
Combined ratio		104.6	%		83.7	%		20.9

(1)	With respect to ratios, changes show increase or decrease in percentage points.
(2)	Not meaningful.

Premiums

Gross premiums written in the three months ended September 30, 2011 were $700.9 million, an increase of $145.3 million, or 26.2%, compared to the same period in 2010. Net premiums written in the three months ended September 30, 2011 were $551.3 million, an increase of $99.4 million, or 22.0%. The change in net premiums written was driven by the following factors:

• An increase in the agriculture line of the Insurance segment in the quarter ended September 30, 2011 compared to 2010 resulting from positive adjustments to previously estimated spring crop premiums as well as higher premiums recorded in relation to winter crops as commodity prices have increased from 2010;

• Growth in the property line of the Reinsurance segment from increased premiums on renewal from one large contract and new business underwritten within the Company’s international operations;

• Growth in the casualty line of the Insurance segment from the addition of the contract binding authority casualty business launched in late 2010; and

• A decline in the casualty line of the Reinsurance segment in the quarter ended September 30, 2011 compared to 2010 as a result of non-renewed business, reduced participations and clients retaining more premium. In addition, the renewal of one significant contract has been deferred to the fourth quarter.

38

Growth in ceded premiums written by the Company in the quarter ended September 30, 2011 as compared to the same period in 2010 was primarily driven by increased cessions in the agriculture Insurance line to the Federal Crop Insurance Corporation associated with the growth in gross premiums written.

Net premiums earned for the three months ended September 30, 2011 were $561.5 million, an increase of $91.7 million, or 19.5%, from the third quarter of 2010. The increase in net premiums earned resulted principally from growth in net written premiums recorded in more recent periods.

Net Investment Income

The Company’s net investment income of $14.1 million decreased 73.7% or $39.6 million for the quarter ended September 30, 2011 as compared to the same period in 2010. Net investment income during the third quarter of 2011 included net mark to market losses of $22.5 million on Other Investments, comprised of alternative funds and high yield loan funds, as compared to mark to market gains of $13.8 million in the third quarter of 2010. Investment income generated from the Company’s fixed income investments, which consist of fixed maturity investments and short-term investments, declined by $3.3 million for the three months ended September 30, 2011 compared to the same period in 2010. This decline resulted from lower reinvestment rates over the past 12 months driven by lower market yields, partially offset by a higher average investment portfolio balance. Investment expenses, including investment management fees were $3.4 million in both the third quarter of 2011 and the third quarter of 2010.

The annualized net earned yield and total return of the investment portfolio for the three months ended September 30, 2011 and 2010 and market yield and portfolio duration as of September 30, 2011 and 2010 were as follows:

	Three Months Ended September 30,
	2011			2010
Annualized net earned yield(1)		0.90	%		3.56	%
Total return on investment portfolio(2)		0.37	%		2.35	%
Market yield(3)		1.91	%		2.02	%
Portfolio duration(4)	2.48 years			2.25 years

(1)	The actual net earned income from the investment portfolio after adjusting for expenses and accretion of discount and amortization of premium from the purchase price divided by the average book value of assets.
(2)	Includes realized and unrealized gains and losses.
(3)	The internal rate of return of the investment portfolio based on the given market price or the single discount rate that equates a security price (inclusive of accrued interest) for the portfolio with its projected cash flows. Excludes other investments and operating cash.
(4)	Includes only cash and cash equivalents and fixed income investments managed by the Company’s investment managers.

During the third quarter of 2011, the yield on the benchmark three year U.S. Treasury bond fluctuated within a 53 basis point range, with a high of 0.82% and a low of 0.29%. Trading activity in the Company’s portfolio during the third quarter included reductions in government guaranteed corporate securities, foreign government securities and non-agency residential mortgage-backed securities and increased allocations to U.S. government securities and equity securities. The duration of the fixed income investments increased to 2.48 years at September 30, 2011 from 2.39 years at December 31, 2010.

39

Net Realized and Unrealized Gains

The Company’s investment portfolio is managed to generate attractive economic returns and income while providing the Company with liquidity. Movements in financial markets and interest rates influence the timing and recognition of net realized investment gains and losses as the portfolio is adjusted and rebalanced. Proceeds from sales of investments classified as available for sale during the three months ended September 30, 2011 were $566.0 million compared to $656.3 million during the same period a year ago. Net realized investment gains decreased during the three months ended September 30, 2011 compared to the same period in 2010 as more securities were sold at a loss compared to the prior period. Gross realized investment gains and losses for the three months ended September 30, 2011 and 2010 were as follows:

	Three Months Ended September 30,
	2011			2010
	(U.S. dollars in thousands)
Gross realized gains on investment sales	$	6,904		$	9,488
Gross realized losses on investment sales		(5,735	)		(515	)
Change in fair value of derivative financial instruments		(136	)		—
Net realized and unrealized gains in earnings	$	1,033		$	8,973

Net Impairment Losses Recognized in Earnings

During the three months ended September 30, 2011, the Company identified available for sale securities that were considered to be other-than-temporarily impaired. The Company considered whether it intended to sell or would be more likely than not required to sell its fixed income investments in an unrealized loss position at September 30, 2011. The Company did not identify any such securities meeting these criteria. As such, the Company performed various analyses and reviews, which are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in our 2010 Annual Report on Form 10-K, to determine whether the investments in an unrealized loss position were other-than-temporarily impaired as a result of credit related factors or non-credit related factors. Net impairment losses recognized in earnings for three months ended September 30, 2011 and 2010 were as follows:

	Three Months Ended September 30,
	2011			2010
	(U.S. dollars in thousands)
Total other-than-temporary impairment losses	$	(168	)	$	(1,140	)
Portion of loss recognized in other comprehensive income		(72	)		(240	)
Net impairment losses recognized in earnings	$	(240	)	$	(1,380	)

The $0.2 million and $1.4 million of other-than-temporary impairment (“OTTI”) losses recognized by the Company in the third quarters of 2011 and 2010 relating to specific credit events for its fixed income investments were primarily due to reductions in expected recovery values on residential and commercial mortgage-backed securities during the period, along with certain credit related downgrades in corporate debt securities. Of this total, $0.1 million was shifted from a non-credit OTTI loss previously recognized in comprehensive (loss) income to a credit OTTI loss recorded in net (loss) income for the third quarter of 2011.

The Company assessed its intent and ability to hold certain equity securities that were in an unrealized loss position at September 30, 2011 and as a result did not recognize any OTTI losses in the three months ended September 30, 2011.

Net Foreign Exchange Gains and Losses

For the three months ended September 30, 2011, the Company remeasured its monetary assets and liabilities denominated in foreign currencies, which resulted in a net foreign exchange gain of $4.1 million compared to a foreign exchange gain of $12.6 million for the same period of 2010. The net foreign exchange gain in the quarter ended September 30, 2011 resulted from the strengthening of the U.S. dollar against other major currencies which reduced foreign denominated liabilities. In the prior year, the net foreign exchange gain resulted from U.S. dollar weakening against major currencies as the Company held net foreign denominated assets. The Company’s foreign exchange exposures have shifted from a net foreign asset position in the prior year to a net foreign liability position in the current year following the catastrophe events that occurred outside of the United States.

40

Net Losses and Loss Expenses

The Company’s reported net losses and loss expenses are characterized by various factors and are significantly impacted by the occurrence or absence of catastrophic events. For the three months ended September 30, 2011, Hurricane Irene, Danish floods, brushfires in Texas and multiple storms in the Midwest United States which when accumulated triggered certain aggregate catastrophe contracts adversely affected the Company’s net loss ratio in the Reinsurance and Insurance segments. The Company recorded losses, net of reinsurance, reinstatement premiums and other loss sensitive accruals, of $98.6 million in relation to these events which added 17.7 percentage points to the Company’s net loss ratio for the third quarter of 2011. For the three months ended September 30, 2010, there were no significant catastrophic events that impacted the Company’s net loss ratio. In addition, the Company recorded higher reserves for attritional losses in the agriculture line of the Insurance segment in the third quarter of 2011 compared to 2010 as a result of current drought conditions in the Southwest United States and excess moisture in the Midwest United States in the spring.

Favorable prior year loss reserve development was $44.4 million for the third quarter of 2011 compared to $35.1 million during the same period in 2010. In the third quarter of 2011, prior year loss reserves emerged favorably across each line of the Reinsurance segment and the short tail and long tail lines of the Insurance segment.

The Company participates in lines of business where claims may not be reported for many years. Accordingly, management does not believe that reported claims are the only valid means for estimating ultimate obligations. Ultimate losses and loss expenses may differ materially from the amounts recorded in the Company’s consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Reserve adjustments, if any, are recorded in earnings in the period in which they are determined. The overall loss reserves were established by the Company’s actuaries and reflect management’s best estimate of ultimate losses. See “Reserve for Losses and Loss Expenses” below for further discussion.

Acquisition Expenses

The acquisition expense ratio for the three months ended September 30, 2011 was lower than that for the same period in 2010 because the agriculture line of the Insurance segment comprises a significantly greater portion of earned premiums in the current period and has lower related acquisition costs.

General and Administrative Expenses

The Company’s general and administrative expense ratio for the third quarter of 2011 decreased compared to the same period in 2010 due to higher earned premiums in the agriculture line of the Insurance segment offset partially by higher personnel costs resulting from increased headcount. At September 30, 2011, the Company had a total of 864 employees compared to 796 employees at September 30, 2010.

Income Tax Benefit

The Company recorded a tax benefit for the quarter ended September 30, 2011 of $1.2 million compared to a tax expense of $0.1 million for the quarter ended September 30, 2010 due to an increase in net losses experienced in its United States taxable jurisdictions compared to 2010.

Net (Loss) Income

The Company produced a net loss of $20.0 million in the three months ended September 30, 2011 compared to net income of $139.1 million in the same period of 2010 primarily as a result of the increase in catastrophe losses and the decrease in net investment income during the current period.

41

Consolidated Results of Operations — For the Nine Months Ended September 30, 2011 and 2010

Results of operations for the nine months ended September 30, 2011 and 2010 were as follows:

	Nine Months Ended September 30,
	2011			2010			Change(1)
	(U.S. dollars in thousands, except for ratios)
Revenues
Gross premiums written	$	2,204,148		$	1,864,011			18.2	%
Ceded premiums written		(412,191	)		(258,382	)		59.5	%
Net premiums written		1,791,957			1,605,629			11.6	%
Net premiums earned		1,430,904			1,291,377			10.8	%
Net investment income		106,443			143,484			(25.8	)%
Net realized and unrealized gains		26,340			15,174			73.6	%
Net impairment losses recognized in earnings		(2,819	)		(3,233	)		(12.8	)%
Other underwriting loss		(2,122	)		(2,046	)		3.7	%
Total revenues		1,558,746			1,444,756			7.9	%
Expenses
Losses and loss expenses		1,220,514			791,676			54.2	%
Acquisition expenses		205,754			198,095			3.9	%
General and administrative expenses		190,421			174,164			9.3	%
Amortization of intangibles		8,800			7,764			13.3	%
Net foreign exchange gains		(7,655	)		(6,465	)		18.4	%
Interest expense		27,166			25,709			5.7	%
Income tax (benefit) expense		(19,896	)		303		NM		(2)
Net (loss) income	$	(66,358	)	$	253,510		NM		(2)
Net loss ratio		85.3	%		61.3	%		24.0
Acquisition expense ratio		14.4	%		15.3	%		(0.9	)
General and administrative expense ratio		13.3	%		13.5	%		(0.2	)
Combined ratio		113.0	%		90.1	%		22.9

(1)	With respect to ratios, changes show increase or decrease in percentage points.
(2)	Not meaningful.

Premiums

Gross premiums written in the nine months ended September 30, 2011 were $2,204.1 million, an increase of $340.1 million, or 18.2%, compared to the same period in 2010. Net premiums written in the nine months ended September 30, 2011 were $1,792.0 million, an increase of $186.3 million, or 11.6%, compared to the same period in 2010. The increase in net premiums written was driven primarily by the agriculture business within the Insurance segment resulting from increased commodity prices for corn, cotton, wheat and soybeans. Net premiums written were also positively impacted by modest growth in the property and catastrophe lines of the Reinsurance segment and the casualty line of the Insurance segment as a result of new business written, larger participation and improved pricing on renewals and reinstatement premiums related to the catastrophes occurring during the period. Offsetting these increases were declines in the property and professional lines of the Insurance segment and casualty and surety and other lines of the Reinsurance segment as a result of non-renewed business.

Net premiums earned for the nine months ended September 30, 2011 were $1,430.9 million, an increase of $139.5 million, or 10.8%, from the nine months ended September 30, 2010 principally due to growth in net premiums written experienced over the last twelve months compared to the same period last year.

42

Net Investment Income

The Company’s net investment income of $106.4 million decreased 25.8% or $37.0 million for the nine months ended September 30, 2011 as compared to the same period in 2010. Net investment income during the first nine months of 2011 included net mark to market losses of $7.6 million on Other Investments, comprised of alternative investments and high yield loan funds, as compared to mark to market gains of $23.8 million in the first nine months of 2010. Investment income generated by the Company’s fixed income investments declined by $6.5 million in the first nine months of 2011 compared to 2010 due to lower reinvestment rates. Investment expenses for the nine months ended September 30, 2011, including investment management fees, were $10.5 million compared to $11.1 million for the same period in 2010.

The annualized net earned yield, total return on the investment portfolio for the nine months ended September 30, 2011 and 2010 and market yield and portfolio duration as of September 30, 2011 and 2010 were as follows:

	Nine Months Ended September 30,
	2011			2010
Annualized net earned yield(1)		2.31	%		3.18	%
Total return on investment portfolio(2)		2.60	%		5.6	%
Market yield(3)		1.91	%		2.02	%
Portfolio duration(4)	2.48 years			2.25 years

(1)	The actual net earned income from the investment portfolio after adjusting for expenses and accretion of discount and amortization of premium from the purchase price divided by the average book value of assets.
(2)	Includes realized and unrealized gains and losses.
(3)	The internal rate of return of the investment portfolio based on the given market price or the single discount rate that equates to a security price (inclusive of accrued interest) for the portfolio with its projected cash flows. Excludes other investments and operating cash.
(4)	Includes only cash and cash equivalents and fixed income investments held by the Company’s investment managers.

During the nine months ended September 30, 2011, the yield on the benchmark three year U.S. Treasury bond fluctuated within a 112 basis points range, with a high of 1.41% and a low of 0.29%. Trading activity in the Company’s portfolio for the nine months ended September 30, 2011 included reductions in U.S. agency securities, government guaranteed corporate securities and non-agency residential mortgage-backed securities and increased allocations to U.S. government securities and equity securities. The duration of the fixed income investments has increased to 2.48 years at September 30, 2011 from 2.39 years at December 31, 2010 primarily due to the decreased allocation to cash and cash equivalents and the purchase of longer duration corporate debt securities.

43

Net Realized and Unrealized Gains

The Company’s investment portfolio is managed to generate attractive economic returns and income while providing the Company with liquidity. Movements in financial markets and interest rates influence the timing and recognition of net realized investment gains and losses as the portfolio is adjusted and rebalanced. Proceeds from sales of investments classified as available for sale during the nine months ended September 30, 2011 were $2,382.6 million compared to $2,341.0 million during the same period a year ago. Net realized investment gains increased significantly during the nine months ended September 30, 2011 compared to the same period in 2010 as the Company realized gains as a result of managing the duration of the investment portfolio. Gross realized investment gains and losses for the nine months ended September 30, 2011 and 2010 were as follows:

	Nine Months Ended September 30,
	2011			2010
	(U.S. dollars in thousands)
Gross realized gains on investment sales	$	40,563		$	23,655
Gross realized losses on investment sales		(13,928	)		(8,481	)
Change in fair value of derivative financial instruments		(295	)		—
Net realized and unrealized gains in earnings	$	26,340		$	15,174

Net Impairment Losses Recognized in Earnings

During the nine months ended September 30, 2011, the Company identified available for sale securities that were considered to be other-than-temporarily impaired. The Company initially considered whether it intended to sell or would be more likely than not required to sell the securities in an unrealized loss position at September 30, 2011. The Company did not identify any such securities meeting these criteria. As such, the Company performed various analyses and reviews, which are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in our 2010 Annual Report on Form 10-K, to determine whether the investments in an unrealized loss position were other-than-temporarily impaired as a result of credit factors or other factors. Net impairment losses recognized in earnings for the nine months ended September 30, 2011and 2010 were as follows:

	Nine Months Ended September 30,
	2011			2010
	(U.S. dollars in thousands)
Total other-than-temporary impairment losses	$	(1,908	)	$	(2,647	)
Portion of loss recognized in other comprehensive income		(911	)		(586	)
Net impairment losses recognized in earnings	$	(2,819	)	$	(3,233	)

The $2.8 million of OTTI losses recognized by the Company in the nine months ended September 30, 2011 relating to specific credit events occurred primarily due to reductions in expected recovery values on residential and commercial mortgage-backed securities during the period, along with certain credit related downgrades in corporate securities. Of this total, $0.9 million was shifted from a non-credit OTTI loss previously recognized in comprehensive (loss) income to a loss recorded as a credit impairment.

For the nine months ended September 30, 2010, the Company recorded $3.2 million of OTTI losses in earnings. This amount included a portion related to credit losses and a portion related to non-credit related factors. Non-credit related factors included market and sector related factors, including limited liquidity and credit spread widening.

The Company assessed its intent and ability to hold certain equity securities that were in an unrealized loss position at September 30, 2011 and as a result recognized approximately $35,000 in OTTI losses in the nine months ended September 30, 2011.

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Net Foreign Exchange Gains

For the nine months ended September 30, 2011, the Company remeasured its monetary assets and liabilities denominated in foreign currencies, which resulted in a net foreign exchange gain of $7.7 million compared to a $6.5 million gain for the same period of 2010. The current period net foreign exchange gain resulted from net gains realized as the U.S. dollar fluctuated over the nine month period. In the prior year, the net foreign exchange gain resulted from the weakening of the U.S. dollar compared to other currencies during the period. The Company’s foreign exchange exposures have shifted from a net foreign asset position in the prior year to a net foreign liability position in the current year following the catastrophe events that occurred outside of the United States.

Net Losses and Loss Expenses

The Company’s reported net losses and loss expenses are characterized by various factors and are significantly impacted by the occurrence or absence of catastrophic events. For the nine months ended September 30, 2011, multiple events adversely affected the Company’s net loss ratio in the Reinsurance segment. These included Hurricane Irene, Danish floods, brushfires in Texas, the Tohuko, Japan earthquake and tsunami, the Christchurch, New Zealand earthquake, Queensland, Australia floods, Midwest United States tornadoes and multiple storms in the Midwest which when accumulated triggered certain aggregate catastrophe contracts. The Company recorded losses, net of reinsurance, reinstatement premiums and other loss sensitive accruals, of $354.7 million in relation to these events which added 25.2 percentage points to the Company’s net loss ratio for the nine months ended September 30, 2011. For the nine months ended September 30, 2010, the Chilean earthquake, the New Zealand Earthquake and European Windstorm Xynthia adversely affected the Company’s net loss ratio in the Reinsurance segment. The Company recorded losses, net of reinstatement premiums and other loss sensitive accruals, of $75.0 million in relation to the two events, which added 6.0 percentage points to the Company’s net loss ratio for the nine months ended September 30, 2010. In addition, the Company recorded higher reserves for attritional losses in the Insurance segment’s agriculture and property lines in the nine months ended September 30, 2011 compared to the same period in 2010 which were partially offset by lower losses in the casualty line where a small number of individual risk events impacted results in the prior period.

Favorable prior year loss reserve development was $137.9 million for the nine months ended September 30, 2011 as compared to $103.2 million for the same period in 2010. In the nine months ended September 30, 2011 and 2010, prior year loss reserves emerged favorably across each line of the Insurance and Reinsurance segment.

The Company participates in lines of business in which claims may not be reported for many years. Accordingly, management does not believe that reported claims are the only valid means for estimating ultimate obligations. Ultimate losses and loss expenses may differ materially from the amounts recorded in the Company’s consolidated financial statements. These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Reserve adjustments, if any, are recorded in earnings in the period in which they are determined. The overall loss reserves were established by the Company’s actuaries and reflect management’s best estimate of ultimate losses. See “Reserve for Losses and Loss Expenses” below for further discussion.

Acquisition Expenses

The acquisition expense ratio for the nine months ended September 30, 2011 was lower than that for the same period in 2010 because the agriculture line of the Insurance segment comprises a significantly greater portion of earned premiums in the current period and has lower related acquisition costs.

General and Administrative Expenses

The Company’s general and administrative expense ratio for the nine months ended September 30, 2011 was comparable to the same period in 2010 due to higher earned premiums in the agriculture line of the Insurance segment offset partially by higher personnel costs resulting from increased headcount. At September 30, 2011, the Company had a total of 864 employees compared to 796 employees at September 30, 2010.

45

Income Tax (Benefit) Expense

The Company recorded a tax benefit for the nine months ended September 30, 2011 of $19.9 million compared to a tax expense of $0.3 million for the same period in 2010 due to an increase in net losses experienced in its United States taxable jurisdictions compared to 2010.

Net (Loss) Income

The Company produced a net loss of $66.4 million for the nine months ended September 30, 2011 compared to net income of $253.5 million in the same period of 2010 primarily due to the increase in catastrophe losses.

Reserve for Losses and Loss Expenses

In order to capture the key dynamics of loss development and expected volatility that may arise within the disclosed amounts for the reserve for losses and loss expenses, the key lines of business within each business segment are aggregated based on their potential expected length of loss emergence. The period over which loss emergence occurs is typically referred to as the tail. The Company has classified its lines of business as either having a “short,” “long” or “other” tail pattern. The Company views short tail business as that for which development typically emerges within a period of several quarters while long tail business would emerge over many years. The Company’s lines of business are generally included in the following reserving categories:

Insurance Segment — Short Tail Line

• Property

Insurance Segment — Long Tail Lines

• Casualty

• Healthcare liability

• Professional lines

• Workers compensation (discontinued)

Insurance Segment — Other Tail Lines

• Agriculture

Reinsurance Segment — Short Tail Lines

• Catastrophe

• Property

• Aerospace and marine

• Surety

Reinsurance Segment — Long Tail Lines

• Casualty

• Other specialty

As of September 30, 2011, the Company had accrued losses and loss expense reserves of $3.9 billion (December 31, 2010 — $3.3 billion). This amount represents management’s best estimate of the ultimate liability for payment of losses and loss expenses related to loss events. During the nine months ended September 30, 2011 and 2010, the Company’s net paid losses and loss expenses were $785.2 million and $392.6 million, respectively.

As more fully described under “Reserving Process” in the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2010 Annual Report on Form 10-K, the Company incorporates a variety of actuarial methods and judgments in its reserving process. Two key inputs in the various actuarial methods employed by the Company are initial expected loss ratios and expected loss reporting patterns. These key inputs impact the potential variability in the estimate of the reserve for losses and loss expenses and are applicable to each of the Company’s business segments. The Company’s loss and loss expense reserves consider and reflect, in part, deviations resulting from differences between expected loss and actual loss reporting as well as judgments relating to the weights applied to the reserve levels indicated by the actuarial methods. Expected loss reporting patterns are based upon internal and external historical data and assumptions regarding claims reporting trends over a period of time that extends beyond the Company’s own operating history.

46

Differences between actual reported losses and expected losses are anticipated to occur in any individual period and such deviations may influence future initial expected loss ratios and/or expected loss reporting patterns as the recent actual experience becomes part of the historical data utilized as part of the ongoing reserve estimation process. The Company has demonstrated the impact of changes in the speed of the loss reporting patterns, as well as changes in the expected loss ratios, within the table under the heading “Potential Variability in Reserves for Losses and Loss Expenses” in the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2010 Annual Report on Form 10-K.

Losses and loss expenses for the three and nine months ended September 30, 2011 are summarized as follows:

Three Months Ended	Incurred related to:					Total incurred
September 30, 2011	Current year		Prior years			losses
	(U.S. dollars in thousands)
Insurance:
Short tail	$	10,648	$	(4,182	)	$	6,466
Long tail		64,522		(8,501	)		56,021
Other		197,447		272			197,719
Total Insurance		272,617		(12,411	)		260,206
Reinsurance:
Short tail		176,214		(19,342	)		156,872
Long tail		50,720		(11,234	)		39,486
Other		1,553		(1,426	)		127
Total Reinsurance		228,487		(32,002	)		196,485
Totals	$	501,104	$	(44,413	)	$	456,691

Nine Months Ended	Incurred related to:					Total incurred
September 30, 2011	Current year		Prior years			losses
	(U.S. dollars in thousands)
Insurance:
Short tail	$	37,705	$	(18,606	)	$	19,099
Long tail		199,149		(16,551	)		182,598
Other		383,797		(35,056	)		348,741
Total Insurance		620,651		(70,213	)		550,438
Reinsurance:
Short tail		563,209		(52,750	)		510,459
Long tail		164,599		(10,624	)		153,975
Other		9,954		(4,312	)		5,642
Total Reinsurance		737,762		(67,686	)		670,076
Totals	$	1,358,413	$	(137,899	)	$	1,220,514

47

Losses and loss expenses for the three and nine months ended September 30, 2011 included $44.4 million and $137.9 million in favorable development of reserves relating to prior accident years, respectively. The favorable loss reserve development experienced during the three and nine months ended September 30, 2011 benefited the Company’s reported loss ratio by approximately 7.9 and 9.6 percentage points, respectively. This net reduction in estimated losses for prior accident years resulted primarily from lower than expected claims emergence across the short tail and long tail reserving groups for the current quarter and all reserving groups for the nine months ended September 30, 2011 included within the Insurance segment and all reserving groups in the Reinsurance segment for both the three and nine months ended September 30, 2011.

For the three and nine months ended September 30, 2011, the Company did not materially alter the two key inputs utilized to establish reserve for losses and loss expenses (initial expected loss ratios and loss reporting patterns) related to prior years for the insurance and reinsurance reserve categories as the variances in reported losses for those reserve categories were within the range of possible results anticipated by the Company.

