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Endurance posts strong quarter as combined ratio improves

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Endurance Specialty Holdings Ltd. reported fourth-quarter net income of $76.4 million, up 29.5% on a significantly improved combined ratio from the same period last year.

Net premiums written declined 16.5% from the year ago to $234.0 million while net investment income fell 44.1% to $25.9 million, the Pembroke, Bermuda-based insurer said Thursday in a statement.

On a Friday morning call with analysts, John Charman, chairman and CEO, said net premiums were affected by the company’s increased use of reinsurance and retrocession. He added that retention levels are expected to stabilize going forward.

Mr. Charman also said he expects “meaningful” expansion in margins over the next several years.

Fourth-quarter revenues of $491.3 million were down 10.4%, but the company’s combined ratio improved to 83.2% from 93.0% in the year-ago period on fewer losses.

For full year 2014, net income rose 11.7% to $348.5 million, and revenue fell 8.7% to $2.00 billion

Net premiums written decreased 5.6% to $1.93 billion, and net investment income declined 20.1% to $131.5 million.

The company’s combined ratio improved to 86.0% from 90.2% in 2013.

Mr. Charman said on the call that “as expected, competitive pricing continued to intensify, most in the short-tail lines,” where additional capital continues to “aggressively seek expansion in that area.”

Endurance in 2014 mounted an unsuccessful $3.2 billion hostile takeover attempt of Hamilton, Bermuda-based Aspen Insurance Holdings Ltd., terminating its bid in August after multiple approaches.

Michael McGuire, Endurance’s chief financial officer, said on the call that yearly earnings were hit by the $20.3 million in expenses related to the bid for Aspen.

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