A.M. Best Downgrades Ratings of Endurance Specialty Insurance Ltd. and Endurance Specialty Holdings Ltd.; Removes From Under Review.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating (FSR) to A- (Excellent) from A (Excellent) and the issuer credit rating (ICR) to "a-" from "a" of Endurance Specialty Insurance Ltd. (Endurance) (Hamilton, Bermuda) and its operating affiliates. Concurrently, A.M. Best has downgraded the ICR to "bbb-" from "bbb" of Endurance Specialty Holdings Ltd. (NYSE: ENH) (Hamilton, Bermuda) and downgraded all existing debt ratings. All ratings have been removed from under review with negative implications and assigned a stable outlook.

The rating action reflects the fact that Endurance's share of Hurricane Katrina losses was outside of A.M. Best's original expectations for a diversified multi-line reinsurance company. Endurance's business mix profile, which includes property, casualty and specialty lines of business, was expected to have more limited correlation and produce less overall volatility. However, the current rating continues to reflect Endurance's strong market profile, which enabled it to re-capitalize with a combination of equity and debt offerings immediately following Hurricane Katrina. The company's recently completed capital raising activities brings Endurance's risk-based capital to an appropriate level for its new rating and outlook.

Following detailed discussions with the company's management, A.M. Best believes that prudent adjustments to the company's underwriting strategy are now being implemented to better manage the potential accumulation of losses from a single large catastrophic event.

The FSR has been downgraded to A- (Excellent) from A (Excellent) and the ICRs have been downgraded to "a-" from "a" for Endurance Specialty Insurance Ltd and the following subsidiaries:

--Endurance Reinsurance Corporation of America

--Endurance Worldwide Insurance Limited

The following debt ratings have been downgraded:

Endurance Specialty Holdings Ltd.

--  to "bbb-" from "bbb" on $250 million 7.0% senior unsecured
        notes, due 2034

The following indicative debt ratings have been downgraded for securities available under shelf registration:

Endurance Specialty Holdings Ltd.

--  to "bbb-" from "bbb" on senior unsecured
    --  to "bb+" from "bbb-" on subordinated
    --  to "bb" from "bb+" on preferred stock

Endurance Holdings Capital Trust I (guaranteed by Endurance Specialty Holdings) Ltd.

--  to "bb" from "bb+" on preferred securities

Endurance Holdings Capital Trust II (guaranteed by Endurance Specialty Holdings Ltd.)

--  to "bb" from "bb+" on preferred securities

An FSR of A- (Excellent) and an ICR of "a-" have been assigned to Traders & Pacific Insurance Company.

The following debt ratings have been assigned:

Endurance Specialty Holdings Ltd.

--  "bbb-" on $200 million 6.15% senior unsecured notes, due 2015
    --  "bb" on $200 million Series A non-cumulative preferred shares

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.