Insurance

Short Tail Insurance. For the three and nine months ended September 30, 2011, the favorable loss emergence within the short tail insurance reserve category was primarily due to lower than expected reported claims and favorable case reserve development related to the property line of business.

Long Tail Insurance. For the three and nine months ended September 30, 2011, the Company recorded favorable loss emergence within this reserve category primarily due to lower than expected claims activity within the healthcare liability, casualty and professional lines of business. Favorable loss emergence was partially offset by adverse development within the workers’ compensation line of business which the Company exited in 2009.

Other Insurance. The Company recorded modest unfavorable loss emergence within this reserve category for the third quarter of 2011 and favorable loss reserve development for the nine months ended September 30, 2011, primarily due to lower than anticipated agriculture claims settlements for the 2010 crop year.

Reinsurance

Short Tail Reinsurance. For the nine months ended September 30, 2011, the Company recorded favorable loss emergence within this reserve category primarily due to lower than expected claims activity and favorable case reserve development within the catastrophe and surety and other specialty lines of business.

Long Tail Reinsurance. For the three and nine months ended September 30, 2011, the Company recorded favorable loss emergence within this reserve category primarily due to lower than expected claims reported within the Company’s casualty line of business within the Reinsurance segment.

Other Reinsurance. For the three and nine months ended September 30, 2011, the Company recorded a modest amount of favorable loss emergence within this reserve category primarily due to lower than expected claims reported within the agriculture business that is part of the surety and other specialty line of business within the Reinsurance segment.

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Losses and loss expenses for the three and nine months ended September 30, 2010 are summarized as follows:

Three Months Ended	Incurred related to:					Total incurred
September 30, 2010	Current year		Prior years			losses
	(U.S. dollars in thousands)
Insurance:
Short tail	$	9,085	$	(5,359	)	$	3,726
Long tail		73,178		(3,480	)		69,698
Other		99,320		(729	)		98,591
Total Insurance		181,583		(9,568	)		172,015
Reinsurance:
Short tail		65,220		(17,743	)		47,477
Long tail		51,458		(6,902	)		44,556
Other		3,005		(921	)		2,084
Total Reinsurance		119,683		(25,566	)		94,117
Totals	$	301,266	$	(35,134	)	$	266,132

Nine Months Ended	Incurred related to:					Total incurred
September 30, 2010	Current year		Prior years			losses
	(U.S. dollars in thousands)
Insurance:
Short tail	$	22,447	$	(16,904	)	$	5,543
Long tail		209,766		(4,574	)		205,192
Other		232,005		(13,868	)		218,137
Total Insurance		464,218		(35,346	)		428,872
Reinsurance:
Short tail		279,025		(58,447	)		220,578
Long tail		142,665		(6,072	)		136,593
Other		8,974		(3,341	)		5,633
Total Reinsurance		430,664		(67,860	)		362,804
Totals	$	894,882	$	(103,206	)	$	791,676

Losses and loss expenses for the three and nine months ended September 30, 2010 included $35.1 million and $103.2 million in favorable development of reserves relating to prior accident years, respectively. The favorable loss reserve development experienced during the three and nine months ended September 30, 2010 benefited the Company’s reported loss ratio by approximately 7.5 and 8.0 percentage points, respectively. This net reduction in estimated losses for prior accident years resulted primarily from lower than expected claims emergence across all reserving groups included within the Insurance and Reinsurance segments.

For the three and nine months ended September 30, 2010, the Company did not materially alter the two key inputs utilized to establish its reserve for losses and loss expenses (initial expected loss ratios and loss reporting patterns) for business related to prior years for the insurance and reinsurance reserve categories as the variances in reported losses for those reserve categories were within the range of possible results anticipated by the Company.

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Insurance

Short Tail Insurance. For the three and nine months ended September 30, 2010, the favorable loss emergence within the short tail insurance reserve category was primarily due to lower than expected reported claims and favorable case reserve development related to the property line of business.

Long Tail Insurance. For the three and nine months ended September 30, 2010, the Company recorded favorable loss emergence within this reserve category primarily due to lower than expected claims activity within the professional lines and healthcare liability lines of business. Favorable loss emergence was partially offset by adverse loss emergence related to the workers’ compensation line of business which the Company exited in 2009.

Other Insurance. Lower than anticipated agriculture claims settlements for the 2009 crop year resulted in a reduction in prior years estimated loss and loss expenses within this reserve category for the three and nine months ended September 30, 2010.

Reinsurance

Short Tail Reinsurance. For the three and nine months ended September 30, 2010, the Company recorded favorable loss emergence within this reserve category primarily due to lower than expected claims activity and favorable case reserve development within the catastrophe, property and surety and other specialty lines of business.

Long Tail Reinsurance. For the three and nine months ended September 30, 2010, the Company recorded a modest amount of favorable loss emergence within this reserve category primarily due to lower than expected reported claims within the casualty line of business within the Reinsurance segment.

Other Reinsurance. For the three and nine months ended September 30, 2010, the Company recorded a modest amount of favorable loss emergence within this reserve category, primarily due to lower than expected claims reported within the agriculture business included in the surety and other specialty line of business.

The total reserves for losses and loss expenses recorded on the Company’s balance sheet were comprised of the following at September 30, 2011:

					Reserve for losses
	Case Reserves		IBNR Reserves		and loss expenses
	(U.S. dollars in thousands)
Insurance:
Short tail	$	28,669	$	24,929	$	53,598
Long tail		387,942		1,194,415		1,582,357
Other		370,589		26,092		396,681
Total Insurance		787,200		1,245,436		2,032,636
Reinsurance:
Short tail		488,768		423,824		912,592
Long tail		268,058		689,905		957,963
Other		573		6,773		7,346
Total Reinsurance		757,399		1,120,502		1,877,901
Totals	$	1,544,599	$	2,365,938	$	3,910,537

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The total reserves for losses and loss expenses recorded on the Company’s balance sheet were comprised of the following at December 31, 2010:

					Reserve for losses
	Case Reserves		IBNR Reserves		and loss expenses
	(U.S. dollars in thousands)
Insurance:
Short tail	$	14,730	$	30,600	$	45,330
Long tail		325,750		1,167,648		1,493,398
Other		116,687		74,178		190,865
Total Insurance		457,167		1,272,426		1,729,593
Reinsurance:
Short tail		319,322		351,428		670,750
Long tail		248,870		658,514		907,384
Other		990		11,210		12,200
Total Reinsurance		569,182		1,021,152		1,590,334
Totals	$	1,026,349	$	2,293,578	$	3,319,927

Underwriting results by operating segments

The determination of the Company’s business segments is based on the manner in which management monitors the performance of the Company’s underwriting operations. As a result, we report two business segments — Insurance and Reinsurance.

Management measures the Company’s results on the basis of the combined ratio, which is obtained by dividing the sum of the losses and loss expenses, acquisition expenses and general and administrative expenses by net premiums earned. The Company’s historic combined ratios may not be indicative of future underwriting performance. When purchased within a single line of business, ceded reinsurance and recoveries are accounted for within that line of business. When purchased across multiple lines of business, ceded reinsurance and recoveries are allocated to the lines of business in proportion to the related risks assumed. The Company does not manage its assets by segment; accordingly, investment income and total assets are not allocated to the individual business segments. General and administrative expenses incurred by the segments are allocated directly. Remaining general and administrative expenses not directly incurred by the segments are allocated primarily based on estimated consumption, headcount and other variables deemed relevant to the allocation of such expenses. Ceded reinsurance and recoveries are recorded within the segment to which they apply.

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Insurance

The following table summarizes the underwriting results and associated ratios for the Company’s Insurance segment for the three and nine months ended September 30, 2011 and 2010.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(U.S. dollars in thousands, except for ratios)
Revenues
Gross premiums written	$	450,451		$	303,561		$	1,302,032		$	999,528
Ceded premiums written		(147,241	)		(99,268	)		(393,020	)		(251,307	)
Net premiums written		303,210			204,293			909,012			748,221
Net premiums earned		318,602			242,766			730,491			616,300
Other underwriting (loss) income		(2,875	)		473			(2,875	)		471
		315,727			243,239			727,616			616,771
Expenses
Losses and loss expenses		260,206			172,015			550,438			428,872
Acquisition expenses		18,738			17,356			50,907			51,336
General and administrative expenses		29,328			29,256			102,361			86,523
		308,272			218,627			703,706			566,731
Underwriting income	$	7,455		$	24,612		$	23,910		$	50,040
Net loss ratio		81.7	%		70.9	%		75.3	%		69.6	%
Acquisition expense ratio		5.9	%		7.1	%		7.0	%		8.4	%
General and administrative expense ratio		9.2	%		12.1	%		14.0	%		14.0	%
Combined ratio		96.8	%		90.1	%		96.3	%		92.0	%

Premiums. Gross premiums written for the three and nine months ended September 30, 2011 in the Insurance segment increased by 48.4% and 30.3% over the same periods in 2010, respectively. Gross and net premiums written for each line of business in the Insurance segment were as follows:

	Three Months Ended September 30,
	2011				2010
	Gross		Net		Gross			Net
	Premiums		Premiums		Premiums			Premiums
	Written		Written		Written			Written
	(U.S. dollars in thousands)
Agriculture	$	289,656	$	185,017	$	156,162		$	89,119
Professional Lines		39,559		30,812		43,381			38,522
Casualty		57,520		37,664		40,538			23,700
Property		30,049		17,681		30,295			21,366
Healthcare Liability		33,652		32,021		34,024			32,393
Workers’ Compensation		15		15		(839	)		(807	)
Total	$	450,451	$	303,210	$	303,561		$	204,293

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	Nine Months Ended September 30,
	2011						2010
	Gross			Net			Gross			Net
	Premiums			Premiums			Premiums			Premiums
	Written			Written			Written			Written
	(U.S. dollars in thousands)
Agriculture	$	855,486		$	577,538		$	560,531		$	402,395
Professional Lines		124,209			99,560			133,456			115,546
Casualty		159,580			107,234			130,172			82,265
Property		90,643			56,262			99,976			76,404
Healthcare Liability		72,243			68,542			76,782			72,947
Workers’ Compensation		(129	)		(124	)		(1,389	)		(1,336	)
Total	$	1,302,032		$	909,012		$	999,528		$	748,221

The increase in the Insurance segment net premiums written for the three and nine months ended September 30, 2011 compared to the same periods in 2010 was driven by the following factors:

• Growth in agriculture net premiums written due to increased commodity prices for corn, cotton, wheat and soybeans partially offset by a slight reduction in policy counts;

• An increase in the casualty line driven by new business emanating from our contract binding authority business which was launched at the end of 2010; and

• Declines in the property, healthcare liability and professional lines in both the three and nine month periods due to increased competition which led to either non-renewing business or a move to higher policy attachment points combined with reduced premium retentions.

Net premiums earned by the Company in the Insurance segment increased in both the three and nine months ended September 30, 2011 compared to the same periods in 2010. The increases were primarily due to the increase in net premiums written in the agriculture line in 2011 compared to 2010.

Losses and Loss Expenses. The increases in the net loss ratios in the Company’s Insurance segment for the three and nine months ended September 30, 2011 compared to the same periods in 2010 reflected higher levels of current accident year losses in the agriculture line as a result of drought conditions experienced in the Southwest United States and excess moisture in the Midwest United States in the spring. Higher current year losses also impacted the property line as a result of several small loss events related to storms and flooding. Offsetting these loss increases was a reduction in the current accident year loss ratio in the casualty line which experienced fewer individual risk loss events in 2011 than in 2010. In addition, higher favorable prior year loss reserve development recorded in the agriculture line in 2011 offset the overall increase in losses incurred. During the third quarter and first nine months of 2011, the Company’s previously estimated loss and loss expense reserves for the Insurance segment for prior accident years were reduced by $12.4 million and $70.2 million, respectively, which decreased the net loss ratio by 3.9 and 9.6 percentage points, as compared to reductions of $9.6 million and $35.3 million, which decreased the net loss ratio by 3.9 and 5.7 percentage points, for the three and nine months ended September 30, 2010. The agriculture, property, healthcare liability, casualty and professional lines of business all experienced net reductions in estimated losses for prior accident years in the nine months ended September 30, 2011 as claims have not materialized or were settled for lower amounts than were originally estimated. These net reductions were partially offset by an increase in estimated losses for prior accident years within the workers’ compensation line of business which the Company exited in 2009.

Acquisition Expenses. The Company’s acquisition expense ratios in the Insurance segment decreased during the third quarter and first nine months of 2011 compared to 2010 as a result of a larger portion of the net premiums earned originating from the agriculture line, which has lower net acquisition costs than other lines of business in the Insurance segment.

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General and Administrative Expenses. The increase in general and administrative expenses in the Insurance segment for the first nine months of 2011 as compared to 2010 was due to higher personnel costs as the Company has been investing in several new insurance lines of business, which requires higher initial expenses compared to revenues. Growth in net premiums earned resulted in a lower general and administrative expense ratio in the third quarter of 2011 compared to 2010.

Reinsurance

The following table summarizes the underwriting results and associated ratios for the Company’s Reinsurance business segment for the three and nine months ended September 30, 2011 and 2010.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(U.S. dollars in thousands, except for ratios)
Revenues
Gross premiums written	$	250,415		$	252,013		$	902,116		$	864,483
Ceded premiums written		(2,298	)		(4,422	)		(19,171	)		(7,075	)
Net premiums written		248,117			247,591			882,945			857,408
Net premiums earned		242,891			227,027			700,413			675,077
Other underwriting income (loss)		734			(151	)		753			(2,517	)
		243,625			226,876			701,166			672,560
Expenses
Losses and loss expenses		196,485			94,117			670,076			362,804
Acquisition expenses		53,511			50,087			154,847			146,759
General and administrative expenses		29,246			30,267			88,060			87,641
		279,242			174,471			912,983			597,204
Underwriting (loss) income	$	(35,617	)	$	52,405		$	(211,817	)	$	75,356
Net loss ratio		81.0	%		41.5	%		95.6	%		53.7	%
Acquisition expense ratio		22.0	%		22.1	%		22.1	%		21.8	%
General and administrative expense ratio		12.0	%		13.3	%		12.6	%		13.0	%
Combined ratio		115.0	%		76.9	%		130.3	%		88.5	%

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Premiums. In the third quarter of 2011, net premiums written in the Reinsurance segment increased by 0.2% over the same period of 2010. In the nine months ended September 30, 2011, net premiums written in the Reinsurance segment increased by 3.0% over the same period in 2010. Gross and net premiums written for each line of business in the Reinsurance segment for the three and nine months ended September 30, 2011 and 2010 were as follows:

	Three Months Ended September 30,
	2011				2010
	Gross		Net		Gross		Net
	Premiums		Premiums		Premiums		Premiums
	Written		Written		Written		Written
	(U.S. dollars in thousands)
Catastrophe	$	46,275	$	43,868	$	45,513	$	41,154
Casualty		56,293		56,292		81,167		81,163
Property		129,203		129,203		111,395		111,395
Aerospace and marine		5,891		6,002		4,184		4,184
Surety and other specialty		12,753		12,752		9,754		9,695
Total	$	250,415	$	248,117	$	252,013	$	247,591

	Nine Months Ended September 30,
	2011				2010
	Gross		Net		Gross		Net
	Premiums		Premiums		Premiums		Premiums
	Written		Written		Written		Written
	(U.S. dollars in thousands)
Catastrophe	$	330,771	$	314,328	$	291,990	$	287,721
Casualty		218,264		217,463		246,060		245,257
Property		251,475		251,475		215,916		215,916
Aerospace and marine		53,472		51,567		46,381		44,316
Surety and other specialty		48,134		48,112		64,136		64,198
Total	$	902,116	$	882,945	$	864,483	$	857,408

Net premiums written in the Reinsurance segment for the three and nine months ended September 30, 2011 were $248.1 million and $882.9 million compared to $247.6 million and $857.4 million during the same periods in 2010. The movements in net premiums written in the Reinsurance segment for the third quarter and nine months ended September 30, 2011 compared to the same periods in 2010 were primarily due to the following factors:

• Catastrophe premiums increased as a result of renewals at higher rates and new business recorded on international catastrophe programs. Part of this growth in new business was attributable to relationships established following the assumption of business from Glacier Reinsurance AG in a quota share and renewal rights transaction in the third quarter of 2010. The growth in catastrophe premiums was also attributable to reinstatement premiums recorded in the quarter and first nine months of 2011 related to the various catastrophes;

• Growth in the property line of business from the Company’s international operations through new business and increased shares of renewals. In addition, a significant favorable premium adjustment on a 2010 incepting policy contributed $13.2 million to net written premium in the second quarter of 2011 and additional growth upon its renewal in the third quarter; and

• Declines in the casualty for the three and nine months ended September 30, 2011 and surety and other lines for the current quarter as a result of non-renewed business.

Net premiums earned by the Company in the Reinsurance segment for the three and nine months ended September 30, 2011 increased compared to the same period in 2010 due to the growth in gross premiums written in more recent periods.

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Losses and Loss Expenses. The net loss ratio in the Company’s Reinsurance segment for the three and nine months ended September 30, 2011 increased compared to the same periods in 2010 as a result of multiple catastrophe losses incurred in the period. For the quarter these included Hurricane Irene, Danish floods, and brushfires in Texas. The nine months ended September 30, 2011 also include the Tohuko, Japan earthquake and tsunami, the Christchurch, New Zealand earthquake, Queensland, Australia floods, Midwest United States tornadoes and multiple storms in the Midwest which when accumulated triggered certain aggregate catastrophe contracts. The Company recorded Reinsurance segment losses, net of reinstatement premiums and other loss sensitive accruals, of $91.1 million and $347.2 million in relation to these events for the three and nine months ended September 30, 2011. The net losses from the 2011 events added 38.4 and 50.8 percentage points to the Reinsurance segment’s net loss ratios for the three and nine months ended September 30, 2011. The Company’s Reinsurance segment results for the nine months ended September 30, 2010 were impacted by net losses of $75.0 million in relation to the Chilean earthquake, New Zealand earthquake and Windstorm Xynthia. The Company recorded $32.0 million and $67.7 million of favorable prior year loss reserve development in the three and nine months ended September 30, 2011 compared to $25.6 million and $67.9 million in the three and nine months ended September 30, 2010. During the nine months ended September 30, 2011, the majority of the favorable loss reserve development emanated from the short tail lines of business, in particular the catastrophe line, as claims emergence in these lines was less than originally estimated by the Company.

Acquisition Expenses. The Company’s acquisition expense ratios in the Reinsurance segment for the three and nine months ended September 30, 2011 were comparable to the same periods in 2010.

General and Administrative Expenses. The general and administrative expense ratios in the Reinsurance segment for the three and nine months ended September 30, 2011 reduced slightly compared to those in the same periods in 2010 due to modest growth in net premiums earned and lower annual incentive expense.

Liquidity and Capital Resources

Endurance Holdings is a holding company that does not have any significant operations or assets other than its ownership of the shares of its direct and indirect subsidiaries. Endurance Holdings relies primarily on dividends and other permitted distributions from its insurance subsidiaries to pay its operating expenses, interest on debt and dividends, if any, on its ordinary shares, its 7.75% Non-Cumulative Preferred Shares, Series A (“Series A Preferred Shares”) and its 7.5% Non-Cumulative Preferred Shares, Series B (“Series B Preferred Shares”). There are restrictions on the payment of dividends by the Company’s insurance subsidiaries as described in more detail below.

Ability of Subsidiaries to Pay Dividends. The ability of Endurance Bermuda to pay dividends is dependent on its ability to meet the requirements of applicable Bermuda law and regulations. Under Bermuda law, Endurance Bermuda may not declare or pay a dividend if there are reasonable grounds for believing that Endurance Bermuda is, or would after the payment be, unable to pay its liabilities as they become due, or the realizable value of Endurance Bermuda’s assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts. Further, Endurance Bermuda, as a regulated insurance company in Bermuda, is subject to additional regulatory restrictions on the payment of dividends or distributions. As of September 30, 2011, Endurance Bermuda could pay a dividend or return additional paid-in capital totaling approximately $545.8 million (December 31, 2010 — $640.4 million) without prior regulatory approval based upon the Bermuda insurance and corporate regulations.

Endurance U.S. Reinsurance, Endurance American, Endurance American Specialty and Endurance Risk Solutions are subject to regulation by the State of Delaware Department of Insurance and ARMtech is subject to regulation by the Texas Department of Insurance. Dividends for each U.S. operating subsidiary are limited to the greater of 10% of policyholders’ surplus or statutory net income, excluding realized capital gains. In addition, dividends may only be declared or distributed out of earned surplus. At December 31, 2010, Endurance U.S. Reinsurance, Endurance American, Endurance Risk Solutions and Endurance American Specialty did not have earned surplus; therefore, these companies are precluded from declaring or distributing dividends at September 30, 2011 without the prior approval of the applicable insurance regulator. At September 30, 2011, ARMtech (with notice to the Texas Department of Insurance) could pay dividends of $2.8 million without prior regulatory approval from the applicable regulators. In addition, any dividends paid by Endurance American, Endurance American Specialty and Endurance Risk Solutions would be subject to the dividend limitation of their respective parent insurance companies.

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Under the jurisdiction of the United Kingdom’s Financial Services Authority (“FSA”), Endurance U.K. must maintain a margin of solvency at all times, which is determined based on the type and amount of insurance business written. The FSA regulatory requirements impose no explicit restrictions on Endurance U.K.’s ability to pay a dividend, but Endurance U.K. would have to notify the FSA 28 days prior to any proposed dividend payment. Dividends may only be distributed from profits available for distributions. At September 30, 2011, Endurance U.K. did not have profits available for distributions.

Cash and Invested Assets. The Company’s aggregate invested assets, including fixed maturity investments, short term investments, equity securities, other investments, cash and cash equivalents and pending securities transactions, as of September 30, 2011 totaled $6.4 billion compared to aggregate invested assets of $6.2 billion as of December 31, 2010. The increase in invested assets since December 31, 2010 resulted from collections of premiums on insurance policies and reinsurance contracts, the proceeds from our offering of $230.0 million of Series B Preferred Shares, as discussed below, and investment income, offset by losses and loss expenses paid, interest and dividends paid, acquisition expenses paid, reinsurance premiums paid, general and administrative expenses paid and repurchases of the Company’s ordinary shares.

As of September 30, 2011 and December 31, 2010, the Company had pledged cash and cash equivalents and fixed maturity investments of $129.9 million and $143.6 million, respectively, in favor of certain ceding companies to collateralize obligations. As of September 30, 2011 and December 31, 2010, the Company had also pledged $467.5 million and $500.9 million of its cash and fixed maturity investments to meet collateral obligations for $403.3 million and $439.3 million in letters of credit outstanding under its credit facility, respectively. In addition, at September 30, 2011 and December 31, 2010, cash and fixed maturity investments with fair values of $370.6 million and $369.1 million were on deposit with U.S. state regulators, respectively, and cash and fixed maturity investments with fair values of $10.3 million and $10.7 million were on deposit with Canadian regulators, respectively.

During the nine month periods ended September 30, 2011 and 2010, the Company used its capital to repurchase its ordinary shares and share equivalents in open market and private transactions. On January 28, 2011, the Company repurchased 7,143,056 ordinary shares and options to purchase 10,000 ordinary shares from two affiliated funds of Perry Corp., a founding shareholder of the Company. The aggregate repurchase price for the shares and the options was $321.5 million. The repurchase price per ordinary share was $44.99 per share. The ordinary shares acquired by the Company represented approximately 15% of its ordinary shares outstanding at December 31, 2010. Endurance Holdings funded the repurchase of these shares primarily from calling an outstanding loan between Endurance Holdings and Endurance Bermuda. Endurance Bermuda funded the settlement of the loan from its existing cash and investments. The repurchase does not impact the dividend payment capacity of Endurance Bermuda for 2011.

Preferred Share Issuance. On June 1, 2011, Endurance Holdings issued 9,200,000 shares of its Series B Preferred Shares. The Series B Preferred Shares sold in the offering were registered under the Securities Act of 1933, as amended, and are traded on the New York Stock Exchange. The Series B Preferred Shares were issued at a price to the public of $25.00 per share. Endurance Holdings received net proceeds from this offering of $224.0 million after expenses and underwriting discounts. The proceeds from this offering were used to provide additional capital to Endurance Holdings’ subsidiaries and for other general corporate purposes.

The Series B Preferred Shares have no stated maturity date and are redeemable in whole or in part at the option of Endurance Holdings any time after June 1, 2016 at a redemption price of $25.00 per share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Endurance Holdings may redeem all but not less than all of the Series B Preferred Shares before that date at a redemption price of $26.00 per share, plus any declared and unpaid dividends, to the date of redemption, if Endurance Holdings is required to submit a proposal to the holders of the Series B Preferred Shares concerning an amalgamation, consolidation, merger, similar corporate transaction or change in Bermuda law.

Dividends on the Series B Preferred Shares, when, as and if declared by the Board of Directors of Endurance Holdings or a duly authorized committee of the board, accrue and are payable on the liquidation preference amount from the original issue date, quarterly in arrears on each dividend payment date, at an annual rate of 7.5%. Any such dividends to be distributed to the holders of the Series B Preferred Shares are computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends on the Series B Preferred Shares are not cumulative.

Upon any voluntary or involuntary liquidation, dissolution or winding-up of Endurance Holdings, holders of the Series B Preferred Shares and any parity shares are entitled to receive out of Endurance Holdings’ assets available for distribution to shareholders, before any distribution is made to holders of Endurance Holdings’ common equity securities, a liquidating distribution in the amount of $25.00 per Series B Preferred Share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

Holders of the Series B Preferred Shares have no voting rights, except with respect to certain fundamental changes in the terms of the Series B Preferred Shares and in the case of certain dividend non-payments or as otherwise required by Bermuda law or Endurance Holdings’ bye-laws.

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Credit Facility. Under the Company’s amended and restated credit facility, the Company and its subsidiaries have access to a revolving line of credit of up to $1,175.0 million which expires May 8, 2012. As of September 30, 2011, there were no borrowings under this facility and letters of credit outstanding under the facility were $403.3 million.

