A.M. Best Co. has downgraded the ratings of Endurance Specialty Insurance and Endurance Specialty Holdings by one notch on concerns over Hurricane Katrina losses.

Endurance Specialty Insurance and its operating affiliates now has a financial strength rating of A- and an issuer credit rating to a-. A.M. Best also downgraded the ICR to ?bbb-? from ?bbb? of Endurance Specialty Holdings Ltd. and downgraded all existing debt ratings.

All ratings have been removed from under review with negative implications and assigned a stable outlook.

Best said that the 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.

Last week, the Bermuda-based company posted a loss of $377 million, or $6.26 per share, in the third quarter after absorbing losses from Hurricane Katrina and other storms.

?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-capitalise 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,? Best said.

The ratings agency understands 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.