Bermuda-based Endurance Specialty this week reported net income of $355.6 million in 2004.

The company?s earnings for the year broke down to $5.28 per share and compared favourably to net income in 2003 of $263.4 million, or $4 per share.

For the fourth quarter, Endurance reported a profit of $113.1 million or $1.71 per share in contrast to net income of $88.9 million or $1.31 per share a year prior.

Meanwhile, operating income ? which excludes after-tax realised investment gains and losses and foreign exchange gains and losses ? stood at $108.4 million or $1.64 per share versus $86.5 million or $1.28 per diluted share in the fourth quarter of 2003.

CEO and chairman Kenneth LeStrange said: ?We significantly exceeded our return on equity guidance of 15.5 percent to 17.5 percent in a year marked by substantial catastrophic losses, demonstrating the strength of our multi-line approach, technical underwriting and liability management. We finished the year with excellent underwriting profitability and generated $1.2 billion in cash flow. Based on the strong businesses we have built, subject to normal catastrophe losses, we estimate that Endurance will generate an operating return on equity in 2005 of 16 percent.?

Mr. LeStrange continued: ?We made significant progress in diversifying our shareholder base and increasing the public float of Endurance?s equity during 2004. With the successful completion of our secondary public offering in March and the sale of Aon?s direct stake in Endurance in December, over half of our equity is now publicly traded.?

Gross premiums written were $272.2 million for the fourth quarter, an increase of 3.8 percent from the $262.2 million in gross premiums written for the fourth quarter of 2003. For the year, Endurance had gross premiums written of $1.7 billion, an increase of 6.8 percent from the $1.6 billion of gross premiums written in 2003. Earned premiums in the quarter were $411.3 million, an increase of 15.5 percent from the fourth quarter of 2003.

Endurance?s combined ratio, a measure of underwriting profitability, was 81.6 percent in the quarter, a slight improvement over the 82.5 percent in the fourth quarter of 2003. The loss ratio was 53.0 percent in the quarter compared to 54.9 percent in the fourth quarter of 2003.

Endurance also said it benefited from $25.7 million in positive reserve development for the fourth quarter of 2004 from prior years, compared to $8.5 million in the fourth quarter of 2003. This reduction in the company?s estimated losses for prior years was heavily driven by lower than anticipated frequency in the Property Per Risk Treaty Reinsurance and Property Catastrophe Reinsurance segments.

Most segments of the business performed well in 2004, Endurance said in its earnings release.

The company also updated its estimate of losses in the third quarter from the strong 2004 hurricane season. It said that based on reported claims activity and the distribution of claims between the four hurricanes last August and September, Endurance was increasing its gross estimate of claims related to those events by $12.3 million.

The company?s statement said this increase was roughly split between the US Property Treaty segment and the Bermuda-based Property Catastrophe Reinsurance segment. Endurance reported no material losses as a result of the Asian Tsunami in December.

Investment income was $37.5 million in the fourth quarter of 2004, an increase of 76.3 percent from the $21.3 million of investment income in the fourth quarter of 2003. For the year, Endurance had investment income of $122.1 million, an increase of 71.9 percent from 2003. Investment income growth was driven by strong operating cash flows coupled with a moderately higher interest rate environment, Endurance said.

At the end of the year, shareholders? equity stood at $1.9 billion or $27.91 per share, up 16.1 percent from December 31, 2003. Total assets were $5.2 billion and cash and invested assets were $3.9 billion, an increase of 47.3 percent from the prior year.