Historically, the operating subsidiaries of the Company have generated sufficient cash flows to meet all of their obligations. Because of the inherent volatility of the business written by the Company, the seasonality in the timing of payments by ceding companies, the irregular timing of loss payments, the impact of a change in interest rates on the Company’s investment returns as well as seasonality in coupon payment dates for fixed maturity investments, cash flows from the Company’s operating activities may vary significantly between periods. The Company expects to continue to generate positive operating cash flows through 2011, absent the occurrence of additional significant catastrophic events. In the event that paid losses accelerate beyond the ability to fund such payments from operating cash flows, the Company would use its cash balances available, liquidate a portion of its investment portfolio, access its existing credit facility, or arrange for additional financing. However, there can be no assurance that the Company will be successful in executing these strategies.

Currency and Foreign Exchange

The Company’s functional currencies are U.S. dollars for its U.S. and Bermuda operations and British Sterling for its U.K. operations. The reporting currency for all operations is U.S. dollars. The Company maintains a portion of its investments and liabilities in currencies other than the U.S. dollar. The Company has made a significant investment in the capitalization of Endurance U.K, which is subject to the FSA’s rules concerning the matching of the currency of its assets to the currency of its liabilities. Depending on the profile of Endurance U.K.’s liabilities, it may be required to hold some of its assets in currencies corresponding to the currencies of its liabilities. The Company may, from time to time, experience gains or losses resulting from fluctuations in the values of foreign currencies, which could have a material adverse effect on the Company’s results of operations.

Assets and liabilities of foreign operations whose functional currency is not the U.S. dollar are translated at exchange rates in effect at the balance sheet date. Revenues and expenses of such foreign operations are translated at average exchange rates during the year. The effect of the translation adjustments for foreign operations is included in accumulated other comprehensive (loss) income.

Other monetary assets and liabilities denominated in foreign currencies are revalued at the exchange rates in effect at the balance sheet date with the resulting foreign exchange gains and losses included in earnings. Revenues and expenses denominated in foreign currencies are translated at the prevailing exchange rate on the transaction date.

Effects of Inflation

The effects of inflation could cause the severity of claims to rise in the future. The Company’s estimates for losses and loss expenses include assumptions about future payments for settlement of claims and claims handling expenses, such as medical treatments and litigation costs. To the extent inflation causes these costs to increase above reserves established for these claims, the Company will be required to increase the reserve for losses and loss expenses with a corresponding reduction in its earnings in the period in which the deficiency is identified. In addition, inflation could lead to higher interest rates causing the current unrealized gain position on the Company’s fixed maturity portfolio to decrease or become an unrealized loss position. The current short duration of the Company’s fixed maturity portfolio has the potential to help reduce the negative effects of higher interest rates on the Company’s fixed maturity portfolio. The Company may also choose to hold its fixed income investments to maturity which would result in the unrealized gains largely amortizing through net investment income.

Cautionary Statement Regarding Forward-Looking Statements

Some of the statements contained herein, and certain statements that the Company may make in press releases or that Company officials may make orally, may include forward-looking statements which reflect the Company’s current views with respect to future events and financial performance. Such statements 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 “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “seek,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise.

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All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:

• the effects of competitors’ pricing policies, and of changes in laws and regulations on competition, including those regarding contingent commissions, industry consolidation and development of competing financial products;

• greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than our underwriting, reserving or investment practices have anticipated;

• greater frequency or severity of loss activity, as a result of changing climate conditions;

• changes in market conditions in the agriculture industry, which may vary depending upon demand for agricultural products, weather, commodity prices, natural disasters, technological advances in agricultural practices, changes in U.S. and foreign legislation and policies related to agricultural products and producers;

• termination of or changes in the terms of the U.S. multiple peril crop insurance program and termination or changes to the U.S. farm bill, including modifications to the Standard Reinsurance Agreement put in place by the Risk Management Agency of the U.S. Department of Agriculture;

• decreased demand for property and casualty insurance or reinsurance or increased competition due to an increase in capacity of property and casualty insurers and reinsurers;

• changes in the availability, cost or quality of reinsurance or retrocessional coverage;

• the inability to renew business previously underwritten or acquired;

• the inability to obtain or maintain financial strength or claims-paying ratings by one or more of our subsidiaries;

• our ability to effectively integrate acquired operations and to continue to expand our business;

• uncertainties in our reserving process, including the potential for adverse development of our loss reserves or failure of our loss limitation methods;

• the ability of the counterparty institutions with which we conduct business to continue to meet their obligations to us;

• the failure or delay of the Florida Citizens Property Insurance Corporation, the Florida Hurricane Catastrophe Fund or private market participants in Florida to promptly pay claims, particularly following a large windstorm or of multiple smaller storms;

• our continued ability to comply with applicable financial standards and restrictive covenants, the breach of which could trigger significant collateral or prepayment obligations;

• Endurance Holdings or Endurance Bermuda becomes subject to income taxes in jurisdictions outside of Bermuda;

• changes in tax regulations or laws applicable to us, our subsidiaries, brokers or customers;

• state, federal and foreign regulations that impede our ability to charge adequate rates and efficiently allocate capital;

• changes in insurance regulations in the U.S. or other jurisdictions in which we operate, including the implementation of Solvency II by the European Commission and the establishment of the Federal Insurance Office and other regulatory changes mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 in the United States;

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• reduced acceptance of our existing or new products and services;

• loss of business provided by any one of a few brokers on whom we depend for a large portion of our revenue, and our exposure to the credit risk of our brokers;

• assessments by states for high risk or otherwise uninsured individuals;

• the impact of acts of terrorism and acts of war;

• the effects of terrorist related insurance legislation and laws;

• loss of key personnel;

• political stability of Bermuda;

• changes in the political environment of certain countries in which we operate or underwrite business;

• changes in accounting regulation, policies or practices;

• our investment performance;

• the valuation of our invested assets and the determination of impairments of those assets, if any;

• the possible downgrade of U.S. government securities by credit rating agencies, and the resulting effect on the value of U.S. government and other securities in our investment portfolio as well as the uncertainty in the market generally;

• the breach of our investment guidelines or the inability of those guidelines to mitigate investment risk;

• the need for additional capital in the future which may not be available or only available on unfavorable terms;

• actions by our competitors, many of which are larger or have greater financial resources than we do;

• the ability to maintain the availability of our systems and safeguard the security of our data in the event of a disaster or other unanticipated event; and

• changes in general economic conditions, including inflation, foreign currency exchange rates, interest rates, and other factors.

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 in our 2010 Annual Report on Form 10-K, including the risk factors set forth in Item 1A thereof and hereof. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Equity Price Risk. The Company invests a portion of its investment portfolio in marketable equity securities (fair market value of $49.3 million) at September 30, 2011. These equity investments are exposed to equity price risk, defined as the potential that the Company incurs an economic loss due to a decline of common stock prices. Beta analysis is used to measure the sensitivity of our equity portfolio to changes in the value of the S&P 500 Index (an index representative of the broad equity market). Our current equity portfolio excluding perpetual preferred equities has a beta of 0.83 in comparison to the S&P 500 Index.

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In addition to beta analysis, a sensitivity analysis can be used to assess equity price risk under varying conditions. The base sensitivity analysis below uses market scenarios of the S&P 500 Index declining both 10 percent and 20 percent to determine the impact of such a decline on the value of the Company’s equity securities. These scenarios would result in approximate decreases in the fair market value of the Company’s equity securities of $4.1 million and $8.2 million, respectively. As we designate all equities as available-for-sale, these fair value declines would impact the Company’s Consolidated Balance Sheet.

	20%			%			10%			%			September 30,		10%		%			20%		%
	decrease			change			decrease			change			2011		increase		change			increase		change
	(U.S. dollars in thousands)
Equities	$	(8,167	)		(16.56	)%	$	(4,084	)		(8.28	)%	$	49,323	$	4,084		8.28	%	$	8,167		16.56	%
Total invested assets(1)	$	(8,167	)		(0.13	)%	$	(4,084	)		(0.06	)%	$	6,362,764	$	4,084		0.06	%	$	8,167		0.13	%
Shareholders’ equity	$	(8,167	)		(0.31	)%	$	(4,084	)		(0.15	)%	$	2,635,950	$	4,084		0.15	%	$	8,167		0.31	%

(1) Includes total investments and cash and cash equivalents net of investments pending settlement.

The changes described above do not take into account any potential mitigating impact from the Company’s fixed income or alternative investment portfolios or the impact of taxes.

Derivative Counterparty Credit Risk. In addition to the Company’s exposure to credit risk as a holder of fixed maturity investments, short-term investments, equity securities and alternative funds and high yield loan funds, and the Company’s exposure to credit risk as relates to reinsurance and retrocessional recoverables, the Company also has credit risk exposure as a party to derivative financial instruments. In order to mitigate the risks associated with derivatives, the Company diversifies its counterparty credit risk, ensures that the counterparties to its derivative contracts are credit worthy and monitors on a regular basis its exposure by counterparty in order to mitigate the counterparty credit risks associated with its derivative contracts. In addition, counterparty risk is mitigated by the periodic receipt of payment of margin. At September 30, 2011, the Company’s absolute notional value of derivative contracts was $1,018.0 million, while the net asset position of those derivative contracts was $0.5 million.

Derivative Interest Rate Risk. The Company uses interest rate futures and swaps within our portfolio of fixed maturity investments to manage our exposure to interest rate risk, which can include increasing or decreasing our exposure to this risk. At September 30, 2011, we had $200.0 million of notional long positions and $3.0 million of notional short positions of Eurodollar futures contracts and interest rate swaps. We account for these derivatives at fair value and record them in our consolidated balance sheet as other assets or other liabilities depending on the rights or obligations. The fair value of these derivatives as recognized in other assets and liabilities in our consolidated balance sheet at September 30, 2011, was $0.2 million.

The aggregate hypothetical loss generated from an immediate upward parallel shift in the treasury yield curve of 100 basis points would cause a decrease in market value of our net position in the Eurodollar futures contracts and interest rate swaps of approximately $1.1 million at September 30, 2011. Credit spreads are assumed to remain constant in these hypothetical examples.

Other than set forth above, there have been no material changes in market risk from the information provided under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Information about Market Risk” included in the Company’s 2010 Annual Report on Form 10-K.

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Item 4. Controls and Procedures

a) Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

(b) Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s third fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II
OTHER INFORMATION

Item 1. Legal Proceedings

We are party to various legal proceedings generally arising in the normal course of our business. While any proceeding contains an element of uncertainty, we do not believe that the eventual outcome of any litigation or arbitration proceeding to which we are presently a party could have a material adverse effect on our financial condition or business. Pursuant to our insurance and reinsurance agreements, disputes are generally required to be finally settled by arbitration.

Item 1A. Risk Factors

Before investing in any of our securities, you should carefully consider the risk factors and all other information set forth in our 2010 Annual Report on Form 10-K, as supplemented by the following risk factors and other information in this on Form 10-Q. These risks could materially affect our business, results of operations or financial condition and cause the trading price of our securities to decline. You could lose all or part of your investment. The headings used in this section are solely to aid the reader as to general categories of risks related to investing in the Company. The risk factors listed may apply to more than one category or to the Company generally. Accordingly, the headings used in this section should not be construed as limiting in any manner the general applicability of any of the risk factors included in this section

We are exposed to equity market and derivative financial instrument risks, which may adversely affect our results of operations, financial condition or liquidity.

We are exposed to risks associated with our investments in equity securities and investments in derivative financial instruments, which are subject to significant financial and capital markets risk, including changes in interest rates, credit spreads, equity prices, real estate markets, foreign currency exchange rates, market volatility, the performance of the economy in general, the performance of the specific securities included in our investment portfolio and other factors outside our control.

Our exposure to equity price risk relates primarily to equity market price variability. Although we take measures to manage the economic risks of investing in a changing equity market, we may not be able to adequately mitigate the equity risk of our assets relative to our liabilities, which could have an adverse effect on our results of operations, financial condition or liquidity.

Losses due to defaults by our derivative counterparties could adversely affect the value of our investments, results of operations, financial condition or cash flows.

Derivative counterparties may default on the amounts they owe to us due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud or other reasons. The occurrence of a major economic downturn, acts of corporate malfeasance, widening risk spreads or other events that adversely impact our derivative counterparties or the collateral supporting our derivative instruments could cause our net income to decline and have a material adverse effect on our financial condition.

63

Our failure to comply with the financial strength standards governing our derivative instruments could obligate us to post collateral or settle our outstanding derivative instruments.

Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings of the individual legal entity that entered into the derivative agreement as set by nationally recognized statistical rating agencies. If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could demand immediate and ongoing full collateralization and in certain instances demand immediate settlement of all outstanding derivative positions traded under each impacted bilateral agreement. The settlement amount is determined by netting the derivative positions transacted under each agreement. If the termination rights were to be exercised by the counterparties, it could have a material adverse effect on the Company’s liquidity, financial condition, results of operations and ability to conduct hedging activities by increasing the associated costs and decreasing the willingness of counterparties to transact with the legal entity.

The further downgrade of U.S. government securities by credit rating agencies could adversely impact the value of the U.S. government and other securities in our investment portfolio and create uncertainty in the market generally.

The further downgrade of the U.S. government securities by credit rating agencies has the potential to adversely impact the value of the U.S. government and other securities in our investment portfolio. A further downgrade in the rating of U.S. government securities may cause the Company’s investment portfolio’s average credit rating to fall and may result in the Company no longer being in compliance with its current Investment Policy at its current level of U.S. government security holdings. In addition to the foregoing, a further downgrade in the rating of U.S. government securities may have an adverse impact on fixed income markets, which in turn could cause our net income to decline or have a material adverse effect on our financial condition.

Other than set forth above, there have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in our 2010 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

							(d) Maximum Number
					(c) Total Number		(or Approximate Dollar
					of Shares		Value) of Shares
	(a) Total		(b) Average		Purchased as Part of		that May Yet Be
	Number of		Price Paid		Publicly Announced		Purchased Under the
Period	Shares Purchased(1)		per Share		Plans or Programs(1) (2)		Plans or Programs(1) (2)
July 1, 2011 – July 31, 2011		—	$	—		—		2,458,354
August 1, 2011 – August 31, 2011		—	$	—		—		2,458,354
September 1, 2011 – September 30, 2011		—	$	—		—		2,458,354
Total		—	$	—		—		2,458,354

(1)	Ordinary shares or share equivalents.
(2)	At its meeting on August 12, 2010, the Board of Directors of the Company authorized the repurchase of up to a total of 7,000,000 ordinary shares and share equivalents through November 9, 2011, superceding all previous authorizations.

64

Item 3. Defaults Upon Senior Securities

None

Item 4. (Removed and Reserved)

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

(a) The following sets forth those exhibits filed pursuant to Item 601 of Regulation S-K:

Exhibit
Number		Description
	31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.
	31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
	32	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as at September 30, 2011 (unaudited) and December 31, 2010; (ii) the Unaudited Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the three and nine months ended September 30, 2011 and 2010; (iii) the Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2011 and 2010; (iv) the Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010; and (v) the Notes to the Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2011 and 2010.

65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ENDURANCE SPECIALTY HOLDINGS LTD.
Date: November 8, 2011	By:	/s/ David Cash
		David Cash
		Chief Executive Officer
Date: November 8, 2011	By:	/s/ Michael J. McGuire
		Michael J. McGuire
		Chief Financial Officer (Principal Financial Officer)

66

EX-31.1

Exhibit 31.1

Endurance Specialty Holdings Ltd.
Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a)

I, David Cash, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Endurance Specialty Holdings Ltd.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2011	By:	/s/ David Cash
		Chief Executive Officer

EX-31.2

Exhibit 31.2

Endurance Specialty Holdings Ltd.
Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a)

I, Michael J. McGuire, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Endurance Specialty Holdings Ltd.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2011	By:	/s/ Michael J. McGuire
		Chief Financial Officer

EX-32

Exhibit 32

Endurance Specialty Holdings Ltd.
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Endurance Specialty Holdings Ltd. (the “Company”) for the quarterly period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, each hereby certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that (1) to the best of his knowledge the Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2011	By:	/s/ David Cash
		David Cash
		Chief Executive Officer
Date: November 8, 2011	By:	/s/ Michael J. McGuire
		Michael J. McGuire
		Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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Segment Reporting (Schedule Of Segment Results To Income Before Income Taxes) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Segment Reporting
Total underwriting (loss) income	$ (28,162)	$ 77,017	$ (187,907)	$ 125,396
Net investment income	14,100	53,654	106,443	143,484
Net foreign exchange gains	4,085	12,565	7,655	6,465
Net realized and unrealized investment gains	1,033	8,973	26,340	15,174
Net impairment losses recognized in earnings	(240)	(1,380)	(2,819)	(3,233)
Amortization of intangibles	(2,976)	(2,588)	(8,800)	(7,764)
Interest expense	(9,055)	(9,051)	(27,166)	(25,709)
(Loss) income before income taxes	$ (21,215)	$ 139,190	$ (86,254)	$ 253,813

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Sep. 30, 2011	Dec. 31, 2010
Available for Sale Securities
Available for sale securities, fixed maturity investments, amortized cost	$ 4,868,323	$ 5,010,147
Available for sale securities, short-term investments, amortized cost	323,189	70,455
Available for sale securities, equity securities, cost	51,185	8,000
Equity
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares issued	40,517,222	47,218,468
Common stock, shares outstanding	40,517,222	47,218,468
Series A Preferred Stock [Member]
Equity
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares issued	8,000,000	8,000,000
Preferred stock, shares outstanding	8,000,000	8,000,000
Preferred stock, aggregate liquidation preference	200,000	200,000
Series B Preferred Stock [Member]
Equity
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares issued	9,200,000	0
Preferred stock, shares outstanding	9,200,000	0
Preferred stock, aggregate liquidation preference	$ 230,000	$ 0

XML

Condensed Consolidated Statements Of (Loss) Income And Comprehensive (Loss) Income (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Revenues
Gross premiums written	$ 700,866	$ 555,574	$ 2,204,148	$ 1,864,011
Ceded premiums written	(149,539)	(103,690)	(412,191)	(258,382)
Net premiums written	551,327	451,884	1,791,957	1,605,629
Change in unearned premiums	10,166	17,909	(361,053)	(314,252)
Net premiums earned	561,493	469,793	1,430,904	1,291,377
Net investment income	14,100	53,654	106,443	143,484
Net realized and unrealized gains	1,033	8,973	26,340	15,174
Total other-than-temporary impairment losses	(168)	(1,140)	(1,908)	(2,647)
Portion of loss recognized in other comprehensive income	(72)	(240)	(911)	(586)
Net impairment losses recognized in (losses) earnings	(240)	(1,380)	(2,819)	(3,233)
Other underwriting (loss) income	(2,141)	322	(2,122)	(2,046)
Total revenues	574,245	531,362	1,558,746	1,444,756
Expenses
Net losses and loss expenses	456,691	266,132	1,220,514	791,676
Acquisition expenses	72,249	67,443	205,754	198,095
General and administrative expenses	58,574	59,523	190,421	174,164
Amortization of intangibles	2,976	2,588	8,800	7,764
Net foreign exchange gains	(4,085)	(12,565)	(7,655)	(6,465)
Interest expense	9,055	9,051	27,166	25,709
Total expenses	595,460	392,172	1,645,000	1,190,943
(Loss) income before income taxes	(21,215)	139,190	(86,254)	253,813
Income tax benefit (expense)	1,197	(62)	19,896	(303)
Net (loss) income	(20,018)	139,128	(66,358)	253,510
Preferred dividends	(8,188)	(3,875)	(15,938)	(11,625)
Net (loss) income (attributable) available to common and participating common shareholders	(28,206)	135,253	(82,296)	241,885
Comprehensive (loss) income
Net (loss) income	(20,018)	139,128	(66,358)	253,510
Other comprehensive income
Net unrealized holding gains on investments arising during the period (net of applicable deferred income taxes of ($6,856) and ($10,619) for the nine months ended September 30, 2011 and 2010, respectively)	9,466	62,455	35,640	163,263
Portion of other-than-temporary impairment losses recognized in other comprehensive (loss) income (net of applicable deferred taxes of $69 and Nil for the nine months ended September 30, 2011 and 2010, respectively)	72	240	842	586
Foreign currency translation adjustments	(5,423)	7,443	(1,956)	(2,950)
Reclassification adjustment for net realized gains included in net (loss) income	(1,273)	(7,593)	(29,159)	(11,941)
Reclassification adjustment for net losses on derivative designated as cash flow hedge included in net (loss) income	22	22	66	66
Other comprehensive income	2,864	62,567	5,433	149,024
Comprehensive (loss) income	$ (17,154)	$ 201,695	$ (60,925)	$ 402,534
Per share data
Basic (losses) earnings per common share	$ (0.71)	$ 2.64	$ (2.07)	$ 4.56
Diluted (losses) earnings per common share	$ (0.71)	$ 2.51	$ (2.07)	$ 4.33
Dividend per common share	$ 0.30	$ 0.25	$ 0.90	$ 0.75

XML

Commitments And Contingencies (Schedule Of Percentage Of Net Premiums) (Details)	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Total of largest brokers	47.10%	53.70%
Aon Benfield [Member]
Percentage of net premium written	18.20%	21.20%
Marsh & McLennan Companies, Inc. [Member]
Percentage of net premium written	15.90%	19.80%
Willis Companies [Member]
Percentage of net premium written	13.00%	12.70%

XML

Segment Reporting (Policy)

9 Months Ended

Sep. 30, 2011

Segment Reporting

Segment Reporting

The determination of the Company's business segments is based on how the Company monitors the performance of its underwriting operations. The Company has two reportable business segments, Insurance and Reinsurance, which are comprised of the following lines of business:

Insurance segment lines of business

• Agriculture

• Professional Lines

• Casualty

• Property

• Healthcare Liability

• Workers' Compensation

Reinsurance segment lines of business

• Catastrophe

• Casualty

• Property

• Aerospace and Marine

• Surety and Other Specialty

Management measures segment results on the basis of the combined ratio, which is obtained by dividing the sum of the net losses and loss expenses, acquisition expenses and general and administrative expenses by net premiums earned. When purchased within a single line of business, ceded reinsurance and recoveries are accounted for within that line of business. When purchased across multiple lines of business, ceded reinsurance and recoveries are allocated to the lines of business in proportion to the related risks assumed. The Company does not manage its assets by segment; accordingly, investment income and total assets are not allocated to the individual business segments. General and administrative expenses incurred by the segments are allocated directly. Remaining general and administrative expenses not directly incurred by the segments are allocated primarily based on estimated consumption, headcount and other variables deemed relevant to the allocation of such expenses.

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2011	Nov. 01, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Entity Registrant Name	ENDURANCE SPECIALTY HOLDINGS LTD
Entity Central Index Key	0001179755
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		40,529,399

XML

Stock-Based Employee Compensation And Other Stock Plans (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Stock-Based Employee Compensation And Other Stock Plans
Number of options granted	0	0	0	0
Number of options expired or vested	0	0	0	0
Total intrinsic value of options exercised	$ 32,000	$ 25,000	$ 21,600,000	$ 9,300,000
Proceeds from stock options exercised	39,000	72,000	12,200,000	5,800,000
Unrecognized stock-based compensation expenses related to unvested stock options	0	0
Number of restricted shares granted	430	3,224	305,422	530,312
Restricted shares weighted average grant date fair value	15,000	100,000	14,800,000	20,300,000
Aggregate fair value of restricted shares vested	400,000	500,000	14,400,000	14,200,000
Compensation costs recognized related to restricted shares	3,000,000	2,900,000	11,200,000	10,200,000
Compensation costs not yet recognized related to unvested restricted shares and restricted share units	13,000,000	17,400,000	13,000,000	17,400,000
Expenses related to employee stock purchase plan	$ 52,000	$ 42,000	$ 159,000	$ 132,000

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2011

Earnings Per Share

Schedule Of Computation Of Basic And Diluted Earnings Per Share

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Numerator:
Net (loss) income (attributable) available to common and participating common shareholders	$	(28,206	)	$	135,253		$	(82,296	)	$	241,885
Less amount allocated to participating common shareholders(1)		(224	)		(2,468	)		(740	)		(4,565	)
Net (loss) income (attributed) allocated to common shareholders	$	(28,430	)	$	132,785		$	(83,036	)	$	237,320
Denominator:
Weighted average shares — basic
Outstanding		39,764,756			50,295,575			40,071,340			52,057,963
Vested restricted share units		—			—			—			2,661
Weighted average shares — basic		39,764,756			50,295,575			40,071,340			52,060,624
Share equivalents:
Warrants		—			1,954,566			—			1,945,705
Options		—			739,109			—			835,089
Restricted share units		—			7,869			—			9,831
Weighted average shares — diluted		39,764,756			52,997,119			40,071,340			54,851,249
Basic (losses) earnings per common share	$	(0.71	)	$	2.64		$	(2.07	)	$	4.56
Diluted (losses) earnings per common share	$	(0.71	)	$	2.51		$	(2.07	)	$	4.33

(1) Represents earnings attributable to holders of unvested restricted shares issued under the Company's equity compensation plans that are considered participating. In periods of loss, no losses are allocated to participating common shareholders (unvested restricted shares).

Schedule Of Dividends Declared

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Dividends declared per Series A preferred share	$	0.484375	$	0.484375	$	1.453125	$	1.453125
Dividends declared per Series B preferred share		0.468750		—		0.468750		—
Dividends declared per common share	$	0.30	$	0.25	$	0.90	$	0.75

XML

Derivatives (Schedule Of Derivative Gain (Loss) On Consolidated Statement) (Details) (USD $) In Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011
Derivatives included in net foreign exchange gains from foreign exchange forward contracts	$ 204	$ (162)
Derivatives included in net realized and unrealized investment gains	(136)	(295)
Derivatives included in other underwriting (loss) income from commodity put options	(2,875)	(2,875)
Total losses from derivatives	(2,807)	(3,332)
Futures Contracts [Member]
Derivatives included in net realized and unrealized investment gains	572	822
Credit Default Swaps [Member]
Derivatives included in net realized and unrealized investment gains	(106)	(100)
Interest Rate Swaps [Member]
Derivatives included in net realized and unrealized investment gains	(620)	(1,054)
Interest Rate Swaptions [Member]
Derivatives included in net realized and unrealized investment gains	$ 18	$ 37

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2011

Earnings Per Share

Earnings Per Share

5. Earnings per share

The two-class method utilized by the Company is an earnings allocation formula that determines (losses) earnings per share for the holders of Endurance Holdings' ordinary and class A shares (also referred to as "common shares") and participating common shares, which includes unvested restricted shares which receive cash dividends, according to dividends declared and participation rights in undistributed earnings. Net (loss) income (attributable) available to common and participating common shareholders is reduced by the amount of dividends declared in the current period and by the contractual amount of dividends that must be paid for the current period related to the Company's common and participating common shares. Any remaining undistributed earnings are allocated to the common and participating common shareholders to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. In periods of loss, no losses are allocated to participating common shareholders. Instead, all such losses are allocated solely to the common shareholders.

Basic (losses) earnings per common share are calculated by dividing net (loss) income (attributable) available to common shareholders by the weighted average number of common shares outstanding. The weighted average number of common shares excludes any dilutive effect of outstanding warrants, options and convertible securities such as unvested restricted shares.

Diluted (losses) earnings per common share are based on the weighted average number of common shares and assumes the exercise of all dilutive stock warrants and options and the vesting or conversion of all convertible securities such as unvested restricted shares using the two-class method described above.

The following table sets forth the computation of basic and diluted (losses) earnings per share for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Numerator:
Net (loss) income (attributable) available to common and participating common shareholders	$	(28,206	)	$	135,253		$	(82,296	)	$	241,885
Less amount allocated to participating common shareholders(1)		(224	)		(2,468	)		(740	)		(4,565	)
Net (loss) income (attributed) allocated to common shareholders	$	(28,430	)	$	132,785		$	(83,036	)	$	237,320
Denominator:
Weighted average shares — basic
Outstanding		39,764,756			50,295,575			40,071,340			52,057,963
Vested restricted share units		—			—			—			2,661
Weighted average shares — basic		39,764,756			50,295,575			40,071,340			52,060,624
Share equivalents:
Warrants		—			1,954,566			—			1,945,705
Options		—			739,109			—			835,089
Restricted share units		—			7,869			—			9,831
Weighted average shares — diluted		39,764,756			52,997,119			40,071,340			54,851,249
Basic (losses) earnings per common share	$	(0.71	)	$	2.64		$	(2.07	)	$	4.56
Diluted (losses) earnings per common share	$	(0.71	)	$	2.51		$	(2.07	)	$	4.33

(1) Represents earnings attributable to holders of unvested restricted shares issued under the Company's equity compensation plans that are considered participating. In periods of loss, no losses are allocated to participating common shareholders (unvested restricted shares).

Endurance Holdings declared a dividend of $0.484375 per Series A preferred share and $0.46875 per Series B preferred share on August 3, 2011 (2010 — Series A: $0.484375, Series B: Nil). The Series A and Series B preferred share dividends were paid on September 15, 2011 to shareholders of record on September 1, 2011. Endurance Holdings also declared a dividend of $0.30 per common share on August 3, 2011 (2010 — $0.25). The dividend was paid on September 30, 2011 to shareholders of record on September 16, 2011.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Dividends declared per Series A preferred share	$	0.484375	$	0.484375	$	1.453125	$	1.453125
Dividends declared per Series B preferred share		0.468750		—		0.468750		—
Dividends declared per common share	$	0.30	$	0.25	$	0.90	$	0.75

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2011

Derivatives

Schedule Of Derivative Fair Value And Notional Amount

	September 30, 2011
			Notional
	Fair		Principal
	Value		Amount
Foreign exchange forward contracts	$	347	$	8,674
Interest rate swaps		193		3,000
Commodity put options		493		799,043
Total recorded in other assets	$	1,033	$	810,717
Foreign exchange forward contracts	$	298	$	3,454
Interest rate swaps		122		2,000
Credit default swaps		122		1,850
Interest rate futures		8		200,000
Total recorded in other liabilities	$	550	$	207,304
Net derivative asset	$	483	$	1,018,021

Schedule Of Derivative Gain (Loss) On Consolidated Statement

	Three Months			Nine Months
	Ended			Ended
	September 30,			September 30,
	2011			2011
Total included in net foreign exchange gains from foreign exchange forward contracts	$	204		$	(162	)
Futures contracts	$	572		$	822
Credit default swaps		(106	)		(100	)
Interest rate swaps		(620	)		(1,054	)
Interest rate swaptions		18			37
Total included in net realized and unrealized investment gains	$	(136	)	$	(295	)
Total included in other underwriting (loss) income from commodity put options	$	(2,875	)	$	(2,875	)
Total losses from derivatives	$	(2,807	)	$	(3,332	)

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Fair Value Measurement (Reconciliation Of The Beginning And Ending Balances For All Available For Sale Investments Measured At Fair Value On A Recurring Basis Using Level 3) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Fair Value Measurement
Level 3, beginning of period	$ 28,466	$ 15,485	$ 9,639	$ 5,554
Total net realized gains included in earnings	22	82	33	91
Total net realized and unrealized losses included in earnings	(25)	(366)	(495)	(1,237)
Change in unrealized gains included in other comprehensive income	571	1,512	2,067	3,581
Change in unrealized losses included in other comprehensive income	(2,036)	(326)	(2,207)	(663)
Purchases		17		2,848
Sales	(1,165)	(3,110)	(3,105)	(3,278)
Transfers in to Level 3	266	209	36,931	11,768
Transfers out of Level 3	(17,582)	(8,832)	(34,346)	(13,993)
Level 3, end of period	$ 8,517	$ 4,671	$ 8,517	$ 4,671

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Investments (Analysis Of OTTI) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Investments
Total other-than-temporary impairment losses	$ (168)	$ (1,140)	$ (1,908)	$ (2,647)
Portion of loss recognized in other comprehensive income (loss)	(72)	(240)	(911)	(586)
Net impairment losses recognized in (losses) earnings	$ (240)	$ (1,380)	$ (2,819)	$ (3,233)

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Fair Value Measurement (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2011

Dec. 31, 2010

Fair Value Measurement

Schedule Of Available For Sale Investments Measured On A Recurring Basis

	Fair Value Measurements at September 30, 2011
				Quoted
				Prices in
				Active
				Markets		Significant
				for		Other			Significant
	Total at			Identical		Observable			Unobservable
	September 30,			Assets		Inputs			Inputs
	2011			(Level 1)		(Level 2)			(Level 3)
Assets
U.S. government and agencies securities	$	1,235,350		$	67,818	$	1,167,532		$	—
U.S. state and municipal securities		55,101			—		55,101			—
Foreign government securities		77,945			—		77,945			—
Government guaranteed corporate securities		400,446			—		400,446			—
Corporate securities		1,219,305			—		1,219,096			209
Residential mortgage-backed securities
Agency mortgage-backed securities		987,145			—		987,145			—
Non-agency mortgage-backed securities		123,729			—		123,195			534
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,851			—		33,851			—
Non-agency mortgage-backed securities		541,128			—		533,354			7,774
Asset-backed securities		324,142			—		324,142			—
Total fixed maturity investments	$	4,998,142		$	67,818	$	4,921,807		$	8,517
Short term investments		323,119			—		323,119			—
Equity securities		49,323			40,272		9,051			—
Other assets (see Note 6)		1,033			—		1,033			—
Total assets	$	5,371,617		$	108,090	$	5,255,010		$	8,517
Liabilities
Other liabilities (see Note 6)	$	(550	)	$	—	$	(550	)	$	—

	Fair Value Measurements at December 31, 2010
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
	Total at		Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Assets
U.S. government and agencies securities	$	1,010,819	$	38,275	$	972,544	$	—
U.S. state and municipal securities		29,979		—		29,979		—
Foreign government securities		140,461		—		140,461		—
Government guaranteed corporate securities		671,150		—		671,150		—
Corporate securities		1,232,511		—		1,232,511		—
Residential mortgage-backed securities
Agency mortgage-backed securities		883,948		—		883,948		—
Non-agency mortgage-backed securities		246,410		—		245,325		1,085
Commercial mortgage-backed securities
Agency mortgage-backed securities		22,889		—		22,889		—
Non-agency mortgage-backed securities		604,820		—		597,512		7,308
Asset-backed securities		273,715		—		272,469		1,246
Total fixed maturity investments	$	5,116,702	$	38,275	$	5,068,788	$	9,639
Short term investments		70,444		—		70,444		—
Equity securities		13,565		—		13,565		—
Other assets		—		—		—		—
Total assets	$	5,200,711	$	38,275	$	5,152,797	$	9,639
Liabilities
Other liabilities	$	—	$	—	$	—	$	—

Schedule Of Securities Lending Collateral Reinvested

			Fair Value Measurements at September 30, 2011
			Quoted Prices		Significant
			in Active		Other		Significant
	Total at		Markets for		Observable		Unobservable
	September 30,		Identical Assets		Inputs		Inputs
	2011		(Level 1)		(Level 2)		(Level 3)
Securities lending collateral	$	—	$	—	$	—	$	—

			Fair Value Measurements at December 31, 2010
			Quoted Prices		Significant
			in Active		Other		Significant
	Total at		Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Securities lending collateral	$	59,886	$	—	$	59,886	$	—

Reconciliation Of The Beginning And Ending Balances For All Available For Sale Investments Measured At Fair Value On A Recurring Basis Using Level 3

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Level 3, beginning of period	$	28,466		$	15,485		$	9,639		$	5,554
Total net realized gains included in earnings		22			82			33			91
Total net realized and unrealized losses included in earnings		(25	)		(366	)		(495	)		(1,237	)
Change in unrealized gains included in other comprehensive income		571			1,512			2,067			3,581
Change in unrealized losses included in other comprehensive income		(2,036	)		(326	)		(2,207	)		(663	)
Purchases		—			17			—			2,848
Sales		(1,165	)		(3,110	)		(3,105	)		(3,278	)
Transfers in to Level 3		266			209			36,931			11,768
Transfers out of Level 3		(17,582	)		(8,832	)		(34,346	)		(13,993	)
Level 3, end of period	$	8,517		$	4,671		$	8,517		$	4,671

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Shareholders' Equity

9 Months Ended

Sep. 30, 2011

Shareholders' Equity

Shareholders' Equity

10. Shareholders' equity

On June 1, 2011, Endurance Holdings issued 9,200,000 shares of its 7.5% Non-Cumulative Preferred Shares, Series B (the "Series B Preferred Shares"). The Series B Preferred Shares sold in the offering were registered under the Securities Act of 1933, as amended, and are traded on the New York Stock Exchange. The Series B Preferred Shares were issued at a price to the public of $25.00 per share. Endurance Holdings received net proceeds from this offering of $224.0 million after expenses and underwriting discounts. The proceeds from this offering were used to provide additional capital to Endurance Holdings' subsidiaries and for other general corporate purposes.

The Series B Preferred Shares have no stated maturity date and are redeemable in whole or in part at the option of Endurance Holdings any time after June 1, 2016 at a redemption price of $25.00 per share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Endurance Holdings may redeem all but not less than all of the Series B Preferred Shares before that date at a redemption price of $26.00 per share, plus any declared and unpaid dividends, to the date of redemption, if Endurance Holdings is required to submit a proposal to the holders of the Series B Preferred Shares concerning an amalgamation, consolidation, merger, similar corporate transaction or change in Bermuda law.

Dividends on the Series B Preferred Shares, when, as and if declared by the Board of Directors of Endurance Holdings or a duly authorized committee of the board, accrue and are payable on the liquidation preference amount from the original issue date, quarterly in arrears on each dividend payment date, at an annual rate of 7.5%. Dividends on the Series B Preferred Shares are not cumulative.

Upon any voluntary or involuntary liquidation, dissolution or winding-up of Endurance Holdings, holders of the Series B Preferred Shares and any parity shares are entitled to receive out of Endurance Holdings' assets available for distribution to shareholders, before any distribution is made to holders of Endurance Holdings' common equity securities, a liquidating distribution in the amount of $25.00 per Series B Preferred Share plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

Holders of the Series B Preferred Shares have no voting rights, except with respect to certain fundamental changes in the terms of the Series B Preferred Shares and in the case of certain dividend non-payments or as otherwise required by Bermuda law or Endurance Holdings' bye-laws.

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General

9 Months Ended

Sep. 30, 2011

General

General

1. General

Endurance Specialty Holdings Ltd. ("Endurance Holdings") was organized as a Bermuda holding company on June
27, 2002. Endurance Holdings writes specialty lines of insurance and reinsurance on a global basis through its
wholly-owned operating subsidiaries:

Operating Subsidiaries	Domicile
Endurance Specialty Insurance Ltd.	Bermuda
Endurance Worldwide Insurance Limited	England
Endurance Reinsurance Corporation of America	Delaware
Endurance American Insurance Company	Delaware
Endurance American Specialty Insurance Company	Delaware
Endurance Risk Solutions Assurance Co.	Delaware
American Agri-Business Insurance Company	Texas

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Investments (Net Realized And Unrealized Investment Gains) (Details) (USD $) In Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
Investments
Gross realized gains on investment sales	$ 6,904		$ 9,488		$ 40,563		$ 23,655
Gross realized losses on investment sales	(5,735)		(515)		(13,928)		(8,481)
Change in fair value of derivatives financial instruments	(136)	[1]		[1]	(295)	[1]		[1]
Net realized and unrealized investment gains	$ 1,033		$ 8,973		$ 26,340		$ 15,174

[1] See Note 6

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Stock-Based Employee Compensation And Other Stock Plans

9 Months Ended

Sep. 30, 2011

Stock-Based Employee Compensation And Other Stock Plans

Stock-Based Employee Compensation And Other Stock Plans

7. Stock-based employee compensation and other stock plans

The Company has a stock-based employee compensation plan, which provides the Company with the ability to grant options to purchase the Company's ordinary shares, share appreciation rights, restricted shares, share bonuses and other equity incentive awards to key employees.

No options were granted, expired or vested during the quarters ended September 30, 2011 and 2010. The total intrinsic value of options exercised during the quarter ended September 30, 2011 was $32,000 (2010 — $25,000). The Company received proceeds of $39,000 (2010 — $72,000) from the exercise of options during the quarter ended September 30, 2011. The Company issued new ordinary shares in connection with the exercise of the above options. There were no unrecognized stock-based compensation expenses related to unvested stock options at September 30, 2011 and 2010.

No options were granted, expired or vested during the nine months ended September 30, 2011 and 2010. The total intrinsic value of options exercised during the nine months ended September 30, 2011 was $21.6 million (2010 — $9.3 million). The Company received proceeds of $12.2 million (2010 — $5.8 million) from the exercise of options during the nine months ended September 30, 2011. The Company issued new ordinary shares in connection with the exercise of the above options.

During the quarter ended September 30, 2011, the Company granted an aggregate of 430 (2010 — 3,224) restricted shares and restricted share units with weighted average grant date fair values of $15,000 (2010 — $0.1 million). During the quarter ended September 30, 2011, the aggregate fair value of restricted shares and restricted share units that vested was $0.4 million (2010 — $0.5 million). For the quarter ended September 30, 2011, compensation costs recognized in earnings for all restricted shares and restricted share units were $3.0 million (2010 — $2.9 million). At September 30, 2011, compensation costs not yet recognized related to unvested restricted shares and restricted share units was $13.0 million (2010 — $17.4 million).

During the nine months ended September 30, 2011, the Company granted an aggregate of 305,422 (2010 — 530,312) restricted shares and restricted share units with weighted average grant date fair values of $14.8 million (2010 — $20.3 million). During the nine months ended September 30, 2011, the aggregate fair value of restricted shares and restricted share units that vested was $14.4 million (2010 — $14.2 million). For the nine months ended September 30, 2011, compensation costs recognized in earnings for all restricted shares and restricted share units were $11.2 million (2010 — $10.2 million).

The Company also has an Employee Share Purchase Plan under which employees of Endurance Holdings and certain of its subsidiaries may purchase Endurance Holdings' ordinary shares. For the quarter ended September 30, 2011, total expenses related to the Company's Employee Share Purchase Plan were approximately $52,000 (2010 — $42,000) and $159,000 (2010 -$132,000) for the nine months ended September 30, 2011.

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Investments (Policy)

9 Months Ended

Sep. 30, 2011

Investments

Equity Investments

In addition to the Company's available for sale investments, the Company invests in (i) hedge funds and private equity funds that generally invest in senior secured bank debt, high yield securities, distressed debt, distressed real estate, derivatives and equity long/short strategies ("alternative funds") and (ii) high yield loan funds. The Company's alternative funds and high yield loan funds are recorded on the Company's balance sheet as "Other Investments."

Securities Lending

Securities Lending

The Company participated in a securities lending program until July 2011. Under this program fixed maturity investments were loaned by the Company to third parties, primarily major brokerage firms and commercial banks. The borrowers of the Company's securities provided the Company with collateral, typically cash, which the Company separately maintained. The Company typically invested such collateral in overnight repurchase agreements. Securities with an estimated fair value of $58.7 million were on loan under the program at December 31, 2010. The Company was liable for collateral under the Company's control of $59.9 million at December 31, 2010. As of December 31, 2010, the fair value of the investments purchased with the cash collateral received from the borrower was $59.9 million. All securities on loan were issued on a term or overnight basis and were subject to daily recall at the Company's discretion. Upon the termination of the securities lending program, the Company recalled all securities on loan and refunded all collateral previously held as part of the program.

Variable Interest Entities

             Variable Interest Entities

Entities that do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristics of a controlling financial interest are referred to as variable interest entities ("VIE"). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure, contractual terms, nature of the VIE's operations and purpose and the Company's relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.

The Company is involved in the normal course of business with VIEs primarily as a passive investor in residential and commercial mortgage-backed securities and through its interests in other investments in alternative and high yield loan funds that are structured as limited partnerships considered to be third party VIEs. The Company determined that it was not the primary beneficiary for any of these investments as of September 30, 2011. The Company believes its exposure to loss with respect to these investments is generally limited to the investment carrying amounts reported in the Company's consolidated balance sheet and any unfunded investment commitments.

Gain Loss On Investments

Realized and unrealized investment gains and losses are recognized in earnings using the first in and first out method.

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Segment Reporting

9 Months Ended

Sep. 30, 2011

Segment Reporting

Segment Reporting

8. Segment reporting

The determination of the Company's business segments is based on how the Company monitors the performance of its underwriting operations. The Company has two reportable business segments, Insurance and Reinsurance, which are comprised of the following lines of business:

Insurance segment lines of business

• Agriculture

• Professional Lines

• Casualty

• Property

• Healthcare Liability

• Workers' Compensation

Reinsurance segment lines of business

• Catastrophe

• Casualty

• Property

• Aerospace and Marine

• Surety and Other Specialty

Management measures segment results on the basis of the combined ratio, which is obtained by dividing the sum of the net losses and loss expenses, acquisition expenses and general and administrative expenses by net premiums earned. When purchased within a single line of business, ceded reinsurance and recoveries are accounted for within that line of business. When purchased across multiple lines of business, ceded reinsurance and recoveries are allocated to the lines of business in proportion to the related risks assumed. The Company does not manage its assets by segment; accordingly, investment income and total assets are not allocated to the individual business segments. General and administrative expenses incurred by the segments are allocated directly. Remaining general and administrative expenses not directly incurred by the segments are allocated primarily based on estimated consumption, headcount and other variables deemed relevant to the allocation of such expenses.

The following table provides a summary of segment revenues, results and reserves for losses and loss expenses for the three months ended September 30, 2011:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	450,451		$	250,415		$	700,866
Ceded premiums written		(147,241	)		(2,298	)		(149,539	)
Net premiums written		303,210			248,117			551,327
Net premiums earned		318,602			242,891			561,493
Other underwriting (loss) income		(2,875	)		734			(2,141	)
		315,727			243,625			559,352
Expenses
Net losses and loss expenses		260,206			196,485			456,691
Acquisition expenses		18,738			53,511			72,249
General and administrative expenses		29,328			29,246			58,574
		308,272			279,242			587,514
Underwriting income (loss)	$	7,455		$	(35,617	)	$	(28,162	)
Net loss ratio		81.7	%		81.0	%		81.3	%
Acquisition expense ratio		5.9	%		22.0	%		12.9	%
General and administrative expense ratio		9.2	%		12.0	%		10.4	%
Combined ratio		96.8	%		115.0	%		104.6	%
Reserve for losses and loss expenses	$	2,032,636		$	1,877,901		$	3,910,537

The following table provides a summary of segment revenues, results and reserves for losses and loss expenses for the three months ended September 30, 2010:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	303,561		$	252,013		$	555,574
Ceded premiums written		(99,268	)		(4,422	)		(103,690	)
Net premiums written		204,293			247,591			451,884
Net premiums earned		242,766			227,027			469,793
Other underwriting income (loss)		473			(151	)		322
		243,239			226,876			470,115
Expenses
Net losses and loss expenses		172,015			94,117			266,132
Acquisition expenses		17,356			50,087			67,443
General and administrative expenses		29,256			30,267			59,523
		218,627			174,471			393,098
Underwriting income	$	24,612		$	52,405		$	77,017
Net loss ratio		70.9	%		41.5	%		56.6	%
Acquisition expense ratio		7.1	%		22.1	%		14.4	%
General and administrative expense ratio		12.1	%		13.3	%		12.7	%
Combined ratio		90.1	%		76.9	%		83.7	%
Reserve for losses and loss expenses	$	1,826,956		$	1,574,356		$	3,401,312

The following table reconciles total segment results to (loss) income before income taxes for the three months ended September 30, 2011 and 2010:

	Three Months Ended
	September 30,
	2011			2010
Total underwriting (loss) income	$	(28,162	)	$	77,017
Net investment income		14,100			53,654
Net foreign exchange gains		4,085			12,565
Net realized and unrealized investment gains		1,033			8,973
Net impairment losses recognized in earnings		(240	)		(1,380	)
Amortization of intangibles		(2,976	)		(2,588	)
Interest expense		(9,055	)		(9,051	)
(Loss) income before income taxes	$	(21,215	)	$	139,190

The following table provides gross and net premiums written by line of business for the three months ended September 30, 2011 and 2010:

	Gross		Net		Gross			Net
	premiums		premiums		premiums			premiums
	written		written		written			written
Business Segment	2011		2011		2010			2010
Insurance
Agriculture	$	289,656	$	185,017	$	156,162		$	89,119
Professional lines		39,559		30,812		43,381			38,522
Casualty		57,520		37,664		40,538			23,700
Property		30,049		17,681		30,295			21,366
Healthcare liability		33,652		32,021		34,024			32,393
Workers' compensation		15		15		(839	)		(807	)
Total Insurance		450,451		303,210		303,561			204,293
Reinsurance
Catastrophe		46,275		43,868		45,513			41,154
Casualty		56,293		56,292		81,167			81,163
Property		129,203		129,203		111,395			111,395
Aerospace and marine		5,891		6,002		4,184			4,184
Surety and other specialty		12,753		12,752		9,754			9,695
Total Reinsurance		250,415		248,117		252,013			247,591
Total	$	700,866	$	551,327	$	555,574		$	451,884

The following table provides a summary of the segment revenues and results for the nine months ended September 30, 2011:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	1,302,032		$	902,116		$	2,204,148
Ceded premiums written		(393,020	)		(19,171	)		(412,191	)
Net premiums written		909,012			882,945			1,791,957
Net premiums earned		730,491			700,413			1,430,904
Other underwriting (loss) income		(2,875	)		753			(2,122	)
		727,616			701,166			1,428,782
Expenses
Net losses and loss expenses		550,438			670,076			1,220,514
Acquisition expenses		50,907			154,847			205,754
General and administrative expenses		102,361			88,060			190,421
		703,706			912,983			1,616,689
Underwriting income (loss)	$	23,910		$	(211,817	)	$	(187,907	)
Net loss ratio		75.3	%		95.6	%		85.3	%
Acquisition expense ratio		7.0	%		22.1	%		14.4	%
General and administrative expense ratio		14.0	%		12.6	%		13.3	%
Combined ratio		96.3	%		130.3	%		113.0	%

The following table provides a summary of the segment revenues and results for the nine months ended September 30, 2010:

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	999,528		$	864,483		$	1,864,011
Ceded premiums written		(251,307	)		(7,075	)		(258,382	)
Net premiums written		748,221			857,408			1,605,629
Net premiums earned		616,300			675,077			1,291,377
Other underwriting income (loss)		471			(2,517	)		(2,046	)
		616,771			672,560			1,289,331
Expenses
Net losses and loss expenses		428,872			362,804			791,676
Acquisition expenses		51,336			146,759			198,095
General and administrative expenses		86,523			87,641			174,164
		566,731			597,204			1,163,935
Underwriting income	$	50,040		$	75,356		$	125,396
Net loss ratio		69.6	%		53.7	%		61.3	%
Acquisition expense ratio		8.4	%		21.8	%		15.3	%
General and administrative expense ratio		14.0	%		13.0	%		13.5	%
Combined ratio		92.0	%		88.5	%		90.1	%

The following table reconciles total segment results to (loss) income before income taxes for the nine months ended September 30, 2011 and 2010, respectively:

	Nine Months Ended
	September 30,
	2011			2010
Total underwriting (loss) income	$	(187,907	)	$	125,396
Net investment income		106,443			143,484
Net foreign exchange gains		7,655			6,465
Net realized and unrealized investment gains		26,340			15,174
Net impairment losses recognized in earnings		(2,819	)		(3,233	)
Amortization of intangibles		(8,800	)		(7,764	)
Interest expense		(27,166	)		(25,709	)
(Loss) income before income taxes	$	(86,254	)	$	253,813

The following table provides gross and net premiums written by line of business for the nine months ended September 30, 2011 and 2010:

	Gross			Net			Gross			Net
	premiums			premiums			premiums			premiums
	written			written			written			written
Business Segment	2011			2011			2010			2010
Insurance
Agriculture	$	855,486		$	577,538		$	560,531		$	402,395
Professional lines		124,209			99,560			133,456			115,546
Casualty		159,580			107,234			130,172			82,265
Property		90,643			56,262			99,976			76,404
Healthcare liability		72,243			68,542			76,782			72,947
Workers' compensation		(129	)		(124	)		(1,389	)		(1,336	)
Total Insurance		1,302,032			909,012			999,528			748,221
Reinsurance
Catastrophe		330,771			314,328			291,990			287,721
Casualty		218,264			217,463			246,060			245,257
Property		251,475			251,475			215,916			215,916
Aerospace and marine		53,472			51,567			46,381			44,316
Surety and other specialty		48,134			48,112			64,136			64,198
Total Reinsurance		902,116			882,945			864,483			857,408
Total	$	2,204,148		$	1,791,957		$	1,864,011		$	1,605,629

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Investments (Summary Of Investment Portfolio By Type) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2011		Dec. 31, 2010
Fair Value	$ 6,362,764		$ 6,187,817
Percentage of Total Investment	100.00%		100.00%
Fixed maturity securities [Member]
Fair Value	4,998,142		5,116,702
Percentage of Total Investment	78.50%		82.70%
Cash and Cash Equivalents [Member]
Fair Value	605,395	[1]	610,454	[1]
Percentage of Total Investment	9.50%	[1]	9.90%	[1]
Other Investments [Member]
Fair Value	386,785	[2]	376,652	[2]
Percentage of Total Investment	6.10%	[2]	6.10%	[2]
Short Term Investments [Member]
Fair Value	323,119		70,444
Percentage of Total Investment	5.10%		1.10%
Equity Securities [Member]
Fair Value	$ 49,323		$ 13,565
Percentage of Total Investment	0.80%		0.20%

[1] Includes net receivable on sales of investments and net payable on purchases of investments.

[2] Consists of investments in alternative funds and high yield loan funds.

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Derivatives

9 Months Ended

Sep. 30, 2011

Derivatives

Derivatives

6. Derivatives

The Company's derivative instruments are recorded in the Consolidated Balance Sheet at fair value, with changes in fair value and gains and losses recognized in net realized and unrealized investment gains, net foreign exchange gains and other underwriting (loss) income in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. The majority of the Company's derivatives are not designated as hedges under current accounting guidance. The Company may enter derivative transactions directly or as part of strategies employed by its external investment managers. The Company's objectives for holding these derivatives are as follows:

Interest Rate Futures, Swaps, Swaptions and Options

The Company may use interest rate futures, swaps, swaptions and options within its portfolio of fixed maturity investments to manage its exposure to interest rate risk, which can include increasing or decreasing its exposure to this risk through modification of the portfolio composition and duration.

Foreign Exchange Forwards, Futures and Options

The Company may utilize foreign exchange forward contracts and options as part of its overall currency risk management and investment strategies.

Credit Default Swaps

The Company may purchase protection through credit default swaps to mitigate the risk associated with its underwriting operations, most notably in the credit/surety line, and to manage market exposures.

The Company may assume or economically hedge credit risk through credit default swaps to replicate or hedge investment positions. The original term of these credit default swaps is generally five years or less.

Commodity Futures and Options

The Company may utilize commodity futures and options to economically hedge certain underwriting risks.

The fair values and the related notional values of derivatives included in the Company's Consolidated Balance Sheet at September 30, 2011 are noted below. The Company first entered into these derivatives in the first quarter of 2011.

	September 30, 2011
			Notional
	Fair		Principal
	Value		Amount
Foreign exchange forward contracts	$	347	$	8,674
Interest rate swaps		193		3,000
Commodity put options		493		799,043
Total recorded in other assets	$	1,033	$	810,717
Foreign exchange forward contracts	$	298	$	3,454
Interest rate swaps		122		2,000
Credit default swaps		122		1,850
Interest rate futures		8		200,000
Total recorded in other liabilities	$	550	$	207,304
Net derivative asset	$	483	$	1,018,021

The fair values of all derivatives at September 30, 2011 were recorded in other assets or other liabilities in the Company's Consolidated Balance Sheet. None of the above derivatives have been designated as hedges under current accounting guidance.

The gains and losses on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for derivatives for the three and nine months ended September 30, 2011 were as follows:

	Three Months			Nine Months
	Ended			Ended
	September 30,			September 30,
	2011			2011
Total included in net foreign exchange gains from foreign exchange forward contracts	$	204		$	(162	)
Futures contracts	$	572		$	822
Credit default swaps		(106	)		(100	)
Interest rate swaps		(620	)		(1,054	)
Interest rate swaptions		18			37
Total included in net realized and unrealized investment gains	$	(136	)	$	(295	)
Total included in other underwriting (loss) income from commodity put options	$	(2,875	)	$	(2,875	)
Total losses from derivatives	$	(2,807	)	$	(3,332	)

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Commitments And Contingencies (Narrative) (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2011	Dec. 31, 2010
Commitments And Contingencies
Reinsurance recoverables	$ 479,132,000	$ 319,349,000
Securities pledged as collateral obligation	129,900,000	143,600,000
Investments pledged under letters of credit facility	467,500,000	500,900,000
Letters of credit outstanding, amount	403,300,000	439,300,000
Securities kept as deposit by US insurance regulators	370,600,000	369,100,000
Securities kept as deposit by Canadian insurance regulators	10,300,000	10,700,000
Prohibited amount under redemption requests	107,400,000	118,900,000
Commitments under investment fund classified within other investments	17,400,000	11,700,000
Total lease expenses under operating leases	$ 9,200,000	$ 8,000,000

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Condensed Consolidated Statements Of Changes In Shareholders' Equity (USD $) In Thousands	Series B Preferred Stock [Member] Preferred Shares [Member]	Series B Preferred Stock [Member] Additional Paid-In Capital [Member]	Preferred Shares [Member]	Common Shares [Member]	Additional Paid-In Capital [Member]	Cumulative Foreign Currency Translation Adjustments [Member]	Unrealized Holding Gains On Investments, Net Of Deferred Taxes [Member]	Accumulated Derivative Loss On Cash Flow Hedging Instruments [Member]	Total Accumulated Other Comprehensive Income [Member]	Retained Earnings [Member]	Total
Balance, beginning of period at Dec. 31, 2009			$ 8,000	$ 55,116	$ 929,577	$ 16,109	$ 38,247	$ (2,208)		$ 1,742,442
Net (loss) income										253,510	253,510
Issuance of shares				752	5,802
Repurchase of common shares and share equivalents				(6,183)	(224,367)
Issuance of restricted share units in lieu of dividends					(53)					53
Public offering and registration costs					63
Settlement of equity awards					(5,179)						(5,179)
Stock-based compensation expense					9,991
Foreign currency translation adjustments						(2,950)					(2,950)
Net unrealized holding gains arising during the period, net of reclassification adjustment							151,322
Other-than-temporary impairment losses during the period							586
Net change from current period hedging transactions, net of reclassification adjustment								66
Dividends on preferred shares										(11,625)
Dividends on common shares										(39,386)
Balance, end of period at Sep. 30, 2010			8,000	49,685	715,834	13,159	190,155	(2,142)	201,172	1,944,994	2,919,685
Balance, beginning of period at Dec. 31, 2010			8,000	47,218	613,915	10,877	129,814	(2,120)		2,040,449	2,848,153
Net (loss) income										(66,358)	(66,358)
Issuance of shares	9,200	214,822		790	12,465
Repurchase of common shares and share equivalents				(7,491)	(333,313)
Public offering and registration costs					(656)
Settlement of equity awards					(6,074)						(6,074)
Stock-based compensation expense					11,164
Foreign currency translation adjustments						(1,956)					(1,956)
Net unrealized holding gains arising during the period, net of reclassification adjustment							6,481
Other-than-temporary impairment losses during the period							842
Net change from current period hedging transactions, net of reclassification adjustment								66
Dividends on preferred shares										(15,938)
Dividends on common shares										(36,247)
Balance, end of period at Sep. 30, 2011			$ 17,200	$ 40,517	$ 512,323	$ 8,921	$ 137,137	$ (2,054)	$ 144,004	$ 1,921,906	$ 2,635,950

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Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

Summary Of Significant Accounting Policies

Summary Of Significant Accounting Policies

2. Summary of significant accounting policies

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The unaudited condensed consolidated financial statements include the accounts of Endurance Holdings and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Management is required to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying disclosures. Actual results could differ from those estimates. Among other matters, significant estimates and assumptions are used to record premiums written and ceded, fair value of investments, and to record reserves for losses and loss expenses and contingencies. Estimates and assumptions are periodically reviewed and the effects of revisions are recorded in the consolidated financial statements in the period that they are determined to be necessary.

The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2010 contained in Endurance Holdings' Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2010 (the "2010 Annual Report on Form 10-K").

Certain reclassifications have been made for 2010 to conform to the 2011 presentation and have no impact on net income previously reported.

There were no material changes in the Company's significant accounting and reporting policies subsequent to the 2010 Annual Report on Form 10-K with the exception of the additions to the Company's accounting policies described below relating to the Company's investment in equity securities and entry into derivative instruments commencing in the first quarter of 2011.

(a)	Equity Investments
	The Company currently classifies its investments in equity securities as "available for sale" and accordingly, they are carried at estimated fair value, with related net unrealized gains or losses excluded from earnings and included in shareholders' equity as a component of accumulated other comprehensive income. The Company determines the fair value of its available for sale securities in accordance with current accounting guidance, which defines fair value and establishes a fair value hierarchy based on inputs to the various valuation techniques used for each fair value measurement. The use of valuation techniques for any given investment requires a significant amount of judgment and consideration of factors specific to the underlying investment. Fair value measurements determined by the Company seek to maximize observable inputs and minimize the use of unobservable inputs.
	The Company determines the estimated fair value of each individual security utilizing the highest level inputs available. Transfers between levels are assumed to occur at the end of each period.
	For equity securities, the Company considers its ability and intent to hold an equity security in an unrealized loss position for a reasonable period of time to allow for a full recovery. When the Company determines that the decline in value of an equity security is other-than-temporary, the Company reduces the cost of the equity security to its fair value and recognizes the loss in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. The new cost basis is not changed for subsequent recoveries in fair value.

(b)	Derivatives
	Current accounting guidance requires the recognition of all derivative financial instruments including embedded derivative instruments, as either assets or liabilities in the Consolidated Balance Sheets at fair value.
	The Company may use various derivative instruments such as foreign exchange forward contracts, foreign currency option contracts, futures, options, interest rate swaps, total return swaps, swaptions, credit default swaps, foreign currency forward contracts and commodity futures and options to enhance the efficiency of the investment portfolio and economically hedge certain risks. These contracts do not qualify, and are not designated, as hedges. Thus, changes in fair value and any realized gains or losses are recognized in net realized and unrealized gains, net foreign exchange gains and other underwriting (loss) income in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. Margin balances required of counterparties are included in cash and cash equivalents. Where the Company has entered into master netting agreements with counterparties, or the Company has the legal and contractual right to offset positions, the derivative positions are generally netted by the counterparty and are reported accordingly in other assets and other liabilities.

(c)	Recent accounting pronouncements
	In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" ("ASU 2011-4"). ASU 2011-4 amends Accounting Standards Codification Topic 820, "Fair Value Measurement" ("ASC 820") to change several requirements for measuring fair value and disclosing information about fair value measurements. Among the more significant changes, ASU 2011-4 amends ASC 820 to clarify certain existing fair value measurement and disclosure requirements as follows:
•	The "highest-and-best-use" and "valuation-premise" concepts only apply to measuring the fair value of nonfinancial assets. The previous guidance permitted the application of these concepts to financial assets and liabilities.
•	A reporting entity is required to measure the fair value of its own equity instruments from the perspective of a market participant that holds that instrument as an asset.
•	Reporting entities are required to disclose quantitative information about inputs used in estimating Level 3 fair value measurements.
	ASU 2011-4 will be effective for the first quarter of 2012, with early adoption prohibited. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.
	In June 2011, the FASB issued ASU 2011-05 "Comprehensive Income (Topic 220): Presentation of Comprehensive Income" ("ASU 2011-05"). ASU 2011-05 eliminates the option in current GAAP to permit the presentation of other comprehensive income in the statement of changes in shareholders' equity. The remaining two options are:
•	A single continuous statement of net income and comprehensive income; or
•	Two separate, but consecutive, statements of net income and other comprehensive income
	ASU 2011-05 is effective for interim and annual reporting periods ending on or after December 15, 2011. Early adoption is permitted and full retrospective application is required. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.
	In September 2011, the FASB issued ASU 2011-08 "Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment" ("ASU 2011-08"). Under ASU 2011-08, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. In addition, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test.
	ASU 2011-08 will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

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Fair Value Measurement (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Fair Value Measurement
Percentage of level 3 assets available for sales	0.16%		0.16%		0.19%
Material changes in valuation techniques			no
Net impairment loss recognized in earnings	$ 25,000	$ 300,000	$ 200,000	$ 1,100,000
Other investments	386,785,000		386,785,000		376,652,000
Senior notes	528,500,000		528,500,000		528,300,000
Senior notes, fair value	$ 561,300,000		$ 561,300,000		$ 536,900,000

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Investments (Composition Of Net Investment Income And Of Invested Assets) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Investments
Available for sale investments	$ 39,841	$ 43,124	$ 123,916	$ 130,451
Other investments	(22,522)	13,815	(7,583)	23,833
Cash and cash equivalents	205	157	639	349
Investment income	17,524	57,096	116,972	154,633
Investment expenses	(3,424)	(3,442)	(10,529)	(11,149)
Net investment income	$ 14,100	$ 53,654	$ 106,443	$ 143,484

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Segment Reporting (Schedule Of Gross And Net Premiums) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Gross premiums written	$ 700,866	$ 555,574	$ 2,204,148	$ 1,864,011
Net premiums written	551,327	451,884	1,791,957	1,605,629
Agriculture Insurance [Member]
Gross premiums written	289,656	156,162	855,486	560,531
Net premiums written	185,017	89,119	577,538	402,395
Professional Lines Insurance [Member]
Gross premiums written	39,559	43,381	124,209	133,456
Net premiums written	30,812	38,522	99,560	115,546
Casualty Insurance [Member]
Gross premiums written	57,520	40,538	159,580	130,172
Net premiums written	37,664	23,700	107,234	82,265
Property Insurance [Member]
Gross premiums written	30,049	30,295	90,643	99,976
Net premiums written	17,681	21,366	56,262	76,404
Healthcare Liability Insurance [Member]
Gross premiums written	33,652	34,024	72,243	76,782
Net premiums written	32,021	32,393	68,542	72,947
Worker's Compensation Insurance [Member]
Gross premiums written	15	(839)	(129)	(1,389)
Net premiums written	15	(807)	(124)	(1,336)
Catastrophe Reinsurance [Member]
Gross premiums written	46,275	45,513	330,771	291,990
Net premiums written	43,868	41,154	314,328	287,721
Casualty Reinsurance [Member]
Gross premiums written	56,293	81,167	218,264	246,060
Net premiums written	56,292	81,163	217,463	245,257
Property Reinsurance [Member]
Gross premiums written	129,203	111,395	251,475	215,916
Net premiums written	129,203	111,395	251,475	215,916
Aerospace And Marine Reinsurance [Member]
Gross premiums written	5,891	4,184	53,472	46,381
Net premiums written	6,002	4,184	51,567	44,316
Surety And Other Specialty Reinsurance [Member]
Gross premiums written	12,753	9,754	48,134	64,136
Net premiums written	12,752	9,695	48,112	64,198
Insurance [Member]
Gross premiums written	450,451	303,561	1,302,032	999,528
Net premiums written	303,210	204,293	909,012	748,221
Reinsurance [Member]
Gross premiums written	250,415	252,013	902,116	864,483
Net premiums written	$ 248,117	$ 247,591	$ 882,945	$ 857,408

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Investments

9 Months Ended

Sep. 30, 2011

Investments

Investments

3.	Investments
	Composition of Net Investment Income and Invested Assets
	The components of net investment income for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Available for sale investments	$	39,841		$	43,124		$	123,916		$	130,451
Other investments		(22,522	)		13,815			(7,583	)		23,833
Cash and cash equivalents		205			157			639			349
	$	17,524		$	57,096		$	116,972		$	154,633
Investment expenses		(3,424	)		(3,442	)		(10,529	)		(11,149	)
Net investment income	$	14,100		$	53,654		$	106,443		$	143,484

The following table summarizes the composition of the investment portfolio by type at September 30, 2011 and December 31, 2010:

	September 30, 2011					December 31, 2010
Type of Investment	Fair Value		Percentage			Fair Value		Percentage
Fixed maturity securities	$	4,998,142		78.5	%	$	5,116,702		82.7	%
Cash and cash equivalents(1)		605,395		9.5	%		610,454		9.9	%
Other investments(2)		386,785		6.1	%		376,652		6.1	%
Short term investments		323,119		5.1	%		70,444		1.1	%
Equity securities		49,323		0.8	%		13,565		0.2	%
Total	$	6,362,764		100.0	%	$	6,187,817		100.0	%

(1)	Includes net receivable on sales of investments and net payable on purchases of investments.
(2)	Consists of investments in alternative funds and high yield loan funds.

The following table summarizes the composition of the fixed income investment portion of the portfolio, which includes fixed maturity securities and short term investments, by investment ratings assigned by rating agencies at September 30, 2011 and December 31, 2010. In some cases, where bonds are unrated, the rating of the issuer has been applied.

	September 30, 2011					December 31, 2010
Ratings(1)	Fair Value		Percentage			Fair Value		Percentage
U.S. government and agencies securities	$	1,235,350		23.2	%	$	1,010,819		19.5	%
AAA / Aaa		1,049,638		19.7	%		2,639,682		50.9	%
AA / Aa		1,994,716		37.5	%		465,315		9.0	%
A / A		786,973		14.8	%		793,980		15.3	%
BBB		132,961		2.5	%		50,733		1.0	%
Below BBB		118,942		2.2	%		221,848		4.2	%
Not rated		2,681		0.1	%		4,769		0.1	%
Total	$	5,321,261		100.0	%	$	5,187,146		100.0	%

⁽¹⁾ The credit rating for each asset reflected above was determined based on the rating assigned to the individual security by Standard & Poor's. If a rating is not supplied by Standard & Poor's, the equivalent rating supplied by either Moody's Investor Service or Fitch Ratings is used.

Contractual maturities of the fixed income portfolio are shown below as of September 30, 2011 and December 31, 2010. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2011				December 31, 2010
	Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value
Due within one year	$	660,817	$	663,098	$	390,886	$	393,333
Due after one year through five years		1,905,068		1,948,058		2,240,820		2,279,581
Due after five years through ten years		599,007		619,401		404,322		413,462
Due after ten years		70,996		80,709		64,663		68,988
Residential mortgage-backed securities
Agency mortgage-backed securities		950,027		987,145		855,637		883,948
Non-agency mortgage-backed securities		128,343		123,729		254,138		246,410
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,217		33,851		22,130		22,889
Non-agency mortgage-backed securities		520,886		541,128		578,951		604,820
Asset-backed securities		323,151		324,142		269,055		273,715
Total	$	5,191,512	$	5,321,261	$	5,080,602	$	5,187,146

At September 30, 2011 and December 31, 2010, the Company held $24.0 million and $27.6 million of insurance enhanced bonds (asset-backed securities), respectively, representing 0.4% and 0.5% of the available for sale securities, respectively. At September 30, 2011, the overall credit quality of the insurance enhanced bond portfolio was an average rating of "Ba" from Moody's and "AA" from Standard & Poor's. The overall credit quality of the financial guarantors had an average rating of "Ca" by Moody's and most were not rated by Standard & Poor's.

In addition to the Company's available for sale investments, the Company invests in (i) hedge funds and private equity funds that generally invest in senior secured bank debt, high yield securities, distressed debt, distressed real estate, derivatives and equity long/short strategies ("alternative funds") and (ii) high yield loan funds. The Company's alternative funds and high yield loan funds are recorded on the Company's balance sheet as "Other Investments."At September 30, 2011 and December 31, 2010, the Company had invested, net of capital returned, a total of $297.4 million and $279.6 million, respectively, in Other Investments. At September 30, 2011 and December 31, 2010, the carrying value of Other Investments was $386.8 million and $376.7 million, respectively. Certain of Other Investments are subject to redemption restriction provisions (see Note 9).

Net Realized and Unrealized Investment Gains

Realized and unrealized investment gains and losses are recognized in earnings using the first in and first out method.The analysis of net realized and unrealized investment gains for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Gross realized gains on investment sales	$	6,904		$	9,488		$	40,563		$	23,655
Gross realized losses on investment sales		(5,735	)		(515	)		(13,928	)		(8,481	)
Change in fair value of derivative financial instruments(1)		(136	)		—			(295	)		—
Net realized and unrealized investment gains	$	1,033		$	8,973		$	26,340		$	15,174

(1) See Note 6

Unrealized Gains and Losses and Other-than-temporary Impairments

The amortized cost, fair value and related gross unrealized gains and losses and non-credit other-than-temporary impairment ("OTTI") losses on the Company's securities classified as available for sale at September 30, 2011 and December 31, 2010 are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized					Non-Credit
	Cost		Gains		Losses			Fair Value		OTTI(2)
September 30, 2011
U.S. government and agencies securities	$	1,185,145	$	50,557	$	(352	)	$	1,235,350	$	—
U.S. state and municipal securities		53,790		1,372		(61	)		55,101		—
Foreign government securities		75,909		2,241		(205	)		77,945		—
Government guaranteed corporate securities		396,479		4,074		(107	)		400,446		—
Corporate securities		1,201,376		31,239		(13,310	)		1,219,305		—
Residential mortgage-backed securities
Agency mortgage-backed securities		950,027		37,360		(242	)		987,145		—
Non-agency mortgage-backed securities		128,343		1,398		(6,012	)		123,729		(8,472	)
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,217		634		—			33,851		—
Non-agency mortgage-backed securities(1)		520,886		24,219		(3,977	)		541,128		(83	)
Asset-backed securities		323,151		2,979		(1,988	)		324,142		—
Total fixed maturity investments	$	4,868,323	$	156,073	$	(26,254	)	$	4,998,142	$	(8,555	)
Short term investments		323,189		9		(79	)		323,119		—
Total fixed income investments	$	5,191,512	$	156,082	$	(26,333	)	$	5,321,261	$	(8,555	)
Equity securities	$	51,185	$	1,913	$	(3,775	)	$	49,323	$	—

(1)	Balances include amounts related to collateralized debt obligations held with total fair values of $24.7 million.
(2)	Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2011, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $0.7 million.

			Gross		Gross
	Amortized		Unrealized		Unrealized					Non-Credit
	Cost		Gains		Losses			Fair Value		OTTI(2)
December 31, 2010
U.S. government and agencies securities	$	993,667	$	23,576	$	(6,424	)	$	1,010,819	$	—
U.S. state and municipal securities		29,472		745		(238	)		29,979		—
Foreign government securities		138,157		2,557		(253	)		140,461		—
Government guaranteed corporate securities		663,709		7,806		(365	)		671,150		—
Corporate securities		1,205,231		31,174		(3,894	)		1,232,511		—
Residential mortgage-backed securities
Agency mortgage-backed securities		855,637		30,946		(2,635	)		883,948		—
Non-agency mortgage-backed securities		254,138		4,457		(12,185	)		246,410		(29,495	)
Commercial mortgage-backed securities
Agency mortgage-backed securities		22,130		761		(2	)		22,889		—
Non-agency mortgage-backed securities(1)		578,951		28,673		(2,804	)		604,820		(109	)
Asset-backed securities		269,055		6,168		(1,508	)		273,715		—
Total fixed maturity investments	$	5,010,147	$	136,863	$	(30,308	)	$	5,116,702	$	(29,604	)
Short term investments		70,455		3		(14	)		70,444		—
Total fixed income investments	$	5,080,602	$	136,866	$	(30,322	)	$	5,187,146	$	(29,604	)
Equity securities	$	8,000	$	5,583	$	(18	)	$	13,565	$	—

(1)	Balances include amounts related to collateralized debt obligations held with total fair values of $13.1 million.
(2)	Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At December 31, 2010, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $6.2 million.

The following tables summarize, for all available for sale securities in an unrealized loss position at September 30, 2011 and December 31, 2010, the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position.

	Less than 12 months					12 months or greater					Total
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses(1)			Value		Losses(1)			Value		Losses(1)			Value
September 30, 2011
U.S. government and agencies securities	$	(352	)	$	115,911	$	—		$	—	$	(352	)	$	115,911
U.S. state and municipal securities		(61	)		16,963		—			—		(61	)		16,963
Foreign government securities		(197	)		17,641		(8	)		4,665		(205	)		22,306
Government guaranteed corporate securities		(11	)		22,502		(96	)		56,471		(107	)		78,973
Corporate securities		(13,185	)		298,002		(125	)		1,680		(13,310	)		299,682
Residential mortgage-backed securities
Agency mortgage-backed securities		(242	)		56,461		—			—		(242	)		56,461
Non-agency mortgage-backed securities		(511	)		22,663		(5,501	)		64,914		(6,012	)		87,577
Commercial mortgage-backed securities
Agency mortgage-backed securities		—			—		—			—		—			—
Non-agency mortgage-backed securities		(3,057	)		108,055		(920	)		7,865		(3,977	)		115,920
Asset-backed securities		(1,478	)		157,343		(510	)		9,541		(1,988	)		166,884
Total fixed maturity investments	$	(19,094	)	$	815,541	$	(7,160	)	$	145,136	$	(26,254	)	$	960,677
Short term investments		(79	)		184,442		—			—		(79	)		184,442
Total fixed income investments	$	(19,173	)	$	999,983	$	(7,160	)	$	145,136	$	(26,333	)	$	1,145,119
Equity securities	$	(3,775	)	$	43,312	$	—		$	—	$	(3,775	)	$	43,312

⁽¹⁾ Gross unrealized losses include unrealized losses on non-OTTI and non-credit OTTI securities recognized in accumulated other comprehensive income at September 30, 2011.

As of September 30, 2011, 666 available for sale securities were in an unrealized loss position. Of those, 89 securities had been in a continuous unrealized loss position for twelve months or greater.

	Less than 12 months					12 months or greater					Total
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses(1)			Value		Losses(1)			Value		Losses(1)			Value
December 31, 2010
U.S. government and agencies securities	$	(6,424	)	$	368,452	$	—		$	—	$	(6,424	)	$	368,452
U.S. state and municipal securities		(238	)		9,301		—			—		(238	)		9,301
Foreign government securities		(253	)		22,585		—			—		(253	)		22,585
Government guaranteed corporate securities		(356	)		131,980		(9	)		4,714		(365	)		136,694
Corporate securities		(3,556	)		243,307		(338	)		5,429		(3,894	)		248,736
Residential mortgage-backed securities
Agency mortgage-backed securities		(2,635	)		160,532		—			—		(2,635	)		160,532
Non-agency mortgage-backed securities		(473	)		26,205		(11,712	)		172,665		(12,185	)		198,870
Commercial mortgage-backed securities
Agency mortgage-backed securities		(2	)		455		—			—		(2	)		455
Non-agency mortgage-backed securities		(1,227	)		75,626		(1,577	)		10,590		(2,804	)		86,216
Asset-backed securities		(555	)		70,218		(953	)		13,218		(1,508	)		83,436
Total fixed maturity investments	$	(15,719	)	$	1,108,661	$	(14,589	)	$	206,616	$	(30,308	)	$	1,315,277
Short term investments		(14	)		30,178		—			—		(14	)		30,178
Total fixed income investments	$	(15,733	)	$	1,138,839	$	(14,589	)	$	206,616	$	(30,322	)	$	1,345,455
Equity securities	$	(18	)	$	640	$	—		$	—	$	(18	)	$	640

⁽¹⁾ Gross unrealized losses include unrealized losses on non-OTTI and OTTI securities recognized in accumulated other comprehensive income at December 31, 2010.

As of December 31, 2010, 376 available for sale securities were in an unrealized loss position. Of those, 112 securities had been in a continuous unrealized loss position for twelve months or greater.

The analysis of OTTI for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Total other-than-temporary impairment losses	$	(168	)	$	(1,140	)	$	(1,908	)	$	(2,647	)
Portion of loss recognized in other comprehensive income (loss)		(72	)		(240	)		(911	)		(586	)
Net impairment losses recognized in (losses) earnings	$	(240	)	$	(1,380	)	$	(2,819	)	$	(3,233	)

Of the $0.2 million (2010: $1.4 million) of OTTI losses recognized by the Company in the third quarter of 2011, the majority of it related to reductions in expected recovery values on mortgage-backed securities during the period, along with certain credit related downgrades in corporate securities. At September 30, 2011, the Company did not have the intent to sell securities in an unrealized loss position and determined that it was unlikely that the Company would be required to sell securities in an unrealized loss position.

	The following table provides a roll-forward of the amount related to credit losses for the Company's fixed income investments recognized in (losses) earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income for the three and nine months ended September 30, 2011:
		Three months ended						Nine months ended
		September 30,						September 30,
		2011			2010			2011			2010
Beginning balance		$	(10,138	)	$	(13,427	)	$	(10,214	)	$	(13,122	)
Addition for the amount related to the credit loss for which an other-than-temporary impairment was not previously recognized			—			—			(12	)		—
Addition for the amount related to the credit loss for which an other-than-temporary impairment was previously recognized			(72	)		(240	)		(1,161	)		(586	)
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security			—			—			—			—
Reductions for securities sold during the period			7,905			64			9,082			105
Ending balance		$	(2,305	)	$	(13,603	)	$	(2,305	)	$	(13,603	)

Securities Lending

The Company participated in a securities lending program until July 2011. Under this program fixed maturity investments were loaned by the Company to third parties, primarily major brokerage firms and commercial banks. The borrowers of the Company's securities provided the Company with collateral, typically cash, which the Company separately maintained. The Company typically invested such collateral in overnight repurchase agreements. Securities with an estimated fair value of $58.7 million were on loan under the program at December 31, 2010. The Company was liable for collateral under the Company's control of $59.9 million at December 31, 2010. As of December 31, 2010, the fair value of the investments purchased with the cash collateral received from the borrower was $59.9 million. All securities on loan were issued on a term or overnight basis and were subject to daily recall at the Company's discretion. Upon the termination of the securities lending program, the Company recalled all securities on loan and refunded all collateral previously held as part of the program.

             Variable Interest Entities

Entities that do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristics of a controlling financial interest are referred to as variable interest entities ("VIE"). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure, contractual terms, nature of the VIE's operations and purpose and the Company's relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.

The Company is involved in the normal course of business with VIEs primarily as a passive investor in residential and commercial mortgage-backed securities and through its interests in other investments in alternative and high yield loan funds that are structured as limited partnerships considered to be third party VIEs. The Company determined that it was not the primary beneficiary for any of these investments as of September 30, 2011. The Company believes its exposure to loss with respect to these investments is generally limited to the investment carrying amounts reported in the Company's consolidated balance sheet and any unfunded investment commitments.

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Fair Value Measurement (Schedule Of Securities Lending Collateral Reinvested) (Details) (USD $) In Thousands	Dec. 31, 2010
Securities lending collateral	$ 59,886
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Securities lending collateral
Significant Other Observable Inputs (Level 2) [Member]
Securities lending collateral	59,886
Significant Unobservable Inputs (Level 3) [Member]
Securities lending collateral

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Segment Reporting (Tables)

3 Months Ended

9 Months Ended

Sep. 30, 2011

Sep. 30, 2010

Sep. 30, 2011

Sep. 30, 2010

Segment Reporting

Summary Of The Segment Revenues, Results And Reserve For Losses And Loss Expenses

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	450,451		$	250,415		$	700,866
Ceded premiums written		(147,241	)		(2,298	)		(149,539	)
Net premiums written		303,210			248,117			551,327
Net premiums earned		318,602			242,891			561,493
Other underwriting (loss) income		(2,875	)		734			(2,141	)
		315,727			243,625			559,352
Expenses
Net losses and loss expenses		260,206			196,485			456,691
Acquisition expenses		18,738			53,511			72,249
General and administrative expenses		29,328			29,246			58,574
		308,272			279,242			587,514
Underwriting income (loss)	$	7,455		$	(35,617	)	$	(28,162	)
Net loss ratio		81.7	%		81.0	%		81.3	%
Acquisition expense ratio		5.9	%		22.0	%		12.9	%
General and administrative expense ratio		9.2	%		12.0	%		10.4	%
Combined ratio		96.8	%		115.0	%		104.6	%
Reserve for losses and loss expenses	$	2,032,636		$	1,877,901		$	3,910,537

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	303,561		$	252,013		$	555,574
Ceded premiums written		(99,268	)		(4,422	)		(103,690	)
Net premiums written		204,293			247,591			451,884
Net premiums earned		242,766			227,027			469,793
Other underwriting income (loss)		473			(151	)		322
		243,239			226,876			470,115
Expenses
Net losses and loss expenses		172,015			94,117			266,132
Acquisition expenses		17,356			50,087			67,443
General and administrative expenses		29,256			30,267			59,523
		218,627			174,471			393,098
Underwriting income	$	24,612		$	52,405		$	77,017
Net loss ratio		70.9	%		41.5	%		56.6	%
Acquisition expense ratio		7.1	%		22.1	%		14.4	%
General and administrative expense ratio		12.1	%		13.3	%		12.7	%
Combined ratio		90.1	%		76.9	%		83.7	%
Reserve for losses and loss expenses	$	1,826,956		$	1,574,356		$	3,401,312

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	1,302,032		$	902,116		$	2,204,148
Ceded premiums written		(393,020	)		(19,171	)		(412,191	)
Net premiums written		909,012			882,945			1,791,957
Net premiums earned		730,491			700,413			1,430,904
Other underwriting (loss) income		(2,875	)		753			(2,122	)
		727,616			701,166			1,428,782
Expenses
Net losses and loss expenses		550,438			670,076			1,220,514
Acquisition expenses		50,907			154,847			205,754
General and administrative expenses		102,361			88,060			190,421
		703,706			912,983			1,616,689
Underwriting income (loss)	$	23,910		$	(211,817	)	$	(187,907	)
Net loss ratio		75.3	%		95.6	%		85.3	%
Acquisition expense ratio		7.0	%		22.1	%		14.4	%
General and administrative expense ratio		14.0	%		12.6	%		13.3	%
Combined ratio		96.3	%		130.3	%		113.0	%

	Insurance			Reinsurance			Total
Revenues
Gross premiums written	$	999,528		$	864,483		$	1,864,011
Ceded premiums written		(251,307	)		(7,075	)		(258,382	)
Net premiums written		748,221			857,408			1,605,629
Net premiums earned		616,300			675,077			1,291,377
Other underwriting income (loss)		471			(2,517	)		(2,046	)
		616,771			672,560			1,289,331
Expenses
Net losses and loss expenses		428,872			362,804			791,676
Acquisition expenses		51,336			146,759			198,095
General and administrative expenses		86,523			87,641			174,164
		566,731			597,204			1,163,935
Underwriting income	$	50,040		$	75,356		$	125,396
Net loss ratio		69.6	%		53.7	%		61.3	%
Acquisition expense ratio		8.4	%		21.8	%		15.3	%
General and administrative expense ratio		14.0	%		13.0	%		13.5	%
Combined ratio		92.0	%		88.5	%		90.1	%

Schedule Of Segment Results To (Loss) Income Before Income Taxes

	Three Months Ended
	September 30,
	2011			2010
Total underwriting (loss) income	$	(28,162	)	$	77,017
Net investment income		14,100			53,654
Net foreign exchange gains		4,085			12,565
Net realized and unrealized investment gains		1,033			8,973
Net impairment losses recognized in earnings		(240	)		(1,380	)
Amortization of intangibles		(2,976	)		(2,588	)
Interest expense		(9,055	)		(9,051	)
(Loss) income before income taxes	$	(21,215	)	$	139,190

	Nine Months Ended
	September 30,
	2011			2010
Total underwriting (loss) income	$	(187,907	)	$	125,396
Net investment income		106,443			143,484
Net foreign exchange gains		7,655			6,465
Net realized and unrealized investment gains		26,340			15,174
Net impairment losses recognized in earnings		(2,819	)		(3,233	)
Amortization of intangibles		(8,800	)		(7,764	)
Interest expense		(27,166	)		(25,709	)
(Loss) income before income taxes	$	(86,254	)	$	253,813

Schedule Of Gross And Net Premiums

	Gross		Net		Gross			Net
	premiums		premiums		premiums			premiums
	written		written		written			written
Business Segment	2011		2011		2010			2010
Insurance
Agriculture	$	289,656	$	185,017	$	156,162		$	89,119
Professional lines		39,559		30,812		43,381			38,522
Casualty		57,520		37,664		40,538			23,700
Property		30,049		17,681		30,295			21,366
Healthcare liability		33,652		32,021		34,024			32,393
Workers' compensation		15		15		(839	)		(807	)
Total Insurance		450,451		303,210		303,561			204,293
Reinsurance
Catastrophe		46,275		43,868		45,513			41,154
Casualty		56,293		56,292		81,167			81,163
Property		129,203		129,203		111,395			111,395
Aerospace and marine		5,891		6,002		4,184			4,184
Surety and other specialty		12,753		12,752		9,754			9,695
Total Reinsurance		250,415		248,117		252,013			247,591
Total	$	700,866	$	551,327	$	555,574		$	451,884

	Gross			Net			Gross			Net
	premiums			premiums			premiums			premiums
	written			written			written			written
Business Segment	2011			2011			2010			2010
Insurance
Agriculture	$	855,486		$	577,538		$	560,531		$	402,395
Professional lines		124,209			99,560			133,456			115,546
Casualty		159,580			107,234			130,172			82,265
Property		90,643			56,262			99,976			76,404
Healthcare liability		72,243			68,542			76,782			72,947
Workers' compensation		(129	)		(124	)		(1,389	)		(1,336	)
Total Insurance		1,302,032			909,012			999,528			748,221
Reinsurance
Catastrophe		330,771			314,328			291,990			287,721
Casualty		218,264			217,463			246,060			245,257
Property		251,475			251,475			215,916			215,916
Aerospace and marine		53,472			51,567			46,381			44,316
Surety and other specialty		48,134			48,112			64,136			64,198
Total Reinsurance		902,116			882,945			864,483			857,408
Total	$	2,204,148		$	1,791,957		$	1,864,011		$	1,605,629

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Investments (Composition Of Fixed Income Including Fixed Maturity Securities And Short Term Investments, By Investment Ratings) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2011		Dec. 31, 2010
Fair Value of available for sale portfolio by investment ratings	$ 5,321,261	[1]	$ 5,187,146	[1]
Percentage of available for sale portfolio by investment ratings	100.00%	[1]	100.00%	[1]
U.S. Government And Agencies Securities [Member]
Fair Value of available for sale portfolio by investment ratings	1,235,350	[1]	1,010,819	[1]
Percentage of available for sale portfolio by investment ratings	23.20%	[1]	19.50%	[1]
AAA [Member]
Fair Value of available for sale portfolio by investment ratings	1,049,638	[1]	2,639,682	[1]
Percentage of available for sale portfolio by investment ratings	19.70%	[1]	50.90%	[1]
AA [Member]
Fair Value of available for sale portfolio by investment ratings	1,994,716	[1]	465,315	[1]
Percentage of available for sale portfolio by investment ratings	37.50%	[1]	9.00%	[1]
A [Member]
Fair Value of available for sale portfolio by investment ratings	786,973	[1]	793,980	[1]
Percentage of available for sale portfolio by investment ratings	14.80%	[1]	15.30%	[1]
BBB [Member]
Fair Value of available for sale portfolio by investment ratings	132,961	[1]	50,733	[1]
Percentage of available for sale portfolio by investment ratings	2.50%	[1]	1.00%	[1]
Below BBB [Member]
Fair Value of available for sale portfolio by investment ratings	118,942	[1]	221,848	[1]
Percentage of available for sale portfolio by investment ratings	2.20%	[1]	4.20%	[1]
Not Rated [Member]
Fair Value of available for sale portfolio by investment ratings	$ 2,681	[1]	$ 4,769	[1]
Percentage of available for sale portfolio by investment ratings	0.10%	[1]	0.10%	[1]

[1] The credit rating for each asset reflected above was determined based on the rating assigned to the individual security by Standard & Poor's. If a rating is not supplied by Standard & Poor's, the equivalent rating supplied by either Moody's Investor Service or Fitch Ratings is used.

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Fair Value Measurement (Schedule Of Available For Sale Investments Measured On A Recurring Basis) (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Total fixed maturity investments	$ 4,998,142	$ 5,116,702
Short term investments	323,119	70,444
Equity securities	49,323	13,565
Other assets (see Note 6)	1,033
Total assets	5,371,617	5,200,711
Other liabilities (see Note 6)	(550)
Residential Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	987,145	883,948
Residential Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Non-Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	123,195	245,325
Residential Mortgage-Backed Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Non-Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	534	1,085
Residential Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	987,145	883,948
Residential Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	123,729	246,410
Commercial Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	33,851	22,889
Commercial Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Non-Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	533,354	597,512
Commercial Mortgage-Backed Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Non-Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	7,774	7,308
Commercial Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	33,851	22,889
Commercial Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Total fixed maturity investments	541,128	604,820
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Total fixed maturity investments	67,818	38,275
Equity securities	40,272
Other assets (see Note 6)
Total assets	108,090	38,275
Other liabilities (see Note 6)
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | U.S. Government And Agencies Securities [Member]
Total fixed maturity investments	67,818	38,275
Significant Other Observable Inputs (Level 2) [Member]
Total fixed maturity investments	4,921,807	5,068,788
Short term investments	323,119	70,444
Equity securities	9,051	13,565
Other assets (see Note 6)	1,033
Total assets	5,255,010	5,152,797
Other liabilities (see Note 6)	(550)
Significant Other Observable Inputs (Level 2) [Member] | U.S. Government And Agencies Securities [Member]
Total fixed maturity investments	1,167,532	972,544
Significant Other Observable Inputs (Level 2) [Member] | U.S. State And Municipal Securities [Member]
Total fixed maturity investments	55,101	29,979
Significant Other Observable Inputs (Level 2) [Member] | Foreign Government Securities [Member]
Total fixed maturity investments	77,945	140,461
Significant Other Observable Inputs (Level 2) [Member] | Government Guaranteed Corporate Securities [Member]
Total fixed maturity investments	400,446	671,150
Significant Other Observable Inputs (Level 2) [Member] | Corporate Securities [Member]
Total fixed maturity investments	1,219,096	1,232,511
Significant Other Observable Inputs (Level 2) [Member] | Asset-Backed Securities [Member]
Total fixed maturity investments	324,142	272,469
Significant Unobservable Inputs (Level 3) [Member]
Total fixed maturity investments	8,517	9,639
Other assets (see Note 6)
Total assets	8,517	9,639
Other liabilities (see Note 6)
Significant Unobservable Inputs (Level 3) [Member] | Corporate Securities [Member]
Total fixed maturity investments	209
Significant Unobservable Inputs (Level 3) [Member] | Asset-Backed Securities [Member]
Total fixed maturity investments		1,246
U.S. Government And Agencies Securities [Member]
Total fixed maturity investments	1,235,350	1,010,819
U.S. State And Municipal Securities [Member]
Total fixed maturity investments	55,101	29,979
Foreign Government Securities [Member]
Total fixed maturity investments	77,945	140,461
Government Guaranteed Corporate Securities [Member]
Total fixed maturity investments	400,446	671,150
Corporate Securities [Member]
Total fixed maturity investments	1,219,305	1,232,511
Asset-Backed Securities [Member]
Total fixed maturity investments	$ 324,142	$ 273,715

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Investments (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Investments
Insurance enhanced bonds	$ 24,000,000		$ 24,000,000		$ 27,600,000
Percentage of available for sale securities	0.40%		0.40%		0.50%
Investment, net of capital returned	297,400,000		297,400,000		279,600,000
Carrying value of other investments	386,785,000		386,785,000		376,652,000
Number of available for sale securities in an unrealized loss position	666		666		376
Number of securities in a continuous unrealized loss position for twelve months or greater			89		112
OTTI losses recognized	240,000	1,380,000	2,819,000	3,233,000
Securities estimated fair value					58,700,000
Amount of controlling liability for collateral securities					59,900,000
Cash collateral received from the borrower					$ 59,886,000

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Summary Of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2011

Summary Of Significant Accounting Policies

Equity Investments

(a)	Equity Investments
	The Company currently classifies its investments in equity securities as "available for sale" and accordingly, they are carried at estimated fair value, with related net unrealized gains or losses excluded from earnings and included in shareholders' equity as a component of accumulated other comprehensive income. The Company determines the fair value of its available for sale securities in accordance with current accounting guidance, which defines fair value and establishes a fair value hierarchy based on inputs to the various valuation techniques used for each fair value measurement. The use of valuation techniques for any given investment requires a significant amount of judgment and consideration of factors specific to the underlying investment. Fair value measurements determined by the Company seek to maximize observable inputs and minimize the use of unobservable inputs.
	The Company determines the estimated fair value of each individual security utilizing the highest level inputs available. Transfers between levels are assumed to occur at the end of each period.
	For equity securities, the Company considers its ability and intent to hold an equity security in an unrealized loss position for a reasonable period of time to allow for a full recovery. When the Company determines that the decline in value of an equity security is other-than-temporary, the Company reduces the cost of the equity security to its fair value and recognizes the loss in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. The new cost basis is not changed for subsequent recoveries in fair value.

Derivatives

(b)	Derivatives
	Current accounting guidance requires the recognition of all derivative financial instruments including embedded derivative instruments, as either assets or liabilities in the Consolidated Balance Sheets at fair value.
	The Company may use various derivative instruments such as foreign exchange forward contracts, foreign currency option contracts, futures, options, interest rate swaps, total return swaps, swaptions, credit default swaps, foreign currency forward contracts and commodity futures and options to enhance the efficiency of the investment portfolio and economically hedge certain risks. These contracts do not qualify, and are not designated, as hedges. Thus, changes in fair value and any realized gains or losses are recognized in net realized and unrealized gains, net foreign exchange gains and other underwriting (loss) income in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. Margin balances required of counterparties are included in cash and cash equivalents. Where the Company has entered into master netting agreements with counterparties, or the Company has the legal and contractual right to offset positions, the derivative positions are generally netted by the counterparty and are reported accordingly in other assets and other liabilities.

Description Of New Accounting Pronouncements Not Yet Adopted

(c)	Recent accounting pronouncements
	In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" ("ASU 2011-4"). ASU 2011-4 amends Accounting Standards Codification Topic 820, "Fair Value Measurement" ("ASC 820") to change several requirements for measuring fair value and disclosing information about fair value measurements. Among the more significant changes, ASU 2011-4 amends ASC 820 to clarify certain existing fair value measurement and disclosure requirements as follows:
•	The "highest-and-best-use" and "valuation-premise" concepts only apply to measuring the fair value of nonfinancial assets. The previous guidance permitted the application of these concepts to financial assets and liabilities.
•	A reporting entity is required to measure the fair value of its own equity instruments from the perspective of a market participant that holds that instrument as an asset.
•	Reporting entities are required to disclose quantitative information about inputs used in estimating Level 3 fair value measurements.
	ASU 2011-4 will be effective for the first quarter of 2012, with early adoption prohibited. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.
	In June 2011, the FASB issued ASU 2011-05 "Comprehensive Income (Topic 220): Presentation of Comprehensive Income" ("ASU 2011-05"). ASU 2011-05 eliminates the option in current GAAP to permit the presentation of other comprehensive income in the statement of changes in shareholders' equity. The remaining two options are:
•	A single continuous statement of net income and comprehensive income; or
•	Two separate, but consecutive, statements of net income and other comprehensive income
	ASU 2011-05 is effective for interim and annual reporting periods ending on or after December 15, 2011. Early adoption is permitted and full retrospective application is required. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.
	In September 2011, the FASB issued ASU 2011-08 "Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment" ("ASU 2011-08"). Under ASU 2011-08, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. In addition, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test.
	ASU 2011-08 will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not expect this standard to have a material impact on the Company's consolidated financial statements.

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Fair Value Measurement

9 Months Ended

Sep. 30, 2011

Fair Value Measurement

Fair Value Measurement

4.	Fair value measurement

 

The Company determines the fair value of its fixed income investments and equity securities in accordance with current accounting guidance, which defines fair value and establishes a fair value hierarchy based on inputs to the various valuation techniques used for each fair value measurement. The Company determines the estimated fair value of each individual security utilizing the highest level inputs available. Valuation inputs by security type may include the following:

• Government and agencies securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical models which may incorporate option adjusted spreads, daily interest rate data and market/sector news. The Company generally classifies the fair values of government and agencies securities in Level 2. Current issue U.S. government securities are generally valued based on Level 1 inputs, which use the market approach valuation technique.  

• Government guaranteed corporate securities — These securities are generally priced by pricing services or index providers. The pricing service or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical spread models which may incorporate inputs from the U.S treasury curve or LIBOR. The Company generally classifies the fair values of its government guaranteed corporate securities in Level 2.

• Corporate securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers typically use discounted cash flow models that incorporate benchmark curves for treasury, swap and high issuance credits. Credit spreads are developed from current market observations for like or similar securities. The Company generally classifies the fair values of its corporate securities in Level 2.    

• Preferred equity securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers typically use discounted cash flow models that incorporate benchmark curves for treasury, swap and high issuance credits. Credit spreads are developed from current market observations for like or similar securities. The Company generally classifies the fair values of its preferred equity securities in Level 2.

• Common equity securities — The Company primarily invests in equity securities through the investment in exchange traded funds. These funds and underlying securities are generally priced by pricing services based on quoted market prices in active markets. The Company generally classifies the fair values of its common equity securities in Level 1.

• Derivative instruments — These instruments are generally priced by pricing services, broker/dealers and/or recent trading activity. The market value approach valuation technique is used to estimate the fair value for these derivatives based on significant observable market inputs. Certain derivative instruments are priced by pricing services based on quoted market prices in active markets. These derivative instruments are generally classified in Level 1. Other derivative instruments are priced using industry valuation models and are considered Level 2, as the inputs to the valuation model are based on observable market inputs.

• Structured securities including agency and non-agency, residential and commercial, mortgage and asset-backed securities — These securities are generally priced by broker/dealers. Broker/dealers may use current market trades for securities with similar qualities. If no such trades are available, inputs such as bid and offer, prepayment speeds, the U.S. treasury curve, swap curve and cash settlement may be used in a discounted cash flow model to determine the fair value of a security. The Company generally classifies the fair values of its structured securities in Level 2.

Transfers between levels are assumed to occur at the end of each period.

The following tables set forth the Company's available for sale investments and derivative instruments categorized by the level within the hierarchy in which the fair value measurements fall, on a recurring basis at September 30, 2011 and December 31, 2010:

	Fair Value Measurements at September 30, 2011
				Quoted
				Prices in
				Active
				Markets		Significant
				for		Other			Significant
	Total at			Identical		Observable			Unobservable
	September 30,			Assets		Inputs			Inputs
	2011			(Level 1)		(Level 2)			(Level 3)
Assets
U.S. government and agencies securities	$	1,235,350		$	67,818	$	1,167,532		$	—
U.S. state and municipal securities		55,101			—		55,101			—
Foreign government securities		77,945			—		77,945			—
Government guaranteed corporate securities		400,446			—		400,446			—
Corporate securities		1,219,305			—		1,219,096			209
Residential mortgage-backed securities
Agency mortgage-backed securities		987,145			—		987,145			—
Non-agency mortgage-backed securities		123,729			—		123,195			534
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,851			—		33,851			—
Non-agency mortgage-backed securities		541,128			—		533,354			7,774
Asset-backed securities		324,142			—		324,142			—
Total fixed maturity investments	$	4,998,142		$	67,818	$	4,921,807		$	8,517
Short term investments		323,119			—		323,119			—
Equity securities		49,323			40,272		9,051			—
Other assets (see Note 6)		1,033			—		1,033			—
Total assets	$	5,371,617		$	108,090	$	5,255,010		$	8,517
Liabilities
Other liabilities (see Note 6)	$	(550	)	$	—	$	(550	)	$	—

During the nine months ended September 30, 2011, certain corporate and commercial mortgaged-backed securities were acquired and classified as Level 3 securities. The Company used pricing models with significant unobservable inputs in order to determine the fair value of these securities.

During the nine months ended September 30, 2011, certain of the Company's fixed maturity investments were transferred from Level 2 to Level 3. The reclassifications were largely related to high yield commercial mortgage-backed and collateralized debt obligation securities where market activity had decreased. During the quarter ended September 30, 2011, the market activity for many of these high yield commercial mortgage-backed securities and collateralized debt obligations had recovered and therefore observable inputs were available at September 30, 2011. As such, the Company transferred these securities from Level 3 to Level 2 during the quarter.

During the nine months ended September 30, 2011, fixed maturity and short-term investments were transferred out of Level 1 to Level 2 as they no longer qualified as on-the-run U.S. treasury securities. During the nine months ended September 30, 2011, the Company purchased exchange traded funds, comprised of equity securities, which are classified as Level 1 securities.

          During the three months ended September 30, 2011, certain corporate and commercial mortgaged-backed securities previously classified as Level 3 securities were sold.

	Fair Value Measurements at December 31, 2010
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
	Total at		Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Assets
U.S. government and agencies securities	$	1,010,819	$	38,275	$	972,544	$	—
U.S. state and municipal securities		29,979		—		29,979		—
Foreign government securities		140,461		—		140,461		—
Government guaranteed corporate securities		671,150		—		671,150		—
Corporate securities		1,232,511		—		1,232,511		—
Residential mortgage-backed securities
Agency mortgage-backed securities		883,948		—		883,948		—
Non-agency mortgage-backed securities		246,410		—		245,325		1,085
Commercial mortgage-backed securities
Agency mortgage-backed securities		22,889		—		22,889		—
Non-agency mortgage-backed securities		604,820		—		597,512		7,308
Asset-backed securities		273,715		—		272,469		1,246
Total fixed maturity investments	$	5,116,702	$	38,275	$	5,068,788	$	9,639
Short term investments		70,444		—		70,444		—
Equity securities		13,565		—		13,565		—
Other assets		—		—		—		—
Total assets	$	5,200,711	$	38,275	$	5,152,797	$	9,639
Liabilities
Other liabilities	$	—	$	—	$	—	$	—

Level 3 securities are primarily comprised of corporate debt securities, non-agency commercial mortgage-backed securities, collateralized debt obligations and non-agency residential mortgage-backed securities. Level 3 assets represented less than 0.16% and 0.19% of the Company's total available for sale assets at September 30, 2011 and December 31, 2010, respectively. Net impairment losses recognized in earnings included losses on Level 3 securities for the three and nine months ended September 30, 2011 in the amount of $25,000 and $0.2 million, respectively ($0.3 million and $1.1 million for the three and nine months ended September 30, 2010, respectively), representing realized losses due to OTTI.

There were no material changes in the Company's valuation techniques for the nine months ended September 30, 2011.

The following tables present the securities lending collateral reinvested by the Company in connection with its securities lending program, categorized by the level within the hierarchy in which the fair value measurements fall, on a recurring basis at September 30, 2011 and December 31, 2010, respectively:

			Fair Value Measurements at September 30, 2011
			Quoted Prices		Significant
			in Active		Other		Significant
	Total at		Markets for		Observable		Unobservable
	September 30,		Identical Assets		Inputs		Inputs
	2011		(Level 1)		(Level 2)		(Level 3)
Securities lending collateral	$	—	$	—	$	—	$	—

			Fair Value Measurements at December 31, 2010
			Quoted Prices		Significant
			in Active		Other		Significant
	Total at		Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Securities lending collateral	$	59,886	$	—	$	59,886	$	—

The following tables present a reconciliation of the beginning and ending balances for all available for sale investments measured at fair value on a recurring basis using Level 3 inputs during the three and nine months ended September 30, 2011 and 2010, respectively:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Level 3, beginning of period	$	28,466		$	15,485		$	9,639		$	5,554
Total net realized gains included in earnings		22			82			33			91
Total net realized and unrealized losses included in earnings		(25	)		(366	)		(495	)		(1,237	)
Change in unrealized gains included in other comprehensive income		571			1,512			2,067			3,581
Change in unrealized losses included in other comprehensive income		(2,036	)		(326	)		(2,207	)		(663	)
Purchases		—			17			—			2,848
Sales		(1,165	)		(3,110	)		(3,105	)		(3,278	)
Transfers in to Level 3		266			209			36,931			11,768
Transfers out of Level 3		(17,582	)		(8,832	)		(34,346	)		(13,993	)
Level 3, end of period	$	8,517		$	4,671		$	8,517		$	4,671

At September 30, 2011 and December 31, 2010, the carrying value of the Company's other investments was $386.8 million and $376.7 million, respectively, which approximates fair value.

At September 30, 2011 and December 31, 2010, the carrying value of the Company's senior notes was $528.5 million and $528.3 million, respectively, and the fair value was $561.3 million and $536.9 million, respectively.

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Earnings Per Share (Policy)

9 Months Ended

Sep. 30, 2011

Earnings Per Share

Earnings Per Share

The two-class method utilized by the Company is an earnings allocation formula that determines (losses) earnings per share for the holders of Endurance Holdings' ordinary and class A shares (also referred to as "common shares") and participating common shares, which includes unvested restricted shares which receive cash dividends, according to dividends declared and participation rights in undistributed earnings. Net (loss) income (attributable) available to common and participating common shareholders is reduced by the amount of dividends declared in the current period and by the contractual amount of dividends that must be paid for the current period related to the Company's common and participating common shares. Any remaining undistributed earnings are allocated to the common and participating common shareholders to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. In periods of loss, no losses are allocated to participating common shareholders. Instead, all such losses are allocated solely to the common shareholders.

Basic (losses) earnings per common share are calculated by dividing net (loss) income (attributable) available to common shareholders by the weighted average number of common shares outstanding. The weighted average number of common shares excludes any dilutive effect of outstanding warrants, options and convertible securities such as unvested restricted shares.

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Investments (Credit Losses Recognized In Earnings, OTTI Loss Was Recognized In Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Investments
Beginning balance	$ (10,138)	$ (13,427)	$ (10,214)	$ (13,122)
Addition for the amount related to the credit loss for which an other-than-temporary impairment was not previously recognized			(12)
Addition for the amount related to the credit loss for which an other-than-temporary impairment was previously recognized	(72)	(240)	(1,161)	(586)
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security
Reductions for securities sold during the period	7,905	64	9,082	105
Ending balance	$ (2,305)	$ (13,603)	$ (2,305)	$ (13,603)

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Commitments And Contingencies (Tables)

9 Months Ended

Sep. 30, 2011

Commitments And Contingencies

Schedule Of Percentage Of Net Premiums

Broker	2011			2010
Aon Benfield		18.2	%		21.2	%
Marsh & McLennan Companies, Inc.		15.9	%		19.8	%
Willis Companies		13.0	%		12.7	%
Total of largest brokers		47.1	%		53.7	%

Schedule Of Future Minimum Lease Commitments

Twelve months ended September 30,	Amount
2012	$	13,332
2013		14,022
2014		8,911
2015		7,626
2016		5,638
2017 and thereafter		24,612
	$	74,141

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Condensed Consolidated Statements Of (Loss) Income And Comprehensive (Loss) Income (Parenthetical) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Condensed Consolidated Statements Of Income (Loss) And Comprehensive Income (Loss)
Other comprehensive income, net unrealized holding gains on investments arising during the period, tax	$ (6,856)	$ (10,619)
Other comprehensive income, portion of other-than-temporary impairment losses, tax	$ 69	$ 0

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Derivatives (Policy)

9 Months Ended

Sep. 30, 2011

Derivatives

Derivatives, Methods Of Accounting

The Company's derivative instruments are recorded in the Consolidated Balance Sheet at fair value, with changes in fair value and gains and losses recognized in net realized and unrealized investment gains, net foreign exchange gains and other underwriting (loss) income in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. The majority of the Company's derivatives are not designated as hedges under current accounting guidance. The Company may enter derivative transactions directly or as part of strategies employed by its external investment managers. The Company's objectives for holding these derivatives are as follows:

Interest Rate Futures, Swaps, Swaptions and Options

The Company may use interest rate futures, swaps, swaptions and options within its portfolio of fixed maturity investments to manage its exposure to interest rate risk, which can include increasing or decreasing its exposure to this risk through modification of the portfolio composition and duration.

Foreign Exchange Forwards, Futures and Options

The Company may utilize foreign exchange forward contracts and options as part of its overall currency risk management and investment strategies.

Credit Default Swaps

The Company may purchase protection through credit default swaps to mitigate the risk associated with its underwriting operations, most notably in the credit/surety line, and to manage market exposures.

The Company may assume or economically hedge credit risk through credit default swaps to replicate or hedge investment positions. The original term of these credit default swaps is generally five years or less.

Commodity Futures and Options

The Company may utilize commodity futures and options to economically hedge certain underwriting risks.

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Earnings Per Share (Schedule Of Computing Basic And Diluted Earnings Per Share) (Details) (USD $) In Thousands, except Share data	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
Earnings Per Share
Net (loss) income (attributable) available to common and participating common shareholders	$ (28,206)		$ 135,253		$ (82,296)		$ 241,885
Less amount allocated to participating common shareholders	(224)	[1]	(2,468)	[1]	(740)	[1]	(4,565)	[1]
Net (loss) income (attributed) allocated to common shareholders	$ (28,430)		$ 132,785		$ (83,036)		$ 237,320
Weighted average shares - basic Outstanding	39,764,756		50,295,575		40,071,340		52,057,963
Vested restricted share units							2,661
Weighted average shares - basic	39,764,756		50,295,575		40,071,340		52,060,624
Warrants			1,954,566				1,945,705
Options			739,109				835,089
Restricted share units			7,869				9,831
Weighted average shares - diluted	39,764,756		52,997,119		40,071,340		54,851,249
Basic (losses) earnings per common share	$ (0.71)		$ 2.64		$ (2.07)		$ 4.56
Diluted (losses) earnings per common share	$ (0.71)		$ 2.51		$ (2.07)		$ 4.33

[1] Represents earnings attributable to holders of unvested restricted shares issued under the Company's equity compensation plans that are considered participating. In periods of loss, no losses are allocated to participating common shareholders (unvested restricted shares).

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Investments (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2011

Dec. 31, 2010

Investments

Composition Of Net Investment Income And Of Invested Assets

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Available for sale investments	$	39,841		$	43,124		$	123,916		$	130,451
Other investments		(22,522	)		13,815			(7,583	)		23,833
Cash and cash equivalents		205			157			639			349
	$	17,524		$	57,096		$	116,972		$	154,633
Investment expenses		(3,424	)		(3,442	)		(10,529	)		(11,149	)
Net investment income	$	14,100		$	53,654		$	106,443		$	143,484

Composition of the Investment Portfolio by Investment Type

	September 30, 2011					December 31, 2010
Type of Investment	Fair Value		Percentage			Fair Value		Percentage
Fixed maturity securities	$	4,998,142		78.5	%	$	5,116,702		82.7	%
Cash and cash equivalents(1)		605,395		9.5	%		610,454		9.9	%
Other investments(2)		386,785		6.1	%		376,652		6.1	%
Short term investments		323,119		5.1	%		70,444		1.1	%
Equity securities		49,323		0.8	%		13,565		0.2	%
Total	$	6,362,764		100.0	%	$	6,187,817		100.0	%

(1)	Includes net receivable on sales of investments and net payable on purchases of investments.
(2)	Consists of investments in alternative funds and high yield loan funds.

Composition Of Fixed Income Including Fixed Maturity Securities And Short Term Investments, By Investment Ratings

	September 30, 2011					December 31, 2010
Ratings(1)	Fair Value		Percentage			Fair Value		Percentage
U.S. government and agencies securities	$	1,235,350		23.2	%	$	1,010,819		19.5	%
AAA / Aaa		1,049,638		19.7	%		2,639,682		50.9	%
AA / Aa		1,994,716		37.5	%		465,315		9.0	%
A / A		786,973		14.8	%		793,980		15.3	%
BBB		132,961		2.5	%		50,733		1.0	%
Below BBB		118,942		2.2	%		221,848		4.2	%
Not rated		2,681		0.1	%		4,769		0.1	%
Total	$	5,321,261		100.0	%	$	5,187,146		100.0	%

⁽¹⁾ The credit rating for each asset reflected above was determined based on the rating assigned to the individual security by Standard & Poor's. If a rating is not supplied by Standard & Poor's, the equivalent rating supplied by either Moody's Investor Service or Fitch Ratings is used.

Contractual Maturities Of Available For Sale Securities

	September 30, 2011				December 31, 2010
	Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value
Due within one year	$	660,817	$	663,098	$	390,886	$	393,333
Due after one year through five years		1,905,068		1,948,058		2,240,820		2,279,581
Due after five years through ten years		599,007		619,401		404,322		413,462
Due after ten years		70,996		80,709		64,663		68,988
Residential mortgage-backed securities
Agency mortgage-backed securities		950,027		987,145		855,637		883,948
Non-agency mortgage-backed securities		128,343		123,729		254,138		246,410
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,217		33,851		22,130		22,889
Non-agency mortgage-backed securities		520,886		541,128		578,951		604,820
Asset-backed securities		323,151		324,142		269,055		273,715
Total	$	5,191,512	$	5,321,261	$	5,080,602	$	5,187,146

Net Realized And Unrealized Investment Gains

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Gross realized gains on investment sales	$	6,904		$	9,488		$	40,563		$	23,655
Gross realized losses on investment sales		(5,735	)		(515	)		(13,928	)		(8,481	)
Change in fair value of derivative financial instruments(1)		(136	)		—			(295	)		—
Net realized and unrealized investment gains	$	1,033		$	8,973		$	26,340		$	15,174

(1) See Note 6

Unrealized Gains And Losses And Other-Than-Temporary Impairments

			Gross		Gross
	Amortized		Unrealized		Unrealized					Non-Credit
	Cost		Gains		Losses			Fair Value		OTTI(2)
September 30, 2011
U.S. government and agencies securities	$	1,185,145	$	50,557	$	(352	)	$	1,235,350	$	—
U.S. state and municipal securities		53,790		1,372		(61	)		55,101		—
Foreign government securities		75,909		2,241		(205	)		77,945		—
Government guaranteed corporate securities		396,479		4,074		(107	)		400,446		—
Corporate securities		1,201,376		31,239		(13,310	)		1,219,305		—
Residential mortgage-backed securities
Agency mortgage-backed securities		950,027		37,360		(242	)		987,145		—
Non-agency mortgage-backed securities		128,343		1,398		(6,012	)		123,729		(8,472	)
Commercial mortgage-backed securities
Agency mortgage-backed securities		33,217		634		—			33,851		—
Non-agency mortgage-backed securities(1)		520,886		24,219		(3,977	)		541,128		(83	)
Asset-backed securities		323,151		2,979		(1,988	)		324,142		—
Total fixed maturity investments	$	4,868,323	$	156,073	$	(26,254	)	$	4,998,142	$	(8,555	)
Short term investments		323,189		9		(79	)		323,119		—
Total fixed income investments	$	5,191,512	$	156,082	$	(26,333	)	$	5,321,261	$	(8,555	)
Equity securities	$	51,185	$	1,913	$	(3,775	)	$	49,323	$	—

(1)	Balances include amounts related to collateralized debt obligations held with total fair values of $24.7 million.
(2)	Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2011, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $0.7 million.

			Gross		Gross
	Amortized		Unrealized		Unrealized					Non-Credit
	Cost		Gains		Losses			Fair Value		OTTI(2)
December 31, 2010
U.S. government and agencies securities	$	993,667	$	23,576	$	(6,424	)	$	1,010,819	$	—
U.S. state and municipal securities		29,472		745		(238	)		29,979		—
Foreign government securities		138,157		2,557		(253	)		140,461		—
Government guaranteed corporate securities		663,709		7,806		(365	)		671,150		—
Corporate securities		1,205,231		31,174		(3,894	)		1,232,511		—
Residential mortgage-backed securities
Agency mortgage-backed securities		855,637		30,946		(2,635	)		883,948		—
Non-agency mortgage-backed securities		254,138		4,457		(12,185	)		246,410		(29,495	)
Commercial mortgage-backed securities
Agency mortgage-backed securities		22,130		761		(2	)		22,889		—
Non-agency mortgage-backed securities(1)		578,951		28,673		(2,804	)		604,820		(109	)
Asset-backed securities		269,055		6,168		(1,508	)		273,715		—
Total fixed maturity investments	$	5,010,147	$	136,863	$	(30,308	)	$	5,116,702	$	(29,604	)
Short term investments		70,455		3		(14	)		70,444		—
Total fixed income investments	$	5,080,602	$	136,866	$	(30,322	)	$	5,187,146	$	(29,604	)
Equity securities	$	8,000	$	5,583	$	(18	)	$	13,565	$	—

(1)	Balances include amounts related to collateralized debt obligations held with total fair values of $13.1 million.
(2)	Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At December 31, 2010, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $6.2 million.

Available For Sale Securities In An Unrealized Loss Position

	Less than 12 months					12 months or greater					Total
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses(1)			Value		Losses(1)			Value		Losses(1)			Value
September 30, 2011
U.S. government and agencies securities	$	(352	)	$	115,911	$	—		$	—	$	(352	)	$	115,911
U.S. state and municipal securities		(61	)		16,963		—			—		(61	)		16,963
Foreign government securities		(197	)		17,641		(8	)		4,665		(205	)		22,306
Government guaranteed corporate securities		(11	)		22,502		(96	)		56,471		(107	)		78,973
Corporate securities		(13,185	)		298,002		(125	)		1,680		(13,310	)		299,682
Residential mortgage-backed securities
Agency mortgage-backed securities		(242	)		56,461		—			—		(242	)		56,461
Non-agency mortgage-backed securities		(511	)		22,663		(5,501	)		64,914		(6,012	)		87,577
Commercial mortgage-backed securities
Agency mortgage-backed securities		—			—		—			—		—			—
Non-agency mortgage-backed securities		(3,057	)		108,055		(920	)		7,865		(3,977	)		115,920
Asset-backed securities		(1,478	)		157,343		(510	)		9,541		(1,988	)		166,884
Total fixed maturity investments	$	(19,094	)	$	815,541	$	(7,160	)	$	145,136	$	(26,254	)	$	960,677
Short term investments		(79	)		184,442		—			—		(79	)		184,442
Total fixed income investments	$	(19,173	)	$	999,983	$	(7,160	)	$	145,136	$	(26,333	)	$	1,145,119
Equity securities	$	(3,775	)	$	43,312	$	—		$	—	$	(3,775	)	$	43,312

⁽¹⁾ Gross unrealized losses include unrealized losses on non-OTTI and non-credit OTTI securities recognized in accumulated other comprehensive income at September 30, 2011.

	Less than 12 months					12 months or greater					Total
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses(1)			Value		Losses(1)			Value		Losses(1)			Value
December 31, 2010
U.S. government and agencies securities	$	(6,424	)	$	368,452	$	—		$	—	$	(6,424	)	$	368,452
U.S. state and municipal securities		(238	)		9,301		—			—		(238	)		9,301
Foreign government securities		(253	)		22,585		—			—		(253	)		22,585
Government guaranteed corporate securities		(356	)		131,980		(9	)		4,714		(365	)		136,694
Corporate securities		(3,556	)		243,307		(338	)		5,429		(3,894	)		248,736
Residential mortgage-backed securities
Agency mortgage-backed securities		(2,635	)		160,532		—			—		(2,635	)		160,532
Non-agency mortgage-backed securities		(473	)		26,205		(11,712	)		172,665		(12,185	)		198,870
Commercial mortgage-backed securities
Agency mortgage-backed securities		(2	)		455		—			—		(2	)		455
Non-agency mortgage-backed securities		(1,227	)		75,626		(1,577	)		10,590		(2,804	)		86,216
Asset-backed securities		(555	)		70,218		(953	)		13,218		(1,508	)		83,436
Total fixed maturity investments	$	(15,719	)	$	1,108,661	$	(14,589	)	$	206,616	$	(30,308	)	$	1,315,277
Short term investments		(14	)		30,178		—			—		(14	)		30,178
Total fixed income investments	$	(15,733	)	$	1,138,839	$	(14,589	)	$	206,616	$	(30,322	)	$	1,345,455
Equity securities	$	(18	)	$	640	$	—		$	—	$	(18	)	$	640

⁽¹⁾ Gross unrealized losses include unrealized losses on non-OTTI and OTTI securities recognized in accumulated other comprehensive income at December 31, 2010.

Analysis Of OTTI

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Total other-than-temporary impairment losses	$	(168	)	$	(1,140	)	$	(1,908	)	$	(2,647	)
Portion of loss recognized in other comprehensive income (loss)		(72	)		(240	)		(911	)		(586	)
Net impairment losses recognized in (losses) earnings	$	(240	)	$	(1,380	)	$	(2,819	)	$	(3,233	)

Credit Losses Recognized In Earnings, OTTI Loss Was Recognized In Accumulated Other Comprehensive Income

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Beginning balance	$	(10,138	)	$	(13,427	)	$	(10,214	)	$	(13,122	)
Addition for the amount related to the credit loss for which an other-than-temporary impairment was not previously recognized		—			—			(12	)		—
Addition for the amount related to the credit loss for which an other-than-temporary impairment was previously recognized		(72	)		(240	)		(1,161	)		(586	)
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security		—			—			—			—
Reductions for securities sold during the period		7,905			64			9,082			105
Ending balance	$	(2,305	)	$	(13,603	)	$	(2,305	)	$	(13,603	)

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows provided by operating activities
Net (loss) income	$ (66,358)	$ 253,510
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization of net premium on investments	12,470	5,860
Amortization of other intangibles and depreciation	17,095	15,513
Net realized gains on investment sales	(26,340)	(15,174)
Net impairment losses recognized in earnings	2,819	3,233
Deferred taxes	(16,280)	(22,412)
Stock-based compensation expense	11,164	9,991
Equity in earnings of other investments	7,583	(23,833)
Premiums receivable, net	(364,846)	(474,341)
Deferred acquisition costs	(48,971)	(45,215)
Prepaid reinsurance premiums	(96,984)	(39,129)
Losses recoverable	(159,783)	142,907
Accrued investment income	2,083	(1,948)
Other assets	(6,035)	1,263
Reserve for losses and loss expenses	590,610	244,286
Reserve for unearned premiums	457,710	353,440
Deposit liabilities	(3,645)	(5,686)
Reinsurance balances payable	15,377	(10,784)
Other liabilities	9,830	(901)
Net cash provided by operating activities	337,499	390,580
Cash flows used in investing activities
Proceeds from sales of available for sale investments	2,382,637	2,341,024
Proceeds from maturities and calls on available for sale investments	657,051	1,076,954
Proceeds from the redemption of other investments	13,877	14,758
Purchases of available for sale investments	(3,164,298)	(3,546,955)
Purchases of other investments	(31,593)	(202)
Net settlements of other assets	(448)
Purchases of fixed assets	(7,920)	(3,620)
Change in securities lending collateral received	59,886	(60,767)
Net cash paid for subsidiary acquisition	(3,173)	(857)
Net cash flows used in investing activities	(93,981)	(179,665)
Cash flows used in financing activities
Issuance of common shares	13,096	6,422
Issuance of series B, non-cumulative preferred shares	224,022
Repurchase of common shares	(344,272)	(227,637)
Change in securities lending payable	(59,886)	60,713
Settlement of equity awards	(6,074)	(5,179)
Offering and registration costs paid	(586)	(2,064)
Proceeds from issuance of debt	718	81,675
Repayments of debt	(597)	(1,023)
Dividends on preferred shares	(15,938)	(11,625)
Dividends on common shares	(36,247)	(39,372)
Net cash flows used in financing activities	(225,764)	(138,090)
Effect of exchange rate changes on cash and cash equivalents	(3,662)	(1,542)
Net increase in cash and cash equivalents	14,092	71,283
Cash and cash equivalents, beginning of period	609,852	528,944
Cash and cash equivalents, end of period	$ 623,944	$ 600,227

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Commitments And Contingencies

9 Months Ended

Sep. 30, 2011

Commitments And Contingencies

Commitments And Contingencies

9. Commitments and contingencies

Concentrations of credit risk. The Company's reinsurance recoverables at September 30, 2011 and December 31, 2010 amounted to $479.1 million and $319.3 million, respectively. At September 30, 2011, substantially all reinsurance recoverables were due from the U.S. government or from reinsurers rated A- or better by A.M. Best or Standard & Poor's.

Major production sources. The following table shows the percentage of net premiums written generated through the Company's largest brokers for the nine months ended September 30, 2011 and 2010, respectively:

Broker	2011			2010
Aon Benfield		18.2	%		21.2	%
Marsh & McLennan Companies, Inc.		15.9	%		19.8	%
Willis Companies		13.0	%		12.7	%
Total of largest brokers		47.1	%		53.7	%

Letters of credit. As of September 30, 2011, the Company had issued letters of credit of $403.3 million (December 31, 2010 — $439.3 million) under its credit facility in favor of certain ceding companies to collateralize obligations.

Investment commitments. As of September 30, 2011 and December 31, 2010, the Company had pledged cash and cash equivalents and fixed maturity investments of $129.9 million and $143.6 million, respectively, in favor of certain ceding companies to collateralize obligations. As of September 30, 2011 and December 31, 2010, the Company had also pledged $467.5 million and $500.9 million of its cash and fixed maturity investments as required to meet collateral obligations for $403.3 million and $439.3 million in letters of credit outstanding under its credit facility, respectively. In addition, at September 30, 2011 and December 31, 2010, cash and fixed maturity investments with fair values of $370.6 million and $369.1 million were on deposit with U.S. state regulators, respectively, and cash and fixed maturity investments with fair values of $10.3 million and $10.7 million were on deposit with Canadian regulators, respectively.

The Company is subject to certain commitments with respect to Other Investments at September 30, 2011 and December 31, 2010. The Company is generally subject to redemption restriction provisions of between one to five years from the date of the original commitment and rolling redemption restrictions on a one or two year basis thereafter. Due to redemption restrictions, the Company is prohibited from requesting redemptions during 2011 of $107.4 million (December 31, 2010 — $118.9 million) of its Other Investments held at September 30, 2011. In addition, as of September 30, 2011 the Company was committed to investing a further $17.4 million (December 31, 2010 — $11.7 million) in various investment funds classified as Other Investments.

Reinsurance commitments. In the ordinary course of business, the Company enters into reinsurance agreements that may include terms which could require the Company to collateralize certain of its obligations.

Employment agreements. The Company has entered into employment agreements with certain officers that provide for equity incentive awards, executive benefits and severance payments under certain circumstances.

Operating leases. The Company leases office space and office equipment under operating leases. Future minimum lease commitments at September 30, 2011 are as follows:

Twelve months ended September 30,	Amount
2012	$	13,332
2013		14,022
2014		8,911
2015		7,626
2016		5,638
2017 and thereafter		24,612
	$	74,141

Total lease expense under operating leases for the nine months ended September 30, 2011 was $9.2 million (2010 — $8.0 million).

Taxation. The Canada Revenue Agency ("CRA") has commenced an examination of income tax returns for 2008 and 2009 for the Canadian branch of one of the Company's U.S. subsidiaries. The Company believes that its income tax filing positions and deductions will be sustained and does not expect to receive any adjustments that would result in a material change to its financial position and therefore no reserves for uncertain income tax positions have been established

Legal proceedings. The Company is party to various legal proceedings generally arising in the normal course of its business. While any proceeding contains an element of uncertainty, the Company does not believe that the eventual outcome of any litigation or arbitration proceeding to which it is presently a party could have a material adverse effect on its financial condition or business. Pursuant to the Company's insurance and reinsurance agreements, disputes are generally required to be settled by arbitration.

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Shareholders' Equity (Details) (USD $)	0 Months Ended
	Jun. 01, 2011	Sep. 30, 2011 Series B Preferred Stock [Member]	Dec. 31, 2010 Series B Preferred Stock [Member]
Preferred stock, shares issued	9,200,000	9,200,000	0
Preferred stock, dividend percentage	7.50%
Proceeds from issuance of redeemable preferred stock	$ 224,000,000
Preferred stock redemption price per share	$ 25.00
Preferred stock redemption price per share before stated redemption date	$ 26.00
Preferred stock, liquidation price per share	$ 25.00
Preferred stock price at issue	$ 25.00

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Investments (Contractual Maturities Of Available For Sale Securities) (Details) (USD $) In Thousands	Sep. 30, 2011		Dec. 31, 2010
Due within one year, Amortized Cost	$ 660,817		$ 390,886
Due within one year, Fair Value	663,098		393,333
Due after one year through five years, Amortized Cost	1,905,068		2,240,820
Due after one year through five years, Fair Value	1,948,058		2,279,581
Due after five years through ten years, Amortized Cost	599,007		404,322
Due after five years through ten years, Fair Value	619,401		413,462
Due after ten years, Amortized Cost	70,996		64,663
Due after ten years, Fair Value	80,709		68,988
Available-for-sale Securities, Amortized Cost	4,868,323		5,010,147
Available-for-sale Securities, Fair Value	4,998,142		5,116,702
Residential Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	950,027		855,637
Available-for-sale Securities, Fair Value	987,145		883,948
Residential Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	128,343		254,138
Available-for-sale Securities, Fair Value	123,729		246,410
Commercial Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	33,217		22,130
Available-for-sale Securities, Fair Value	33,851		22,889
Commercial Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	520,886	[1]	578,951	[2]
Available-for-sale Securities, Fair Value	541,128	[1]	604,820	[2]
Asset-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	323,151		269,055
Available-for-sale Securities, Fair Value	324,142		273,715
Total Fixed Income Investments [Member]
Available-for-sale Securities, Amortized Cost	5,191,512		5,080,602
Available-for-sale Securities, Fair Value	$ 5,321,261		$ 5,187,146

[1] Balances include amounts related to collateralized debt obligations held with total fair values of $24.7 million.

[2] Balances include amounts related to collateralized debt obligations held with total fair values of $13.1 million.

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Fair Value Measurement (Policy)

9 Months Ended

Sep. 30, 2011

Fair Value Measurement

Fair Value Of Financial Instruments

 

The Company determines the fair value of its fixed income investments and equity securities in accordance with current accounting guidance, which defines fair value and establishes a fair value hierarchy based on inputs to the various valuation techniques used for each fair value measurement. The Company determines the estimated fair value of each individual security utilizing the highest level inputs available. Valuation inputs by security type may include the following:

• Government and agencies securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical models which may incorporate option adjusted spreads, daily interest rate data and market/sector news. The Company generally classifies the fair values of government and agencies securities in Level 2. Current issue U.S. government securities are generally valued based on Level 1 inputs, which use the market approach valuation technique.  

• Government guaranteed corporate securities — These securities are generally priced by pricing services or index providers. The pricing service or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical spread models which may incorporate inputs from the U.S treasury curve or LIBOR. The Company generally classifies the fair values of its government guaranteed corporate securities in Level 2.

• Corporate securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers typically use discounted cash flow models that incorporate benchmark curves for treasury, swap and high issuance credits. Credit spreads are developed from current market observations for like or similar securities. The Company generally classifies the fair values of its corporate securities in Level 2.    

• Preferred equity securities — These securities are generally priced by pricing services or index providers. The pricing services or index providers typically use discounted cash flow models that incorporate benchmark curves for treasury, swap and high issuance credits. Credit spreads are developed from current market observations for like or similar securities. The Company generally classifies the fair values of its preferred equity securities in Level 2.

• Common equity securities — The Company primarily invests in equity securities through the investment in exchange traded funds. These funds and underlying securities are generally priced by pricing services based on quoted market prices in active markets. The Company generally classifies the fair values of its common equity securities in Level 1.

• Derivative instruments — These instruments are generally priced by pricing services, broker/dealers and/or recent trading activity. The market value approach valuation technique is used to estimate the fair value for these derivatives based on significant observable market inputs. Certain derivative instruments are priced by pricing services based on quoted market prices in active markets. These derivative instruments are generally classified in Level 1. Other derivative instruments are priced using industry valuation models and are considered Level 2, as the inputs to the valuation model are based on observable market inputs.

• Structured securities including agency and non-agency, residential and commercial, mortgage and asset-backed securities — These securities are generally priced by broker/dealers. Broker/dealers may use current market trades for securities with similar qualities. If no such trades are available, inputs such as bid and offer, prepayment speeds, the U.S. treasury curve, swap curve and cash settlement may be used in a discounted cash flow model to determine the fair value of a security. The Company generally classifies the fair values of its structured securities in Level 2.

Fair Value Transfer Between Levels

Transfers between levels are assumed to occur at the end of each period.

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Condensed Consolidated Balance Sheets (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
ASSETS
Fixed maturity investments, available for sale at fair value (amortized cost: $4,868,323 and $5,010,147 at September 30, 2011 and December 31, 2010, respectively)	$ 4,998,142	$ 5,116,702
Short-term investments, available for sale at fair value (amortized cost: $323,189 and $70,455 at September 30, 2011 and December 31, 2010, respectively)	323,119	70,444
Equity securities, available for sale at fair value (cost: $51,185 and $8,000 at September 30, 2011 and December 31, 2010, respectively)	49,323	13,565
Other investments	386,785	376,652
Total investments	5,757,369	5,577,363
Cash and cash equivalents	623,944	609,852
Premiums receivable, net	1,192,455	827,609
Deferred acquisition costs	203,455	154,484
Securities lending collateral		59,886
Prepaid reinsurance premiums	204,961	107,977
Losses recoverable	479,132	319,349
Accrued investment income	30,851	32,934
Goodwill and intangible assets	183,857	181,954
Deferred tax asset	40,253	33,684
Net receivable on sales of investments	37,947	602
Other assets	80,013	73,711
Total assets	8,834,237	7,979,405
LIABILITIES
Reserve for losses and loss expenses	3,910,537	3,319,927
Reserve for unearned premiums	1,299,864	842,154
Deposit liabilities	28,860	32,505
Reinsurance balances payable	244,769	228,860
Securities lending payable		59,886
Debt	528,664	528,411
Net payable on purchases of investments	56,496
Other liabilities	129,097	119,509
Total liabilities	6,198,287	5,131,252
Commitments and contingent liabilities
SHAREHOLDERS' EQUITY
Common shares Ordinary - $1.00 par value, 40,517,222 issued and outstanding (2010 - 47,218,468)	40,517	47,218
Additional paid-in capital	512,323	613,915
Accumulated other comprehensive income	144,004	138,571
Retained earnings	1,921,906	2,040,449
Total shareholders' equity	2,635,950	2,848,153
Total liabilities and shareholders' equity	8,834,237	7,979,405
Series A Preferred Stock [Member]
SHAREHOLDERS' EQUITY
Preferred stock, value	8,000	8,000
Series B Preferred Stock [Member]
SHAREHOLDERS' EQUITY
Preferred stock, value	$ 9,200

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Investments (Unrealized Gains And Losses And Other-Than-Temporary Impairments) (Details) (USD $)	Sep. 30, 2011		Dec. 31, 2010
Available-for-sale Securities, Amortized Cost	$ 4,868,323,000		$ 5,010,147,000
Available-for-sale Securities, Gross Unrealized Gains	156,073,000		136,863,000
Available-for-sale Securities, Gross Unrealized Losses	(26,254,000)		(30,308,000)
Available-for-sale Securities, Fair Value	4,998,142,000		5,116,702,000
Available-for-sale Securities, Fair Value, Non-Credit OTTI	(8,555,000)	[1]	(29,604,000)	[2]
Collateralized debt obligations	24,700,000		13,100,000
Gross unrealized loss related to securities, non-credit OTTI	700,000		6,200,000
Residential Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	950,027,000		855,637,000
Available-for-sale Securities, Gross Unrealized Gains	37,360,000		30,946,000
Available-for-sale Securities, Gross Unrealized Losses	(242,000)		(2,635,000)
Available-for-sale Securities, Fair Value	987,145,000		883,948,000
Commercial Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	33,217,000		22,130,000
Available-for-sale Securities, Gross Unrealized Gains	634,000		761,000
Available-for-sale Securities, Gross Unrealized Losses			(2,000)
Available-for-sale Securities, Fair Value	33,851,000		22,889,000
Residential Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	128,343,000		254,138,000
Available-for-sale Securities, Gross Unrealized Gains	1,398,000		4,457,000
Available-for-sale Securities, Gross Unrealized Losses	(6,012,000)		(12,185,000)
Available-for-sale Securities, Fair Value	123,729,000		246,410,000
Available-for-sale Securities, Fair Value, Non-Credit OTTI	(8,472,000)	[1]	(29,495,000)	[2]
Commercial Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	520,886,000	[3]	578,951,000	[4]
Available-for-sale Securities, Gross Unrealized Gains	24,219,000	[3]	28,673,000	[4]
Available-for-sale Securities, Gross Unrealized Losses	(3,977,000)	[3]	(2,804,000)	[4]
Available-for-sale Securities, Fair Value	541,128,000	[3]	604,820,000	[4]
Available-for-sale Securities, Fair Value, Non-Credit OTTI	(83,000)	[1],[3]	(109,000)	[2],[4]
U.S. Government And Agencies Securities [Member]
Available-for-sale Securities, Amortized Cost	1,185,145,000		993,667,000
Available-for-sale Securities, Gross Unrealized Gains	50,557,000		23,576,000
Available-for-sale Securities, Gross Unrealized Losses	(352,000)		(6,424,000)
Available-for-sale Securities, Fair Value	1,235,350,000		1,010,819,000
U.S. State And Municipal Securities [Member]
Available-for-sale Securities, Amortized Cost	53,790,000		29,472,000
Available-for-sale Securities, Gross Unrealized Gains	1,372,000		745,000
Available-for-sale Securities, Gross Unrealized Losses	(61,000)		(238,000)
Available-for-sale Securities, Fair Value	55,101,000		29,979,000
Foreign Government Securities [Member]
Available-for-sale Securities, Amortized Cost	75,909,000		138,157,000
Available-for-sale Securities, Gross Unrealized Gains	2,241,000		2,557,000
Available-for-sale Securities, Gross Unrealized Losses	(205,000)		(253,000)
Available-for-sale Securities, Fair Value	77,945,000		140,461,000
Government Guaranteed Corporate Securities [Member]
Available-for-sale Securities, Amortized Cost	396,479,000		663,709,000
Available-for-sale Securities, Gross Unrealized Gains	4,074,000		7,806,000
Available-for-sale Securities, Gross Unrealized Losses	(107,000)		(365,000)
Available-for-sale Securities, Fair Value	400,446,000		671,150,000
Corporate Securities [Member]
Available-for-sale Securities, Amortized Cost	1,201,376,000		1,205,231,000
Available-for-sale Securities, Gross Unrealized Gains	31,239,000		31,174,000
Available-for-sale Securities, Gross Unrealized Losses	(13,310,000)		(3,894,000)
Available-for-sale Securities, Fair Value	1,219,305,000		1,232,511,000
Asset-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	323,151,000		269,055,000
Available-for-sale Securities, Gross Unrealized Gains	2,979,000		6,168,000
Available-for-sale Securities, Gross Unrealized Losses	(1,988,000)		(1,508,000)
Available-for-sale Securities, Fair Value	324,142,000		273,715,000
Short Term Investments [Member]
Available-for-sale Securities, Amortized Cost	323,189,000		70,455,000
Available-for-sale Securities, Gross Unrealized Gains	9,000		3,000
Available-for-sale Securities, Gross Unrealized Losses	(79,000)		(14,000)
Available-for-sale Securities, Fair Value	323,119,000		70,444,000
Total Fixed Income Investments [Member]
Available-for-sale Securities, Amortized Cost	5,191,512,000		5,080,602,000
Available-for-sale Securities, Gross Unrealized Gains	156,082,000		136,866,000
Available-for-sale Securities, Gross Unrealized Losses	(26,333,000)		(30,322,000)
Available-for-sale Securities, Fair Value	5,321,261,000		5,187,146,000
Available-for-sale Securities, Fair Value, Non-Credit OTTI	(8,555,000)	[1]	(29,604,000)	[2]
Equity Securities [Member]
Available-for-sale Securities, Amortized Cost	51,185,000		8,000,000
Available-for-sale Securities, Gross Unrealized Gains	1,913,000		5,583,000
Available-for-sale Securities, Gross Unrealized Losses	(3,775,000)		(18,000)
Available-for-sale Securities, Fair Value	$ 49,323,000		$ 13,565,000

[1] Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2011, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $0.7 million.

[2] Represents total OTTI recognized in accumulated other comprehensive income. It does not include the change in fair value subsequent to the impairment measurement date. At December 31, 2010, the gross unrealized loss related to fixed income investments for which a non-credit OTTI was recognized in accumulated other comprehensive income was $6.2 million.

[3] Balances include amounts related to collateralized debt obligations held with total fair values of $24.7 million.

[4] Balances include amounts related to collateralized debt obligations held with total fair values of $13.1 million.

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Segment Reporting (Summary Of The Segment Revenues, Results And Reserve For Losses And Loss Expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Gross premiums written	$ 700,866	$ 555,574	$ 2,204,148	$ 1,864,011
Ceded premiums written	(149,539)	(103,690)	(412,191)	(258,382)
Net premiums written	551,327	451,884	1,791,957	1,605,629
Net premiums earned	561,493	469,793	1,430,904	1,291,377
Other underwriting income (loss)	(2,141)	322	(2,122)	(2,046)
Total revenue	559,352	470,115	1,428,782	1,289,331
Net losses and loss expenses	456,691	266,132	1,220,514	791,676
Acquisition expenses	72,249	67,443	205,754	198,095
General and administrative expenses	58,574	59,523	190,421	174,164
Expenses, net	587,514	393,098	1,616,689	1,163,935
Underwriting income (loss)	(28,162)	77,017	(187,907)	125,396
Net loss ratio	81.30%	56.60%	85.30%	61.30%
Acquisition expense ratio	12.90%	14.40%	14.40%	15.30%
General and administrative expense ratio	10.40%	12.70%	13.30%	13.50%
Combined ratio	104.60%	83.70%	113.00%	90.10%
Reserve for losses and loss expenses	3,910,537	3,401,312	3,910,537	3,401,312	3,319,927
Insurance [Member]
Gross premiums written	450,451	303,561	1,302,032	999,528
Ceded premiums written	(147,241)	(99,268)	(393,020)	(251,307)
Net premiums written	303,210	204,293	909,012	748,221
Net premiums earned	318,602	242,766	730,491	616,300
Other underwriting income (loss)	(2,875)	473	(2,875)	471
Total revenue	315,727	243,239	727,616	616,771
Net losses and loss expenses	260,206	172,015	550,438	428,872
Acquisition expenses	18,738	17,356	50,907	51,336
General and administrative expenses	29,328	29,256	102,361	86,523
Expenses, net	308,272	218,627	703,706	566,731
Underwriting income (loss)	7,455	24,612	23,910	50,040
Net loss ratio	81.70%	70.90%	75.30%	69.60%
Acquisition expense ratio	5.90%	7.10%	7.00%	8.40%
General and administrative expense ratio	9.20%	12.10%	14.00%	14.00%
Combined ratio	96.80%	90.10%	96.30%	92.00%
Reserve for losses and loss expenses	2,032,636	1,826,956	2,032,636	1,826,956
Reinsurance [Member]
Gross premiums written	250,415	252,013	902,116	864,483
Ceded premiums written	(2,298)	(4,422)	(19,171)	(7,075)
Net premiums written	248,117	247,591	882,945	857,408
Net premiums earned	242,891	227,027	700,413	675,077
Other underwriting income (loss)	734	(151)	753	(2,517)
Total revenue	243,625	226,876	701,166	672,560
Net losses and loss expenses	196,485	94,117	670,076	362,804
Acquisition expenses	53,511	50,087	154,847	146,759
General and administrative expenses	29,246	30,267	88,060	87,641
Expenses, net	279,242	174,471	912,983	597,204
Underwriting income (loss)	(35,617)	52,405	(211,817)	75,356
Net loss ratio	81.00%	41.50%	95.60%	53.70%
Acquisition expense ratio	22.00%	22.10%	22.10%	21.80%
General and administrative expense ratio	12.00%	13.30%	12.60%	13.00%
Combined ratio	115.00%	76.90%	130.30%	88.50%
Reserve for losses and loss expenses	$ 1,877,901	$ 1,574,356	$ 1,877,901	$ 1,574,356

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Earnings Per Share (Schedule Of Dividends Declared) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Dividends declared per common share	$ 0.30	$ 0.25	$ 0.90	$ 0.75
Series A Preferred Stock [Member]
Dividends declared per preferred share	$ 0.484375	$ 0.484375	$ 1.453125	$ 1.453125
Series B Preferred Stock [Member]
Dividends declared per preferred share	$ 0.468750		$ 0.468750

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Derivatives (Schedule Of Derivative Fair Value And Notional Amount) (Details) (USD $) In Thousands	Sep. 30, 2011
Derivatives recorded in other assets, Fair Value	$ 1,033
Derivative recorded in other liabilities, Fair Value	550
Net derivative asset, Fair Value	483
Derivatives recorded in other asset, Notional Principal Amount	810,717
Derivatives recorded in other liabilities, Notional Principal Amount	207,304
Net derivative assets, Notional Principal Amount	1,018,021
Foreign Exchange Forward Contracts [Member]
Derivatives recorded in other assets, Fair Value	347
Derivative recorded in other liabilities, Fair Value	298
Derivatives recorded in other asset, Notional Principal Amount	8,674
Derivatives recorded in other liabilities, Notional Principal Amount	3,454
Interest Rate Swaps [Member]
Derivatives recorded in other assets, Fair Value	193
Derivative recorded in other liabilities, Fair Value	122
Derivatives recorded in other asset, Notional Principal Amount	3,000
Derivatives recorded in other liabilities, Notional Principal Amount	2,000
Commodity Put Options [Member]
Derivatives recorded in other assets, Fair Value	493
Derivatives recorded in other asset, Notional Principal Amount	799,043
Credit Default Swaps [Member]
Derivative recorded in other liabilities, Fair Value	122
Derivatives recorded in other liabilities, Notional Principal Amount	1,850
Interest Rate Futures [Member]
Derivative recorded in other liabilities, Fair Value	8
Derivatives recorded in other liabilities, Notional Principal Amount	$ 200,000

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Commitments And Contingencies (Schedule Of Future Minimum Lease Commitments) (Details) (USD $) In Millions	Sep. 30, 2011
Commitments And Contingencies
2012	$ 13,332
2013	14,022
2014	8,911
2015	7,626
2016	5,638
2017 and thereafter	24,612
Total	$ 74,141

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Investments (Available For Sale Securities In An Unrealized Loss Position) (Details) (USD $) In Thousands	Sep. 30, 2011		Dec. 31, 2010
Unrealized Losses, Less than 12 months	$ (19,094)	[1]	$ (15,719)	[2]
Fair Value, Less than 12 months	815,541		1,108,661
Unrealized Losses, 12 months or greater	(7,160)	[1]	(14,589)	[2]
Fair Value, 12 months or greater	145,136		206,616
Unrealized Losses, Total	(26,254)	[1]	(30,308)	[2]
Fair Value, Total	960,677		1,315,277
Residential Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Unrealized Losses, Less than 12 months	(242)	[1]	(2,635)	[2]
Fair Value, Less than 12 months	56,461		160,532
Unrealized Losses, Total	(242)	[1]	(2,635)	[2]
Fair Value, Total	56,461		160,532
Commercial Mortgage-Backed Securities [Member] | Agency Mortgage-Backed Securities [Member]
Unrealized Losses, Less than 12 months			(2)	[2]
Fair Value, Less than 12 months			455
Unrealized Losses, Total			(2)	[2]
Fair Value, Total			455
Residential Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Unrealized Losses, Less than 12 months	(511)	[1]	(473)	[2]
Fair Value, Less than 12 months	22,663		26,205
Unrealized Losses, 12 months or greater	(5,501)	[1]	(11,712)	[2]
Fair Value, 12 months or greater	64,914		172,665
Unrealized Losses, Total	(6,012)	[1]	(12,185)	[2]
Fair Value, Total	87,577		198,870
Commercial Mortgage-Backed Securities [Member] | Non-Agency Mortgage-Backed Securities [Member]
Unrealized Losses, Less than 12 months	(3,057)	[1]	(1,227)	[2]
Fair Value, Less than 12 months	108,055		75,626
Unrealized Losses, 12 months or greater	(920)	[1]	(1,577)	[2]
Fair Value, 12 months or greater	7,865		10,590
Unrealized Losses, Total	(3,977)	[1]	(2,804)	[2]
Fair Value, Total	115,920		86,216
U.S. Government And Agencies Securities [Member]
Unrealized Losses, Less than 12 months	(352)	[1]	(6,424)	[2]
Fair Value, Less than 12 months	115,911		368,452
Unrealized Losses, Total	(352)	[1]	(6,424)	[2]
Fair Value, Total	115,911		368,452
U.S. State And Municipal Securities [Member]
Unrealized Losses, Less than 12 months	(61)	[1]	(238)	[2]
Fair Value, Less than 12 months	16,963		9,301
Unrealized Losses, Total	(61)	[1]	(238)	[2]
Fair Value, Total	16,963		9,301
Foreign Government Securities [Member]
Unrealized Losses, Less than 12 months	(197)	[1]	(253)	[2]
Fair Value, Less than 12 months	17,641		22,585
Unrealized Losses, 12 months or greater	(8)	[1]
Fair Value, 12 months or greater	4,665
Unrealized Losses, Total	(205)	[1]	(253)	[2]
Fair Value, Total	22,306		22,585
Government Guaranteed Corporate Securities [Member]
Unrealized Losses, Less than 12 months	(11)	[1]	(356)	[2]
Fair Value, Less than 12 months	22,502		131,980
Unrealized Losses, 12 months or greater	(96)	[1]	(9)	[2]
Fair Value, 12 months or greater	56,471		4,714
Unrealized Losses, Total	(107)	[1]	(365)	[2]
Fair Value, Total	78,973		136,694
Corporate Securities [Member]
Unrealized Losses, Less than 12 months	(13,185)	[1]	(3,556)	[2]
Fair Value, Less than 12 months	298,002		243,307
Unrealized Losses, 12 months or greater	(125)	[1]	(338)	[2]
Fair Value, 12 months or greater	1,680		5,429
Unrealized Losses, Total	(13,310)	[1]	(3,894)	[2]
Fair Value, Total	299,682		248,736
Asset-Backed Securities [Member]
Unrealized Losses, Less than 12 months	(1,478)	[1]	(555)	[2]
Fair Value, Less than 12 months	157,343		70,218
Unrealized Losses, 12 months or greater	(510)	[1]	(953)	[2]
Fair Value, 12 months or greater	9,541		13,218
Unrealized Losses, Total	(1,988)	[1]	(1,508)	[2]
Fair Value, Total	166,884		83,436
Short Term Investments [Member]
Unrealized Losses, Less than 12 months	(79)	[1]	(14)	[2]
Fair Value, Less than 12 months	184,442		30,178
Unrealized Losses, Total	(79)	[1]	(14)	[2]
Fair Value, Total	184,442		30,178
Total Fixed Income Investments [Member]
Unrealized Losses, Less than 12 months	(19,173)	[1]	(15,733)	[2]
Fair Value, Less than 12 months	999,983		1,138,839
Unrealized Losses, 12 months or greater	(7,160)	[1]	(14,589)	[2]
Fair Value, 12 months or greater	145,136		206,616
Unrealized Losses, Total	(26,333)	[1]	(30,322)	[2]
Fair Value, Total	1,145,119		1,345,455
Equity Securities [Member]
Unrealized Losses, Less than 12 months	(3,775)	[1]	(18)	[2]
Fair Value, Less than 12 months	43,312		640
Unrealized Losses, Total	(3,775)	[1]	(18)	[2]
Fair Value, Total	$ 43,312		$ 640

[1] Gross unrealized losses include unrealized losses on non-OTTI and non-credit OTTI securities recognized in accumulated other comprehensive income at September 30, 2011.

[2] Gross unrealized losses include unrealized losses on non-OTTI and OTTI securities recognized in accumulated other comprehensive income at December 31, 2010.